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Jiggetts ruling continues rent help.

In a case that has been bouncing through the courts for a decade, a New York State Appellate Court has affirmed the lower court order that the state's Social Services Commissioner provide a reasonable shelter allowance for welfare recipients related to the actual cost of housing.

In a different issue spurred by the same case, the Court of Appeals has already ruled it is mandatory that officials set a reasonable shelter allowance.

"We're still considering our options," said a spokesperson for New York State Attorney General Elliot Spitzer, who inherited the defense of the state's welfare policy.

Sources indicate that a motion may be filed this week in order to begin the next round of Court of Appeals procedures. Since the Appellate Division ruling was unanimous, there is a greater likelihood the Court of Appeals might not agree to hear the matter.

State officials could still drag out the process of resetting the allowance, and could trigger more legal battles once any actual amount is announced.

Meanwhile, the cheapest alternative for the state would be to continue the so-called "Jiggetts system," set up in response to the initial lawsuit, in which only those facing actual eviction receive additional rent funds, which are paid directly to property owners.

The earlier Court of Appeals decision in Jiggetts v. Grinker stated the requirement that the Commissioner set reasonable shelter levels was mandatory.

The affiliated case to decide if the current payments are reasonable was previously heard in the state's lower Supreme Court. In its May 6th opinion, the Appellate Division unanimously agreed that the trial court's determination in Jiggetts v. Dowling was correct, and the levels are not reasonable. The court also said the Commissioner needs to set shelter levels which are reasonably related to the cost of housing in New York City.

"Presumably the commissioner would have to set it at a reasonable level today," said Ian Anderson, an attorney with Davis Polk & Wardwell.

When welfare recipient Barbara Jiggetts was in danger of being evicted for nonpayment, Legal Services began an action against the State's then Commissioner of Social Services, claiming the shelter allowance was not adequate for New York City rents. [In 1997, Social Services was split into two agencies, with the State Office of Temporary and Disability Assistance (TDA) now responsible for those rent levels].

"The shelter allowances set in 1988 would have resulted in tens of thousands of evictions," said Anderson, who represented community and tenants' organizations worried about such a result.

By court order, while the matter is being adjudicated, an interim program was established and named after the tenant. Under this so-called Jiggetts system, if a welfare tenant is about to be evicted for non-payment, rather than simply sending the check to the tenant, the building owner is paid the rent directly.

According to Anderson, over 25,000 families are currently receiving this interim relief.

Anderson, along with Jim Liss and Tricia Lawson of the firm, wrote an amicus brief for the court in Jiggetts v. Dowling on behalf of organizations that had the Community Service Society of New York as the lead, and included the Settlement Housing Fund, the New York Housing Conference, the New York State Tenants & Neighbors, and the Metropolitan Housing Council.

Anderson does not understand why none of the owners' organizations joined them as part of the amicus group. "The owners interest should be aligned with the tenants," he said, to ensure a shelter allowance that can support the buildings. "One of the issues at trial was the cost of the upkeep of apartments. This money isn't adequate."

That allowance, set by the TDA, remains at $258 per month - the same amount set in 1988. Michael McKee, executive director of the Tenants & Neighbors, said "The shelter allowance should be increased and is totally out of line with reality."

Information that included Rent Guidelines Board statistics on the high cost of housing was among the evidence presented at trial.

"Since 1991, rents have only gone up, and the housing situation has only become more dire in New York City. They need to set higher shelter allowances," said Anderson. Because the shelter allowance virtually never covers the actual rent, tenants were using food and clothing money to pay it.

Anderson said, "One of the arguments that the state has tried to make right along is that the recipients could meet the rent out of money intended for food."

That balancing act, however, is hard to maintain in a city as expensive to live in as New York, and many times the rent is not paid at all.

Michael Laub, president of the Bronx Realty Advisory Board and an owner/operator of 4,500 units through the Realty Group, said "Without Jiggetts, it was an impossible situation, and the [welfare recipients] were being evicted from apartments, which no one wanted to see."

When Governor George Pataki was elected, his administration tried to codify the shelter allowance to avoid the extra Jiggetts payments. At the same time, he fought for the deposit of disputed rent with the court, so if the owner prevailed, the money would be available to maintain the housing stock.

"We assume that they will appeal," said Anderson of the state. "If they appeal, the effect of the order is stayed, but in the interim, the interim [Jiggetts] relief system that was set up by the court prior to trial continues."

The main brief on behalf of the tenant was handled by Legal Aide attorneys Susan Barn and Scott Rosenberg.

Within the next two years, Laub thinks the state will switch all welfare recipients to a direct rent payment system, which would end the routine administrative fees to create and mail individual checks, and avoid the cost of duplicate rent checks. Despite a two-party check system, he said, many tenants are still able to cash them without the actual owner's signature.

"The tenant would lose a check and was able to cash checks whether two-party or not, and then they get in trouble because they don't have the money to pay the rent," said Laub. "The direct payment takes away the chance for abuse. They can always have welfare take the owner to court if there is a problem."

Under a direct payment plan, Laub says if his company had 100 welfare tenants spread over a dozen buildings, instead of sending each tenant an individual check in an individual envelope, the state could transfer the money directly to his bank and merely provide him with a schedule, explaining one possible scenario. "It would save them hundreds of thousands of dollars just on the postage. It's most important that we have direct payment so there is no loss of funds."
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Title Annotation:New York State Appellate Court affirms lower court order on shelter allowance for welfare recipients
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:May 26, 1999
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