Item 49

[Colleen Pate]

I want to provide some information regarding Item 49. This is a unique opportunity for Austin to obtain significant state funding to meet a critical need.

You will recall that in July 2023, I secured a partnership between the City and the Texas Department of Housing and Community Affairs (TDHCA) to help with Austin’s homelessness challenges. Around the same time, I worked with the state and, as a result, TXDOT ultimately purchased land contiguous to the original Esperanza site to allow for expansion. The general timeline has been:

• 2019-present – TXDOT allows the Esperanza Community on state land owned by TXDOT
• 2023 – TDHCA agrees to partner with the City and offers $65 million in homelessness funding with most of the funds ($48 million) going to The Other Ones Foundation (TOOF) for the expansion of the Esperanza Community. The remaining funds were divided between Caritas and Lifeworks for prevention and navigation services.
• Early 2024 – TXDOT purchases 7 acres adjacent to Esperanza I for Esperanza II
• Mid 2024 – TDHCA awards $2 million capacity building grant for Esperanza II project
• December 11, 2025 – After the item had been postponed from another meeting, TDHCA awards $48 million for construction of Esperanza II and the planned 325 additional non-congregate shelter beds. State funding (capacity building + capital costs) = $50 million (not including use of land and the TXDOT purchase of the additional 7 acres).

Reason for the resolution

Before the grant dollars can be released to begin the project, TDHCA rules require TOOF to demonstrate within 90 days of the board vote that they have a financial commitment for the first two years of operating funds for the new facility. The 90-day deadline is March 10, 2026.
I brought this as an IFC simply for ease of getting it in front of the Council to assure TOOF and Austin don’t lose the money while facing the deadline. I’ve been involved with the matter from the beginning and recently when issues arose about whether the millions of dollars would still come to Austin. Now that the TDHCA Board has voted, I felt it was important to bring the issue forward to help secure this very large amount of state money by providing a mechanism for meeting TDHC’s needed commitment. The resolution uses negotiated language that has been approved by TDHCA to meet TDHCA’s standards for making a grant. This has been achieved after multiple discussions.
This resolution does not appropriate funds or set monies aside – that would be part of the City’s normal budget process. Given that the project is not anticipated to be completed and open to new residents until late 2029, TOOF fortunately has time to assist in securing operating funds from multiple sources so that it’s not dependent solely upon the City, although the City’s commitment is necessary to meet the 90-day requirement.
It should be noted that, over the past six years, the City Council approved operating funds for the Esperanza Community only once. In November 2025, Council approved $2.9 million, an amount that is less than half of TOOF’s current 2026 operating needs.

TOOF Fundraising
TOOF has a proven ability to satisfy partners at the state level and to fundraise for the Esperanza Community since it opened in 2019 as a state-sanctioned homeless encampment on TXDOT land. I have told TOOF that it needs to aggressively seek other funds from other sources. It needs to operate its business with a development/funding plan and show results.
TOOF has committed to increase its fundraising efforts to operate Esperanza II. These efforts will be in line with its usual practice to diversify funding for a more sustainable Esperanza Community.
I have confidence that it will be able to achieve its goals. Through its evolution from an encampment to a non-congregate tiny home shelter, TOOF has diversified its funding with grant awards and philanthropic gifts to provide most of its operating funds.
From TOOF’s start with its Workforce First program to the Esperanza Community, AHSO considers TOOF to be one of its highest performing operators serving the most complex clients and coming up with phenomenal outcomes. The Esperanza Community model helps folks move steadily upward from the streets to safety and dignity, offering case management, workforce development through Skillpoint Alliance, and pathways to permanent housing.

AHSO Strategic Plan
The City needs this state funding and should not sacrifice tens of millions of dollars for homeless services from a source other than the City. This is especially true after the loss of the TRE, which would have provided significant funds for our AHSO Strategic Plan. This potential investment by the City results in significant money from another jurisdiction and helps achieve the AHSO plan.
AHSO’s Strategic Plan recommends adding 650 more shelter beds by 2027 to the existing 1,482 current shelter capacity. AHSO also recommends a commitment to ongoing funding for operations at the Esperanza Community – Esperanza I has 100 beds, soon to reach 200 beds, and Esperanza II will add 325 more. TOOF’s approach, particularly with case management, broad services, and vocational training, advances multiple AHSO and Council priorities and offers a fuller spectrum on the continuum of care.
The resolution includes a clear signal that support for Esperanza II should not be interpreted as support to reduce shelter beds elsewhere. This is in response to questions about potentially closing the Marshalling Yard shelter and shifting operations and funding to Esperanza II when it opens.
Such an idea assumes that the Marshalling Yard and Esperanza II are identical in their approach and serve the same populations, but that is not the case.

The Esperanza Community can serve the function of transitional housing, and like the Northbridge and Southbridge facilities, it targets a specific need. Esperanza Community focuses on workforce development and is the primary shelter for those who are able and prepared to take on job readiness.

The Marshalling Yard, on the other hand, is a low barrier emergency shelter where easy access is intentional. Shifting Marshalling Yard to Esperanza II will result in a large net loss of low-barrier shelter beds for the most vulnerable. The Marshalling Yard, or a similar facility to replace it, is needed as part of the continuum of care.

Thanks for your consideration and for your continued commitment to meeting the needs of our unhoused population.

Kirk

Resources (chronological order)
• AHSO Plan Initiating Resolution (from Public Health Committee January 2025)
• Homelessness Prevention Framework (AHSO presentation April 2025)
• Additional Shelter Support (Mayor Watson, Sponsor August 2025) This led to the $2.9 million in additional funds for Esperanza I in November 2025 as part of Budget 2.0.
• Staff Response to Shelter Support resolution (AHSO memo October 2025)
• AHSO Strategic Plan

On behalf of Mayor Watson