City leaders are moving closer to finalizing a long-awaited hotel tax that could generate funds for homelessness services, with a City Council vote expected within the month.
On Monday, the *Austin Business Journal* [reported](https://www.bizjournals.com/austin/news/2024/09/09/austin-hotel-tourism-public-improvement-district.html) that the proposed Tourism Public Improvement District (TPID) tax has reached a key milestone. Local hotel owners representing 78 percent of the assessed value of the 150 eligible hotels have signed onto the agreement, surpassing the required 60 percent threshold. The next step is securing approval from 60 percent of the total square footage or 60 percent of the total number of eligible hotels, a target that is reportedly close to being met.
If the TPID is approved by both the hotels and the city, a new 2-percent tax would be added to hotel room rates. Most of the revenue would be used to promote Austin hotels for conferences and events during the four-year reconstruction of the Austin Convention Center. However, through a [complex funding arrangement](https://services.austintexas.gov/edims/document.cfm?id=414538), the city expects to receive an average of $7 million annually, which could be used to support services for individuals in permanent supportive housing.
This arrangement is necessary due to a recent state law that restricts how TPID funds can be spent. Despite this, city leaders have long seen the hotel tax as a crucial source of funding for homelessness services, an issue they’ve been grappling with for nearly a decade.
Last fall, Council members Ryan Alter and Vanessa Fuentes [announced](https://www.austinmonitor.com/stories/2023/09/hotels-adjust-proposed-new-tax-giving-city-steady-funds-for-homeless-services/) they had helped broker an agreement on the tax and its use to address homelessness. Alter noted that while they had hoped to bring the agreement to the Council sooner, the process of securing signatures from the various hotel ownership groups has taken longer than anticipated.
With the Council currently focused on homelessness services as part of the city’s budget discussions, Alter believes there will be strong support for the TPID, which is expected to begin generating revenue by early 2025.
“If you look at how the recent budget discussions went, it’s clear the Council is very focused on addressing homelessness,” Alter said. “We’ve made significant investments in housing, but we need a sustainable revenue stream to fund the services that go along with it. This tax could provide that ongoing funding.”
Alter added that the city plans to spend the remainder of the year consulting with housing and service providers to determine the best use of the funds.
“Once we pass the TPID, hopefully in the next month, we’ll have the fall to engage with stakeholders and figure out how to best allocate the available funds,” he said.
Walter Moreau, executive director of Foundation Communities, emphasized the importance of the new funding. His organization is currently $2 million short of the $7 million it needs to provide support services for residents in its housing. With costs ranging from $6,000 to $20,000 per client, Moreau said the TPID funds would be a significant help to his and other groups working to expand permanent supportive housing in Austin.
“We’re really struggling to fund the social services that are crucial to reducing homelessness,” Moreau said. “The city is realizing that you can’t just build housing without providing ongoing services. It’s an essential public service.”
*Photo by [Daderot](https://commons.wikimedia.org/wiki/File:Driskill_Hotel_-_Austin,_Texas_-_DSC09393.jpg), [CC0](https://creativecommons.org/publicdomain/zero/1.0/deed.en), via Wikimedia Commons.*
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Source: austinmonitor.com