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Bronx realtors wary of welfare cutbacks.

The plan to codify welfare shelter allowances as part of Governor George Pataki's budgetary plans is getting a Bronx cheer from an owner's group that at the very least would like to see direct payment of the shelter allowance.

Right now, the language in the Social Services law requires the state to provide enough of a shelter allowance to welfare recipients to pay for decent housing, which the tenant then pays to the building owner.

What often happens is that the shelter allowance does not come close to paying for a typical $500 to $600 Bronx apartment, or for paying for a family's other needs. So when a welfare recipient juggles the money to pay for necessities, the building owner comes up short. Some tenants receive Section 8 allowances, but that program has its own problems.

But a lawsuit brought by a tenant named Jiggetts some years back to demand an increase in the shelter allowance was only settled with an interim order. It was remanded back to Manhattan's Supreme Court for a final decision, but that decision is still pending. There are similar Jiggetts cases in Westchester, Nassau, Suffolk and Erie counties, say Legal Aid Society attorneys.

Meanwhile, if a welfare recipient is about to be evicted, the Legal Aid attorneys can help the tenant request relief under the interim Jiggetts order. Once that relief is granted, the state nearly always pays the owner of the building all of the rent directly, including the arrearages.

Nevertheless, the rent cannot exceed twice the shelter allowance plus 10 percent, or it will not be granted, said I. Scott Edelstein, a partner with Novick Edelstein Lubell Reisman Wasserman & Leventhal, a Yonkers law firm.

But once the shelter allowance is set forth in the statute, the Jiggetts case will be moot and owners are afraid they won't come close to getting their rents.

It is unclear what will happen to those covered under the current orders, but certainly no new recipients will be placed in this program, and more and more are added every day. "It's costing the state millions," agreed Edelstein.

But that is millions of dollars the owners had effectively been losing and includes money that would have not otherwise been available to pay for fuel, property taxes and water charges, not to mention simple repairs.

With Pataki's additional plans to lower the welfare recipient's non-shelter allowance in an effort to spur them to work, Bronx owners are afraid many of their tenants will be unable to come up with the correct rent and housing will end up in rem.

Michael Laub, president of the Bronx Realty Advisory Board and a partner in a realty group that owns and manages about 3,500 apartments in the Bronx and Washington Heights, says Pataki should "revisit" his proposals saying, it would be much cheaper in the long run to pay the shelter allowance directly to owners.

"Tenants aren't managing their money," he said. "They are buying other goods and services, and not paying their rent." When they end up in court for non-payment of the rent, he added, the court bails them out. "I say it is wrong. What they should have is a direct rental payment for all tenants. Then that would eliminate the tenant managing his own funds and misappropriating them."

Laub notes the average rent is over $500 in welfare areas and believes the state needs to make the shelter allowance the market allocation and pay it directly to the owners. "This takes all the fraud and duplication of rent out of the system," he said. "They would also save millions just with the cases not going to court."

Eugene S. Reisman, a landlord/tenant attorney and Edelstein's partner, said the welfare issue is only a problem for people who are operating housing in low income areas.

"The tenants are very much dependent on housing allowances from Social Services in order to meet their rent," he explained. "In turn, the owners are dependent on the same housing allowance. If the state doesn't provide it, where is it coming from?"

Reisman sees the potential for more unpaid rent and eviction proceedings, while at the same time the owners would not be getting their money and the tenants would be without shelter.

Joseph Strasburg, president of the Rent Stabilization Association, said owners have to recognize there is a shortage of state funds. Nevertheless, this proposal would severely impact the property owners of the City of New York. "We supported George Pataki as governor and in this particular issue we are going to ask his people to look at this for the long-term perspective," Strasburg said.

He concurs that one way to deal with the shelter allowance is to have direct vouchering. "At least the owner will get that part of the allowance," he noted. "If women don't get employment, you don't have to be a genius to see what will happen."

Dan Margulies, president of the Community Housing Improvement Program, an owner's group, agrees that getting a direct payment would be beneficial to owners. "We've always sought the direct payment of rent because the tenants rob Peter to pay Paul," he said. "What we should look for is a general overhaul of welfare and some form of workfare as the governor is proposing."

He thinks that Pataki is correct in trying to change the whole system. "The Jiggetts money is a court-ordered half-remedy of a much more complex problem of providing shelter rents," Margulies added.

For smaller owners, Margulies said the cash flow drain is simply too great while waiting for the tenant to be approved for the Jiggetts program.

Not all tenants are eligible and it can take over a year from the time they first don't pay a part of their rent and the owner starts a court action to evict. "These are not the most desirable tenants," Margulies noted. "But courts weren't set up as a place where lawyers collected fees for arranging social services."

There are cases that Edelstein has found welfare will pay the entire amount owed. These include tenants with AIDS, tenants in need of supervision, or who are wheelchair-bound, or if there is "a real bad situation" such as a funeral. But sometimes, he says, "Even if everyone does what they are supposed to do, they won't pay."

Marshall Green, attorney in charge of the Bronx Neighborhood office of the Legal Aid Society, said he was not surprised to find owners upset at Pataki's proposal.

"I've spoken to landlords in the Bronx and many of them say they will be hurt," Green said.

The current shelter allowance for one person is $215; for a family of two, $250; a family of three $286; and a family of four $312. "It's totally inadequate," added Green.

Jay E. Sicklick, staff attorney with the Bronx neighborhood office of the Bronx Legal Aid Society, said those are the amounts that would be codified while the money for food and others needs is being cut by 15 percent.

Additionally, there would be a four-month limit for the payment of only the actual shelter allowance for arrearages of "rental allowance, mortgage arrears, or property tax arrears," he said. "The progression of the shelter allowances since 1980 have been woefully behind the cost of the actual housing." The present levels were determined in 1988.

Calls to Pataki's press office were unreturned.

"I believe in fingerprinting, accountability and workfare," said Laub, still supportive of Pataki's general proposals. "But there should be direct payments."
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Title Annotation:real estate agencies in Bronx, New York, New York
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Feb 15, 1995
Words:1250
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