New York City’s Major Shelter Contract Signed
Mayor Zoran Mamdani’s administration has inked a new contract worth nearly $1.9 billion with the hotel sector to furnish emergency shelter for homeless families over the next three years. This substantial deal, totaling $1.86 billion, arrives despite the city seeing a decline in the immigration crisis that previously pushed former Mayor Eric Adams to convert several hotels into temporary shelters for a surge of new residents.
In recent developments, Mamdani also announced the closure of the Bellevue facility, which, with 250 beds, was the largest men’s shelter in Manhattan. This closure indicates a shift in the city’s approach to handling homelessness, even as more than 100,000 individuals continue to seek shelter each night—the highest number since the Great Depression, according to the advocacy group Homes.
During a particularly harsh winter from late January to February, at least 15 individuals tragically died due to the extreme cold while outdoors.
The Department of Homeless Services (DHS) has set forth a three-year agreement with the New York City Foundation Hotel Association—representing approximately 300 hotels in the area. Hotel Association President and CEO Vijay Dandapani emphasized that the contract is designed for emergencies rather than immigration, indicating the possibility of increasing capacity based on demand.
However, concerns have been raised about the dependency on hotels for shelter. Nicole Gelinas, a senior fellow at the Manhattan Institute, described this reliance as problematic, labeling the contract as essentially a no-bid agreement. She pointed out that hotels should compete based on pricing if they are to serve as shelters, rather than functioning as a coordinated group.
High hotel prices in New York City complicate the situation, as removing thousands of rooms from the market could lead to even higher rates in a tourist-heavy economy. The current contract includes provisions for up to 10,651 hotel rooms for homeless families through June 2025, with over $626 million already disbursed.
A spokesperson from the hotel industry insisted that they are playing a role in addressing the serious homelessness issue, highlighting the variety of room prices available.
New York City’s “Right to Shelter” ordinance mandates that officials provide shelter to everyone in need. Previously, the city negotiated on a case-by-case basis with individual hotels to secure emergency housing. However, the pandemic prompted a shift to blanket contracts with hotel associations to quickly facilitate a larger number of rooms for those in need.
In his initial days in office, Mamdani directed DHS to dismantle a separate system for migrant shelters housed in hotels, allowing asylum seekers indefinite stays at city shelters—a departure from Adams’ strategy.
Currently, DHS is no longer responsible for hotels and shelters exclusively for asylum seekers. According to DHS spokesman Nicholas Jacobelli, actual expenditures for the new contract are anticipated to be below the stated cap, as efforts are made to reduce reliance on emergency hotels. An emphasis is now placed on reinstating family shelters that offer essential amenities.
Nevertheless, he acknowledged that adjustment will take time, emphasizing the need to maintain adequate shelter options to adhere to the city’s legal obligations.
Jacobelli also noted the importance of having an avenue to promptly open additional shelter units in case of emergencies, underscoring this contract’s role in preparing for unexpected needs.
Advocacy groups battling homelessness recognize that leaning on hotels is, unfortunately, becoming inevitable. David Giffen, executive director of the Coalition for the Homeless, indicated it is less than ideal but necessary, especially in light of recent tragic events where individuals succumbed to the harsh weather. He noted that the long-term solution lies in developing more affordable housing for low-income residents to reduce overall demand for shelter.
