May 13, 2024 - News

The "fiscal cliff" facing Hennepin County's homelessness response

Illustration of a sleeping figure on a bench on a football field.

Illustration: Lindsey Bailey/Axios

Hennepin County officials are warning of a looming "fiscal cliff" for homeless services just a year-and-a-half away.

Why it matters: Federal pandemic relief money has helped the county make long-sought reforms to its emergency response to homelessness, but that money will run out at the end of 2025.

  • New improvements to the shelter system could disappear β€” unless something changes.

Yes, but: There's still time to find new funding sources.

  • "We're talking about it now, more than 18 months out, because we know our community needs these services," Hennepin County director of housing stability David Hewitt told Axios.

The big picture: Hewitt says the relief money has helped lower shelter barriers and pushed county shelter use to an eight-year high.

  • The county's official count shows 2,843 people as "sheltered" β€” nearly 86% of the total homeless population, a rate well above the national average for large U.S. cities.

Threat level: The services most at risk of losing funding are essentially the field hospitals of the broader battle against homelessness: low-barrier, emergency shelter space.

  • When relief money expires, non-profit Avivo would have to close its tiny home village in Minneapolis. It's helped shepherd more than 500 people into permanent housing since 2021 and costs around $5 million annually to run.
  • A second low-barrier shelter serving the Native community, Homeward Bound, would also lose funding, Hewitt adds.
  • Without more money, more than 320 beds worth of shelter space currently open 24/7 would revert to being overnight only.

Plus: Relief money has also funded what Hewitt called the county's "biggest priority for reform" in its emergency response: case managers who help unhoused people navigate a complex path to permanent housing.

By the numbers: Since the pandemic's onset, Hennepin County's annual spending on homeless shelters and crisis response grew from $15 million to around $50 million.

  • The federal funds cover a large portion of that increase, including $13 million currently going to shelters.

The fine print: Relief money is also helping the county cover the rising costs of the county's longstanding guarantee to shelter at-risk families with children.

  • The county will continue to do so without relief dollars β€” but likely at local property taxpayers' expense, Hewitt said.

What's next: A search for new funding and sustainable solutions.

  • Avivo leaders say they've explored purchasing the North Loop warehouse that houses their tiny home village, which they say would be more financially prudent than continuing to lease the site with public funds.
  • "We just would like to work with every partner that's willing to show up and figure out how we can create a sustainable model," Avivo's John Tribbett told Axios, "So that we can truly consistently address the problem."
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