A voucher program designed to reduce homelessness in New York City has been hamstrung by the discriminatory practices of landlords and real estate agents who have turned away people relying on subsidies to pay rent, according to a lawsuit filed on Wednesday.
The lawsuit, which accused more than 120 real estate companies, brokers and property owners across the city of engaging in the illegal practice, comes as New York City is struggling to move people out of shelters or off the streets and into homes, and reflects how voucher discrimination may be undermining nationwide efforts to address homelessness and segregation.
As part of a monthslong sting operation, investigators with a nonprofit watchdog group, the Housing Rights Initiative, posed as prospective tenants. The investigators made thousands of inquiries seeking to rent homes using a special city voucher for people struggling with evictions and homelessness. But in recorded phone calls, text messages and emails, which were shared with The New York Times, the investigators were repeatedly told that landlords did not rent to such voucher holders.
It is illegal in New York City, and in a growing number of places across the nation, for landlords to refuse to accept applications from tenants who depend on vouchers. The defendants in the lawsuit, which was filed on Wednesday in the New York State Supreme Court in Manhattan, include well-known firms such as Douglas Elliman and teams associated with Re/Max and Coldwell Banker, in addition to dozens of individual brokers and landlords.
“Housing discrimination is not an isolated incident,” Aaron Carr, the executive director of the Housing Rights Initiative, said in an interview. “It is a part of an industrywide problem.”
Douglas Elliman did not respond to a request for comment before the lawsuit was filed, nor did representatives of Re/Max Edge, a Re/Max team based in Brooklyn that is named in the lawsuit.
Joseph T. Hamdan, a broker and managing member with Coldwell Banker Reliable, an affiliate of Coldwell Banker based in New York City, said the team was waiting to see the specific allegations in the lawsuit before responding.
“We offer our sales associates weekly rental training including fair housing, and we have regularly and consistently provided service to tenants with vouchers,” he said. “We will continue to do so and have completed leases with tenants with a voucher on many occasions.”
The Real Estate Board of New York, an influential industry group whose members include property owners and brokers, has called on the city to better regulate and cut down on bad actors, but has also said it does not believe the problem is industrywide. Basha Gerhards, the board’s senior vice president of planning, said the group is also “educating our members on all relevant laws and policies” and pushing for greater access to vouchers at the city and state level.
The lawsuit came as rising rents and homelessness remain a major focus for New Yorkers and Mayor Eric Adams.
More than 48,000 people slept in New York City shelters each night in March, according to the Coalition for the Homeless, a nonprofit advocacy group. The number of single adults in shelters has increased steadily over the last several years. City data shows that about 8,700 families with children were living in shelters in May, up 6 percent from a pandemic low of 8,400 in August, but still below the 12,000 families recorded in January 2020.
The city last year expanded the voucher program, called CityFHEPS, that is the focus of Wednesday’s lawsuit. The CityFHEPS program, which stands for Family Homelessness and Eviction Prevention Supplement, covers a portion of a voucher holder’s rent, depending on their level of income.
In general, voucher programs have been relatively successful, said Ingrid Gould Ellen, faculty director of the New York University Furman Center and an urban planning professor at the university. She said that research indicates that families who receive vouchers are less likely to be homeless compared with other families in shelters; they are also less likely to be rent-burdened and less likely to live in crowded homes compared with other low-income households.
But the nonprofit’s investigation, which followed a similar lawsuit filed last year targeting federal housing vouchers, was another stark reminder of how government voucher programs are hampered by an array of problems, including discrimination against voucher holders, but also complex rules and regulations that make it difficult to navigate the voucher system.
Roughly a quarter of the nearly 90 defendants from the 2021 case have settled, Mr. Carr said, with brokers agreeing to pay agents higher commissions for renting apartments to voucher holders and some landlords agreeing to set aside units for voucher holders.
The investigation also exposed a skeletal oversight system in New York City, which lacks the capacity to enforce laws barring discrimination against voucher holders.
A unit with the City Commission on Human Rights that is supposed to investigate voucher discrimination had zero full-time staff members remaining after years of turnover, according to an April article from the local news site, City Limits. A report in the New York Daily News highlighted how city bureaucracy has kept people, who would otherwise be qualified, from renting apartments.
Inquiries to the commission were referred to the mayor’s office, which said there were some staff in the unit but did not confirm if they were working there full time. The mayor’s office said it was also working to add more staff. Mr. Adams has said that he intends to address the problems with the voucher system as part of his housing plan, which is expected to be released next month.
The city’s Department of Social Services, which runs the CityFHEPS program, did not provide information about the program, including how many people have the vouchers and how many have found homes.
But many New Yorkers struggling with homelessness have encountered difficulties trying to find a home that they can pay for with a voucher.
Ayesha McGaney, 44, said she had struggled with mental health issues and bounced between hotels and the homes of different family members before arriving at a shelter in Queens. She ended up living there for more than six years, starting in 2015.
Over that time, Ms. McGaney, a chef who had worked in the school system and has been delivering food to people during the pandemic, applied to more than 200 different apartments, mostly unsuccessfully. She only received a few responses.
“As soon as I said, this is what I have, this is what my income is, immediately they are like ‘Oh no, I can’t take that,’” she said.
It was not until early 2021, when she enlisted the help of a lawyer with the Legal Aid Society, a nonprofit group, that she was able to finally find an apartment that would take her voucher after the group helped her file a discrimination complaint with the city.
Fannie Lou Diane, 44, an activist with Neighbors Together and Unlock NYC, both nonprofits that focus on housing issues, said it took roughly three years since she was evicted in 2019 from her Bronx apartment to find a place that would take her voucher.
“I’ve had a lot of brokers tell me the reason they don’t want to take people with CityFHEPS vouchers is because of the stigma that’s attached — historical stigmas of laziness, don’t want to work, don’t take care of their apartments, don’t take care of their children,” she said.
Even as renters encounter problems while applying, landlords and brokers say they are frustrated with inefficiency and delays in the program.
Sarah Saltzberg, an owner of Bohemia Realty Group, which brokers sales and rentals in New York City, said that programs like CityFHEPS require landlords to meet complex inspection standards — for instance, a certain amount of kitchen counter space or square footage in a bedroom — that sometimes narrowly disqualify homes for voucher holders.
It can also take several months to complete the paperwork, she said, meaning tenants remain in shelters while landlords miss out on potential rent payments, if they choose to wait at all instead of seeking another tenant. Many landlords and real estate agents do not know all the rules of how to comply with voucher program requirements, she said, adding that the city should work to revamp the system with input from renters, landlords and brokers.
“It feels so often that we are odds, and I just don’t know why it has to feel that way,” she said.
Andy Newman contributed reporting.
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