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Under new policy, 25 percent of tax rebates would benefit affordable housing

by Ben OlivoAug 13, 2018

Editor's Note: This is the first in a series of stories examining proposed revisions to the Center City Housing Incentives Policy, which are intended to aid affordable housing efforts in San Antonio. The City Council is scheduled to vote on the changes Sept. 20.

In the downtown area, apartment building seems to be sprouting up steroidically — wooden lattices growing four or five stories tall on empty lots.

The one consistent driver in all of these developments has been the Center City Housing Incentives Policy (CCHIP), the Mayor Julián Castro-era mechanism from 2012 that made it easier for developers to build apartments and condos.

The idea back then was simple: Build places for people to live. ETC ETC ETC

But those places, it turns out, are expensive given the high demand for downtown living.

They're described as market-rate apartments, but that's just another name for luxury. Take, for example, 120 Ninth Street, the latest apartments nearly complete along the Museum Reach, where market-rate rents range from $1,300 to $5,000. sq feet

The policy's critics have zeroed in on the fact that the main driver of these incentives is tax rebates over 10 or 15 year periods that often amount to millions of dollars the developer doesn't have to pay in city property taxes. This in light of the fact that XX percent of the total X,XXX units either built or in the planning stages are market-rate, which, in the booming downtown area, is another word for luxury.

Market forces

have caused the . . .

City officials said last week that the

You know this. If you've looked for a place to live downtown, you know this.

The downtown area is in the midst of a development boom. Not since the years leading up to the stock market crash of 1929 have there been so many buildings going up in downtown at the same time.

Have you been

Last week, city officials released details on a new version of the Center City Housing Incentives Policy, one that — at the behest of Mayor Ron Nirenberg — is intended to aid affordable housing efforts in San Antonio.

If downtown seems like it's changing fast, it's because it is.

The housing incentives policy that has dramatically changed downtown, called the Center City Housing Incentives Policy, is due for a dramatic change of its own.

I've requested pro formas

what Gene Dawson said.

use the market demand for market-rate housing in
to generate revenue for affordable housing

Twenty five percent of city property tax rebates that downtown developers receive would aid affordable housing in San Antonio, according to a revised housing incentives policy the City Council is scheduled to consider on Sept. 20.

preserving neighborhoods

leverage public land

actual transparency, online database

no hotel components are eligible

new housing goal of 10,000
extend to 2020, and then reassess from there

mention
— rents charged for AH must not exceed 30 percent of household's gross monthly income
— at least 10 percent of total units 60 percent AMI, 10 percent at 80 percent AMI

The Center City Housing Incentives Policy (CCHIP), which expired in late June as city officials were revising it, has yielded 6,238 housing units, either completed or in the works, mostly in the downtown area. Under it, developers who build downtown housing received rebates on 100 percent of their city property taxes for either 10- or 15-year periods. The program offers other incentives, but the tax rebates are by far the most lucrative. The largest, an estimated $9.5 million over 15 years, went to the Arts Residences and Thompson San Antonio, a $116 million, condo-hotel development behind the Tobin Center for the Performing Arts. But the most of the rebates that surpass $1 million fall in the $2-4 million range.

Under the revised CCHIP, 25 percent, or WHAT, would feed an affordable housing fund managed by the Housing and Neighborhood Services department. The revision would apply to projects that receive CCHIP packages after the Council approves it — so the 25 percent allotment would not apply to the Arts Residences and others projects that have received incentives package.

ESTIMATE

DOESN'T KNOW HOW EXACTLY THE FUND WILL BE USED

In December, Mayor Ron Nirenberg announced his intention to place a moratorium on CCHIP. The policy had 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.

PROS

— it was not originally designed as an incentive tool for affordable housing
Veronica Gonzalez
interim administrator at the Center City Development and Operations department

— successes

— taxes yielded
$34 million in non-city taxes, $21 million of which goes to SAISD
although, to figure out how exactly those funds are spent, there are literally only a handful of people in the state who can tell you that, because of Texas labyrinthine school finance system.

— ROI

— this kind of assistance is still needed

CONS

During a presentation to the Economic & Workforce Development Council on Tuesday, city officials laid out a whole array of CCHIP revisions besides the affordable housing fund.
Really encourage developers to think big with their projects

tier 1
tier 2
breakdown

ICRIP

protecting neighborhoods
new boundaries
new fee waivers

preserving neighborhoods

leverage public land

actual transparency, online database

no hotel components are eligible

Courage pushback

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

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.

make the point about increased tax revenue from

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

when are the first CCHIP meetings??

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