The City of Denver’s decision to award a $7 million contract for the purchase of 200 mini-homes known as “pallet shelters” has come under scrutiny due to a lack of transparency. Officials chose to bypass a competitive bidding process, and it remains unclear whether the city explored alternative options or considered other companies for the contract.
When asked about the selection of Pallet PBC, Inc. for the contract and the criteria used to determine the best price and service without a competitive bidding process, the city responded that Denver officials looked to “another jurisdiction” that had made a similar purchase.
According to a city spokesperson, “Under the city’s Homelessness Emergency Declaration, Pallet PBC, Inc. was awarded a master purchase agreement based on a similar procurement by another jurisdiction, outside of Colorado, with similar needs to Denver’s current emergent housing initiative.”
Pallet PBC, headquartered in Everett, Washington, describes itself as a “public benefit corporation,” combining elements of both for-profit and nonprofit organizations, with profits reinvested into social purpose missions. The company has provided pallet shelters to multiple states, including California, Wisconsin, Washington, Vermont, Florida, Arkansas, and Massachusetts.
Denver Mayor Mike Johnston’s administration declared a homelessness emergency in July, expediting the city’s response to the crisis. This fast-track approach extends to multi-million dollar purchases, although it’s not the first time the city has approved a contract without a competitive bidding process. In August 2022, the city awarded a $2.4 million contract for overseeing an economic recovery program without competitive bids.
When The Denver Gazette requested records related to the decision to purchase shelter units from Pallet PBC, the city estimated it would require “40 hours of research, retrieval, and review time” and cost $1,320.
Under the contract with Pallet PBC, the company will deliver 200 units of pallet shelters, ranging from 70 to 120 square feet, each equipped with one or two beds, a desk, air conditioning, heating, and storage shelves. The city also ordered six larger pallet shelters for community gatherings and services, as well as laundry units.
The total value of the contract is $5,117,497, even though the city council approved a total budget of $7 million. The additional funds serve as a cushion for potential extra expenses, according to Denver’s homeless advisor, Cole Chandler.
The contract covers various components, including sleeper shelters, electric kits and heaters, air conditioning and installation kits, bed frames and mattresses, folding desks, service shelters, bathroom units, and laundry units. Additionally, the contract includes shipping and handling fees, as well as fees for training or inspection.
Under the terms of the contract, pallet shelters are scheduled to be delivered by November 1, while the larger units will arrive between December 1 and December 13.
Mayor Johnston’s administration has prioritized addressing homelessness, focusing on decommissioning homeless encampments, relocating individuals to shelters, and eventually transitioning them to permanent housing. A key element of this strategy is the creation of “micro-communities” in various parts of the city.
As of the latest data, 119 homeless individuals have received housing under Johnston’s administration. However, this figure does not include the 83 homeless people temporarily housed in a hotel during a recent encampment cleanup outside the Governor’s Mansion.
Supporters argue that pallet shelters offer an intermediate housing option that is more cost-effective and quicker to produce than traditional housing solutions. Pallet PBC claims its shelters can be assembled in under an hour, providing residents with privacy.
The company’s cost-effective approach is attributed to its use of materials like fiberglass-reinforced plastic, foam insulating cores, and aluminum framing.
Aurora, a neighboring city, has also adopted pallet shelters for homeless individuals, operated by the Salvation Army. According to Pallet PBC, the program in Aurora has shown positive results, with 10% of homeless residents obtaining permanent housing in a village equipped with 30 pallet shelters.
Denver has allocated significant resources to address its homelessness crisis, with $152 million spent in the previous year. In 2023, the city has allocated $254 million for homelessness initiatives. Mayor Johnston plans to allocate up to $52 million by the end of the year, with $19.6 million designated for micro-communities.
Despite these efforts, the city experienced an 8% increase in the number of homeless individuals sleeping in public places this year. The Metro Denver Homeless Initiative reported a total of 9,065 homeless people across the seven-county metro area, representing a nearly 32% increase from 2022.
