Landlords are warned to return homeless units to rent regulation

Crain's New York Business reports:

As the city winds down the much-maligned use of private apartments to house the homeless, officials here and in Albany are reminding landlords they must return those units to rent stabilization.

In addition to shelters, the so-called cluster- or scatter-site program entailed housing the homeless in a collection of poorly maintained apartments with little oversight. At its peak, more than 3,600 units across the five boroughs were being used, though the de Blasio administration pledged to end the practice and by June expects to have phased out 1,700 apartments, most of which will need to go back on the rent-regulation rolls by the end of July.

"We want to work together with the state to make sure these units are returned to lawful rent levels," said Department of Social Services Commissioner Steven Banks.

The Giuliani-era cluster program targeted units registered under Albany's affordable-housing program, but the apartments were exempted from rent caps while being used as de facto shelters. Predictably, rents went up, and by 2015 the city was paying landlords $2,451 a month on average per unit, and many rents were far above the market rate. With the cluster program ending, those rents are poised to go back down.

The city is sending a list of the roughly 1,700 units to the state agency that enforces rent regulation. And the new legal rent for the apartments will be based on a formula outlined in a March letter being sent to landlords reminding them of their obligation, and giving them guidance on how to meet it.

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