The governor's office made the proposal Thursday. The former Fort Lyon Correctional Facility in Las Animas was shuttered last year because of a declining prison population.
Fort Lyon is a 500-acre facility that has functioned as a VA hospital and a prison.
The chief of staff for Gov. John Hickenlooper says the facility could eventually house 200 or so homeless people.
State officials considered using the facility as transitional housing for veterans, but Chief of Staff Roxane White says homeless treatment is the best use.
The homeless veterans would receive drug and mental health treatment, as well as job training at the former prison.
(Copyright 2012 by The Associated Press. All Rights Reserved.)