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SUPREME
COURT
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No t i ce o f Mo t i o n / O r d e r t o Sh o w Ca u se A f f i d a v i t s Exhib it s t-
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PR 03 014
NEWYORK
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laintiff
-w1K
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- against
-
THE ClTY
OF MEW
YORK:
MICHELE OVESEY,
CommisdDner for the New York City epartment
of Homeless Services; JOHN
C. LIU Comptrol ler
of the City of Ne w York , and AGUILA, INC.
Defendants.
In the Article 78 proceeding under Index number 401122/2013, the petitioner is Mayor
Michael Bloomberg
nd
the New York City Department of Homeless Services DHS); he
respondent
is
Comptroller John
Liu.
By order to show cause, Mayor Bloomberg sought a
preliminary injunction to compel the respondent to register two contracts between the DHS
nd
AgUila, Inc., which operates shelters for homeless f d l i e s . The two contracts at issue concern
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Facts
shelters located at 162 5- 163
1
Fulton Street (Fulton Residence) in the borough of Bron x, and 3
16
and 330 West
9Sh
Street (Freedom Hou se), in the borough of Manha ttan. Com ptroller John Liu
cross-moved for consolidation o f the instant proceeding with a related case, Neighborhood in the
Nineties, Inc. v The City of New York ohn
C.
Liu Comptroller of the
City of
New York et.
al.
under Index Number 156382/2013.
The plaintiff in the related case is Neighborhoo d in the
Nineties, Inc. (Neig hbo rhoo d), a not-for-profit corporation representing block associatio ns, residents,
retailers and property owners b etween W est 90th nd W est 97‘h Streets between Riverside Drive and
Amsterdam Avenue. Neighborho od moved to enjoin the Com ptroller from registering the contract
for Freedom House. As the facts relevant to Neighborhood ’s case are fairly mu ch the sam e as those
to
the proceeding brought by M ayor Bloomberg, the two cases are consolidated for only the purposes
of the decisions on these motions.
Briefly, DHS is a mayoral agency of the City that is tasked with providing transitional
housing and services, short-term em ergency housing and re-housing sup port to the City’s home less
families and individuals. Under section 328 of the New York City Charter (the Charter), the
Comptroller is mandated to register contracts between DHS and service providers s uch as Aguila,
within
30
days of receipt. Com ptroller John Liu did not do
so.
One contract is for 1625-163
1
Fulton
Residence’; the second contract
is
for Freed om House’. Faced with an urgent need to hou se the
unprecedented number of homeless people, these shelters had started operation pursuant to an
emergency declaration. The Comptroller had app roved and registered the em ergency contracts in
early 2012. On June 5, 2013, petitioner submitted executed contracts for both shelters to the
Comptroller’s office (Ex h A - Fulton Residence; Exh
B
- Freedom H ouse). At the end of the 30-day
period on July 3,2 01 3, the Co mptroller informed
DHS
by e-mail that both con tracts were rejected
and raised issues relating to re-inspection of cured building violations and Administrative Code
section 21-3 12(2)(b) limiting the num ber of adults for e ach shelter at
200.
By letter dated July 9,
20
13,
DHS
responded to the Comptroller’s rejection informing him that the statute was inapplicable
to
the subject shelters as it applies only to “shelters for hom eless ‘adults’” rather than “sh elters for
homeless families - either families with children, or ad ult families” (Cross-Motion, Spo lzino Aff.,
p
3),
and that since the allotted 30-day period for registering the co ntracts had elapsed, the contracts
were deeme d registered. The reafter, on or about July
19, 20
13, petitioner comm enced the instant
proceeding to compel th e Com ptroller to register th e co ntracts.
Neighborhood commenced a plenary action, which is more properly an Article 78
proceeding, in September 20 13 to enjoin the Com ptroller from registering the contract between the
City and Aguila for Freedom H ouse. Neighborhood claims that its district, covered by Comm unity
Board 7 (CB7), is over-saturated with support housing. Wh en the shelter on West
9 S h
Street started
operations on August
6,
2012, it was under an emergenc y short-term contract of six months. As
such, there was no op portunity for public review preceding the opening. Indeed, there was no
opportunity even to attend a public hearing as neither DHS nor Agu ila notified any C B7 officers
of
the hearing date; and the notice by e-m ails purportedly sent to elected officials were not sent to their
Fulton Residence
is
a residence for
10
homeless families with children.
’
reedom House houses
up to 200
homeless adult families in
two
adjoining buildings.
Bloomberg v Liu
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Index 40 1122/20 13, Neighborhood v City - Index 156382/2013
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regular e-mail addresses
(see
Aff. of Aaron Biller, Exh 6, p
2 .
Neighborh ood also argues that
DHS
misrepresented the fair share review to the comm unity and the Mayor. Th e
DHS’
fair share review
did
not
include the follow ing facilities:
2643
Broadway
-
Volunteers
of
Am erica; 3 16 West
97th
Street (The Yale)
- HRA
and HPD; 306 West
9Sh
Street (Camden)
-
HRA; 2508 Broadway
(Naragansett) - Housing and Services; 336 West
8Sh
Street (Brandon House) - Volunteers of
America; and scatter site housing in
SROs
for
HRA
and
DHS
clients througho ut c omm unity district
7 (see
id.
15).
On September 4,201
2,
CB 7 adopted a resolution opp osing operation o f the Shelter
on West
9Sh
Street
(see id.
xh
7).
Neighborhood adds that the mann er in which Freedom House is operated causes a nuisance
to area residents. Exam ples of the Shelter’s negative impact included an in crease in felony and
misdemeanor assaults, petit larcenies and rapes reported in the 24*h olice Precinct
(see id.
. 20;
Exh 14); an increase in trash strewn in the streets around the shelter; unreasonable loud noises; and
loitering. The residents have also seen an increase in panhandling; pub lic drinking; drug u se; people
sleeping in streets; and altercatio ns (see Aff. of Dennis M cGath, p
2).
Finally, N eighborhoo d asserts
that the cost per unit constitutes a waste under the General Municipal Law, and that the
Com ptroller’s Audit of
DHS’
control of payments and expenditures with A guila sho ws an abysmal
operation.
The City and
DHS
argue that Neighborhoo d
is
time-barred from its action because it is more
properly an Article
78
proceeding that would be subject to a four month statute of limitations.
Neighborhood’s action was brought thirteen months since the Shelter open ed, and six m onths since
DHS submitted its Fair Share docum ent for Freedom House. Aside from the statute of limitations
defense, they argue that Neighborhoo d’s claim also fails because the Adm inistrative C ode § 2 1-312
(2)(b) regarding the 2 00 person limit on ad ult shelters is inapplicable to adult family shelters, which
is defined as adult families without ch ildren. Freedom House provides shelter for up to 200 adult
families where each family is given a sep arate unit. Further it is pre-empted by state law.
Analysis
New
York
City Charter Section 328
Section 32 8 of th e Ch arter directs the Comptroller to register the contract w ithin thirty (30)
“(i) there remains no unexpended and unapplied balance of the app ropriation or fund
thereto, sufficient to pay the estimated expense of executing such contract, as
certified by the officer making the same;
(ii) that a certification required by se ction three hundred tw enty-se ven of this chapter
has not been made; or
(iii) the proposed vendor has been debarred by the city in accordance with the
provisions
of
section three hundred thirty-five.”
days of filing of the c ontrac t unless
-
(NYC Charter 328 (b)).
The reason cited by the Comptroller for declining to register the contracts was his
determination that the contracts facially violated New York C ity Adm inistrative Cod e Section
21
-
3
12(2)(b) for housing above the limited number
of
200 adults. How ever, this reason is not one of
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Liu - Index
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the exception s in the section 328 mandate to the C omp troller
(see
Comptroller of City ofN ew York
Mayor
o f c i t y
o f N e w
York, 7 NY3d 256 [2006]). Further, when the Mayor responded to the
Comp troller’s concerns that gave rise to his refusal to register the con tracts
(see
Petition by Mayor
Bloomberg, Exh F), the Ma yor essentially overrode the Com ptroller’s concern s, where upon, it was
incumbent on the Co mptroller to carry out the mandate in section 328 seeNYC Charter t j 3289 (c);
see e.g., Giuliani
v
Hevesi,
276 AD2d 398
[ l s t
Dept 20001 “Under normal circumstances, the
Com ptroller need not register a contract where he suspects corruption , but once the May or chooses
to override those objections, the Com ptroller must carry out the m andatory function. Th e legislative
history of this provision o f the Charter confirms that conclusion” [internal citation omitted]). Thu s,
whether the two contracts fall under Adm inistrative C ode f j 2 1-312 (2)(b) is not o ne of the reasons
for which the C omp troller may refuse to register the contracts.
The Com ptroller posits that the Co urt of Appeals in Comptroller v. Mayor (supra)only held
that the Comptroller may not withho ld registration based on procedural grounds. Th e distinguishing
factor between Comptroller
v.
Mayor and the instant case is the illegality of the Mayo r’s direction
rather than the procedural omission by the Comptroller in Comptroller v. Mayor. The Com ptroller
did not explain how his legal reasoning and findings are superior to that
of
the Mayor’s in
determining the size of the shelter violated Administrative Code
tj
21-312(2)(b). Nor did the
Comp troller distinguish
or
contradict the City’s argument that Admin istrative Code fj 2 1-312(2)(b)
is inapplicable to the subject shelters. However, the Comp troller is not com pelled to do
so
as he is
not mandated to analyze a statute - procedurally or substantively
-
under section 328 of the City
Charter; rather, the Comp troller is mandated to register the co ntracts for Freedom H ouse and F ulton
Residence. Nevertheless, the City responds to this challenge and points out that the local law
pertaining to adult shelters has been preempted by state law (see inJFa .
Preemption by State Law
The City argues that state law preempted Adm inistrative Code section 21 -3 12(2)(b), which
puts a cap on the num ber o f beds in adult shelters at 200. Citing Social Service s Law
tj
460, the
Appellate Division in the Second Department has held that regulation of adult-care facilities has
been preempted by the S tate
(see
Adkins v Board ofAppea ls, 199 AD 2d 261 [2d Dept 19931). With
this field preemption by state law, local laws such as Administrative Code section 21-312(2)(b)
placing control on the operation of an adult shelter is illegal
see
DeStafuno
v Emergency Housing
Group, Inc.,
28 1AD2d 449,45
1
[2d Dept 20011). Accordingly, petitioner’s claim that the ope ration
of Freedom House vio lated the bed lim it of Adm inistrative Co de section 2 1-3 12(2)(b) cannot be
sustained.
Statute o f L imitations
The City raises the defense of the four-month statute of limitations as a bar to
Neighborhood’s action that was comm enced more than thirteen month s after Freedom House opened
on August 6, 20 12. And as to Neighborhood’s claims relating to the Fair Share Analysis, the clock
started to run from F ebruary 4, 20 13, and therefore, the Fair S hare Analysis claims are also time-
barred. The dates pertinent to this issue are as follows: In January 20 13,
DHS
sought a six-month
extension of the emergency declaration from the Com ptroller, which was refused. Thereafter, DHS
prepared to finalize a long-term contract for Freedom House. A public hearing was held Decem ber
I 3 , 2 0 12;
the Fair Share review was issued on February 4, 2 0 13.
The
long-term contract was then
presented to the Com ptroller for registration on June 5, 20 13. T he Com ptroller rejected the contract
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on July 3,2013 . Neighborhood commenced the instant proceeding on o r about July 1 7,2 013.
Neighborhood’s argument is reasonable considering that absent a final determination, a challenge
to the report would be academic. Hence, the statute of limitations on the fair share report is a non-
issue.
In an Article 78 proceeding, there are two requirements in calculating the statute of
limitations: “the agency mu st have arrived at a definite position on the issu e inflicting actual injury,
and the injury may not be significantly amelio rated either by further admin istrative a ction or steps
taken by the complaining party”
(Comptroller
v
Mayor,
7 NY3d at 262,
quo ting Matter
o
Best
Payphones, Inc. v Depar tment
o
Info. Tech. Telecom. of City
of N Y . ,
5 NY3d 30, 34 1720051).
Here, Neighborhood argues that the actual injury occurred on June 6, 2013, when the long-term
contract was submitted to the Com ptroller; and not A ugust
6 , 2 0
12, as that was un der an emergency
short-term plan. As to the Fair Share review , Neighborhood op ines that it need no t be challenged
independently as it is not a final agency action.
The key question from these two arguments is when the actual injury occurred. Based on all
accounts, Freedom H ouse started on an emergency basis on a short-term contract. As it was a short-
term contract, wheth er it was a 200 bed shelter for adults or a 400 b ed shelter for adu lt families, is
not
so
consequential since there is a not-so-distant end to the shelter operation at that particular site.
How ever, with a long -term facility, the type of shelter Freedom H ouse is of sign ificant consequence
as there is no end in sigh t to the effects to the neighborhood. Therefore, the actual injury is the
agency’s presentation of a long-term con tract to the Co mptroller for registration, wh ich wa s on June
6, 20 13. Thus, Neighborhoo d is within the four-month time period w hen it com men ced the instant
action on or about July 17, 20 13.
Fair Share Criteria
Neighborhood’s fair share report claim is that the City did not follow the Fair Share Criteria
when it did its siting review because it did not c onsider similar housing facilities in the district. The
Fair Share Criteria has been view ed as a guideline for siting city facilities, and no t a s regulations
(see
Community Planning
Bd.
No. 4
v
Homes
f o r
the Hom eless, 158 Misc.2d
184,
191 [Sup.Ct. NY Cty,
19931; see also, Tribeca Community Ass ’nv New York City Dept, O Sanitation [2010 WL 151534
[Sup.Ct., NY Cty,
20101,
a f ’ d
83 AD3d 513 [ lstDept 20111). While a flagrant disregard
of
the
Criteria could give rise to a ca use of action (see Com munity Planning
Bd.
at 192), there is nothing
alleged here that rises to that level.
Section 203
of
the New York City Charter requires the City Planning C omm ission to adopt
rules establishing criteria for the location, expansio n, reduction, or closing of City Facilities. The
goal of the criteria is to “further the fair distribution among com mu nities of the burdens and benefits
associated with city facilities, consistent with co mm unity needs for service s and efficien t and cost
effective delivery of services and w ith due regard for social and econo mic imp acts o f such facilities
Bloomberg
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Liu
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upon the areas surrounding the sites”
(NY
City Charter 203).
Article 6 .53 [a] of the Fair Share Criteria requires th e C ity to consider “[wlhether the facility,
in combination w ith other similar city and non-city facilities within
a
defined area surrounding the
site (approximately a half-mile radius, adjusted for significant physical boundaries), would have a
significant cumulative negative im pact on neighborhood character.” (62 RC .NY
§
Appx . A to Title
62 Article 6.53[a]).
Article 6.53[c] of the Fair Share Criteria requires the City to consider “[wlhether any
alternative sites actively considered by the sponsoring agency o r identified pursuant to section 204(f)
of the Charter which are in com munity districts with low er ratios of residential facility beds to
population than the citywide average wo uld a dd significantly to the cos t of constructing or operating
the facility or would impair service delivery.” (62 RC.NY Ap px. A to Title 62 Article 6.53[c]).
The Fair Share Report (the Report) at hand claims to have met the Fair Share Criteria. It
reported that there are a total of seven shelters in CD7, including Freedom House. Those six shelters
are not located within a
400
foot radius of Freedom Ho use. Tw o of those shelters services house
families with children and are within a half-mile o f Freedom H ouse, w hile the other four, three of
which are for single adults and one for families with children, are outside the half-mile radius. The
Report also informed that A guila had notified CB7 o f its proposal to operate a family shelter at
Freedom House. On Augu st 3 and 6, DH S met with Manhattan Borough President Scott Stringer,
Council Member Gail Brewer, Assembly Member Linda Rosenthal (collectively, the elected
officials), and C B7 Chair, Mark Diller, to discuss the shelter proposal. Subsequently, by letter dated
November 30, 2012, DHS informed all five Borough Presidents, the City Council, and the City
Comptroller of its intention to enter into a long-term contract with A guila to operate Freedom House
and the public hearing date on Decemb er 1 3, 20 12. The public hearing with date, time and place was
advertised in the City Record. The Report stated that no opposition to the proposal was given. On
January 30,2 013 , CB7 convened a two-hour town hall meeting at which
DHS
and Aguila attended,
and the elected officials addressed community concerns and answered questions regarding the
shelter. The Report added that due to the unprecedented need for homeless shelters, a dema nd that
increased 2 1 percent since Novem ber 20 1 1, the City was mandated by law to open new shelters to
meet the need.
The Report informed that the City’s selection of sites is affected by the size and type of
buildings offered for shelter purposes. In selecting the West 9S h site, the Report found the tw o
adjoining seven-story buildings, w hich can accommodate 400 adults in 200 units, could meld with
the multifamily residential, and mixed-use commercial and residential neighborhood with
community facilities and would not cause traffic congestion because of available public
transportation nearby. The Report noted that DHS did a field survey of the neighborhood and
reviewed relevant literature to determine whether Freedom H ouse would create or contribute to a
concentration of facilities. It listed the various facilities, progra ms, institutions and open sp aces that
are within a half-mile radius of Freedom Ho use. It also spo ke to the cost-effectiveness of the
services
to
the homeless adult families such as case management, employment, and rehousing
assistance. Because o f the size of the facility, these service s can be provided o n site.
Further,
because the site is fully equipped w ith comm unal kitchens, o n-site laundry facility, and individual
mini-refrigerators n eve ry room, it is more self-contained and less burde nsom e on the neighborh ood .
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As
to alternative sites, the Report indicated nine a lternate sites
-
five in M anhattan, three in
Bronx, and one in Queens - were considered. Two sites in Bronx had co ntracts either in procurement
or awaiting registration at the Com ptroller’s office. The other seven sites were not viable or suitable
as one landlord decided against use as a shelter, and the costliness of another site as th e building
would have to be converted, or they w ere too close to other shelters.
Therefore, contrary to Neighborhood’s claims that the
DHS
did not abid e by the Fair Share
Criteria in creating the Repo rt, it appears tha t
DHS
addressed the issues of other shelters in the area
and the impact to the neighborhood o f addin g Freedom Ho use. In fact, the Rep ort had a diagram
depicting and identifying the sup port housing, service centers, schools, clinics and such facilities
within both 400 feet and a half-mile radius of Freedom Hou se. Accordingly, Neighborhood ’s claim
that
DHS
did not abide by the F air Share Criteria contradicted by the Fair Share Rep ort, which show s
substantial compliance w ith the Fair Share Criteria (see Turtle Bay Ass ’n
v
Dinkins, 207 AD2d 670,
670
[
1
t
Dept 19941).
Nuisance
Neighborhood claimed that the operation of a shelter in the area created a nu isance for the
neighboring residents. A pub lic nuisance “is an offense against the State and is subject to abatement
or prosecution on application of the proper governmental agency” (Copart Indus. v Con Ed
Co., 4 1
NY2d 564, 568 [1977]).
To
make ou t a cause of action for public nuisance, Neighborhood “must
establish by clear and con vincing ev idence that the conduct am ounts to “a sub stantial interference
with the exercise of a co mm on right of the public, thereby offending public m orals, interfering with
the use by the public of a public place or endangering or injuring the property, health, safety or
comfort of a considerable num ber of persons’’ (532
Madison Ave. Gourmet
Foods
v Finlandia
Ctr.,
96 NY2d 280,29 2 [2001];
see
DeStefano v Emergency Housing G roup, Inc. 281 AD 2d449 ,45 1 [2d
Dept 20011 [internal citations om itted];
lv to appeal denied,
96 NY2 d 715 [2001]). Further, as a
private party, petitioner h as to show that it suffered som e special damage, separate and apart from
that suffered by the public at large
(see
532 Madison Ave. Gourmet Foods, 96 NY2d at 292).
Neighborhood alleged that the community at large was affected by the conduct
-
loud noises,
loitering, littering, panha ndling , and an increas e in crime. As the injury to petitioner a lso affects the
comm unity at large, it is not sp ecial within the mean ing of a public nuisance. As such, petitioner has
no standing to bring this public nuisance c laim
(see
id. ).
General Municpal Law
4
51
Pursuant to General Mu nicipal Law 5 1, taxpayers may bring suit to prevent illegal acts by
officials or agents of a munic ipality or to prev ent waste or injury to,
. . .
any property, funds of such
county, town, village or municipal corporation
. .
.”
(GML
9
51).
How ever, a suit under GML
§
51 “lies only when the acts com plained of are fraudulent, or a waste of public pro perty in the sense
that they represent a use of public property o r fund s for entirely illegal purposes” (Godfrey
v
Spano,
13 NY3d 358,37 3 [2009], quotingMestiva ofForest Hills Inst v Ci ty ofN ew Y ork, 58 NY2d 1014,
1016
[
19831). There is no frau d alleged here. Therefore, for this claim to be viable, petitioner must
“state a claim an illegal dissipation of municipal funds” (Godfrey, 13 NY 3d at 373). Petitioner’s
allegations again focuses on Administrative Code section 2 1-3 12(2)(b) which limits a shelter for
adults to 200 beds. As discusse d
supra,
this section of the Administrative Cod e is preempted by
state law, which does not m ake the operation of a shelter for 200 adult families (400 beds) unlawful.
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4 .
Petitioner also argu es that A guila’s performance of its obligation h as been po or and improper, and
the contract between Aguila and
DHS
should not be registered. Petitione r cites the audit report by
the Com ptroller on DH S’ control
of
payments to Aguila dated Novem ber 4,200 1 (see Aff. of Aaron
Biller, Exh
1 9 ,
which “recomm ended that the city recoup
900,000.00
in payments m ade to Aguila
and to further investigate additional A guila expend itures totaling
9.1
million” (Aff. ofA aron Biller,
T[
58). The affiant, howev er, did not cite to any place in the
50
or mo re pages of Exhibit
15
that
supports his allegation . In any event, the allegation remains void o f any fraud or illegal dissipation
of
municipal funds. As such, petitioner failed to state a cause of action under G M L
6
5
I
Conclusion
The conflict between ho using the homeless and maintaining a neighborhood’s status quo is
hardly ever easily resolved. Given the increasing number of hom eless people in Ne w Y ork City3,
and the duty incumbent upon the M ayor to provide them shelter, New York City is often rife with
such conflicts. Th e homelessness pro blem is not likely to go away soo n as the num bers continue to
rise4. Nonetheless, with regards to the case at hand, this court need only address whether the
Com ptroller has a duty to register the contracts, whether DH S com plied with the Fair Share Criteria
in creating its report, whether Neighborhood’s nuisance claim ma y be sustained , and whether DH S
and Aguila’s spending gives rise to
a
claim under GML 5
1.
Based on the foregoing, the complaint under Index Numb er 1563 82/201 3 by Neighborhood
of the Nineties to enjoin the Com ptroller from registering the contract between D H S and Aguila for
the operation of a homeless shelter for adult families located at 316
and
330 West 9 S h Street
(Freedom House) in Manhattan is dismissed. The petition under Index 401 122/2013 by M ayor
Michael Bloomberg is granted; the Comptroller shall register the contracts between the DHS and
Aguila for homeless shelters at 1625-1631 Fulton Street (Fulton Residence) in the borough of
Bronx, and
3 16
and 330 W est 9ShStreet (Freedom House) in Manh attan.
This constitutes the decision a nd order of the court.
The number o f homelessness grew in New York City by 1 3% at the start
of
2013, in contrast to the rest of
the country, with the excep tion of Los Angeles, California. “In New York, where the shelter population has reached
levels not seen since the Depression era, the count in January estimated 64 ,060 homeless people in shelters and on
the streets in January 2013 ” (Mireya N avarro, Homeless
Tally Taken
in
.January Found
13 Rise
in
New York NY
Times, NYiRegion N ov. 21, 2013 ).
3
Number
of Homeless in
City Hits
Record High, Report Find,
http:lwwwiny1 .comicontenthewsi205 1 16
(accessed March 12, 2014 ).
Bloomberg v Liu - Index 401 12212013, Neighborhoo d v City - Index 156382i2013
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