The city of Austin is cutting ties with Urban Alchemy, a nonprofit that runs two downtown emergency shelters, after the city learned five employees with the nonprofit "misrepresented" exit dates and other records.
David Gray, director of Austin's Homeless Strategy Office, said the decision not to renew the contract was necessary.
“In a lot of ways Urban Alchemy has been a good partner with the city,” Gray said, citing the nonprofit's work to provide medical care, food and a safe place for people to sleep. “We know the actions of these five staff don’t reflect the overall value that Urban Alchemy has brought, but because of the nature of the infraction, it's just something that is not excusable.”
Urban Alchemy has been running the Austin Resource Center for the Homeless, or the ARCH, since 2022, after the city ended its contract with a previous nonprofit partner.
When the city took over running the Eighth Street Shelter in 2023, Urban Alchemy was selected to operate that facility as well. The nonprofit's contract to operate both shelters is set to expire on Sept. 30.
A spokesperson with Urban Alchemy said in a written statement that the nonprofit had identified staff who “improperly, and without permission” misreported the information.
“We notified the City after our internal controls discovered the issue and terminated the employees that we identified as responsible,” the statement said. “We hold our entire team to the highest possible standards, and will never hesitate to take appropriate action when we fall short of those standards.”
Through its Homeless Management Information System, the city of Austin tracks information about people experiencing homelessness, including when the person has found a more permanent place to live.
Gray said this helps the city and its partners understand how a person is moving through the system, including what services they have been provided and how the city can help people get back on their feet.
“Having the accurate data is important both for the public to be able to know which programs are producing high results, where we are getting strong returns on investment for our taxpayer dollars, but also important for all the service providers in the system too,” Gray said.
Urban Alchemy officials and Gray confirmed that the data has since been corrected, but a spokesperson with Urban Alchemy said it will review any misreported records and submit them for the next quarterly progress report to the city.
To minimize disruptions to operations at both shelters, Gray said the Austin City Council will approve a one-year emergency contract with the nonprofit Endeavors at its Oct. 9 meeting. The organization already operates the Marshalling Yard emergency shelter and the Northbridge Shelter, both of which Gray said have seen positive outcomes.
“We know that Endeavors has the capacity to quickly scale up staffing to help us continue operations at the ARCH and the Eighth Street Shelters, and we also know they have a demonstrated record of success,” Gray said.
He said the city will open a competitive bidding process next year for a long-term operator.
Urban Alchemy succeeded Front Steps, which managed the ARCH since it was opened in 2005. The decision came as a shock to some within Austin’s homeless services community. The city quickly terminated its $6 million contract with Front Steps before forging ahead with Urban Alchemy on a one-year contract.
Advocates questioned the move, pointing to a handful of federal lawsuits filed against the California-based nonprofit. Five of those suits filed since 2021 against Urban Alchemy have been dismissed. Another that accuses the nonprofit of drug-trafficking and abuse is still in court. Urban Alchemy has also faced nearly a dozen lawsuits in California state courts.
KUT's Andrew Weber contributed to this story.
