The early 2010s marked a turning point for the City of San Antonio’s housing policies. After declaring the “Decade of Downtown,” former Mayor Julián Castro oversaw the creation of the Center City Housing Incentive Policy, or CCHIP, in 2011, which offered multimillion-dollar incentive packages to developers building housing in the urban core. The year before, a newly-created city nonprofit named the San Antonio Housing Trust Public Facility Corp., or PFC, awarded a property tax exemption to its first project, Cevallos Lofts, in Southtown.
The idea was to incentivize new housing in parts of the urban core that hadn’t seen much of it in a long time by providing developers with tax breaks, mostly—and by that measure, both policies were a success. Over the next decade, CCHIP proved instrumental in turning the Pearl and the Broadway corridor into destinations for urban living, while the Housing Trust PFC gave rise to more than a dozen apartment complexes in downtown and elsewhere in San Antonio.
Now, CCHIP is “no more,” as Mayor Ron Nirenberg put it in a recent interview. The Housing Trust PFC, facing growing opposition from community groups, is about to get a new board and undergo reforms that are likely to make it more selective in the projects it chooses to build. City Council has three new members from urban core districts—Mario Bravo in District 1, Jalen McKee-Rodriguez in District 2, and Teri Castillo in District 5—who have been outspoken in their skepticism of the way the city has been giving incentives to developers.
[ Editor’s note: San Antonio’s CCHIP and Texas’ PFC are extremely complex housing policies. For more on how they work, read “City Council reinstates downtown housing incentives policy after one-year hiatus”, and “Tax breaks for developers under scrutiny in San Antonio, Texas capitol.” ]
In the area of housing, then, it seems likely that the early 2020s will mark another turning point for the city.
Where in prior years there was a focus on fostering a housing market in the center city that could run on its own steam, Nirenberg and other city leaders now put more emphasis on addressing the city’s affordable housing woes, its rapidly-rising property taxes, and the displacement of long-time residents from urban neighborhoods by just the kind of new construction the city had long tried to promote.
“I think you have three new (council members) that have an understanding of issues in perhaps ways that weren’t thought about before,” said Cynthia Spielman, who is on the steering committee of the Tier One Neighborhood Coalition, a coalition of neighborhood associations. “And then you have other people on council that have already been working on these issues and gained an understanding. I think this is probably the most neighborhood-friendly council we’ve seen.”
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The passage of Proposition A on the April election ballot was another game-changer for the city’s housing efforts. The proposition changed the city charter to allow the city to issue bonds to raise money for affordable housing, the way it has done for decades to build streets, sidewalks, parks, libraries and other amenities.
With the ability to issue bonds, the city could now spend tens of millions of dollars a year more on housing than it currently does—or even more than that. The Housing Policy Framework, a housing strategy drawn up by the Mayor’s Housing Policy Task Force in 2018, noted that the city then planned to spend $64 million from its general fund on housing over the next five years, compared to $1 billion on transportation, $2.6 billion on water infrastructure and $3 billion on energy infrastructure.
Vero Soto, director of the city’s Neighborhood and Housing Services Department (NHSD), said that the framework recommends asking for $125 million in the upcoming 2022-2027 bond cycle, and another $125 million in the one after that.
Such a drastic surge in funding would give the city wide opportunity to try new policies, or expand ones that it had only dabbled in before, such as its Under One Roof home repair program, which had a $2.3 million budget this year. Nirenberg said that the rehabilitation of aging housing stock presented the “biggest area of opportunity” for a housing bond.
Another potential use, he said, is land-banking, or the purchase of land by the city—often, land that is difficult to build on for environmental reasons—to fix up and lease or sell to a developer who would build below-market rate housing on it.
Land-banking “might be the best way we can get deep, very deep levels of affordability,” Nirenberg said.
An increase in federal funding for housing from the Biden administration will also offer opportunities to the city, he said.
“We have a generational crisis when it comes to housing in this country, but I think we also have a generational opportunity in what is likely to be put together through the Biden administration, coupled with the communities have done at the local level,” Nirenberg said.
It’s an observation Ed Hinojosa Jr., the San Antonio Housing Authority’s (SAHA) interim president and CEO, shared with the Heron earlier this year. In that interview, Hinojosa Jr. said SAHA’s housing policy would shift away from mixed-income developments, which had been the strategy under his predecessor, David Nisivoccia, and more toward the production of public housing. It should be noted that Nirenberg appoints SAHA’s board of commissioners.
In Nirenberg’s view, the new council members are unlikely to change the direction of the city’s housing policy. The mayor pointed out that the city already has a housing strategy in the Housing Policy Framework, which recommends new policies aimed toward relieving the property tax burden on homeowners, helping them rehabilitate their homes, and assisting those who are displaced by rising housing costs—priorities matching those expressed by Bravo, McKee-Rodriguez and Castillo during their campaigns.
“I think the conversations will be sharpened” under the new council, Nirenberg said. “I think that council members Castillo and McKee-Rodriguez have both justifiably pointed to the need for more resources in rehabilitation and preservation of existing housing stock. I wholeheartedly agree with that. I think they’ll be helpful to us. I think those conversations will be helpful to us as we make use of the new tools that the voting public has given us to tackle the problem.”
Upcoming housing plan
Several new tools are likely to come out of the Strategic Housing Implementation Plan, or SHIP, which the city began working on last year with stakeholders such as community groups and representatives of the real estate and development industries, in order to help it enact policies put forth by the framework. The plan, set to go before council in September or October, will carry a goal of creating nearly 48,000 units of affordable housing over the next 10 years, according to a presentation given by the NHSD in April—or enough to house roughly 141,000 residents of San Antonio, where the average household has three occupants.
Some of the policies being considered include service-enriched housing, which would help connect residents to social programs such as Medicaid, and by-right zoning, which would allow for zoning changes to be made faster and easier—perhaps skipping parts of the public hearing process—for affordable housing developments.
“Sometimes, zoning is a barrier” to creating affordable housing, Soto said. “It’s also acknowledging that sometimes when you go to the public hearings, there could be neighborhood opposition. So it’s that balance between, ‘Yes, the neighborhood needs to know. It still has to fit in a neighborhood without totally disrupting the character of our neighborhood.’ ”
“But how do we get beyond what could be called NIMBYism?,” Soto continued, referring to situations when neighborhoods pushback on incoming development, also known as Not In My Backyard.
If the council approves the plan, it would serve as a “guiding North Star” for the city’s housing policies. City Council would have to enact the policies separately, she said.
“I think those new council members will be receptive,” Soto said. “I know the mayor’s office is very engaged and supportive.”
The San Antonio Housing Authority and the San Antonio Housing Trust, which both have used the PFC model to build mixed-income housing, will also consider whether to adopt the plan, she said.
City’s shifting housing role
The city allowed CCHIP to expire in December as it tightened its belt during the Covid-19 pandemic. It can still issue incentive packages on a project by project basis, but the subsidies will require City Council approval, said Veronica Garcia, assistant director of the Center City Development & Operations Department.
For years, some local residents and City Council members have questioned whether the city still needs to incentivize housing in bustling neighborhoods such as the Pearl. In 2018, the council overhauled the program by creating affordable housing requirements for some projects.
There are signs that the housing market in the urban core could be ready to stand on its own. Austin firm Sabot Development plans to build a 10-story apartment building in Tobin Hill, across the San Antonio River from the Pearl, with no help from CCHIP.
Even without CCHIP, incentives remain available through the city’s dozen or so tax increment reinvestment zones, which offer grants for public upgrades and affordable housing efforts; or through the growing number of active PFCs locally. Bexar County recently created its own PFC: it’s partnering with Weston Urban to redevelop the site of the former Continental Hotel on West Commerce Street into housing and retail.
District 4 Councilwoman Adriana Rocha Garcia, who serves on the Housing Trust PFC board, said the city should pay more attention to making sure that new development brings benefits to those who are living in the surrounding neighborhoods.
“In general, there’s a consensus that there needs to be deeper affordability,” Rocha Garcia said. “I’m looking forward to the discussions that will come with the new folks, because they have a laser-eye on this. And I’m happy that we can all work together.”
Whether or not the new council members change the city’s policies, they will hold sway over how the city awards incentives for development. A good example is the council’s vote in May over whether to award a $24 million incentive package to GrayStreet Partners and Midway development company of Houston to redevelop the former Lone Star Brewery. Shirley Gonzales, Teri Castillo’s predecessor in District 5, was a strong supporter of the package, and it passed unanimously.
Castillo, who was running for office at the time, said the city should have negotiated a package that brought more benefits to residents of the neighborhood around the brewery.
“We can’t just give incentives and hope it works out in our favor,” Castillo said. “We need to know: When the project is completed… are they going to be paid a liveable wage? Are they going to hire from the community?”
In voting for a project, council members often take into consideration the views of their colleague whose district it resides in. If Castillo had been the council member for District 5 at the time of the vote, the deal with GrayStreet and Midway might have turned out differently.
In June, the Housing Trust PFC approved a project to rehabilitate the Friedrich Air Conditioning Co. site in District 2 into an apartment building the day before McKee-Rodriguez took office. McKee-Rodriguez said he was “disappointed” by the vote because the affordability threshold for PFC projects should be below 60% of the area median income. “I don’t believe that this development meets our affordable housing needs,” McKee-Rodriguez said. Of the complex’s 358 apartments, 155 will be reserved for those making up to 80% of the area median income (AMI), and 24 for those making up to 60% AMI.
[ Scroll down for a chart showing AMI levels. ]
Before the new council was elected in June, the board of the Housing Trust PFC, which has helped build projects such as The Baldwin and the newly-opened Flats at River North, consisted of the council members from Districts 1, 3, 4, 5 and 9. Later this summer, the mayor will nominate new members to the board, and it is unclear whether the same districts will be represented.
The District 2 council member had a seat on the Housing Trust PFC’s board until Nirenberg removed Jada Andrews-Sullivan in 2019, giving the seat to District 9 City Councilman John Courage. Nirenberg declined to say whether he planned to return a seat to District 2.
If Castillo, McKee-Rodriguez and Bravo are nominated, they would likely bring a new attitude to the board. In April, Bravo told the Heron that he didn’t think any council member “should be allowed to take our city’s most prime pieces of property off the tax rolls for 75 years,” a reference to the 75-year property tax exemptions that the Housing Trust PFC awards to developers. Castillo told the Heron that the city “must ensure that developers are paying their fair share in taxes.”
“I firmly believe that this new board makeup is going to demand deeper income-targeting,” said Pete Alanis, the executive director of the San Antonio Housing Trust. “But I think that the general public and your readers realize that it takes more than just a mandate (to achieve) lower income-targeting; it takes financial resources to do it.”
In other words, the Housing Trust PFC’s new board members could demand that new apartments are priced for people living far below the poverty line, but developers won’t be able to make them unless PFCs make a larger investment in the complexes. That kind of infusion of dollars would reduce developers’ cost burden thus making more financial sense to lower the rents, the thinking goes.
“I think (the property tax exemption) will be used less often, because in order to create deep-targeting affordability, which I think the new board will demand, it’s going to take additional financial resources to do it,” Alanis said.
Alanis raised the possibility that this infusion in future Housing Trust PFC projects could come from city’s upcoming housing bond, allowing for rents to be lowered. As of now, most of the Housing Trust PFC’s complexes reserve half their units for those making up to 60% or 80% AMI, which is $74,100 for a family of four. Castillo told the Heron earlier this year that the city should focus on providing housing for those who earn less than $22,580, or about 30% AMI.
The Housing Trust PFC will soon undergo reforms suggested by a study that the National Association for Latino Community Asset Builders conducted for the city last year. Five council members will be joined on the board by six housing experts and community leaders, Alanis said. The new members will be nonvoting, but the council members could choose to elect them as officers of the Housing PFC, which would give them votes, he said.
A subcommittee will likely be formed to consider potential deals before they go before the board, adding a new level of scrutiny, though the new board will decide whether to make that change, he said.
“I would hope that we get representation from folks who are still in our inner-city communities, who are under-represented with respect to housing issues,” Alanis said, adding that he has no say on the matter. “If District 2 gets a seat, I’d be excited.”
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