How do you solve a problem as intractable as homelessness?

Either way, PSP grew big on the county contract. In 1994, the latest year for which the organization filed a tax return with the state attorney general's office, it had revenues of almost $5 million (about 95 percent of that from the county) and employed about 100 people. Treiber was making an annual salary of $77,000.

Around the same time, trouble began brewing in the shelter system. After years of operating with some excess capacity, the patchwork of county shelters, church basements, and motels was finally reaching the breaking point. Even the Drake, known to many on the streets as a last resort, crammed 562 people into what were supposed to be 545 beds and cots one night in January 1995.

County staffers estimated that to keep up with demand they'd have to build a new 150-bed shelter every two years, an option they didn't bother exploring further: The capital cost (some $50,000 per bed) and the political resistance from cities and neighborhoods seemed insurmountable. The final straw came when the Legislature and Gov. Arne Carlson agreed to terminate Work Readiness, the program providing a $201 monthly check to childless, nondisabled adults. Officials estimated that upwards of 1,500 people in Hennepin County could lose the roof over their heads as a result.

"We had a team of staff members going over the census on a daily basis," says Marge Wherley, supervisor for the county's adult housing unit. "We projected with computers, we did everything we could. But we knew we were going to be out of space pretty darn quickly." And, she adds, the people who were going to be left in the lurch would have to be taken care of with local property-tax dollars. There would be no state or federal funds to help take up the slack.

And so, says Wherley, "given that we only had so many beds, we were trying to make sure that we prioritized those beds for people with certain attributes--vulnerable adults, families with children, people whom we are required to provide shelter for. We didn't want to be in a position where the Work Readiness people were suddenly competing for those beds that we had. And so we felt we had no choice but to recommend that the board discontinue sheltering those people."

Which it did. In August 1994, the seven county commissioners voted to adopt a "Plan to Meet Emergency Shelter Needs in Hennepin County"--which turned out to mean exactly the opposite. The plan called for shelter beds to be "targeted to the most vulnerable homeless persons [such as] families with children and single adults with disabilities/special vulnerabilities. All other beds should be used on a first-come first-served basis." In practice, that amounted to showing everyone but the "most vulnerable persons" the door.

"We did what we had to do," says Wherley. "We declared a whole bunch of people ineligible because we didn't have a place for them to live. It was a success in that we were able to triage the space we had. But I don't think anybody thinks that that solved the problem of homelessness."

The new rules became effective in September, and by November the results were in. An average 1,013 people had slept in county shelters per night in August, down just slightly from the same month the previous year (a decline explained in part by the arrival on the scene of a new, 200-bed private shelter, Mary's Place). In November, the average nightly figure had plummeted to 681--down 30 percent from the previous year. Adults without children made up for the biggest part of the decline, but the number of families likewise dropped more than 25 percent. (Though the county still guarantees shelter for families, the new policy required AFDC recipients to pay for shelter out of their grant with a view to "removing incentives.")

For the Drake, the numbers spelled impending doom. Its daily population, and thus its revenues, fell 50 percent between September and December; two days before Christmas, PSP laid off close to a third of its staff. The county agreed to pitch in, increasing the reimbursement rate from $18.90 to $25.13 per person per night. For a family of three, that amounts to roughly $2,261 per month; the same family trying to make it on their own can count on a welfare check of $534.

The story that led to the final shutdown is a murky one. PSP leases its facilities from the Leamington Co., controlled by a wealthy local family whose most prominent member was the late Bob Short, a real estate and trucking magnate and the onetime owner of the Texas Rangers baseball team. His son, Brian, is an attorney and president of Leamington Co., whose current business includes a contract to manage most of the city of Minneapolis's parking ramps. Until recently, Brian Short also served as president of Catholic Charities.

Despite the potential for conflicts of interest--Catholic Charities also contracts with the county for housing services--Short's company and PSP seem to have had a mutually agreeable relationship. PSP got to rent the Drake for cheap at first, in return for promising to fix it up. As the group's income climbed so did the rent, finally totaling close to $60,000 a month for the Drake and the 410 combined. In addition, PSP paid all the taxes on the buildings and was responsible for all the maintenance.

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