Council Approves Voucher Program, Mamdani Settles Suit

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Hey there, let’s get into today’s news at the intersection of policy and real estate:

The city is creating a new housing voucher program, which offers some relief to rent-stabilized building owners grappling with weak rent collections.
The final city budget commits $300 million to the new program over the next two fiscal years — short of the $500 million sought by some council members.
A city legal settlement over expanding the housing vouchers reins in spending on the program, but also limits the expansion’s reach.

In this edition we mention: City Council member and housing committee chair Pierina Sanchez, New York Apartment Association CEO Kenny Burgos, Mayor Zohran Mamdani, Council Speaker Julie Menin and others.

We Heard

CityFHEPS 2.0: The City Council has approved a new housing voucher program that will expand rental assistance to thousands more New Yorkers and their landlords. The legislation, sponsored by Council member and housing committee chair Pierina Sanchez, broadens eligibility to tenants facing eviction from rent-stabilized apartments who meet income restrictions and people staying in shelters outside of those run by the Department of Homeless Services, including runaway and homeless youth, people leaving the criminal justice system and those displaced by fires or vacate orders. With a voucher, tenants pay 30 percent of their income in rent while the city pays the balance. The program shifts the income cap to households earning up to 50 percent of the area median income, from the maximum income of 200 percent of the federal poverty level. For example, the income limit would rise from about $55,000 for a family of three to roughly $76,000. The expansion is designed to offer some relief to rent-stabilized landlords grappling with weak rent collections and tightening margins. New York Apartment Association CEO Kenny Burgos praised the program as a sorely needed eviction diversion initiative for the city’s rent-stabilized housing. “Sanchez showed her commitment to finding solutions for families in need without jeopardizing the financial stability and quality of their housing,” said Burgos. “No owner or tenant wants to go through the eviction process and this bill provides an alternative path.” Unlike the current CityFHEPS program, the new iteration doesn’t condition a voucher on employment or on the number of days spent in a city shelter. Another change: the new voucher program will be administered by the Department of Housing Preservation and Development, rather than the Department of Social Services. Essentially, the program is a new iteration of CityFHEPS, and is being implemented by HPD instead of DSS to avoid conflicts with social services law, according to Council sources. The existing CityFHEPS program will continue to operate under DSS.
Policy compromise: The new voucher program is part of a final budget deal struck Tuesday between Mayor Zohran Mamdani and the Council, ending a years-long legal fight over the city’s rental subsidy program. The final city budget commits $175 million in fiscal 2027 and another $125 million in fiscal 2028 to the new vouchers — the total $300 million is well short of the $500 million sought by some Council members. Sanchez told reporters Tuesday that the expansion “isn’t where we wanted to land” but that she’s generally pleased with the compromise. “What is clear is that the choice is not between compassion and fiscal discipline. We can do both,” she said. The Council estimates the expansion will make housing vouchers available to as many as 30,000 additional households. Nearly 70,000 already use city vouchers. As part of the deal, the Mamdani administration agreed to drop its appeal of a city lawsuit challenging reforms the Council passed in 2023 to expand CityFHEPS. That overhaul was projected to extend vouchers to as many as 50,000 additional households but became the center of a prolonged standoff between City Hall and the Council over implementation and the program’s ballooning price tag. CityFHEPS has grown from roughly $26 million in 2019 to more than $1.8 billion this year. “Our position was, there’s no need to keep this endless, costly litigation,” Council Speaker Julie Menin told reporters Tuesday. “We should enter a responsible settlement that protects vulnerable New Yorkers and at the same time contains the cost of FHEPS.”
Legal deal: Wasting no time, the Mamdani administration, the City Council and the Legal Aid Society on Tuesday formally settled the lawsuit over expanding the housing voucher program. Among the settlement’s provisions is a stipulation that the new rental assistance program will not be an entitlement program, which guarantees specific benefits to all individuals who meet the eligibility requirements. Once the annual funding runs out for the year, it’s tapped. The program’s year-to-year funding will be subject to annual allocations as part of the budget process. Translation: Get ready for the mayor and City Council to fight over housing voucher funding nearly every budget season. The stipulation is designed to put some guardrails around the program’s ever rising price tag, but will limit the amount of households who utilize the program each year and the landlords who can benefit from it.

Have a tip or feedback? Reach me at caroline.spivack@therealdeal.com.

Bill Tracker

Bill Number	Lead Sponsor(s)	Summary	Committee
T2026-2197	Council member Pierina Sanchez	Establishes a new housing voucher program with expanded eligibility criteria	Referred to Committee on Housing and Buildings, set to pass the full Council Tuesday

The Catch-Up

A Brooklyn landlord’s alleged failure to make repairs has landed both the owner and the city in court, reports The Real Deal’s Ben Miller.

NYCHA mistakenly cut off federal rent subsidies for hundreds of tenants in privately managed public housing, triggering eviction notices, The City Reporter reports.

A judge permanently blocked the Trump administration from pulling funding for the $16 billion Hudson River rail tunnel linking New York and New Jersey, The Wall Street Journal reports.

The Kicker

“Groundhog day was a great movie, but it’s no way to manage a budget,” said Andrew Rein, president of fiscal watchdog the Citizens Budget Commission on the Mamdani’s administration’s reliance on short-term fixes to close the city’s budget gap.