Strained by housing crisis, Mass. funneling millions of dollars each month to shore up shelter system for homeless families

Amid a rise in the number of migrant and homeless families in Massachusetts, a Best Western hotel in Concord is being turned into a family shelter.Jonathan Wiggs/Globe Staff

A lack of affordable housing combined with a surge of migration has overwhelmed the state’s shelters for homeless families, and it is costing taxpayers dearly.

Last month, Governor Maura Healey signed a budget bill that will inject $85 million into the shelter system, which is operating beyond capacity and failing to keep pace with accelerating demand. But that infusion is likely to cover little more than half a year of costs, according to a Globe review of state payment records.

The state is forced to act quickly — sometimes within a single day — to shelter homeless families due to a 1983 “right-to-shelter” law that obligates officials to immediately house eligible families. The law, which is the only one of its kind in the country, pushes officials to make “Herculean efforts,” a state spokesperson said, to find shelter options on short notice. But the urgency can cause costs to balloon, according to state officials and the Globe’s records review.

In recent months, according to the review, the state has pumped tens of millions of dollars into nearly 50 nonprofits tasked with sheltering and caring for thousands of homeless and migrant families. In February alone, taxpayers footed the bill for nearly $12 million of shelter space, office rentals, employee salaries, and, increasingly, hotel rooms the state rents at great expense because traditional shelters are full.

State officials, shelter providers, and advocates agree that sheltering families in hotels is not ideal. The locations tend to be far from public transportation, they often lack amenities for children, and they aren’t built for long-term stays.

They are also expensive. In February, the state spent $3.5 million on hotel rooms to shelter more than 400 families, it said.

And that number is expected to increase further. After a winter lull, immigration to Massachusetts is surging again, advocates said. By Monday, the number of families in hotels had already climbed to 692, according to state figures.

“We have more people coming every day,” said Geralde Gabeau, head of the Immigrant Family Services Institute in Mattapan, which serves newly arrived Haitian migrants.

As the system grapples with the influx of migrants, providers and state officials find themselves turning to hotels with increasing frequency, which comes at a cost.

The state sometimes pays significantly more than market rates for hotel rooms even though it is booking in bulk, according to the payment records obtained by the Globe through public records requests.

In February, the state paid a nightly rate of $229 for hundreds of bookings at a Holiday Inn Express in Waltham that offers similar rooms to the public for less than $110.

When the nonprofit providers book hotel rooms directly, there is less clarity about the cost. The invoices they submit to the state for reimbursement do not specify how much they are paying hotel operators.

A Department of Housing and Community Development spokesperson said the agency is involved in negotiating room rates on the providers’ behalf, but declined to disclose the exact rates paid.

According to payment documents obtained by the Globe, the state directly paid for rooms at six different hotels in February, totaling about $1.6 million in charges for the month. The rates range from $130 to $260 a night, though officials say the state also pays shelter providers an extra fee to manage and staff the hotels.

Because of the urgent nature of the situation, providers interviewed by the Globe said they aren’t required to negotiate rates or get them pre-approved by the state.

Shiela Moore, who runs Boston’s Hildebrand Family Self-Help Center, said the demand for hotels has increased so much that her center has a local hotel manager on speed dial. Job losses related to COVID-19, increases in housing costs, and the influx of migrants are putting nonprofits like hers “at a crisis point,” she said.

When summer comes and hotel rates in the Boston area skyrocket, her team often finds itself without many options and paying exorbitant rates.

“There is not enough capacity,” Moore said. Her organization is actively working to expand its capacity and rent more apartments around the city. “There is a demand on the shelter system and a demand for hotels. And there is a lot of pressure.”

At least one provider took advantage of the lack of oversight. Last year, Manuel Duran pleaded guilty to stealing more than $1.5 million from provider Casa Nueva Vida, which he ran. The nonprofit’s $8 million annual budget was almost entirely funded by DHCD’s emergency assistance program.

Duran stole much of the money through self-dealing: the group he ran paid above-market rents on apartments he secretly owned. Then DHCD reimbursed Casa Nueva Vida for the inflated rent payments.

DHCD failed to detect the years-long scheme on its own. The theft only came to light after a whistle-blower complained to the state’s official watchdog, the inspector general’s office, prompting the law enforcement investigation.

Casa Nueva Vida, which drew more than 98 percent of its revenue from government grants, according to its latest tax filing, also paid Duran nearly $280,000 a year to serve as executive director until his indictment in September 2021.

For decades, the state has placed homeless families in hotels as a last resort when shelters are full. Former governor Charlie Baker, who vowed on the campaign trail to curtail the practice, reduced the number of families sheltered in hotels from around 1,500 at the beginning of his administration to practically zero by 2021.

But a surge of migration and an increase in homelessness last year reversed that progress, as officials believed they had no viable options besides placing families in hotels as traditional shelters overflowed.

Another factor adding to the crisis: the state’s broader housing crisis. It has grown increasingly difficult, state officials say, for shelter residents to find more permanent housing they’re able to afford, even with resources such as housing vouchers and the state’s HomeBASE program, which helps families transition from shelters by providing money to cover expenses like first and last month’s rent, security deposits, furniture, and utilities.

“Massachusetts is in a longstanding housing crisis where escalating housing costs are pushing more families into homelessness and limiting options for families to exit shelter into permanent housing,” Samantha Kaufman, a spokesperson for the DHCD, wrote in a statement.

At the core of the problem, housing experts say, is the simple lack of housing stock. Focusing on reducing the number of people in shelters draws attention away from the bigger solution, they say. When communities fail to build affordable housing, they pay for it in expensive shelter options like hotels.

To achieve more housing, the state, local municipalities, and advocates need to work together on changing zoning laws and funding more assistance programs that help people leave the shelter system for good, said Rachel Heller, CEO of Boston-based Citizens’ Housing & Planning Association.

“People need safe, affordable homes,” Heller said. “Housing is core to why people are experiencing homelessness. . . . When people have a home they can afford, they don’t need shelter.”