By Ben Olivo | @rbolivo | Heron editor
As District 2 Councilman Jalen McKee-Rodriguez sees it, the near East Side isn’t being gentrified as if it’s a new phenomenon. “We’ve been gentrified,” the councilman said in an interview a week ago. “Other parts of town are starting to feel it. Of course, District 1, (and) some of the West Side and South Side (neighborhoods) are going to start feeling the impacts of gentrification.”
For this reason, McKee-Rodriguez wants what’s called a displacement study—or, an assessment—completed during the process when a developer seeks incentives from the city of San Antonio. The purpose: to gauge the impact their development might have on people who live near it.
The city’s Neighborhood and Housing Services Department (NHSD) is currently crafting a pilot policy, which would first apply to projects that receive funding from the voter-approved $150 million housing bond. It could be expanded later to include market-rate housing developments that receive other forms of city incentives, such as tax increment financing—which would be more in line with the intent of the councilman’s request.
“We want to make sure if it is shown that a development is going to cause displacement that (they’re not awarded) the contract unless they make a substantive change that is not going to lead to displacement,” McKee-Rodriguez said. “That’s the part of the process I want to make sure is guaranteed.”
The initiative by McKee-Rodriguez comes at a time when steady neighborhood change east of downtown—which has been going on for years—has shown no signs of slowing down. The three San Antonio ZIP codes that have seen the highest appreciation of property values since 2017 are located on the near East Side, according to an analysis of county records.
Meanwhile, there are signs the downtown-area multifamily housing market, which was spurred by former Mayor Julián Castro’s Decade of Downtown property tax rebate policy of the 2010s, is starting to grow on its own, as a handful of developments are in the works using 100 percent private capital and no public subsidies. (Although it’s unclear how inflation, including skyrocketing construction costs, will impact the nascent independent growth.)
It’s worth noting that these types of 100 percent-private projects would not be subject to the displacement assessment policy, NHSD officials confirmed to the Heron recently.
The issue of displacement is one San Antonio has been grappling with for several years. The city’s emergency housing assistance program, which helped more than 60,000 households pay their rent or mortgage, among other living expenses, during the first two years of the pandemic, was born from the city’s effort three years ago to provide aid to people who were being uprooted due to development or publicly-funded infrastructure projects, such as the first phase of the San Pedro Creek Culture Park.
McKee-Rodriguez’s district has been ground zero for neighborhood change—and continues to be as large-scale housing projects are now beginning to take root inside the neighborhoods themselves, in particular, Government Hill, as opposed to the outskirts. The rise in property values, which dictate property taxes, offer one piece of evidence. But McKee-Rodriguez also points to conversations he’s had with constituents who tell him that rising property taxes wouldn’t be so bad if the streets and sidewalks around them were repaired, or if they had a neighborhood grocery store or a movie theater.
“‘If I had access to the same things they do, maybe it wouldn’t be so bad’,” McKee-Rodriguez says he hears from residents. “But it’s insult to injury when we have had nothing for decades, and my home value is going to continue to increase’.”
[ Heron Archive: Is San Antonio doing enough to address displacement?” | March 10, 2019 ]
He’s ambivalent about the phased approached NHSD is taking. On one hand, the spirit of his council consideration request, a process he initiated along with District 3 Councilwoman Phyllis Viagran in January, is to require an assessment for all developments, not just affordable housing within the bond. As the parameters for them were written, housing bond projects are supposed to target the most vulnerable households in San Antonio. More to the point, the housing bond, crafted by a committee of residents and approved by voters on May 7 with nearly 60 percent of the vote, already has displacement measures baked into it: “Projects that receive bond funding will not cause direct displacement of residents,” and “Priority will be given to projects with the least displacement impact.”
He also understands why it may be best to start it as a pilot program.
“If this is a tool that doesn’t work the way I want it to, or the way the bond committee had intended, we want to make sure to tweak it before mass implementation,” McKee-Rodriguez said. “That does provide some kind of opportunity there.”
What is displacement?
San Antonio defines displacement as an occurrence “when a household is forced to move from their home involuntarily.”
NHSD pulled the definition from the ForEveryoneHome initiative of 2019—which was a gathering of community leaders, sponsored by the Grounded Solutions Network and the Ford Foundation, to discuss, define and provide solutions to the displacement of residents. Here are three types of displacement:
1) Direct, which can include “evictions, demolitions and foreclosures, large rent increases or rising homeownership costs, unlivable conditions like mold, utility cutoffs, landlord harassment or pests, or rehabilitation or reconstruction.”
“When we’re talking about direct displacement we’re usually talking about an action that’s very easy to link to the displacement of residents,” Ian Benavidez, NHSD’s assistance director, told the council’s Governance Committee in late May.
The most glaring example of direct displacement happened six years ago on the South Side, when Castro’s downtown housing incentive policy led to the uprooting of more than 100 low-income families at the Mission Trails mobile home park along the Mission Reach segment of the San Antonio River. Today, a luxury apartment complex called Mission Escondida by local developer White Conlee stands there. Because of Mission Trails, the city scaled back the boundaries for its incentive program, and later prohibited developments that cause direct displacement from being eligible for incentives.
It should be noted that large public upgrades such as the Mission Reach, which received the bulk of its funding from Bexar County, have also been considered by the city as sources of displacement.
2) “Indirect” happens “when changes in housing costs make it unaffordable for those who previously could afford to live there, typically lead to an influx of more affluent, often white residents.”
“When we talk about indirect displacement, which is really what this policy is seeking to address, often time we are looking at a series of factors that lead to either a gradual or a substantial … quick changes in cost of living that force residents to make decisions on whether or not they are going to stay and become further cost burdened or have to move to other parts of the city,” Benavidez said.
Records from the Bexar Appraisal District show property values have risen higher in the three near-East Side neighborhoods—Denver Heights (171 percent), Government Hill (121 percent) and Dignowity Hill (130 percent)—since 2017 than any other ZIP code in San Antonio.
Perhaps the best example of indirect displacement happened around 2018 when residents of the former Soapworks apartments, next to the first phase of the San Pedro Creek Culture Park, were forced to move when the building’s Houston owner hiked up the rent. The first recipients of the city’s risk mitigation fund, the precursor the emergency housing assistance program, were residents of Soapworks, which is now known as Soap Factory.
3) Cultural,” when “the racial and ethnic makeup of a neighborhood” occurs and “through changes in the shops, services and institutions that serve and operate in the neighborhood.”
“The effect of generational families that are having to leave neighborhoods means the culture and identity of those neighborhoods also go,” Benavidez said. “So that could be anything from the shops or the services or institutions within that neighborhood that no longer exist as a result of those families having to move.”
[ Heron Archive: In San Antonio, what qualifies as displacement? | March 8, 2019 ]
For McKee-Rodriguez, the issue of incoming large-scale apartment projects has been on his plate even before he took office.
In June 14, 2021, the day before McKee-Rodriguez was to be sworn into office, the San Antonio Housing Trust Public Facility Corp. agreed to partner with Dallas developer Provident Realty Advisors to build apartments on a majority of the former Friedrich Air Conditioning Co. site on East Commerce—which he opposed at the time because, he said, it didn’t offer enough affordable units. Construction has yet to begin at the Friedrich.
Since then, two more large apartment developments have emerged in District 2.
One is a 386-unit luxury building by Dallas developer Encore that’s currently under construction on the southern edge of Government Hill, near Broadway and the Pearl. In November, McKee-Rodriguez reluctantly voted in favor of an incentive package from the Midtown Tax Increment Reinvestment Zone (TIRZ) worth up to $7 million. In a TIRZ, the property tax revenue gained from the rise values is collected and put back into the zone usually in the form of public upgrades tied to developments.
In the months prior, he had been crystal clear that such subsidies should not benefit market-rate, or luxury, apartment units. But he defended his vote, albeit with mixed feelings, by pointing out that Encore’s development had had the support of previous council members and the neighborhood association, and had had other prerequisites accomplished, such as rezoning of the property, in place.
[ Related: Olivo: How McKee-Rodriguez’s support for a luxury housing project helps shape the Decade of Downtown | Dec. 2, 2021 ]
He advocated for as many public amenities from the private developers as he could, he said, including a clubhouse the neighborhood could reserve as meeting space, and a splash pad. For Encore’s development, a displacement study was ordered, but after the incentive package was already awarded.
Most recently, at a meeting of the Inner City TIRZ, which McKee-Rodriguez chairs, in early May, the councilman lent his support for Grayson Heights, a mixed-use, 281-unit market-rate development that’s due to receive an incentive package up to $2.1 million for the reimbursement of money spent for sidewalk and street repairs, drainage upgrades, the replacement of SAWS water lines, and new street lighting.
“What I tried to get out of this was the public benefit,” McKee-Rodriguez said. “Five council members before me had worked with this developer and said we want market-rate. And it’s the last project I was inheriting, and so I really struggled with it.”
McKee-Rodriguez asked the developers, a partnership lead by J.J. Feik of San Antonio, if affordable housing was possible; and he was told it wasn’t without starting from scratch. For the Government Hill neighborhood, a variety of amenities were added, including a dog park, community meeting space, and additional lighting in the neighborhood. The full City Council will vote on the incentive at a later date.
McKee-Rodriguez and District 1 Councilman Mario Bravo, and others on the City Council, have begun to talk about expectations for future TIRZ dollars, “so that when folks come before us they would know what things we were prioritizing … a project like Grayson Heights likely wouldn’t be recommended now. We started that conversation a little before the Grayson Heights (discussion).”
[ Heron Archive: Council passes $24M Lone Star incentive package, despite community concerns ]
[ Related: Lone Star Brewery project uncertain as GrayStreet-Midway offers 32-acre property for sale ]
Assessment, tools with teeth
NHSD’s charge is twofold: 1) to assess a development’s impact on residents of nearby neighborhoods. 2) offer tools to help prevent or ease displacement. Public engagement could begin next month.
Proposed assessment process
[ Download: “Displacement Impact Assessment Policy Development,” presentation to Governance Committee, May 25, 2022 ]
The department is also working with the city’s Metro Health department to craft an assessment tool that would look at data from the U.S. Census; the Bexar County Appraisal District; Costar, a real estate information company; and local data to gauge which San Antonio neighborhoods are changing and are most vulnerable to displacement.
In San Antonio, they’re looking to see how specific areas have already changed, including the Pearl and Broadway area, near San Pedro Creek Culture Park, around Mission Trails, and the neighborhoods around the former Lone Star Brewery.
What neighborhoods are most at risk?
[ Note: The Heron asked to see the Prototype Neighborhood Change & Displacement Tool, but was not granted access by NHSD because it’s still in prototype form. ]
Perhaps the biggest question mark has to do with what the city can do at the local level to help ease the impact of such change on long-time residents.
City housing officials are brainstorming potential tools to either prevent displacement or mitigate it, meaning that in some situations, displacement may be inevitable, but perhaps the city would step in and help cover the cost of relocation.
In recent years, NHSD, under former director Veronica Soto, attempted to find loopholes in existing state statutes that could be used to help residents stay in place.
In 2019, the department explored the use of Texas’ neighborhood empowerment zones, which freezes property taxes for areas as a way of incentivizing property owners to fix up their properties without fear that such improvements would increase their taxes. NHSD was exploring using some of the city’s home rehab programs, such as Under 1 Roof, that would count as the improvement, but couldn’t find a way to make it work.
Deputy City Manager María Villagómez told the council the city plans to continue working with state lawmakers to craft and push policy at the state level.
State Rep. Diego Bernal, most notably, has tried to introduce bills during recent Texas Legislative sessions in an attempt to offer some kind of relief (most notably through property taxes), but to no avail.
“One thing we want to try is finding a way to treat long-term residents who aren’t 65 like their 65—like a bridge to 65,” Bernal said. “We have another bill that would only allow homesteads to be compared to homesteads when you’re doing evaluations. In other words, if there’s an Airbnb, or one of these properties is bought by a management company, that doesn’t count as a (comparison) when you’re doing your property taxes. You should only compare homesteads to homesteads.”
Bernal said these issues are complicated, and it takes a variety of tools working together to help address the problem.
“I think what also happens, honestly, is that people see a community like ours, and they just see opportunity, right?,” Bernal said. “They want to live in the cool neighborhoods that we’ve built, but they only want to live with our ghosts. And that’s a problem, too.”
Heron Editor Ben Olivo has been writing about downtown San Antonio since 2008, first for mySA.com, then for the San Antonio Express-News. He co-founded the Heron in 2018, and can be reached at 210-421-3932 | ben@saheron.com | @rbolivo on Twitter
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