CityFHEPS housing voucher program expansion goes into effect amid lawsuits and controversy

On Tuesday, an expansion of the CityFHEPS housing voucher program that the City Council voted into law last July — overriding Mayor Eric Adams’ rare veto — went into effect. Before the law even began, though, some Council members were threatening to sue Adams’ administration because it did not seem to be planning to implement the law, with Department of Social Services Commissioner Molly Park writing to Deputy Council Speaker Diana Ayala that changes “cannot be implemented at this time.”

Very broadly, the shifts would expand eligibility for the voucher program, which is similar to Section 8. Tweaks like raising eligibility from 200% of the federal poverty level to 50% of area median income sound quite technical, but the effects would be substantial; in that case, the income cutoff for a family of three would go from about $50,000 to over $63,000, a pretty big jump. Most significantly, the changes allow people who are not only homeless but “at risk of eviction” to get the vouchers, with a definition that is relatively broad and doesn’t require the household to actually be in eviction proceedings.

The bill’s proponents have pointed to the city’s high cost of living, expiration of pandemic-era benefits, rising rents, and other factors to argue that simply more NYC families need help, and that it doesn’t make sense to wait until people are homeless to act to secure their housing. The mayor’s office has responded that it would cost too much and expand the program well beyond the parameters of people in dire need.

Despite what seems like a purely political clash between a relatively (though not quite as much as is sometimes believed) progressive City Council and a more moderate mayor, this is at base a logistical issue. Housing is, inarguably, a good in extremely high demand paired with limited supply. That’s the case in much of the country but is an infamously acute problem in New York, where vacancy rates, particularly for affordable units, hover near zero.

Vacancy rates vs. affordability

The NYC Housing and Vacancy Survey, conducted every three years by the Census Bureau with the sponsorship of the city’s Department of Housing Preservation & Development, gives us some insight here. It’s slated to be conducted again this year, meaning that the last year for which we have this data is 2021, but things haven’t changed dramatically since then. Among the survey’s selected findings are vacancy rates per borough and monthly asking rent.

The survey found that NYC’s citywide vacancy rate was about 4.5%, about one percentage point below the national rental vacancy rate of 5.6% as of the end of 2021, and not wildly out of line with what economists and other experts consider a healthy vacancy rate. Not terrible, right? Yet the picture gets a lot more complicated once you break this out by rent bands. Vacancy rates for apartments asking for less than $900 a month and between $900-$1,499 a month were each below 1%. Jumping up to the $1,500-$2,299 band, the rates rise significantly, to about 4.1%, but that’s still below the supposed citywide average. It’s the more expensive apartments, with rents of $2,300 or more, that spike sharply upward in vacancy, with an eye-popping 12.6% vacancy.

Put another way, a significant amount of relatively high-priced rentals are vacant, while almost nothing on the affordable end is empty at any given time (this is only counting units that are actively on the market; the issue of landlords engaging in so-called warehousing of unlisted, empty units is a separate matter). More recent data suggest that this trend has persisted and probably gotten worse. Median rents citywide dipped a little bit at the end of last year after having climbed dramatically over the last couple of years. Housing construction hasn’t really accelerated, and the pandemic-era outflow has stabilized somewhat, partly counteracted by the arrival of immigrants, including tens of thousands of asylum seekers.

This is all relevant here because, obviously, there’s a cap to the rents that CityFHEPS will help cover. Even after the Council voted in 2021 to put the city vouchers at rough parity with the higher Section 8 coverage, the vouchers won’t cover very high-priced housing. As of this month, the vouchers will cover rent for apartments without included utilities up to $2,484 for a one-bedroom for a single person or couple, $2,762 for a two-bedroom for a family of three or four, and so on, with increasing family sizes having higher caps. 

Those numbers likely mean that the vacancy rates for voucher holders will be lower than citywide vacancy rates; pair that with a significantly larger pool of vouchers and you begin to see the problem here. Mayor Adams and his administration have maintained that the expansion will pit people who are by definition more stable in their housing situation against the existing pool of voucher-eligible people, who previously had to have been shelter residents or at least receiving homeless services.

Too much need to accommodate

Regular readers will know that I am, to put it mildly, often skeptical of the mayor’s frequent sweeping generalizations and instinctive counter-punching at legitimate criticism and valid questions about his programs. In this case, though, the reasoning seems pretty solid, and I haven’t heard anything particularly convincing to signal that this won’t be an issue. I’m less convinced by the budget issue — yes, a massive expansion of rent subsidies will balloon the program’s budget, obviously, but as I wrote last week, there are cogent arguments to be made in investing in certain services while trimming bloat elsewhere — but the supply crunch can’t really be ignored.

Think of it this way: there’s necessarily some upper bound of vouchers it’s logistically possible to accommodate. As of the end of last year, there were about 36,000 households receiving rental subsidies, and that number certainly does not include every household that was eligible. If the city issues 100,000 vouchers, will each be able to find housing in the allotted monthly rent bands? What about 200,000? 500,000? At some point, the answer is going to undeniably be “no.” Do I know for sure that this voucher expansion is going to put the voucher pool above the level at which the housing stock can reasonably accommodate the people in the most dire need? No, but it’s a clear danger and it’s concerning that this gets waved away as fear-mongering.

The frequent counter here is that it’s not like voucher holders wouldn’t need housing in the absence of the vouchers, they’d just have a harder time paying for it, and that’s fair enough. But the program was designed to be a backstop for the people at the absolute most severe need, and it’s not really possible to ensure that a family who was already in a relatively stable but less than ideal housing situation won’t edge out a family that was homeless for a nice new apartment if they’re both wielding the same vouchers.

Speaking of logistics, there is of course the fact that the city bureaucracy has already failed spectacularly to process many of these applications in a timely manner. The unit tasked with enforcing so-called source of income discrimination, i.e. landlords discriminating against voucher holders, has been gutted to the point it can barely do its job. That’s not acceptable, and it’s incumbent on the Adams administration to fix it, but that doesn’t change the fact that it seems a little dubious to massively swamp the agencies that are already barely hanging on.

I don’t really have a clean answer. The law has been passed and it is, well, the law. If the Council and the Legal Aid Society want to sue over the city’s noncompliance, they’re perfectly able to do so, and a judge could very well order the city to take steps to comply. What the court can’t do is order lower-rent vacancy rates to rise, or more housing to sprout up. Perhaps compliance isn’t going to look like what the Council wants it to look like. In the long-run, the only thing that can really fix the city’s housing crisis is more housing. All eyes are now on how the Council and the State Legislature work to make that possible.