Olivo: Housing needed at all price points, Nirenberg says

Note: This is a column of analysis.

Reading President Biden’s housing action plan last week, two points stuck with me.

One is that our housing shortage as a nation was exacerbated during the pandemic, which drove up prices. The other is how to fix this crisis: by increasing housing production at all price points. Though Biden’s announcement focusses on the production and preservation of affordable housing, the underlying message was that all levels of housing are required to get us out of this mess. So, it’s not that we need more market-rate housing or more affordable housing—we need both. At least that’s the message I got.

An analysis by Moody’s Analytics estimates a shortfall of an estimated 1.5 million homes across the country.

“President Biden believes the best thing we can do to ease the burden of housing costs is to boost the supply of quality housing,” his announcement says.

Mayor Ron Nirenberg told me as much a few weeks ago at the groundbreaking ceremony for 300 Main, Weston Urban’s 32-story apartment tower. The development, the tallest residential structure to be built in San Antonio ever, received a lofty incentive package, worth $8 million, most of which is property tax rebates from the city over 15 years. It’s worth noting that Weston Urban will also contribute an estimated $2.2 million to San Antonio’s affordable housing fund over same timeframe.

Nirenberg pointed out that 300 Main was one of the last developments to receive aid under the old Center City Housing Incentive Policy, or CCHIP, which expired in December 2020.

But he also said developments such as 300 Main, which will infuse downtown with 354 luxury units while adding to San Antonio’s skyline, was much needed.

“My belief is that in order for us to stimulate a healthy affordable housing market, we need to build inventory and demand at every level—from market-rate to luxury to affordable homes and deeply affordable homes, even some public housing,” Nirenberg said.

“We need to build the demand at all levels,” he said. “If we neglect anyone of those areas, it creates pressure downward. So if we neglect the need for market-rate housing, it’s going to stimulate more investment that ends up costing us more in terms of affordability, a loss of affordable units when we don’t build the demand above it.”

His response came after I asked him about how some people continue to criticize the incentivizing of downtown development, which the city continues to do for certain mixed-use projects. (See an incentive package worth up to $4.4 million for the Riverplace project on North Main by Boerne developer Universal Services Group.) The difference now is that subsidies must be approved by the City Council, whereas before they were turnkey as long as they met CCHIP requirements.

I asked him this question because my brain is still programmed to think in a binary way, as it was in the years between 2010 and the start of the pandemic. During Mayor Julián Castro’s Decade of Downtown, the question of how to continue to build our downtown was an either/or proposition. You were either on the side of subsidizing as much affordable housing as possible, or you were on the side of subsidizing as much market-rate housing as possible. Both were a means to cheaper rents, each side argued. But in those years, you took a side.

The reason, I believe, debate raged then was that the city’s incentives were limited, as they always are. Then, in December of 2017, Nirenberg slammed the brakes on CCHIP—a few months after he was elected mayor, and two months after he convened the Mayor’s Housing Policy Task Force to study this city’s housing woes. Nirenberg spoke of a CCHIP policy that “left out affordability so that only certain portions of our community can actually benefit from that revitalization.” In those early years, San Antonio was incentivizing nothing but market-rate housing. By this time the Pearl area and Southtown were maturing with mixed-use buildings. And we at the Heron began to ask whether developers were receiving incentive packages they didn’t need. It took a year for the city, at Nirenberg’s behest, to revamp CCHIP and restructure it with affordable housing measures baked into it.

“We recognized the CCHIP program needed to be throttled in regard to market-rate housing,” Nirenberg said in reference to those early years. “By the time we got to the mid-2010s, it was very evident that the intent of CCHIP to spark interest in the housing market that was virtually dormant had been accomplished, that the market was staring to take off. So we decided to throttle back on the incentives.”

He added, “At the same time, we didn’t want to kill projects that were already in the pipeline. (300 Main) represents the last of these projects.”

The housing crisis that has emerged since the pandemic has certainly helped level the playing field. We’re all feeling the rising cost of housing. But let’s not forget that lower-income families are hit hardest. In other words, some rich people choose—and can afford—to spend more than 30 percent of their income on housing (the federal definition of affordable housing) if their income is, let’s say, six figures. For those who make well below the area median income, spending more than 30 percent of their income could mean disaster.

That fierce debate of the mid-to-late-2010s has also simmer down because, under Nirenberg, San Antonio has added to its affordable housing tool box. We still have tax rebates, and tax increment financing. In December, the City Council adopted the Strategic Housing Implementation Plan, a highly-technical and multi-pronged document borne from Nirenberg’s housing task force, with the goal of leveraging $1 billion of public dollars over the next 10 years to address an estimated 96,000 cost-burdened households in San Antonio. And, the city, even before Nirenberg took office as mayor, began to lay the foundation for the $150 million affordable housing, which voters approved earlier this month.

Nirenberg says future incentives should be directed toward affordable housing, which the city defines as housing for households who make up to 60 percent of the area median income.

“We need to focus the public resources on housing that can’t be produced by the market,” he said.

But what happens when developers come back to the city requesting more tax rebates? Nirenberg said there are other ways the city can help facilitate market-rate housing. He spoke of cutting red tape wherever the city can, speeding up the timeline, that sort of thing.

But the question must be asked, now that the city is putting real money into solving affordable housing: Can these new affordable housing dollars and strategies truly offset the forces of capitalism, which has had a 10-year head start? The example everyone uses is the little old lady who lives in a house that’s in the path of gentrification. Can these measures keep her from being displaced? Are we even talking about gentrification in the inner city, anymore? It seems like that’s another conversation we don’t have anymore.

To be fair, the city isn’t going to solve these issues alone. In the coming weeks, I’ll dissect Biden’s plan, which involves incentivizing cities to adopt more inclusive zoning laws, augmenting existing programs such as low-income housing tax credits, and a slew of other recommendations.

I haven’t even mentioned until now the San Antonio Housing Authority (SAHA), which, in my opinion, has done a complete 180 in their housing strategy—from one that is based on capitalism to one that embraces the public housing model—since president and CEO Ed Hinojosa Jr. took the helm in early 2020. It would only make sense that SAHA’s strategy, as an entity funded by the federal government, would work in lockstep with Biden’s. Another column for another day.

The quasi-city entity San Antonio Housing Trust has a role to play. Bexar County has a role to play.

So much to chronicle and analyze when it comes to housing in the coming months and years.

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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