In 2007, the Bloomberg administration established one of its signature anti-homelessness programs: the Work Advantage plan, which awards rental subsidies to homeless families transitioning out of city shelters.

The subsidy, controversially, was limited to two years. And for the thousands of families who enrolled in the program when it was first created, those two years are just about done.

Advocates and elected officials say they are bracing for a new wave of formerly homeless families flooding back into the shelter system, as they come off the subsidy program and run head-first into a persistent economic downturn.

“The Work Advantage program is fundamentally flawed, by being a poorly crafted, one-size-fits-all program that cuts off poor families’ housing assistance, no matter what their circumstances are,” said Patrick Markee, policy analyst at the Coalition for the Homeless. “In this economic downturn, many of those families don’t have the jobs or incomes to keep their apartments after their subsidy expires.”

The administration implemented the Work Advantage program in 2007, replacing a predecessor program that lasted only two years and was widely considered a failure.

Both programs were designed after the administration controversially scrapped a decades-old policy of giving homeless families priority for federal housing vouchers, arguing that too many people were entering shelters just to qualify for the subsidies.

The Work Advantage program was heralded by the Bloomberg administration as a vast improvement over its predecessor. But advocates say the Department of Homeless Services failed to anticipate the sour economy and predict that many of the enrollees now finishing their two years in the system— as many as 2,000 families in the current fiscal year and 3,000 in the next—will be forced back into city shelters.

As evidence, advocates point to data released by the administration last year tracking the number of families cycling in and out of the shelter system. In 2009, 13 percent of single adults who were transitioned into permanent housing ended up back in city shelters within a year—up from 9.9 percent in 2005, when the Section 8 voucher was revoked. For families with children, the recidivism rate was up to 3.4 percent, from just 0.8 percent in 2005.

DHS officials say they have so far seen only anecdotal evidence of “a couple isolated incidents” of Advantage program participants cycling back into the shelter system after their two years are up. But Markee said he finds that “absolutely unrealistic.”

In a statement, DHS Commissioner Robert Hess said the agency would not repeat its past mistakes, and has redoubled its focus on daytime drop-in centers, prevention services and speedy transitions from emergency shelters to permanent housing. “Today we continue the transformation of our system,” he said. “The Department of Homeless Services will not re-adopt failed policies of the past.”

Officials estimate that the number of families flooding back into the alreadyovercrowded shelter system this year could mount into the several thousands.

The prospect of sending the few thousand families that have managed, with the help of subsidies, to carve out a niche of their own back into the shelter system has some elected officials aghast.

“The idea of them going back to the shelter is unconscionable,” said Council Member Gale Brewer, who has long been involved in this issue. “You can’t even fathom it.”