What happened
The city's series of hotel conversions took place as part of a broader strategy to boost the local stock of permanent supportive housing, or PSH—units offering extended rental assistance and supportive services, such as health care and career assistance for homeless people with disabling conditions.
PSH is viewed locally and nationally as among the best-performing homeless interventions. In Austin, nearly 100% of people who move into supportive housing either successfully maintain their space or move out into a stable living situation.
“It’s a highly successful intervention. That being said, it’s also our most costly intervention, so that's why we’re trying to do some more work upstream," Homeless Strategy Officer David Gray said. "PSH is a worthwhile investment for folks who’ve been chronically homeless, have some type of underlying health condition and really need that long-term sustained care.”
In 2021, officials moved to buy or fund the conversions of three hotel properties in North and Northwest Austin to serve as long-term PSH. After years of work and millions of dollars invested, and some maintenance- and safety-related issues, the complexes all opened in the second half of 2024, including:
- The 123-unit Balcones Terrace managed by Foundation Communities
- The 78-unit Pecan Gardens managed by Family Eldercare
- The 60-unit Bungalows at Century Park, managed by Integral Care
Zooming out
Transforming the three hotels and offering supportive services has cost the city around $50 million combined between property acquisitions, renovations and operating costs. Gray said the 2024 openings represented the end of the first chapter for city-backed hotel conversions. Even so, he said the Homeless Strategy Office and Housing Department continue to weigh new property purchases for homeless housing and may revisit the strategy down the road.
“I don’t ever want to take anything off the table. I think we’ve now learned a lot about these hotel conversions that, we now know better what we would be looking for in a hotel property for it to be worth the public’s investment to convert that into PSH," he said.
The permanent housing projects join a pair of other refurbished hotels that have served as emergency shelter tied to Austin's Housing-focused Encampment Assistance Link, or HEAL, program that's served about 1,000 people since 2021. The city is also converting an east side hotel into a family violence shelter.
What's next
The more than 260 new units spread across the three former hotels were just some of the recent PSH additions around Austin, joining new construction like the 171-unit Espero Rutland that opened earlier in the year.
Gray said new development, rather than the rehabilitation of existing buildings, will likely make up the bulk of new PSH projects in Austin going forward. The city is anticipating the arrival of hundreds more units through the mid- to late 2020s, and city leaders are also now considering future investments to continue adding new buildings as the current wave of construction wraps up.
The Ending Community Homelessness Coalition, or ECHO, is responsible for overseeing the regional homeless response system and statistics on the area's unhoused community. This fall, ECHO representatives told City Council at least $350 million in new spending could be needed to meet the Central Texas system's needs over the next decade, including nearly $220 million to develop the hundreds of new PSH units now projected to be needed each year.
“If that is something that we are going to provide as a community, as a city, and hopefully with partners, we are going to need a large amount of capital and a large amount of ongoing funding for those services," council member Ryan Alter said in December. "These projects take a long time. They’re not something that in 2027, we can say we want to start the process to get units in 2028. We need to start the process today if we’re going to be building the over 600 units in some of these years that is called for in this plan.”
New financing sources will likely need to be found for future housing programs after the current wave of construction wraps up. Many current projects are supported by Austin and Travis County's allocations from the federal American Rescue Plan Act, funds that must be used up by the end of 2026. A recent recommendation out of a City Council subcommittee, if approved in early 2025, would make homelessness a key budget priority next summer and kick off the development of a wider funding plan.
It remains to be seen how Austin's shelter and supportive housing gaps will be filled, but Gray said the presence of successful PSH communities around Austin can serve as examples for any new apartments coming to neighborhoods around town.
“We’ve had no major issues, we’ve had no major complaints. Every site that I’ve been to, the clients have been overjoyed to be there, the neighbors have been happy to have the site there, and the staff are doing phenomenal things," he said. "Things are going really well right now, and we’re hoping to keep this momentum moving forward as we bring these other projects online.”
