Housing first, paid last

How one small business disrupted the status quo on homelessness in Spokane

Tales of a small business vs bureaucracy get my attention. Daniel Klemme and Dane Jessen’s woes as a small business having a hard time collecting from the City of Spokane hit my soft spot. They came with references for integrity from people I trust. They have a special status as a Washington Social Purpose Corporation, a for-profit business with a social mission to solve the homeless crisis. In addition, Housing Navigator SPC has a unique concept for making more affordable housing available for a broader range of tenants, doing it sooner than any amount of public funding can accomplish and at less cost.

And then the story expanded into the politics of Camp Hope and a hard-fought 2023 mayoral race in Spokane.

My husband read today’s column on Housing Navigator SPC, Camp Hope, the City of Spokane, the Department of Commerce, Empire Health Foundation, the Spokane Low Income Housing Consortium, and the politics surrounding the mayor's race and said, “That’s confusing, you need a graphic to follow all the players.”

I wasn’t offended, it is confusing and it should be more than an op-ed column on the Opinion page. It deserves detailed investigative reporting by a team with more experienced journalists than I. That’s why I turned to Jonathan Choe, with his two decades of experience in television news, an Emmy winner, and currently doing deep-dive reporting on the homeless crisis in Seattle. He covers homelessness issues for the Discovery Institute’s Center on Wealth and Poverty Fix Homelessness initiative as a Senior Fellow with the Institute. Check out his full bio on the Discovery Institute website here.

But as it turns out, a background in architecture and construction contract administration has been helpful in following what quickly grew beyond a simple tale of a small business having trouble collecting Accounts Receivable from the City of Spokane.

It would be easy to portray the problems as mayoral mismanagement by the City of Spokane or partisan politics at the Dept of Commerce, depending on whether you were Team Woodward or Team Brown in the 2023 mayor’s race. There are enough odd bits in the research so far to provide lightweight support for clickbait headlines. It would be easy to assign blame to whoever you want to throw under the bus.

But I'm Team Taxpayer. If we're going to spend money on something, we need to do it effectively. To me, it looks like a systemic problem with how we're managing social services contracts at every level of government.

Highlighting wasted spending by the homelessness industrial complex is a Choe Show focus, and he came to Spokane this week to interview Daniel Klemme and Dane Jessen, co-founders of Housing Navigator SPC. We also reached out to former Sheriff Ozzie Knezovich, Mayor Lisa Brown and former Mayor Nadine Woodward. Woodward declined to comment on camera, saying she didn’t want to be the kind of former mayor who criticizes her successor.

Jonathan Choe’s reporting is on line here:

Social services workers are not drawn to the field because they want to manage contracts. They want to help people, and managing complex contracts is a different skill set. The need for a business-focused approach to contracting was a point made by the report on the proposed Spokane Regional Authority for Homelessness, Housing, Health and Safety, something I wrote about last August.

One of the advantages of the regional authority would be more efficient contract management and prompt payment, taking the cash flow issues of multiple small service providers into account. Companies like Housing Navigator SPC and the small nonprofits working at Camp Hope have little margin to absorb a hit from delayed reimbursements.

There was a push in August to set up the new regional authority before the November elections to avoid having to start over with new leadership in municipal and county government, but that didn’t happen. The Spokane City Council rejected the plan and deferred the decision to the next mayor and council. The uncertain status over the summer of 2023 added another layer of confusion to an already muddled situation for city staff.

There was staff turnover at the city. Every handoff introduced delays as Housing Navigator waited for new staff to be onboarded. Interpretations on how to file invoices sometimes changed with these changes in staff, according to Daniel Klemme, founder of Housing Navigator. Managing multiple contracts is a challenging task.

Coordinating the work of a mix of new and experienced contractors of different sizes and capabilities on a single project is similar to the complexity at the Camp Hope Right of Way Initiative. There’s a reason construction management is expected to grow “faster than the average for all occupations” at 5% per year over the next decade, according to the Bureau of Labor Statistics. Any project with multiple parallel contracts runs the risk of gaps and misunderstandings. Funded under a single prime source at the Department of Commerce, there needed to be a clear point of control and coordination from Commerce for their contracts with the City of Spokane, Empire Health Foundation, Volunteers of America, and Catholic Charities of Eastern Washington.

A project manager also needs to be aware of new subcontractors operating on tight cash flow and coach them through the hoops for prompt payment. Project meetings need to make efficient use of time, with clear meeting minutes and follow-up assignments; subcontractors under separate contracts don’t have an obligation to participate but they will if content is meaningful to their success. Documentation of decisions and conversations is critical, not difficult with time-stamped email. Contracts are rarely terminated for cause unless there is egregious behavior, so the termination letter to Housing Navigator stands out as a bit odd, unless the intent is to block a vendor’s future opportunities for contracts. It’s much less risky to simply exercise the option to terminate without cause, and the closing of Camp Hope would have been easy to point to as a reason to terminate for convenience.

Not all the dots are there to make connections on the management or the politics. Public records requests are necessary to fill in the gaps between the records already obtained, and that will be a fun new experience. Here are my questions, and don’t hesitate to add your own in the comments:

• Who was the project manager (or who were the project managers) for the Department of Commerce? Was one person working with all Spokane area contracts? Was there turnover that affected continuity?

• Who was involved or not involved in deciding that Housing Navigator SPC would not be included in the primary Department of Commerce contract for housing people exiting Camp Hope? What was the plan for finding housing without Housing Navigator services? The City of Spokane contract with Housing Navigator wasn’t signed until April 2023, the Empire Health Foundation contract with Commerce preceded it by six months. Why was Housing Navigator isolated from the rest of the primary team assembled under Empire Health Foundation?

• How does the contract from Commerce to upgrade the city’s IT system fit into this picture? Commerce said the City of Spokane was maintaining its own homelessness tracking database (acronym CMIS) separate from the state and “asked for help to integrate with the current state system, in part because of huge turnover in their IT department” per a Commerce spokesperson via email. Penny Thomas went on to write “I believe city officials at the time also chose to allocate funding to SLIHC to do data entry, again because of lack of capacity and also likely SLIHC’s knowledge of and experience with the required data.”

• Who decided to pull $150,000 from the Housing Navigator original contract and where did it go, since Empire Health Foundation says they never received it? Was that a City of Spokane Decision or a Department of Commerce decision?

• Who had access to the City’s CMIS database for input of data besides SLIHC? Empire Health’s September 2022 contract directly with Commerce refers to coordination of outreach and data collection. Laura Martin, Vice President of Operations for Empire Health, said in an emailed statement “this only applies to parties subcontracting with EHF” and data entry was subcontracted to the Spokane Low Income Housing Consortium. For which entities did SLIHC actually perform data input as a subcontractor to Empire Health under the Right of Way initiative?

• Who was involved or not involved in negotiating or dictating the contract amendment for Housing Navigator that changed the terms from housing 30 to housing 15 per year, split the grant amount between fiscal years, and extended their contract through FY2025?

• Why extend a contract for emptying Camp Hope through FY2025 when Camp Hope was scheduled to close by June 30, 2023 and in fact closed earlier?

• How does this mesh with public statements from Commerce saying Camp Hope was officially closed June 9, 2023. Were referrals still being made for housing after June 30, 2023?

• In a late-breaking follow-up email response after the newspaper was already on the streets, a Commerce spokesperson said “There was not funding available to fund more than 15, so getting back in line with the approved budget was part of the process.” Housing Navigator SPC invoices indicate they were within the total budget. The number to be housed was interpreted by Housing Navigator as a performance target as long as they stayed in budget. That interpretation is supported by the email thread from November 3, 2023 wherein a city staffer said “typically exceeding outcomes is viewed as positive but for reasons beyond my understanding, the number of units you may secure under the grant is capped at 15” based on guidance from Commerce staff. Is there a paper trail from Commerce with instructions to the city? What documentation exists to clarify the performance target versus a hard lid interpretations? Was the intent to house the first 15 maximum on an ongoing basis (i.e. paying rent for the same 15 in each fiscal year rather than 15 new placements in the second year)?

• What documentation exists to support the letter retroactively registering complaints about Housing Navigator performance, a letter dated November 11, 2023 from Ben Stuckart as Executive Director at SLIHC? Is it an odd coincidence or not a coincidence that complaints allegedly going back four months were documented after the outcome of the mayor’s race was becoming clear?

• Who was involved or not involved in the decision to terminate the Housing Navigator contract per the letter from Interim City Administrator Garret Jones dated December 4, 2024 (postmarked December 8, 2024)? Is the gap in dates significant? What documentation exists to support termination for cause and why not simply terminate for convenience?

• To whom was responsibility for Housing Navigator clients transferred by the City of Spokane? The new contract and scope of work may tell an interesting story.

Housing Navigator SPC has a concept that can play a critical role in rapidly rehousing people who have high barriers to placement in permanent housing. They did it by building positive relationships with landlords, developing incentive payments to encourage rehabbing existing buildings, and giving landlords access to a damage mitigation fund to reduce the risks of taking on Camp Hope residents still struggling with addiction, mental health or other challenges to being a good tenant. Landlords are eager to be part of the solution and Daniel figured out how to align the interests of landlords to reduced risk and tenants to increased access.

Based on many years of contract administration experience for complex public construction projects, it is my opinion that these contracts were not coordinated and poorly administered. A mess was inevitable. Whether it was deliberate or not is still an open question. Public records requests will be forthcoming. To be continued . . .

A timely reminder to Subscribe for notifications of new content. Pledges are most welcome. It’s journalism as busking, only instead of a hat on the pavement or an open guitar case there’s a link for a voluntary pledge as part of the subscription routine.