When David Dinkins ran for mayor in 1989, he set forth an ambitious plan to change the way the city dealt with homeless families. Homelessness, he argued, was basically a housing problem, one that could be solved by rapidly relocating families from shelters and welfare hotels into permanent housing. Within months of Dinkins’s election, however, it became clear that this approach was not working. Over the next few years, the administration slowly and reluctantly abandoned the views about homelessness that Dinkins had confidently asserted in the campaign.

The blueprint for the new administration’s homeless policy had been prepared in March 1987 by a task force that Dinkins, then Manhattan borough president, appointed. Its report, entitled “A Shelter Is Not a Home,” defined family homelessness in narrowly economic terms and argued that the solution was to provide more permanent housing. Since the report’s authors thought the private market incapable of supplying affordable housing, the city itself would have to do the job.

In fact, the city was already providing homeless families with permanent housing, placing them in apartments rehabilitated by the Department of Housing Preservation and Development (HPD). The number of HPD units distributed to homeless families had been rising steadily during the latter years of the Koch administration. In 1985, 2,401 such units were provided to homeless families; in 1987, 3,635. In 1988, the administration planned to increase the number to 4,042. The Dinkins task force called on the city to increase its production of rehabilitated apartments for homeless families to 8,000 per year.

The Dinkins proposal assumed that doubling the supply of city-provided permanent housing would not stimulate demand for temporary shelter. In a section of its report entitled “Myths and Facts About Homeless Families,” the task force criticized what it called “Myth 7: Families with other housing options voluntarily enter the shelter system in order to upgrade their housing at the public’s expense and get priority for rehabilitated permanent housing. Fact: There is little evidence that families forsake stable housing arrangements hoping to get an apartment through the city.”

The report pointed out that although the number of families sheltered by the city had grown steadily during the mid-1980s (from 1,153 in January 1983 to 4,365 in September 1986), the number of families requesting shelter each month did not rise. “There is no indication that the availability of emergency housing has produced an increase in demand for shelter or an increase in homelessness,” the report stated. The task force concluded that the growth of family homelessness resulted from too few shelter-system families moving out to permanent housing, not from too many marginally housed families moving into the shelter system.

The task force further contended that homeless families did not suffer unusually high rates of personal or behavioral problems that would impair their ability to maintain stable housing arrangements. The report pointed out that, at the time, no scientific studies had demonstrated that such dysfunctions were disproportionately common among shelter families:

Myth 3: Homeless families are the “worst” of New York’s welfare families. Family homelessness is the result of drug addiction, mental illness, or behavioral dysfunction. Fact: No facts support the belief that addiction or behavioral problems occur with more frequency in the homeless family population than in a similar socioeconomic population. Homeless families are not demographically different from other public assistance families when they enter the shelter system. . . . Family homelessness is typically a housing and income problem: the unavailability of affordable housing and the inadequacy of public assistance income.

The claim was, in effect, that since scientific research had not proven that the homeless were much worse in these terms than other poor people, behavioral problems were not the primary causes of homelessness, which were therefore largely structural and economic. It followed that there was no reason to expect that formerly homeless families, once they were provided with permanent housing, would not thrive and escape the shelter system permanently. “In most cases homeless families are able to manage households and can be fully integrated into ordinary permanent housing,” the task force declared.

When Dinkins took office in 1990, his administration put its ideas to the test. The mayor appointed Nancy Wackstein, an advocate with the Citizens’ Committee for Children who had served on the staff of his task force, to head the Mayor’s Office on Homelessness and SRO Housing. Under her direction, the city vastly increased the supply of permanent housing for homeless families, and continued a Koch administration initiative to give homeless families priority for vacant public housing units. The results were disappointing.

Perverse Incentives

A program was already in place in 1990 to provide homeless families with permanent housing. In August 1988, in response to threats by the Federal Government to stop funding welfare hotels, the Koch administration had stepped up the supply of permanent housing and stopped assigning new families to the hotels. Instead, they were placed in barracks-style shelters (Tier 1) or shelters with private rooms, congregate dining facilities, and stricter supervision than at hotels (Tier II). Families who had been in any part of the system for 12 months (later reduced to 9 months) became eligible for permanent housing.

Researchers have shown that most homeless families greatly prefer the relative autonomy of hotel accommodations to the closely supervised city shelters. Thus, the Koch administration was consciously making the conditions under which shelter-system families would await apartments less attractive. As a result, the number of families entering the shelter system fell during the later Koch years, even though the number of permanent housing placements increased.

Dinkins, too, wanted to end the use of welfare hotels and supply permanent housing to shelter-system families. But he pursued these goals by means quite different from those of Mayor Koch. For one thing, the Dinkins administration could draw from a greater supply of permanent housing, made available by Is’ och programs that were beginning to produce results. The number of HPD units going to homeless families, which had dropped from 4,042 in 1988 to 3,201 in 1989, rose to its former level. Under a 1988 agreement between the city and the Housing Authority, an increasing number of homeless families were moved into public housing. And other homeless families were relocated to privately owned apartments under the Emergency Assistance Rehousing Program, which paid landlords rent and gave them other substantial incentives to accept formerly homeless tenants.

The Dinkins administration hoped to take advantage of the increased supply of permanent housing to put an immediate end to the use of welfare hotels, which were already being phased out. But unlike Koch, Dinkins was unable or unwilling to move hotel families into less desirable accommodations to await permanent housing; further, in May 1990, the City Council had enacted legislation to phase out the use of Tier I shelters by June 1992.

Thus, the direct transfer of hotel and other shelter families to permanent housing began apace. The Dinkins administration assigned huge numbers of apartments to homeless families during the spring and summer of 1990. Between March and August, an average of 561 shelter families per month, or 55 percent of the shelter population, were referred to city-provided permanent housing; the average for the previous six months had been only 262, or 36 percent.

By some indications, the new strategy seemed to be working. As of July 1990, only 147 families remained in the infamous welfare hotels, compared with 3,306 families when Koch committed to ending the use of the hotels in 1988.

But since families entering the system were far more likely to receive permanent housing without having to wait in a shelter, the number of entries into the system went up in short order. As Figure I shows, immediately after the Dinkins administration began increasing the provision of permanent housing in spring 1990 (Point B), new entries to the shelter system jumped from about 530 per month to about 650 per month by July (Point C). (Figure I also shows how Koch’s policy of shifting from the use of hotels to Tier I and Tier II shelters, initiated at Point A, led to a decline in new entries.) Researchers from the Bureau of Management Information Systems, a division of the city’s Human Resources Administration (HRA), concluded that the number of entries into the shelter system “appears to be highly responsive to changes in housing and shelter policy. . . . It appears that ’word gets out’ to the clients and community within months after a significant policy shift occurs, and that the perceived implications of the policy change affect the decision to enter the system or not.”

Dinkins’s 1987 report had, of course, argued that no such effect would occur. When entries to the shelters suddenly started going up, Wackstein recalls, “this was something pretty wild, something we hadn’t contemplated.”

The trend created a crisis for the city, which was legally bound by a court order, issued in the case of McCain v. Koch, to supply every applicant with shelter. “We became simply obsessed with numbers,” Wackstein says. “Compliance was based on providing so many beds, so many units. There was no time for long-range planning at all.”

By the early fall of 1990, according to some participants, Wackstein and deputy HRA commissioners Jeffrey Carples and Kenneth Murphy were convinced that the greater supply of permanent housing had stimulated the increased demand for shelter. But HRA commissioner Barbara Sabol and private homeless advocates continued to insist that family homelessness was primarily caused by a shortage of affordable housing. According to Wackstein, those officials who argued that something had to be done to discourage inappropriate use of the shelter system were “roundly denounced” by homeless advocates.

The perverse incentive, however, was of such a magnitude that the administration could not ignore it. Since the problem had been caused by an increase in the supply of permanent housing and a lessening of reliance on shelters, these trends had to be reversed. But the tactic the Koch administration had used-deterring demand for shelter by consciously making the system less attractive-was unpalatable to the Dinkins administration.

The result was the Alternative Pathways Program (APP), implemented in October 1990. Under APP, some of the HPD apartments that would otherwise go to shelter-system families were instead made available to families doubled up in private apartments. The city explained that the program would give doubled-up families an incentive to stay out of the shelters by convincing them that they had a chance of getting their own apartment.

It is doubtful that APT has been effective as a reward for doubled-up families to stay put. Because families enrolled in APP are assigned apartments by lottery, they cannot be certain of getting their own apartment. By contrast, all families entering the shelter system are still assured of an eventual transfer to permanent housing.

APP did, however, cut the number of HPD-produced units allotted to shelter-system families by 961 in 1991, thereby reducing the yearly supply of units available to those families to about its 1989 level. By allowing the city to cut back on the supply of permanent housing to shelter-system families, the program increased the amount of time such families would have to wait before being transferred to permanent housing. As a result, entries into the system began to drop shortly after the implementation of APP (Point D of Figure 1).

In September 1991, a discouraged Wackstein resigned. In a July 1992 interview with the New York Times, she discussed her disillusionment with the efforts to move homeless families into permanent housing. “That was our big mission,” she said. “It was the mayor’s campaign issue. Boy, I believed it. I approached it with energy and passion.” Yet her efforts “didn’t seem to be making a difference.”

The Dysfunctional Homeless

The city’s policy of placing homeless families in public housing was originally a Koch initiative, but its results would challenge the Dinkins administration’s assumption that homelessness is primarily a problem of economics, rather than personal behavior. In 1988, as part of its response to the Federal Government’s threat to cut off funding for welfare hotels, Mayor Koch persuaded the New York City Housing Authority to commit to a four-year plan offering two thousand apartments a year-one in four of the authority’s vacancies-to homeless families. The Housing Authority, which initially resisted Koch’s policy, had to reorganize itself to fulfill its new obligation.

In June 1988, the authority established the Special Rental Team (SRT), whose mission was to expedite the process of determining whether homeless families were eligible to live in public housing. Those who had untreated drug, psychological, or medical problems or were suspected of criminal or disruptive behavior were supposed to be screened out.

Eligibility determinations for nonhomeless families were usually conducted in Housing Authority Offices, just one day a week. The SRT, by contrast, conducted daily hearings at separate offices more conveniently located for homeless families, and in some cases would send staffers out to shelters to conduct interviews. Homeless families, therefore, got through the eligibility process in an average of two to three months, with perhaps one in three declared eligible immediately after the interview. Meanwhile, nonhomeless families faced an average six-month wait and were almost always subjected to further investigation before their eligibility was determined. Because the screening process for homeless families was less rigorous than for nonhomeless ones, some Housing Authority officials suspected that SRT was interpreting eligibility criteria rather loosely. SRT staff, however, hotly denied that they were failing to weed out dysfunctional homeless families.

In 1990, the authority further stepped up its efforts to place homeless families by establishing the Command Center, a centralized unit that aimed to speed up the process of matching eligible homeless families with vacant apartments. Normally, when a housing project had a vacancy, it would be reported up through the regular chain of command: the local project manager would inform the Housing Authority’s district office, and the district office would inform the central office, whose application department maintained the authority’s waiting list. Under the new regime, vacancies were first reported to the Command Center, which would immediately match a new vacancy with an eligible homeless family. Early on, the Command Center interpreted its mission as ensuring that the Housing Authority filled its yearly quota of apartments for the homeless before any vacant units were made available to nonhomeless families on the waiting list. Accordingly, the Command Center would “warehouse” vacancies-that is, if a homeless family were not immediately available for a given apartment, the Command Center waited until one became available, rather than release the apartment to a waiting nonhomeless family. Only if a homeless family declined a particular vacancy, which was its prerogative, would an apartment be offered to a waiting-list family. With the establishment of the Command Center, placement of homeless families picked up sharply. In all of fiscal 1990, 2,418 homeless families received apartments, but the majority of them-1,318 or 55 percent-were placed in the final quarter of that year alone (April through June 1990), just after the Command Center had been established.

The mission of accommodating homeless families, however, conflicted with the Housing Authority’s institutional interests, as well as the interests of its tenants. The city’s public housing managers had held “an article of faith for many years that the New York City Housing Authority maintains its reputation as the very best of the large public housing authorities in the nation because of its deliberate policy of an ’economic mix,’” as Sally Hernandez-Piñero, now the authority’s chairman, explains. In order to maintain social stability, the authority has tried to balance the population in its roughly 179,000 apartments at about one-third elderly, one-third working poor, and one-third very-low-income (families on public assistance). But between 1985 and 1991 the mix of entrants into the authority changed drastically. Very-low-income families increased from 32 to 54 percent of total yearly entrants, while the elderly decreased from 49 to 35 percent and the working poor dropped from 19 to 12 percent. Housing Authority officials came to see the homeless referrals as a threat to their long-standing policy of “economic mix.”

Public housing tenants resented the preferential treatment accorded to homeless families. In 1990, Housing Authority projects were home to some 100,000 members of families doubled up in authority units, in addition to their 470,000 authorized residents. These doubled-up residents were eager to apply for public housing vacancies, but found that none would be available until SRT had filled its quota for homeless referrals. Housing Authority tenants did not take kindly to seeing their own “internal homeless” pushed to the back of the line.

By 1990, tenants had become so frustrated that they held public demonstrations protesting the expedited placement of homeless families in public housing. City hall dispatched First Deputy Mayor Norman Steisel and HRA Commissioner Barbara Sabol to soothe tempers at a public meeting with Housing Authority tenants. They promised to transfer some $1 million from HRA to the authority in order to cover costs associated with integrating the formerly homeless families. (These funds were eventually cut from the HRA budget and therefore were never transferred to the Housing Authority.)

It was only a matter of time before Housing Authority officials would side with their tenants, partially as a means of strengthening their own hand in the interbureaucratic struggles over responsibility for the homeless. “I can’t have any moral authority if I have to say to our people that they have to do something that I know is undermining our housing,” explains Hernandez-Piñero, who became Housing Authority chairman in February 1992. “That just goes to the core of the relationship I’m trying to develop with the tenants. The stories of some of the people on our waiting lists would break your heart too.”

The resistance to homeless families among public-housing tenants likely came as a surprise to the Dinkins administration. “A Shelter Is Not a Home” had attacked “Myth 13: No community wants housing for the homeless in its own backyard. Fact: . . . Communities have accepted housing for the homeless when the facilities are small-scale and well-supervised by an accountable non-profit organization, priority is given to homeless people from the same area, and advance planning includes local input.”

Public housing tenants certainly would have been more receptive to the policy if it had given priority to “homeless people from the same area”-that is, to doubled-up families in public housing. But this is as much as to say that the Housing Authority should not have accepted outside homeless families in the first place, since its own internal homeless could have filled most, if not all, of the available vacancies.

Even if the homeless families referred to public housing had possessed the social skills of diplomats, regular tenants would likely have resented a policy that put them at a disadvantage in getting vacant apartments. But were the tenants’ doubts about the functioning capabilities of the homeless justified, or were they, as Dinkins’s task force had argued in 1987, the result of “stereotypes of homeless people which have aroused unfounded fear and prejudice”?

In September 1989, New York University’s Health Research Program published a scientific study that supported the tenants’ view. The control-group study compared 704 homeless families requesting shelter at one of the city’s emergency assistance units with 542 nonhomeless families on public assistance interviewed at welfare offices.

The findings of the study, shown in Figure 2, contradict several of the assertions made in Dinkins’s 1987 report. For one, homeless families are in fact demographically different from other public assistance clients. They are more likely to be black, less likely to be Hispanic, and much younger on average than nonhomeless poor families. Further, homeless families have consistently higher rates of behavioral problems than their housed counterparts. “On almost every measure of ’well-offness’ or ability to function independently,” the authors remarked, “homeless families are in somewhat worse shape than the housed public assistance population.”

It is true that reported substance-abuse and mental health problems involve only a minority of homeless families. One should not conclude, however, that the higher reported rates of behavioral problems among homeless families are too small for such problems to play a role in causing homelessness. A combination of such “small” differentials can have a powerful impact. “Although the differences in the two groups are not dramatic for many of the individual measures, the cumulative effects of the higher incidence of numerous problems may be the major cause of many families’ homelessness,” the study noted. It seems likely, based on the NYU findings, that at least 15 to 20 percent of homeless families suffer from at least one type of dysfunction. This is a large enough proportion that it is reasonable for landlords and public housing tenants to worry whether a formerly homeless family would make a desirable tenant or neighbor.

When, under Hernandez-Piñero, the Housing Authority undertook an unscientific survey of its formerly homeless tenants, the results bore out concerns that SRT was doing an inadequate job of screening homeless families. “We tracked our first two thousand homeless families,” Hernandez-Piñero has said, “and it is clear that there is a high incidence of contact with the Police Department, drug dealing, and harassment of other tenants.”

Because of these problems, the Housing Authority has reduced its efforts to place homeless families. In the summer of 1991, the Command Center abandoned its practice of “warehousing” vacant apartments for the homeless. In June 1992, Hernandez-Piñero abolished the SRT. Homeless families applying for vacancies in public housing are now subject to the same eligibility review as everyone else. And Hernandez-Piñero renegotiated the 1988 agreement, so that the authority is obliged to accept only about 1,400 homeless families a year.

Although it is true that some families become homeless for economic reasons, the results of the efforts to place them in public housing undermined the assumption that the problem is primarily economic. This assumption is implicit in the word “homeless” itself, which, in contrast with a term like “underclass,” stresses the economic aspects of homelessness and diminishes the behavioral and social aspects. As Wackstein observed in July 1992, “’Homelessness’ is a useless word because it describes so many different kinds of people with different problems. A crack-abusing young man on the street has different problems than a mentally ill alcoholic in a flophouse than a teenage mother on welfare.”

Dinkins’s About-Face

The Dinkins administration realized early on that its approach to homelessness was not working. As a response, in September 1991, Mayor Dinkins farmed out the job of rethinking homeless policy to a Commission on the Homeless, headed by Andrew Cuomo, the governor’s son (and now an assistant secretary of housing and urban development). In February 1992, the commission released its report, “The Way Home: A New Direction in Social Policy,” which refuted the assumptions that had guided the early Dinkins policy.

The commission forthrightly acknowledged that placing thousands of homeless families into permanent housing contributed to an enormous surge of families entering the shelter system. It also acknowledged that behavioral problems were an important cause of homelessness. It conducted its own extensive survey of homeless individuals and families in the city. “The results were enlightening. The commission found that homelessness is frequently a symptom of some underlying problem, such as lack of job skills or education, a substance-abuse problem, or mental illness. It results when one or more of these problems interact with a number of social and economic factors, including a shortage of affordable housing.” The commission’s data were striking: fully 42 percent of the families surveyed seemed to have either a mental health or drug problem, and no less than 29 percent of adults in shelter families tested positive for illegal drugs.

The commission went even further, arguing that the sociological reality of homelessness in New York was incompatible with a policy of unconditional right to shelter. Advocacy groups had won recognition of such a right in lawsuits they filed against the city and state: first, in 1979, for single men (Callahan v. Carey), then, in 1983, for families (McCain v. Koch).

These advocacy groups pursued such cases in the belief, shared by Dinkins in his 1987 report, that homelessness was primarily an economic problem. The “basic thrust” of this strategy, according to the Community Service Society, was “to shift the focus from rehabilitation, the attempt to return the disabled to normalcy, to welfare.” The Cuomo Commission argued not only that such an approach misunderstands the true nature of homelessness, but also that it strains the city’s limited resources. “Government should not, and cannot, be expected to provide housing to everyone who asks for it,” the commission stated. “A determination of need must be made so that government’s limited resources can be targeted to the most needy.”

The Cuomo Commission made a number of policy recommendations, including the creation of a new “small, entrepreneurially styled” city agency that would coordinate efforts to deal with homelessness; provision of rent vouchers to homeless families; increased reliance on nonprofit organizations, rather than city agencies, to provide services to the homeless; and, most importantly, establishing requirements that homeless families undergo screening and treatment before being assigned to permanent housing.

The Dinkins administration’s response was decidedly ambivalent. Three weeks before the commission released its report, city officials, including Deputy Mayor Cesar Perales and HRA Commissioner Barbara Sabol (herself a member of the commission), were already criticizing it in the press. When the report was released in February 1992, the mayor would only say, “I’m fully committed to examining whether we can go forward.” He quickly created another panel to explore the practicality and political viability of the proposals.

Several factors may explain the official resistance to the commission’s recommendations. In objecting to the proposed new agency, for example, Sabol may simply have been trying to protect her own bureaucratic turf. The same may have been true of HPD Commissioner Felice Michetti, who questioned the use of rent subsidies. On the other hand, there were indications that the administration was applying the lessons of its early policy failures. In May 1992, Newsday reported that “a large-scale voucher program . . . worries officials, who fear that doubled-up families might flock to the shelters in search of apartments.”

While Dinkins was initially slow to act, by September he had embraced the commission’s recommendation to require homeless families to earn placement in permanent housing by participating in treatment and training programs. He also called for the creation of a new city agency to deal with homelessness. But rather than the streamlined, entrepreneurial agency suggested by the Cuomo report, Dinkins proposed a new Department of Homeless Services with a staff of nearly three thousand, most of whom would be transferred from HRA.

As of mid-May 1993, the mayor’s proposal was stymied in the City Council. Speaker Peter Vallone, who had enthusiastically endorsed the Cuomo Commission recommendations when they were released, objected to the size of the proposed agency and argued that the mayor had not specified how the revamped shelter system would deal with such matters as drug treatment, mental health care, and job training. Charles Raymond, appointed by the mayor to head the proposed new agency, testified before the council that the administration had been so occupied with the logistics of establishing the agency that it had not had time to “present that kind of gigantic plan.”

Mayor Dinkins and some of his top administrators deserve considerable credit for facing up to the truth that they have pursued a wrongheaded policy. They have acknowledged that perverse incentives and behavioral problems are central to the problem of family homelessness, and the Cuomo Commission has developed a detailed plan for reform. But the administration has not yet been vigorous enough in translating its own hard-won insights into policy. Whether because of ideological reservations or bureaucratic turf wars, the administration has not unequivocally embraced, much less effectively implemented, the recommendations of the Cuomo Commission report. Only if the administration gets serious about acting upon its own epiphanies can Dinkins succeed in his campaign promise to make fundamental reforms in homeless policy.


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