
This month, crews are scheduled to begin the environmental abatement process on the ruinous Friedrich industrial site on the East Side, preparing it for the construction of the mixed-income 358-unit Friedrich Lofts.
The $92.9 million project is a public-private partnership between the San Antonio Housing Trust, a city of San Antonio nonprofit, and Dallas developer Provident Realty Advisors; and it’s poised to breathe life into the four-acre Friedrich site after it has sat mostly-vacant for decades.
The project has also been controversial as the Housing Trust’s board of directors, composed of City Council members, has wrestled over the past four years with giving the Friedrich a property tax exemption, which the Housing Trust has the power to do under state law, in exchange for apartments largely not considered affordable by the city’s own definition. Ultimately, the trust’s board has been swayed, during various stages of approval over the years, by the argument that developing a site that has sat mostly unused for more than 30 years outweighed concerns about its lack of true affordability.
Overall, the Friedrich Lofts will include 173 market-rate units, 155 units priced for households making up to 80 percent of the area median income (AMI), and 24 for people making up to 60 percent AMI. The city defines affordable apartments as those priced for people making 60 percent AMI or less.
[ Scroll down for a chart showing various AMI levels. ]
The former home of the Friedrich Air Conditioning Co., the site contains 14 structures on four acres that were built from 1923 to 1956. The three buildings facing the 1600 block of East Commerce Street, including the one that supports the neon “Friedrich Refrigerators” sign, are owned by a group headed by John Miller of Dallas, and will remain. There’s another structure on the back end of the site also owned by the Miller group.
The others will be demolished.

“As buildings are abated, they can concurrently be demolished while other parts are in the abatement process,” Pete Alanis, executive director of the San Antonio Housing Trust, said in a recent email.
The abatement process is expected to last 90 to 120 days, and demolition another five months “to get down to the slab.” An additional 75 days, it’s anticipated, will be required to remove the foundations.
Construction is expected to begin a year from now, and take roughly two years putting the project’s completion around September 2025.
The Friedrich project serves as a turning point in how the San Antonio Housing Trust uses its power to grant property tax exemptions for housing developments. The Friedrich has been criticized by housing advocates who say Provident Realty is receiving a lucrative government subsidy—a 75-year property tax exemption—in exchange for housing whose rents aren’t as affordable as they should be, and which will hasten the gentrification of the East Side.
The Friedrich site is located at 1617 E. Commerce St., within the Dignowity Hill neighborhood and near its border with Denver Heights. These two neighborhoods have seen property values jump faster than any other in San Antonio since 2017, according to data collected by the Heron from the Bexar Appraisal District. Comprising the Top 3, in Denver Heights, property values have risen 171 percent in the past five years, 130 percent in Dignowity Hill during the same timeframe, and 121 percent in Government Hill (a near-East Side neighborhood).
Since the Friedrich agreement was inked in 2020, the San Antonio Housing Trust has pivoted toward partnering on housing developments that reach the lower and middle rungs of the affordability ladder, as they’ve felt pressure from housing activists.
“I would say that what was negotiated way-back-when was a different time,” Alanis said last year. “Obviously, there’s a lot more pressure—which is a good thing—to figure out how can we extract more out of these deal structures as much as humanly possible. And our board has tasked me with doing that.”
The Housing Trust is able to grant property tax exemptions using its public facility corporation, or PFC, another form it can take under state law. In these types of public-private partnerships, the PFC—in this case the San Antonio Housing Trust PFC—purchases the land, and the development partnership (which includes the PFC and developer Provident Realty) leases the land for what is typically 75 years.
5 steps to understanding public facility corporations, or PFCs

Supporters of the Friedrich redevelopment point out that the site has sat derelict for more than 30 years, as previous attempts to resurrect it have failed for multiple reasons, including the complex environmental abatement that’s required for the site.
In recent months, the U.S. Department of Housing and Urban Development (HUD) informed the project’s lender, Greystone of New York, that it would grant the Friedrich an “early start” approval. HUD is backing what’s called a 221(d)(4) loan on the project.
The initial approval means Provident Realty can begin the environmental abatement process, which is “a necessary step in the demolition process that removes materials like asbestos from insulation, tiles, roofing materials, etc.,” Alanis said.
After demolition is complete, another round of environmental tests, as required by HUD and the Texas Commission on Environmental Quality, will be required before construction can begin.
Previous estimates have put the HUD-backed loan at $54.8 million, but it’s unclear if that figure has changed given rising construction costs and fluctuating interest rates. The trust declined to give an updated capital stack (or, list of the various funding sources) until after HUD officially closes on the deal.
American South Real Estate Fund of Atlanta is providing the equity for the project, which has been previously estimated at $10.9 million in cash. For its participation, American South Real Estate Fund required an ownership stake of 67 percent, which puts Provident Realty and the Housing Trust’s stake at 16.5 percent each.
In a previous interview, Alanis said the larger ownership stake for American South Real Estate Fund was necessary in order to get them on board.
Friedrich Lofts rents |
|||||
Studio | 1BR | 2BR | |||
60% AMI | $767 | $822 | $987 | ||
80% AMI | $1,100 | $1,375-$1,420 | $1,420 | ||
Market-rate | $1,100 | 1,400-$1,600 | $1,800 | ||
Source: San Antonio Housing Trust; anticipated rents two years from now. |

Friedrich Lofts
» Address: 1617 E. Commerce St.
» Developer: Provident Realty Advisors (16.5% ownership; Dallas), San Antonio Housing Trust Public Facility Corp. (16.5% ownership; City of San Antonio nonprofit), American South Real Estate Fund (67% ownership; Atlanta)
» Property Owner: San Antonio Housing Trust; purchased from group headed by John Miller (Dallas) on Aug. 7, 2020, for $6.31 million
» Type: Residential
» New or reuse: New (except for series of three-story commercial buildings facing East Commerce)
» Status: Pre-construction
» Height: 4 stories
» Land size: 4.04 acres
» Rent or buy: Rent
» Total units: 358
» Market rate: 173
» 80% AMI: 155
» 70% AMI: 24
» 60% AMI: None
» 50% AMI: None
» 40% AMI: None
» 30% AMI: None
» Student Units: None
» Section 8: Yes, will accept voucher
» Retail: N/A
» Office: N/A
» Hotel: N/A
» Parking: Garage, 771 spaces
» Construction start date: September 2023
» End date: September 2025
» Architect: Architecture Demarest (Dallas)
» Cost: $92.9 million
» Investors: $10.9 million via American South Real Estate Fund
» Financing: $54.8 million HUD 221(d)(4) loan via Greystone (New York)
» San Antonio Incentives: $2.29 million
» SAWS Fee Waivers: $500,000
» City Fee Waivers: $97,670
» City Loans: N/A
» Est. City Property Tax Rebate: $1.7 million Inner City TIRZ reimbursement
» Tax increment reinvestment zone (TIRZ): See “SAWS fee waiver”
» Bexar County incentives: N/A
» Texas incentives: Full property tax exemption via San Antonio Housing Trust Public Facility Corp. duration of 75-year lease beginning 2021. $61,622.39 owed in 2020. Expected 75-year lease.
» Federal incentives: N/A
» Total public subsidy: $2.29 million (does not include tax exemption)
» Cashflow/ROI: 7%
» Affordable housing fund (City of San Antonio) contribution: N/A
Friedrich Lofts timeline
Editor’s note: This timeline shows financial details that were current at the time of reporting. They may have changed.
June 14, 2021
At a meeting that included some fierce debate about gentrification, the San Antonio Housing Trust Public Facility Corp. (PFC) voted 3-1 to let the Friedrich Lofts go forward, with District 4 Councilwoman Adriana Rocha Garcia abstaining
The meeting included testimony from 20 local residents who spoke against the proposed rehabilitation of the old the Friedrich Air Conditioning Co. on the East Side. They argued that its rents wouldn’t fit the budgets of East Side residents and that it would speed up the area’s gentrification.
The Housing Trust PFC and its partner on the project, Dallas developer Provident Realty Advisors, plan to transform the derelict industrial site, which has sat vacant for 31 years, into 358 apartments, 155 of them reserved for those making up to 80% of the area median income (AMI), or $57,600 a year for a family of four—and 24 for those making up to 60%, or $43,200.
But as is often the case with the PFC’s deals, it is up for debate whether the units will qualify as affordable housing. A two-bedroom apartment in the complex, reserved for 80% AMI households, is expected to rent for $1,420 a month, according to the agenda for the Monday meeting. That is 22% above the average rent of $1,163 a month for a two-bedroom apartment in the San Antonio region in the first quarter of this year, according to Austin Investor Interests, a research firm.
A studio apartment reserved for 60% AMI is expected to rent for $767 a month, slightly above the current average rent of $737 for a studio in the local region. The rents for one-bedroom and two-bedroom apartments reserved for 60% AMI would be below the local averages.
The project, named Friedrich Lofts, will receive a full property tax exemption because its land will remain owned by the Housing Trust PFC. Construction work is expected to begin in a couple weeks, and the project will take an estimated two years to be completed.
“Affordability is in name only. It’s not the reality,” said Irasema Cavazos, who identified herself as a senior citizen living in District 2. “The area, District 2, has historic poverty. It will not benefit us. It will benefit the tourists, and people that come that are way beyond the District 2 culture.”
Pete Alanis, executive director of the San Antonio Housing Trust, said in an interview that the PFC couldn’t achieve lower rents with the financial tools at its disposal. In order to achieve lower rents, the city needs to invest more money in affordable housing projects to offset the cost of land, construction and debt, he said.
To create housing affordable for those making 30% or 50% AMI, “we need to see a higher investment—public investment, or low-cost equity—come into the field,” he said. “We need to see more work from our nonprofit community, and more tools available to our nonprofit community. This is a question of math. It’s a question of financing.”
When the PFC board considered the project on June 8, District 9 Councilman John Courage asked for the vote to be delayed so that an attempt could be made to lower the income thresholds. Later in the meeting, District 5 Councilwoman Shirley Gonzales called his request “flat-out racism” after he approved a complex in his own district with income restrictions only as low as 80% AMI.
“It makes me so angry that a council member will fight for not as much affordability in one area, but then demand it in another,” she said. “Every council district deserves to have quality spaces. Having an abandoned building for 30 years is not OK for that community.”
The leaders at Provident Realty were “not very happy” about renegotiating the terms of the deal, which has been in the works since at least 2017, Alanis said.
Nevertheless, the developer reached a new deal in which the Housing Trust PFC would give up 5% of its equity stake in the project—in other words, its share of the apartment complex’s cash flow—in exchange for 24 of the units being tagged to 60% AMI, rather than 14 as before. The PFC would also take 1% percent of the sales price each time the complex was sold.
Many of those who spoke against the project on Monday complained that it was being approved the day before Jalen McKee-Rodriguez is sworn in as the new councilperson for District 2, after defeating Councilwoman Jada Andrews-Sullivan in a runoff on June 5.
[ Read more: San Antonio Housing Trust PFC approves Friedrich Lofts project despite gentrification concerns | June 14, 2021 ]
Aug. 7, 2020
The San Antonio Housing Trust Public Facility Corp. (PFC) purchased the bulk of the former Friedrich Air Conditioning Co. complex on East Commerce Street, a major step in the redevelopment of the long-derelict industrial site.
Construction of the $68.7 million Friedrich Lofts is expected to begin in the spring of 2021 and take 22-24 months to complete, said Pete Alanis, the Housing Trust’s executive director. The trust is governed by a board composed of five City Council members.
The new complex will be composed of 347 apartments, half of which will be priced at market-rate and the other half for households earning 80% of the area median income (AMI) or less. Of those below-market-rate units, 14 will be reserved for people making 60% AMI or less.
The Housing Trust PFC will lease the property to a development partnership that includes the trust, and also developer Provident Realty Advisors of Dallas and capital provider American South Real Estate Fund of Atlanta.
Provident is building the new lofts, while American South is providing $10.9 million in equity. The Housing Trust’s involvement means the development will benefit from a full property tax exemption under state law.
The Housing Trust purchased the 4.04 acres from a group headed by developer John Miller of Dallas for $6.31 million on Aug. 7, Alanis said. The purchase was first reported by the San Antonio Business Journal.
Before construction begins, Provident will have to work with the Texas Commission on Environmental Quality on environmental remediation of the site, and with the Texas Historical Commission on the demolition of the old manufacturing plant.
Miller will continue to own the small cluster of buildings on the northeast corner of North Olive and East Commerce, on which the iconic “Friedrich Refrigerators” sign sits, for potential future development.
The project has received mostly praise from the near East Side communities of Dignowity Hill and Denver Heights, San Antonio Express-News Skyline columnist Madison Iszler wrote recently. It’s also received some criticism for its pricey rents, especially for those reserved for people making below the area median income.
In a previous interview, Alanis explained the rents at 60% and 80% AMI, or less, exceed the rent limits for below market-rate rents, established by the U.S. Department of Housing and Urban Development for the San Antonio region, in order to make the project work financially.
“It’s the deal that is going to finally allow this project to proceed, and we’re finally going to have the Friedrich done,” Alanis told the Heron in June. “Otherwise, it just wouldn’t have happened.”
[ For more on how rent limits work, read “Why some subsidized housing is beyond reach for many San Antonians.” ]
June 15, 2020
The San Antonio Housing Trust Public Facility Corp.(PFC) board agrees to purchase of the property sooner than planned. Though the deal isn’t final, the purchase now gives the Friedrich, which has sat derelict for decades after numerous attempts to rehab it, the best chance for success, local officials said.
The Housing Trust PFC board, chaired by District 3 Councilwoman Rebecca Viagran, approved the formation of a company to purchase the property now so that the environmental work and, ultimately, the demolition of the buildings can be completed before taking the project to HUD in March 2021 for final closing.
“We recognize (the HUD closing) is not going to happen until March,” Jim Plummer, an attorney with Bracewell LLP who puts together local PFC deals, told the board. “However, HUD … has to see TCEQ has approved the environmental and the state of Texas (historical commission) has approved the demolition plan.”
The 347-unit Friedrich Lofts project at 1617 E. Commerce St. is being lead by Dallas developer Provident Realty Advisors in partnership with the Housing Trust PFC and Atlanta-based investor American South Real Estate Fund.
The Friedrich is located within the Dignowity Hill neighborhood, just north of the Denver Heights neighborhood—two of the fastest gentrifying communities in inner San Antonio.
The San Antonio Housing Trust PFC brings to the partnership a full property tax exemption afforded to governmental nonprofits (or PFCs) under state law in exchange for half the units priced for people making below the area median income, or AMI. This year the Bexar Appraisal District appraised the five-acre property at $2.1 million, and concludes $61,622.39 is owed in property taxes to local jurisdictions.
The American South Real Estate Fund, meanwhile, is contributing $10.9 million in cash.
Provident has applied for a $54.8 million U.S. Department of Housing and Urban Development (HUD) 221(d)(4) loan via Greystone of New York, but additional environmental assessments, such as ground water and soil testing, is being required by the Texas Commission on Environmental Quality (TCEQ). The Texas Historical Commission also has to approve the demolition of the buildings.
American South Real Estate Fund has agree to pay for the upfront costs of the environmental and demolition work, but the group only works with nonprofits, or public nonprofit, entities, thus the need for the San Antonio Housing Trust PFC to move on ownership now, Alanis said.
According to Alanis and Plummer, the board needed to approve the purchase of the property because the current sales contract, between Provident Realty Advisors and Dallas developer John Miller, who’s owned the Friedrich for many years, is due to expire June 30. Miller plans to retain ownership of the buildings facing East Commerce Street. It’s unclear what his plans are for those buildings.
Provident Realty Advisors will pay the San Antonio Housing Trust PFC a $350,000 fee at the imminent closing, and another $250,000 at the HUD closing in March, Alanis said.
During the meeting, District 9 Councilman John Courage said he supported the project, but called its financing convoluted. Council members Roberto Treviño (District 1), Adriana Rocha Garcia (District 4), and Shirley Gonzales (District 5) also serve on the S.A. Housing Trust PFC board.
“The city has tried five attempts to find a way to get the Friedrich rehabilitated,” Plummer told the board. “It has been unsuccessful to date. So, yes, you have seen this project many times. I think we finally have a structure that’s going to work. Yes, it’s a convoluted structure … because we are working to make sure you have no risk in an environmental remediation.”
For its part, the American South Real Estate Fund will hold 67% ownership, while Provident Realty Advisors and the San Antonio Housing Trust PFC will have 16.5% ownership each when the apartments are built. Alanis acknowledged the large ownership stake by American South Real Estate Fund, but said the investment group was the only one Provident Realty Advisors could find for the Friedrich. Part of the delay has been finding an investor willing to commit to the Friedrich, Alanis said.
The project is also receiving $2.29 million in city incentives.
During the meeting, virtually all council members expressed concern that District 2 Councilwoman Jada Andrews-Sullivan, who’s district encompasses the Friedrich complex, wasn’t present at the meeting. The San Antonio Housing Trust PFC board is composed in a way that excludes the District 2 council member. Alanis told the board Andrews-Sullivan supports the Friedrich Lofts project.
Under a PFC development structure, the PFC owns the property to receive the property tax exemption and leases it to a partnership that includes the PFC. For more, scroll to the bottom of this post.
Setting It Straight: This section was updated to reflect the Friedrich complex being located inside Dignowity Hill.
Jan. 22, 2020
San Antonio Housing Trust PFC revises memorandum of understanding with Provident Realty Advisors. At the time, the total project cost is projected to be $68.6 million with a bank loan of approximately $54.8 million, and a cash investment of $10.9 million.
Along with a $1.7 million reimbursement grant from the Inner City TIRZ, it’s mentioned at the meeting that the project is also receiving $500,000 in SAWS impact fee waivers and “eligible fee waivers.”
Also, “the PFC is anticipated to receive $250,000 as a closing fee, $25,000 per year as administrative rent, and 16.5% of cash flow and capital events after repayment of preferred equity funds estimated in Year 8,” according to documents attached to the agenda.
[ Read the agenda item from that meeting. ]
The document also states that rents for the below-market-rate apartments (or, half of the total units) will be set at 30 percent of the tenant’s income, and can be raised to no more than 35 percent of the income.
Aug. 14, 2018
The Inner City Tax Increment Reinvestment Zone (TIRZ) board approves a $1.7 million reimbursement to the Friedrich Lofts project. For more info, read “Friedrich receives $1.7M incentive for mixed-income apartments”
Feb. 28, 2018
The San Antonio Housing Trust Public Facility Corp. (PFC), which is composed of five City Council members, approves memorandum of understanding with Provident Realty Advisors of Dallas for the Friedrich Lofts project.
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