Elim Transitional Housing had billed Hennepin County improperly, prompting the move.
Elim Transitional Housing, which pioneered a unique program for the homeless in Minnesota nearly 30 years ago, was fired by Hennepin County on Tuesday after commissioners learned it had billed the county for disallowed services and housed ineligible clients.
Commissioners, whose vote to terminate Elim's contracts was unanimous, made their decision based on the recommendation of the county's Human Services and Public Health Department.
The county is continuing to investigate Elim's actions.
"It saddens me that we have to take this action today," said Commissioner Gail Dorfman, the board's biggest advocate for homeless programs.
Elim's six contracts with the county, the longest of which extend into next year, amount to nearly $643,000. Three are funded by the state, two by the federal government and one by the county itself.
The contracts will be terminated as of Feb. 29, by which time officials hope to have found housing for the more than 100 Hennepin County families served by Elim, said Curt Haats, chief financial officer for Human Services.
Federal and state officials have been told about the Elim investigation, Haats said.
Before the vote, Elim's interim executive director, Laurel Miller, told them that loss of the contracts would close the Minneapolis agency.
"There will be a significant loss of services in both Hennepin and Anoka counties," she said.
Elim was founded in 1983 by Sue Watlov Phillips, who focused on transitional housing for the homeless using traditional dwellings such as duplexes and apartments rather than shelters.
In the years since, Watlov Phillips became a state and national leader on homeless issues.
Last fall, Watlov Phillips stepped down as Elim's director and went on medical leave, shortly before county contract managers discovered irregularities in the agency's files.
Further investigation revealed more problems, Haats said, to the point where "we decided it was such a severe situation that we couldn't continue our contracts with them."
Miller told commissioners Tuesday that Watlov Phillips had not been well last year when the county asked Elim to spend $150,000 in unused Homelessness Prevention and Rapid Re-Housing Program (HPRP) funds provided by the federal government's 2009 stimulus program. The result, she said, was incomplete documentation and a debt of at least $20,000 to Hennepin County.
To get its financial house in order, Miller said, Elim has cut three contract and three staff positions, streamlined job functions and is preparing to sell a house it doesn't use. Board members are helping with funding, she said.
On its website, Elim claims to help more than 6,000 people annually in the metro area.
"We completely understand that serious mistakes were made," Miller said.
"However, we do not believe that 27 years of service should be discarded because of a mistake made not by the 10 people who will become unemployed but by a person who is not well and is no longer involved with our agency."
Kevin Duchschere • 612-673-4455