Urban Peak Accused of Wage Theft During Construction of New Homeless Shelter

Urban Peak, a longtime homeless service provider that works in partnership with the City of Denver, has been accused of wage theft by the Denver Auditor's Office over the construction of its new $38.6 million shelter known as the "Mothership."

Christina Carlson, the nonprofit's CEO, tells Westword that the charge could wind up costing Urban Peak an estimated $2 million should the results of a February appeal hearing not swing in the organization's favor.

"It will have an impact on what we are able to do in terms of staffing, furnishing and additional components to the building," Carlson says. "And so based on that, we requested the hearing with the auditor's office to work out what is what."

Matthew Fritz-Mauer, executive director for Denver Labor — a division of the Auditor’s office that handles wage compliance — says that Urban Peak has been paying workers residential prevailing wages instead of building prevailing wages.

Residential prevailing wage rates for electricians are $26.91 an hour, while building prevailing wages for electricians are $39.75 an hour, according to Denver Labor. Plumbers make $23.24 an hour in residential and $39.53 in building; sprinkler fitters make $18.47 and $41.46, respectively.

"People have to get paid the money that they've earned," Fritz-Mauer tells Westword. "The prevailing wage is essentially a minimum wage that applies to a job. So if the hearing officer agrees with us that this is a building project, then there will have to be back pay paid."

Construction of the 66,000-square-foot "Mothership" building at 1630 South Acoma Street, set to open in July, was made possible through partnerships, bonds and donations from the City and County of Denver, the State of Colorado, local fundraising efforts and the federal government.

Specifically, $16.8 million was supplied through the city's 2021 RISE Denver Bond program; $11 million through federal New Market Tax Credits; $3.7 million from the state; and then millions more through donations and various other venues. Congresswoman Diana DeGette helped secure $3 million in federal funding for the complex.
Urban Peak's wage-theft dust storm got kicked up on January 4, 2023, when Denver Labor received a pair of emails from one of the organization's housing developers, Christian Pritchett, with Blueline Development, Inc.

"Cleaning up contracts here," Pritchett said in one of the emails, which were reviewed by Westword. "Can you all let me know who at the City the contractor should coordinate with on Davis Bacon," he wrote in a follow-up, referring to the Davis-Bacon Act.

The federal legislation directs the U.S. Department of Labor to determine locally prevailing wage rates. It applies to contractors and subcontractors performing work on federal or District of Columbia contracts.

"Urban Peak accepted $16.7 million in taxpayer dollars and promised to follow all prevailing wage requirements," says Taylor Overschmidt, director of communications for the Auditor's Office. "The project was being planned since at least March 3, 2021. Nevertheless, nobody contacted us until January 4, 2023, five days before they finalized the agreement and just shortly before Urban Peak broke ground."

Carlson says Urban Peak and its partners on the Mothership project "followed the precedent set by a similar project and the guidance from the contracting agency who issues and oversees all housing and homeless services contracts," but she did not say what that similar project was.

"We followed the direction we were given by the previous administration, assuming it was accurate and had been vetted internally within the city agencies," Carlson says. "Urban Peak is not involved in those internal government discussions, and we rely on the communications that we have with the City."

The Auditor's Office says that Denver Labor conducted a "review" of Urban Peak's Mothership project after being contacted by Pritchett and Blueline Development, determining that it warranted building prevailing wages rather than residential prevailing wages, which it had been paying out.

"Residential projects are things like single-family homes, townhouses, apartment buildings of four stories or less, duplexes, and then there's, like, a narrow category of student housing that's four stories or less," Fritz-Mauer explains. "Building project examples include offices, dormitories and commercial space. And so, you look at the Mothership project, it's got dormitories with between two or eight beds, and it's also going to serve as Urban Peak's headquarters."

Urban Peak's layouts and blueprints for the Mothership indicate the building is made up of dorms, with office and shelter space set aside for gatherings and meetings. The Mothership is described on Urban Peak's website as a "medical clinic" and "shelter" that will provide "life skills development," mental health services, case management, supportive services and shelter beds for more than 130 teens and young adults.

"On February 6 of 2023, we first informed partners at HOST [Department of Housing Stability], and through HOST the developer, that this is not a residential project," Fritz-Mauer says. "And then after that, there were further discussions, including several meetings between my predecessor — the prior executive director — and Urban Peak's leadership, including a representative from the developer and Christina Carlson."

According to Fritz-Mauer, the meetings were about understanding Urban Peak's perspective, listening to what the organization and Carlson had to say, and then explaining to them the reason for Denver Labor's determination.

"Urban Peak requested and received an extension to file their appeal," Fritz-Mauer says. "Among everyone in our office, as far back as any of us can remember, we've never seen something like this. This is the only time any of us can recall in our collective careers of a wage determination from our office being appealed."

One reason the city doesn't see wage appeals, according to the Auditor's Office, is that the wage standards aren't set separately for each individual project. Normally, contractors and developers will reach out at the beginning of a build to get the proper determination from the city in a bid to avoid back pay and wage theft accusations.

"For the vast majority of building prevailing wage and qualified construction projects, the contractors and the people doing the work reach out to our office," Overschmidt says. "This is an anomaly."

Carlson says that while Urban Peak requested an appeal hearing to determine the appropriate prevailing wages for the Mothership, that doesn't mean the organization doesn't want to pay workers what they're owed. She just wants to make sure the city got it all right.

"We look forward to the resolution of this issue so that we can both pay the extraordinary contractors that are working on the project appropriately and meet the needs of youth experiencing homelessness," Carlson says. "We do not want this to be an either/or; what we want is to provide the most vulnerable among us with a dignified place to heal, learn and grow so that our youth can break the cycle of homelessness. We are also committed to paying the appropriate prevailing wage to the members of the community who are building the Mothership and our great city."

Although she says Urban Peak is "deeply grateful" to all of its partners — and in particular to the City of Denver — for investing so much money in the Mothership project, Carlson adds that this prevailing wage change could really hurt the group and its efforts.

"To find out in the eleventh hour that there is a possibility of needing an additional $2 million to this project is very challenging, particularly in the current landscape, where inflation is impacting our staff, our youth, our donors and our funders," she says. "We have to raise money for annual operations, not just for this campaign. We continue to provide services every single day. And there is only so much money out there. Our donors and government partners are incredibly generous to us, but there is only so much money."

Fritz-Mauer and Denver Labor say that for Urban Peak to suggest it was "blindsided" by the wage review and determination is wrong.

"I think it's unfair to suggest that the Auditor's Office blindsided anyone, because Urban Peak never brought us into the process until early January of last year, right before finalizing the funding assignment agreement with the city and shortly before breaking ground," Fritz-Mauer points out.

He says Urban Peak's claim that it was following "precedent" is also wrong, pointing to 46 years of guidance from Denver Labor.

"It's a building dedicated wholly to office space and dormitories — and it's a shelter," he adds. "It's not an apartment building, it's not student housing. There's a lot of office space there. Office space for at least forty people to work at once. So I disagree that they were following precedent."
According to Denver Labor, Urban Peak did not follow the standard process for getting prevailing wage rate approvals from the Auditor's Office "from the start," which raised city eyebrows because Denver Labor is the only entity — and has been the only entity for decades — with the authority to determine what prevailing wages apply to a project.

"Private parties like Urban Peak, contractors and architects aren't able to do that," Overschmidt says. "Although we support their admirable goals, we cannot waive wage laws simply because they missed a step. Wage theft causes significant harm to the workers who suffer it. If Urban Peak's $2 million number is accurate, that's $2 million that isn't going into the pockets of the hard-working people who literally build this city. It's an extraordinary amount of money being denied to families and communities."

A ruling from Urban Peak's appeal hearing is expected soon, according to the Auditor's Office. The case's timeline has been impacted by legal delays caused by pre-hearing briefings and other matters.

"I wish that Urban Peak had contacted us. I know that they were working on this project for years and it got put up for bid in March of 2021. So I just wish they'd contacted us," Fritz-Mauer says.

Urban Peak is one of the city's biggest partners in addressing homelessness; the organization currently serves youth at its Drop-In Center and Overnight Shelter, aka The Spot, on Stout Street.

Workers with Urban Peak made history in July 2023 by becoming the first homeless service providers to unionize in Colorado. The Service Employees International Union 105 had accused Urban Peak of "high workloads, excessive turnover, and most critically, the lack of proper training and resources to effectively serve the unhoused youth," according to the union.

In January 2023, Urban Peak lost a $500,000 grant from the state's Behavioral Health Administration due to "ongoing performance issues" related to performance targets and goals for the number of youth served. BHA officials said the organization had failed to meet its quota multiple years in a row.