Analysis: How the city created some of San Antonio's most expensive neighborhoods

by Ben OlivoAugust 12, 2018

Inside San Antonio's downtown bubble, where rents are on par with Austin's at $2 a square foot and beyond, the cost of living may seem justifiable. As more lofts and condos are built, it all seems normal. Studio apartments priced at $1,000 a month. Topo Chicos for $5. It's not anyone's fault. It's just market forces. It is what it is.

San Antonians who live in other parts of the city, however, are not exactly joining in on the development boom. And make no mistake, not since the years leading up to the stock market crash of 1929 have there been so many buildings going up in downtown San Antonio at the same time.

The Center City Housing Incentives Policy (CCHIP), a Mayor Julián Castro-era mechanism from 2012, is the reason this market exists today. City incentives have yielded 6,238 completed or planned units, mostly in the downtown area.

In December, Mayor Ron Nirenberg announced his intention to place a moratorium on CCHIP. Why? Because the policy has resulted in the construction of mostly luxury apartments — or market-rate — of late, Nirenberg said. His charge to city officials at the time: Revise CCHIP so that it assists in the creation of more affordable housing in the downtown area.

As a place for entertainment, family activities and recreation, downtown is becoming more accessible with events such as the summertime movies at Travis Park and Hemisfair's Yanaguana Garden. To live downtown? If you're working class or poor, don't bother trying. Of course, there are exceptions, but they are infinitesimal.

So when Nirenberg benched CCHIP in December, it was the first time a public official so openly put the city-backed downtown growth into context with the economic segregation of the rest of the city.

"Those are case in points of a policy created with [the] great intention of revitalizing downtown, but that left out affordability so that only certain portions of our community can actually benefit from that revitalization," Nirenberg told me when I was reporting for nonprofit Folo Media. "That's not what we want. We want downtown to be a place for all San Antonians, especially, when its (growth is) coming with public dollars."

On Tuesday, city officials will unveil the new policy to the Economic and Workforce Development Committee.

Backstory: Before CCHIP, the city handed out incentives, but each deal was unique. City officials and the developer negotiated. Cash was sometimes included in the package. Then the agreement would go to the City Council for a vote. This took time and it raised ethical questions about city officials and developers negotiating behind closed doors.

In 2012, the city created CCHIP with the intent of aiding in getting as many people living downtown as possible while adding transparency and brevity to the incentives process. No longer, did the Council vote on each deal.

What went right: It worked. CCHIP has resulted in 6,238 housing units that have either been built or that are in the works. More and more developments are coming into the core. At the beginning of CCHIP, the development pattern took on the shape of a donut — affecting downtown's surrounding neighborhoods more than the actual center city.

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It had consequences.

What went wrong: Simply put, Mission Trails. Early on, the CCHIP boundaries extended into parts of the city clearly not the central business district. A kind of gerrymandering.

In late 2014 and early 2015, more than 100 mostly low-income households, living in the Mission Trails mobile home park along the San Antonio River on the South Side, were displaced by a luxury apartments that received a CCHIP package.

In June 2016, the City Council revised the program — scaling back its footprint and extending it until June 2018.

hays street bridge

What's to come: CCHIP works for all types of housing — from market-rate to workforce to affordable housing — but units the working class and poor can afford are rarely built in the downtown area. Last week, we reported that the Museum Reach Lofts, an almost completely affordable project by Alamo Community Group near the Pearl, is getting closer to securing all of its financing. (Ironically, the project is taking shape during the CCHIP hiatus, and therefore is not currently due to receive city incentives.)

Conversely, another project called The Durango, 421 S. Flores St., is due to receive a CCHIP package worth $3.3 million — including an estimated $2.4 million in city tax rebates over 15 years — while commanding rents at about $3 a square foot. To give you an idea, a studio apartment (typically 400 square feet; a room with a bathroom) would cost you $1,200 a month.

Construction costs, the cost of land, and other factors, drive up development costs and therefore rents. If you want to build affordable housing in the downtown area, you need help, such as low-income housing tax credits, city incentives.

Every multifamily project that receives an incentive will either include affordable housing or pay a kind of fee that will go into a fund that assists in the creation of affordable housing, says people who have seen the recommendations and, to a lesser degree, CCDO director John Jacks. What we'll be looking for, more importantly, is if the incentives policy will actually encourage developers to add affordable units themselves.

Contact Ben Olivo: 210-421-3932 | ben@saheron.com | @rbolivo on Twitter

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