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The staircase that leads up to Pedro Acevedos apartment smells of urine and marihuana. The building is located in the Longwood neighborhood of the South Bronx. Almost half of the population here lives below the federal poverty line. The front door of the building is unlocked.

Acevedo, 41, lives in a one-bedroom apartment with his wife and his 9- and 7-years old daughters. The girls share a bunk bed in the bedroom; he and his wife sleep on folding beds in the living room. Technically, this apartment is not Acevedos apartment. It is a homeless shelter, paid for by the City of New York; one of approximately 3,000 so-called cluster shelters the city provides to homeless families. Now, a controversy has broken out over them. The dispute involves three parties: The homeless of the city and their advocates, who complain about bad conditions; for-profit operators, who make millions renting out the apartments; and the city of New York, which seems overwhelmed with dealing with its homeless population and pays exorbitant rates for the cluster shelters.

The worst maintained, the most poorly monitored

On March 12, 2015, the City of New Yorks Department of Investigation (DOI), released a report based on a yearlong investigation, which described serious deficiencies in homeless shelters. The report concluded that cluster shelters are the worst maintained, the most poorly monitored, and provide the least adequate social services to families, amongst all shelters in New York. Pedro Acevedo says he and his families have had problems with bed bugs; in the girls bedroom, a leaking radiator made the floor sodden.

Standing inside his apartment, it is hard to imagine that places like this have become cash cows for their landlords. According to the DOI report, the city pays two to three times the market rate to rent cluster shelters: The average monthly rate for an apartment in a cluster program is approximately $2,451 (2,281 euros), while the market rate for non-DHS buildings in the same neighborhoods range from $528 a month to $1,200 a month. Even in a city with exorbitant rents, no tenant in a low-income neighborhood, where almost all cluster shelters are located, would pay these amounts.

Exploding rents, growing number of the homeless

The origin of those cluster sites can be traced back to the early 2000s, to a program called scatter-site housing. Around the turn of the millennium, the New York City Department of Homeless Services (DHS) was faced with the problem that the number of homeless families kept on growing. Even though the DHS contracted new conventional shelters, it couldnt keep up with demand. To find alternative spaces, they got in touch with private landlords.

Most landlords were paid per-months rates that far exceeded market-rate prices, according to a study by the Institute for Children, Poverty and Homelessness (ICPH,) the research branch of the homeless outreach organization Homes for the Homeless. The high prices were an incentive for the landlords to agree to the deal. According to the ICPH study, the program began small, with only 50 units in August 2000, and then virtually exploded. Around two years later, 21 percent of all homeless families lived in more than 2,000 apartments all over the city.

From the beginning, there were reports about insecure conditions inside the buildings, about the lack of social services and about former tenants, who were being pushed out of their apartments to make space for the more profitable scatter-sites. In 2007, the Bloomberg administration eventually ended the program. The cluster shelters took its place. Now, the providers had to offer social services to residents, similar to other shelters of the city. However, according to the DOS report, these services have often been insufficient and poorly performed, if at all.

A lucrative business model

Read the original: New York milks the homeless for cash

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New York City Bed Bug Registry Maps & Database

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