Cattlemen once preferred the hotel on West Commerce for its proximity to the stockyards and Military Plaza; in those days, it was known as La Clede Hotel. 

Around 1926, the vacant three-story structure spanning the length of four lots became the Continental Hotel, the name by which it was known until it closed in the late 1970s, later serving as home to the San Antonio Metropolitan Health District. 

This year, the old hotel, an adjacent parking lot, and the 1928 Arana Building on the same block could get a new lease on life as the first housing project approved under the newly formed Bexar County Public Facility Corporation, or PFC.

In June, the PFC board, made up of all five county commissioners, gave approval for the PFC and downtown developer Weston Urban to move forward with negotiations to redevelop the properties into a multi family residential complex.

Established in January, the PFC was developed with the Continental Hotel project in mind, said David Marquez, executive director of the Bexar County Economic Development Department. 

“People have been asking us for years to create one and we had just not felt there was the need since the City had theirs,” Marquez said. “What made this one different was that the project is right there on San Pedro Creek,” where the County has invested considerable funds toward turning the blighted creek way into a linear park

The fact that downtown developer Weston Urban was involved made it even more attractive, he said. Weston Urban is finalizing its purchase of the Continental Hotel property, a deal approved in June 2020 by the City of San Antonio with the price set at $4.7 million and a commitment to build affordable housing.

Weston Urban already owns the two-story Arana Building, the historic O. Henry and De la Garza houses, and a parking lot currently being used for construction staging. 

“The ability to partner with them and do what we need to do there was really a value to us so [commissioners] felt it was time to create one and use it as a tool for development and for historic preservation.”

Under Texas law, a PFC allows developers to partner with a public entity to build multi family “workforce” housing. Developers receive full property tax exemption for the duration of the 75-year lease in exchange for committing to rent half the units to people who make up to 80% of the area median income, or AMI, which for a family of four is $57,600. 

The multi-story, 250-unit project that Weston Urban is planning will offer half of the units at these “affordable” rates. Up to 20% of those will be available to people making 60% of the AMI, and all affordable units will not exceed 30% of a renter’s income. 

Housing advocates have complained that the San Antonio Housing Trust which manages the city’s PFC, created in 2009, for not developing enough projects that meet lower affordability thresholds. 

While the first project for the county’s PFC offers some affordability, that’s not the main focus, Marquez said. “We feel like we have other tools for [affordable housing], but we will get in this case 60% AMI and 80% AMI units so it’s a pretty solid deal.”

Weston Urban plans to seek conceptual approval for its designs from the Historic and Design Review Commission during an upcoming meeting, said Mark Jensen, Weston Urban’s vice president. 

Those designs include the construction of a multi story apartment complex and parking garage situated adjacent to the creek and between the historic hotel and Arana buildings, which would be redeveloped as commercial space. 

A preliminary conceptual rendering of the Continental Hotel and adjacent properties. Credit: Courtesy / Bexar County

The De la Garza home facing Laredo Street won’t be moved, contrary to previous proposals, but the future of the O. Henry house, which is not original to the site, is uncertain. 

Construction could begin next year. “Like many downtown projects, this one is complicated and constantly evolving,” Jensen said. “We don’t have a definite timeline at the moment.”

The PFC also has approval rights over what happens at the site, according to the agreement, as it holds the title to the land and is responsible for typical maintenance and upkeep. Weston Urban will pay the PFC a structuring fee of $250,000 plus an annual ground rent of $125,000 and an administrative rent of $25,000. These funds can then be used to invest in other housing issues and public purposes.

“But for this Public Facility Corporation structure, this deal wouldn’t happen,” said Andy Cohen, attorney representing the PFC, during the June 15 meeting of the PFC board. “The developer wouldn’t be able to acquire the project from the City and make this work given the expenses involved in the project.”

The PFC board is expected to vote in August on final approval of the project.

“I’m excited about what they will do with the Continental and Arana buildings,” Marquez said. “The Arana building has huge potential because it’s across the street from UTSA [School of Data Science]. So that really makes it an important node of development.”

Repurposing vacant buildings and revitalizing the corridor between Military Plaza and Market Square — in the Zona Cultural — is not going to happen without that kind of development, he added. “It’s one more step on the ladder.”

Shari Biediger

Shari Biediger is the development beat reporter for the San Antonio Report.