Hotel industry rebound undermines city’s acquisition strategy to address homelessness


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Thursday, June 9, 2022 by Chad Swiatecki

The city may have to abandon its strategy of converting hotels and motels into temporary and permanent housing with support services for the homeless, due to a rebound in the housing market that has driven up prices and reduced available properties.

Tuesday’s city council business session included a progress report from homelessness strategy manager Dianna Gray on the city’s goal of providing housing for approximately 3,000 homeless residents over the next three coming years. The update notes that $422 million has been raised to meet the estimated cost of $515 million to achieve this goal, with $8 million in new funds coming in recently from the state of Texas and private donors.

Gray said the Housing-Focused Encampment Assistance Link, or HEAL initiative, has so far successfully dispersed and provided housing for residents of nine homeless encampments in the city, with 267 people helped to find shelter. .

The biggest obstacle to expanding and accelerating the initiative is the limited number of bridge shelters available to the city, with one of the two currently in use due to be converted into permanent supportive housing, thus removing it as a temporary housing option for those in other encampments on HEAL’s list for future attention.

For more than a year, the city’s main solution to providing shelter and permanent housing has been to acquire hotels or motels that can be converted fairly quickly for long-term living.

Michael Gates of the city’s real estate office said the post-pandemic recovery in the hotel and lodging industry has dramatically changed the market for buying such properties.

“The outlook for Austin’s hospitality industry is rosy at this point. Some of these operators were holding each other by the nails, but now the people who were happy to hear from us a year ago are no longer returning our calls,” he said. “It’s the confluence of lack of prospects and sticker shock. We’re acting as a market player, making unsolicited offers to them to sell to us, so the leverage is with them to demand a premium.

Gates said he and others involved with homelessness continue to research possible acquisitions, while looking for other facilities such as nursing homes that could be converted into shelters. A more remote and expensive option, he said, would be for the city to build new shelters in locations that meet its criteria, although this would cost significantly more than buying an existing hotel and would take a year. or more.

Council member Ann Kitchen, who has been one of the strongest advocates of the HEAL initiative, said the municipal land that is currently being considered for affordable housing should also be considered for new shelters and permanent housing.

“I wonder what the solution is. Is there a different approach or another kind of properties we need to look at? I am assuming that we need to acquire another refuge,” she said. “The HEAL initiative, while just one piece of what we do, has been one of the most successful pieces to date in targeting high-risk locations. I wish we could speed up HEAL, but having another deck shelter is a critical part of our ability to grow.

With the real estate market proving tough and some parts of the city having few hotels or motels for potential acquisition, council member Natasha Harper-Madison said it was time for staff to start exploring other options so that progress in solving the city’s homelessness problem is not. stall.

“I was convinced from the start that the hotel conversion strategy was not going to be what was supporting this. I really thought it was long, frankly, and the harder it was in different parts of town, I was already looking for other options. What are our other options? What isn’t even remotely viable? And if this strategy is untenable, I’d rather know than not.

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