The San Antonio Housing Authority board of commissioners on Thursday agreed to pursue a partnership with JMJ Development of Dallas on a $63 million apartment high-rise called the St. Mary’s Tower on the southwest corner of Villita and South St. Mary’s streets.
The St. Mary’s Tower will comprise 250 apartments, half priced for households making 80 percent of the area median income (AMI), the other half at market rate, rising 24 stories kitty-corner to the Tower Life building.
The SAHA-JMJ partnership, which would receive a property tax exemption because of SAHA’s involvement, is exploring ways to offer apartments to families making 60 percent AMI or below.
The area median income (AMI) for a family of four in the greater San Antonio area (Bandera, Bexar, Comal, Guadalupe and Wilson counties) is $71,000, according to the U.S. Department of Housing and Urban Development. Here’s how it breaks down for lower-income households:
» 80% – $56,800
» 70% – $49,700
» 60% – $42,600
» 50% – $35,500
» 40% – $28,400
» 30% – $21,300
SAHA’s new development strategy
Of late, SAHA has become popular with private developers because of the property tax exemption it brings to these types of deals, as well as other benefits. For example, for St. Mary’s Tower, SAHA would serve as the lead contractor in order to eliminate the sales tax on construction-related costs.
However, absent from Thursday’s discussion was the benefit JMJ would receive for its participation in the deal.
SAHA Commissioner Sofia Lopez, who cast the lone vote against the project, said she felt “profoundly uncomfortable” because of a lack of specifics regarding JMJ’s profit, as well as the savings JMJ would garner from a full tax exemption—all in exchange for affordable units, but on the higher end.
“I look at something like this and I see a development that looks like half is going to be luxury and half is going to be affordable to some of the higher-income earners in the city,” Lopez said.
SAHA President and CEO David Nisivoccia said SAHA’s strategy is to provide higher-priced affordable housing through public-private partnerships as a way to fatten SAHA’s reserves. Then, SAHA would use its larger reservoir to subsidize cheaper rents—as low as 30 percent AMI—in future projects, he said.
He said affordable housing is needed at all levels to accommodate the 1 million new residents state demographers are expecting San Antonio to absorb in the next 20 years.
“We are everybody’s No. 1 partner now because of the opportunities we can provide developers,” Nisivoccia said in response to Lopez’s concerns. “Not specifically talking about this deal, but other people share your concerns: How much is given to developers? …
“Now we’re expanding our toolkit, we’re expanding the options to go get more affordable housing, to be a wealthier housing authority so we can offer a deeper subsidy dive. We’ve heard that from the board.”
Lopez’s point was the lack of details needed to make the best informed cost-benefit decision.
“If SAHA has really become the No. 1 partner for developers, are we really asking for everything we can possibly get from them?” Lopez said.
Alcott said SAHA executives will return to the board of commissioners with more specific numbers at a later date.
[ Dallas developer JMJ now wants to build two apartment towers—one with SAHA’s help ]
Among the other public-private partnerships SAHA’s involved in that are in the pipeline:
» With Austin developer Dennis McDaniel, SAHA wants to build a similarly-structured apartment development, in terms of financing and rent structures, but at eight stories tall, called St. John’s Square on Nueva Street.
» Again, similarly, SAHA has partnered with 210 Development Group on a 200-unit, mixed-income development southwest of downtown along Alazan Creek called the Tampico Lofts.
» On the West Side, it’s has partnered with NRP Group on the controversial Alazan Lofts project, an 88-unit mixed-income housing development next to the Alazan Courts.
Into the financial weeds
Preliminary figures show SAHA would receive $6.9 million in the first 10 years from operations revenue of the St. Mary’s Tower; a nonprofit entity controlled by SAHA would lease the property at 126 Villita St. to the SAHA-JMJ partnership for 75 years.
According to the Thursday’s meeting agenda, SAHA would receive 25 percent of operations revenue, while JMJ would receive 75 percent. The agenda also mentions that any investor can expect to make 8 percent return.
Tim Alcott, SAHA’s real estate and legal services officer, added that because the St. Mary’s Tower’s funding strategy includes tax-exempt bonds, the project would be required to offer units priced at 60 percent AMI or below.
For St. Mary’s Tower, where SAHA envisions downtown service industry workers living in lower-rent units, Nisivoccia said it is JMJ’s responsibility to close the gaps in financing. For example, JMJ will pursue city tax increment reinvestment zone (TIRZ) financing, and Bexar County incentives, to pay for the acquisition of the property at 126 Villita St., as well as construct the seven-story parking garage, upon which 17 stories of apartments will rest. In exchange for the incentive, the garage will be open to the public during the day.
[ For more info on St. Mary’s Tower, download SAHA’s meeting agenda (pages 146-168). ]
At the meeting, Alcott said he had called JMJ after reading about the Dallas developer’s plans to build the riverfront Villita Tower, a luxury 24-story high-rise of 226 units across from the St. Mary’s Tower site on Jack White Way.
“I see deals, (and ask) ‘What can I do to be able to bring more affordable units?’ ” he said. “I always have that conversation.”
But he didn’t hear a reply, until a few months later, when JMJ returned SAHA’s call.
By partnering with SAHA, JMJ will benefit from a full property tax exemption for the St. Mary’s Tower, but not for the Villita Tower, which the developer is building on its own, JMJ CEO Tim Barton said in a recent email.
How public facility corporations, or PFCs, work
Under state law, government nonprofits known as public facility corporations, or PFCs, receive a property tax exemption if half the housing they create on the property is offered to households making 80 percent AMI, or less.
Other public entities, such as the city of San Antonio, Alamo Colleges, and Hemisfair, have built mixed-income housing using PFCs.
Here’s how they work:
[ The San Antonio area median wage rises to $71,000 ]
Though the discussion has faded some about the definition of affordable housing, many housing advocates, including Mayor Ron Nirenberg, have criticized the description of 80 percent AMI units as affordable. In the greater San Antonio area, 80 percent AMI ranges from $39,800 for a single person to $56,800 for a family of four. Because the U.S. Department of Housing and Urban Development’s AMI includes the counties that surround Bexar, many have said the figures don’t represent San Antonio’s true median household income.
In the Mayor’s Housing Policy Task Force report release in August 2018, the five-member group said the figure of $49,268, derived from the U.S. Census Bureau’s American Community Survey 1-year estimate for San Antonio in 2016, better represented San Antonio’s median income.
However, defenders of HUD’s AMI say a higher AMI means more people in San Antonio can qualify for these housing programs, because the cap is raised.
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Contact Ben Olivo: 210-421-3932 | firstname.lastname@example.org | @rbolivo on Twitter
Pancho Valdez says
Once again public funding will be used to subsidize another building for people other than low income.
SAHA is having major issues with safety, security, and the spread of mold and roaches.
It’s time that SAHA be held more accountable to the public in San Antonio.
-Pancho Valdez, Organizer
San Antonio Tenants Union