In an abrupt transition, a new, for-profit company is taking over management of Anchorage’s largest homeless shelter

A for-profit business that has existed for one year will take over management of Sullivan Arena on Friday, just days after the city announced it had ended its contract with Bean’s Cafe to run Anchorage’s only large homeless shelter.

The abrupt change in management is high-stakes, with hundreds of homeless residents already relying on Sullivan Arena for safe shelter each night, with more expected as winter nears.

Since March 2020, the Sullivan Arena emergency shelter has been managed through a sole-source contract by Bean’s Cafe, an Anchorage soup kitchen operating since 1979 that expanded into sheltering people at the start of the coronavirus pandemic.

In August, the new administration of Mayor Dave Bronson put management of the shelter out to a competitive bid process. Proposals were due on Aug. 31.

While the city’s own criteria in its request for proposal says that a bidder will only be considered if it has at least three years experience in running shelters, a city official overseeing the Sullivan says that multiple other considerations went into the decision to award the contract to the year-old company.

Several Anchorage Assembly members have said that it’s good the city finally returned to its normal procurement process.

“Competition is the bedrock of our system, and the sole-source deal that was offered in the heart of the pandemic was understandable, but at some point we have to get back to our regular methods. And so I appreciate that there was a solicitation,” Assembly Vice Chair Chris Constant said.

On Sunday, the city announced it had awarded a contract to operate the shelter to 99 Plus 1, Inc., a business incorporated last September. The contract itself is not public until after the Assembly authorizes it.

The Assembly didn’t have details of the contract on Monday, Constant said.

The mayor’s office said by email that the contract runs through Oct. 31 and that its total cost depends on the number of clients for the month.

On the highest end, if the shelter houses between 350 and 420 people, it will cost $371,883, according to the mayor’s office. As of Monday, 393 people were staying at Sullivan Arena.

For the last year the municipality has been paying 99 Plus 1, Inc. to provide “non critical transport” to people who need medical testing between shelters or other sites, said Shawn Hays, the mass care branch chief for the municipality.

The company is also operating four of the city’s non-congregate shelter sites where people live and quarantine at hotels, said Bob Doehl, the city’s director of development services.

The company has not previously operated a large shelter, though its leaders say managers have years of experience in working with the homeless population.

On Monday, the new operators stood in the parking lot of Sullivan Arena with a stack of job applications. They will need to hire enough staff within days to comply with a 30:1 staffing ratio required by the city.

Zachary Zears, the future on-site manager, said he was hoping to catch current Bean’s Cafe employees to interest them in applying for jobs.

Zears said he has worked in behavioral health in Anchorage for years and at homeless shelters in Seattle before that.

The new operators plan to offer at least job interviews to all 77 people currently working at Sullivan Arena, said Joe Cizek, who described himself as one of the owners of the company. On Monday, it wasn’t clear how they’d contact the current Bean’s employees -- no invitation to enter Sullivan Arena had been forthcoming.

Cizek said he is a longtime Anchorage Fire Department employee but plans to retire soon. He said he owns the company along with his sister, Theresa Pisa, and co-owners Jason Cates and Marty Severin.

Pisa is the only owner listed on 99 Plus 1, Inc.’s state business license.

Cates is a former manager of the Anchorage Safety Patrol program, which picks up intoxicated people from the streets of Anchorage and delivers them to a city “sleep off” center managed by a private security contractor.

The name 99 Plus 1 is a reference to a Biblical parable of the lost sheep, Cizek said.

Hays, the city congregate shelter manager, said three days is enough time for the transition. Shelter clients shouldn’t notice any disruption, she said.

“They’re already an established organization,” she said.

Hays had nothing to say about the competitive bid process or Beans Cafe’s management of the shelter.

“I don’t want to comment on that,” she said.

Bean’s Cafe CEO Lisa Sauder said she was unable to comment on the situation until the Bean’s Cafe contract is finished.

‘Out of extensions’

Doehl said that the city had a sole-source contract with Bean’s Cafe in response to the immediate pandemic crisis.

“That’s what we did last March, because we had, frankly, less than a week — about three days — where we desperately had to decompress existing facilities to avoid an outbreak here in our shelters,” Doehl said.

The city then extended that sole-source contract with Bean’s Cafe several times, he said.

“We got to a point, though, where we’re out of extensions or means to extend further. We’ve hit our final contract end date,” Doehl said.

So the city put it out for bid in August, which is the usual competitive process.

It’s how the city should try to do its contracting, to “ensure we are getting the best services for the best price,” said Assembly member Meg Zaletel, chair of the committee on housing and homelessness.

99 Plus 1 was formed in September of 2020, according to Department of Commerce records.

The city’s request for proposal says that any bidders must have three year’s experience.

“If your corporation or non-profit organization does not have at least three years of experience, your proposal will not be considered any further,” the document says.

But Doehl said that question on experience is “not just a yes or no” question. Instead, a panel of seven people evaluated the various proposals and the bidders’ experience based on criteria specified in the city’s request for proposal, Doehl said.

That criteria includes five key factors, he said:

First, the panel looks at the total experience of the entity in operating a mass shelter, he said. Second is the bidder’s experience and ability to use a statewide data sharing system that helps providers track and care for clients. The panel also examines the experience of the individuals who will be in key leadership positions and how the organization plans to coordinate with other service providers to move people from the shelter toward longer-term solutions, Doehl said.

“An organization can have had decades of experience, but if all the people that did it are gone, it doesn’t matter,” he said.

Lastly, the panel considered each bidder’s references, he said.

Doehl said he could not immediately recall who participated in the panel. The mayor’s office also did not respond to an inquiry about the panel.

Doehl said that members of 99 Plus 1, while part of a company called Securitas, helped to stand up the mass quarantine and isolation facility at Dempsey Anderson Ice Arena last year.

“That was basically doing what we’re doing now,” Doehl said.

The city’s contract with Bean’s Cafe to provide food — three meals a day plus snacks — at the Sullivan is also expiring on Sept. 15. Bidding on a new meal contract doesn’t open until Sept. 17, according to the bidding documents.

Doehl said the city’s emergency operations center on Monday put out an emergency request for a quote, for closing on Tuesday, to “figure out who will fill that gap” until the city settles on a longer-term contract.

“I do not expect a disruption in providing food,” Doehl said. “We will have to see what the procurement process requires for the long term contract to determine the short term; however, we will continue to provide three meals a day snacks and beverages at the mass shelter.”

Unlike the previous contract, in which Bean’s Cafe provided the physical cots and storage bins for clients, the city will now provide furnishings, Doehl said.

“At this point, we have procured alternate sources for — the cots are scheduled to be delivered — we will have available as early as the 14th. We have lined up boxes, we’re now having the contractor provide locks for those boxes, which is important, so individuals do not have to risk they’re getting their items stolen there. We have 1,000 blankets available. So we’ve already backfilled those items.”

Correction: A previous version of this story included an incorrect title for Shawn Hays. She is the mass care branch chief for the municipality.