In what’s become an ugly dispute centered on a feel-good project, Denver’s best-known nonprofit working to solve youth homelessness is being accused of underpaying its contractors as it builds a four-story, $38 million shelter.
Urban Peak, which plans to open the new, dormitory-style shelter this summer, paid its construction crews at residential rates instead of business construction rates, according to a review by Denver Labor, which flagged the pay issue as potential wage theft.
The mistake could bump up the cost of the state-of-the-art building by $2 million to $4 million, which means the shelter could struggle to afford furniture and the staff needed to operate it.
Urban Peak, which received $16.8 million from the city to build the 136-bed homeless shelter, ran its building contract by a different city office — the Denver Department of Housing Stability — and assumed the contract had been vetted by all necessary city agencies, Urban Peak CEO Christina Carlson said.
The nonprofit was advised, not only by Housing Stability but by the project developer, that the shelter was a residential project, in part because its purpose is to house people and because it’s under five stories tall. The contract was modeled after a similar project that was classified as residential — a homeless shelter and supportive housing complex by the nonprofit Delores Project.
But Denver Labor says the Urban Peak project is not classified as residential — because it’s not a single-family home or apartment building — and that the nonprofit erred in failing to contact Denver Labor before it sought bids for the project in March 2021. The agency is a division of the Denver Auditor’s Office that monitors compliance with wage laws.
Most projects, and especially those using more than $2,000 in public money, are required to check in with Denver Labor for guidance about federal law and Denver ordinances that dictate the “prevailing wage” for specific types of work. The residential prevailing wage for drywall finishers, for example, is $13 per hour. But the commercial prevailing wage for drywallers is significantly higher — $21.20. For electricians, the rates are $26.91 per hour for residential and $39.75 per hour for commercial.
“The idea is that if the public is funding construction, and taxpayer dollars are being spent, the people working on that job should earn a dignified wage,” said Denver Labor executive director Matthew Fritz-Mauer.
“Urban Peak could have reached out to us, should have. Blueline, the developer, could have reached out to us sooner, should have.”
And, Fritz-Mauer acknowledged, other government officials who were aware of the project could have reached out sooner to Denver Labor.
Emails reveal miscommunication, confusion
An email exchange provided to The Colorado Sun by Denver Labor shows that Urban Peak was caught between city departments.
In February, after a question from the developer led to the Denver auditor’s office learning about the wage rates in Urban Peak’s contract, the auditor’s office informed the city Office of Housing Stability that the project was not classified as residential.
BlueLine Development’s Christian Pritchett then asked the housing stability office what was happening, arguing that the project is a homeless shelter and not a business. He warned such a change could “result in a significant escalation” in cost.
The city housing stability office’s Megan Yonke, capital projects manager, replied: “I know this is a big deal. Apparently, only single‐family homes and apartment buildings qualify as residential. Shelters do not. This is certainly news to me. What’s the impact? Sorry to deliver this news.”
The impact, Pritchett replied, is $2 million to $4 million.
Carlson, Urban Peak’s CEO, said the nonprofit has no intention of shorting anyone what they are owed. But first, she requested a hearing to settle the matter. The auditor’s office hearing in February was overseen by a third-party hearing officer, who collected final briefs on the matter this week. A determination about what Urban Peak owes is expected within a few weeks.
“We want to pay people appropriately,” Carlson said. “That is what we are going to do.”
The wage issue has been a huge upset, she said.
“In the 12th hour, this kind of large number was surprising and stressful,” she said, not naming names but noting a “lot of bureaucracy that we are not involved in because those are internal conversations within the city. It was our understanding that everything had been vetted amongst the internal city agencies and we followed their direction. We did ask numerous times about the prevailing wage.”
The new shelter, a 66,578-square-foot complex, was funded by $16.8 million from the city’s voter-approved RISE bond program, $11 million in private capital through a federal tax credit program called New Market, $3.8 million from the state, $3 million from the federal government and $4 million in private donations.
“We’re grateful for the city partners and we want to do what’s right and most importantly we want to serve youth experiencing homelessness,” Carlson said.
Wage issue buried deep in audit of affordable housing
The Urban Peak wage issue was mentioned in an affordable housing audit released by the Denver Auditor’s Office, then later reported by Westword.
That audit highlighted confusion about prevailing wage rates and different types of construction, revealing that the city’s Office of Housing Stability relied on a 2001 legal opinion from the city attorney when it advised Urban Peak. That ordinance has since been updated, however.
The auditor’s communications director, Tayler Overschmidt, told The Sun that the office did not attempt to attract any publicity about the issue. “It’s not something we tried to put out there,” she said, noting that the auditor’s office fully supports Urban Peak’s mission to help homeless teens and young adults.
While the new shelter on Acoma Street is under construction, Urban Peak is operating a temporary, 30-bed shelter in downtown Denver. The organization also has three apartment buildings, with a combined 68 units, and places young people in about 100 apartments scattered throughout the city.
The number of young people who are homeless in the city is rising, with outreach workers counting 469 teens and young adults sleeping in shelters or outside during the latest count, up from 375 the previous year.
The first floor of the new shelter will have large dormitories that hold multiple beds, plus a storage room for bikes and other belongings. Teens 15-17 will live separately from young adults, ages 18-24. The second and third floors of the building are arranged in “neighborhoods,” individual and double bedrooms surrounding shared living rooms.
Denver Labor recovered more than $2 million in wages for 3,570 workers in 2023, according to the latest wage theft report from Auditor Timothy O’Brien’s office. The annual report is required by Denver’s wage ordinance.