New York State pauses $3M fair housing testing program

The New York attorney general’s fair housing testing program has hit a delay, leaving unused up to $3 million in real estate license fees and penalty payments dedicated to the effort.

Nine months after the new program was tentatively expected to launch, the office of state Attorney General Letitia James has not yet moved ahead with it. The original plan — using grants of up to $250,000 a year to launch new fair housing testing programs in underserved areas of the state — attracted no bids, with groups saying the funding levels and two- to three-year time frame were insufficient, the attorney general’s office said.

The office is reworking its plans and expects to request new bids this fall, a spokeswoman said. 

"No one should face discrimination when searching for a home," James said in a statement. James said her office will work with grant-seekers to "provide additional financial and education support so they can create fair housing programs."

The delay demonstrates how difficult, time-consuming and expensive it is to start new programs in which testers serve as secret shoppers, seeking to detect potential housing discrimination and amass evidence that could be used in complaints against landlords, real estate agents and others who discriminate, fair housing experts said.

Launching a new program "requires a huge monetary and time investment," said Ian Wilder, executive director of Long Island Housing Services in Bohemia, which operates a fair housing testing and advocacy program.

"From everything I've seen from this attorney general's office, they care deeply about fair housing, they care deeply about the funds that are in and do not want them to sit there not being used," Wilder said. "So my assumption would be that they're just spending the time retooling because they want to get a successful program."

The attorney general’s program is funded by new real estate license fees and higher discrimination penalties collected by the New York Department of State, which regulates real estate agents. State lawmakers increased the fees and penalties in 2021 as part of a package of nine new laws passed in response to Newsday’s 2019 "Long Island Divided" investigation into housing discrimination. Using paired testers — one white, and one Black, Hispanic or Asian — the three-year investigation showed that people of color risked unequal treatment 40% of the time.

One of the new laws imposed surcharges of $10 for agents and $30 for brokers when they obtain or renew real estate licenses. Another increased penalties for violating anti-bias laws from $1,000 to $2,000, with half the money funding the attorney general’s anti-bias program.

The Department of State had collected more than $2 million in fees and $22,000 in penalties dedicated to the fair housing fund by September 2023, the most recent available figures show.

The attorney general announced last November that she was inviting nonprofit groups and government agencies to apply for grants of up to $250,000 a year for two years — tentatively, from January 2024 through the end of 2025, with a one-year renewal option — to launch new fair housing enforcement programs in areas of New York that lack such programs, including the Albany region and northeastern New York. To be eligible, groups must not currently receive state or federal funding to conduct fair housing work. 

The attorney general also offered grants of up to $250,000 over two years for experienced fair housing groups to provide training and other support. 

The relatively modest funding and short time frame might have discouraged groups from applying, especially if the groups do not already have other sources of funding for fair housing work, said John Kaehny, executive director of the nonprofit, nonpartisan group Reinvent Albany. "It’s reasonable to think that it would take about a year for them to get good at this," he said. "It's not very efficient unless you have a longer runway."

It's "fairly common" for a request for bids to be rescinded and issued again later, Kaehny said. 

Elizabeth Grossman, executive director of the Fair Housing Justice Center in Long Island City, said her group applied to be a trainer but was informed that the request for bids had been withdrawn.

"We haven't been given an official reason as to why the RFP [request for proposals] was rescinded, but we've made clear to the office of the attorney general that we're available to help craft a proposal that will receive a robust response, and to do anything that we can to support new fair housing organizations," Grossman said.

Long Island Housing Services did not apply for a training grant because it would not have made sense to travel from Long Island to the upstate regions targeted by the new program, Wilder said. Long Island and the western and central counties of New York got second priority for funding, since they already have fair housing groups.

The Syosset-based civil rights group ERASE Racism did not apply for a grant, said the group's president, Laura N. Harding. Harding said the two-year time frame and the funding levels might not have been sufficient to attract applicants. "My understanding is that the amount of money that was made available may not have been enough for organizations to feel that they could sustain the work," Harding said. "It's way more expensive than people think."

The head of one upstate housing group, United Tenants of Albany Inc., said the group would have applied if the timing had worked out. Canyon Ryan, executive director of the nonprofit, said the group did not apply for several reasons, including the need to focus on applying for a different grant at the same time. The request for bids was issued last November, with a December due date.

"It just didn’t work on the timeline," Ryan said. "It's a shame that upstate is not seeing the money come to fruition."

The delay in the attorney general’s program comes as the state Division of Homes and Community Renewal proceeds with a separate fair housing testing and enforcement effort on Long Island and in other regions in downstate and upstate New York.

That effort is funded by $4 million in the current state budget and $2.25 million in each of the previous two years’ budgets, the Division of Homes and Community Renewal said.

Testing is an essential tool in uncovering discrimination, and it consistently shows that certain housing providers continue to discriminate, fair housing experts said. "A lot of these issues are so normalized that we don't even realize we're perpetuating discrimination," Harding said. "We'll call it, 'Well, you know, the owner just wants this,' or 'We're trying to help people live around people that look like them,' but in effect, we're really perpetuating historical and ongoing racism, structural racism."

The Fair Housing Justice Center filed a federal discrimination lawsuit in June against a Brooklyn brokerage called Exclusive Properties Realty Inc., its broker, Alevtina Ioffe, and other defendants. In its lawsuit, the center alleged that a Black couple applied to rent an apartment through Exclusive but an agent told them the landlord "refused to rent to Black tenants," according to court documents.

The couple complained to the Fair Housing Justice Center. When the group sent Black and white testers to the brokerage, the white testers were offered rent discounts while Black testers were not given rental applications and their calls and texts were not returned, the lawsuit alleged. In one instance, an agent told a white tester that a preferred Staten Island neighborhood had "nice white people," according to the lawsuit, which called the brokerage’s conduct "profound bigotry."

Reached by phone, Ioffe declined to comment. In court documents, the defendants denied "ever engaging in any discriminatory housing practices or holding any discriminatory policies."

The nonprofit’s tests of the brokerage were funded by the Homes and Community Renewal program.

That program was modeled on a two-year, $4.5 million fair housing pilot program announced by the state attorney general in 2020, funded by the attorney general’s settlement with the Royal Bank of Scotland over mortgage practices that contributed to the 2008 financial crisis.

In the pilot program, six fair housing nonprofits offered 350 training events for landlords, real estate agents and others, conducted 1,500 paired tests and filed 110 enforcement actions, said Baaba Halm, senior vice president of programs for Enterprise Community Partners, which oversaw the program.

The goal of such programs, Halm said, is to "open up housing choice and opportunity and combat that segregation that sometimes happens, pushing people to low-income communities, communities that may not have the options of good schools, amenities, community character, and really open up the choice for families to have an even playing field."

By Maura McDermott

maura.mcdermott@newsday.commauramcdermott

Maura McDermott is a reporter on the investigations desk. Since starting at Newsday in 2012, she has also covered real estate and the business of health care.