The current six-month lull in new applications for the city's downtown housing incentive program may indicate the development wave San Antonio rode from 2015 to 2017, when deals were closed on 41 projects in and around downtown, has nearly subsided.
Or, will nearly subside, depending on how you look at it.
Since 2012, the Center City Housing Incentive Policy, or CCHIP, has catalyzed an estimated 6,800 housing units, either built or under development, in or around the downtown area, according to the city. Some areas, such as the Broadway corridor, have completely transformed largely because of the program.
It's also the policy critics blame for the rapid change occurring in the neighborhoods that abut downtown and many of these multifamily projects. As areas become more attractive to live in, the single-family communities nearby do as well.
So, the lack of new applications for future developments could be a good or bad thing, depending on how you view the downtown area's transformation in recent years.
The city hasn't received an application for CCHIP, since it received four submissions on Jan. 2. That's the date CCHIP was reinstated after a year-long moratorium. More on this a few paragraphs down.
To explain the dearth in new applications, one would have to survey all potential future developers, and also take into account the many factors that go into each potential site.
We can certainly surmise.
"We kind of acknowledge that there is kind of a downturn in the housing market right now," said Veronica Garcia, assistant director of the Center City Development and Operations department. "We know construction prices have gone up. So that's a variable."
Garcia also said developers may be wanting to gauge how well developments currently under construction fill up when they're completed before pulling the trigger on something new.
However, the elephant in the room is the CCHIP revisions that Mayor Ron Nirenberg and the City Council approved in December after the program took a hiatus in 2018. In December 2017, Nirenberg paused CCHIP for a year and instructed city staff to build into it avenues that would lead to the creation of more affordable housing. This was his way of inserting equity into a program he felt was creating too many apartments most San Antonians couldn't afford to rent.
During the discussions late last year, developers warned Nirenberg and the council they may not be able to make the financial numbers work for their projects under the new CCHIP. The revised version reduces the amount of tax rebate developers receive, and also requires developers to include affordable housing (which it defines as rents priced for households making 80 percent or below the area median income, or AMI) if they build on the outskirts of downtown.
"We have certainly made the requirements to qualify for CCHIP more rigorous, and that was based on the feedback we got from the public, the City Council and the mayor," Garcia said.
The handful of developers I've interviewed about CCHIP said the full 15-year rebate on city property taxes, as well as smaller subsidies offered under the program, is crucial to making developments work financially. Or, yield enough profit for the developer and other investors to make the project worth everyone's time and investment.
It's worth pointing out that a city-commissioned 2018 study of CCHIP by TXP, Inc., of Austin, said some developments, especially the ones in the four-to-five-story range, the very kind developers seem to only be building, may no longer require incentives to be financially viable.
David Adelman, one of the more active downtown developers, agrees about construction costs rising. He also points to what he calls a "watered down" version of CCHIP.
"It's a combination of things, but watering down CCHIP did not help," Adelman said. "I can't speak for other developers."
Before the revisions, when CCHIP began in 2012, developers received a full rebate on the increment of the city portion of their property taxes. For a typical project of five stories, many of these rebates were worth roughly $3-$5 million usually over 15 years. There are other components of CCHIP, but the tax rebate is the most lucrative.
Under the new CCHIP, developers receive 75 percent rebate on the city portion of their property taxes. The other 25 percent is fed into a fund for affordable housing.
Adelman believes deals may still emerge, but outside the requirements of CCHIP.
"I think what's going to happen, people are going to get deals kind of close, and they are going to talk to the city and county and talk about it being more creative and customizing the package, if you will," Adelman said. "Which is what happened pre-CCHIP."
If you were to drive around downtown, you'd see housing construction all over the place.
The Arts Residences hotel-condo tower on Lexington Avenue, for example, is starting to get its skin. The 260-unit apartment project on Augusta Street by Stillwater Capital of Dallas and the 340-unit apartment project along South Main and Dwyer by Argyle Residential of Austin are beginning to go up in the ubiquitous units-wrapped-around-a-parking garage format. At Broadway and Jones Avenue, the ground is starting to be scraped for the massive Flats at River North by a partnership that includes the San Antonio Housing Trust Public Facility Corp. and NRP Group.
What will happen, however, when these are built?
At least five projects are still in the works.
Two others, whose applications were submitted on Jan. 2, but whose CCHIP agreements are still pending, are the Cattleman Square Lofts on West Houston Street by Alamo Community Group and The Villas at Museum Reach on Dallas Street by MGS Museum Reach LLC.
Garcia said the city has met with other developers who may be looking for a more tailored incentive agreements, which would have to be approved by the City Council. There's also the potential for new luxury developments, which would not be covered under CCHIP.
For example, JMJ Development of Dallas is planning a 24-story, 226-unit tower at 126 Villita St., but has not applied for a CCHIP package. The firm has talked to city officials about the project, which JMJ has characterized as luxury apartments.
Under the new CCHIP, a development that charges more than $2.92 per square foot for rent is considered luxury, and therefore would not qualify for the incentives.
[ Editor's note: When the City Council approved the revisions in December, this cap was $2.75. The city increased the cap to coincide with the increase in the area median income. Both increased 6.287 percent. ]
The current six-month lull isn't the longest since CCHIP began in 2012. From July 16, 2013, to May 17, 2014, no new CCHIP agreements were signed. Of course, the premise of this analysis is based on applications submitted. There's a whole process that starts with the application, which leads to a term sheet drafted between the city and the developer. After the term sheet is drafted, it may take several months before the developer decides to commit to the terms of the agreement. At that time, the final agreement is signed by all parties.
There's also the other black-out period, from Dec. 22, 2017 to Dec. 20, 2018, which was Nirenberg's moratorium.
Nirenberg did not respond to an interview request for this analysis.
Whether you define development momentum as new applications received, agreements executed or actual construction is entirely up to you.
It will be interesting to see how this plays out—whether the city will receive any new CCHIP applications this year. Another way of putting this: It will be interesting to see whether Nirenberg struck that balance between simultaneously backing market-rate and affordable housing in a single policy.
The council is supposed to revisit the program at the end of 2021.
Some, like Adelman, believe market-rate and affordable housing are two separate issues, and that the city is harming its downtown growth by conflating the two into one policy. Adelman believes affordable housing efforts should be done outside the scope of incentivizing market-rate housing.
On the other end of the spectrum are affordable housing advocates, like COPS Metro Alliance, who argue Nirenberg's version of CCHIP should incentivize even deeper affordability—60 percent AMI, they've argued—because the incentives are city backed, and because of the effects they are having on poorer households in the surrounding neighborhoods.
On the other hand, city officials point to the other taxing entities, such as the county and the school districts, that receive revenue from newly-developed land, rather than land long vacant.
Many of these points were made last year, during the vigorous debate leading up to the council vote in December. For more context, read the articles below. Please note the policy changed throughout 2018, and some of the details in the articles may be outdated.
» Are developers receiving incentives they don’t need? [ Oct. 5, 2018 ]
» Delay sought in downtown housing incentives vote [ Dec. 11, 2018 ]
» City Council reinstates downtown housing incentives policy after one-year hiatus [ Dec. 13, 2018 ]
» A deeper dive into the latest housing projects eligible for incentives [ Jan. 27, 2019 ]
For five months, the city’s Housing & Neighborhood Services Department (NHSD) has been crafting a policy designed to help residents who have been forced to leave their homes, or who are on the verge of being uprooted.
Maybe the residents are experiencing rising housing costs because they live in a rapidly changing neighborhood, or live near a multimillion dollar public project like San Pedro Creek Culture Park, that’s going to make their area more attractive to investors. Perhaps their house is deteriorating, and code compliance violations are piling up; they can’t afford to make the repairs and pay the fines and are forced to move. Or maybe the household is suddenly faced with an unexpected expense, such as a hospital stay or car repair, which is hindering their ability to pay the rent.
In these situations, the $1 million policy—known as the risk mitigation policy—would kick in and disperse various amounts depending on the situation. For example, if a family was forced to move because its rent increased by a percentage twice the city's average—which is estimated to be 3-4 percent, based on real estate data the city pulled from CoStar.com—the policy would pay out up to $2,250 or $3,000, depending on their income level.
While the policy has been gestating since the fall, some housing advocates and observers have described it as nothing more than a Band-Aid. They say it doesn’t address the root causes of neighborhood change that sparked the displacement in the first place. The policy kicks in when it’s too late, they say, the moment a household is forced to move or just before it gets to that point.
NHSD officials have said consistently the risk mitigation policy is designed to address displacement as it occurs, and is not meant to solve gentrification.
"There’s no one root cause (of displacement), unless you want to call poverty the root cause," NHSD Director Veronica Soto said. "Because there are so many factors, there are so many things you have to do."
The process of crafting the risk mitigation policy, which the City Council will consider on March 21, has also raised questions about the definition of displacement in San Antonio.
Though the Center City Housing Incentive Policy (CCHIP) is not responsible for every change happening in San Antonio's central neighborhoods, it was the catalyst, and it was city-made. Besides the larger question about the merits of CCHIP—how much return are San Antonians getting for the tax breaks developers receive?—the displacement discussion begs another question:
Is the city doing enough to address the situation its downtown housing incentive policy created?
The risk mitigation policy is one piece in a larger displacement strategy, Nirenberg and Soto told the Heron in recent interviews. For example, Soto said the city is proceeding with a CCHIP impact study, which will examine how city-incentivized housing developments have either indirectly or directly displaced communities in this area.
NHSD has also forwarded Bexar County Appraisal District data to the office of state Rep. Diego Bernal, D-San Antonio, who recently introduced House Bill 1102 at the Texas Legislature that would freeze a property's school taxes if the home was owner occupied for at least 15 years, and if property tax payments increased at least 120 percent during that time.
A study initiated by District 8 Councilman Manny Pelaez will examine how the Bexar County Appraisal District values properties compared to other Texas counties of similar size, and how those practices impact San Antonio’s economic development.
There are other pieces.
"We're going to move as fast as humanly possible," Nirenberg said recently about the big-picture strategy.
After being displaced for the second time in 18 months, Maureen Galindo, 31, has settled into her two-bedroom apartment at Refugio Place, a mixed-income complex built by the San Antonio Housing Authority (SAHA) just south of Hemisfair.
Galindo was first displaced from an apartment in southwest Portland, Oregon, when her rent rose from $1,215 to $1,450.
“I couldn’t survive,” Galindo said. “It was like, ‘What’s wrong with me? Why can’t I keep up?’ ”
In May 2017, Galindo and her three young children left Portland and spent a few months living with Galindo’s aunt in Philadelphia until she decided to move to San Antonio, where housing was more affordable, and where she could attend the University of Texas at San Antonio. In August of that year, the family moved into the Soapworks apartments in west downtown. At the time, construction on the $178 million overhaul of San Pedro Creek, which runs alongside the Soapworks properties, had been going on for about a year.
The Soapworks and neighboring Towne Center apartments—which are now called Soap Factory—had become prime real estate because of the creek project, similar to the way land along the Museum and Mission Reach portions of the San Antonio River—north and south of downtown, respectively—had appreciated after those sections were turned into linear parks. At Soap Factory, the new Houston-based owner, the Barvin Group, began upgrading the units, adding additional fees and hiking up the rent, residents have told the Heron in previous interviews.
At least three Soap Factory households, including Galindo, have received relocation assistance from the city—either from federal dollars or from the city’s general fund—because of a rent hike.
For Galindo, a $70 rent increase and extra utility charges, she said, brought her monthly apartment costs at Soap Factory to $970, an amount she couldn't afford.
Three days before her lease ended at Soap Factory, she was considering staying with a friend when Refugio Place contacted her with an available apartment: a two-bedroom with a view of the Tower of the Americas for under $800 a month. Galindo considers the timing miraculous.
From the general fund, the city gave Galindo $2,380, but the assistance didn't come until after she moved. She had quit paying bills and used some of a student loan to fund the move until the city came through and paid her rent at Refugio Place from January through March.
Galindo describes the time as “one of the most anxiety-ridden months of (her) life.” She said the process of receiving the assistance from NHSD was so dysfunctional—she said it took more than 20 phone calls to receive the assistance—she questioned whether NHSD was prepared for other Soap Factory residents who could be priced out of the complex.
Currently, there are four pots of money—two federal, two from the general fund—the city of San Antonio uses to help people who are forced to move from their home. The risk mitigation fund, assuming the City Council passes it next month, would introduce a fifth pot.
Since October, NHSD has held community meetings to get feedback on the policy. Galindo attended the meetings early on, but then stopped attending, calling them a waste of time.
"(NHSD) didn't use people who were being displaced, so they don’t even know what displacement looks like," she said.
Galindo wasn't the only source of criticism NHSD received as it put together the risk mitigation policy.
Many citizens involved with the process, and observers from afar, say the policy is helpful in what it’s designed to do, but focuses too little on preventing displacement.
"We thought this was going to be about prevention," said Dr. Sarah Gould, a member of the Westside Preservation Alliance and the Esperanza Peace and Justice Center. "We don't want a flood of people go through the mitigation (policy) when they could’ve been kept in their home."
The same message is also coming from COPS/Metro, which isn't necessarily coordinating with the Esperanza Center.
Lourdes Menchaca, a member of COPS/Metro, said the organization has told NHSD the risk mitigation policy needs to be more preventive in its approach to displacement.
NHSD officials, including Soto, have held firm in their stance that the risk mitigation policy will do what it's intended to do: help those who need the help now.
"We know the conditions exist," Soto said. "We know there are neighborhoods and homes and potential citizens that would need assistance."
The Esperanza Center acknowledges that NHSD is listening. Its suggestion that the policy include people who are forced out of their deteriorating homes because of code enforcement violations was accepted and NHSD made the change.
However, Yaneth Flores, an organizer with Esperanza, says there's a disconnect between NHSD and other city departments, particularly Development Services and Code Enforcement.
"Although we are having these internal conversations (with NHSD) that are really great, I don’t see that reflected in the other city departments," Flores said. "I don't know where that lack of communication is taking place."
Soto and other NHSD officials have talked about a coordinated housing system that's in the early stages that will address some of these concerns. The idea behind the system is to ensure city departments whose core function impacts housing are talking to each other. The effort would also reach out to external partners such as SAHA—with the goal of sharing data and eventually creating a housing dashboard.
One of the key differences between the risk mitigation policy and the federal Community Development Block Grant (CDBG) dollars is the eligibility requirements; the local program is less stringent.
For example, households making 80 percent of the area median income—which the U.S. Department of Housing and Urban Development defines as $53,440 for a family of four in the greater San Antonio area—are eligible for CDBG dollars. With the risk mitigation policy, households making 100 percent of the median wage—in theory, half of all San Antonio households—would be eligible.
Also, only U.S. citizens can take advantage of CDBG dollars, whereas people living in San Antonio who are not U.S. citizens are ineligible. Under the risk mitigation policy, non-U.S. citizens could qualify for assistance.
It adds another layer to what Nirenberg describes as a larger displacement strategy.
Late last year, as the City Council was mulling the CCHIP revisions, which were designed to add more funding for affordable housing, groups such as the Esperanza Center and COPS/Metro urged the council to delay the vote until a displacement study was conducted.
At the time, city officials and the community groups argued over the definition of displacement in San Antonio. City officials acknowledged the former Mission Trails mobile home park on the South Side being uprooted for the Mission Escondida luxury apartments, which received $1.8 million in CCHIP aid, as an example of direct displacement. The city later changed CCHIP so no project that would directly displace people would be eligible.
But officials wouldn't acknowledge any form of indirect displacement, such as the kind that comes with increased taxes, the groups were talking about.
Now, the CCHIP impact study is moving forward, but it's too early to tell if NHSD or the Center City Development and Operations (CCDO) department will take the lead, Soto said.
NHSD is also working on designating neighborhood empowerment zones within San Antonio.
Under state law, a city can designate these zones, which offer what is essentially a freeze on the valuation of their property for 5-10 years, but only if the homeowner made improvements to their home. The idea is that home upgrades, which typically result in higher appraisals and therefore taxes, should not deter a homeowner from maintaining their home.
At the Texas Legislature, Bernal is fighting to get HB 1102, which will freeze school taxes, enacted.
"I feel like over 15 years, you probably never saw (gentrification) coming," Bernal said. "If you moved into a neighborhood and it happened in 3-4 years, you probably had an idea that that neighborhood was interesting in some way."
He continued, "So, we're really trying to identify people who didn't anticipate this, and have demonstrated every indication that they plan to stay in their home."
He also filed House Bill 240, which would allow homeowners to pay their property taxes on a payment plan.
Gould, the West Side preservationist, has noticed two trends facing residents: San Antonio Property Maintenance Code compliance violations and residents selling their homes for low-cash offers.
Last fall at a community meeting, Bernal asked attendees if they had received letters in the mail inquiring about selling their homes and nearly everyone raised their hand, Gould said.
Many West Side residents call the Esperanza Center and the Historic Westside Residents Association (HRWA) asking for assistance, complaining about code compliance violation notices, Gould said. Some of the residents tell the Esperanza the city referred them to both organizations.
Gould explained residents whose homes are condemned by the city, because they can’t afford the repairs, or to pay the code compliance fees, are eventually displaced. Fees range from $100 to $2,000—minimum costs are raised with each violation of an unaddressed issue, according to the city.
Gould said some of the residents she spoke to, even those whose houses are not being condemned, sell their homes to real estate investment firms like Dallas-based We Buy Ugly Houses, aka HomeVestors of America, for cash which they then use to purchase or rent a less expensive home or apartment. These residents, who sell their homes usually for less than $25,000, have found it was not enough money to acquire sustainable housing, she said.
Because UTSA is expanding its downtown campus closer the near West Side, Gould believes a more comprehensive policy is necessary to prepare those older residents from the influx of new residents, new developments, and potential new businesses that will attempt to capitalize on the area’s eventual student-heavy demographic.
She said more impact studies should be conducted in tandem with new development projects, similar to a study Dr. Christine Drennon, associate professor of sociology and anthropology at Trinity University, conducted on the former Wheatley Courts and East Meadows, the mixed-income complex SAHA built in its place.
In a recent interview, Drennon talked about a form of displacement when large mixed-use or residential developments force out residents by changing the cultural and sociological elements of a neighborhood.
Changing retail mixes in an area, where more upscale stores and restaurants are built, whether part of a larger development, such as the Pearl, or around a new residential complex, can cause people to move farther away to shop, eat, drink and socialize at places they can afford, Drennon said.
Drennon also mentioned that developments, including city infrastructure that uses public funds, should be examined for how they will impact an area and its residents. One example could be an old warehouse on Tampico Street on the near West Side, which SAHA wants to convert into a 200-unit, mixed-income apartment complex. East of the property is a future segment of the San Pedro Creek Culture Park. West of it is Alazan Creek and a tiny neighborhood of about 35 homes.
"We cannot tolerate the use of public funds, which will displace its own citizens," Drennon said. "We need to be very aware of the externality and prepare for it in advance."
Editor Ben Olivo contributed to this report.
Some time last week, the city of San Antonio updated its Center City Housing Incentive Policy (CCHIP) database to include the value of the tax rebate each developer is estimated to receive. The rebates only apply to the city portion of their property tax bill—the developers still pay the other taxing entities such as Bexar County, San Antonio Independent School District, etc.
The tax rebate figures, which amount to the bulk of the total CCHIP incentive package each developer receives, are now listed under the column titled "Delayed Incentives."
The upgrade happened shortly after the Heron—in a column I wrote—called out the city's Center City Development & Operations department for what I considered to be a lack of transparency. In the previous version of the database, you could find the tax estimate, but you had to download the CCHIP agreement and sift through many pages. Few people who aren't developers and who don't work for the city follow this stuff as closely as I do, and I didn't even think to check the agreement for the tax rebate total. It didn't meet my definition of transparency.
But that was then, and this is now.
To the city's credit, the CCHIP database now qualifies as being useful.
Still missing, however, is each project's pro forma, which is the document that describes how much profit the developer expects to make.
This is the critical missing piece one would need to truly assess CCHIP. In other words, how much bang is San Antonio getting (whether that be a more vibrant downtown, more affordable units in the downtown, increased revenue to non-city taxing entities, etc.) for its buck (which are the tax rebates on city property taxes over 10 or 15 years). We'd need to know occupancy rates, as well. So that's kind of one assessment. The other assessment needed would look at the residual effects of CCHIP—what's the impact on the neighborhoods that abut downtown? And what happens to developers' pocketbooks?
And then we kind of weigh all of that information and decide. We're not at that point. We don't have enough information.
Of the 63 CCHIP projects, last year we requested five pro formas, and received four of them. We intend to request the other 58, or so. However, in the aftermath of the piece we ran two weeks ago, I became aware of a 2015 Texas Supreme Court ruling that lowers the bar or threshold for the withholding of a company's proprietary information when that company has received a public benefit, such as CCHIP.
In other words, if developers building in San Antonio don't want us to have their pro formas, they need only put up a small fight to get the Texas Attorney General to side with them and withhold the info.
That said, we received four pro formas because, as it was explained to me by city staff, those developers didn't ask the Texas AG's office to withhold the documents. So they were released to us.
We're still studying how all of this stuff works, because, as I'm starting to figure out, there are loopholes upon loopholes, and I'm no lawyer so it's going to take us a while to figure it all out. My goal is that by the end of this year, if the Heron's still around, we'll have all the data—or, as close as humanely possible.
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:
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.
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.
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.
For those keeping score at home, four housing developments have been deemed eligible by the city's downtown development department for the revamped Center City Housing Incentive Policy (CCHIP). Since its inception in 2012, the program has always offered tax rebates, and waivers on SAWS and city development fees, among other so-called carrots. But it's gone through a few revisions.
The latest, which was passed by City Council in December after the program was suspended for a year, offers essentially the same types of incentives, but with a bent toward the production of more affordable housing.
Two weeks ago, the city's Center City Development and Operations department released the list of four projects eligible for the revamped CCHIP, and we, like other media outlets, reported on them. They are the Museum Reach Lofts, Cattleman Square Lofts, Augusta Apartments and The Villas at Museum Reach.
Since then, I've asked CCDO if other developers have applied for CCHIP incentives since Jan. 2, to try to gauge the level of interest from developers in the new policy—because the revised policy offers less subsidies to developers. For example, whereas a developer would receive a full rebate on city property taxes under the old CCHIP, now they'd receive 75 percent back, while 25 percent feeds into an affordable housing fund. CCDO told me last week they'd get back to me on other applicants.
For now, here's a deeper dive at the incentives each of the newer projects are due to receive under the new CCHIP.
[ Editor's note: Typically, CCDO provides an estimated value for the tax rebate over the term, which is either 10 or 15 years, depending on the location, using a method that's been explained to me, but that I'm still trying to comprehend, to be honest. For these projects, CCDO has released the rebate's worth for only the first year. Under the new incentives policy, CCDO is working on a CCHIP applicant database it says it will put online in February. I'll explore more the full estimated value of the tax rebates then.
» Developer: Alamo Community Group (nonprofit based in San Antonio)
» Location: Southeast corner of West Jones Avenue and North St. Mary's Street.
» Cost: $17.5 million
» Size: 95 units
• 77 units reserved for households earning less than 60 percent of the area median income (AMI)
• 9 units reserved for households earning less than 30 percent AMI
• 9 units rented at market rate
» Estimated construction start: March 2019
» Estimated completion: September 2020
» CCHIP package:
• $27,431 in city development fee waivers
• $295,988 in SAWS fee waivers
• 75 percent rebate on city property taxes over 10 years (estimated rebate is $34,600 the first year); 25 percent of its city property tax obligation will feed into the affordable housing fund (estimated at $11,500 the first year).
» Other incentives: $2.8 million reimbursement grant from the Midtown Tax Increment Reinvestment Zone; 9 percent low-income housing tax credits worth an estimated $10 million after they're sold to investors.
» Previously published: Affordable Museum Reach Lofts receive $2.8 million incentive
» Developer: Alamo Community Group
» Location: 811 W. Houston St.
» Size: 160 units
• 8 units reserved for households earning less than 80 percent AMI
• 136 units reserved for households earning less than 60 percent AMI
• 16 units reserved for households earning less than 30 percent AMI
» Estimated construction start: First quarter 2020
» Estimated completion: 2021
» CCHIP package:
• $83,522 in city development fee waivers
• $480,160 in SAWS fee waivers
• 75 percent rebate on city property taxes over 10 years (estimated rebate is $55,800 the first year); 25 percent of its city property tax obligation will feed into the affordable housing fund (estimated at $18,600 the first year).
» Other incentives: Alamo Community Group is pursuing 4 percent low-income housing tax credits. Estimated value unknown.
» Previously published: Cattleman's Square Lofts would add affordable apartments near UTSA's expansion
» Developer: Stillwater Capital (for profit developer based in Dallas)
» Location: 819 Augusta St.
» Size: 260 units
• 13 units reserved for households earning less than 80 percemt AMI
» Estimated construction start: Spring 2019
» Estimated completion: Early 2021
» CCHIP package:
• $112,601 in city development fee waivers
• $846,755 in SAWS fee waivers
• 75 percent rebate on city property taxes over 15 years (estimated rebate is $154,300 the first year); 25 percent of its city property tax obligation will feed into the affordable housing fund (estimated at $51,400 the first year).
» Previously published: McCullough Avenue apartments get the green light
» Developer: MGS Museum Reach LLC (San Antonio)
» Location: 920/922 Dallas St.
» Size: 13 townhomes (for sale)
• 4 units reserved for families earning less than 120 percent AMI
» Estimated construction start: Unknown
» Estimated completion: Unknown
» CCHIP package:
• $12,167 in City fee waivers
• $79,326 in SAWS fee waivers
• 75 percent rebate on city property taxes over 10 years (estimated rebate is $12,700 the first year); 25 percent of its city property tax obligation will feed into the affordable housing fund (estimated at $4,200 the first year).
The nonprofit developer behind the Museum Reach Lofts, which has been lauded by many for offering true affordable housing near the Pearl, is planning a similar project near the University of Texas at San Antonio's campus in west downtown.
Alamo Community Group wants to build a 160-unit, four-story apartment building on 1.5-acres at 811 W. Houston St., which is a cluster of older and modern buildings, and empty lots, currently owned by Alamo Colleges District.
The district plans to vacate the property, which houses its IT services and accounts payable departments, as it prepares to combine its administrative offices into a new building at 2222 N. Alamo St., the former site of Playland Park.
Meanwhile, Alamo Community Group is one of three early applicants to the revamped Center City Housing Incentive Policy, or CCHIP, which was reinstated Jan. 2 after a yearlong moratorium, during which city officials worked to revise the policy so that it produces more affordable units.
Of the 160 apartments at Cattleman's Square Lofts, 136 units would be offered to households making 60 percent of the area median income (AMI), or $40,800 according to U.S. Department of Housing and Urban Development. That figure factors in New Braunfels and other small cities in the greater San Antonio area.
Sixteen units would be offered to people making 30 percent AMI, or $20,400, while eight would be rented at market rate prices, said Jennifer Gonzalez, Alamo Community Group's executive director.
The organization also applied for CCHIP incentives for the $17.5 million, 94-unit Museum Reach Lofts on the southeast corner of North St. Mary's Street and West Jones Avenue. In that project, which is scheduled to break ground March 30 and be completed in September 2020, 86 units will be priced for people making between 30 and 60 percent of the median wage.
One of the other early CCHIP applicants is Stillwater Capital of Dallas, which is building the $28 million, 260-unit Augusta Apartments at 819 Augusta St. at McCullough Avenue. In exchange for a 75 percent rebate on the city portion of its property taxes over 10 years, Stillwater Capital will provide 13 units for households who make 80 percent AMI, or $53,440.
An entity called MGS Museum Reach, LLC, submitted a CCHIP application for The Villas at Museum Reach, a $3.5 million, for-sale townhome project on Dallas Street across from the Museum Reach Lofts. Four of the 13 homes will be reserved for households who earn 120 percent AMI, or $80,160.
Last week, the Heron requested the names of the developers who have applied for CCHIP packages since Jan. 2 from the Center City Development & Operations (CCDO) department. This morning, the Heron requested the list of incentives each developer would be eligible for. Like previous versions of CCHIP, the incentives are considered as-of-right, meaning incentives are set for each development depending on their location and other specifications. Here's are some charts that explain how that works:
The maps below show Level 1 in beige, Level 2 in purple and Level 3 in green:
The CCHIP restructuring also calls for the creation of an online database that the public can access. CCDO officials said Tuesday that the database would go live by February. Assistant City Manager Lori Houston told the Heron late last year that the database would likely exclude each project's pro forma, which would show each project's profit, because those documents are considered proprietary.
For the Cattleman's Square Lofts, Alamo Community Group is still in the beginning stages. At this time, nonprofit does not know the project's cost, nor all of its funding streams, Gonzalez said. It will apply for 4 percent low-income housing tax credits, which is a federal program administered by the state, in order to help finance the project.
Last year, during a bidding process, Alamo Community Group, which also owns and operates the Calcasieu apartments at 214 Broadway, offered up $2.8 million for the properties at 811 W. Houston St. The other bidder was UTSA, which is planning a massive expansion of its west downtown campus. UTSA's bid was $400,000, ACD confirmed last year.
Gonzalez said she hopes ACG begins construction on the Cattleman's Square Lofts in the first quarter of 2020, and be completed by 2021.
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
Despite strong pushback from prominent community groups, the City Council said it was proceeding with a vote on Thursday that will likely reinstate the Center City Housing Incentive Policy, the driver of the downtown area's metamorphosis the past six years.
A year ago this month, Mayor Ron Nirenberg suspended the policy, which doles out tax rebates to developers, among other incentives, and instructed city staff at the time to bake affordability requirements into it. As a result, throughout 2018, the Center City Development and Operations (CCDO) department has been revising CCHIP so that it produces more affordable units, and has made other adjustments so that the policy is more palatable to the general public.
"We often throw out a phrase, 'Perfect is the enemy of the good,' I think to often," Nirenberg said, "but I do think in this very moment, we risk that very thing."
The City Council discussed the policy Wednesday during its regularly scheduled B session, which lasted more than three hours. It also discussed changes to the Inner City Reinvestment Infill Policy, which waives city development and SAWS impact fees, which would blanket the entire city.
The marathon discussion was bookended by criticism. Before the meeting, COPS/Metro Alliance held a press conference outside City Council chambers, calling for a delay in a vote on CCHIP until, what they called, a legitimate public process could begin.
"Where are incentives for homeowners in communities impacted by new development?" Linda Davila, a leader with COPS/Metro Alliance, said.
After the meeting, the city held its first public hearing strictly devoted to CCHIP, after a year of targeted meetings with near-downtown neighborhood associations, and of receiving feedback from larger community initiatives such as the SA Tomorrow Comprehensive Plan and the Mayor's Housing Task Force. During the hearing, citizens spoke in favor of pushing forth CCHIP, and others spoke in favor of delaying the vote—taxpayers who ranged the gamut from downtown developers to grassroots activists.
It was a pretty balanced discussion.
The council's discussion, however, was lopsided in favor of restoring CCHIP as soon as possible.
The lone dissenter was District 4 Councilman Rey Saldaña, whose main reason for delaying the vote was to give more people time to understand the complexities of CCHIP. He also took issue with the city's definition of "affordable housing," which is based on the area median income (AMI)—$66,800 for a family of four—provided by the U.S. Department of Housing and Urban Development. HUD's definition includes the greater San Antonio area, which includes cities such as New Braunfels and Boerne. HUD's figure, therefore, does't reflect the average working class San Antonio citizen, Saldaña said.
"It makes no sense to me," Saldaña said. "We care about San Antonio's area median income. I don't care about Comal (County) and New Braunfels. It serves no purpose to use it in this case. Can we see a proposal that uses our definition and not HUD's?"
"The projects would not work with the CCHIP incentive package (alone)," Assistant City Manager Lori Houston told Saldaña. "We would have to come back with a greater incentive package to make that work."
After the meeting, Jennifer Gonzalez, executive director of Alamo Community Group, a nonprofit that builds affordable housing, said lenders, or banks, won't underwrite projects that use an AMI other than HUD's standard.
However, Saldaña is not alone in his assessment.
In its final report released in August, the Mayor's Housing Policy Task Force, for example, uses the AMI of $49,268, which is taken from the 2016 U.S. Census Bureau's American Community Survey.
The AMI drum is one District 9 Councilman John Courage has been beating in housing discussions throughout 2018.
"So when we say we're offering 80 percent AMI (apartments offered to people making $53,440), we know it really isn't affordable for the hundreds of thousands of people who live within the city of San Antonio," Courage said.
In the revised CCHIP, for developments that are five stories or shorter, developers would be required to offer 10 percent of their units to people making 80 percent of the HUD AMI, and 10 percent to people making 60 percent of HUD's AMI ($40,800). If the development were to be built higher than five stories, the developer won't need the affordability requirement, Houston said, because it would require more expensive materials, such as steel and concrete, thus hiking up the cost.
Courage then pivoted to the other big topic: displacement.
Currently, the city's Housing and Neighborhood Services Department is drafting a "risk mitigation policy," which will address displacement caused by city incentivized development, changing neighborhoods, and the threat of eviction, the department's director, Veronica Soto, said. The city has allocated $1 million to assist residents in cases of displacement. The department is simultaneously crafting a "displacement impact assessment"—"the scope of that is what we are working on now," Soto told council.
In an interview earlier in the day, it was unclear coming from Soto whether the assessment would factor in potential displacement—whether it be renters who have become priced out of their neighborhood, or homeowners who can no longer afford to pay their property taxes—caused by CCHIP-incentivized developments. The Mayor's Housing Policy Task Force recommended a displacement impact study be conducted for every public project that exceeds $15 million, such as the San Pedro Creek Culture Park. Not necessarily CCHIP.
Editor's note: The Heron has been covering CCHIP discussions extensively, and will cover more of the subtopics discussed after Thursday's council vote. We'll also have some final analysis on Sunday.
Some leaders of downtown area communities, and at least one former member of the Mayor's Housing Policy Task Force, are asking Mayor Ron Nirenberg and the City Council to delay a vote on San Antonio's downtown housing incentives policy until a true public process is started, and a displacement study is completed.
The policy, also known as the Center City Housing Incentive Policy, or CCHIP, has been the impetus for the wave of new apartment buildings and condos—64, so far—built in the center city the past six years.
Through the developments it has incentivized, CCHIP has created a vibrancy in parts of the downtown area that wasn't there before—the Pearl area and Broadway corridor being the most obvious example. It has also sparked the gentrification process in downtown's abutting neighborhoods, while producing apartments whose rents are out of reach for many San Antonians. As property values continue to rise—skyrocket in neighborhoods such as Denver Heights and Dignowity Hill—so do taxes and rents, while developers receive rebates on the city portion of their property taxes worth several million dollars over 15-year periods, in most cases. CCHIP's defenders say the program is simply meeting the demand for market-rate housing downtown, which is proven by companies that are either moving offices (USAA) or headquarters (Credit Human and Jefferson Bank) to the city's core. And that reviving downtown is critical to creating the type of environment that's attractive to young talent (either homegrown or from other cities), and to luring the companies they work for.
[ Editor's Note: There are many more arguments on both sides of this debate. For an overview as they pertain to San Antonio, read this piece, "Downtown's housing incentives are changing. Here's why you should care," from September. ]
A year ago this month, Nirenberg placed a moratorium on CCHIP, which the city launched in 2012 under former Mayor Julián Castro, and ordered city staff to revise the policy so that it produces more affordable housing. To date, the policy has produced 6,810 units—mostly apartments either completed or under development toward the city's goal of 7,500 units by 2020—but most of the housing is unaffordable to most San Antonians, Nirenberg said. Nirenberg also said recently that he understands the need for downtown's economy to continue to grow—the city estimates the 64 CCHIP projects have yielded $1.4 billion in private investment into the downtown area in the form of new housing, office and retail—and that housing is the critical element in that process.
The council is scheduled to discuss CCHIP—for the third time—on Wednesday, and vote on the revised policy Thursday. If it's approved, CCHIP would be reinstate after a yearlong hiatus.
Based on interviews with community leaders and city officials, there seems to be a clear disconnect between the two sides on two main points:
» Whereas city officials feel adequate public outreach was accomplished throughout 2018, as they revised CCHIP, community leaders contend there has been zero community outreach. Some say CCHIP and the Inner City Reinvestment and Infill Policy (ICRIP), another incentives policy the council is voting on Thursday, require a citywide discussion, especially now, because the city is recommending both policies now be applied citywide.
» Whereas city officials don't see a direct link between CCHIP incentivized developments and the displacement of people who live near them, some community leaders worry the policy either is currently displaying residents—or will eventually displace residents—via skyrocketing rents or property taxes, or both.
So far, the groups asking the council to delay its vote are COPS/Metro, the Tier 1 Neighborhood Coalition, the Westside Preservation Alliance and the Esperanza Peace and Justice Center.
Prominent individuals familiar with San Antonio's housing woes are also speaking up.
Former Councilwoman Maria Berriozabal, who Nirenberg selected to serve on his housing policy task force, says there isn't enough public understanding about CCHIP and ICRIP, which waives city development and SAWS impact fees worth hundreds of thousands of dollars for residential projects, building rehabs, or business recruitment or expansion efforts.
As a policy wonk herself, Berriozabal is familiar with the policies and their labels, but she said she gets asked by well-informed people, "What is CCHIP and ICRIP?"
"And I'm talking about very well-informed, professional people," said Berriozabal, who sent her concerns to Nirenberg and the rest of council in a letter dated Dec. 4. "So there's a lack of understanding of what both are. For some of us, the acronym, we know it. For a lot of people, there has not been the public process."
Veronica Garcia, Interim Assistant Director for the Center City Development and Operations Department, said her department has conducted community outreach via presentations at several council committee meetings, as part of the mayor's housing task force process at the end of 2017 and throughout 2018, as part of the SA Tomorrow Comprehensive Plan process (two of the 13 regional centers identified in the plan—downtown and Midtown—are within CCHIP's boundaries), through meetings with for-profit and nonprofit developers, meetings with the neighborhood associations of communities directly impacted by CCHIP, and targeted meetings with other community groups. Garcia added that a public hearing has been called on CCHIP for 6 p.m. Wednesday at City Council chambers, 114 W. Commerce St.
Feedback from those discussions, Garcia said, have been incorporated into the policy. For example, meetings with nonprofit housing developers are the reason why CCHIP developments (under the revisions) must restrict a tenant's rent to roughly 30 percent of their income.
But Berriozabal isn't buying Garcia's list of examples.
"There has been no public process, period," said Berriozabal, who pointed out that citizens aren't allowed to speak at council committee meetings. And there has yet to be a public meeting dedicated to CCHIP and ICRIP, the former councilwoman, and others, say.
Last week, Assistant City Manager Lori Houston, other city officials, and District 1 Councilman Roberto Treviño, met with leaders of downtown's abutting neighborhood associations and other community groups. But each group was only allowed to bring a maximum of two board members or representatives. The general public was not invited. And the people who attended these meetings describe them as briefings, rather than anything resembling a true public meeting.
"Although, yes, most people don't know what CCHIP is, and aren't necessarily following this closely, it does affect almost every single person living in inner San Antonio," said Yaneth Flores, an organizer with the Esperanza Peace and Justice Center, who attended one of the meetings. "It doesn't make any sense to push it through right now."
For District 7 Councilwoman Ana Sandoval, the fact that the policies are now being proposed across the city means a citywide discussion needs to happen. She likes that CCHIP, for example, is being proposed for the 13 regional nodes outlined in the SA Tomorrow Comprehensive Plan, and along the major transportation corridors—not just downtown. "The idea was to have density around those regional centers, and along the corridors, so you can eventually have rapid transit," she said. But ...
"That also means it's going to affect a lot more people," Sandoval said. "All of a sudden, you've moved from a downtown incentive to a citywide program. I think that means your stakeholders are changing, and that group has grown."
Garcia said CCHIP revisions—which would grant developers a 75 percent rebate on city taxes, while the remaining 25 percent would feed a housing affordability fund—would only kick in after each regional center's land-use plan was approved by council. Those regions are downtown, the Medical Center, Midtown (includes the Pearl), Brooks, Texas A&M-San Antonio, University of Texas at San Antonio, Stone Oak, Highway 151-Loop 1604, the greater airport area, northeast I-35-Loop 410, Rolling Oaks, Fort Sam Houston and Lackland AFB-Port San Antonio.
For Berriozabal, her biggest criticism is about ICRIP, which would go from being a mostly inner city fee waiver program to blanketing the entire city.
"As far as I can see, ICRIP has had no study or assessment of how well, or not, it has done since it was installed," Berriozabal said.
Berriozabal also took issue with the lack of a coordinated housing system—a primary recommendation in the task force's Housing Policy Framework released in August—which she says is critical to understanding the labyrinth of housing departments, groups, policies, and initiatives, and how they can better work together.
"All of those are spread throughout the city, and there is no one person that manages, understands, and plans for housing across the board," she said.
She also said there is a lack of clarity on the definition of truly affordable housing. The mayor’s housing task force, in its report, uses an area median income (AMI) of $49,268 taken from the 2016 U.S. Census American Community Survey, because it’s more representative of San Antonio's median wage.
The city, and other entities, use the U.S. Department of Housing and Urban Development's AMI of $66,800 for the greater San Antonio area, which includes New Braunfels. So when programs such as CCHIP characterize housing made available to people making, say, 80 percent of the HUD AMI, or $53,4400, as affordable, that doesn't ring true for many San Antonians. This includes Nirenberg, who challenged city officials about this point almost a month ago.
Currently, the city's Housing and Neighborhood Services Department is drafting a "risk mitigation policy," which department head Veronica Soto anticipates will be completed in mid-January, and presented for City Council approval in late January.
The policy will address "displacement due to city incentivized development, rapid neighborhood change, threat of eviction, or recent homelessness," Soto said in an email. The mayor's housing task force recommended a displacement impact study be conducted for public projects that exceed $15 million. That recommendation was inspired by the San Pedro Creek Culture Park project, and some of the changes residents of the adjacent Soap Factory apartments experienced after a new owner started renovating those properties this year.
Community leaders are asking that a vote on CCHIP and ICRIP be delayed until the city's housing department completes the displacement policy.
"I don't understand what the rush is," said Anisa Schell, a member of the Tobin Hill Community Association and the Tier 1 Neighborhood Coalition, who also participated in one of the recent CCHIP briefings. "If the policy is good, it will still be good in six months."
At a meeting two weeks ago, city officials and developer David Adelman told council members that reinstating CCHIP cannot wait. Downtown is losing its momentum just from CCHIP's one-year hiatus, and any further delay could mean the momentum dies altogether, they warned. They said no new CCHIP developments have come online in 2018, while the policy has been on ice.
Which is true.
But members of the Tier 1 Neighborhood Coalition, such as Schell, point out that downtown housing developments have proceeded without CCHIP.
Which is also true.
But it's complicated.
For example, the $17.5 million Museum Reach Lofts near the Pearl, a truly affordable development by nonprofit Alamo Community Group (ACG), did not receive a CCHIP package and is proceeding with construction anyway. Of its 95 units, 86 will be offered to people making between 30 and 60 percent of HUD's AMI.
That project, which is scheduled to begin construction in March, was made possible by 9 percent low-income housing tax credits, a federal program administered by the state of Texas, which could be worth about $10 million after the tax credits are sold to investors.
However, the way the program works, the state entity that doles out the credits will not grant future tax credits to affordable housing projects within two miles of developments that received the awards in the past. ACG Executive Director Jennifer Gonzalez told the council a month ago that, because of this rule, the Museum Reach Lofts may be the last of the 9 percent tax credit projects in the downtown area.
Houston also told the Heron via email that ACG and the city may reach a tax rebate agreement for the lofts, but that may have to go to council separately, if the council does not reinstate CCHIP soon.
Projects such as NRP Group's Broadway Jones and Adelman's The '68 at Hemisfair didn't require CCHIP's city property tax rebates, because they receive a full property tax exemption through partnerships with public facility corporations—nonprofits that are granted special tax privileges in exchange for housing affordability, according to state law.
The projects received fee waiver incentives from CCHIP before Nirenberg's moratorium, but they could have received the same waivers from ICRIP.
Incentives from tax increment reinvestment zones, another incentives tool the council is not revising at this time, would have gone to council anyway.
Finally, there is the $28 million, 280-unit apartment project by Dallas developer Stillwater Capital on the northern-most corner of McCullough Avenue and Augusta Street. Stillwater Capital applied for a CCHIP package during the moratorium, and the it didn't want to wait on a council approval process that could have taken months.
"We didn't want to wait, and we had already discussed viable options," Brandon Easterling, a partner with Stillwater Capital, told the Heron in late September.
So Stillwater is proceeding with construction anyway with no CCHIP package. Although it has received city development waivers from ICRIP, it didn't receive SAWS impact fee waivers because the funds were not available. In an interview in September, Garcia said Stillwater told city officials that SAWS fee waivers were critical to the project, and that they would return to the city when CCHIP was restored.
The larger point, critics of the CCHIP revision process say, is the city's lack of understanding about CCHIP's impact on the neighborhoods it abuts.
The one case where displacement occurred because of CCHIP was the Mission Trails mobile home park, back in late-2014, early-2015, when more than 100 low-income households were removed from their South Side community by the San Antonio River. A luxury development by White Conlee Builders, which received a CCHIP package worth an estimated $1.7 million, has gone up in place of the mobile homes.
In 2016, the city redrew CCHIP's boundaries, which at the time consumed a 36-square-mile boundary, to represent more of downtown proper. Also, the policy no longer incentivizes projects that would cause direct displacement, such as what happened at Mission Trails.
However, that's not what neighborhood activists are worried about any longer. They're worried about indirect displacement, the unintended side effects of the rise in property values on low-income to moderate-income residents—either renters or homeowners—who live in downtown's adjacent neighborhoods.
"The outcome is that people in the surrounding community are more than likely going to be displaced, because rents are going to go up," said Cherise Rohr-Allegrini, president of the Lavaca Neighborhood Association, who also attended one of the recent briefings.
Garcia acknowledged the difference.
"We understand that there are broader questions about displacement throughout the city and we will be working Neighborhood and Housing Services (on those issues)," Garcia said.
She points to one of CCHIP's main revisions: a pulling back even further of the program's boundaries—from 5.4 square miles (outlined by the red dotted line in this map) to 2.64 square miles (defined as Tier 1 and 2)—in an attempt to exclude low- to medium-density residential areas.
"I don't think it will ever be the perfect policy," Garcia said, "but I think it takes a lot of the feedback into consideration."
In a lengthy Facebook post on Dec. 5, Jim Bailey, an architect with Alamo Architects who served on the Mayor's Housing Policy Task Force, said he fears that San Antonio is on the same trajectory as Austin, "where nothing within a mile of downtown is affordable."
"Will we become like Los Angeles with 50,000 homeless people living in tents on the sidewalks?"
He concluded by saying the city should pursue programs such as CCHIP, but it must also understand its potential negative effects, and try to stop them from happening. For this reason, he supports a displacement study, whether it's done before CCHIP is reenacted, or after.
"Too many voices have spoken to not act," he wrote.
Editor's note: Last week, Nirenberg declined to comment on the latest CCHIP revisions, which were first reported by the Heron. Also last week, Treviño said he wanted to meet with more community members before weighing in on the changes.
Editor's Note: This is an analysis of the latest revisions to the Center City Housing Incentive Policy (CCHIP), which the City Council has not yet discussed. The council is scheduled to discuss the changes you're about to learn about on Dec. 12, and vote on them Dec. 13.
In a set of revisions meant to appease Mayor Ron Nirenberg's concern about a lack of true affordable housing being produced, the downtown housing incentives policy, which is responsible for the flurry of new apartments in the center city in recent years, would also apply to the 13 regional nodes outlined in the SA Tomorrow Comprehensive Plan. And it would define, and exclude, a new category of housing: luxury.
The latest changes to the policy, crafted by the Center City Development and Operations Department (CCDO), come almost exactly a year after Nirenberg placed a moratorium on the Center City Housing Incentive Policy (CCHIP), because he said it subsidized housing—mostly market-rate apartments—most San Antonians could not afford to live in. The City Council was scheduled to reinstate CCHIP in early October, but some council members and Nirenberg asked that the policy produce a deeper level of affordability from the units it produces.
The more time CCDO works to meet the demands of the council, the more time community members are beginning to understand better CCHIP's complexities, and some are beginning to pushback. Now, with other parts of San Antonio potentially affected by CCHIP, the debate about whether developers should be granted subsidies in exchange for a denser San Antonio, as well as some affordable housing, is sure to grow larger and larger.
This is setting up to be a citywide issue.
This is complicated stuff, so let's walk through it together.
From 2012 to Dec. 14 of last year, developers received a gift basket of incentives for building multifamily housing in the downtown area. This policy, aka CCHIP, is the main driver of all of the four- and five-story apartment buildings that have sprouted up in the Pearl area and in Southtown. By far the most lucrative incentive in the basket were rebates on city property taxes, which developers usually were granted for 15 years. The highest estimated rebate is $9.5 million over 15 years for The Arts Residences, 66 condos above a Thompson Hotel, currently under construction across the river from the Tobin Center for the Performing Arts. But most are worth a few million dollars.
In the recommendations, developers would receive 75 percent of their city property taxes back, instead of 100 percent. They'd still have to pay all other taxing entities.
San Antonians never discussed CCHIP much as a city, because it was downtown-centric, just pertaining to the very core and its abutting neighborhoods. But now CCDO is recommending developers receive rebates if they build in the comprehensive plans' 13 regional centers.
Besides downtown, those areas are the Medical Center, Midtown (includes the Pearl), Brooks, Texas A&M-San Antonio, University of Texas at San Antonio, Stone Oak, Highway 151-Loop 1604, the greater airport area, northeast I-35-Loop 410, Rolling Oaks, Fort Sam Houston and Lackland AFB-Port San Antonio.
These regions would only be eligible after the City Council adopts their future land-use plans, according to an outline of the new policy, which was shared at a meeting with community members on Tuesday, and obtained by the Heron.
The city is also recommending that multifamily luxury developments be ineligible for CCHIP incentives. It defines luxury as condos priced at more than $360,000 (based on the Federal Housing Administration's mortgage loan maximum for Bexar County) and apartments rents at more than $2.75 a square foot.
The new CCHIP—which the City Council is scheduled to discuss Dec. 12 and vote on Dec. 13—delineates three levels, or tiers as they're shown on this map, eligible for incentives.
Level 1 is defined roughly as downtown proper, or the 2.64 square miles of the core itself. Level 2 consists of properties that directly surround downtown—such as the Pearl, the near West Side, the near East Side, and parts of the near South Side. Level 3, the latest addition, is the 13 regional centers shown on the map above.
Here's how the tax rebate would work by level:
» Level 1: 75 percent city property tax rebate for 15 years. No luxury.
» Level 2: 75 percent city property tax rebate for 10 years. Must include 20 percent affordable units (10 percent reserved for households making 80 percent or below of the area median income [AMI] and 10 percent at 60 percent or below AMI) or build above five stories in height—or both. No luxury.
» Level 3: 75 percent city property tax rebate for 10 years. Must also include 20 percent affordable units for households making 60 percent AMI, or below.
The other 25 percent of the city property tax revenue would feed into an affordable housing fund, which city officials expect to yield $1.1 million through 2020. The fund's use has not been determined.
Besides the tax rebates, CCHIP also includes waivers on city development and SAWS impact fees. Projects in Level 1—again, strictly downtown—are also eligible for a infrastructure grant—to pay for project-related upgrades such as sidewalks, utilities, etc.—which offer $10,000 per affordable unit up to 50 units. But this only applies to projects in which the developer includes at least 10 percent affordable units.
Also, projects that include hotel rooms would not be eligible for CCHIP incentives.
As per District 4 Councilman Rey Saldaña's request, the new policy also outlines some goals.
The city is setting a 10-year goal of 12,382 affordable units, which it defines as being available to households making 80 percent or less AMI, for the three levels combined. The bulk of those units—7,613—would be built in the regional centers and priced between 30-60 percent AMI.
In 2016, an estimated 165,000 San Antonio households spent more than 30 percent on their incomes on housing, and are therefore considered cost-burdened, the Mayor's Housing Task Force concluded in its August 2018 housing report. It estimates there are 36,900 cost-burdened households who make less than 30 percent AMI, or $14,780—the lowest of the low-income.
[ Editor's Note: The Mayor's Housing Policy Task Force uses an AMI from the 2016 U.S. Census ACS 1-year estimates, because it's more representative of San Antonio's median wage. The HUD figure includes New Braunfels and the rest of the greater San Antonio area. ]
I'm still gathering reaction from community members, and I should have that story published later today. Yesterday, I placed an interview request with CCDO about the latest CCHIP recommendations, but the request wasn't granted.
I can tell you that some City Council members are concerned about the CCHIP changes, and that some communities beyond downtown are beginning to catch wind of the revisions, and are pushing back as I type this Wednesday morning. Members of the Mayor's Housing Policy Task Force are also making their concerns known to the council.
Again, that story later today.
CCHIP also has plenty of supporters, besides developers. During a B session a few weeks ago—before the 13 regional centers were introduced as a possibility for incentives—a handful of council members, and Nirenberg, criticized that versionof CCHIP, saying it still lacked the right mix of affordable units. But the majority of council members, judging from their comments and/or voting records, were fine with the changes.
Through 2012 and 2017, CCHIP has been credited with the surge of apartment developments—with some condos—in the downtown area. City officials say the program was never meant as an affordable housing tool. Instead, it was meant as an economic generator, and to meet the downtown housing demand they say is proven by companies such as USAA, Credit Human and Jefferson Bank moving offices and, in some cases, headquarters, to the downtown area.
CCHIP has worked, having produced or spurred the creation of 6,810 units (on its way of surpassing its goal of 7,500 by 2020), 230,000 square feet of retail space, and 28,000 square feet of office space. The city's presentation doesn't say how many hotel rooms were aided.
However, the majority of the new housing has been on downtown's outskirts, where land prices are cheaper, and that's why the revisions suggest less restrictions—such as no affordability requirement—in the core.
Overall, $102 million in CCHIP incentives have been doled out to the developers of 64 projects, which the city estimates a yield of $1.4 billion in private investment—meaning that's how much private equity is being spent to build all of these structures, and related public upgrades.
City officials say another taxing entities benefit—such as Bexar County, the San Antonio Independent School District, VIA Metropolitan Transit, etc.—by the rise in value of the properties on which these developments are built. They say that if you took the 64 CCHIP projects, assuming they were all built in 2017, and looked at the first year after the 15-year tax rebate ended (or, the 16th year) the owners of the developments would pay $10.1 in city property taxes. Using that same metric, the land owners would pay $39.8 million to other taxing entities.
If those properties were undeveloped, city officials say, they would produce $349,164 in property taxes to the city, and $1.3 million to the other entities, in the same time frame.
That's all well and good, some critics, such as Nirenberg, have said, but it was still producing apartments that many San Antonians can't afford. The 120 Ninth Street apartments, which are nearly open on the Museum Reach portion of the river, offer apartments starting at $1,300. Its CCHIP package is worth an estimated $3.9 million.
There is much more to be written about San Antonio's housing incentives debate. This seems like an appropriate place to stop for now. Again, I'll have reaction to these latest changes later today, and much more CCHIP stories planned that explain other aspects of the policy in the next few weeks.
I've written a few already (keep in mind these articles are based on the last CCHIP version, which is slightly different than the one outlined in this piece):
» Downtown's housing incentives are changing. Here's why you should care.
» Are developers receiving incentives they don't need?
By the way, the city is recommending extending CCHIP for two years, and re-evaluating it at that time.