Chum Struve approached the city of St. Paul this summer fearful for the future of not just the four sober homes she operates in the capital city, but also the 10 women and 36 men who call those locations home at a difficult time in their lives. After testifying before the city’s Board of Zoning Appeals and then the St. Paul City Council, she’s still worried.

“A lot of sober homes have already closed,” said Struve, who said the industry has been whacked by a raft of new state rules that have in turn put several of the city’s sober homes out of step with city zoning requirements. “We’re waiting for the stats to come out. There’s going to be a lot more homeless people. Try to be sober when you’re homeless. That’s not going to work.”

Not all sober house operators agree with her assessment of an industry that added hundreds of beds and services virtually overnight, inflated in recent years by easy access to federal funding, and is now in flux. There are approximately 130 sober houses in St. Paul, each housing up to 22 residents, according to the city Planning Commission, which is studying potential new regulations.

“Of the sober houses that have closed, none of them in my opinion were really good sober houses to begin with,” said Tim Murray, a long-standing operator who runs Trinity Sober Homes, which maintains three locations in St. Paul. “They were all opportunists.”

One-year moratorium

City staff have recommended limiting sober homes to 10 residents and requiring them to register with the city’s zoning administrator, among other regulatory changes. On the other hand, distance requirements between more intense uses, such as shelters for the battered, could be cut by more than half, dropping from 1,320 feet to 600 feet, or even 300 feet if they’re separated by a major street.

Given the large concentration of sober housing in St. Paul and recent fraud scandals involving addiction treatment providers such as Minneapolis-based NuWay Alliance and St. Paul-based Evergreen Recovery, city planners and state regulators have been left wading through the aftermath.

On Aug. 6, the same day Struve testified before the city council, the council members put a halt to new applications for sober housing and “supportive housing facilities” for up to a year while the city’s Planning Commission completes a review of distance separation requirements, definitions and other potential rule changes.

The one-year moratorium could be lifted as soon as Planning Commission recommendations land before the council for final approval.

A hearing on the city’s new “congregate living zoning study” is scheduled before the Planning Commission on Oct. 17, and Struve is among a number of sober house operators who plan to testify. The hearing will be held at 8:30 a.m. at City Hall.

What constitutes a ‘sober house’?

Among key questions: What exactly constitutes a sober house, how does it differ from “supportive housing,” how many people are allowed to live in one at once and how far should sober houses be situated away from each other in St. Paul?

In city code, the short answers are they’re sober living group homes that are not staffed and provide no on-site therapeutic services, which makes them distinct from treatment facilities and other institutional settings. There’s currently no upper limit to how many residents can live in a sober house in most of St. Paul’s zoning districts, and the minimum distance requirement between them is currently 330 feet.

For St. Paul city planners, that much is clear. After that, definitions and requirements get murkier. Confusion over whether certain facilities fall under the title “sober houses” or “supportive housing” in city code has increased as facilities have sought state behavioral health dollars, which has required them to acquire new state operating licenses and reclassify themselves as the latter.

Under St. Paul’s zoning code, that brings with it some challenges. The minimum separation distance requirement for supportive housing facilities — including emergency housing, shelters for battered persons and other “congregate living facilities” that are generally staffed and provide on-site services — is 1,320 feet in most of the city outside of downtown, or four times that of sober houses.

The Planning Commission is looking to possibly cut that distance by more than half. New distance requirements for “congregate living facilities” could land anywhere from 300 feet — a short city block — to 1,000 feet, with 600 feet being the current staff recommendation. Distances could run as little as 300 feet if an arterial street sits in between the facilities.

Additional changes to city code are likely. In 2024, an operator requested to establish a sober house with 30 occupants. They were denied, but the situation raised questions about the appropriate upper limit. Currently, all sober houses with more than six adult residents must submit a request for “reasonable accommodation” to the city, and apply for a conditional-use permit if there are more than 17 residents. City staff have recommended dropping the limit for sober homes to 10 occupants.

New housing providers in limbo

For a decade or more, the Stronger Sober House on Farrington Street has offered a halfway house environment for 11 men on the road to recovery from addiction. Not long after Struve and partner Chad Unger bought Stronger Sober in 2023, a Medicaid billing and kickback scandal involving addiction services provider NuWay Alliance upended their corner of the industry.

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Unger and Struve discovered that under new state rules, treatment centers would no longer pay sober homes to house clients transitioning out of their programs, which had grown more common as a result of federal funding changes related to the Affordable Care Act, or Obamacare.

Instead, group homes that used that model would be forced to apply to the Minnesota Department of Human Services for behavioral health funding to stay afloat, and abide by an entirely different set of regulations and expectations.

Among them, any clients receiving less than nine hours of outpatient treatment per week would not be eligible for state funding and would be forced to relocate. In addition, sites such as Stronger Sober would have to apply for a board and lodging license and reclassify themselves from a group home to a “supportive housing” facility.

Struve said Stronger Sober went through a rigorous application process, made the deadline and were approved for state funding in June, but many of the sober house operators she’s aware of did not and were forced to shut down. Some of those clients are now living on the streets.

“If you looked at the provider list in the board and lodging program, the sober homes got reduced by at least 30%. That’s a conservative estimate,” said Struve on Wednesday. “(State funds are now) 100% of our budget, because all of our residents are using it. It’s how our residents survive. It’s how we serve them.”

Then came yet another complication. Struve and Unger, among other sober house operators, discovered they were now in conflict with the St. Paul zoning code, which maintains a stricter separation requirement between “supportive housing” facilities like emergency shelters than it does for traditional sober homes. The required distance is 1,320 feet in most of the city, or four times that of a sober house.

Too close for comfort

Under the code, their Farrington Street location was suddenly situated too close to three other supportive housing facilities in Frogtown and the Summit-University area, the closest of which is about 700 feet away.

That set them on a path before the city’s Board of Zoning Appeals, which took up a number of similar applications for zoning variances for newly reclassified “supportive housing facilities” in May and June. Most of those variance requests were turned down, including Struve and Unger’s. The BZA rejected their application 5-0.

Struve and Unger appealed their case to the St. Paul City Council, which in early August chose to neither approve or deny their appeal. Instead, the council put their variance request on hold for up to a year while city planners probe some increasingly thorny questions around “congregate living.”

Murray, whose Trinity Sober Homes company operates 50 beds, said he’s skeptical of efforts on all sides and doesn’t want the city to alter sober housing regulations or distance requirements.

“Chum’s situation is very unique,” Murray said. “Probably less than 20 sober homes have been affected by this NuWay fallout. We are unfazed.”

Most sober homes have relied on tenants to pay their own way, he said. That limits most of the fallout from recent scandals to newer operators who saw an opportunity to get easy access to Medicaid dollars through treatment providers who were sometimes unscrupulous in their methods, according to Murray and other established owners.

For quick cash, some operators filled their sober houses with “anyone who had a heartbeat and could fog a mirror” and needed cheap housing, regardless if they were committed to sobriety, Murray said. “For a lot of these guys, it was easy, lazy money. The supply of beds jumped to meet this new flood of money that was coming in.”

“There’s probably hundreds of beds where 100% of the people were funded by NuWay,” he added. “Well, what happens to those beds? The majority of us were relatively unaffected by this whole fiasco.”

Pushback against state oversight

In June, the U.S. Attorney’s Office announced that NuWay had agreed to pay the United States $18.5 million for submitting fraudulent claims to Medicaid in violation of the False Claims Act. Based on an investigation by the state attorney general’s office, DHS suspended Medicaid payments for NuWay’s non-residential treatment programs in February, leading to 174 employee layoffs.

Other industry providers in the Twin Cities such as Evergreen Recovery and Kyros, which provided coaching for non-clinical peer recovery specialists, have also shut down amid recent fraud probes.

“NuWay put up a bat signal and said, ‘Every idiot who can open a sober house, come here and we’ll fill you up,’” said Chris Edrington, proprietor of St. Paul Sober Living, which maintains about 50 beds in St. Paul and 20 in Colorado. “Evergreen did it even worse.”

Still, both Murray and Edrington said they’re skeptical of the state’s growing oversight of sober housing.

As a purist, Murray defines sobriety as being completely abstinent from habit-forming substances that could cause dependency, including prescription drugs like Xanax and Suboxone. Group homes subscribing to state DHS definitions of sobriety likely would be open to individuals who still use those substances, which Murray said flies in the face of the goals of creating a non-clinical, tenant-driven therapeutic sober community.

“What I think gets missed is we have an incredible sober community in St. Paul, mostly because of the sheer numbers,” Edrington said. “(Sober housing) is a valuable part of the continuum of care, which does not need to be wrecked by the state of Minnesota. We’re social housing, not clinic organizations. The addiction agency of any state should not be the certifying body.”

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