WAIT! Before you read any further — this eminent domain blog post is extra special for us because our own Jennifer Polovetsky, partner at Sanchez & Polovetsky, PLLC was extensively quoted in a follow-up story in the New York Post. In a nutshell, and as set forth in further detail below, the City of New York plans to use eminent domain if landlords don’t want to sell their buildings.
When asked by reporter Danika Fears for insight into how this process would work, and whether landlords would be able to fight the city in court, Jennifer Polovetsky commented that “New York has “one of the broadest eminent domain authorities in the country. She said it would be very difficult for a landlord to take the city to court and prove that affordable housing is not “a public use.”
“Affordable housing is definitely public use, in my legal opinion,” she said. “They can certainly try [to fight it]. But if they came to me to fight, I would tell them not to bother.”
Polovetsky added that building owners could eventually sue for damages, however.
“Although the City will be required to pay them for their properties, the owners can always file a claim for additional compensation in court,” she explained. “In other words, the owners can claim that the compensation paid to them was not ‘just’ as required by the constitution, and can sue for more money.”
If you are not familiar with the details of this most recent NYC eminent domain story, here goes:
Mayor Bill De Blasio won the recent election handily, but ask any New Yorker and their biggest gripe about his leadership is the increasing rate of homelessness. Many of the homeless are families.
For a long time, the City has placed these families into “Cluster” or “Scatter-site” housing. This means that decrepit, private apartments are used as housing. It’s expensive and as you can probably imagine, not very nice. The reason why it exists is that it helps the city meet its legal mandate to provide shelter to those who qualify.
As mentioned above, there has been significant growth and reliance on cluster housing and it has become an issue of major importance for the Mayor. Some critics, well almost anyone, consider this issue to be the biggest failure during his time in office. According to a count overseen by the Department of Housing and Urban Development, in February 2017, an estimated 77,000 people were living in the city’s different shelter systems and on the streets. This is up significantly from when the mayor took office in January 2014, and there were an estimated 68,000 people were living in the city’s different shelter systems and on the streets.
Mayor De Blasio has publicly stated that he took too long to recognized the crisis and come up with a plan. The homeless crisis is due to a variety of issues, most notably, rising rents, stagnant wages and the loss of affordable housing. Band-aid fixes, such as cluster sites, have done little to help and possibly more to hurt.
The cluster program began in 2000 under Mayor Rudolph W. Giuliani, with a few hundred apartments.
Politically and practically, it can be seen as a good program. The clusters drew little community outcry when they opened because, unlike traditional shelters, they were not immediately visible. The apartments are tucked away in mostly private buildings, and homeless families have simply blended in with people who are not homeless. In fact, this is how Mayor De Blasio, an outspoken critic of clusters, became so dependent on them. When pressured not to open more homeless shelters, clusters became a quiet way to find housing for the homeless.
The proposed solution? De Blasio will be announcing that the clusters will be converted into affordable housing. The city would use public financing to help nonprofits buy approximately 33% of the apartments currently used for the homeless. Then the apartments would be converted into affordable units. This strategy kills two birds with one stone: lowering homelessness and adding to the city’s affordable housing stock. For those landlords not amicable to the arrangement, the City will probably forcibly acquire their properties by eminent domain–regardless of whether the landlords actually want to sell their properties.
The largest area for the acquisition is in the Bronx, where 800 apartments in 25-30 buildings are located. Right now these buildings are majority cluster apartments as the city targeted buildings where more than 50 percent of the units were occupied by homeless people. Estimates on the cost of the program has yet to be announced.
In a statement, Mr. de Blasio said his administration had to “think creatively and be bold.” He said, “We’re fast-tracking the transition from shelter to higher-quality, permanently affordable housing for New Yorkers caught in the grips of our city’s affordability crisis.”
In reality this could place about 3,000 people into permanent housing. Interestingly, for some families, they would continue living in their apartments and would no longer be considered homeless.
Like with most government programs, the plot thickens….
According to the New York Times, for approximately 17 years, the rents demanded by landlords for clusters have been price gauged. The City Department of Investigation released a report two years ago that showed that the city was paying an average $2,451 a month for cluster apartments in poor and working-class neighborhoods, where rents ranged from $528 to $1,200 a month. Unbelievably, or believably, landlords often drove out residents who were not homeless just so they could collect the larger payments from the city!
The Mayor had pledged to phase out cluster apartments by 2018, but under the current challenges, the deadline has been moved to 2021. Without more shelters, and a focus on phasing out cluster apartments, the City is now paying for hotel rooms which cost it approximately $400K a day. Mayor De Blasio has also proposed a plant to open 90 new shelters and expand 30 current ones. So far the city has opened eight new shelters and announced that three more will be opening soon.
Among elected officials, the feedback on the new conversion plans is positive, since the program would lower the risk that landlords could turn the apartments, which had once been rent stabilized, into market-rate ones.