After a judge issued a temporary restraining order preventing the city from immediately eliminating an incentive that pays landlords to hold vacant units for CityFHEPs voucher holders, the city decided to put the rule change through the official public review process.
Incentives for landlords to hold units for CityFHEPs voucher holders will continue, at least temporarily, after a court appearance Thursday morning where lawyers for the City of New York stated their intention to send the rule change through an official public review process.
The incentive pays one month’s rent for voucher holders moving into housing from shelter while the city processes their applications. As City Limits first reported, the Department of Social Services (DSS) had, in a late May email, announced that it would be ending the payment in an effort to rein in costs.
The Legal Aid Society and a group of voucher holders sued, arguing the decision was made without a good reason and without going through the official process for program rule changes, called the City Administrative Procedure Act (CAPA).
They won a temporary restraining order to preserve the incentive on June 27. Thursday morning, a judge extended a preliminary injunction to halt the changes.
“You’re preliminarily enjoined from making changes until the finalization of such a rule,” said Judge Lyle Frank to the petitioners and respondents in court Thursday morning.
Tenants moving into housing with CityFHEPs vouchers pay 30 percent of their income on rent. The program has grown significantly in recent years, with more than 15,000 households moving into housing with a voucher in fiscal year 2025, a 17 percent increase to a total of 58,723 assisted households.
Landlords, brokers, lawyers, and tenants told City Limits that eliminating the payment would make it harder for landlords to take CityFHEPS, with one real estate group previously describing the program as “cumbersome, lengthy, and convoluted.”
It’s already difficult for CityFHEPs holders to find building owners who will rent to them (though rejecting a tenant because of how they pay their rent, a practice known as source of income discrimination, is illegal under the city’s human rights law).
Advocacy groups supporting homeless New Yorkers celebrated the injunction.
“It seems the Adams administration will go to the ends of the Earth, including through frivolous legal action, to make life even more difficult for New Yorkers in need,” said Christine Quinn, chief operating officer for Women In Need, in a statement.
DSS previously told City Limits that the rule did not have to go through the official CAPA review process because the incentive was not an official rule of the CityFHEPs program when it began, and that the agency can allocate resources as it sees fit.
But after the judge issued an initial temporary restraining order, the city has since decided to send the rule change through the CAPA process, which includes providing the public with a minimum of 60 days to review and comment on the proposal.
DSS said no changes would be made to the program until after the review is complete.
That process could begin next week, Eric Hiatt, senior counsel at NYC Law Department told Judge Frank, though neither he nor DSS conceded that the rule change should have gone through CAPA in the first place.
The City Law Department declined to comment further on the case.
DSS, in response to written questions from City Limits, said the decision to pursue CAPA was to take a more proactive approach and respond to concerns raised by advocates and community members.
DSS previously told City Limits that it eliminated the incentive, which had been a feature of the CityFHEPs program since it began in 2017, because it had new data systems that would make processing voucher applications faster.
Eliminating the extra month’s rent payment, DSS claims, was part of a plan to reduce costs as the budget for the CityFHEPs program has grown fivefold since 2021, to $1.25 billion in fiscal year 2025.
DSS previously told City Limits that the average time to process voucher applications was about three weeks. An audit by the state comptroller’s office last year found that it can sometimes take much longer (DSS disputes the findings of the comptroller’s report).
“We’re not buying the 25 days argument. It’s not 25 days. Unless they completely revamp the process to really streamline it and make it under a month, these problems are gonna exist,” said Pavita Krishnaswamy, supervising attorney at Legal Aid who argued the case Thursday morning.
Judge Frank declined to take further action, like ruling if ending the incentive was lawful, before the public review process completed.
“They could decide tomorrow, through the CAPA process, to keep the program…I just think it’s premature,” said Judge Frank.
Legal Aid’s Krishnaswamy maintained that they will fight the rule change regardless, arguing that there are tens of thousands of people in shelters who rely on the incentive.
“It will have the effect—whether you go through CAPA or not—of harming petitioners and this entire class of individuals,” said Pavita.
Legal Aid said that if the rule change goes through CAPA and the city still decides to eliminate the incentive, they will continue to sue on grounds that the move is “arbitrary and capricious”—in other words, it was made without a good reason.
“It makes no sense and [the incentive is] saving the city tons of money,” said Krishnaswamy. “It is in the city’s interest and the petitioner’s interest for people to be moved out of shelters into affordable, permanent housing. The unit incentive, in our experience, is one of the only things that makes it possible for them to move out.”
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