Editor’s note: This article has been updated to reflect that developer Dennis McDaniel and St. John’s Evangelical Lutheran Church intend to proceed with St. John’s Square, even if the housing authority is no longer involved. The Heron reached out to McDaniel and the church early Saturday morning, and first published late Saturday afternoon. In retrospect, we should have give both parties more time to respond.
An Austin developer and St. John’s Evangelical Lutheran Church are moving forward with plans to build St. John’s Square, a 253-unit apartment building near La Villita, despite the San Antonio Housing Authority (SAHA) backing away from the project.
In recent years, SAHA had partnered with Austin developer Dennis McDaniel, and St. John’s Evangelical Lutheran Church, which owns the adjacent parking lot where the building was envisioned at 410 E. Nueva St., on the $65 million project. McDaniel, on behalf of SAHA, had secured up to $50 million in tax-exempt bonds, which the state had granted to St. John’s Square.
McDaniel and St. John’s Evangelical Lutheran Church say they have identified a bank that will finance the development.
“Our project is alive and it has not been shelved,” Ronald Stinson, president of the congregation at St. John’s Evangelical Lutheran Church, said in a phone interview Monday morning, in reference to a previous version of this article that suggested the project’s future could be in jeopardy because of the amount of equity the housing authority was bringing to it.
“Most churches don’t have this financing mechanism with the parking lots and now this facility, which is going to help finance projects at the church,” Stinson said.
In our last report in August 2020, officials said that 53 units would be designated for low-income workers under the U.S. Department of Housing and Urban Development’s Moving to Work program. The remaining 200 would be market-rate priced.
Now that St. John’s and McDaniel are moving forward with financing through the private sector, the project would be 100 percent market rate.
From SAHA’s perspective, leaving the project is another sign the agency is adjusting its role in how it uses its ability to procure tax-exempt bond for low-income housing, and the ability to receive full property tax exemptions for certain types of projects.
On Wednesday, SAHA’s board voted to reallocate the bonds for St. John’s Square to another development to be named at a later date.
On Friday, SAHA confirmed that the St. John’s Square project was no longer in its development pipeline.
“SAHA is seeking deeper affordable financing models to support the lowest income families,” SAHA spokeswoman Marivel Resendiz said in an email.
SAHA did not grant an interview request for this update.
St. John’s Square had seemingly cleared most major development hurdles on the path toward breaking ground.
McDaniel signed a 99-year lease with the church on the land, and had procured up to $50 million in tax-exempt low-income housing bonds through the state on SAHA’s behalf. A major investor, Affordable Housing Partners Inc., a subsidiary of Berkshire Hathaway of which Warren Buffet serves as chairman and CEO, was committed to providing $4.4 million in equity in exchange for 4% low-income housing tax credits. The city’s Historic and Design Review Commission had approved the design. The city also chipped in an incentive package worth $924,305—$624,305 in fee waivers and a $300,000 forgivable loan for retail build-out.
Aside from the bonds, it’s assumed any other incentive for low-income housing would be rescinded.
In 2020, SAHA officials told its board of commissioners the partnership had struggled to secure a construction lender due to the pandemic.
At SAHA’s real estate committee meeting on Jan. 19, Tim Alcott, the agency’s real estate and legal services officer, told the board that the bonds must be used up to three years after they are issued. It’s unclear exactly when those three years are up.
“What we’re doing is saying this building may not go forward with these bonds, but we don’t want to lose them,” Alcott told the board on Jan. 19.
“Rather than having these things go to waste, we want to have them reallocated to other projects,” he said.
The St. John’s Square is one of a handful of projects that was conceived under former SAHA President and CEO David Nisivoccia, who had been lambasted by housing advocates for his eagerness to partner with private developers. According to both men, St. John’s Square grew from a chance meeting between Nisivoccia and McDaniel at the Steel House Lofts, where Nisivoccia used to live, and which McDaniel built.
It was always questioned why SAHA was getting involved with developments that were yielding predominately market-rate, or near-market-rate, apartments.
Nisivoccia, who left SAHA in January 2021 to lead the Denver Housing Authority, said repeatedly the idea was to generate revenue so the agency could then build more-deeply affordable housing elsewhere to help offset the lack of federal funding, which has been slashed nationwide in recent years.
To be fair, SAHA’s public-private policy had taken shape well before Nisivoccia took the helm in 2015—during the Clinton administration (see Victoria Courts demolished and turned into Victoria Commons), and later under President Obama (see Wheatley Courts demolished and turned into East Meadows).
[ Related: SAHA sees end in sight for Victoria Commons development in Lavaca | Oct. 22, 2021 ]
Since Ed Hinojosa Jr., an 18-year veteran of the agency, now acts as SAHA’s president and CEO, SAHA has moved away from such deals, and there’s been a palpable shift in strategy from mixed-income developments to increasing the number of public housing units. SAHA’s announcement that it would retain the 501 public housing units at the Alazan Courts—rather than raze them and build mixed-income units—could be viewed as a prime example of the shift. A redevelopment at Alazan-Apache Courts will still happen, and the number of public housing units will remain—if not increase, Hinojosa Jr. has said—the big question is whether to demolish and rebuild, or renovate the existing decades-old structures.
So St. John’s Square, considering the difficulty the SAHA-McDaniel-St. John’s partnership had in securing a construction lender, was an opportunity for SAHA to back away and allocate those $50 million in tax-exempt bonds toward a mixed-income project whose rents skew more toward lower-income households.
By comparison, the 210 Josephine Apartments, a SAHA-Lynd Company of San Antonio partnership, is a 259-unit mixed-income building on West Josephine Street, near the Pearl, that doesn’t appear to fall in line with Hinojosa’s strategy. It reserves 104 units for people making up to 80% of the area median income (AMI), and 26 for people making up to 60% AMI. The rest are market-rate.
Construction is already underway.
In 2020, Nisivoccia told the Heron that 210 Josephine Apartments, and another project called Culebra Crossing, had been conceived from talks he and A. David Lynd, the company’s president and CEO, had after they spoke on Urban Land Institute panel discussion in recent 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 | email@example.com | @rbolivo on Twitter