Currie Avenue is a two-block-long, dead-end stretch of city street tucked away and generally unknown on the north side of downtown Minneapolis. It's a busy street, even if most of the real estate there looks vacant. People come and go all day long at the Salvation Army's Harbor Lights center, a combination shelter, detox, and transitional housing site. There is also the former soup kitchen at 1010 Currie, now known as the Hennepin County Safe Waiting Space. People start lining up there by 4:30 every afternoon, waiting for the door to open on the newest and bleakest experiment in local poverty policy.

By 8 o'clock on one recent night there were about 80 people in the waiting space, a large room furnished with nothing but a few old church pews. This is home for the night for those who can't find shelter elsewhere, and it isn't meant to be a comfortable experience. The people here strain for gestures of normalcy. One man dribbles a basketball in the corner, while another unpacks a tiny portable TV and, after some deliberation, sets it up where the whole room can watch its black-and-white static glow.

Some of the pews are arranged to form a rectangle. Inside is the women's area; officials decided to separate the sexes after a few months of operation to cut down on arguments between couples. About 20 women occupy the space, most of them white, some looking dirty and lost and some resembling office workers after hours. A gray-haired woman is telling her friend a complicated story: "And so every time the government passes a program, they issue bonds, and people buy the bonds. So then the government has to pay interest, and that's what they do with our taxes. And when the Federal Reserve meets, and they talk about the interest rates..." She takes to a whisper after that. Along the other wall, a woman is meticulously spreading layers of newspaper on the vinyl floor; a smaller sheet of brown packing paper goes over the top to make a mattress, while her belongings are neatly set up around the edges. By lights-out some 200 people will have made beds on the floor in this room and an identical one upstairs.

A year ago, the people who crash here would have stayed at shelters operated by Hennepin County, chiefly the 650-bed Francis Drake Hotel. But the Drake is closed for good as of last month. The ostensible reason was a leaky roof; the consequences of the closing, to hear news media tell it, were minimal. As the Star Tribune put it, a surprising "decline in the numbers of homeless" had made the Drake's beds all but unnecessary.

None of that came close to explaining what had happened. The Drake had had a bad roof and other maintenance problems for a long time, but that had never threatened its viability before. And the county's own figures show no basis for claiming any decline in homelessness.

What did change is that last fall, Hennepin County officially abandoned its promise to shelter everyone in need. The much-cited decline in "homelessness" has only reflected a decline in the number of people allowed into shelters under the revised county standards. The first casualties were childless, nondisabled adults. But everyone involved acknowledges that it won't stop there.

"People had been saying for quite a while that things are going to change, that we're not going to be doing shelter the way we had in the past," says Allison Boisvert, a low-income housing administrator at Catholic Charities. "But no one really understood what that meant. It was looked at as a more dire forecast than necessary. When it actually came down, all of us were surprised that they actually stopped sheltering people. We've always been more benevolent [in Minnesota] than some other places; the weather has dictated that. But it's over now."

Hennepin County created its current shelter system in the early '80s, when homelessness rose in the wake of welfare cuts and a recession. Its policy was to turn no one away, and officials expected the entire program to be temporary. But homelessness refused to disappear, and finally the county switched from small shelters scattered around town to centralized poverty hotels. Chief among them were the Drake and the old Leamington Motor Inn (known as the 410, and reserved for families), both operated under contract by a group called People Serving People. For $10 per person per day, PSP promised to provide rooms sleeping two, three, and four people, three meals a day, and a "clean, safe, dignified environment."

How well that promise was fulfilled has been a matter of contention over the years. Critics, including some county officials, claimed the Drake was dirty, badly maintained, and dangerous for both clients and staff. There were also complaints that PSP head John Treiber, a tough-talking, formerly homeless recovering alcoholic, had built a monopoly on the shelter business through chummy relationships with county commissioners (one of whom eventually went to work for him). Treiber--who, after 15 years at PSP's helm, was quietly booted out last summer--denies those accusations, saying it was the county that kept asking him to shoehorn more people into PSP's buildings.

Either way, PSP grew big on the county contract. In 1994, the latest year for which the organization filed a tax return with the state attorney general's office, it had revenues of almost $5 million (about 95 percent of that from the county) and employed about 100 people. Treiber was making an annual salary of $77,000.

Around the same time, trouble began brewing in the shelter system. After years of operating with some excess capacity, the patchwork of county shelters, church basements, and motels was finally reaching the breaking point. Even the Drake, known to many on the streets as a last resort, crammed 562 people into what were supposed to be 545 beds and cots one night in January 1995.

County staffers estimated that to keep up with demand they'd have to build a new 150-bed shelter every two years, an option they didn't bother exploring further: The capital cost (some $50,000 per bed) and the political resistance from cities and neighborhoods seemed insurmountable. The final straw came when the Legislature and Gov. Arne Carlson agreed to terminate Work Readiness, the program providing a $201 monthly check to childless, nondisabled adults. Officials estimated that upwards of 1,500 people in Hennepin County could lose the roof over their heads as a result.

"We had a team of staff members going over the census on a daily basis," says Marge Wherley, supervisor for the county's adult housing unit. "We projected with computers, we did everything we could. But we knew we were going to be out of space pretty darn quickly." And, she adds, the people who were going to be left in the lurch would have to be taken care of with local property-tax dollars. There would be no state or federal funds to help take up the slack.

And so, says Wherley, "given that we only had so many beds, we were trying to make sure that we prioritized those beds for people with certain attributes--vulnerable adults, families with children, people whom we are required to provide shelter for. We didn't want to be in a position where the Work Readiness people were suddenly competing for those beds that we had. And so we felt we had no choice but to recommend that the board discontinue sheltering those people."

Which it did. In August 1994, the seven county commissioners voted to adopt a "Plan to Meet Emergency Shelter Needs in Hennepin County"--which turned out to mean exactly the opposite. The plan called for shelter beds to be "targeted to the most vulnerable homeless persons [such as] families with children and single adults with disabilities/special vulnerabilities. All other beds should be used on a first-come first-served basis." In practice, that amounted to showing everyone but the "most vulnerable persons" the door.

"We did what we had to do," says Wherley. "We declared a whole bunch of people ineligible because we didn't have a place for them to live. It was a success in that we were able to triage the space we had. But I don't think anybody thinks that that solved the problem of homelessness."

The new rules became effective in September, and by November the results were in. An average 1,013 people had slept in county shelters per night in August, down just slightly from the same month the previous year (a decline explained in part by the arrival on the scene of a new, 200-bed private shelter, Mary's Place). In November, the average nightly figure had plummeted to 681--down 30 percent from the previous year. Adults without children made up for the biggest part of the decline, but the number of families likewise dropped more than 25 percent. (Though the county still guarantees shelter for families, the new policy required AFDC recipients to pay for shelter out of their grant with a view to "removing incentives.")

For the Drake, the numbers spelled impending doom. Its daily population, and thus its revenues, fell 50 percent between September and December; two days before Christmas, PSP laid off close to a third of its staff. The county agreed to pitch in, increasing the reimbursement rate from $18.90 to $25.13 per person per night. For a family of three, that amounts to roughly $2,261 per month; the same family trying to make it on their own can count on a welfare check of $534.

The story that led to the final shutdown is a murky one. PSP leases its facilities from the Leamington Co., controlled by a wealthy local family whose most prominent member was the late Bob Short, a real estate and trucking magnate and the onetime owner of the Texas Rangers baseball team. His son, Brian, is an attorney and president of Leamington Co., whose current business includes a contract to manage most of the city of Minneapolis's parking ramps. Until recently, Brian Short also served as president of Catholic Charities.

Despite the potential for conflicts of interest--Catholic Charities also contracts with the county for housing services--Short's company and PSP seem to have had a mutually agreeable relationship. PSP got to rent the Drake for cheap at first, in return for promising to fix it up. As the group's income climbed so did the rent, finally totaling close to $60,000 a month for the Drake and the 410 combined. In addition, PSP paid all the taxes on the buildings and was responsible for all the maintenance.

But shortly after PSP's board gave Treiber the boot last August, it began withholding rent to Leamington. The organization claimed the landlord refused to deal with structural repairs for which it was responsible under the lease, and the matter ended up in housing court. A settlement in December gave PSP $133,000 in rent reductions over seven months. But the roof still wasn't fixed. Finally on May 10, Minneapolis building inspectors came by, looked at the roof, and issued a "Notice of Intent to Condemn," giving PSP 30 days to fix the damage.

Instead, PSP gave Leamington seven days' notice and notified the media. Board chair Susan Lucas gave reporters tours of the building, pointing out peeling paint, cracking plaster, and ruined ceilings. "We tell people that we're going to treat them with dignity and respect," she complained, "and then we put them in rooms that don't reflect that."

PSP officials hem and haw a bit when asked why they picked this particular time to precipitate a showdown. The roof, after all, had been leaking for years, and PSP officials acknowledge that they themselves called in the building inspectors. Executive Director Becky Worner says the group wanted to get things over with before summer, which usually brings a surge in the number of homeless people. Chances are the move was also designed to force Leamington's hand on the rent reductions, which were set to expire at the end of June. The two organizations have been negotiating, and both sides say there's a chance the Drake might reopen, perhaps with fewer beds. A mediation session is planned for later this summer.

If the Drake stays closed, there are plenty of people who won't miss it. The cops don't have to worry about being called to the facility anymore; Elliot Park neighbors, who have long been blaming the shelter for crime and loitering, practically cheered when the doors were locked. County Commissioner Mike Opat says he "would proclaim victory in some measure" for the county's shelter-rationing policy. And PSP's Worner acknowledges that "organizationally, our life is a lot easier without the Drake. We have one building, and we can turn our attention to the social services rather than fight with the landlord."

What no one talks about much is what would seem to be the main impact from the closing: The fact that it put the county shelter system right back into the crunch mode it sought to relieve with the policy changes last year. Though some of its rooms had been closed lately due to water damage, the Drake contained almost half of all the county's shelter beds. And while once only childless adults slept there, up to half its space had more recently been used for families as the other shelters filled up. When the hotel closed there were enough beds in the rest of the county system to pick up its 126 remaining guests. But with that, whatever excess capacity the system had to deal with during the summer rush was gone. If current trends hold, that means the county will either have to issue more vouchers for homeless people to stay in budget motels--an unpopular option at $50 a night--or figure out how to turn more of them away.

No one knows exactly how many people are homeless. The most commonly used number is that of people in shelters, though that's misleading for obvious reasons: When people are being turned away, "homelessness" can be shown to drop even as it's getting worse. Real figures are harder to come by, since there's no solid way to estimate how many people are doubling up, sleeping in abandoned houses, or drifting around. The best guesses may lie in studies by the research branch of the Wilder Foundation, which in 1994 estimated the number of people "homeless or precariously housed" on any given day in Minnesota at more than 12,000. By contrast, there were just under 5,000 spaces statewide in shelters, transitional housing, and detoxes.

A few things are known about those 12,000. More and more of them each year comprise families; Wilder researcher Greg Owen says there were four times as many homeless families in 1994 as in 1990, while the number of childless adults on the street doubled. Many--between 40 and 60 percent of adults, depending on who's counting--are mentally ill, drug- or alcohol-addicted, or both. And it's an axiom in the business that if you didn't have those kinds of problems before you landed on the street, chances are you soon will.

Finally, shelter providers report a growing number of working people using their beds, and that figure is rising too: Between 1990 and 1994, Owen's research indicates, the share of homeless adults who held down jobs rose from 19 percent to 25 percent. About half of those jobs were full-time. Some temp-labor agencies run vans past shelter doors to pick up their regular workers.

At St. Stephen's--a church-basement shelter that takes no county reimbursement and is thus one of the few to still accept single, nondisabled men--one recent night, at least a dozen of the 40 men who had won a cot through the nightly lottery were asking to be awakened at 5 a.m. to go to work. Among them was James, a tall, balding, bespectacled man in his early 50s who works about 25 hours a week stacking supplies at the Metrodome. He had a family and a good job in Omaha years ago; then the plant where he worked shut down. His current weekly paycheck, after child support, comes to less than $100. The average efficiency apartment in the Twin Cities rents for $350 a month, and most places require an income of at least twice the rent.

Ironically, it's people like James who are among the most drastically affected by the closing of the Drake. It was the only local shelter that stayed open 24 hours a day; residents could work the late shift without worrying about being locked out and didn't have to worry about carrying their belongings with them all the time. There were people who paid the nightly rate out of their own pockets--even at $25 in the final days. Now all that's left are a few extra-low-rate hotels like Catholic Charities' Exodus; boarding houses, which the city is targeting for closure; and the street.

Lately there have been complaints of loitering in the park across from the shuttered Drake. Shelter officials say a few of the regulars are people they know, third-shift workers who can't get in anywhere to sleep during the day.

There was a time when all this made headlines. Back in the late '80s and early '90s, celebrities held benefits for the homeless and newspapers reported the annual statistics with alarm. Locally, groups like the Minneapolis Coalition for the Homeless and Up and Out of Poverty Now! were in the news . A task force on homelessness was duly culled from the ranks of government and service providers. It released several sets of recommendations, some of which were adopted by the relevant government bodies.

But the studies and resolutions and advisory panels were pale compensations for the larger forces that were producing more homelessness--changes in the economy and demolition of local housing stock. "When I came to Minneapolis in 1974," remembers deposed PSP head John Treiber, "there used to be a lot of low-income housing, transit hotels, and so on. I was going to school, and you could get a room for $10, $15 a week, a little apartment for $80 a week. With urban renewal that all disappeared.

"Then when they had the task force, they created a lot of so-called low-income housing. But we used to refer people over there and they'd say 'we can't take people from the Drake. We need someone with a rental history, a steady income.' I can understand why they do that--they have to go into those neighborhoods and have an agreement that they're not going to be a nuisance. But that begs the question: What are you going to do with the people who are a nuisance? What are you going to do with the guy who just got to town?"

Hennepin County's latest answer is, not much. The official emphasis on words like "triaging" and "targeting" reflects a national trend toward directing whatever public assistance moneys there are (shelter funds, welfare, you name it) toward the "salvageable" portion of the clientele--down-on-their-luck families, say, who may get on track with counseling, referrals, and training. The 410 shelter houses a bevy of programs aimed in that direction: a clinic, a women's support group, a school social worker, a Head Start intake office, a Girl Scout troop. The county's Rapid Exit program, which hooks homeless families up with landlords and provides help with damage deposits, has placed hundreds of people in the last couple of years.

But even that is getting harder to do. Sue Roedl, who coordinates one segment of Rapid Exit, says landlords have been increasingly tepid toward shelter clients as the apartment vacancy rate has dropped to near 2 percent. Adding to the trouble are new get-tough policies from the city, chiefly one making landlords responsible for the actions of tenants and anyone else who might visit the premises. Roedl notes, "A lot of landlords are saying, 'I'm willing to believe that this person who has a criminal history is turning their life around. But what if their friends come around?'"

Then there are the ubiquitous blacklists put out by rental-research firms. Having ever been in unlawful-detainer court (whatever the reason) makes it very hard to find an apartment in Minneapolis, says Roedl. Two UDs make it almost impossible. "And no one," she adds, "wants to rent to a family with teenage boys."

All of which leaves a great many people with very few options. Turning large numbers of them out into the streets is something no one wants to discuss openly, but the county plan is fairly candid. "Philosophically," it says, "there is broad consensus for requiring those who use emergency shelter to make active efforts to stabilize their housing... [But] there must also be a safety net for... those who are unwilling to cooperate but must be housed due to legal or ethical considerations. This safety net would take the form of 'safe waiting' places where families and single adults could spend the night, with assurance of supervision."

The county initially offered "safe waiting" in the lobby of the General Assistance building downtown. People started coming in after the office workers had left; they were herded out again between 6 and 8 a.m. Soon a request for bids from outside contractors went out. One of the specifications was that "they didn't want beds or mats on the floor," remembers St. Stephen's shelter Director Ed Murphy. "They only wanted chairs. It seemed as if they were trying to make it as uncomfortable for people as possible." Eventually the county accepted a Catholic Charities proposal that did feature mats--two-inch-thick, vinyl-covered foam pads that are handed out each night at 9.

Other than that, regulators have been adamant about disallowing creature comforts in the waiting space. It's all the staff can do, says supervisor Diane Dirksen, to stay out of people's hair and "leave them what little dignity there is." There's no frisking at the door and only minimal rules. The Currie Avenue waiting space has hosted pretty much the same crowd since it opened December 21, with one influx of new faces--mostly women--when the Drake closed.

For now, you won't find families in Safe Waiting, though just how long that will remain the case is an open question. The closing of the Drake left just over 650 public and private family shelter beds available in Hennepin County; last August, 615 of those were used on an average night. Which is why the county plan specifically called for safe waiting space for "singles and families."

Even now, Safe Waiting is reaching its capacity of 200 by 11 p.m. most nights. The 30 or 40 people who show up after that find a locked door,. As summer picks up, Dirksen expects the place to fill up a lot earlier.

Meanwhile the Salvation Army runs a truck to deliver sandwiches and coffee to some of the encampments hidden along the river and under the freeway overpasses that ring downtown. When the service began, says the Army's Maj. Dave Dalberg, they dealt with fewer than 50 people each day; now the number is closer to 200.

"Maybe it will be like L.A.," muses Jose, who divides his time between the outdoors and the church basements, but won't go to Safe Waiting. "Have you been to L.A.? People just lie down on the sidewalk. Some of them have big cardboard boxes that they set up like houses. And people don't bother them. They just step around them."

That's about what the county board has been doing in the wake of the Drake's closing. County commissioners who returned calls for this story said they had no plans for an immediate response, and weren't sure one was needed. "The word we're hearing,"says Herb Frey of the Alliance of the Streets, a downtown drop-in center, "is that they really want to get out of the shelter business."

They aren't alone. At the national level, congressional support for low-income housing has been weak for years, and for the next budget year the Emergency Shelter Grant program is slated for a 25-percent cut. At the same time, some 40,000 people with drug or alcohol addiction stand to permanently lose their Social Security Disability income. Official talk--to the extent anyone's talking about these matters at all--is freighted with words like "compassion fatigue."

Locally, the political endgame is clear: Maybe, as someone pointed out during the 1994 debate on the new shelter policy, word will get back to Chicago. "There's no trouble with us sheltering our own Hennepin County homeless," as Commissioner Mike Opat summarizes the board's reasoning. "But there has been a significant number of people arriving from out of state whose first stop is the homeless shelter. And I do not believe that it's the obligation of the county board or any other local government to subsidize people's move from other parts of the country here with our tax dollars. People have to have a plan for their shelter if they're going to move here, is my contention." ("If these people were from Bosnia, we'd welcome them," scoffs Catholic Charities head Msgr. Jerome Boxleitner. "But not if they're from Detroit.")

The numbers suggest that not even a moat around Minnesota would quite solve Hennepin County's crunch: On average, between one-quarter and one-third of new shelter residents in any given month are from other states--Illinois, Wisconsin, and California chief among them. The largest share, about 50 percent, are from Minneapolis, and most of the remainder are from suburban Hennepin and other metro counties, where shelter space is close to nonexistent.

But what politicians are really worried about at the moment is something other than regular migration: It's the prospect of welfare-reform refugees. Local governments everywhere are watching Congress and the Clinton administration's moves toward sending public assistance back to the states. They know that there isn't a welfare-reform plan in the country that doesn't reduce or remove benefits at least to some people.

Even if Congress doesn't get around to passing a national welfare package, the Clinton administration has already granted reform waivers to 15 states, and more--including Minnesota--are on the waiting list. Minnesota's package, passed at the Legislature this spring, includes a 30-day residency requirement for new applicants. It's full of loopholes and will probably be found unconstitutional, but the message is clear.

Hennepin County has been down this road before. Back in 1985, when Jan Smaby of more recent public-television fame headed the welfare department, intake workers got a memo on "services to out-of-state residents." As a result of "an unusually large number of families and individuals arriving here with no resources [and] no previous connections with the community," it said, a new policy was being put in place: "Emergency help will consist of no more than one night's lodging, food to cover the trip, and a one-way bus ticket or the equivalent in gas money back to point of origin." People who wanted to stay would be given an appointment and "processed in the normal manner," but without shelter or any other emergency aid in the meantime.

The policy was quickly struck down in court. But Hennepin County apparently remains the only government entity in the country that offers a free bus ticket to public-assistance recipients who ask. And within days after the closing of the Drake, an Alliance of the Streets flier warned homeless people that as space got tight during the summer, Greyhound might indeed be their best option. Around the same time, Gov. Arne Carlson complained in a Star Tribune welfare-reform story that Florida "pays people to take the bus up here" and announced that the state might respond in kind.

You can picture the outcome, says Frey: "Buses as traveling shelters," a new class of nomads shipped from neighborhood to neighborhood, state to state. Or, suggests Bill at St. Stephen's, maybe it's better to drink yourself into a stupor; then you get taken to detox or, if they're full, to the hospital. He's been on the streets most of the time for two years and has tried this a few times--along with being taken in for frostbite, pneumonia, and suicidal feelings. "You get taken care of better when you're drunk or you're going to kill yourself," he notes. An older version of the same trick involves breaking a shop display window so you'll get picked up and taken to jail for the night. But that's dubious these days, because the jails are always full.