County to Homeless Shelter: You can stay - for now

After more than a year of negotiations, representatives from the Bethlehem Inn and the Deschutes County Commissioners are poised to sign a lease that will extend the homeless shelter's stay at the former Econo Lodge Motel through July of next year. The retroactive two-year lease would give Bethlehem Inn time to find a new location for its shelter, which serves as a safety net for individuals and families who don't have anywhere else to go.

The two sides reaffirmed the terms of the deal in a meeting Tuesday between county commissioners and Bethlehem Inn staff.

The shelter moved into the property three years ago with the intention of making it the long-term home of the Bethlehem Inn, which had grown from a church-based all volunteer operation to the region's largest homeless shelter. However, after living rent free for two years, the organization told county commissioners, who along with the city of Bend had spent more than $2 million to acquire the former motel property, that the space no longer suited the shelter's needs. The revelation came after several months of squabbling between Bethlehem Inn officials and county staff about how much the nonprofit would pay to purchase the building, as was originally planned. County officials wanted the shelter to pay the full purchase price for the property, while Bethlehem Inn board members were willing to pay only the current market value of the building, a significant difference due to the real estate crash.

The agreement, set to be inked this week, establishes an interim plan allowing the shelter to stay put for the time being while formulating a strategy for the future. Under the agreement, the Bethlehem Inn would pay roughly $2,100 per month in rent, retroactive to this past July, enough to cover the monthly interest on the loan that the county took out to purchase the property. County commissioners discussed the possibility of returning all that money to the shelter at the end of its tenure at the county-owned property. County officials, however, stressed that it was imperative that Bethlehem Inn have an exit strategy for the location so that the county is free to either market the property or repurpose it.

"What I don't want to have happen is at the end of the second year of the contract, that they aren't able to move and we're back at square one," said Commissioner Tammy Baney.

How much the county will lose on the building when Bethlehem Inn vacates is unclear. If the market recovers, the county could recoup some or all of its investment, but that could take years. In the meantime, the county will have to absorb the interest on the loan. Deschutes County Administrator Dave Kanner said it was important that the county apply the payments it is receiving to the loan in order to prevent the county from digging the hole any deeper than necessary on the Bethlehem investment. Under current conditions, commissioners acknowledged that they would stand to lose roughly $1 million on the property.

The situation underscores some of the perils that public bodies face when partnering with nonprofits, even for laudable causes. The City of Bend found itself in a similar situation several years ago when it extended a loan to the Tower Theatre Foundation to help with the renovation of the downtown landmark only to later forgive a sizeable portion of the debt. In the case of the Bethlehem Inn, the shelter was banking on a large federal housing grant to cover a portion of the purchase cost. The non-profit planned to embark on a fundraising campaign to help close the rest of the gap, but Bethlehem Inn failed to secure the grant. At the same time, non-profit donations have dried up locally and the homeless population has swelled.

That up-tick in homelessness forced the Bethlehem Inn staff and board to reevaluate their long-term plans with regard to the county building, said Deborah Bolton, the organization's director of development.

"Central Oregon has seen a huge rise in homelessness. The need is out there and the demographic of homelessness has changed and Bethlehem Inn is trying to change with it," she said.

Shelter managers said the board and staff are actively working to formulate its new plan and is already looking at potential locations, but were not ready to publicly reveal details. However, both Bethlehem officials and county commissioners agreed that the two organizations must work more closely to avoid some of the issues that led to the current situation. One idea endorsed by county commissioners and representatives from the shelter was to add two members to Bethlehem Inn's board who can serve as liaisons to the county.

In other news from Tuesday's meeting:

County staff told commissioners that they are steadily spending down their rainy-day fund for health insurance. While the county's self-insurance approach has helped the organization avoid the large premium hikes that businesses and other government bodies have seen, a steady increase in claims is eroding the county's insurance fund, which covers the gap between premiums and pay outs. County staff said they plan to realize up to a $1 million in savings annually within the next few years, thanks to an on-site clinic that the county plans to open. Kanner, however, said that it's imperative that county employees pick up a larger share of the costs associated with health care in order to reverse the spending trend.

"I think the numbers show that is essential. It has to happen," Kanner said.