In case you haven’t seen it yet, this week’s New York magazine has an excellent story on the Podolskys, the family that is making a fortune charging the city $3600 a month per unit for run-down, dangerous buildings packed with cubicles that the city is using as homeless shelter. The story describes the units as “tiny, often windowless cells so narrow that you could stand in the middle and touch either wall.”

The story, by Andrew Rice, nails the reason for this: The Bloomberg administration’s stripping of subsidies for proper rentals for people in need of housing and herding them into shelters instead. Excerpting from the story: “It’s literally the biggest policy mistake of the Bloomberg administration,” said Patrick Markee, a senior analyst for the Coalition for the Homeless, which opposed the shift from Section 8 vouchers. “It’s the keystone of why family homelessness has exploded.”

But importantly, the story also reminds us that mayor-elect De Blasio took $35,000 in campaign donations from these slumlord entities, before being embarrassed into giving the money back. The story asks: Will De Blasio have the wherewithal to put his money where his mouth is when it comes to safe, stable housing solutions for homeless New Yorkers and move city dollars from payouts to slumlords back into subsidies for decent rentals?

If you don’t have time to read the whole story, here are the policy excerpts below:

“Of course, for much less than that amount, the city could have rented the Websters a modest but decent apartment. In fact, the city’s approach to homelessness used to include rental subsidies for its poor residents, allowing the homeless to jump to the head of the line for federal Section 8 vouchers. But Bloomberg ended the policy, believing that it created an incentive for poor households to enter the shelter system. The administration’s replacement, a short-term subsidy, was eliminated owing to state budget cuts in 2011.”

“The cluster system has been the target of persistent criticism, in part because it appears to create more homeless people. In June 2012, Torres found a letter taped to the door of her apartment saying that her lease was about to be terminated. The letter was written in legalese, but it seemed to say there was a problem with her Section 8 eligibility. Soon afterward, an eviction action was filed in court.”

“I wanted to ask the architects of Bloomberg’s homelessness policy why the city continues to do business with the Podolskys, but DHS officials declined interview requests. Privately, however, current and former agency employees advanced a rationale. The city needs beds, and it has to seek them from the willing suppliers: the kind of people who inhabit the bottom reaches of the real-estate market.”

“Like many creations of the Bloomberg era, the shelter system is now under reassessment. Liu tried to block the West 95th Street shelter contract, though Bloomberg sued him and the facility remains open for now. Last month, after protests from Carroll Gardens residents, Buildings Department inspectors descended on an empty Podolsky condo building slated to become a 170-bed shelter. Its front window is now pasted with a VACATE sign, warning of conditions “imminently perilous to life.”

“De Blasio has promised to reform the city’s “disastrous and broken homelessness policy,” reinstituting rental subsidies and ending the cluster program. But the mayor-elect has also been embarrassed by reports that he raised more than $35,000 from shelter landlords and contractors linked to Hess and Housing Solutions USA. In May 2012, Hess threw the candidate a fund-raiser, attended by Lapes, who exploited a loophole to give twice the legal limit. De Blasio returned some of the contributions and has rejected any suggestion of improper influence.”

“The Podolsky’s business model, however, has outlasted many mayors; it has proven as persistent as the problem is intractable. Last week, a federal study showed a 13 percent rise in homelessness in New York last year, even as the population dropped nationally. On West 148th Street in Harlem, workers recently began subdividing a brownstone into cubicles. Winter is coming, and it promises to be a lucrative season for the Podolskys.”