Council hearing spotlights bill to require quarterly advances for certain human-service contracts

The City Council's Committee on Contracts on Oct. 23 heard competing views on Intro. 1392, a bill sponsored by Speaker Adrienne Adams to require quarterly advances for certain human-service contracts and to pilot advances for large contracts. Speaker Adams said the bill would stop nonprofits from "collectively pay[ing] millions of dollars on bridge loans because our procurement process isn't working the way it should." She described the proposal as a way to give providers predictable cash flow so they can focus on services rather than borrowing costs.

Adams described the bill's mechanics: beginning Jan. 1, 2026, covered agencies would provide at least 25% of a contract's annual value each quarter for contracts with the Department of Homeless Services (DHS) for temporary housing assistance and the Mayor's Office of Criminal Justice. For multi-year contracts the advances would continue in subsequent years, and the bill would launch a pilot on Jan. 1, 2027 for contracts over $1 million. Adams said the bill includes safeguards: advances would not apply when incompatible with state or federal funding, agencies could withhold advances from contractors who fail to submit required invoices for three or more consecutive months, and agencies must establish processes to reclaim funds if services are not delivered.

Administration witnesses supported the goal of more predictable payments but warned the timeline and implementation as written pose operational and fiscal challenges. Yesenia Markland, First Deputy Director of the Mayor's Office of Contract Services (MOCS), told the committee "the proposed January 2026 start date for quarterly advances is not feasible for DHS and Mach j," and urged a pilot approach and more time to align systems, staffing, and recoupment processes. Markland said advances require ongoing invoicing and recoupment workflows so the city can account for advanced funds; she told the committee that in fiscal year 2025 the city issued about $3,200,000,000 in advances and "approximately 796,000,000 has yet to be recouped." Michael Sadillo, Executive Director of the Mayor's Office of Nonprofit Services (MONS), said the administration is open to pilots and partnership but emphasized implementation details and cross-agency coordination.

Nonprofit providers urged action. Kristen Miller of Homeless Services United testified that while some progress has been made, "providers still have months of catch up in pending budget actions, updates, and invoice approvals that are prohibiting them from being reimbursed for the services they have already performed." Miller said an HSU sample found one-third of member organizations have over $189,000,000 in outstanding budget actions from fiscal years 2020'2025. Dan Layman of HelpUSA said his organization has seen higher advances for FY26 but still spends "hundreds of thousands of dollars on interest for working capital line of credit loans to bridge these cash flow delays," and he called for clear reconciliation, recoupment, and audit procedures as part of any advance model.

Council members pressed administration witnesses for data and timelines. MONS and MOCS provided progress statistics: MOCS reported 88% of human-service contracts for FY26 were submitted to the controller on time, and MONS said the overall contract backlog had fallen from over $11 billion in 2022 to under $3 billion. Administration officials pledged to provide requested provider- and backlog-related figures within 24 hours.

The committee did not take a vote. Members and witnesses generally agreed on the goal of more predictable vendor cash flow, but they diverged on how quickly the city could shift from a largely reimbursement-based model to a quarterly-advance system without causing fiscal or operational risks. The administration repeatedly proposed a phased pilot and additional rulemaking to align systems, retrain staff, and preserve ability to recoup advanced funds.

Provenance: topic introduction at 00:10:51 ("Intro number 1392, which I also sponsored, would expand standardized ...") and last discussion in committee at 02:06:15 (public testimony from HelpUSA).