DENVER — Denver City Council voted on Monday to let a San Francisco-based nonprofit take over operations at one of the city's homeless shelters, despite concerns from council members over legal issues the nonprofit has faced in other cities.
The Aspen Shelter on Quebec Street has 289 units for adults experiencing homelessness. The Salvation Army currently runs the shelter, but the organization's contract with the city will expire at the end of the year.
Council members voted 9-4 to approve a contract with Urban Alchemy, a nonprofit that hires formerly incarcerated people to work at its shelters and run programs. The vote came after a lengthy debate over whether the nonprofit is the best choice to take over the shelter.
Urban Alchemy has faced allegations of fraud, overspending and data misrepresentation in other cities, including San Francisco, Los Angeles, and Austin, where it provides services.
The City of Austin ended its contract with Urban Alchemy after the city said five nonprofit employees misrepresented shelter exit dates and other records, according to an ABC-affiliate station in Austin. The San Francisco Controller's Office also flagged the nonprofit this year after the city controller said Urban Alchemy did not properly track employee output for two years in a row, along with other cash-flow issues.
Jess Montejano, a spokesperson for Urban Alchemy, said the controller's office in San Francisco recently took the nonprofit off its watchlist. He said the nonprofit fired the five employees who were involved in data misrepresentations in Austin. Urban Alchemy's Chief Talent and Development Officer Ian Clark-Johnson told council members during Monday's meeting that the nonprofit self-reported the data issues.
"That is part of some of the internal measures that we have in place, where we have a data quality team that's checking our data consistently, weekly, randomly and monthly, and also cross checking reports, and we were able to catch that data inaccuracy before the quarterly report was submitted, self reported and, you know, corrected it," Clark-Johnson said.
According to the nonprofit's website, Urban Alchemy runs services in San Francisco, Oakland, Los Angeles, Culver City, Portland, Birmingham, and Santa Fe.
"I remain extremely concerned," Denver City Councilman Paul Kashmann, who represents District 6, said. "I'm just not sure that this is the direction that Denver needs to go."
"My community deserves so much better than we what we are seeing from the administration to bring another contract to the tune of $30 million in which we are already seeing accusations and concerns," Denver City Councilwoman Shontel Lewis said.
Deputy Director of Shelter and Stability for Denver's Department of Housing Stability (HOST) Jeff Kositsky said the nonprofit was one of three that showed interest in the city's request for proposal to operate the shelter. According to his LinkedIn page, Kositsky previously worked as the chief growth officer for Urban Alchemy from November 2021 to May 2024.
"There was not a great deal of interest when we pulled out the RFP to operate this site, and we went with provider, the panel went with the provider that they thought was the most qualified and the most able to operate the site," Kositsky said during Monday's council meeting.
Several city council members said despite their concerns with Urban Alchemy, they voted to approve the contract to keep the homeless shelter from shutting down if the city could not find a new provider to take over by the end of the year.
"My concern is that we are out of options, and the only other option that we're going to have at the end of the day here is to put people back out on the street in the freezing cold," Denver City Councilwoman Amanda Sawyer said.
Denver City Councilman Kevin Flynn said he voted to approve the contract because he trusts that the city's switch to performance-based pay for shelter providers will hold the nonprofit accountable.
"The reimbursement on this isn't how much did you spend last month, and here's the money for it, but it's how many successful exits did you have, how many interviews, how much training, how much counseling, how much other services have been provided. And your pay is based on that," Flynn said.
The Salvation Army currently operates all three city-owned shelters, including the Aspen Shelter, Stone Creek Shelter and the Tamarac Family Shelter. The organization announced in August that it will not renew the contracts with the city next year, citing increased operating costs.
