Homeless advocate Bill Hobson has cleared every bureaucratic hurdle and beaten every legal challenge but still cannot build his "wet house" for chronic alcoholics. The problem now is funding.

As director of a nonprofit social service center, Hobson wants to build a government-subsidized apartment house for 75 of the city's most hardened street drunks. The residents would be allowed, on a managed basis, to drink in their rooms; the goal would be to eventually nudge them into treatment programs.

The controversial $11 million project -- to be paid for with state, local and federal funds -- would further bolster this city's reputation as a progressive place for the homeless.

It came close to fruition in 2001, when city and county officials first approved the development, known by its street address: 1811 Eastlake.

The small, triangular lot -- in a commercial district on the outskirts of downtown -- was purchased, the permits were paid for, and the heavy machines were ready to break ground.

But then came the lawsuit from neighbors, and the project was in limbo.

The case wound its way through the court system, with Hobson and his allies winning every round.

But with their last legal victory, in the state Supreme Court, came bad news: The federal funding secured in 2001 had to be returned because construction had not begun within the required two-year period.

Now Hobson is about $6 million short and looking for help.

"Our opponents couldn't win in court," Hobson said, "but we've thought all along their goal was to delay the development long enough to destabilize our funding. They've succeeded. But I will say this: This project is going to be built."

Opposition to the development runs along predictable lines: The apartment house and its residents would make the neighborhood unsafe and undesirable.

Richard Aramburu, the attorney representing neighbors -- chief among them the Benaroya Corp., a major landlord in the area -- said the concern was that alcoholism "would spill out into the streets and sidewalks," creating an atmosphere of panhandling and petty crime that would keep good people out.

Other opponents include owners of hotels, office buildings and several small businesses.

"We might have to put our building up for sale, but who would buy it now?" asked Robb Anderson, whose family owns Northwest Trophy, next door to the project site.

Besides the devaluation of the neighborhood, Anderson said, he and his family were opposed to allowing alcoholics to keep drinking "on the state's tab."

Opponents argue that by permitting the project, the city would be enabling alcoholics to continue their self-destructive behavior.

Even Hobson admits that it is a hard idea for many people to grasp.

But in his 18 years as director of the Downtown Emergency Service Center, he said, he has learned that a small percentage of "chronic public inebriates" likely will never recover.

The best the city can do for this population, he said, is to manage their behavior.

Hobson told the story of one man, whom he called Rex, a former logger and truck driver living in a local shelter.

Rex is 71 and has been a chronic alcoholic for 30 years. He has entered and failed in 16 alcohol-treatment programs. Hobson says Rex spends most of his time on the street and would be an ideal candidate for 1811 Eastlake.

On any given night in Seattle, there are more than 1,800 homeless people, many of them in the downtown area. An estimated 500 are chronic public inebriates, according to city and county studies.

Hobson said there were 20 chronic drunks in the Seattle area who cost taxpayers more than $1 million a year in police and jail costs, emergency room services and legal expenses.

The annual cost of running 1811 Eastlake for 75 residents, he said, would be about $750,000. And because residents would be monitored and have access to counselors and medical help, they would spend less time on the streets getting into trouble.

"The logic of it, from a purely practical perspective, is unassailable," Hobson said.

Seattle Mayor Greg Nickels and King County Executive Ron Sims have publicly endorsed the project, as have the Seattle Police Department and the Downtown Seattle Association, whose members include the city's biggest department stores.

The fate of 1811 Eastlake rests with an obscure agency called the Washington State Housing Finance Commission, which will decide this summer whether to open the way for federal funding of the project.

The commission approved the project in 2001, but this year the agency has a new list of proposals to consider, all of them vying for the same federal money.

Said Hobson, "We're holding our breath over here."