City hearing on late nonprofit payments focuses on three council proposals as providers describe cash-flow crises

The New York City Council convened a hearing May 20 to examine long-standing delays in registering human-service contracts and paying nonprofit providers, a problem administration officials said they are working to fix even as providers and advocates described continuing cash-flow crises.

Council leaders held the hearing to review three pending measures — Intro. 12-47, Intro. 12-48 and Intro. 12-49 — that would speed cash to nonprofit contractors, create a department-level procurement office and require corrective action plans from agencies with many late-registered contracts.

The hearing, led by two committee chairs and the council speaker, featured testimony from the mayor's nonprofit and procurement offices, agency chief nonprofit officers and more than two dozen nonprofit leaders who described taking out lines of credit, cutting programs and struggling to make payroll.

Why it matters: human-service nonprofits deliver housing, meals, after-school programs, legal assistance and other essential services across the city. When contracts or invoices are delayed, providers say they must borrow or cut services; city officials say new technology, rule changes and staffing increases are reducing some bottlenecks but that substantial backlog remains.

Administration officials: scope and recent steps

Michael Sadillo, executive director of the mayor's office of nonprofit services, and Kim Yu, the newly appointed director of the mayor's office of contract services (MOX) and the city's chief procurement officer, described a complex set of causes for the recent crisis — a migration from legacy systems into the city's Passport procurement platform, a large increase in contracting volume tied to shelters and other services, hiring freezes that limited agency capacity and implementation of a $741 million cost-of-living adjustment (COLA) that produced many budget modifications.

"There are no quick fixes to the challenges we face. This is complex, demanding work, but I'm ready to…