NYC’s immigrant and tenant legal groups say contract delays put them in financial peril

Nonprofit legal groups tasked with assisting immigrant families and tenants at risk of eviction say they could soon slash services due to chronic late contract payments from the city.

In interviews and a letter to Mayor Eric Adams on Tuesday, the heads of more than a dozen city-contracted organizations described a dire financial situation that may soon force them to cut programs, declare bankruptcy or even shut down. They said the problem stems from the city’s failure to approve their budgets, accept invoices and cut checks for services.

“We are a lifeline to New Yorkers in need. However, mounting payment issues are making it impossible for us to operate and provide essential services to the New Yorkers who need us most,” wrote the group, which includes the leaders of the Legal Aid Society, New York Legal Assistance Group and Legal Services NYC.

Delayed contract payments have remained a chronic problem for nonprofits to whom the city outsources key social and legal services, despite a pledge from Adams to streamline reimbursement early in his tenure. A 2022 task force appointed by Adams and Comptroller Brad Lander found more than three-quarters of city-funded nonprofits had their contracts approved after the start date, forcing many organizations to take out loans and incur interest while they awaited payment. The task force report pinned the problem on lengthy backlogs, amendments requiring individual approval and limited staff capacity.

The delays have forced some organizations serving homeless young people and survivors of sex trafficking to shut down or come up with cash to stave off closure in recent years.

The groups appealing to Adams cited payment delays for the "right-to-counsel" program, which is meant to guarantee representation for low-income tenants facing eviction in housing court, and the Immigrant Opportunities Initiative, which provides legal help and social services for immigrant New Yorkers.

Those programs are crucial for supporting people in need amid a rise in homelessness and with President-elect Donald Trump pledging to deport immigrants en masse, said Legal Services NYC Executive Director Shervon Small, one of the administrators who signed the letter.

“If we're not there on the front line providing the services, then New Yorkers who cannot receive legal services will be deported and will be evicted from their homes,” Small said. “You will see families having to leave their homes. You will see families being broken up.”

City Hall spokesperson Liz Garcia said the Adams administration has taken steps to “streamline” contract payments and recently launched a new Payment Backlog Initiative involving the Human Resources Administration.

“We will continue to work closely with our nonprofit legal services partners to help ensure they have the resources they need to assist New Yorkers,” Garcia said.

The nonprofit executives who wrote to Adams are asking for a 20% advance on their contracts while they wait for the city’s Human Resources Administration to sign off on their budgets and issue payments. The city provided an initial 30% advance to cover some of the contracts over the first four months of the fiscal year, which began in July. But the organization leaders said they have long since used up that partial funding, with the fiscal year now in its fifth month.

Legal Services NYC has $182.1 million in city contracts for a variety of programs, like representing tenants in housing court, according to the city comptroller’s spending database. The organization is owed roughly $30 million, including more than $20 million from the last fiscal year that ended June 30, according to agency stats.

Small told Gothamist his organization has been taking out loans to pay staff and may soon have to cut programs and reject potential clients if it isn't paid what it's owed. Smaller nonprofits may also declare bankruptcy and shut down, creating a “domino effect” where their clients seek services from other strained nonprofits, he added.

New York Legal Assistance Group, another organization participating in the appeal to the mayor, has $78.5 million in city contracts. The largest sums are directed to eviction prevention and free civil legal clinics for low-income New Yorkers, according to the comptroller’s office.

The organization is now owed more than $9 million, according to NYLAG data. The group's president and CEO, Lisa Rivera, said the funding dilemma could force organizations like hers to lay off staff and cut programs.

“We're not going to be able to sustain our organizations, which is going to translate, quite frankly, to hundreds of thousands of New Yorkers without critical services in a time that they're going to need us the most,” she said.