AZ Hugs, a Valley organization that places families experiencing homelessness in motels using private donations, typically raises between $7,000 and $9,000 a day for temporary shelter, according to founder Austin Davis. But the group had been housing families for weeks at a Motel 6 near Priest Drive, and the tab came due.

Motel management said AZ Hugs owed more than $10,000 in back rent and that families had to leave because the bill had not been paid. The city of Tempe said the outstanding balance exceeded $20,000.

On Monday, families gathered at Jaycee Park near University Drive and Roosevelt Street while Davis and volunteers worked the phones looking for available rooms. The organization managed to find placements for Monday night, Davis said, but the search restarted Tuesday after families checked out.

"We've been picking up the family from a hotel to bring them here so we can figure out what we're going to do with them tonight," volunteer Robin Lippincott said.

Among those waiting was Angelica Reyes, who is pregnant and has been staying in motels with her husband and newborn. She said the family was evicted after her husband was laid off and their rent went up, and they turned to AZ Hugs for help.

"I don't want this for my kids. Like, I wish I could do better. I feel like a failure almost," Reyes said. "But I'm pushing through. I have to get through for myself and my kids."

Reyes said she has also sought help through the city but was told she is on a waiting list. "Every time I call in to see where I'm at in the list, they're telling me, well, it's just a waiting game. You're on the list. There's people ahead of you," she said.

Tempe officials said the city's HOPE homeless outreach team has been working with the families since mid-October and has connected with about 50 families seeking assistance. The team has helped families enroll or re-enroll with the Family Housing Hub to prepare for emergency shelter openings and linked them to other services, the city said. Some families declined services on Monday, according to the city.

Tempe also said about 85 families had been brought to the Motel 6 by AZ Hugs since the beginning of October, many of whom were already experiencing homelessness in other communities before arriving in Tempe. The additional need has stretched city resources, officials said.

Davis is asking city leaders to seek state help for temporary shelter. "What we're asking of the mayor is to request assistance from the state, not to fund AZ Hugs, but $200,000 for the city of Tempe to use to shelter our families for 30 days," he said.

The city confirmed that AZ Hugs had requested $200,000 to fund motel stays for 30 days but said it cannot legally provide that amount to a single agency without an open bidding process, and there would be no guarantee AZ Hugs would win a contract.

Tempe said it provides $1.1 million in grants to nonprofits each year. According to the city, AZ Hugs has not applied for those grants and, to the city's knowledge, did not apply for $16 million in available state funding.

Families seeking assistance can call Tempe's 24-hour CARE & HOPE Line at 480-350-8004.

The standoff highlights a broader squeeze on homeless services across the Valley, where rising rents and stagnant wages have pushed more families into instability. For now, the burden falls on volunteers and donations, with each night's shelter uncertain for the families who spent Tuesday afternoon waiting in a park for a place to sleep.