City staff identify $101M in funding needs to address homelessness in Austin

Ahead of this month’s budget workshops, city staff have released estimates that it will take more than $100 million in additional funding to sustain and expand the local homelessness response system as the expiration of federal pandemic relief aid approaches and long-term capital and service demands continue to grow.

The memo from Homeless Strategy Officer David Gray, offers a detailed response to a City Council resolution approved in January that directed city staff to identify priorities, costs, and potential administrative changes required to ensure continuity in critical homelessness programs.

The analysis assumed a system-wide framework, focusing on prevention and diversion, rapid rehousing and permanent supportive housing. According to the report, Austin’s current homelessness-response infrastructure is at risk of losing several key components as one-time federal American Rescue Plan Act funds sunset.

Among the initiatives identified as vulnerable are: the Marshalling Yard Emergency Shelter, which provides 300 beds and will require $8 million annually to continue operating; a bridge shelter housing program tied to the City’s encampment resolution strategy; and street outreach contracts that have supported coordinated responses across Austin’s 300-square-mile service area.

Without new funding, the memo cautions that emergency shelter capacity would be reduced, outreach operations would be scaled back, and individuals currently placed in temporary or transitional housing could return to homelessness. The memo identifies $15.6 million in ARPA-funded programs recommended for ongoing support.

The loss of those resources would weaken management of encampments, likely reduce utilization of the shelter system, and impact case-managed rehousing efforts connected to the Downtown Community Court and other diversion points.

Beyond immediate shortfalls, the memo outlines long-term investment needs through a 10-year system model developed by the Ending Community Homelessness Coalition and adopted by Council in January. That model, informed by historical data from the Homeless Management Information System and projected rates of homelessness episodes, has become the city’s primary planning tool for estimating future housing and service needs.

According to the memo, executing on that model will require significant increases in both capital and operating funds, particularly in the areas of emergency shelter, rapid rehousing, and permanent supportive housing.

Staff project that an additional $32.3 million in annual operating and service costs will be required to meet projected shelter demand, not including capital expenses for new construction or renovation of shelter sites. The analysis anticipates the need for 550 new shelter beds by 2029.

In addition to previously announced expansions underway at Camp Esperanza and Central Health’s Cameron Center, the city is also awaiting a decision from the state on a proposed shelter project adjacent to Camp Esperanza that could add more than 300 beds if approved.

Rapid rehousing programs are projected to require $23.65 million in new funding to scale up and maintain programs, with $650,000 in new funding for the Downtown Community Court’s rapid rehousing initiative. The memo notes that expanding rapid rehousing efforts during the current period of relative rental market softness could allow for more efficient leasing and greater landlord participation. Homeless Strategy Office staff also propose changes to the coordinated entry system to ensure that rapid rehousing is prioritized for individuals with lower service needs, thereby improving outcomes and reducing program costs.

Between 2024 and 2027, 391 permanent supportive housing units already in development will require approximately $7.9 million per year in supportive services funding. The office has no available budget to cover those costs, although a one-time $4.8 million Budget Stabilization Reserve Fund allocation is available and may be used to temporarily fill some of the gap.

The report estimates that meeting projected permanent supportive housing demand through 2034 will require an additional $23 million in annual service and operating funding, not including the estimated $675 to $760 million in capital costs to construct up to 4,550 new permanent supportive housing units. The memo notes that ongoing limitations in state-administered tax credit programs and a pause in new voucher availability from the Housing Authority of the City of Austin have created uncertainty around new project-based shelter development, prompting staff to explore tenant-based and global leasing models as alternatives.

The memo also details several administrative challenges that staff say are limiting the effectiveness of the Homeless Strategy Office. Among the most significant are a lack of dedicated leadership depth, no internal data or technology staff and a minimal field presence for encampment management and unsheltered outreach. Currently, two temporary employees are responsible for conducting daily fieldwork citywide.

The office has proposed a 40-position staffing expansion to improve operational continuity, strategic planning, communications, and performance monitoring. Those positions would be assigned to newly created divisions focused on encampment management, outreach, data systems, and shelter quality assurance, among others.

The memo concludes with a recommendation that the City continue to convene its primary homelessness system funders including Travis County, Central Health, Integral Care, and philanthropic organizations to explore funding scenarios.

Photo made available through a Creative Commons license.

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