City Council approves nearly $7 million to keep Marshalling Yard shelter open

The city of Austin has identified the financing it will use to keep the Marshalling Yard emergency shelter open indefinitely.

In September, City Council agreed to keep the shelter in Southeast Austin open until a more permanent location could be identified. Mayor Kirk Watson proposed the extension, saying that without alternative places for people to go it would be a move backward in helping get people off the street.

But it was not clear then how the city would pay for it.

City officials said they were able to scrape together a combination of federal COVID relief dollars and General Fund money to support the shelter. The City Council approved the $6.75 million at a meeting on Thursday.

While the city was able to find a solution, Council Member Vanessa Fuentes said it’s not sustainable.

She said she hopes a new source of funding through what is called a Tourism Public Improvement District can help close the gap. A Tourism Public Improvement District, or TPID, taxes hotels within a given area to generate money for certain services.

“By establishing this TPID, and per the terms of agreement, this will inject an additional $76 million at minimum, over the next 10 years,” she said. “It is my hope that those dollars go toward homelessness, and, of course, emergency shelter is one piece of that.”

Council established the creation of district on Thursday. It will apply to hotels with 100 or more rooms and is set to take effect in January.

Fuentes was one of several Council members who expressed concerns about funding the shelter without a permanent funding source and location.

Austin opened the shelter in August 2023, approving a one-year, $9.1 million contract through August 2024. It costs $1 million a month to operate the Marshalling Yard. The shelter can house up to 300 people and offers a variety of services like meals and case management.

About 5,300 people are estimated to be experiencing homelessness in Austin, according to data from the Ending Community Homelessness Coalition, or ECHO, a local nonprofit.

But the city does not have enough beds – temporary or permanent – to meet the needs of people experiencing homelessness, officials said.

The city has been working to open more permanent supportive housing. It expects to have about 1,000 housing units available by the end of 2027. In the meantime, the Marshalling Yard has been helpful for people who need a place to sleep indoors. It also has been critical in helping people who are waiting for more permanent housing to open.

Fuentes said this is not a perfect solution but agreed the shelter is an important part of the city’s ability to address homelessness.

“We actually need more emergency shelter beds, so it just really underscores the need for us to identify a permanent location for us to have emergency shelter available,” Fuentes said.

The money approved Thursday will fund operations through September 2025, giving the city more time to find a more permanent location. City officials said staff are also researching how to financially support the shelter after that.

This story was produced as part of the Austin Monitor’s reporting partnership with KUT.

The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here.