Analysis: How downtown's twin towers project helps us understand how housing incentives work

by Ben OlivoJanuary 31, 2020
Two towers one by SAHA and JMJ, and the other by just JMJ. Renderings going to SAHA board meeting Aug. 1, 2019. SAN ANTONIO HOUSING AUTHORITY
JMJ Development of Dallas wants to built two, 24-story residential towers on Villita Street, one (left) with the help of the housing authority. Courtesy San Antonio Housing Authority

The potential for two, 25-story residential towers being built in the center of downtown, creating the kind of density our downtown so desperately needs makes me giddy as a downtowner.

and that some will be affordable

Potential headline
Analysis: Is SAHA helping a Dallas developer make a profit?

The truth is: When a governmental entity hands a subsidy, usually a tax break, to a developer, they're helping said developer make a profit. But there are other things to consider. Mainly, what is the public getting in exchange for the subsidy, the tax break? With respect to housing incentives in San Antonio, what San Antonians are getting in return are affordable housing (whose definition varies depending on whom you ask) in the center city, where it's hard to offer such rents because of how expensive it is to build buildings here.
HAD BEEN DENSITY
NOW IT'S ABOUT DENSITY AND AFFORDABILITY
With that in mind, is the trade-off equal? In other words, compared to the number of affordable units, their level of affordability, is the developer's tax break worth it. Then, finally, is the developer making too much of a profit?

Of course, every development is different. Of course, some developments are similar to others.

And then there's the twin housing high-rises JMJ Development of Dallas wants to build across from the Tower Life Building. If built, the two, 24-story high-rises would be historic for San Antonio's downtown: comprising close to 500 new apartments built across from the Tower Life Building. The 24-story Frost Tower received much pomp and circumstance, and rightfully so as the first office high-rise in more than 30 years, when it opened last year. The Class A office space was needed, and the EFFECT IS WHAT???

Imagine two more building of equal height infusing downtown with the type of density it so desperately lacks. We talk about downtown's lack of vibrancy when there isn't a major event for out-of-towners, or when locals don't descend here for Fiesta or the holiday season. This is it. This is exactly what the doctor ordered.

Here's the development in a nutshell.

The Villita and St. Mary's tower are being proposed for Villita Street by the San Antonio Housing Authority and Dallas developer JMJ.
HERON | GOOGLE

SUMMARIZE
JMJ first wanted to build a luxury high-rise BLAH BLAH
defined PFC
» Villita Tower
112-120 Villita St.
24 stories
226 units
market rate
.35 acres
» St. Mary's Tower
126 Villita St.
24 stories
250 units
80% AMI half
.58 acres

PFC GRAPHIC

What I can't get out my head is how these developments would work from a financing perspective. Last year, after interviews officials at the San Antonio Housing Authority, and previous interviews with city officials, and what JMJ said to the city's historic and design board. It all adds up to the question: Is SAHA helping JMJ earn a profit on its luxury high-rise. The more I think about it, the more I realize there are really two categories of PFCs

Let's walk through this together:

TWO KINDS

ROADMAP HOW I GOT THERE
Here's how my mind reached this question

I ASKED JMJ
SAHA
/// /// /// /// ///

David Nisivoccia
SAHA CEO

Nov. 12, 2019

Two separate real estate deals.

SAHA has nothing to do with their first real estate deal. We’re not involved in it in any form or fashion.
They probably have a pro formas for that deal, and they have a pro forma for the deal that we engaged in a partnership. Those two pro formas are separate entities. Those two real estate deals are separate entities.

Our interest is in the second one to provide affordable housing to the greater community of San Antonio. To provide workforce housing for people who provide a lot of the labor for the hotel industry. For alot of the

A lot of the tourist industry.

For people who can’t affordable viable transportation they can live downtown walk to work and take advantage of the amenities that so many other people have an opp to do so. That’s our interest on the second real estate deal. We have to do with the first one.

/// /// /// /// ///

CCDO

In all fairness, all public entities that contribute subsidies toward a private development are helping ??? But not all subsidies are created equal.
and in this case, there is no affordabilty component
JMJ eligible for what CCHIP incentives now?

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

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