This is a column of analysis.
How much money do developers make on multifamily projects that receive city incentives?
It seems like a pretty important question, but it's one I didn't hear anybody ask in 2018, the year city officials used to revamp the Center City Housing Incentive Policy.
Why not? It's a pretty obvious question. I kind of asked it, at times.
In the dozens upon dozens of discussions that were had on CCHPI in 2018, whether they were City Council debates or media interviews, the question of one's profit was
so that it produces more affordable housing at the direction of Mayor Ron Nirenberg.
How do developers benefit in terms of profit from packages under the Center City Housing Incentives Policy?
And I'm talking specifics. So when District 4 Councilman Rey Saldaña, for example, mentions the Arts Residences and Thompson San Antonio hotel project, which received a $10 million package under the old Center City Housing Incentive Policy, he should have also asked how much Houston developer DC Partners is making on the deal.
Same goes for anything anyone builds because of CCHIP—Silver Ventures, David Adelman, anyone.
Why aren't we asking this question? Is it because it's rude? I certainly don't mean to be.
It's a question no member of the media—as far as I can tell—has asked, nor from any City Council member who voted through CCHIP in 2012, and who approved the changes in December. I put myself at the top of the list as the San Antonio Express-News' CCHIP writer from 2012 to 2016. We should have been asking for each project all this time: What's the profit? What's the rate of return on investment? Who are the equity partners and lenders, i.e., who's sharing in the profit?
It's what every real estate reporter at every news organization should be asking.
These aren't easy questions to ask, and that's probably the reason nobody asks them.
I want to be very clear: Just because I'm barely now beginning to ask developers these questions doesn't mean I am anti-CCHIP or development.
My role in the CCHIP revision process, which all media share in, is to translate the jargon and mumbo jumbo coming from the meetings and briefings city staff had, usually, with City Council members. What do they mean when they use the word "pencil" as a verb? What is AMI? THIRD QUESTION
If we're going to properly debate whether San Antonio should be in the business of incentivizing market-rate housing in the downtown, we need all of the information. And it's the media's responsibility to disseminate the information in a way that's fair and balanced.
Developers' rate of return on investment and pro formas and all of that proprietary stuff should be part of this conversation. These missing pieces complete the CCHIP picture. And it's only at that point can we decide, as individuals, whether or not we want to support CCHIP or not, or what minute changes we're comfortable with, or not.
You also can't blame developers for resisting. Not all of the developments are financed the same way. There isn't a cookie cutter formula. In this regard, each project's pro forma would normally be regarded as proprietary, as it should be, BLAH BLAH BLAH
The argument has been, at least one I've made to the Texas Attorney General on the seven developments I've requested pro formas for—these developments are receiving incentives, and therefore their pro formas and financial documents should be open record. It's also a matter of amount of money. If, for example, a development receives a few hundred thousand dollars in an incentive, how much are we allowed to know. But, like in the case of the Arts Residences and its $10 million incentive, yes, I think the tax payers have a right to know.
I may be in favor of handing out incentives to developers, for all you know. Again, my fight is with giving you the complete information. You never know, when you have all the facts, you might actually feel like the incentives are worth it.
It's worth noting that the city, particularly Assistant City Manager LorI Houston, made the point several times that a database of all CCHIP projects will be put online, in the interest of transparency—something that should have been in place at CCHIP's launch. Just as the city should live stream all of the Zoning Commission meetings, and Planning Commission and Historic and Design Review Commission, etc. But the pro formas likely won't be included in that list because they are considered proprietary, Houston told me last week.
There is an argument to be made on the side of the developers that the general public cannot handle all of the information. This is the specter of Proposition B, and the way San Antonians reacted to City Manager Sheryl Sculley's half-million salary. MORE MORE