“The City should repeal its 2018 law that ignores zoning requirements and community input to allow shelters as of right. And, instead of warehousing people, the city should focus its efforts and resources on more permanent and sustainable solutions like supportive and affordable housing,” Congresswoman Malliotakis said. “Property owners are now building hotels for the sole reason of entering lucrative contracts with the city, robbing taxpayers of their hard-earned money and deteriorating quality of life in their communities. The focus is no longer on helping homeless individuals and providing them with resources to turn their lives around, it’s all about exploiting loopholes in current law to profit off of their misfortune.”

Specifically, under the 2018 Citywide Hotels Text Amendment, Article Four, Section B, “Transient Hotels” may be used for “temporary housing assistance” by the City, State, or non-governmental entity in cooperation with government partners. According to data from the New York City Department of Homeless Services, hotel shelters contracted with the city are being paid daily rates ranging from $55 to $385, which, on the high end, adds up to more than $11,500 for one room per month. Meanwhile, the average monthly mortgage payment in New York City is $2,991, and the average rent payment is $3,741.

Fraud schemes in homeless shelter contracts have been rising across the country, including earlier this month when a New York City contractor pleaded guilty to federal fraud charges in connection with siphoning money from homeless shelter contracts worth $12 million. In October, two men were charged with conspiring to defraud New York City of more than $50 million after they were caught funneling money from a nonprofit intended to help unhoused to other companies they owned.