NYC To Expand Contentious Housing Voucher Program In $126B Budget

Mayor Zohran Mamdani and city council Speaker Julie Menin managed to agree on their first municipal budget hours before the fiscal year begins. 

The two were locked in a dispute that delayed the handshake agreement for a finalized $125.8B budget for days after it was initially scheduled. The disagreement centered around expanding the city’s expensive rental assistance program to another 30,000 New Yorkers, which Mamdani campaigned on before backtracking once he took office.

Menin, a moderate Democrat, refused to pass a budget that lacked additional funding for the City Fighting Homelessness and Eviction Prevention Supplement, or CityFHEPS. The voucher program was reformed in 2023 but has lacked the funding required to deliver the promised expansions. 

Meanwhile, Mamdani, a self-described democratic socialist who campaigned on CityFHEPS expansion, walked back that promise since entering his new role. Mamdani proposed reducing costs for the program rather than increasing spending. New York City Comptroller Mark Levine’s analysis of the budget projects an $8.8B gap in fiscal year 2028.

The handshake agreement was originally scheduled for Friday. The event was canceled, and instead Menin held a rally alongside the city council’s Progressive Caucus, calling on Mamdani to increase funding for CityFHEPS. They were joined by advocates for tenants and landlords, including New York Apartment Association CEO Kenny Burgos. 

The deal was hammered out over a series of tense calls between Mamdani, Menin and their staffs Monday night, The New York Times reported. The two announced Tuesday morning that a deal, which includes $300M in additional rental assistance funding across the FY 2027 and 2028 budgets, had been reached.

The funding is on top of the $1.7B already budgeted for the program but below the $500M that advocates sought. 

“Housing vouchers are a smart investment that save taxpayers money by preventing homelessness before it happens,” Menin said in a statement. “Keeping families in their homes means children can remain in their schools, parents can stay connected to work, and communities remain stable.”

CityFHEPS is the nation’s second-largest voucher program, behind the New York City Housing Authority’s Section 8 program. 

Despite the 2023 reforms, the voucher program has been operating as previously established. Even so, its cost has tripled in the last three years, from $499M in FY 2023 to a projected $1.7B this year, according to the Citizens Budget Commission.

The reforms change the eligibility for a voucher from 200% of the federal poverty level to 50% of the area median income and ease work and source-of-income requirements. The Comptroller’s Office estimates that the expansion would add costs of anywhere between $6B and $22B over the first five years of implementation.

The 2023 reforms were vetoed by then-Mayor Eric Adams. His decision was then overridden by the city council under Speaker Adrienne Adams. 

The dispute eventually escalated into a constitutional fight over legislative versus executive authority in city government. On the campaign trail, before encountering the fiscal challenges facing his predecessor, Mamdani said he would drop the lawsuit and implement the changes.

Now, as part of the budget deal, he will be following through with that promise. 

“New Yorkers deserve a government that works as hard as they do — and a government as careful with their money as they are,” Mamdani said in a statement. “I want to thank Speaker Julie Menin and the City Council for their partnership in getting this budget across the finish line.”

Here is what else the budget adds for real estate: 

• FY 2027 will have $4.2M of increased funding for the preservation of affordable housing, growing to $17.5M by FY 2030, with the goal of saving more than 200 units annually.

• An additional $1.4M to build upon the $2.3M baseline for the Housing Stability Support program, which provides housing microgrants to survivors of domestic, sexual and gender-based violence.

• The Homeowner Help Desk, which provides technical assistance and financial and legal counseling to residents at risk of displacement, will receive $500K. 

The city council is set to approve the finalized budget at Tuesday’s 3 p.m. meeting.