On a weekend last November, a group of parents and kids were hanging out in the parking lot of the Human Solutions Family Center, talking about an incident that had woken them up abruptly that morning.
“The ceiling fell in,” said Joe Tomasso, who was staying at the shelter with his girlfriend and her three kids. “Possibly from the water. Definitely from the water. It was a small spot. It wasn’t like the whole roof.”
Families at the shelter, which is run by the nonprofit Human Solutions on behalf of Multnomah County, said the roof had been leaking for some time. County records show a portion of it failed due to a leak in October 2016, causing a 2-by-3 foot section of drywall to fall. Two months after that, Human Solutions reported that insulation came down after a leak and as they tried to treat mildew caused by water intrusion.
In the two years of the shelter’s operation, Human Solutions estimates it spent $40,000 hiring contractors to patch the leaks. That’s eight months in mortgage payments on the building.
This winter, as pieces of drywall continued to soak through and fall despite efforts to patch the holes, Human Solutions spent $13,000 on a big blue tarp to cover the whole roof.
“At no point was water pouring in on sleeping people,” said Andy Miller, the executive director of Human Solutions. “Were there times when we had to get a bucket out to catch a drip that was coming through the ceiling until we could get a contractor in the next day to address the leak? Absolutely.”
Earlier this month, the roof troubles led county leaders to evacuate 110 parents and children from the shelter into motels.
“Yesterday I learned that the roof at one of our homeless family shelters was failing,” County Chair Deborah Kafoury said as she announced the Feb. 8 move. “I took immediate action, pulling together resources from across the county to make sure that families had a safe place to sleep last night.”
In fact, records show that the faulty roof should have been apparent to county and nonprofit leaders when they made the deal to buy the shelter building.
County leaders allocated $700,000 to help Human Solutions acquire and remodel a 40-year-old building that had been home to a vegan strip club without reviewing an independent building inspection first. Human Solutions and Multnomah County entered into a deal that could put Human Solutions at risk of defaulting on its mortgage if the county does not continue to operate a homeless shelter at the site.
To understand how this all happened, it helps to look back to 2015, when the county agreed to help Human Solutions buy the property.
Finding sites for homeless shelters is hard. Human Solutions had, for years, run a winter warming shelter for families. Starting in the spring of 2015, leaders at the nonprofit tried to interest county officials in helping buy several properties to house a year-round family shelter that could stay open 24 hours a day.
Those deals fell through for a variety of reasons. In one case, the mayor of Gresham opposed the site they’d chosen. In another, a building would have required expensive seismic upgrades.
Records show initial friction between Human Solutions and Multnomah County staff over the notion of purchasing a permanent site for a shelter that would be funded by the county but operated by an independent contractor.
To justify the time and expense of remodeling a building, and to ensure they could pay the mortgage or their lease, the leadership at Human Solutions asked Multnomah County to guarantee that they would win contracts with the county to provide shelter services in future years. County staff repeatedly refused to do that.
“We don’t do multiyear contracts,” Mary Li, with the county’s human services department, wrote to Liesl Wendt, the department’s director, on May 12. “We renew contracts annually based on performance and availability of funding for up to five years per county administrative purchasing rules. I’ve said it to them many times, including in the last two weeks. They are trying to see if they get a different answer from the Chair.”
Li also worried that helping the nonprofit buy a building might run afoul of the county’s procurement practices.
“This is nuanced,” she wrote. “If they purchase a building based on us always funding them and someone else wins the RFP to provide services, we are in a mess. On the other hand, we do need a permanent location for the warming center no matter who runs it. ”
In August 2015, Human Solutions approached the county about a new potential shelter site: the former Black Cauldron strip club in East Portland.
It was a big building with the right zoning, and neighbors supported the idea of siting a shelter there, a big plus. Neighborhood support is often difficult to muster for government agencies trying to open new homeless shelters. Neighbors in Foster-Powell, for example, are currently fighting county and city plans to put a shelter in their Southeast Portland community.
“We were in a rare position where the use that we were contemplating for the building was actually considered by the neighborhood to be an improvement from its prior use,” Miller said.
For both the county and Human Solutions, the real selling point wasn’t the building. It was the land underneath, a parcel close to an acre, with a parking lot attached. In the long term, Human Solutions proposed redeveloping the site and building an affordable apartment complex with 70 units there.
“It is an excellent site with good redevelopment potential for a project that could include affordable housing and commercial development like a green grocery,” Miller wrote in an email to officials at Multnomah County.
This pitch helped convince Kafoury, the county chair, to invest county money.
Portland is short tens of thousands of units of affordable housing, and quickly rising rents are making it harder for nonprofits to move temporarily homeless families back into permanent housing.
In September 2015, the strip club’s owner gave Human Solutions an ultimatum: Buy now or he would split the lot in two. That would likely have been the end of the long-term plan for affordable apartments on the land. So on Sept. 4, 2015. Human Solutions put down a $50,000 non-refundable deposit.
On Oct. 22, 2015, county commissioners agreed to loan Human Solutions $300,000 to help buy the property. They also agreed to forgive $50,000 of the loan for every year Human Solutions operated the shelter, and they gave the nonprofit $397,697 for renovations.
Human Solutions also took out a $700,000 loan from the Housing Development Center Community Fund to cover the rest of the purchase price. The HDC Community Fund provides low-interest loans to affordable housing nonprofits.
Records show that loan from the HDC Community fund — and Human Solutions’ plan to repay it — raised some of the same difficult questions about the county’s competitive bidding process that staff had flagged as potential problems months earlier.
Human Solutions is repaying its loan from the HDC using a portion of the money it receives from Multnomah County to operate the family shelter. Human Solutions pays HDC $5,000 a month. Running the shelter costs approximately $100,000 a month, according to Human Solutions.
In a Sept. 24, 2015, email to county staff discussing the property deal, Miller again asked the county to consider whether they could guarantee Human Solutions the contract to provide family shelter in future years.
“You were going to check in to the requirement that this service contract go out for competitive bid and, if it must, whether the County would require any future awardee (if not Human Solutions) to lease back this site from us. The operating contract is the source of repayment on the primary loan,” he wrote.
In the end, the county, Human Solutions and the HDC Community Fund reached a deal: If Human Solutions lost the county’s operating contract for the family shelter, the provider who won it would rent the shelter building from Human Solutions. That would enable Human Solutions to cover their monthly mortgage payments.
The HDC Community Fund made this a condition of their $700,000 loan.
The county also was given an option to buy the property if Human Solutions decided to redevelop it.
Both Kafoury and Miller say that before Human Solutions closed on the deal to purchase the site, and before the county board approved its loan to the nonprofit, they conducted normal due diligence and a building inspection.
They say the inspection suggested the roof would need to be replaced at some point in the future.
“This roof had 5 to 10 years of life left in it,” Miller said.
But public records contradict public statements Miller and Kafoury have made about the roof.
Multnomah County provided OPB with thousands of pages of due diligence documents it received from Human Solutions in October 2015, while the deal was being worked out.
Before the sale went through, Human Solutions had the property tested for lead and asbestos and other environmental hazards. They completed a detailed property survey and had an appraisal done. The appraiser reported that the building was in “fair to average condition” and estimated it needed approximately $60,000 in deferred maintenance.
But the county has no record of a standard pre-sale building inspection or a professional assessment of the roof.
Last week, Human Solutions sent OPB one more document: It’s a one-page letter written by the contractor hired to remodel the building, Colas Construction.
“The roof needs some basic maintenance but appears to have another 5 years of useful life,” wrote Marc-Daniel Domond, the Colas project manager on the remodel.
Attached to the letter is a more detailed report written by a roofing company, RyKi LLC. That report includes photos of damage — and recommends replacing the roof.
“If your budget isn’t there yet then we are here to help you get by the best we can with regular maintenance and repairs to see if you can get a few more years out of the roof,” the letter states.
It’s not clear whether county facilities staff conducting due diligence on the loan to Human Solutions ever received this report. Miller said Human Solutions hasn’t been able to determine whether the document was sent to anyone at the county.
Kafoury couldn’t say whether her staff had ever read it.
The roofer’s report could have jeopardized or changed financing of the deal, because it suggests the property needed immediate repairs beyond the proposed remodel. The report was dated Oct. 19, 2015, just days before county leaders voted to help Human Solutions buy the property.
Human Solutions’ primary lender, the Housing Development Council, had asked to review the project’s rehabilitation budget as a condition of closing and had said “the budget must ensure that the roof will be viable for five years.”
Miller said he stands by Human Solutions’ decision not to replace the shelter’s roof back in 2015.
“It wasn’t intended to be a permanent shelter. It wasn’t intended to last 60 years,” he said. “It was intended to last six years.”
Now the county has suspended operations at the shelter after just two.
County Commissioner Loretta Smith voted to approve funding for the shelter purchase in 2015, but said before she cast her vote she was concerned that at the county was awarding money to Human Solutions for a shelter facility without seeking competitive bids.
“There may have been a better site that didn’t need all of this deferred maintenance,” she said this week.
Smith said she plans to ask the Multnomah County auditor to review how Human Solutions spent the $398,000 the county awarded the nonprofit to renovate the building.
The Joint Office has promised to conduct a full inspection of the building, including the roof and other systems, to determine whether the shelter can reopen. Human Solutions is leading that inspection.
County officials declined to say whether the loan and trust agreements it has signed with Human Solutions will obligate the county to make mortgage payments on the property if the shelter is forced to close or move.
Marc Jolin, director of the Joint Office of Homeless Services, said the loan agreements will not influence the decision over the shelter’s future.
“When we are talking about families with kids, the priority is going to be to ensure that environment is safe for the kids,” Jolin said. “Whatever the arrangements are, at the end of the day, that’s not a value that’s going to be sacrificed in this process.”
Jolin said he defends the county’s loans to Human Solutions and the quality of the remodel that took place before families arrived.
But he also said the county opened this shelter before he was hired as the head of the Joint Office of Homeless Services and before the joint city-county office even existed.
Jolin said the office is shifting away from quick deals to open inexpensive, temporary shelters in makeshift places like old strip clubs and empty offices, in favor of planning more permanent facilities
“We can open shelters quickly in the spaces that are available to us, but as we do that we need to also be looking for the better site, the better building, one that we can make a sustainable investment in,” he said.
It’s time, he said, to accept that the housing crisis is going to be with us for a while. We’re going to need to start building shelters that will last.
This is the second story of a multipart series by OPB detailing health and safety issues at Portland’s largest shelter for homeless families with children. Read the first part here.