A recent audit of Denver’s Office of Housing Stability revealed gaps in security and fiscal accountability within Mayor Mike Johnston’s campaign to provide shelter to homeless people.

Auditors noted that the city’s housing department — known as HOST — suffers from “poor organization” and could not provide documentation for tens of millions of dollars in shelter-related spending.

Some, including Denver Auditor Tim O’Brien and the department itself, said several developments and decisions led to the department’s current woes, notably the onset of COVID-19, the new mayor’s initiatives, and the influx of immigrants arriving in the Denver area after illegally crossing America’s southern border. The audit noted, for example, how the work to open a shelter “overwhelmed” staffers. 

“The COVID-19 pandemic exacerbated the housing crisis,” HOST Executive Director Dr. Jamie Rife said in her 2023 annual report. “Denver saw unemployment quadruple, and requests for rent and utility assistance increased 270%.”

America’s economy, along with the rest of the globe, came to a grinding halt after governments restricted or banned travel, shut down businesses, and prohibited large gatherings in response to the pandemic.  

Derek Woodbury, communication director for Denver’s Department of Housing Stability, said during the pandemic, the agency, the City and County of Denver and shelter providers “leaned in” to help ensure housing stability for residents, while rebuilding shelter capacity in light of mandated social distancing requirements.

Denver’s case is not unique.

Last week, the Los Angeles Homeless Services Authority endured a scathing audit, also citing “lax accounting procedures” and the “failure to reclaim millions of dollars in cash advances to contractors,” according to a story in the Los Angeles Times.

Like Denver, Los Angeles said many of its problems “occurred during a period of rapid growth in the context of the COVID-19 pandemic when it was under intense pressure to establish services to save lives.”

Former Denver Mayor Michael Hancock had established the Mayor’s Office of Housing Stability in September 2019 — before the pandemic — as a separate entity from the Denver Housing Authority. Hancock’s order charged HOST with overseeing planning, investment, policy development, and housing governance, as well as coordinating the city’s homeless shelter programs.

The idea was to centralize the city’s support for housing, shelter, and services under one roof, combining housing funds previously managed by Denver Economic Development and Opportunity, and homelessness funds previously managed by Denver Human Services.

Shortly after Johnston assumed office in July of 2023, he declared a citywide homelessness emergency and pledged to get 1,000 homeless people out of the streets. During his campaign for mayor, Johnston had promised to end homelessness in his first term.

At a press conference, he told reporters the emergency declaration was “necessary” to expedite construction permits and resources and open up special funding avenues within the city budget.

“The city underwent an immediate change in its approach to resolving unsheltered homelessness immediately following Mayor Johnston’s inauguration and the emergency declaration that was issued on his second day in office,” Woodbury said.

Over the next 18 months, the city expanded its homeless shelter problem, leaning heavily on $200 million in federal American Rescue Plan Act (ARPA) COVID relief funds, acquiring — either by purchase or lease — six hotels to house homeless people at a cost of more than $137 million dollars, according to city documents and previous reports by The Denver Gazette. 

Among the findings listed in the Denver Auditor’s report were training and staffing woes, with some city workers saying the speed with which one city shelter opened — The Aspen at 4040 Quebec St. — “overwhelmed” them.

“Our survey of department staff with shelter-related responsibilities found 15 of 20 — or 75% — said citywide emergencies and mayoral initiatives impacted their ability to do their jobs,” the report read.

Moreover, 55% indicated they “did not receive adequate training when they began their current roles.”

As the housing department continued its recovery following the pandemic and a major change in administration in 2023, the number of immigrants arriving from America’s southern border grew dramatically, sending city officials scrambling to increase shelter capacity and offer essential services.

Some 43,000 immigrants have come to Denver since December 2022. A review of travel spending by the city indicated that about half of them have stayed in Denver.

Meanwhile, funds from the American Rescue Plan Act, which allocated $350 billion in emergency dollars to local governments at the height of the pandemic, are set to expire in 2025. The federal dollars provided key funding for Johnston’s efforts to ramp up the infrastructure for his shelter initiatives.

“Like every American city, Denver faces headwinds from an uncertain national economic environment and the end of one‐time federal ARPA funds,” Johnston said. “We, therefore, must adapt and be prepared for any future scenario.”

The federal funding must be obligated by the 2024 and spent by the end 2026. 

In 2023, the city’s housing department received a budget of $217 million. By 2024, that figure grew to $242 million.

And with ARPA money expiring, the Johnston administration trimmed the agency’s 2025 budget to $226.3 million, with plans to leave five full-time positions empty.

Johnston’s office earlier pushed back on the audit’s findings, insisting that the report had “referenced data and information from more than eight months ago and is not an accurate representation of the current state of our shelter system.”

And responding to the audit findings, HOST officials also said “most of the recommendations were already well underway.”

“As a public agency, HOST is always working in a space in which it needs to act accordingly in light of underlying conditions that might surface,” Woodbury said. “The pandemic has presented many challenges, not the least of which is an increase in evictions following the elimination of federal rental assistance funds.”