Dallas developer Encore Multifamily plans to build a five-story apartment complex as the first phase of GrayStreet Partners’ $560 million Broadway East master-planned community.
The 386-unit complex will be constructed on about 3.4 acres of land that Encore bought from GrayStreet in July, northwest from the corner of Carson and Austin streets in Government Hill, across Broadway from the Pearl. Construction is expected to begin some time next year, company spokeswoman Amy Dunaway said in an email.
The complex will feature a courtyard, and its landscaping will make use of an historic acequia that runs through the property, said Peter French, GrayStreet’s director of development. All of its units will be market-rate, he said. It will not feature a retail component.
French said he wasn't sure when the groundbreaking will happen, but said "sooner rather than later."
"They're a great outfit," French said of Encore, which finished construction last year of the Encore SoFlo complex in south downtown. "They've approached this with a clear understanding that they’re part of a larger master plan. … That's not the way everyone approaches projects."
Over the next 10 years, GrayStreet has said it plans to develop more than 1.6 million square feet of mixed-use space in Broadway East with its partner, Houston builder Midway. The community would span about 20 acres roughly bounded by Broadway, North Hackberry, Casa Blanca and East Grayson streets. In recent years, GrayStreet has acquired the non-residential properties, most of which were previously owned by the San Antonio Independent School District.
Along with the construction of Encore’s complex, the first phase will include infrastructure work that is badly needed in the area, which is expected to begin this year, French said.
The second phase will focus on the city blocks north and south of a planned extention of Pearl Parkway to the east, French said. As currently planned, a mixture of office space and retail would be built on land GrayStreet owns next to the 1800 Broadway apartment complex, while retail and multifamily would be built south of the extension. The plans also include a hotel component.
It’s not yet clear whether GrayStreet and Midway would develop the second phase by themselves or would work with other partners, French said.
He is hopeful that Encore’s complex will build momentum for the community, attracting retail businesses to serve the new residents. The complex would be just south of a cluster of trendy bars and restaurants on East Grayson Street.
“Rooftops, rooftops, rooftops is one of the keys to successful neighborhood retail,” French said. “Activity begets activity.”
Last month, French went before the board of the Midtown Tax Increment Reinvestment Zone (TIRZ) after GrayStreet and Midway requested $8.9 million in reimbursement dollars to cover part of their infrastructure work for the first phase. In a TIRZ, revenue gained from the rise in property taxes is collected and reinvested into public upgrades within the zone. Recently, San Antonio began using some of those dollars to restore and create affordable housing.
In addition to the TIRZ dollars, GrayStreet is also seeking a Chapter 380 economic development agreement for a total ask of $20.5 million in public incentives from the city.
The massive development is expected to generate more than $160 million in new tax revenue by 2030, which includes property tax, sales tax, and hotel occupancy tax revenues, French told the TIRZ board. GrayStreet and Midway are not requesting property tax breaks, such as an exemption or a rebate.
Addressing concerns of affordable housing, French told the Midtown TIRZ board that commercial tenants and hotel guests at Broadway East would pay a fee that would feed a fund that could be used by Government Hill or the city for below-market-rate housing. Government Hill is one of the fastest gentrifying neighborhoods in San Antonio, according to county property records; it's also located in one of San Antonio's poorest ZIP codes.
"We will create an annual fund to support affordable housing, community organizations and events, and maintenance of area homes and businesses, which will be administered in conjunction with the Government Hill neighborhood association," French told the board.
Broadway East is expected to return to the Midtown TIRZ board for a vote in December, and to the City Council for final approval in January.
GrayStreet also plans to build a 20-story office and hotel tower at 1603 Broadway.
Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter
The First Baptist Church of San Antonio on Tuesday began razing the former Rodeway Inn on the northwest corner of Broadway and 4th Street, which it purchased earlier this year.
The purchase significantly expands the footprint of the church, whose address is on McCullough Avenue. So far, the church isn't revealing plans, and added it will consult its neighbors as to the property's best use.
"It will allow us to stay established downtown, and not have to move to the suburbs," said Mikel Allen, First Baptist Church's director of communications.
The purchase means the church now controls the square block bound by Broadway, McCullough, Avenue B and 4th Street, along with its flagship property. It also owns two parking lots to the north, and the property the Tobin Center Parking Garage sits on. The church acquired the Rodeway Inn property in March from an entity called Aashay Hospitality LLC for an undisclosed price. The property, 405 Broadway, is appraised at $2.9 million.
Allen said it should take 3-5 weeks to completely level the multiple structures on the site.
More details emerged this week on a $560 million mixed-use development east of the Pearl, across Broadway, on more than 20 acres of land owned by GrayStreet Partners of San Antonio in the Government Hill neighborhood.
The multi-phased Broadway East development is scheduled to be built over the next 10 years, starting with a 380-unit apartment building facing Broadway at Pearl Parkway, just south of the 1800 Broadway apartment building. Before construction can begin, GrayStreet Partners and its partner Houston-based Midway must rebuild the area's streets and sidewalks, add bike lanes, and tackle drainage upgrades and bury utility lines. The initial phase extends from Broadway to North Alamo Street, as future phases will push the project as far as North Hackberry Street, well into Government Hill.
The infrastructure work is expected to begin in November, Peter French, GrayStreet Partners' development director, told the Midtown Tax Increment Reinvestment Zone (TIRZ) board on Wednesday.
French said there will be 1.6 million square feet of mixed-use development, which includes copious amounts of ground-floor retail, as well as parks and plazas, office space, some hospitality and parking structures. The plan looks to extend Pearl Parkway from the Pearl across Broadway into Government Hill, essentially connecting the two large-scale developments. Broadway East will also "observe and honor the historic pathway of the Acequia Madre (irrigation canal) as it traverses the neighborhood," French said.
"Pedestrian spaces, green spaces, are the primary drivers of this project," he said.
GrayStreet is also planning to build a 20-story office and hotel tower at 1603 Broadway. GrayStreet is also partnering with Midway on the Lone Star Brewery redevelopment.
GraySreet and Midway are asking for $8.9 million in reimbursement dollars from the Midtown TIRZ over several years to cover the infrastructure upgrades for the first phase, which is estimated to cost $146 million.
In a TIRZ, revenue earned from the rise in property values is recaptured and invested back into the zone in the form of public upgrades. The City of San Antonio has recently used the revenue to stabilize and create affordable housing.
For the entire Broadway East, GrayStreet is asking for TIRZ dollars and a Chapter 380 agreement totaling $20.5 million in public incentives.
"We will create over $160 million dollars in new tax revenue by 2030, including $65 million alone for the San Antonio Independent School District," French told the Midtown TIRZ board, referring to revenue from property taxes, as well as sales and hotel occupancy taxes from the commercial tenants. The bulk of the properties were kept off the tax rolls because they were previously owned by the tax-exempt San Antonio Independent School District, which the district used to store its school buses.
Broadway East, because of its sheer size, would become one of the most significant developments in the downtown area since its resurgence started in 2009 with the Vistana apartment building. At the same time, neighborhoods like Government Hill have experienced gentrification because of the influx of new multifamily housing developments, especially those that abut or enter lower-income inner city neighborhoods. In recent years, GrayStar has met with and received the blessing of neighborhood group Government Hill Alliance.
Since Mayor Ron Nirenberg took office in 2017, San Antonio has prioritized the stabilization and creation of affordable housing, especially in an attempt to mitigate the effects of some of the neighborhood change. During the Midtown TIRZ meeting, French acknowledged San Antonio's affordable housing goals.
He said commercial tenants, and guests who stay at the hotel, would pay a fee that would be funneled into an affordable housing fund that could be used by Government Hill or the city for affordable housing projects.
"We will create an annual fund to support affordable housing, community organizations and events, and maintenance of area homes and businesses, which will be administered in conjunction with the Government Hill neighborhood association," French said.
"As you guys are certainly familiar with and have heard: the creation of dedicated affordable units is challenging and expensive in urban development," he said.
For its part, GrayStreet and Midway will restrict the rent increases for some of the units based on the where the household lands on the consumer price index, during the life of the TIRZ agreement, which hasn't been determined, yet. It's also building a large amount of smaller units, "to help keep the prices down," in the $1,200 to $1,400 price range for monthly rent. French said these prices are expected to serve people making 70% and 80% of the area median income.
[ Scroll down for a chart showing AMI levels. ]
During the meeting, Ramiro Gonzales, who serves on the Midtown TIRZ board, and who's also the new president and CEO of the Westside Development Corp., asked French if GrayStreet and Midway were willing to take less reimbursement from the TIRZ so the area can keep more funding for affordable housing. Gonzales' remarks reference the new role the city has made for San Antonio TIRZs in affordable housing, such as helping to fund the rental assistance program during to Covid-19 pandemic.
"I'd be interested in pumping less than 100%, that way more of that increment stays with the TIRZ," Gonzales said.
Broadway East "is an incredible project and a great use," Gonzales said. "I'm just concerned as it pertains to the TIRZ, our role is somewhat changing more and more. The city and others are looking to the TIRZ to fill that role."
French said the total Broadway East project is expected to create 9,000 jobs during construction, and 2,600 full-time daily jobs from the businesses taking over the various spaces.
The project is expected to return to the Midtown TIRZ board for a vote in December, and to the City Council for final approval in January.
Setting It Straight: A previous version of this article misstated the stance of Government Hill United, one of three neighborhood groups in Government Hill, toward the project. It hasn't taken a position.
Rezoned properties offer glimpse of GrayStreet’s 23-acre Broadway East campus (July 5, 2019)
Jefferson Bank has reached an agreement with Still Golden Social House that will keep the popular cocktail bar on East Grayson Street, the bank announced Thursday. The bar will remain open through May 23, at its location on the corner Broadway and East Grayson, then go on a two-year hiatus while the bank's new headquarters is built.
Still Golden's aging one-story building, which sits on the corner of Broadway and East Grayson, is the only structure that remains standing on the block; the others have been razed or moved in anticipation for construction. In June, the building will be demolished and Jefferson Bank will begin construction on its $62 million, 13-story headquarters on the square block bound by Broadway, East Grayson, North Alamo and East Josephine streets.
In 2022, Still Golden is expected to move into a retail space, one of four in the new building, on the corner of East Grayson and North Alamo, the bar's owner Jeret Peña said via text.
Scroll down for more info.
» Developer: Milam Real Estate Capital (for Jefferson Bank)
» Address: 1900 Broadway
» Property owner: Jefferson Bank
» Type: Office with retail
» Height: 13 stories
» Units/square feet: 190,000 s.f. office; 15,000 s.f. retail
» Land size: 1.8 acres
» Cost: $62 million, according to state documents.
» Investors: N/A
» Incentives: None
» Rate of return on investment: N/A
» Construction start date: June 2020
» End date: Spring 2022
» Occupancy: The bank is expected to use half of the new building—200 to 300 workers—and lease the remaining space to other tenants.
» Architects: HKS Architects (Dallas); Don B. McDonald/DMA Architects (San Antonio)
[ View Google map ]
DEC. 18, 2019
HDRC approves design for 13-story Jefferson Bank’s headquarters building. It's unclear whether Still Golden Social House will be incorporated into the new building. In early December, Plack Carr, Milam Real Estate Capital’s managing director, and Jeret Peña, Still Golden’s owner, declined to comment on the bar’s future. Peña said at the time Still Golden has eight years left on its lease. One of three mid-rise office buildings going onto the fast-changing Broadway corridor. Read more
DEC. 3, 2019
Zoning Commission approves rezoning of the property where Still Golden Social House sits at 1900 Broadway. The vote paves the way for Jefferson Bank to control the entire square block, bound by Broadway, East Grayson Street, North Alamo Street, and East Josephine Street, for its future headquarters building. Read more
AUG. 22, 2018
Three shotgun-style homes on North Alamo Street are prepared for relocation. Read more
JUNE 28, 2018
Jefferson Bank executives purchase 1.7 acres of land on Broadway and East Grayson Street, except for Still Golden Social House. Read more
The design for Jefferson Bank's headquarters building, a 13-story limestone-glass office and parking structure proposed for the southwest corner of Broadway and East Grayson, was approved Wednesday by the Historic and Design Review Commission (HDRC).
The building, which will include four retail spaces, is designed by local architect Don B. McDonald, the same architect behind the Credit Human and Oxbow mid-rise buildings currently under construction a block south adjacent to the Pearl.
HDRC's decision also means Still Golden Social House, a cocktail bar that occupies a 1918-commercial building on the corner of Broadway and Grayson, will be demolished. The property the building sits on, at 1900 Broadway, is the last piece left to be acquired to complete the headquarters' footprint—a 1.8-acre square block bound by Broadway, East Josephine, North Alamo and East Grayson in the Government Hill neighborhood.
It's unclear whether Still Golden will be incorporated into the new building. In interviews two weeks ago, Plack Carr, Milam Real Estate Capital’s managing director, and Jeret Peña, Still Golden’s owner, declined to comment on the bar's future. Peña said at the time Still Golden has eight years left on its lease.
"We are in discussions with Still Golden, and we want them to be part of the project," Carr said two weeks ago. "We are very much pro local businesses. Absolutely."
Still Golden opened on Broadway in March 2018 after Peña and his group closed a similar bar, Stay Golden, after it was forced to move to make room for Credit Human's headquarters.
Though McDonald has designed the Jefferson Bank and Credit Human/Oxbow projects for different clients, he has designed all three buildings almost identically. They each contain arched arcades with loggia columns facing the street.
Construction on Jefferson Bank's headquarters is expected to begin second quarter 2020 and take approximately two years to complete, said Patrick Christian, a local land-use attorney who represents Milam Real Estate Capital. Carr has declined to give the project's cost.
The bank is expected to use half of the new building—200 to 300 workers—and lease the remaining space to other tenants, Lindsay Armstrong, the bank’s senior vice president and director of marketing, told the Heron in a previous interview.
At the HDRC meeting, The Conservation Society of San Antonio opposed the demolition of the Stay Golden building, which first opened in 1918 as a Pierce-Fordyce gas station back when Broadway was known as River Avenue. Virginia Van Cleave, speaking for the conservation society, argued for saving the one-story structure, and said the application contained contradictory findings from the Office of Historic Preservation, the city office that assesses historical value of buildings, among other responsibilities.
"We further do not understand why the building cannot be incorporated into the planned building as it addresses the corner in a similar fashion to the new design and does not underpin the taller portion of the project," Van Cleave said, reading a letter from society President Patti Zaiontz.
In response to a demolition request made in late October by Christensen, who also represents the current property's owner, a New Mexico-based entity called OT Partners LLC, OHP had 30 days to assess the building's historical significance. In that study, OHP determined the building was eligible for landmark status because it met four of the 16 criteria outlined in the city's Unified Development Code (the minimum for landmark consideration is three criteria).
After a site visit, which OHP conducted in preparation of today's HDRC meeting, it was determined that not enough of the original 1918 structure remained save for a brick wall, at the very least. What's present now is the building's transformation into a car dealership in 1944, which the conservation society said still merited saving.
This post has been updated with the outcome of the Zoning Commission vote.
The property at 1900 Broadway, known by cocktail aficionados as Still Golden Social House, is under contract to be sold and incorporated into the future Jefferson Bank headquarters building, the project's developer confirmed. The sale would mean Milam Real Estate Capital, which is developing the mid-rise office building for Jefferson Bank, would control the entire square block on the northeast corner of Broadway and East Grayson Street (which is also bound by East Josephine and North Alamo streets).
This afternoon, the Zoning Commission unanimously approved rezoning the property so it's consistent with the other parcels on the block. The case now goes to the City Council for consideration at its Thursday meeting.
A site plan included in the rezoning application shows an office building taking up the entire square block (including where Still Golden currently stands). A retail space is planned for the corner currently under review; additional retail will face East Grayson, Broadway, and East Josephine.
Which begs the question: What will happen to Still Golden Social House?
Plack Carr, Milam Real Estate Capital's managing director, and Jeret Peña, Still Golden's owner, declined to comment specifically about the bar's future. Peña emphasized his group still has eight years left on the lease. Carr said he's negotiating with Peña on some kind of solution; it's unclear whether Still Golden will occupy one of the building's retail spots once it's built.
"We are in discussions with Still Golden, and we want them to be part of the project," Carr said. "We are very much pro local businesses. Absolutely."
Still Golden opened in March 2018 as a kind of reincarnation of Stay Golden, Peña and co.'s ice house-ish bar adjacent to the Pearl, which closed to make room for Credit Human's own 10-story headquarters facing Broadway.
Details on Jefferson Bank's headquarters remain scarce. In a previous interview, Lindsay Armstrong, the bank’s senior vice president and director of marketing, said the building's height could be between 13 to 15 stories. The bank is expected to occupy roughly half the space—between 200 to 300 workers total—while leasing the rest to other tenants.
Carr declined to give the project's cost, as well as a construction start date, but said he hopes to complete it by first quarter 2022.
According to Bexar County property records, a New Mexico-based entity called OT Partners LLC owns the property at 1900 Broadway.
The $500,000 revitalization of Maverick Park at 1000 Broadway, a half-mile south of the Pearl, and just a few blocks from the near East Side, is a few months away.
The project, which is being lead by the San Antonio Parks Foundation, includes an off-leash dog park facing Jones Avenue, picnic tables, drinking fountains, trash and recycle bins, more trees, new lighting, and a Portland Loo stand-alone restroom. Future upgrades include a play area for kids facing 10th Street and a fitness area along Alamo Street.
The project is largely funded by the 2017-2022 bond program.
In the plans, the dog park alone takes up about a third of Maverick Park's three acres and includes areas for small dogs and large dogs, agility training, disc and ball throwing, climbing and showering.
The Historic and Design Review Commission will consider granting conceptual approval to the plans later this afternoon.
Larry Clark, co-founder of Bender Wells Clark Design, the firm redesigning Maverick Park, anticipates City Council will vote on construction costs by April, with construction beginning in May or June. Construction is expected to be completed in July 2020, according to a bond projects map on the city’s website.
Bender Wells Clark is also designing a bioswale for the park—a long, channeled trench that filters out pollutants, like pet waste and trash, from the rainwater before it flows into a water source, such as the San Antonio River, a block west of the park.
"We have always thought of Jones Avenue as being a green street," Clark said. "Water coming off of Broadway always has a lot of car oils and dirts in it, so we want to take any water that comes off the dog park area and let it percolate through the soil and let that rainwater that comes out the other side of the infiltration area be cleaned up."
The Portland Loo is the same type of restroom located at Lion Fields Park and across from the Torch of Friendship and will use a solar panel for its lighting system. Clark said more trees and plantation will be added to the park along with shaded seating areas, water fountains, improved sewer and water systems, fencing for the off-leash dog park, and pedestrian lighting replacement and installation. Existing, damaged sidewalks in Maverick Park will be torn out and replaced with new sidewalks made of limestone, basalt gravel, and cut stone.
Since 2015, the parks foundation has lead an effort to establish a dog park at Maverick Park, along with improving its facilities.
So far, several nearby residential properties such as Jones & Rio and The Mosaic on Broadway have contributed nearly $150,000, said Ashley Riley with AREA Real Estate, LLC, developer David Adelman’s firm, which is a project manager. Other sources include $350,000 in park improvement funds from the 2017-2022 bond program, and $50,000 from the Midtown Tax Increment Reinvestment Zone.
The commission approved the project's site and foundation plan, and work can now begin, but final approval on the Gensler-design will have to return to the HDRC some time in the spring, said Peter French, GrayStreet's director of development.
French said construction would begin in the first quarter of 2019, and will take 24-30 months to complete.
The $97 million development will include 11 stories of hotel rooms, four stories of Class A office space, four levels of parking (one below grade), and one level of retail. No word on possible tenants to fill the office and retail space.
A block north on Broadway, Pearl developer Silver Ventures is building a 10-story office tower that will become the headquarters for Credit Human. It's expected to be completed in early 2020, Silver Ventures told the Heron in a previous interview.
Construction on GrayStreet's Broadway tower estimated to begin Feb. 1
For the much-anticipated and much-discussed Broadway Jones apartments, developer NRP Group has agreed to an incentive deal that will provide 10 percent of the project's 283 units to households making between 50 and 60 percent of the area median income (AMI), or between $33,400 and $40,800, respectively.
The discount only applies to one-bedroom apartments.
For example, a household making $33,400 would pay $835 a month for a one-bedroom apartment at Broadway Jones, based on the agreement. Under the deal, a tenant would be charged 30 percent of their income, a rent restriction intended to make these units truly affordable. However, NRP Group—which is the developer, the builder and the management company for Broadway Jones—has the ability to charge up to 35 percent of a tenant's income.
On Wednesday, the deal was solidified between NRP Group and the San Antonio Housing Trust Public Facility Corp. (PFC), a city-created nonprofit run by the City Council members who represent Districts 1-5. NRP Group, the PFC and an undisclosed equity provider, are partnering with an undisclosed bank to make Broadway Jones happen.
Here's roughly how it works:
The development partnership is exempt from paying all property taxes because the PFC also owns the property and everything built on it. In exchange for the tax exemption, NRP Group must offer half of the 283 units at Broadway Jones to people making 80 percent AMI, according to state law. NRP Group will rent the other half at market-rate prices.
But many observers, including Mayor Ron Nirenberg, have recently questioned whether a typical San Antonio household making 80 percent AMI—or, $53,440—should be described as low income. Others on the City Council agree. And it was from Council discussions in the past month that NRP Group decided to take its agreement with the PFC a step further and add 10 percent of the units, or 28 apartments (taken from the half that's offered at 80 percent AMI) and offer them to people in the 50 to 60 percent AMI bracket.
So what does NRP Group get in return?
By offering rents to people making between 50 and 60 percent AMI, NRP Group doesn't pay the PFC's closing fee of $250,000. Instead, those funds will be used to create a reserve that will "buy down" rents, i.e. make up the cost of making the apartments affordable.
For example, a one-bedroom rented to someone making 80 percent AMI would cost $1,065 (based on the 30 percent rent restriction). For the person making 50 percent AMI, it would cost $835. The difference—or, $230—will be subsidized using the $250,000 reserve fund.
In an interview a few weeks ago, Veronica Soto, director of the city's Neighborhood and Housing Services Department, described the practice of "buying down" rents as an incentive.
The agreement comes after much discussion among City Council members about the city's role in incentivizing housing, especially in the downtown area. In light of San Antonio's economic segregation, a handful on the Council said they must be able to convince their constituents that the public is receiving a worthwhile benefit in return for doling out tax breaks to developers. Cheaper apartments, especially in the downtown area, do that, they said.
On Nov. 1, before voting on a reimbursement grant worth up to $680,000 from the Midtown Tax Increment Reinvestment Zone, the Council entered a candid discussion about what some members called a lack of affordability at Broadway Jones. At the time, the agreement between the PFC and NRP Group did not include 60 percent AMI rents—just half at 80 percent AMI, half at market rate.
During the discussion, District 9 Councilman John Courage voted against the incentive for Broadway Jones because it didn't offer apartments to people making below 80 percent AMI.
On Wednesday, via text, Courage said he was encouraged to hear that the PFC and NRP Group found the means to incentivize more affordable units at Broadway Jones.
"We need to keep our inner city and downtown neighborhoods affordable for all San Antonio working families," Courage said.
The $55.9 million, five-story, Broadway Jones apartments will add 283 mixed-income units to what is arguably San Antonio's hottest real estate submarket—River North. It will also add roughly 15,000-square-feet of retail on two floors. Restaurants, most likely.
This type of agreement between the PFC and NRP Group produced the Cevallos Lofts in Southtown, and the newer Baldwin apartments on the near East Side, to name a few. The PFC partners with other affordable housing builders, and most are built outside downtown. For example, for the Friedrich Lofts project on the East Side, the PFC is partnering with Dallas developer Provident Realty Advisors, Inc.
It's the same type of agreement that's resulting in The '68 at Hemisfair, but that agreement is between AREA Real Estate and the Hemisfair Park Public Facility Corp.
The San Antonio Housing Trust PFC's board is composed of Council members representing Districts 1-5, who are, in district order: Roberto Treviño, William "Cruz" Shaw, Rebecca Viagran (chairwoman), Rey Saldaña and Shirley Gonzales.
The PFC purchases the land and owns everything built on the land.
The PFC forms a partnership with an apartment developer, and typically a third equity partner, and the partnership finds a lender, a bank, which then backs the project. The partnership leases the property from the PFC for 75 years, and it also constructs the building. At the end of the 75 years, the PFC owns the development outright.
» $680,000—Midtown Tax Increment Reinvestment Zone reimbursement grant
» $1.5 million—Center City Housing Incentive Policy (a combination of city and SAWS fee waivers, and a mixed-use loan)
» ?—fully property tax exemption
In October, the San Antonio Express-News analyzed Broadway Jones and concluded the project will deprive public agencies of an estimated $1.6 million a year. Reporter Richard Webner, who recently left the Express-News, told me he used the estimated tax figures from the Bexar County Appraisal District records, from the properties involved, in his calculations. His article did not give an estimated total value of the tax exemption over the 75-year lease. (The Heron is currently working on its own calculation.)
The PFC, in the case of Broadway Jones, owns 15 percent of the partnership without putting in any equity. It's bringing to the table the tax exemption (the total value of which the PFC has not shared after requests from the Heron). However, for its 15 percent ownership, the PFC receives 15 percent of the rent revenue stream. It also receives an annual administrative fee from the developer, which is $20,000 a year for Broadway Jones, according to Soto.
If NRP Group decided to charge full market-rate prices, or sell its partnership stake to another developer who then charged full market-rate, the development would lose its tax exemption. If this were to happen, the PFC would still have the right to own its 15 percent.
In Broadway Jones, NRP Group is also an equity partner, though Travis Sheffield, NRP Group’s vice president of development, declined to say how much money the developer was putting into the project.
When asked who the other equity partner was, and which bank was lending the rest of the funds, Sheffield said he would disclose those other players once NRP Group closes on the deal, which it's scheduled to do on Dec. 14.
When asked about the development's projected rate of return on investment, Sheffield deferred to PFC attorney Jim Plummer with the law firm Bracewell LLP. Plummer told me he didn't remember.
"If I knew it, I'd tell ya," Plummer said. "I don't know it off the top of my head."
The 2.6 acres is currently owned by developer James Lifshutz, which is selling the three combined properties for an unknown price to the PFC. Under the partnership agreement, Lifshutz will own and lease the retail portion of the building, and pay sales taxes. The three properties are valued at $5.7 million by the Bexar County Appraisal District.
NRP Group hopes to break ground on Broadway Jones the first week of January, Sheffield said.
[ Editor's note: The Mayor's Housing Task Force uses an AMI of $49,000 (just San Antonio)—a 2016 figure from the U.S. Census American Community Survey 1-year estimate—because it's more representative of San Antonio's workforce. Broadway Jones, and all other city incentives programs, uses the HUD definition of $66,800 for the greater San Antonio area, which includes New Braunfels. ]
At the Nov. 1 Council meeting, Sheffield and Assistant Manager Lori Houston told Council members that the full tax exemption offered by the PFC was necessary because the property, even though the land is arguable the most prime real estate in the downtown area, possesses a set of challenges unique to the location.
PFC projects such as the Friedrich Lofts, which are replacing the decades-long vacant former Friedrich refrigerator factory, are said to be economic boosters of long-neglected neighborhoods.
But the Broadway corridor is far from being ignored. It has seen a flurry of multifamily projects pop up since the creation of the city's Center City Housing Incentive Policy (CCHIP) is 2012. Last year, voters approved the 2017-2022 bond program, the largest single item of which was $40 million toward Broadway street and sidewalk upgrades, right outside the front doors of Broadway Jones. It's nearly equidistant from the Pearl and downtown proper, and is a quarter-block from the Museum Reach section of the San Antonio River. It's also a short bike ride away from the gentrifying East Side.
A city-funded assessment of CCHIP, which offers rebates on city property taxes alone, concluded that these types of projects—wood-framed, five-story apartment buildings along downtown's outskirts—no longer required incentives to be successful, because the rents they're able to command offer a large enough revenue stream that they are profitable without incentives.
At Broadway Jones, environmental issues having to do with the removal of underground storage tanks, and the spacing out of utility poles, which is required in order for NRP Group to maximize the land, have added additional cost to the project, Sheffield said.
In short, Sheffield said NRP Group could possibly build the apartments without the tax break, but the apartments wouldn't be affordable.
"The project itself would be challenging to exist without the PFC partnership and the incentives," Sheffield said after the Nov. 1 meeting. "You would need significantly higher rents. Now there are new products in the area on the river that are really pushing rents that haven't quite been proven. I can't say if (Broadway Jones) would exist on the same timeline. It might exist five years later. It's possible. (The rents) would have to be very expensive."
At the Nov. 1 meeting, District 6 Councilman Greg Brockhouse criticized Broadway Jones for only offering one-bedrooms to low-income households.
"You quoted it as the 'best development in the city' ... that a family can not live in," Brockhouse told Sheffield at the meeting. "That is a problem. So (families) cannot have access to the best developed unit."
Plummer said in future PFC deals, he's telling developers they need to include 60 percent AMI rents across all bedroom types.
The new direction in affordability seems to be the result of some strong feedback from Nirenberg, Courage, and, most notably, Saldaña, who has been beating the affordability drum for more than a year in regards to CCHIP and, now, the PFC.
"I just want to say, we're changing the course of business," Saldaña said Nov. 1. "I do think we have to start holding the line on certain items."
The next time you're driving on Broadway and you approach Jones Avenue from either direction, imagine, in place of Mayor Ron Nirenberg's campaign headquarters, apartments rising five stories. They consume the width of the block, from Jones to 10th Street, and extend back another block to Avenue B. A glacier made of wood, stucco and brick assembled on a piece of land the size of Maverick Park across the street.
Broadway Jones, as it's called, will consist of 283 mixed-income units. Half of the units will be offered to people making less than the area median wage. The other half will be leased at market rate rents. The project will include 15,000-square-feet of retail on two floors. Restaurants, most likely. And it will add more residents to what is arguably San Antonio's hottest real estate submarket—River North.
It's easy to imagine what these apartments—what this area—will look like in five years: the vibrant, 24/7 neighborhood that city officials have sought through various housing incentives programs.
Broadway Jones is benefiting from three such programs.
It's hard to explain, however, the how this neighborhood is being built.
Broadway Jones, in particular, is a project by a labyrinthine development partnership that includes developer NRP Group, and a city-created nonprofit called the San Antonio Housing Trust Public Facility Corp., among other unknown partners. It's a relationship very few people fully understand, including the City Council members who make decisions on these projects.
This article is based on a Nov. 1 discussion by City Council members on these topics.
Some criticized Broadway Jones for what they called a lack of true affordability. They also debated whether a deeper level of affordability is possible given the obstacles of developing downtown. At times, the conversation touched on larger questions:
How much affordability can a city demand from developers in return for the incentives it provides?
Will those affordability demands slow the growth of the market the incentives are supposed to be fueling—all in the name of equity?
Is more affordable housing downtown realistic? Or, is it fantasy?
It's a discussion San Antonio has been having ever since Nirenberg formed his Mayor's Housing Policy Task Force in October of last year, and after he put a moratorium on the city's Center City Housing Incentives Policy in December 2017.
Usually, a housing incentive under $1 million wouldn't produce much discourse from the City Council. It would pass on the consent agenda with no discussion, or a Council member would briefly highlight it for the record. Barely a blip.
The matter of approving a $680,000 reimbursement toward NRP Group's $55.9 million, five-story Broadway Jones project, however, was not business as usual.
In an 8-1 vote on Nov. 1, the Council approved the incentive for Broadway Jones, but it was not without a vigorous debate.
"I'm glad we're getting some level of affordability, even if I don't agree with the definition of affordable," District 4 Councilman Rey Saldaña told his colleagues.
The Council members also tried to get a clearer picture of what exactly it was they were incentivizing—because some, admittedly, didn't fully understand how Broadway Jones was put together.
In short, Broadway Jones is being developed by a partnership group that involves NRP Group, one of San Antonio's most active developers, and a city-created nonprofit called the San Antonio Housing Trust Public Facility Corporation (PFC), which is operated by Council members who represent Districts 1 through 5.
The partnership is exempt from paying all property taxes because the PFC also owns the property. The group partners with a developer—in this case, NRP Group—to build the housing that includes affordable units.
This type of agreement first produced the Cevallos Lofts in Southtown, and the newer Baldwin apartments on the near East Side, to name a few.
Specifically, half of the units at Broadway Jones will be offered to households making 80 percent of the area median income (AMI), which in the greater San Antonio area (including New Braunfels) is $53,440 for a family of four, according to the U.S. Department of Housing and Urban Development. The average rent for these units—all one-bedrooms—will be $1,128. GIVE SOME CONTEXT!!! SPELL OUT FOR THE READER
Some on the Council, particularly Saldaña and District 9 Councilman John Courage asked city staff to explore ways to include units offered to families making 60 percent AMI, or $40,800 for a family of four.
Before we explore these questions, you first have to understand how these PFC projects are put together. It's extremely complex, but let's walk through it together.
The PFC, which, again, is operated by Council members, owns the land and everything that's built on the land.
A partnership is formed that builds and manages the apartments. The PFC leases the building to the partnership for 75 years. During that time, the partnership is exempt from paying any property taxes. At the end of the 75 years, the PFC owns the entire development.
THIS IS HOW THE PFC MAKES MONEY ...
The PFC, in the case of Broadway Jones, owns 15 percent of the partnership. For that, they receive 15 percent of the rent revenue stream. The PFC also receives an annual administrative fee from the partnership, which is $20,000 for Broadway Jones, according to Veronica Soto, director of the city's Neighborhood and Housing Services Department.
In Broadway Jones, NRP Group is also an equity partner, though it's unknown how many millions of dollars it's putting into the project. It's also unknown what other entities, such as investment trusts or individuals, comprise the partnership. A request to NRP Group for the complete partnership list was not answered.
Broadway Jones' lender, nor the rate of return on investment (the profit) is also unknown. I requested these figures from NRP Group and the PFC, but was either denied or ignored.
In return for the tax exemption, the partnership agrees to lease half of the units to households making 80 percent of the area median income, which in San Antonio is $53,440 for a family of four. Just like when you apply to live at an apartment, and you have to prove you make a certain amount of money—but here, lower income households are allowed to rent these apartments. However, the partnership then restricts the rent to 30 to 35 percent of the family's income.
SOTO so even thogh to quality you have to below 80%,
once you're in the building, your rent can not go as high as that 35% of your income
[ Editor's note: The Mayor's Housing Task Force uses an AMI of $49,000 (just San Antonio)—a 2016 figure from the U.S. Census American Community Survey 1-year estimate. Broadway Jones uses the HUD definition of $66,800, which includes New Braunfels. ]
Pfc literally could sell the whole thing, lock stock and barrell?
they can sell its 15%
They cannot back out of the lease
If the project lost its affordability component
Which is very much theoretical
If 10 years from now there’s a different owner, and they … ???
That property would be subject to full property taxes,
And the pfc would still own it
And the pfc would still hae the right to own 15%
??? legally they could, but nobody's going to buy a minority interest in that partnership
if the project is sold, we get a share of the sales proceeds
we can convert that 15% to a rental stream, we can say, no we don't want sales proceeds, we want a longterm rental stream
OTHER QUESTIONS SENT TO SHEFFIELD
In the Friedrich Lofts deal on the East Side, the PFC partnered with Dallas developer Provident Realty Advisors. Of the 347 units on the site of the former refrigerating plant, 14 will be offered to households making 60 percent AMI. HOW MANY TO 80% AMI???
In a meeting in late September, the PFC, which is chaired by District 3 Councilwoman Rebecca Viagran, voted to "buy down" rents by applying the $250,000 closing fee and a $25,000 annual administrative fee Provident Realty Advisors would have to pay, and reinvest those payments into the project to be able to offer lower rents.
Jim Plummer, an attorney with the law firm Bracewell LLP, who represents the PFC in these deals, explained how this all works using a hypothetical rent structure.
"If rent for an 80 percent (AMI) person was $1,000, then the rent for a 60 percent AMI probably has to be $800," Plummer said in an interview. "We're agreeing that we will pay into the project the $200 differential a month and we're going to use the fees we made from the project to do that."
At the PFC meeting, Plummer told Council members they could use future revenue generated from rents to buy down more rents to be able to offer 60 percent AMI rents than just the 14.
The one-time $250,000 closing fee and the $25,000 annual administrative fee over the 75-year lease add up to $2.1 million. In a recent interview Veronica Soto, director WHAT, said she considers the "buying down" of rents an incentive for the developer. In this case, the developer, Provident Realty Advisors, is essentially paying itself in exchange for offering 14 units to households making 60 percent AMI.
Plummer nor Sheffield responded to follow-up questions on this point. But Soto did. I asked her if this method of "buying down" rents is essentially the developer paying themselves.
"The developer is paying themselves, but the beneficiary is the person who rents at $600 as opposed to $800."
??????This method, however, was not presented as an option for Broadway Jones. During the Council meeting two weeks ago, District 7 Councilwoman Ana Sandoval asked if it was too late to go back and ask for lower rents.
??? ??? ??? GET RESPONSE TO SANDOVAL'S QUESTION Likely the reason is that the Friedrich project is newer and the details of the rent-structure was just put into place, based on Plummer's recent presentation to the PFC board. Broadway Jones has been going on for nearly two years, Assistant City Manager Lori Houston said.
PFC projects such as the Friedrich Lofts—which are replacing the decades-long vacant former Friedrich refrigerator factory—are said to be economic boosters in long-neglected neighborhoods.
But the Broadway corridor is far from being ignored. It's the complete opposite of being ignored.
In fact, a city-funded assessment of another incentive program, called the Center City Housing Incentives Program, concluded that these types of projects—wood-framed, five-story apartment buildings along downtown's outskirts—no longer required incentives to be successful, because the rents they're able to command offer a large enough revenue stream that they are profitable without incentives.
The project at Broadway and Jones, however, is unique in that it has environmental issues and additional utility work specific to the site that have added cost to the project, Houston told City Council members.
After the vote, Travis Sheffield, NRP Group's vice president of development, explained.
"The project itself would be challenging to exist without the PFC partnership and the incentives," Sheffield said. "You would need significantly higher rents. Now there are new products in the area on the river that are really pushing rents that haven't quite been proven. I can't say if (Broadway Jones) would exist on the same timeline. It might exist five years later. It's possible. (The rents) would have to be very expensive."
During the discussion, Saldaña asked if the city would do it over again, could they have squeezed in more affordable units into Broadway Jones.
"If the city had an additional $1.8 million," the developer could make 10 percent of the total units at 60 percent AMI, Assistant City Manager Lori Houston said.
The $1.8 million Houston referred to was the gap NRP Group explained it needed in order to make the project more affordable.
this project would not happen without city incentives
NRP would not be able to do this project
if hthe city had an additional 1.85 in cash
they could make that 10 percent at 60%
the inner city incentive fund, we don't have that cash
we receive $2M annually
we do not have that pot of money to help with that affordability.
Saldaña stresses the need for more affordability in projects like Broadway Jones, which has 80% area median income rents. He wants 60% in the future.
He said he understood that Broadway Jones was well underway before the mayor launched his housing task force, and his moratorium on the CCHIP, and therefore the subsequent conversation about affordability.
"This was a project was maybe a year and a half in the making, but we are changing the way we do business," Saldaña said.
For Broadway Jones, the average rent offered to people making 80 percent AMI is $1,128; the average market rate rent will be $1,966, according to figures provided to NRP Group.
MUSEUM REACH LOFTS
looking to see how they can create a tier of body??? system /// that is a path we are lokoing at
9 percent tax credit
we are looking at one right now
Museum Reach Lofts
but the tax credit provides 9 percent of the project cost annuallly for a 10 year period
the city incenties help with that project as well
it's a satcking of incenties
the CCHIP when aprtnered with PFC or a tax credit project canhelp with that affordability
GET CCHIP QUOTE FROM L HOUSTON
But Houston broke down the reality the city of San Antonio and developers are pushing.
"60% is not possible without buying down rents, or without a 9 percent."
What works for the people providing the equity, the investors. And what works for the city of San Antonio. In a way, it is not as of right, but a negotiation. Unlike the CCHIP. There isn't a magic ROI. Every one is different. Every one is specific to the investors involved. And the lenders.
One person who ripped into Broadway Jones, and who was the lone dissenting vote, was Courage. "We don't believe 80 percent of the county-wide AMI reflects the 80 percent (AMI) of people who live in the city," he said of other Council members, and alluding to the difference in AMIs.
"I think we've heard concern from several Council people about the fact that affordability is very questionable, when we hear that it’s only affordable for an individual or maybe a married couple who’s at the very top of what we consider affordable income."
District 1 Councilman Robert Treviño, who represents downtown, painted a more realistic picture. He said there are factors that limit the affordability, alluding to fluctuating land prices, and problems inherent with specific pieces of land—in the case of Broadway Jones, they had to do with environmental concerns and utility work.
"I certainly agree with Councilman Saldaña that we need to look for ways to find affordability in these projects," Treviño said. "I just think we can also be thoughtful of where that location is. One location is not necessarily equal to another."
Sandoval asked whether Broadway Jones is designed to serve families, given that the affordable units are only offered in one-bed rooms. "The development as a whole is not necessarily structured to serve full-size families."—@NRPGroup's Travis Sheffield says
"If we're going to put incentives... it's got to have something for the families, too. You quoted it as 'the best development in the city' ... that a family can not live in." @GregBrockhouse tells @NRPGroup's Sheffield about BroadwayJones on limit of affordable units to only 1BRs
sandoval "We likely don't expect to see families living in the affordable units?"
"The development as a whole is not necessarily structured to serve full size families. You're correct."
Other PFC development agreements are structured that way.
young professional, typically younger ... this is a creative flow partnership ... for folks ...
in a true top of the line quality apartment,
"I could be biased, but I feel like it will be the nicest product in all of San Antonio," Sheffield said.
"Right. It sounds like you could have saved yourself 2.6 million if you didn't make it so nice, and maybe have found that gap."
there is a balance there
we have the market rate units, we're actually a fianncail patner with the PFC, it's in the city's
what's the estimate on that
????????since we are a 501c3
you quoted it as the best dev in the citiy that a family can not live in
That is a problem. So they cannot have access to the best developed unit.
I’m not so sure that’s the target audience I would want to incent.
Editor's Note: We'll report more on the Friedrich Lofts project at a later time. Honestly, we're still trying to figure it out, so that we can produce a clear article on how it works.
two sets of incentives, but Broadway Jones is benefiting from both
although the PFC has never been described as an incentive, who is receiving the benefit?
it's also up to the developer. or the equity provider. or the banks??? how do those conversations go
PFC is a negotiation
Soto looking at more insight into the projects
"I just want to say, we're changing the course of business," Saldaña said. "I do think we have to start holding the line on certain items."
It's flanked by Broadway, which is due for $40 million in upgrades from the current bond program, and the Museum Reach segment of the San Antonio River, which received its millions of dollars in improvements six years ago. Apartments continue to go up along the river and Broadway. And now, office space is being built, as well.???
saldana began by questioning
overhead power, street improvements,
that's what tirz dollars go toward
we're saying that's part of a larger pool
timetable, other details of the project
2.75 acres. A monolith.