Less than a year after Deschutes County paid $2.25 million toward the purchase of a facility for a Bend homeless shelter, county commissioners heard Wednesday that the shelter has no immediate plans to pay back that money.

The county also learned that the Bethlehem Inn board of directors thinks the former hotel purchased mostly with county funds in late July is inadequate for the shelter’s long-term needs. In a letter the County Commission received Wednesday, the board’s president wrote that Bethlehem Inn would prefer to buy vacant land and build a facility from scratch.

“Given the Inn’s increased operating cost at the facility, the change in funding priorities, and the prohibitive cost to purchase and remodel the facility into a homeless shelter, the Econo Lodge no longer appears to be a permanent solution for the Inn,” board President Jonathan Basham wrote in the letter.

The economic slowdown has increased demand at Bethlehem Inn on Third Street.

It has also led to a decrease in donations from local businesses and individuals, said Executive Director Sandra Mears.

The Bethlehem Inn is not meeting its operating budget and is having difficulty finding sponsors for its June 21 casino fundraiser.

The fundraising goal for that event is $75,000, Mears said, but even if the shelter reaches that amount, it will need to raise $45,000 more just to meet operating costs for the fiscal year ending June 30. The shelter currently houses about 60 people, she said.

Commissioner Tammy Melton said she was disappointed that Bethlehem Inn did not seem to be planning any fundraising events specifically to repay the county.

“Even if there had been a $10,000 repayment, a good faith of anything, I would feel a little better,” Melton said. “I hope that this is not how we’re going to be moving forward.”

Melton also voiced concerns about how Mears and Cyndy Cook, the executive director of the Redmond nonprofit Housing Works, described a movement away from emergency shelters under way in Oregon and nationally.

Government agencies are encouraging programs that transition homeless people quickly into permanent housing, Mears and Cook said, and this model is sometimes referred to as “housing first.” Bethlehem Inn offers services to help people transition out of the shelter, such as case management and a “ready to rent” class, but it is still an emergency shelter, Mears said.

Bethlehem Inn brought Housing Works into the fundraising process after the county had agreed to contribute $2.25 million to the purchase of a former hotel for the shelter, Melton said. The city of Bend also chipped in $230,000 for a down payment, and the county obtained a $20,000 grant for the down payment, according to the county’s 2007-08 budget.

So when Cook told the County Commission on Wednesday that most government and private funding is available for housing-first programs — which emphasize a rapid transition into permanent housing — Melton said she was concerned that the focus of the Bethlehem Inn shelter was changing simply to meet funding trends.

“We purchased it as a homeless shelter,” Melton said. “We need one, regardless of what the state’s doing.”

Commissioner Dennis Luke also expressed concerns, and said it would be difficult for Bethlehem Inn to expand its operation to include the housing-first model when it still has not paid the county back for its current facility.

Mears said Bethlehem Inn will maintain an emergency shelter, although the organization could eventually incorporate components of transitional and permanent housing.

“If we’re going to do anything, it would be down the road at least three years,” Mears said. “That’s contingent on finding another facility or whether we can build.”

Commissioner Mike Daly said he was not disappointed at Bethlehem Inn’s failure to pay the county back so far, because the county can sell the building if it needs to in the future. The city of Bend holds the title to the property, said Deputy County Administrator Erik Kropp, because the county wants to apply for a $800,000 community development block grant to pay for the facility and cannot do so if it is the owner. An agreement between the city and county specifies that the county or Bethlehem Inn will eventually purchase the shelter from the city.

“I never expected to get paid back,” Daly said.