An audit of Denver’s homeless encampment response revealed major holes in the program, notably that the city does not track how much it actually spends on enforcement, outreach and clean-up activities.

The city also does not “sufficiently” oversee the invoices for services it contracts with, including the amounts it pays vendors and how well the latter are performing, the audit said.

The city’s auditor released its report at a time when the city struggles to confront its homelessness crisis. A point-in-time count, which offered a snapshot of the problem in January of last year, showed that 4,794 people were homeless in Denver, 27.4% of whom were unsheltered.

The number of homeless people have been increasing since 2019, but the unsheltered population, in particular, exploded from 554 in 2019 to 1,313 in 2022. Many contend that this point-in-time data undercounts the magnitude of the crisis.   

“Addressing unsheltered homelessness and encampments in a humane and equitable way is a big area of concern for the public,” Auditor Timothy O’Brien said in a news release. “Yet, despite creating the Department of Housing Stability after our last audit, the city’s multi-agency response remains lacking in formal structure and fundamental guideposts like a clear budget and expense tracking mechanism.”

The audit said because Denver does not track the expenses, it “cannot know how much it is truly spending or whether its efforts are cost-effective.”

The report said Denver’s insufficient oversight “hinders the city’s ability to ensure all contract deliverables are met, that contractors are providing agreed-upon services, that the city is not overpaying, and that taxpayers’ dollars are being used effectively, efficiently, and for their intended purpose.”

The Auditor’s Office, which outlined details of the analysis in a press briefing on Thursday morning, also concluded that:

• Denver lacks sufficient procedures and reliable data to ensure homeless people who live in unauthorized encampments are treated equitably and lawfully.

• The city’s draft plan needs improvement to effectively guide agencies in their responsibilities over unauthorized encampments.

• The city’s encampment response program may not have appropriate staffing to achieve its goals and responsibilities.

In a statement, the city said it has agreed to make changes to how it oversees and tracks its response to unauthorized encampments.

The city said the audit focuses on a “need to refine and clarify policies, procedures and data-tracking” to ensure Denver remains compliant with legal requirements and treats homeless people equitably.

“Chronic unsheltered homelessness is the most complex issue any city will manage, and we appreciate the audit team, over the course of many months, taking a hard look at how our city is approaching the challenge of encampments,” Mayor Michael B. Hancock said. “More than a housing crisis, it’s a situation made more complicated amid a nationwide drug crisis, mental health crisis and continued fallout from the pandemic on our most vulnerable residents and communities.”

No tracking, insufficient monitoring 

An analysis of expenses showed neither the city nor any of its agencies has policies or procedures for tracking encampment-related expenses, according to the audit.

The auditors said they asked 10 city agencies involved in addressing homeless encampments, and the departments said they spent $13.65 million between January 2019 and June 2022. 

Of that amount, 22% or $2.98 million went to enforcement; 60% or $8.18 million went to outreach services; and, $2.49 million or 18% went to cleanup activities.

The auditors, however, believe the spending is likely higher because the tally did not include expenses from the Denver Police Department, only four agencies provided expenses for the audit’s timeframe of 3.5 years, and only one department — the City Attorney’s Office — gave documentation, such as invoices, to support its self-reported expenses.

“Because 90% of the agencies did not provide supporting documentation, we cannot validate all self-reported expenses,” the auditors said. 

The four agencies that provided expenses for the entire audit timeframe were Public Health and Environment, Fire Department, Transportation & Infrastructure, and Parks and Recreation. The Mayor’s Office, City Attorney’s Office, Denver Human Services, Public Safety, and Housing Stability agencies failed to do the same.

The auditors recommended identifying expenses to track and developing a tracking method. The city agreed.

The auditors also found that invoice and contract monitoring is inadequate, as not all city agencies adequately oversaw invoice approval and payment or contractor performance oversight. 

They recommended included establishing oversight of invoices and developing and documenting invoice policies and procedures. The city also agreed.

Denver risks lawsuits on homeless encampments 

The city complied with the “Lyall Settlement” in most instances, but Denver failed to fully follow the requirements when it came to property storage and disposal and homelessness sensitivity training, the audit found.

The auditors said the data that city agencies used to track encampment enforcement, outreach services and connections, and cleanups was “often unreliable.”

“Without full compliance with the Lyall Settlement and sufficiently reliable data, the city is at increased risk of further lawsuits on homeless encampments,” the audit said.

Denver faced a lawsuit in 2016 over the way it conducted its encampment sweeps, notably by immediately seizing property — and then discarding it. The lawsuit resulted in the Lyall Settlement, under which the city agreed to give advance notice of an upcoming cleanup operation and provide a written notice before removing people’s personal property. 

In 2021, the city created the Denver Unauthorized Encampment Response Program, and, in the following year, the Department of Housing Stability established a small team to work alongside agencies to provide transportation, case management services and housing connections. 

The audit found issues with missing property, storage data and tracking inconsistency. The city appears to provide access to services and equitably conducts assessments and cleanups, but had issues with inconsistent, missing or inaccurate data, the audit said. 

• For example, 2% of stored personal property was thrown away before the required 60-day hold time. Some personal property was also thrown away without 48 hours’ notice, and the city does not have policies and procedures in place for handling unattended property. 

• The city’s property storage webpage did not contain all of the required information, including a phone number to call with questions and a correct address for the property storage facility.

• One Department of Transportation and Infrastructure employee did not take the required homelessness sensitivity training.  

• The city did not conduct a formal needs assessment to determine the best location for the property facility, according to the audit.

• While they complied with the Lyall Settlement, their practices for communicating with people — such as those who speak a language other than English — may not provide equitable access to information.

“I think this audit itself proves that there needs to be a formal and centralized organization of this response,” said Matthew Wilmes, the Encampment Response Program Executive. “The program is needed to make sure that everyone at the table is sitting at the table and making sure that we are taking an equitable and appropriate approach.”

The program is new, the city’s spokespeople noted, so there are a lot of things to work on. 

“This is a brand new program that is continuing to change and evolve to address an ever-changing and evolving situation,” Wilmes said. 

The auditors recommend monitoring outreach data, conducting a needs assessment, developing and documenting policies and procedures for property storage compliance, monitoring compliance with employee training, and following the city’s records retention policy. The city agreed to the recommendations.

Define success

The response program may not be appropriately staffed to achieve its goals and responsibilities, the audit said.

The audit added that, with current levels, staff burnout and turnover poses a risk to the program’s effectiveness. 

The committee recommended a formal staffing analysis to identify existing staffing levels and determine needs to meet program objectives and goals. The city agreed. 

The city’s program management plan also needs improvements to effectively guide city agencies in their responsibilities.

The audit found that the city’s plan aligned with elements of leading practices, such as holding frequent meetings and including homeless people in their conversations, but should conduct a needs assessment. 

The city’s goals lack timeframes and defined metrics, the audit said, adding this means it lacks any real way to define the program’s success. 

The committee’s recommendations included documenting program need, establishing a goal timeline and developing performance metrics. The city agreed.

O’Brien, the city auditor, said he hopes Denver’s next mayor and city council would view the report as “the roadmap for how to start tracking expenses and better serve our communities in the future.”