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Shelter security and financial disorganization highlight Housing Stability issues

the Auditor at your service

Timothy M. O’Brien, CPA, Auditor of Denver

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The Denver’s homeless shelter system plays a critical role in addressing homelessness. However, in our most recent audit, my office found Housing Stability has ineffective systems for monitoring shelter provider performance. The city department also failed to ensure safety measures at one shelter, track overall shelter-related expenses, and enforce invoice contracting requirements.

The city contracted with the Salvation Army to operate a shelter at a former DoubleTree hotel and provided them with a security budget of $807,000. Several months later, the Salvation Army had not yet hired a contractor to manage a security presence at the property. In March 2024, two guests were shot and killed. Weeks later, a third guest was shot but survived. The city took over security at the property following the first shooting.

Housing Stability’s failure to enforce contract terms had effects beyond security. Contract terms include financial oversight of expense reimbursements. Yet, Housing Stability was unable to provide documentation identifying overall shelter-related spending between January 2022 and March 2024. The inability to measure expenses means the department cannot effectively monitor or enforce accountability for shelter spending. Based on available data, we estimated Housing Stability spent nearly $150 million on shelter expenses during this period but the department does not specifically track this information.

Shelter security and financial disorganization highlight Housing Stability issues

Housing Stability failed to hold providers accountable for their use of city funds. The department received 55% of reviewed invoices past deadline. One shelter requested duplicate reimbursements and Housing Stability issued them. If shelter staff disregard contract terms, they may disregard other important financial controls.

We found Housing Stability was not requiring shelters to provide meaningful documentation for reimbursements. However, this policy does not comply with the city’s Fiscal Accountability Rules. We also recommended Housing Stability end its new cost-reimbursement policy, but the department disagreed.

Separately, my office found issues around lax protection of sensitive information and insufficient nondiscrimination policies.

We found sensitive confidential data -such as birth certificate orders containing contact information and family information of shelter guests- was left unprotected in a shared drive that staff in other city agencies could access.

Some shelters we reviewed also lacked sufficient documentation of their efforts to prevent discrimination against guests. In one case, the Salvation Army’s employee handbook conflicts with the contract with the city. The handbook says the Salvation Army will follow nondiscrimination law unless it goes against their religious practice. To say that they are going to follow the law, except for when its different from their religious practices is unacceptable.

Housing Stability agreed with all but one of our recommendations, but I will conduct a follow-up to ensure they are doing what they have promised. It’s my mission to keep city agencies accountable for the people I serve.