Delay sought in downtown housing incentives vote

Some leaders of downtown area communities, and at least one former member of the Mayor’s Housing Policy Task Force, are asking Mayor Ron Nirenberg and the City Council to delay a vote on San Antonio’s downtown housing incentives policy until a true public process is started, and a displacement study is completed.

The policy, also known as the Center City Housing Incentive Policy, or CCHIP, has been the impetus for the wave of new apartment buildings and condos—64, so far—built in the center city the past six years.

Through the developments it has incentivized, CCHIP has created a vibrancy in parts of the downtown area that wasn’t there before—the Pearl area and Broadway corridor being the most obvious example. It has also sparked the gentrification process in downtown’s abutting neighborhoods, while producing apartments whose rents are out of reach for many San Antonians. As property values continue to rise—skyrocket in neighborhoods such as Denver Heights and Dignowity Hill—so do taxes and rents, while developers receive rebates on the city portion of their property taxes worth several million dollars over 15-year periods, in most cases. CCHIP’s defenders say the program is simply meeting the demand for market-rate housing downtown, which is proven by companies that are either moving offices (USAA) or headquarters (Credit Human and Jefferson Bank) to the city’s core. And that reviving downtown is critical to creating the type of environment that’s attractive to young talent (either homegrown or from other cities), and to luring the companies they work for.

[ Editor’s Note: There are many more arguments on both sides of this debate. For an overview as they pertain to San Antonio, read this piece, “Downtown’s housing incentives are changing. Here’s why you should care,” from September. ]

A year ago this month, Nirenberg placed a moratorium on CCHIP, which the city launched in 2012 under former Mayor Julián Castro, and ordered city staff to revise the policy so that it produces more affordable housing. To date, the policy has produced 6,810 units—mostly apartments either completed or under development toward the city’s goal of 7,500 units by 2020—but most of the housing is unaffordable to most San Antonians, Nirenberg said. Nirenberg also said recently that he understands the need for downtown’s economy to continue to grow—the city estimates the 64 CCHIP projects have yielded $1.4 billion in private investment into the downtown area in the form of new housing, office and retail—and that housing is the critical element in that process.

The council is scheduled to discuss CCHIP—for the third time—on Wednesday, and vote on the revised policy Thursday. If it’s approved, CCHIP would be reinstate after a yearlong hiatus.

Based on interviews with community leaders and city officials, there seems to be a clear disconnect between the two sides on two main points:

» Whereas city officials feel adequate public outreach was accomplished throughout 2018, as they revised CCHIP, community leaders contend there has been zero community outreach. Some say CCHIP and the Inner City Reinvestment and Infill Policy (ICRIP), another incentives policy the council is voting on Thursday, require a citywide discussion, especially now, because the city is recommending both policies now be applied citywide.

» Whereas city officials don’t see a direct link between CCHIP incentivized developments and the displacement of people who live near them, some community leaders worry the policy either is currently displaying residents—or will eventually displace residents—via skyrocketing rents or property taxes, or both.

So far, the groups asking the council to delay its vote are COPS/Metro, the Tier 1 Neighborhood Coalition, the Westside Preservation Alliance and the Esperanza Peace and Justice Center.

Prominent individuals familiar with San Antonio’s housing woes are also speaking up.

Public process?

Former Councilwoman Maria Berriozabal, who Nirenberg selected to serve on his housing policy task force, says there isn’t enough public understanding about CCHIP and ICRIP, which waives city development and SAWS impact fees worth hundreds of thousands of dollars for residential projects, building rehabs, or business recruitment or expansion efforts.

As a policy wonk herself, Berriozabal is familiar with the policies and their labels, but she said she gets asked by well-informed people, “What is CCHIP and ICRIP?”

“And I’m talking about very well-informed, professional people,” said Berriozabal, who sent her concerns to Nirenberg and the rest of council in a letter dated Dec. 4. “So there’s a lack of understanding of what both are. For some of us, the acronym, we know it. For a lot of people, there has not been the public process.”

Veronica Garcia, Interim Assistant Director for the Center City Development and Operations Department, said her department has conducted community outreach via presentations at several council committee meetings, as part of the mayor’s housing task force process at the end of 2017 and throughout 2018, as part of the SA Tomorrow Comprehensive Plan process (two of the 13 regional centers identified in the plan—downtown and Midtown—are within CCHIP’s boundaries), through meetings with for-profit and nonprofit developers, meetings with the neighborhood associations of communities directly impacted by CCHIP, and targeted meetings with other community groups. Garcia added that a public hearing has been called on CCHIP for 6 p.m. Wednesday at City Council chambers, 114 W. Commerce St.

Feedback from those discussions, Garcia said, have been incorporated into the policy. For example, meetings with nonprofit housing developers are the reason why CCHIP developments (under the revisions) must restrict a tenant’s rent to roughly 30 percent of their income.

But Berriozabal isn’t buying Garcia’s list of examples.

“There has been no public process, period,” said Berriozabal, who pointed out that citizens aren’t allowed to speak at council committee meetings. And there has yet to be a public meeting dedicated to CCHIP and ICRIP, the former councilwoman, and others, say.

Last week, Assistant City Manager Lori Houston, other city officials, and District 1 Councilman Roberto Treviño, met with leaders of downtown’s abutting neighborhood associations and other community groups. But each group was only allowed to bring a maximum of two board members or representatives. The general public was not invited. And the people who attended these meetings describe them as briefings, rather than anything resembling a true public meeting.

“Although, yes, most people don’t know what CCHIP is, and aren’t necessarily following this closely, it does affect almost every single person living in inner San Antonio,” said Yaneth Flores, an organizer with the Esperanza Peace and Justice Center, who attended one of the meetings. “It doesn’t make any sense to push it through right now.”

For District 7 Councilwoman Ana Sandoval, the fact that the policies are now being proposed across the city means a citywide discussion needs to happen. She likes that CCHIP, for example, is being proposed for the 13 regional nodes outlined in the SA Tomorrow Comprehensive Plan, and along the major transportation corridors—not just downtown. “The idea was to have density around those regional centers, and along the corridors, so you can eventually have rapid transit,” she said. But …

“That also means it’s going to affect a lot more people,” Sandoval said. “All of a sudden, you’ve moved from a downtown incentive to a citywide program. I think that means your stakeholders are changing, and that group has grown.”

Garcia said CCHIP revisions—which would grant developers a 75 percent rebate on city taxes, while the remaining 25 percent would feed a housing affordability fund—would only kick in after each regional center’s land-use plan was approved by council. Those regions are downtown, the Medical Center, Midtown (includes the Pearl), Brooks, Texas A&M-San Antonio, University of Texas at San Antonio, Stone Oak, Highway 151-Loop 1604, the greater airport area, northeast I-35-Loop 410, Rolling Oaks, Fort Sam Houston and Lackland AFB-Port San Antonio.

For Berriozabal, her biggest criticism is about ICRIP, which would go from being a mostly inner city fee waiver program to blanketing the entire city.

“As far as I can see, ICRIP has had no study or assessment of how well, or not, it has done since it was installed,” Berriozabal said.

Berriozabal also took issue with the lack of a coordinated housing system—a primary recommendation in the task force’s Housing Policy Framework released in August—which she says is critical to understanding the labyrinth of housing departments, groups, policies, and initiatives, and how they can better work together.

“All of those are spread throughout the city, and there is no one person that manages, understands, and plans for housing across the board,” she said.

She also said there is a lack of clarity on the definition of truly affordable housing. The mayor’s housing task force, in its report, uses an area median income (AMI) of $49,268 taken from the 2016 U.S. Census American Community Survey, because it’s more representative of San Antonio’s median wage.

The city, and other entities, use the U.S. Department of Housing and Urban Development’s AMI of $66,800 for the greater San Antonio area, which includes New Braunfels. So when programs such as CCHIP characterize housing made available to people making, say, 80 percent of the HUD AMI, or $53,4400, as affordable, that doesn’t ring true for many San Antonians. This includes Nirenberg, who challenged city officials about this point almost a month ago.

A displacement plan

Currently, the city’s Housing and Neighborhood Services Department is drafting a “risk mitigation policy,” which department head Veronica Soto anticipates will be completed in mid-January, and presented for City Council approval in late January.

The policy will address “displacement due to city incentivized development, rapid neighborhood change, threat of eviction, or recent homelessness,” Soto said in an email. The mayor’s housing task force recommended a displacement impact study be conducted for public projects that exceed $15 million. That recommendation was inspired by the San Pedro Creek Culture Park project, and some of the changes residents of the adjacent Soap Factory apartments experienced after a new owner started renovating those properties this year.

Community leaders are asking that a vote on CCHIP and ICRIP be delayed until the city’s housing department completes the displacement policy.

“I don’t understand what the rush is,” said Anisa Schell, a member of the Tobin Hill Community Association and the Tier 1 Neighborhood Coalition, who also participated in one of the recent CCHIP briefings. “If the policy is good, it will still be good in six months.”

At a meeting two weeks ago, city officials and developer David Adelman told council members that reinstating CCHIP cannot wait. Downtown is losing its momentum just from CCHIP’s one-year hiatus, and any further delay could mean the momentum dies altogether, they warned. They said no new CCHIP developments have come online in 2018, while the policy has been on ice.

Which is true.

But members of the Tier 1 Neighborhood Coalition, such as Schell, point out that downtown housing developments have proceeded without CCHIP.

Which is also true.

But it’s complicated.

For example, the $17.5 million Museum Reach Lofts near the Pearl, a truly affordable development by nonprofit Alamo Community Group (ACG), did not receive a CCHIP package and is proceeding with construction anyway. Of its 95 units, 86 will be offered to people making between 30 and 60 percent of HUD’s AMI.

That project, which is scheduled to begin construction in March, was made possible by 9 percent low-income housing tax credits, a federal program administered by the state of Texas, which could be worth about $10 million after the tax credits are sold to investors.

However, the way the program works, the state entity that doles out the credits will not grant future tax credits to affordable housing projects within two miles of developments that received the awards in the past. ACG Executive Director Jennifer Gonzalez told the council a month ago that, because of this rule, the Museum Reach Lofts may be the last of the 9 percent tax credit projects in the downtown area.

Houston also told the Heron via email that ACG and the city may reach a tax rebate agreement for the lofts, but that may have to go to council separately, if the council does not reinstate CCHIP soon.

Projects such as NRP Group’s Broadway Jones and Adelman’s The ’68 at Hemisfair didn’t require CCHIP’s city property tax rebates, because they receive a full property tax exemption through partnerships with public facility corporations—nonprofits that are granted special tax privileges in exchange for housing affordability, according to state law.

The projects received fee waiver incentives from CCHIP before Nirenberg’s moratorium, but they could have received the same waivers from ICRIP.

Incentives from tax increment reinvestment zones, another incentives tool the council is not revising at this time, would have gone to council anyway.

Finally, there is the $28 million, 280-unit apartment project by Dallas developer Stillwater Capital on the northern-most corner of McCullough Avenue and Augusta Street. Stillwater Capital applied for a CCHIP package during the moratorium, and the it didn’t want to wait on a council approval process that could have taken months.

“We didn’t want to wait, and we had already discussed viable options,” Brandon Easterling, a partner with Stillwater Capital, told the Heron in late September.

So Stillwater is proceeding with construction anyway with no CCHIP package. Although it has received city development waivers from ICRIP, it didn’t receive SAWS impact fee waivers because the funds were not available. In an interview in September, Garcia said Stillwater told city officials that SAWS fee waivers were critical to the project, and that they would return to the city when CCHIP was restored.

Definition of displacement

The larger point, critics of the CCHIP revision process say, is the city’s lack of understanding about CCHIP’s impact on the neighborhoods it abuts.

The one case where displacement occurred because of CCHIP was the Mission Trails mobile home park, back in late-2014, early-2015, when more than 100 low-income households were removed from their South Side community by the San Antonio River. A luxury development by White Conlee Builders, which received a CCHIP package worth an estimated $1.7 million, has gone up in place of the mobile homes.

In 2016, the city redrew CCHIP’s boundaries, which at the time consumed a 36-square-mile boundary, to represent more of downtown proper. Also, the policy no longer incentivizes projects that would cause direct displacement, such as what happened at Mission Trails.

However, that’s not what neighborhood activists are worried about any longer. They’re worried about indirect displacement, the unintended side effects of the rise in property values on low-income to moderate-income residents—either renters or homeowners—who live in downtown’s adjacent neighborhoods.

“The outcome is that people in the surrounding community are more than likely going to be displaced, because rents are going to go up,” said Cherise Rohr-Allegrini, president of the Lavaca Neighborhood Association, who also attended one of the recent briefings.

Garcia acknowledged the difference.

“We understand that there are broader questions about displacement throughout the city and we will be working Neighborhood and Housing Services (on those issues),” Garcia said.

She points to one of CCHIP’s main revisions: a pulling back even further of the program’s boundaries—from 5.4 square miles (outlined by the red dotted line in this map) to 2.64 square miles (defined as Tier 1 and 2)—in an attempt to exclude low- to medium-density residential areas.

“I don’t think it will ever be the perfect policy,” Garcia said, “but I think it takes a lot of the feedback into consideration.”

In a lengthy Facebook post on Dec. 5, Jim Bailey, an architect with Alamo Architects who served on the Mayor’s Housing Policy Task Force, said he fears that San Antonio is on the same trajectory as Austin, “where nothing within a mile of downtown is affordable.”

“Will we become like Los Angeles with 50,000 homeless people living in tents on the sidewalks?”

He concluded by saying the city should pursue programs such as CCHIP, but it must also understand its potential negative effects, and try to stop them from happening. For this reason, he supports a displacement study, whether it’s done before CCHIP is reenacted, or after.

“Too many voices have spoken to not act,” he wrote.

Editor’s note: Last week, Nirenberg declined to comment on the latest CCHIP revisions, which were first reported by the Heron. Also last week, Treviño said he wanted to meet with more community members before weighing in on the changes.

Contact Ben Olivo: 210-421-3932 | ben@saheron.com | @rbolivo on Twitter