This was the first sanctioned village in Seattle that doesn't require sobriety; it's also the first to be shut down.

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The city of Seattle plans to shut down the Licton Springs tiny-house village after March, bringing to an end one of the most controversial city efforts to help house homeless people.

The decision to let Licton Springs’ two-year permit expire next spring marks the first time Seattle has closed one of its tiny-house villages since it began opening them in 2015. Seattle, with a ninth village set to open next month, has embraced the tiny-house strategy to fight homelessness as aggressively as any city in the nation.

Representatives with SHARE/WHEEL, the activist nonprofit that handles day-to-day management of the camp, were informed of the city’s decision Tuesday, according to an organization spokesperson who spoke on background. The group was shocked but will try to persuade the city to change its mind, the person said.

The decision on Licton Springs, and recent moves to cut funding for SHARE/WHEEL shelters in next year’s budget, signal a clear evolution in Seattle’s approach to the villages, who should run them and how.

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Licton Springs opened on Aurora Avenue North in April 2017 as part of the city’s effort to address a steep rise in the population of homeless people sleeping outside, many of them dealing with substance abuse. The site was controversial from the beginning because residents are allowed to use alcohol and drugs, something not permitted at the other city-sanctioned encampments.

That was a draw for many of the city’s hardest-to-serve homeless people who had previously refused offers of shelter. But it incensed residents of the surrounding north Seattle neighborhood; calls for police service on the block where Licton Springs sits spiked 62 percent in a year, according to a Seattle Times analysis.

The homes are usually no bigger than 120 square feet, often equipped with electricity but no plumbing, raising concerns about their fitness for human habitation. But they are cheaper than most shelters, and far cheaper than building new subsidized housing.

After learning of the camp’s closure, neighborhood resident Michael Armijo, who said he had lost sleep over his safety concerns, had mixed emotions but was generally relieved.

“I am happy that it seems to be acknowledged that we need to do better,” Armijo said.

Fifty-three people still live in Licton Springs; 39 of them have been living there more than a year, said Will Lemke, spokesman for the city’s Human Services Department. Most of them had significant challenges and disabilities, Lemke said, including chronic mental-health issues and substance abuse.

“They weren’t getting into housing at the rate we wanted,” Lemke said. In response, the city instituted a performance improvement plan for the site.

That plan will remain in place as the city spends the next several months working to find permanent housing for the remaining Licton Springs residents, Lemke said. The city’s decision to not renew the permit was first reported by KUOW.

Licton Springs has been closed to new admissions since June, Lemke said.

The city will pay the Low Income Housing Institute (LIHI), an affordable-housing nonprofit, a combined $1.75 million this year to operate six of the city’s villages, including Licton Springs, with SHARE/WHEEL and its sister nonprofit Nickelsville as partners for on-the-ground staff.

The city’s decision underscored tensions in the relationship between SHARE and LIHI, with the former accusing LIHI of neglecting to provide  resources, like sufficient case management.

But LIHI Executive Director Sharon Lee said some Licton Springs residents turned down housing, which she partly attributed to her belief that SHARE/WHEEL did not support the city’s efforts to move villagers into permanent homes.

“We think there’s an attitude that, ‘This is just fine and dandy and we can stay here,'” said Lee, who added that LIHI will be developing affordable housing on the site, which the nonprofit owns, once the camp moves. “We’re trying to say with this push, staying here is not going to be an option.”

Charles Johnson, senior staff member for SHARE/WHEEL, said Lee’s characterization is absolutely untrue.

The city’s three newest villages, including one that will open in October, do not involve SHARE or Nickelsville.

According to new data from the city, the rate of people leaving the existing tiny house villages for permanent housing decreased in the first quarter of 2018 compared to the same time period last year, from 22 percent to 17 percent. Licton Springs moved only 13 people into housing between July 2017 and March 2018, although that village did better than others.

Lemke said, based on the experience at Licton Springs, the city learned it needs to require residents to work with a case manager – it has been optional before now – and it needed to pay for more case management, which Seattle Mayor Jenny Durkan’s proposed 2019 budget does.

The city’s closure of Licton Springs also comes as officials have started to remove unauthorized homeless encampments at a rapid clip. All Licton Springs residents were referred there by the Navigation Team, the group of outreach workers and police officers responsible for connecting people living in the city’s estimated 400 unsanctioned camps, and with overseeing removal of the camps.

Durkan said during her campaign she planned to open 1,000 tiny houses in her first year, a goal she won’t come close to hitting. Instead, she has pushed to add 500 more spaces for people in shelters and tiny-house villages, some of which will also include case-management services.

The tiny houses are not considered shelter by federal standards, and have been criticized by Seattle homelessness consultant Barb Poppe, the U.S. Interagency Council on Homelessness and departing King County Human Services director Adrienne Quinn, who called them “tiny shacks.” But supporters say the sites are an important transition space for people who’ve lived outside for significant periods of time.

Things seemed to be running as usual at Licton Springs Wednesday, with people coming and going to and from the homes, many painted bright colors and decorated in individual styles. John Robert, 52, tended to plotted plants arranged around his front steps, hiding an elaborate music and entertainment studio he’d set up inside his tiny home. He has been living in Licton Springs since soon after the site opened, after spending the previous eight months homeless.

He’s been happy with his experience at the village, where people are free to live as they choose, Robert said. “They’re a group of people here who give you many, many chances,” he said.

Now, with news of the village’s impending closure, Robert said he’s ready for housing. Johnson, the SHARE staffer, said the nonprofit hopes the city can come through with its promises to people like Robert.

But already, Johnson said, he’s heard about people planning to move back on the street.

Staff writer Scott Greenstone contributed to this report.