Selection process for tenants is under way as project seeks to provide permanent place to live before solving issues such as mental health, drugs or alcohol

For rent: brand new one-bedroom apartments in the shadow of downtown Dallas, a short walk from one of the city’s trendiest areas. On-site concierge. Successful applicants will be homeless, mentally ill and possess criminal records.

These are strange-sounding tenant requirements, but The Cottages at Hickory Crossing is an unusual kind of project. It is a “housing first” strategy: find the homeless a permanent place of their own before trying to solve their problems, rather than the other way around.

The fifty 400sq ft units are set to open in April in north Texas. Despite its bucolic name, Hickory Crossing is wedged between freeways a mile from the city’s high-rises, with railroad tracks, warehouses and the nightlife of the Deep Ellum district close by. One of the nonprofits that has raised the funds for the multimillion dollar project, CitySquare, has an Opportunity Center across the road offering a variety of services for low-income Dallas residents.

“In order to live across the street you have to be chronically homeless, disabled, with some presenting mental health issue, typically drugs or alcohol, and you have to have a criminal background. If you haven’t been in jail you can’t stay in our houses,” says Larry James, CitySquare’s CEO.

The process of selecting tenants is under way. It began by identifying the 300 most expensive homeless people in the county, based on their cost to city services such as the health and prison systems.

Facebook Twitter Pinterest Hickory Crossing’s 50 units are set to open in April in north Texas. Photograph: Tom Dart

“We will have 50 of the most expensive homeless persons. The average cost per person on this list of 300 to the county alone, not counting the city or nonprofit organisations, is over $40,000 a year to stay outside. We’re going to provide a gated community with security, seven day a week mental health services, really good housing – platinum LEED certified – every house has a bedroom scaled to queen-sized furniture, a living room, kitchen and a bath, a nice front porch. Less than $15,000 a year is what it costs to provide that kind of housing,” James says.

All for a rent of 30% of the tenant’s monthly income – whether it is $1,000 or $10. The only requirement? “Be a good tenant,” James says. That means no criminal or disruptive behaviour; but no pressure on residents to immediately go sober if they are addicted to alcohol, for example. Help will be on hand when they are ready.

“I’ve heard stories of people getting ‘housing first’ and sleeping with the door open because it’s such a massive shift, it took months or even a year for them to be able to shut and lock the door,” says Jonathan Grace, a pastor who works with the homeless in Dallas.

Other models for housing that focus on mental illness and alcoholism have been credited with reducing chronic homelessness in Utah by 91% and have been tried in cities including Seattle, Los Angeles and New York.

Even in a Republican-dominated state known for its miserly welfare benefits, part of a culture that promotes limited government and self-reliance as keys to individual success, James has not heard carping from anyone who argues the scheme is rewarding failure. “Even if you buy that business that you make your own luck, these people obviously aren’t, and they’re costing the rest of us,” he says.

“We didn’t lead with our high-tone morals. We led with return on investment, we led with a business proposition. Do we want to keep bleeding the county at 40 grand a head, or could we intervene, bring the private sector in as well as the public sector, have a real partnership, that produces a product that reduces cost for everybody? The projected savings to the county over the 30-year life of this project is somewhere between $35 to 40m. Not only is it more humane, more socially appropriate from a public health and safety standpoint, it also is cheaper than doing nothing.”

Dallas had to try something. It is a city of glaring extremes: increasingly wealthy yet with a swelling poverty problem. The Dallas-Fort Worth area’s GDP increased by 68% between 2000 and 2012. Yet poverty rose too, to the point that four years ago, 38% of children in Dallas were in poverty, the worst rate among US cities with more than a million inhabitants.

Requests for emergency food assistance increased by 8% in a year and although the number of homeless families went down by 26%, homeless individuals increased by 50%, according to a December 2015 report from the US Conference of Mayors. Some 40% of homeless adults in Dallas are severely mentally ill.

As builders worked on the cottages site last year, another development that puts human faces to the numbers expanded dramatically only a couple of hundred metres away: Tent City.

The sprawling homeless encampment beneath a freeway overpass grew to be so large that it encompassed hundreds of tents and distinct neighbourhoods: the alcoholics, the drug users, the young people, clustered on a dusty patch of wasteland close to the shimmering glass skyscrapers of downtown and a giant billboard advertising a banana-yellow Ford Mustang. Clothes hung on a metal fence, pigeons pecked at the ground and portable toilets stood in a corner near a truck providing medical services.

“There’s new faces every day,” a Tent City resident who gave his name as Lopez said earlier this year above the hum of the traffic. He’d been sleeping there since last spring after giving up a bed in a shelter to look after a friend who lived in the camp but had recently been incarcerated. “It’s not really a fun place to live but you’ve got good people and bad,” the 53-year-old said.

After losing a job as a metalworker he fell on hard times but preferred not to stay with his sister. “I don’t like being a burden to people. I want to be independent,” he said. Lopez found a job working downtown. For all its challenges, life in Tent City offers a level of flexibility and independence that is not always available in shelters, which are often run by religious groups and have rigid rules that can make taking a job impractical, such as the need to line up for a bed by mid-afternoon.

But after violent episodes including two murders this year, city authorities decided to close Tent City and will evict residents by 4 May. “We are working hard every week to find housing for relocating these folks,” James says.

James believes the cottages could promote a more enlightened approach to homelessness in Texas, one that emphasizes trust, time and collaboration. “People given resources and opportunities typically work hard to solve their own problems. We just don’t respect that enough,” he says.

“We want to swoop in with our answers rather than engaging people and hearing what they think is the best next step. Usually when we get that information and take it, good things happen, people do the best they can with what they’ve got.”