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Jim Crawford and his fiancee were walking down the street in northern Santa Rosa one day last January, headed downtown where they planned to spend another night sleeping outside in the cold.

Crawford and his fiancee, Dana LeBlanc, had just left a motel where they often stayed for a few days whenever they could pull together the funds. The homeless couple had just checked out and, with no cash left even for a bus ride, was making a more than 2-mile trek down Mendocino Avenue.

Then Crawford received a phone call that would change their lives. A representative from Catholic Charities said he and LeBlanc would become two of the first new residents of the Palms Inn, a former motel on Santa Rosa Avenue being converted into 104 permanent housing units for chronically homeless people and homeless veterans.

For the first time in two years, Crawford and LeBlanc would be able to sleep every night in the same bed, with a roof over their heads and heat to keep them warm during the North Bay’s frigid winter nights.

“It felt like a load off my back, (like) maybe we have a chance,” said Crawford, 49, who has worked as a handyman and cares for LeBlanc, 29, who is disabled.

Sitting with her at a communal gathering space at the Palms Inn, Crawford emotionally recalled the day his and LeBlanc’s homeless ordeal began drawing to a close.

“For a long time, I was getting worried about having faith in humanity and losing faith in God. I never was really a religious man, but I hoped,” Crawford said, his voice trembling as he wiped tears from his eyes. “It was a blessing. I didn’t know if we were going to be able to (be homeless) for another year.”

Crawford and LeBlanc are just two of more than 140 people who have benefited over the last year from Sonoma County’s ambitious experiment to combat homelessness.

By providing low-cost permanent shelter to the county’s most vulnerable residents, the Palms Inn project has sought to demonstrate how the burden to public services can be eased — and the lives of the chronically homeless improved — when housing is provided first. Those involved with the project say it’s had a major positive impact, even as financial challenges remain.

When selecting people to move into the Palms Inn, Catholic Charities evaluated potential residents using the so-called vulnerability index, which assigns people a score based on criteria such as their contact with law enforcement and medical needs. Those with the highest scores were offered rooms at the former motel.

Six months later, the nonprofit re-evaluated people using the same index and found that among the formerly chronically homeless residents interactions with law enforcement dropped 77 percent, admittance to the emergency room and in-patient hospitalizations fell 45 percent and ambulance transportations were reduced 56 percent, according to Jennielynn Holmes, Catholic Charities’ director of shelter and housing. Usage of suicide hotlines and other crisis intervention services plummeted 98 percent, Holmes said.

“Those are pretty powerful indicators, local indicators, of what housing can do for a population,” she said. “With the absence of housing, people are using our emergency response system more often, are using the criminal justice system more often ... We’ve seen a dramatic reduction of what resources people are using in the community.”

The project was modeled after a similar effort in San Francisco, where in 2014 a former hotel on Kearny Street was transformed into permanent housing for homeless veterans. Unlike that project, the Palms Inn houses both formerly homeless veterans and chronically homeless people at the same site.

Catholic Charities operates the entire facility and contracts with the motel owner for 44 units for chronically homeless people, while the local Veterans Administration pays to house veterans in 60 units.

Sonoma County Supervisor Shirlee Zane, whose district includes the Palms Inn, said the project furthers the county’s goal of getting homeless people sheltered as soon as possible.

“That’s their highest stressor. It’s not getting them into treatment, it’s getting them off the streets, and then getting them the treatment they need,” said Zane, who helped get the Palms Inn conversion off the ground.

Once housed, residents receive an on-site case manager and access to support services such as substance abuse treatment, job training and mental health care.

Because the project has targeted the most at-risk homeless, shelter hasn’t been enough to prevent the inevitable for some residents — and officials expected that. Seven residents died over the last year, all from natural causes and “people with extreme physical health issues,” Holmes said.

Palms Inn resident Mary Blanton, 56, knows her life was saved when she received shelter there a few months ago.

A lifelong Santa Rosa resident who was homeless for 10 years, Blanton said living largely on the streets for so long took a severe toll on her health. “I was going to the hospital more than I was staying out. Sick with pneumonia all the time, cold, whatever,” Blanton said. “And then I had my high blood pressure and all that stuff. Now, since I’ve been in, everything’s just perfect.”

Blanton spent many nights sleeping outside in the rain, nights that made her resolve somehow to find permanent shelter.

“I knew I couldn’t do another winter out here,” she said.

For all its successes, however, Palms Inn continues to face challenges moving forward, with funding perhaps chief among them.

Annual operating costs are now about $1.5 million, with most of that covering rent for residents, who generally pay 30 percent of whatever income they have to stay at the former motel, Holmes said.

The Board of Supervisors approved a $260,000 contribution to cover operational costs for the first six months of the project, and additional funding came from the city of Santa Rosa, the U.S. Department of Veterans Affairs, the U.S. Department of Housing and Urban Development and donors.

But faced with a $350,000 funding gap for 2017 operations, supervisors in January approved spending another $143,700 to get the Palms Inn through June. Holmes expects grants and donor contributions to cover the rest.

Akash Kalia, the property’s owner, waived rent for the communal spaces for the first year to help the project get off the ground during winter. But Kalia can’t afford to do so again this year and will be charging commercial space rent in order to maintain the viability of the project, he said.

“If I could give it away for free, I would,” Kalia said. “It’s hard. I really wish I could, but I’m not überwealthy. For us to be an example for the rest of the business community, we need to set a good precedent and show ... that you can maintain business viability and maintain a social good.”

Kalia would like to make capital investments into the property, including replacing the roof on the hotel, and the rent money will help with that, he said. Supervisors also want to see the Palms Inn become financially self-sufficient, according to Zane.

“They have to create some type of sustainable funding on an ongoing basis,” Zane said. “It doesn’t mean that we might not be able to help them some more ... but it’s pretty clear that the board has said, ‘You’ve got to find ways to sustain these programs.’ They are on a mission in terms of grant writing and in terms of individual and local donors, and I feel confident that they will be able to do this.”

Holmes felt similarly assured the project would secure the funds it needs to continue, describing the outpouring of support so far as “overwhelmingly humbling.”

“I think that the community loves this project too much to see it go away,” Holmes said. “I feel confident that we have some sustainable funding coming, and even more so, I believe in our community and the impact this has had on them and that they will make sure these vets and these people can stay housed.”

Kalia remains committed to the project as well.

This year he hopes to bring in a partner organization to operate the currently unused kitchen as a dining hall, where Palms Inn residents could receive vocational training. He also envisions eventually building apartment units on the property for low-income residents.

LeBlanc, Crawford’s fiancee, is looking to the future with anticipation, too.

She loves living at the Palms Inn, but eventually would like to find a permanent house where she and Crawford can live together.

“It might take a long while. It might take years to find a place,” said LeBlanc. “But I know somewhere, somehow, somebody’s going to eventually help us out. For now, I’d rather call this place right here home. Now I don’t have to worry about being on the streets.”