A long-delayed residential project expected to spur more development east of the Pearl cleared a major hurdle this week when the City Council agreed to reimburse the developer for public improvement costs. 

City Council voted unanimously to approve the Midtown Tax Increment Reinvestment Zone (TIRZ) agreement awarding 10 years of property tax reimbursements to Dallas-based Encore Enterprises to build a $90 million apartment complex at the northwest corner of Carson and Austin streets in the Government Hill neighborhood. 

The vote followed the Midtown TIRZ board’s approval of the agreement in August. 

The TIRZ funding for the Encore project will fund up to $7 million in utility improvements, street reconstruction, new sidewalks, enhanced lighting, and other public improvements to support the new complex made up of 386 market-rate units. 

The agreement — and the subsequent improvements — will likely lead to more new developments in the area where developer GrayStreet initially assembled about 23 acres for a large retail and residential project, said attorney James Griffin, who represents Encore. That project appeared to dissolve when GrayStreet listed more than half of the property for sale in January.

“I think everybody in that area that is looking at investment and redevelopment was waiting to see if this was, one, going to be approved and, two, waiting to see if these infrastructure improvements and the project itself come up because that is going to be the first domino to fall,” he said.

But the council’s approval didn’t come without hesitation. 

The initial request for TIRZ funding for the project goes back to before developer GrayStreet sold 4 acres of its total 20 in the area to Encore in 2020 and also before the council began to focus on affordable housing as part of the TIRZ process, Griffin said.

When it came time for the council to sign off on the agreement in September, Encore pulled the item from the agenda to meet with council members individually, including Councilman Jalen McKee-Rodriguez, whose District 2 is where the development is located. 

On Thursday, McKee-Rodriguez and other council members said they would approve it reluctantly, voicing concerns over the use of public funds for a development lacking any units available for affordable housing. 

“When projects like this come before us, I spend a lot of time thinking about them,” McKee-Rodriguez said. “I do maintain the belief that if an applicant for public tax dollars can’t meet our community’s need, then we don’t need to grant them community dollars. And I’m glad that I’ve had the opportunity to work with the applicant.”

Conversations with the developer led to an agreement that Encore will provide public meeting space within the development, guarantee at least 250 construction jobs and 10 post-construction jobs at the site, and contribute $20,000 toward a community investment and displacement impact assessment. 

“I think it’s great that it will have an impact study,” said Councilwoman Ana Sandoval (D7), who said she also had some hesitation about the agreement. “A project of this magnitude will definitely have consequences on the surrounding neighborhood.”

But Sandoval said she wanted to know what to tell her constituents who questioned public funding for a luxury development on lower Broadway

“Although this project is about a block off of Broadway, it’s not Broadway,” Griffin said. “As the gateway heading east into Government Hill, there really hasn’t been the investment and the infrastructure is in terrible shape. 

“So it’s close to Broadway, but it’s a world away as far as the investment and the existing infrastructure and what’s needed to have any sort of investment there and future development.”

Griffin added that the Encore project “fits the goal of the TIRZ to a ‘T’” because of the increased tax revenue it generates from future development it spurs and offsetting the cost of public infrastructure the city would traditionally bear. Construction is expected to be complete by the end of 2023.

A list of city-initiated TIRZ agreements can be found here.

Councilman Mario Bravo (D1) requested a further discussion of the goal of TIRZ agreements. “How are we measuring success?” he said. “And how are the projects that are coming through the TIRZ aligned with our city’s vision or any master plans or any regional projects?”

Bravo said he would support the Encore agreement based on the vetting that McKee-Rodriguez did, but “going forward I just want every applicant to know I’m going to be asking a lot of these questions and if I don’t get the answers that I want, then I’m not going to be approving these projects.”

Those discussions could lead to a new set of standards, McKee-Rodriguez said. “Because the community is watching.”

Shari Biediger

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