A year after Utah officials announced to great fanfare that chronic homelessness had been nearly wiped out, a battle is brewing over the future of the largest shelter in the state.

Not because the Road Home, in Salt Lake City, and its 1,000-plus beds aren’t needed in the Utah capital – but because they are.

On Sunday night, the massive operation housed 1,041 men, women and children on triple bunks in overflow dormitories, in small rooms for desperate families, on so-called medical beds for the sickest and most frail, on yoga mats on the floor.

Some had spent more than 3,000 nights in the jammed facility, one of the nation’s biggest. More than 300 fit the shelter’s definition of chronic homelessness, even if they don’t match the federal government’s guidelines, which the state used to trumpet their good news a year ago on 28 April.

That’s when the state housing and community development division boasted in a press release: “Utah’s Chronic Homelessness Approaching ‘Functional Zero.’ State Achieves Goal Ten Years in the Making.”

Road Home residents in front of a newly constructed mural wall. Photograph: Chad Kirkland/The Guardian

Headlines across the country lauded the Beehive State and its rare statewide Housing First program, which strives to place homeless people in permanent housing before addressing their addiction and mental health issues. Utah had cut the chronic ranks by 91% in the last decade, said Gordon Walker, division director at the time, and there were only 178 chronically homeless people left statewide.

“The surprisingly simple way Utah solved chronic homelessness and saved millions,” trumpeted the Washington Post. “Utah Reduced Chronic Homelessness by 91%; Here’s How”, cheered NPR. “Utah is winning the war on homelessness with ‘Housing First’ program”, said the Los Angeles Times.

Except no one at the state had bothered to run the announcement by service providers such as the Road Home and Crossroads Urban Center – groups that support the state’s efforts but also work each day with the men, women and children who still have no place to call home.

“Making a statement like that was in direct contrast to what you see on the street,” said Glenn Bailey, executive director of Crossroads, which runs a food pantry and thrift store and fights for economic justice. “It’s an exaggeration. It wasn’t helpful … since the recession, the largest single part of the homeless population that’s grown is families with children, and youth”.

When asked whether he agreed that Utah’s chronic homeless population was nearing “functional zero”, Road Home executive director Matt Minkevitch replied: “I would differ with that perspective.”

Hannah Tracy, 41. Photograph: Chad Kirkland/The Guardian

Utah is exhibit A for the most difficult reality of homelessness in the US today: It is possible to work hard, be innovative, make headway – all of which Utah has done – and still be nowhere near “winning the war on homelessness”, or even the fight to put a permanent roof over the most vulnerable.

People like Barbara Crofts. Early Monday, the 51--year-old former baker was seated in her wheelchair on South Rio Grande Street. Her friend, Lori, perched on the curb beside her, smoking. Bedraggled people milled around, many wrapped in the blue blankets they are issued when checking into the Road Home. Storm clouds gathered.

Crofts has been at the huge shelter since August, for the first six months in a medical bed because of her osteoarthritis and degenerative disc disease. Her children, she said, kicked her out while she was waiting for social security disability payments to begin.

The state’s announcement that chronic homelessness is almost gone “was stupid”, Crofts said. “There’s no cure for it, unless there’s some huge influx of money from somewhere. I don’t even think there’s enough low income apartments to move into.”

“I sleep on a yoga mat,” she continued. “That’s the overflow. There’s not enough ‘beds’. And I say that in the kindest of fashions. They’re prison cots. But it’s better than sleeping on the floor. We need more room.”

Crofts dreams of buying a mobile home and living there with her boyfriend, David Thomas, whom she met at the shelter.

On the coldest, dampest nights of the year, the Road Home cares for upwards of 1,300 people. Nine hundred or so sleep in the cinderblock facility, across the street from a soup kitchen and a day center run by Catholic Community Services. Around 300 are housed in the family shelter in Midvale, about 11 miles away.

Angel Ivens, 42, has lived at the Road Home for two years. Photograph: Chad Kirkland/The Guardian

But not long after Salt Lake City mayor Jackie Biskupski was inaugurated in January, she revived the city’s Homeless Services Site Evaluation Commission. The group has until September to decide where in the city to place two new homeless shelters, one for 250 men and the other for 250 women.

Whether the Road Home will continue to operate on South Rio Grande has not been decided. At this point, all that is clear is that Salt Lake City will eventually have shelter beds for 830 people – 500 at the two new facilities, 300 at the Midvale family shelter and 30 at a Volunteers of America youth shelter that will open soon.

What will happen to the other 500 or so people in need of emergency winter shelter is an open – and contentious – question.

What is not debated is that Utah has made strides in moving many of the state’s long-term, disabled homeless people into permanent supportive housing.

In the last decade, for example, Salt Lake County opened Grace Mary Manor, with 84 units, and the Road Home rehabilitated an old hotel into the 210-unit Palmer Court. Other supportive housing units are scattered throughout the city, although demand far exceeds supply.

And the number of chronically homeless people – based on the annual point-in-time count in January –has definitely dropped. However “functional zero” does not mean that homelessness is gone, but rather that a jurisdiction has a system in place to deal with it. Even by that definition, providers and the state disagree about Utah’s success.

Alan Lovelace is one of the lucky ones. The 66-year-old former laborer has “lived outside” on and off for decades, depending on whether he was able to find work.

“I was here, living outside and attempting to become employed again, and one night I collapsed and had a stroke,” he said. It was 2006. He was camping alone. When he was able, he walked to the Road Home, an ordeal that took him two days.

During the stroke, he broke his left big toe, which he had injured in 1993. Gangrene developed and the toe was amputated. He spent a year in a medical bed at the Road Home. Two years ago, he was able to get an apartment with the shelter’s help. He planted a garden.

“I’m growing vegetables, I have a kitchen, a bathroom, a living room, a utility porch,” he said, proudly. “I just planted jalapeños … Now I’m living as a normal person. I have an income through social security. I can only thank the people who helped me.”

Many of those same people meet every Tuesday afternoon in the shelter’s boardroom for “housing triage”. Housing supervisor Kevin Austin prints a list of the most long-term residents, those with some kind of mental or physical disability who meet government standards for housing assistance.

He also has a list of what housing is available that week – either actual supportive housing units or vouchers that homeless people can use to rent an apartment in the community.

On Tuesday, the numbers were grim. More than two dozen outreach workers and case workers met to figure out who would get a home. There were 71 eligible men and women, and two vouchers. One available housing unit.