We hear the sounds of the city waking up: traffic, shrill police whistles, jack-hammers, the sounds of heavy construction equipment. As the sounds of the city become more rhythmic, the orchestra picks up and melds with the city sounds as they diminish to the point where they are barely audible. As the orchestra rises, so do several homeless figures from what appeared to be piles of debris just moments ago. They sing Homeless Souls led by Ward, the protagonist and storyteller, who appears a little too pale, almost translucent. During the song Ward transforms from a homeless person dressed in rags to a somewhat shabbily attired businessman.
At the end of Homeless Souls, while the rest of the cast enters some form of theatrical suspended animation, Ward moves down stage and delivers the prologue. Basically, Ward reiterates what has just been sung in Homeless Souls. He welcomes us and says that he was once like us---successful, happy, at ease--but that he had become homeless and that now he is condemned to re-tell his story until we all find our homes. But for now, says Ward, relax and enjoy the show.
As Bill and Crumb exit they almost knock down two women who have come on stage. One of the women, Faith, is a social worker who is bringing a homeless woman, Phoenix, to the tenement that serves as temporary housing for homeless people. Ward, who is still on stage, recognizes Phoenix as his ex-wife. He turns his face away so as not to be recognized. Phoenix is so wrapped up in her current problems that she doesn't notice him. Faith and Phoenix sing No Place Like Home, a song that looks into the difficulties associated with temporary housing. After the song, Phoenix double takes on Ward, shakes her head as if to say, "that's not him," and exits into the building. Faith moves downstage and is assisted by the chorus as she sings What Can One Person Do?
As Faith moves off the building inspector wanders in, clip-board in hand and asks Ward if he is the representative from Crumco who is supposed to meet him and give him access to the building. Ward replies that he is and that there has been a big mistake and that they no longer want to have the building condemned. The inspector is angry and wants to know why he wasn't notified before he made the trip. The inspector hurries off in the direction of the office building to talk to Crumb, his old buddy. Ward follows in hot pursuit to attempt some damage control.
Phoenix emerges from the tenement as Diego a young street punk comes forward. He is a teenager and has followed Phoenix to the shelter. When Phoenix comes out into the street Diego hangs back, stalks her, then grabs her from behind and spins her around to face him. She is alternately terrified, shocked, and--recognizing Diego as her son--relieved, then angry. She implores him to join her, but he knows that if they find out she has three kids instead of two, she could lose her place at the shelter. Besides, he tells her, he's doing ok and sings an account of his rise in stature in the gang, Momma If You Could Only See. Phoenix exits and Diego meets Danny, his friend. Danny brings Diego up to date about himself in I'm Just Sixteen.
We hear several gun shots from the tenement side of the stage. This prompts Bill to ask Crumb why he wants to build in this area with all of the crime, poverty and drugs. Crumb explains that once he has redeveloped the area it will be too expensive for the present residents to continue to live there. "Where will they go?" asks Bill. "Not my problem," responds Crumb.
Crumb, assuming the role of mentor, tells Bill that he can't worry about those bums in the street. He tells Bill that his own Father was a bum and a boozer who never had time for his family and who disappeared when Crumb was just a child. He tells Bill about a local organization of business people who asked Crumb to donate money to help the homeless. "Putting good money after bad if you ask me." Crumb has a better idea, the telling of which he relates to Bill as My Old Neighborhood.
After Bill exits, Ward comes back on stage. He stands in the alley, searching the windows of the tenement for a sign of Phoenix, his ex-wife. He is a little tipsy and has a bottle in a bag in his hand. Frustrated and lonely, he sings Where Are You Tonight? Phoenix, unaware of him, joins in as they sing a duet.
At the end of the song, Vet, one of the ever-present homeless people, comes forward and asks Ward if that's his old lady. "Used to be," Ward replies. Vet says he doesn't blame him for not letting his old lady see him. He doesn't want his family to know where he is either. Vet asks for a drink and Ward obliges. A bond is formed between the two.
Vet introduces Ward to some of the other homeless people in the alley. When Ward meets Mary, a young, modestly attractive woman, he comments that he thought that all homeless women were bag ladies. Mary, who is not surprised, explains that she, too, had a lot of misconceptions about homeless people when she was a housewife, not so long ago. She sings about these attitudes in Not My Job.
Ward is buoyed by the levity of the situation and in his inebriated state invites everyone to the local bar for a drink. Vet, however, declines and opts to stay behind in the alley alone.
Phoenix comes to the window of the tenement and sings Dream Your Own Dreams, a song lamenting how her life has turned out.
At the end of the song, Vet has moved down stage and is talking to himself. He segues into Who Goes There?, a song about his experiences in Vietnam. As the song progresses and he moves deeper and deeper into his flashback, we see shadowy figures entering the set from unusual entrances. One or two climb out of the trash bin. Although it is dark, we get the impression that these shadowy figures are the Viet Cong that Vet is imagining in his trance. The shadows move more quickly as Vet begins to panic. They begin to close in on him. At the very end of the song one of the shadows appears to be beating Vet. Abruptly the lights come up and we see it is Diego beating Vet out of his anger and frustration over having shot his friend.
At the end of the song, Bill and the Inspector emerge from the tenement. The Inspector posts a condemned sign on the building. Bill thanks the inspector and apologizes for the mix-up yesterday. Vet and Ward hide in the alley and eavesdrop. After Bill and the Inspector exit, Vet go up to inspect the notice. It is a thirty day eviction notice from the health department. Ward wonders if there is any thing that he can do to help his ex-wife. Vet says it seems like there are fewer and fewer places that people like us, meaning he and Ward, can stay. Ward becomes angry with Vet. "I'm not like one of you. I can take care of myself," says Ward and storms off. "Oh, yeah! I can take care of myself too. I just have a few problems," Vet retorts and exits in the other direction.
Faith enters and reads the notice on the tenement door. Phoenix enters, obviously excited and crosses quickly to Faith. Phoenix tells Faith that she got a job and that it is a good one. The pay's not much but there is day care for her littlest. They sing Together, a song about how much easier it is to accomplish things when we work together. At the end of the song they discuss the eviction notice on the door. Phoenix is confident that she can afford a better place now.