Analysis: City buries most relevant info in downtown housing incentive database release

by Ben OlivoFebruary 21, 2019
The 338-unit Encore SoFlo apartments are under construction at 304 and 308 S. Flores St. It received a CCHIP incentive package worth an estimated $5.9 million—$4.5 million of which is a tax rebate. BEN OLIVO | HERON

Editor's note: The focus of this column of analysis, the hiding of the tax rebate figure for each CCHIP development—was addressed after the piece ran. The city improved the database by displaying the figure prominently on the database itself. The original piece will be preserved for the sake of keeping an archive.

The city of San Antonio has released a database of developments that received incentive packages through the Center City Housing Incentive Policy, or CCHIP, which you can find here. The press release that announced the database is titled, "Center City Development & Operations Department promotes transparency with publicly accessible housing incentive database."

But is it truly transparent?

At first glance, two critical pieces of information appear to be missing:

» the estimated value of the rebate on city property taxes that the developer receives over 10- or 15-year periods.

» the pro forma, or the financial document, which shows how much profit the developer expects to make.

Let's tackle these points one at a time:

Tax rebate

Not including the projected value of the tax rebate in the database is kinda critical. And by "kinda," I mean, it's pretty much the entire incentive. It is the main sticking point, the reason CCHIP became controversial, why Mayor Ron Nirenberg placed a moratorium on CCHIP in the first place.

The average tax payer doesn't care that developers receive development fee waivers or forgivable loans for retail build-out. CCHIP is touchy to some because—you know—who's giving the rest of us a tax rebate?

The flip side of the argument is that the rebates on the city portion of the property tax bill is a drop in the bucket compared to the taxes the developer ends up paying to all of the other taxing entities—San Antonio Independent School District, Bexar County, Alamo Colleges District, University Health System, San Antonio River Authority, Advance Transportation District, VIA Metropolitan Transit, State of Texas.

When the term of the rebate is over, after 10 or 15 years, depending on the development's location, the city benefits from the rise in property value over that decade or decade-plus.

The Center City Development and Operations (CCDO) department last year did a little exercise in which it estimated the 64 CCHIP projects would yield an estimated $10.1 million a year in city property taxes, and $39.8 million annually to the other taxing entities in the 16th year, after the rebates stopped, assuming all projects were built at the same time and that they all received 15-year rebates. Using property values from 2017, its argument was that the rebates are more beneficial to the entire city if one were to take a closer look.

Of course, the larger arguments have to do with the benefits of ramping up downtown housing, which will undoubtedly ramp up its vibrancy, which costs tax payers less in the long run if their city builds in rather than builds out. On the other hand, the communities built with tax rebates aren't affordable to most San Antonians. So, where's the justice in that? And back and forth, back and forth.

Even if you believe the tax rebates developers receive over time is paltry, shouldn't people have a right to know what the breaks are worth? So they can decide which side of the CCHIP argument they fall on?

Now, the figures are included in the legal agreements, which are downloadable from the database. To find it, one has to download each agreement and application packet, and sift through the scanned documents to find the figure—for all 63 projects.

Good luck with that.

I asked Veronica Garcia, CCDO assistant director, why the tax rebate estimate was omitted from the database.

It's because the tax rebate is a moving target, a projection, she said. There's no telling what a developer is going to pay in city property taxes year after year, because property values fluctuate.

"We were trying to make it clear that the tax rebate is kind of an ongoing incentive they get based on what they paid each year," Garcia said.

The other incentives—the fee waivers and loans—are given up front, and so that's why they're included.

"The tax rebate is more of a delayed incentive that you get over time," she said.

The most noteworthy developments—the ones around the Pearl and Southtown—receive an estimated tax rebate in the $3 million, $4 million, $5 million range. Here's a spreadsheet, which was provided to the Heron in June 11, 2018, that shows many of these projects and their estimated tax rebate totals.

120 Ninth Street on the Museum Reach is being developed by SC Bodner of Indianapolis. It received a CCHIP package worth an estimated $3.9 million—$3.1 million of which is tax rebate. BEN OLIVO | SAN ANTONIO HERON

No pro forma

When you download the document packet—which includes the legal agreement and the application—each project's pro forma is missing.

Garcia said, "The pro forma is a proprietary document and under the Public Information Act, the developer does have the right to go to the Texas Attorney General's office and request that that particular document be withheld. By not posting them, we make sure we're preserving that right, if they choose to have that kept proprietary."

Here's the thing, though: If we're going to have an honest and transparent conversation about the merits of CCHIP—how much affordable housing we as a city should demand from developers who receive tax breaks—shouldn't we have all the data?

This is an argument I've made to the Texas Attorney General's office. Actually, here's what I said in an open records request in September:

"I'm requesting these documents to better understand the process for how multifamily developments are financed in relation to the incentives—i.e. San Antonio's Center City Housing Incentives Policy—they receive."

It appears the AG's office saw my point.

Last week, the city released the applications, including pro formas, for four of the five developments I was seeking information for, for an article about whether developments needed CCHIP to be built. I requested applications for five of the latest projects with wood-frames that were located on downtown's edges, the kind of projects a city-funded study concluded may not require CCHIP incentives.

So, I received what appears to be the complete applications for 120 Ninth Street by BC Bodner at 120 9th St.; Jones & Rio by Alamo Manhattan at 111 W. Jones Ave.; Brewery South by Silver Ventures at 226 Newell Ave.; The Bridge Apartments by 803 N Cherry LLC at 803 N. Cherry St.

The premise of my article never reached a conclusion because I didn't have all of the information. But now I (mostly) do.

We're still sifting through the documents, while trying to understand why our request for the fifth development—Vitre by 210 Developers at 700 W. Houston St.—wasn't granted. We'll be requesting the CCHIP applications for the other 60 or so developments very soon. That information will be used to populate our own CCHIP database. Stay tuned.

Worth noting

Making the list of CCHIP projects available to the public was one of the recent changes the city made to the program, which was on hiatus throughout 2018 as officials worked to squeeze more affordability from the policy. CCHIP is the program that is responsible for the roughly 6,800 housing units—either completed or under development—most of which have been built in the downtown area since 2012.

Garcia said the CCHIP database is a work in progress, and that CCDO may consider adding the estimated value of the tax rebates. Another improvements would be to define AMI, which stands for average median income, she said.

...

Editor's note: The city's database only includes executed CCHIP agreements, according to CCDO Spokeswoman Kelly Saunders. The four CCHP applications CCDO has received since Jan. 2—Museum Reach Lofts, Cattleman Square Lofts, Augusta Apartments, The Villas at Museum Reach—are not included on the list.

Also, last year, as city officials gave briefings on CCHIP, they mentioned there were 64 projects that were either built or in progress. However, the database lists 63.

Not listed is the mixed-use development that's planned for the northwest quadrant of Hemisfair. That is where Zachary Hospitality is overseeing the construction of the 200-room hotel, the 100,000-square-feet of office space, the 50,000-square-feet of retail, the 200 or so apartments, and the 1,000-space underground parking garage.

NRP Group had been chosen to develop the apartment portion, the San Antonio Express-News reported in 2016, which Hemisfair shared on its website. But in an interview on Monday, Hemisfair CEO Andres Andujar said an agreement with NRP Group was not final.

In an email response, Saunders added, "The CCHIP agreement for the project that will be located at the northwest quadrant of Hemisfair is still in the planning stages, which is why it isn’t listed."

...

Setting It Straight: The original headline for this column incorrectly stated that the city omitted the pro forma and the value of the tax rebate for each development listed in its newly-released Center City Housing Incentive Policy database. While I'm still researching the public records requests process when it involves private entities, and documents such as pro formas—especially when those entities receive public funds—the headline was inaccurate in describing the tax rebate estimates as being omitted from the database. You can find them, but you have to download each CCHIP agreement, and then find the figure, among all the legalese, in each multi-page packet. There are 63 packets. Whether the city acted in the true spirit of transparency is for you to decide. The headline has been corrected. Every word of the piece remains the same.

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

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