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Philadelphia once set itself the goal of being the first big city to end chronic homelessness. And the city did dramatically cut the number of people sleeping on the streets downtown. Now, the number of homeless is climbing again, and no one is quite sure why.

Joel Rose of member station WHYY has that story.

JOEL ROSE: Katie Duncan(ph) lived on the street for three years. She was struggling with drug addiction and mental illness. So when she was offered the keys to her own apartment, Duncan says she didn't believe it.

Ms. KATIE DUNCAN (Former Homeless Resident, Philadelphia): I was always on drugs. I'm a mental (unintelligible). Who the hell would want to help me?

ROSE: Now, the 44-year-old Duncan is off drugs. She's working part-time and living in an apartment in North Philadelphia, a few blocks from where she grew up.

Ms. DUNCAN: I have a first floor with a (unintelligible). I have a backyard, and I love it. I'm not moving no more. And the only way I'll move, if they tear it down.

ROSE: Duncan got her apartment and drug treatment services through a federally funded pilot program called New Keys, part of a broader effort around the country to fight homelessness by placing the chronically homeless in permanent housing first and worrying about their other problems later.

Dennis Culhane teaches sociology at the University of Pennsylvania. It may seem counterintuitive, but Culhane says so-called housing-first programs are sometimes cheaper than traditional approaches that emphasize treatment and sobriety.

Professor DENNIS CULHANE (Sociology, University of Pennsylvania): When people who are on the street are placed in permanent housing they end up getting hospitalized less frequently, they don't get arrested as often. So when you total up all of the reduced use of those services, it nearly offsets the cost of the housing. It suggests it's a wise public investment to place people in housing rather than have them live on the street.

ROSE: Culhane says housing-first programs help cut the number of people sleeping on the streets of downtown Philadelphia, from almost 800 people a night during the late 1990s to fewer than 300. That's far less than New York, San Francisco or Los Angeles.

In an interview late last year, Philip Mangano, head of the U.S. Interagency Council on Homelessness, touted Philadelphia as a success story.

Mr. PHILIP MANGANO (Executive Director, United States Interagency Council on Homelessness): Philadelphia has been a model for cities around the country. There are mayors and other people that made pilgrimages to Philadelphia to see the effort that's been made here that has reduced the street homelessness in Philadelphia by about 50 percent. I know that there has been a recent tick up in that number.

ROSE: In fact, it's more than just a tick. After accounting for seasonal fluctuations, homeless advocates say about 600 people a night are sleeping on the streets of downtown, more than twice the number of a few years ago, despite the fact that the Bush administration has poured millions of new dollars into homeless services around the country.

The University of Pennsylvania's Dennis Culhane says federal money helped build new housing in Philadelphia, but it didn't make the problem go away all together.

Mr. CULHANE: We had a lot of successes in the late '90s and early 2000s, which led to the creation of a lot of new units. It's hard to sustain that level of success. So now we're dependent on vacancies in turnover in the units we have.

ROSE: And some advocates say the administration is putting more pressure on existing homeless services by cutting subsidies for public housing. Sister Mary Scullion is the director of Project H.O.M.E., the largest private provider of homeless services in Philadelphia.

Sister MARY SCULLION (Director and Co-Founder, Project H.O.M.E): They continue to cut housing programs except for the programs for the chronically homeless, which is just the tip of the iceberg. But the other cuts help produce chronic homelessness. So we have a long way to go.

ROSE: Sam Santiago is an outreach worker for Project H.O.M.E. It's his job to drive around town talking to the homeless, trying to connect them with shelters and other services.

Unidentified Woman: Hey, we have a response call.

Mr. SAM SANTIAGO (Outreach Worker, Project H.O.M.E): It's a slow process with everything in there. And sometimes, the politicians basically want a quick fix. This work is not a quick fix.

ROSE: One of the men Santiago did convinced to come into a shelter is Allan Krause(ph). Krause had been living in a park in Northeast Philadelphia for over two years. When I spoke to him, Krause was staying in a city-funded shelter called Somerset, but he did not know how long he'd be there.

Mr. ALLAN KRAUSE (Homeless Resident, Philadelphia): They're going to close some of these shelters, and they don't have enough shelters as it is. There're still a lot of people out in the street.

ROSE: Do you know what's going to happen to you if Somerset were to close?

Mr. KRAUSE: I guess I'm back to the park.

ROSE: As it turned out Krause did have to leave Somerset when the weather warmed up. Today, he's back in the park.

For NPR News, I'm Joel Rose in Philadelphia.

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