A nearly three-year dispute over expanding a crucial city rental assistance program to more low-income New Yorkers was supposed to come to an easy resolution after Zohran Mamdani was sworn in as mayor in January.

On the campaign trail, Mamdani had pledged to drop his predecessor Eric Adams’ legal opposition to a package of laws, passed by the City Council in 2023, that would give city-funded rental vouchers to many more people in shelters or at-risk of eviction and homelessness.

But facing a yawning budget gap, Mamdani made an about-face. He cited the $1.2 billion program’s growing price tag and said last month that his administration would instead try to negotiate changes to the laws with the Council and with attorneys representing New Yorkers who were supposed to be eligible for the rental assistance program, known as CityFHEPS.

Officials in the mayor’s office have until March 25 to file a challenge to a lower court’s order to implement the laws in a case now before the state’s Court of Appeals — a three-week timeline that also allows formal negotiations to continue.

Yet legal, fiscal and political complications abound.

Many city councilmembers and advocates for low-income New Yorkers who supported Mamdani’s dogged focus on affordability for renters and vulnerable New Yorkers are now digging in publicly, saying they’ll accept nothing short of full implementation of the laws that Mamdani once backed.

“We want them to commit to the full expansion and sustainably grow the program,” said Adolfo Abreu, the housing campaigns director at the organization VOCAL-NY.

Councilmember Crystal Hudson, a Brooklyn Democrat who chairs the general welfare committee, said the Council “stands firm in its support of legislation that was passed.”

Behind the scenes, however, some advocates have floated potential compromises. At a meeting between top city officials and leaders from various advocacy organizations last Thursday, attendees specifically mentioned a proposal to expand voucher eligibility to a smaller subset of people who can’t afford below-market rent in their rent-stabilized apartments, according to four people present who asked to remain anonymous so as not to derail negotiations.

City officials have also considered capping the amount of money that the city spends on the program, making it more like the federal Section 8 subsidy than an entitlement available to everyone who qualifies, according to two other people familiar with preliminary talks. Under such a first-come-first-served model, the city would stop issuing new vouchers once the funding ran out.

“Our administration looks forward to working with advocates and elected leaders to improve the CityFHEPS system, keep New Yorkers stably housed, and craft a sustainable, balanced budget,” City Hall spokesperson Matt Rauschenbach said in a written statement.

CityFHEPS recipients typically pay no more than 30% of their income toward rent, while the aid program covers the remainder up to a certain amount depending on household size.

Former Councilmember and Deputy Speaker Diana Ayala, who chaired the general welfare committee when the Council approved the expansion laws, said she did not support a cap on the number of vouchers. But she.said she would support expanding eligibility to people in rent-stabilized apartments.

“That’s a compromise I could live with,” said Ayala, a Democrat now running for a state assembly seat. “We have people being evicted from rent-stabilized apartments who could stay home and save the city money.”

Councilmember Pierina Sanchez, a Bronx Democrat who sponsored two of the expansion bills, said she wants Mamdani to back full implementation.

“There’s a real argument to be made that it's more efficient and inexpensive to keep families permanently housed,” Sanchez said.

The Legal Aid Society sued the city to implement the laws on behalf of people locked out of rental assistance vouchers. Legal Aid attorney Robert Desir said he expects the organization to be involved in negotiations to "ensure that this legislative package, duly enacted by the City Council, is finally implemented into law."

But the dispute involves more than just the city’s financial and moral obligations.

Rising costs

The Adams administration's legal opposition hinged on the rule-making authority of the Council over city social service policy, threatening the power of the city’s legislative branch itself. A state court sided with Adams in a decision later overturned by an appellate court. The dispute is now before the state’s Court of Appeals.

Any compromise between the Mamdani administration, councilmembers and advocates would likely require amendments to the laws that the Council passed nearly three years ago.

Council Speaker Julie Menin said in a statement that she is open to negotiations that expand access.

“The Council passed this law to be fully implemented, not endlessly litigated,” Menin said. “We remain open to settling this matter with the administration in a way that advances this vital voucher program.”

The laws the Council passed in 2023, and then defended by overriding vetoes from Mayor Adams, would cover more low-income New Yorkers in two main ways: They make more people who face eviction eligible and also increase the income threshold to cover those who can’t afford housing but who earn slightly too much to currently qualify for rental assistance.

The problem with that, at least to Mamdani, Adams and fiscal watchdogs, is that the cost of CityFHEPS has grown to exceed $1 billion per year since it was first implemented as a pilot program in 2018. Over the past eight years, rents have surged and a shortage of affordable homes has fueled a sharp rise in homelessness.

The program already covers more than 65,000 households, making it the nation’s largest municipal rental assistance program by a wide margin.

“The growth of the program now is already reaching a point where the city can't afford to continue expanding it at the rate it’s been growing,” said Sean Campion, the director of housing and economic development at the Citizens Budget Commission.

Comptroller Mark Levine has also weighed in, warning that the program could cost up to $2 billion this year under the program’s current manifestation, and $20 billion over the next five years if the new laws are implemented.

But the absence of meaningful state and federal aid have placed a greater onus on the city to intervene as evictions rise and the city shelters continue to swell with roughly 90,000 people.

The Trump administration last year announced it would be winding down a Biden-era emergency voucher program for the lowest-income Americans that it said was close to running out of money. The end of the program threatens housing aid for nearly 8,000 New York City households. The Department of Housing and Urban Development is now proposing time limits as short as two years for standard Section 8 rental assistance, despite the rising cost of housing.

New York state created a new housing aid program last year, but funded it with a modest $50 million and has yet to issue vouchers.

'I need help'

Juan Figueroa, 57, is one of the New Yorkers who would benefit from the CityFHEPS expansion.

Figueroa said he was living on the streets and in public spaces for over a decade before moving into an apartment with his mother and sister in 2017. He said he remained in the unit after both died, but has been unable to cover his roughly $1,200-a-month rent for the past three years because mental illness and other health problems prevent him from working.

He said he receives less than $200 a month in cash assistance benefits from the city’s Human Resources Administration. Figueroa’s landlord sued to evict him for nonpayment in 2024, court records show.

He does not qualify for a CityFHEPS voucher because he is not currently in a shelter run by the city’s Department of Homeless Services and does not fit other narrow criteria, but he said he would return to the streets if he lost his housing.

“I need help with the rent because I don't want to go back to the way I was,” Figueroa said. “I feel like a little mouse trapped in a corner with no way out.”

Attorneys from the Safety Net Project, part of the organization Urban Justice Center, are representing Figueroa in housing court. Safety Net Project Homeless Advocacy Director Helen Strom said many people like Figueroa are in similar situations

“It’s the perfect example of people who are in the community and really need this expansion,” Strom said. ”It’s ridiculous that people like that would become homeless.”

A recent analysis by nonprofit shelter provider WIN found the city would save money on shelter costs by expanding access to the vouchers, offsetting the price of the program.

A separate 2023 report by the Community Service Society, a nonprofit poverty research group that has backed the full expansion, specifically described how the city can save money by issuing vouchers to people who are housed when they are at risk of losing low-cost apartments where they currently reside. The city could pay far more if the person enters a shelter, gets a voucher and uses it to rent a costlier unit, the report found.

Community Service Society Senior Policy Analyst Samuel Stein said he understands the concern over the program costs.

But, he added, “it’s expensive because it’s working.”

Stein questioned what other method the city could use to house the lowest-income New Yorkers:

“If we’re not going to spend more money, do we have another idea for how to get people out of shelter and stop the eviction-to-shelter pipeline?”