A WNYC investigation has discovered that more than 70 million dollars paid out by the city has been spent placing homeless families in buildings that often have long histories of violating housing codes. The money has gone to just twelve operators – and was never reported to the City Comptroller’s office – placing it outside the city’s usual system of checks and balances. Amy Eddings and Andrea Bernstein prepared this story. We begin with Amy Eddings in the Mount Hope section of the Bronx
In January of 2002, when Annette Foy lost her federally-subsidized apartment in Brooklyn, she and her four children turned to the city for help. They went to the Emergency Assistance Unit in the Bronx, the intake office for homeless families, which set them up in a private apartment building on Walton Avenue.
Foy: The night that they were placing me here, I gave the man in the car the third degree: "I'm not going to a facility? I'm going to a regular building, regular tenants? And he was like, you know, "This is something wonderful."
The "something wonderful" is part of what's known as the scatter site program, where homeless families are placed in vacant, privately-owned apartment buildings, instead of hotels or other shelter programs. On Monday night, there were 9,251 families in the homeless shelter system -- a record high. Roughly a quarter of them are being housed in scatter site apartments.
Foy: And this is actually supposed to be a living room. But what they did when they moved here, the futon bed was here…
Foy sits in her living room, surrounded by three beds and a crib. She and her four children were placed in a one bedroom apartment. Her scatter site apartment operator provided the beds, a small dresser, and one cabinet in the kitchen.
Foy: So when I go shopping, I gotta put nails in the wall to hang bags on the wall, keep things up, because we do have mice, mice sometimes come in and chew on things.
Foy has no complaints about the upkeep of her building -- she says her landlord responds to complaints -- but that's not the reality for many others. Eric Baldi was "temporarily" placed in his scatter site apartment in Hunts Point two years ago. In the bathroom, there are signs of extensive water damage, including a large bubble of plaster.
Eric Baldi: I mean, it leaks through the lightbulb sometimes! Son: Tell her about the time it fell on you while you were shaving. Baldi: I know I told her. My boy is telling me, when I was shaving, that piece of the ceiling, it started leaking and we told him, and he left it for about three or four weeks. And I was shaving one night and it fell on me.
Baldi says the bathroom ceiling has fallen six times.
Baldi: You know, there are so many inspectors out, I've got phone numbers from the inspector, I've called several times. They keep coming out, issuing summonses, and they don't care.
Baldi's building has accumulated 292 building code violations. Seventy one violations are in the most serious class, dealing with issues such as peeling paint, and a lack of heat and hot water. One scatter site building has as few as 14 violations; another, as many as 653.
The unit where Baldi lives was offered to the city by David Somerstein, who's paid $96 a night for each family he houses in at least 60 buildings he owns or leases. Somerstein, and other operators declined to be interviewed for this story or did not return calls. They've previously said their profit margin isn't that big, they make timely repairs, and they've even improved buildings. And Department of Homeless Services Commissioner Linda Gibbs says Somerstein, like the other operators, is meeting the program's criteria.
Gibbs: Any time this provider has gotten any calls from us he has been extremely responsive and dealt with the issue and our follow up inspection has demonstrated that.
DHS didn't respond to specific questions about Baldi's building. But Commissioner Gibbs concedes the scatter site program is flawed. Patrick Markee, with Coalition for the Homeless, says that by placing apartments in this program, the city is taking is taking affordable housing off the market.
Marquee: The city's sending really perverse signals to the housing market and private landlords, essentially telling them, you can make a bundle by participating in this program.
And operators have been paid a bundle. According to records furnished to WNYC, there are just twelve operators collecting checks in the scatter site program. They've collected $70 million dollars, and counting…..tens of millions of dollars of business with the city that has no contracts, no competitive bidding, and hasn't even been reported to the city comptroller's office. Andrea Bernstein has that part of the story.
Andrea: Indeed, the tiny emergency program has grown to a size and scope no one imagined when the program was launched in the waning years of the Giuliani Administration. By the summer of 2000, the number of homeless people had risen to record levels. There weren’t enough shelters to send them to, says the current Commissioner, Linda Gibbs.
Gibbs: The program was born in crisis and it really has continue to grow in crisis. The cause has always been the city’s desire to ensure adequate shelter for every family that needs shelter. It was an emergency response to a growing population.
An emergency response – with all of the trappings of an emergency expenditure. No contracts were ever put out to bid. There was no competition.
Gibbs: The structure of this allows us to use the units that we need on a nightly basis without ongoing contractual responsibility to pay for the cost of the program if we don’t need it.
But they have needed it – and it keeps growing. The first year, the city spent $3.5 million dollars. The second year -- almost $40 million. Last summer, Gibbs says, she reluctantly added another 300 units. The city is on track this fiscal year to spend more than ever.
Despite all of these expenditures, over two and half years, the city never started to contract out the work And homeless services has never reported the tens of millions of dollars in payments to the City Comptroller’s office, which is responsible for tracking all city spending. Officials say the program has circumvented all the city’s checks and balances.
De Blasio: It’s very troubling if this kind of money is being spent. You’re talking You’re talking about 70 million that’s a very noticeable amount of money.
City Council member Bill De Blasio chairs the General Welfare Committee, which has oversight over homeless services.
De Blasio: I have a lot of respect for Linda Gibbs and I think she runs a tight ship but this is a dangerous practice because it’s a good way for unscrupulous landlords to try and pull the wool over the eyes of the city. Anytime something is being done in a crisis atmosphere there are people who are going to take advantage of that.
De Blasio says when he, as a city official wants to purchase supplies for his office, he has to use a pre-authorized list and carefully report the payments.
De Blasio: If I want to buy copy paper, if I want to buy a floppy disk, whatever it is you know anything at all you still have to fit into the criteria of what’s acceptable. When you’re talking about 70 million, it should go through a much higher level of scrutiny.
De Blasio says he will hold hearings on the matter next month. The City Comptroller is doing an audit. A spokesman says the Comptroller won’t comment until the audit is complete.
A DHS spokesman issued this statement: “These units are paid on a daily rate for rooms used and all of the city’s applicable procedures and controls for a per diem are in place including audits and reviews by the comptrollers office.”
But Commissioner Gibbs says changing the program isn’t what she wants to do.
Instead, she says, she’s trying to move homeless families into permanent housing. Already, she says she placed seventy seven percent more families in permanent housing between September and December 2002 over the same period last year, an increase of about a thousand families. And Mayor Michael Bloomberg has a plan to create 65,000 units of affordable housing in the next five years.
Back in Mount Hope, Annette Foy sits at a small table, surveying the three beds and a crib jammed into one end of her room.
Annette Foy: I mean, I'm not going to knock it because right now, I'm in a situation, and no matter what, this problem exists. But just to know that someone is working on it and changes are coming slowly and surely would be a relief.
Commissioner Gibbs says she’s going to start reducing the number of units by early spring and will continue until the program is gone. But when all is told, if spending continues as projected, the city will have written $100 million in checks to 12 operators for a program almost no one is happy with. For WNYC, I’m Andrea Bernstein with Amy Eddings.