By Richard Webner | @RWebner | Heron contributor
In 1992, nearly 20 years before the Decade of Downtown, the city of San Antonio—or, at least, a nonprofit it had just created—made an early attempt to stimulate the downtown housing market.
The one-year-old nonprofit, known as the San Antonio Housing Trust Foundation, teamed up with three businessmen that year to rehabilitate the Prohibition-era Exchange Building on the River Walk into 40 apartments. Over the next 30 years, the building would serve as one of the few living options in the heart of downtown as its ground floor hosted landmark restaurants such as chef Andrew Weissman’s La Reve, and most recently chef Michael Sohocki’s Restaurant Gwendolyn.
Now, as the downtown housing market heats up with the recovery from the Covid-19 pandemic, the nonprofit and its partners are preparing to sell the 10-story building, 152 E. Pecan St., kitty-corner to the Greyhound, to a local buyer.
Pete Alanis, the foundation’s executive director, declined to say who the buyer was, as did Thomas Guggolz, one of the nonprofit’s three partners. The other two are David Lake and Ted Flato, principals at the Lake|Flato architecture firm.
“I’m going to be 74 years old. We’ve decided we’re just going to let somebody take over the property,” Guggolz said in a phone interview. “We’ve paid all our bills and kept it going for 30 years.”
The building’s two retail spaces are vacant, he said.
“We want the new buyer to have the ability to do what it wants with the street-level space,” he said.
The foundation owns a 9.21 percent stake in the building and has a $100,000 loan outstanding for the project, so it expects to recoup about $504,000 from the sale, Alanis told the foundation’s board at its meeting on Monday evening. The 12-member board includes five City Council members.
The board did not vote to approve the sale because it did not have a quorum.
Alanis said he would have liked to buy the building and convert it into affordable housing—which is the mission of the San Antonio Housing Trust, its affiliate—but the numbers wouldn’t work. On Monday, he told the board that if the foundation issued debt to buy the building, it wouldn’t be able to afford paying it off while keeping rents at levels of deep affordability, targeting residents making between 30 percent and 50 percent of the local area median income, or AMI.
The building’s units are market-rate, Alanis said in an interview. The only restriction is that 10 of the units must be reserved for those making up to 120 percent of AMI.
The foundation plans to devote its proceeds from the sale toward charitable giving, he said. It has given money to organizations such as Habitat for Humanity, the Esperanza Peace and Justice Center and Towne Twin Village, a development under construction on the East Side that will provide shelter to the homeless.
“We’re not in the market business—we’re in the affordability business. So for us to be able to depart from a market-rate product, that’s in line with our future,” Alanis said. “We’re looking at this as the ability to take that 9 percent equity we have in the project, take the cash and let’s reinvest it into something that will help provide the affordability needs for vulnerable populations.”
Built in 1925, the Exchange Building had served as offices before going vacant by the time Guggolz, Lake and Flato purchased it in 1988—the same year the Weston Centre, downtown’s tallest office tower, was completed across the river. The San Antonio Housing Trust Foundation came on as a partner in 1992, when the renovations were done.
Over the following 30 years, and especially in the last decade, the surrounding area has been transformed as the city’s efforts to encourage the development of housing and retail through generous financial incentives have borne fruit. The blocks north of Houston Street have become something of a tech district centered around the Geekdom tech accelerator, co-founded by developer Graham Weston, whose company Weston Urban is preparing to build a 32-story apartment tower called 300 Main, and a 15-story mixed-use project nearby.
The top floor of the Exchange Building had been a meeting room in the 1930s, with exposed steel trusses, Guggolz said, so the top-floor apartments have high ceilings.
“It’s a beautiful Gothic building,” Guggolz said. “We’ve got exposed concrete floors everywhere. Open spaces with a lot of natural light, windows. The building has a lot of character.”
At the Monday meeting of the San Antonio Housing Trust Foundation, District 9 City Councilman John Courage, who sits on the board, asked whether the foundation could raise money in the future to buy a building like the Exchange and convert it into affordable housing, even if the rents would not reach into deep levels of affordability.
“My guess is, whoever buys that is not going to make it below market-rate,” Courage said. “I know we always want to shoot for 50 percent (AMI), 30 percent, but in a situation like this, if (we could buy the building) and have units at 80 percent and 60 percent, that’s still more affordable than what it’s going to be when new owners take it over.”
“I think, to a certain extent, we might want to look and determine, are there affordability aspects in future projects that aren’t necessarily all 50, 30, but we know could benefit the community,” he said.
Alanis said in response: “I think there are opportunities in the future that I envision, with a number of partners that we’re talking to, that I think y’all are going to be very excited about.”
Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter