Denver Mayor Mike Johnston on Tuesday revealed the city intends to spend roughly $50 million on his homeless initiatives through the rest of the year, the majority of which is earmarked for building “micro-communities.”

Micro-communities consist of a supervised set of tiny homes or “pallet” shelters with access to bathrooms, kitchens, showers and other services. The idea is to offer homeless people a place to live that can be built faster and cheaper.   

The city expects to spend about $48.6 million on his initiatives, said Johnston, who was sworn into office in July and who vowed to get 1,000 homeless people off of the city’s streets.

An additional $3 million is being set aside to create a budget cushion for four different strategies the city is deploying to combat homelessness, Johnston added.

The building of micro-communities sits atop the list of strategies the Johnston administration is deploying in a campaign to curb the city’s soaring homelessness crisis, with a price tag of $19.6 million this year alone, according to the mayor’s office.

The mayor’s office released earlier potential sites for micro-communities, and the city council last month approved a contract to purchase 200 pallets. Johnston said the pallets have been ordered.

Denver, like other major cities in America – notably metro centers in the West – is grappling with homelessness that some believe are fueled by substance abuse and the lack of access to affordable housing.

The seven-county metro Denver region saw a 32% jump in homelessness this year, based on the Metro Denver Homeless Initiative count. Point-in-time counts are estimates taken on a single night, which many say undercount the true scale of the crisis.

As of Jan. 30, the region had 9,065 homeless people, compared to 6,884 the year before. Between 2022 and 2023, the number of “unsheltered” people – those who specifically sleep in public places, such as on the street, in tents or in cars – grew by 33%, from 2,078 to 2,763.

In raw count, Denver saw the biggest increase with 5,818 homeless people, up from 4,794 last year. The city has poured significant resources into reducing homelessness, spending $152 million in 2022 and authorizing $254 million to address the problem in 2023. When then-Mayor Michael Hancock took office a dozen years ago, that spending stood at $8 million.

When pressed about residents’ concerns surrounding micro-communities and the potential of increased crime and drug use, Johnston replied, “The long term goal is to move people out of homelessness and into housing, and we can then close these encampments, and keep those encampments closed permanently.”

He added: “The single most dangerous strategy is keeping folks living in encampments that are unsupervised, unstructured and unsafe. We know when we get people out of these settings into settings that do have wraparound services, that do have staff around the clock … That these are the safest, most stable structures.”

Johnston maintained that the micro-community structure is “proven to be safer for unhoused residents and safer for neighbors.”

A resident near a new homeless pop-up or refugee shelter in the 300 block of Zuni Street said violence, drug-use, loitering and jaywalking have become problems.

“Our tax dollars are going toward this. The city is creating a homeless problem in our neighborhood that wasn’t there before,” the resident told The Denver Gazette.

During his first full day in office, Johnston declared a homelessness emergency, which the city council has twice extended.

“We are confident we’re going to be able to deliver on that,” Johnston said, referring to his vow to get 1,000 homeless people off of the streets.

Sources for Johnston’s initiatives include the city’s Department of Housing Stability, which is funding $37 million for homeless efforts. Other funding sources are the American Rescue Plan Act ($4.7 million), savings from under-budgeted real estate acquisitions ($2 million) and general fund transfers from COVID-19 pandemic response efforts ($8 million), according to the mayor’s office.

“I think the long-term zoning capacity is up to four years,” Johnston said on micro-community timelines. “But I think we’ve looked at a two-to-four year timeline. As people know, this goes to our longer need around affordable housing.”

The Johnston administration is implementing other strategies to tackle homelessness, notably the following: 

• Converting hotels into shelters: The city spent a tentative $18.9 million to purchase and operate the 194-unit Best Western Central Park hotel on Quebec Street. The original price tag was $26 million, according to 9News. An additional $5.4 million is earmarked for leasing and operating additional hotels. The housing agency funded $16.1 million of the purchase, the mayor’s office reported.

• Spending $4 million for rapid re-housing contracts on leased units.

• The city’s homeless encampment response for outreach, transportation, resources and related service is costing $750,000 in 2023.

Amongst the homeless population, 40% are employed, Johnston told The Denver Gazette. 

“They just can’t make enough money to pay the first and last month’s rent,” he said. “So, what we’re really working on is getting folks into these transitional supportive housing units so we can then work on expanding the number of affordable units that are available across the city.”