NEW YORK, June 22 (Reuters) - Testimony began Wednesday in a trial over whether New York City must continue to pay millions of dollars in rent subsidies for formerly homeless New Yorkers, despite funding cuts. The plaintiffs' first witness was a landlord who assumed the payment was guaranteed.
"I thought the city's obligation was clear," the landlord, Andrew Reaccuglia, testified in the bench trial before Manhattan Supreme Court Justice Judith Gische.
"They gave me a guarantee that they were going to pay the rent, their portion of the rent, for a term of a year."
Reaccuglia said the documentation from the Advantage Program helped him pick one woman over others who wanted the place.
Whether or not the city is contractually bound to keep paying that subsidy is the crux of the case the Legal Aid Society brought against the city and its Department of Homeless Services on behalf of a class of residents who benefit from the Advantage Program, which subsidizes rent for families who would otherwise be forced to live in homeless shelters.
Earlier this year, the city announced that state budget cuts would make it impossible to keep funding the program, which began in 2007. The program is expected to cost $140 million in fiscal year 2012, $92 million of which was supposed to come from state and federal funds, according to the DHS.
Legal Aid insists that the city is still responsible. None of the paperwork the city provided tenants and landlords indicated that their guarantee to pay was based on the city's fiscal condition, Steven Banks, attorney-in-chief for the Legal Aid Society, said in court papers.
Since the lawsuit was filed on March 28, the case has progressed swiftly. On June 2, the Appellate Division, First Department, issued a ruling compelling the city to continue paying the subsidies. City officials said they are paying $15 million a month.
Konrad Cailteux, of Weil, Gotshal & Manges, which is providing pro bono representation to Legal Aid, questioned the landlord about the documents he received from a real-estate broker and tenant, A.T., whose full name was not used because she is a victim of domestic violence. That package included a certification letter saying the city would pay $594.80 and the tenant would pay $367.20 a month. One of the documents "guarantees" a portion of the rent would be sent directly to him, Reaccuglia said.
"This is what I had in black and white," Reaccuglia said. He also said he received the checks, including three months of rent up front, from the city.
On cross examination, city attorney David Cooperstein asked Reaccuglia about his 29 years of experience as a landlord.
"If you want somebody to be bound by a contract, it is indeed important that they sign it, correct?"
Reaccuglia agreed, and Cooperstein pointed out that no one from the city signed any of the documents that A.T. and the broker presented.
When asked why he didn't ask anyone from the city why they didn't sign the documents, Reaccuglia said he thought he had the answer. One of the documents used the word "guarantee," he said, and the checks he received from the city led him to believe he had a contract.
Testimony in the trial resumes Friday.
The case is Jasmine Zheng et al v. The City of New York et al, New York Supreme Court, No. 400806-2011.
For Jasmine Zheng et al: Steven Banks of The Legal Aid Society and Konrad Cailteux, Isabella Lacayo and Debra Dandeneau of Weil, Gotshal & Manges.
For New York City et al: Eric Rundbaken, David Cooperstein and Abigail Goldenberg of the New York City Law Department and Michele Ovesey of the Department of Homeless Services.
(Reporting by Jennifer Golson)