Denver’s recent shift to a pay-for-performance contract model has improved day-to-day operations across the city’s seven noncongregate homeless shelters, but has struggled to deliver promising numbers on its most important metric: getting people out of shelters and into housing.

However, city officials still plan to expand the model to five additional city shelters while working to improve and adjust metrics to drive housing outcomes, which the city’s Department of Housing Stability states is the program’s biggest constraint.

Due to limited housing opportunities, officials said, the number of long-term shelter stays increased, as did the average length of stay for all properties from 166 days to 229.

The bottom line, city officials said, is that performance-based contracting is working and providers have exceeded expectations. But in the next
phase, HOST must pair providers’ efforts with continued metric refinement and more housing resources, officials said.

Jeff Kositsky, HOST deputy director, told members of a Denver City Council committee that available options for housing exits from shelters have decreased “significantly” between 2025 and 2026 due to the loss of housing authority vouchers, as well as American Rescue Plan Act funding that covered a large swath of rapid rehousing.

“So, despite the fact that our providers really did an outstanding job, the housing outcomes that we’re seeing are somewhat mixed,” he said.

The pay-for-performance “pilot” program launched in January 2026 and replaced the city’s former “flat-fee and invoice compliant” contract model, tying shelter provider payments to measurable performance metrics to produce better outcomes before expanding the model citywide.

Covering seven city-owned homeless hotel shelters, 769 units and more than $50 million in funding over three years, Kositsky told committee members the numbers for the pay-for-performance program actually exceeded expectations this early in the game.

“We’re obviously very pleased with the results of this and are going to expand it for HOST,” Kositsky said. “You know, good enough is never good enough. We’re always going to be trying to do better for our clients and for our community.”

Current contracts for shelter providers include Urban Alchemy, which operates the Aspen, St. Francis Center, which operates Stone Creek, and Bayaud, which operates the Tamarac Family Shelter.

Under terms of the contracts, shelter providers must meet specific performance standards, which are tracked using the Homeless Management Information System dashboard.

Funding breakouts include number of sheltered nights, 45% of budget; rapid rehousing, 5%; housing-focused case management, 40%; and housing queue, 10%.

Six of seven shelters showed improved occupancy scores year over year, and the program’s overall performance came in at 93%, exceeding the 90% contract target — an increase of nine points over the Q2 2025 mark.

Engagement with shelter residents increased, as did the number of individual residents actively participating in case management.

But the progress has come in the wake of great public scrutiny.

The Denver City Council reluctantly approved Urban Alchemy’s 11th-hour contract last year amid media reports about the nonprofit’s finances and oversight practices in San Francisco, Austin and other cities.

“There’s a ton of very concerning legal mess related to Urban Alchemy in a number of cities,” Councilmember Paul Kashmann said at the time. “These are not from 10 years ago. They’re current. They continue to grow at a rapid pace, and I’m just not sure that this is the direction that Denver needs to go.”

Kositsky told the council that if the Urban Alchemy contract were not approved, significant “retooling” would be required to go back and select and vet a replacement provider.

“We would have to seek out another provider,” Kositsky said. “There was not a great deal of interest when we put out the RFP to operate this site, and the panel went with the provider that they thought was the most qualified and the most able to operate the site.”

Shortly after he was elected in 2023, Denver Mayor Mike Johnston, who promised to end homelessness in his first term as mayor, declared a state of emergency and launched what he called the “House 1000” initiative. After the emergency ended, the program transitioned to what he dubbed “All In Mile High.”

As envisioned, it would deliver homeless services through the Mayor’s Office, the Department of Housing Stability and other city agencies.

During an October presentation to the Denver City Council, Johnston’s office reported that the total cost of the program from July 2023 through June 2025 was about $158 million.

When auditors compared expenses in Workday, the city’s official system of record, they found that roughly $178.1 million was spent over the same period, an estimated $20 million more than previously reported,

Auditors added that the initiative was poorly planned, with underreported expenses, no monitoring plan, inadequate “equity” considerations in shelter siting and no one responsible for tracking the program’s citywide expenses.

Johnston’s office fired back in a statement, arguing that the audit “misstates key facts and is, in some instances, willfully misleading.”