‘It’s a Mess’: Homeless Services Nonprofits Say Oakland Routinely Fails to Pay Contracts

Updated 12:07 p.m. Tuesday

A year without pay. Millions in debt. Months without a contract.

Those are some of the allegations from homelessness services providers in Oakland that have surfaced since one nonprofit nearly had to shut down two shelters this month. Its experience is shining a spotlight on a broken repayment system that’s thwarting the city’s ability to address one of its most pressing problems.

The Wood Street Community Cabins and RV safe parking sites in West Oakland, which consist of 100 cabin beds and 40 RV spots, are slated to close at the end of June but were nearly forced to shut down three months early, after the city missed some five months of payments to the nonprofit running the sites, Building Opportunities for Self-Sufficiency (BOSS).

Nonprofits say BOSS’ experience is only the latest example of an ongoing struggle that has them operating under the weight of massive debt as they wait on the city to reimburse them for housing and feeding its most vulnerable residents. And it’s those residents who are hurt most as they contend with subpar living conditions at some sites that are exacerbated by the stymied cash flow.

“No one really knows exactly what’s going on,” John Janosko, a former resident of the Wood Street Cabins, said during a Monday press conference outside the shelters, where advocates rebuked the city and lobbied to take over the sites.

He said muddled information has left residents uncertain of when they’ll need to find alternative housing, with some expecting to leave in a matter of weeks and others circulating rumors the site may run through the end of the year. According to BOSS, there are currently 70 people living in either the cabins or at the RV site. Of those, 41 are still awaiting a housing placement.

“The bottom line is we don’t know, so we’re basically here to help uplift and support our family,” Janosko said.

BOSS CEO Donald Frazier said he issued layoff notices to staff last week in preparation to shut down at the end of March after repeated and increasingly urgent requests for payment went unaddressed.

It was only after the layoff notices went out that city officials sat down with Frazier and provided assurances the city would make good on its debt. In all, Frazier said the city owes BOSS about $900,000 through April and that the organization will need another $480,000 to fund the programs through June.

“We’ll see,” he said. “Until the money is in our hands, I won’t be content.”

Sean Maher, a spokesperson for the city of Oakland, said in a statement to KQED that staff is working on solutions to “bring the city’s outstanding payments to BOSS up to current, as well as identifying solutions to support the programs’ operations to the end of June.”

At a Friday meeting, officials with the City Administrator’s Office told Frazier they would provide the back pay owed for November through January within 10 days. As a result, Frazier said he would rescind the layoff notices and inform staff of the June closure.

“This will allow critical time for identifying options for the residents currently being served by both programs,” Maher said, adding that those options would be finalized over the next several days.

But on Monday, some cabin residents said they had little sense of where they’d end up.

“I’ll go stay in a tent if it comes to that,” said Jared Defigh, who’s been living at the site for about two years. “I might get housed before then, it’s hard to say.”

Late payments from local governments and the state are a thorn in the side of services providers around California, with some large organizations regularly waiting on tens of millions of dollars in reimbursement at any given time. However, local nonprofits say the lags in Oakland are extreme.

KQED spoke with three other local nonprofit providers who said payment delays make it particularly challenging to operate in the city. While a typical wait time is two to three months, one leader estimates Oakland takes nearly twice as long to pay. Another said it’s not unusual for the city to run a year behind on payments.

Roots Community Health CEO Noha Aboelata said that for the second year in a row, the city has racked up a million-dollar debt with the nonprofit. She and other CEOs, including some who declined to speak on record, said that while the situation long predates Oakland’s current budget crisis, it’s only gotten worse. And, Aboelata said the delays now extend to the contracting process itself, meaning organizations are often working for months without contracts in place.

“Without a contract in place, you can’t invoice,” she said. “So the delays have gotten incredibly lengthy.”

In a statement, Maher said the city values its service providers and welcomes feedback “on ways we can collaboratively improve our work together, including in our contracting, invoicing, and payments processes.”

Aboelata said she understands the city is in a fiscal crisis and is willing to work through it.

“But we really do need clarity,” she said, echoing the frustration over poor communication with the city that the other CEOs expressed. “Every week we’re not knowing what’s going to happen next or what we’re going to be told, or what we are going to find, so it does create kind of an instability.”

That instability also breeds inefficiency, leaders said.

For BOSS, that means taking out a line of credit to cover operating costs, resulting in added interest payments that will most likely get passed on to taxpayers.

And residents say it also manifests as mismanagement and subpar conditions at the shelters themselves.

“They didn’t have toilet paper, they didn’t have drinking water,” said a former resident of the Wood Street Cabins and advocate who goes by Freeway. “The facilities were constantly non-functioning as they are right now.”

“We don’t even have shower heads anymore,” Defigh said. “There might be sewage coming out of that bathroom.”

Frazier acknowledged those challenges, though he said the sewage issue had been addressed. With cashflow severely limited, he said BOSS struggled to maintain the shelters, leading to health and safety concerns.

“There were tremendous problems,” he said. “All that was a direct result of not having funds to do all the existing maintenance and some deferred maintenance.”

In a February letter (PDF) to City Administrator Jestin Johnson, Frazier alerted officials that delays had “significantly impacted clients, staff wages and limited our ability to accept new clients.” The letter lists an estimated $130,000–$150,000 worth of necessary maintenance, including mold testing, remediation and repairs to over two dozen units. One charred cabin needed removing, according to the letter; others needed new locks, doors, floors and windows.

In an email accompanying the letter, Frazier called the conditions at the cabins “unconscionable.”

“Staff and participants’ health and safety are at risk,” he wrote.

That pressure ultimately led the city to reimburse BOSS for payments owed from September and October of last year, he said, but the organization hasn’t been paid since then.

“It’s a mess,” Frazier said. “It strains the entire agency. It’s like stretching a rubber band — how far can you stretch it before it pops?”