Tampico Apartments lands key city incentive; construction underway on near West Side

The 200-unit Tampico Apartments on the near West Side received a key public subsidy from the City of San Antonio on Thursday.

The $33.6 million Tampico Apartments is a true mixed-income project by local developer Mission DG and the San Antonio Housing Authority (SAHA) on 3.7 acres along Alazan Creek between San Fernando Cemetery No. 1 to the west, and I-10/I-35 and San Pedro Creek to the east.

The development received up to $328,341 from Westside Tax Increment Reinvestment Zone (TIRZ), which required City Council approval, to cover the cost of impact fees, building permits, and other city development fees. Under the city’s old incentive policy for downtown housing, such fees were automatically waived for any housing development that met the requirements. Since the pandemic started, however, the city is handling each project on a case by case basis.

This may be the first time a TIRZ was used to cover such expenses. Traditionally, in a TIRZ, the tax revenue gained from the rise in property values was used to fund public upgrades within the zone. Recently, the city has been using the monies to fund affordable housing.

Demolition of an old SAHA-owned warehouse began in July, to make way for Tampico.

The 200 apartments are a true mix of affordability, offering apartments to households making each level below the area median income (AMI)—from 80% AMI to 60% AMI and under rents—as well as market-rate.

[ Scroll down for a chart showing AMI levels. ]

However, the affordability mix has been criticized by some West Side activists who say it’s tilted more toward the higher rents, rather than the lower rents that are more akin to the historically impoverished West Side.

[ Scroll down to the timeline for more arguments and counter arguments on the rent mix. ]

Anticipated rent structure at Tampico Lofts

Tampico Apartments

» Address: 200 Tampico St.
» Development partnership: Mission DG (Victor Miramontes, managing partner; Henry Cisneros, partner; Mark Tolley, partner), San Antonio Housing Authority (SAHA)
» Property Owner: SAHA, leasing to development partnership for 35 years
» Occupancy: N/A
» Rent or Buy: Rent
» Height: Four stories
» Land size: 3.7 acres
» Total units: 200
     » Market rate: 64
     » 80% AMI: 9
     » 70% AMI: 20
     » 60% AMI: 70
     » 50% AMI: 18
     » 40% AMI: 10
     » 30% AMI: 9
     » Student Units: N/A
» Section 8: Yes
» Retail (s.f.): N/A
» Office (s.f.): N/A
» Parking: 167 spaces, surface
» Construction start date: July 2020
» End date: August 2022
» Architect: GRG Architecture (San Antonio)
» Cost: $33.6 million
» Investors: $7.4 million via 42 Equity Partners LLC of New York purchasing 4% low-income housing tax credits awarded to project.
» Financing: $20.4 million loan via Bellwether Enterprise of Cleveland (Freddie Mac tax-exempt loan; serves as collateral for Multifamily Housing Revenue Bonds [see “Federal incentives”]); $22.9 IBC Bank taxable construction loan (pays Multifamily Housing Revenue Bonds in full once project is completed; partly serves as collateral for Bellwether/Freddie Mac loan)
» San Antonio Incentives: $662,805
     » Tax Increment Reinvestment Zones (TIRZ): $328,341 (Westside TIRZ)
     » SAWS Fee Waivers: $334,464
     » City Fee Waivers: N/A
     » City Loans: N/A
     » Est. City Property Tax Rebate: N/A
» Bexar County Incentives: N/A
» Texas incentives: Developer to receive full property tax exemption via Las Vargas Public Facility Corporation (SAHA entity) for the duration of 35-year lease; under state law. Property valued at $19,097 in 2020.
» Federal incentives: Up to $23 million in tax-exempt Multifamily Housing Revenue Bonds issued by Las Vargas Public Facility Corporation (SAHA entity), pays for construction; $7.4 million via 42 Equity Partners LLC of New York purchasing 4% low-income housing tax credits awarded to project
» Other: $2.6 million developer fee (SAHA and Mission DG to pay fee in 50-50 split into the partnership over 10 years); $627,000 Moving to Work Demonstration funds (HUD)
» TOTAL PUBLIC SUBSIDY: $31 million (at least)
» Return on investment:
      » Mission DG: $750,401.25 cash flow (15 years)
      » SAHA: $750,401.25 cash flow (15 years)
      » Bellwether Enterprise: Unknown
      » IBC Bank: Unknown

» Editor’s note: SAHA, which is a public tax-exempt entity, has owned the property since 1994. In recent years, SAHA issued a request for proposals for a developer to build mixed-income apartments on the property. That developer was Mission DG. In the Heron’s analysis above, the taxable value of the land was not included in the total public subsidy because SAHA hasn’t been paying taxes on the property since the agency purchased it 26 years ago.

Timeline

June 29, 2020

The Westside Tax Increment Reinvestment Zone board approved $328,341 for the Tampico project to cover the cost of city fees.

The $33.6 million development will provide some of the most diverse rents of any project in the downtown area, from market rate to those priced at 30% of the area median income (AMI), which is $21,600 for a family of four. The price points, however, have been criticized by some West Side activists for not including a greater percentage at the lower rent levels. Only 4.5%, or nine of the 200 units, will be priced at 30% AMI or lower. Less than 20% of the total, or 38 units, will be priced for people making less than 50% AMI.

“I ask that you consider a more favorable ratio,” Kayla Miranda, an Alazan-Apache Courts resident who’s also a member of the Historic Westside Residents Association, said to the Westside Tax Increment Reinvestment Zone (TIRZ) board, which met via video conference. “You cannot truly call the property mixed income if 90% of the tenants are required to make well above the current (West Side income) average. … You should be blending into a community, not drawing a line in the sand.”

Victor Miramontes, Mission DG’s managing partner, agreed with Miranda’s assessment, but justified Tampico’s rent structure as one that would bridge the area’s lower rents with those spurred by newer developments such as SAY Sí’s new headquarters, which is due to open early 2021 nearby along Apache Creek.

“Do I agree with the comment that the West Side is impacted with much lower AMIs? We acknowledge that,” Miramontes said. “We recognize the reality of what people who live on the West Side deal with.”

“This project must be a part of a broader, bigger West Side affordable housing strategy,” Miramontes said.

Miramontes told the Westside TIRZ board, which approved a $328,341 incentive to help cover SAWS and city fees, construction would begin in July. In a TIRZ, the revenue gained from the rise in property taxes is invested back into the zone in the form of public upgrades or affordable housing subsidies.

The Tampico Apartments project is benefitting from $23 million in tax-exempt revenue bonds, issued by SAHA entity Las Vargas Public Facility Corporation (PFC; see below), and $7.4 million revenue from the sale of 4% low-income housing tax credits, which New York company 42 Equity Partners LLC purchased from Mission DG and SAHA.

June 4, 2020

SAHA board unanimously approved Tampico Apartments project. During the meeting, Mark Tolley of Mission DG told the board the Tampico Apartments was redesigned to orient the buildings farther from I-10/I-35.

February 2019

Mission DG and SAHA host a public meeting on the project. Read more.

5 steps to understanding public facility corporations, or PFCs


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