Calling it a better deal for San Antonio, City Council on Thursday voted to approve an agreement that restores plans to turn Hemisfair into a great public space.
The revised agreement between local developer Zachry Hospitality and the Hemisfair Park Area Redevelopment Corporation (HPARC) ensures that Civic Park and a hotel will be ready when San Antonio hosts the NCAA men’s Final Four in 2025.
“Despite the modifications to this agreement, which I would argue are an improvement actually in every respect, I see what the community envisioned and approved during the master planning sessions, and I’m proud to be able to carry that vision forward,” said Mayor Ron Nirenberg following the vote.
One of the most significant changes to the agreement outlined by Assistant City Manager Lori Houston call for less office space and more apartments than originally planned and, due to inflation and added parking, a higher price tag for the public-private partnership.
The agreement calls for extending the project’s completion date to 2025. Originally set for 2021 by an agreement signed five years ago, both construction and Zachry’s lease payment schedule were postponed until after the 2018 Final Four and the city’s tricentennial celebrations the same year.
The start of the pandemic in 2020 further delayed Zachry’s plans and changing market conditions pushed the developer to cut the amount of commercial office space within the development.
Other changes to the agreement allow HPARC to defer payment to the city for the project through 2029 to give the park developer time to raise the needed funds. HPARC will reimburse the city with interest starting with an $8.8 million payment due in September 2029.
The city also has agreed to rebate all state hotel occupancy sales taxes to HPARC, which will in turn rebate the taxes to Zachry to help offset parking costs and other public improvements at Hemisfair. The city will still collect all San Antonio hotel occupancy taxes and city sales taxes.
The garage will be privately funded and operated, but the city has pledged $8 million to the Hemisfair Tax Increment Reinvestment Zone to pay for the utilities needed for the South Alamo Street and Civic Park improvements.
In lieu of office space, more residential units will be constructed at the park, also bringing the number of affordable units up from 38 to 87. The developers will receive city and San Antonio Water System fee waivers only for those units, not the entire housing project as the agreement previously stated.
Several council members expressed admiration for the city manager’s role in negotiating the new agreement and supported the effort to move it forward.
“I’m just really excited that after so many delays that were outside of our control, with the challenges we’ve experienced, that we’re moving forward and I really look forward to supporting this project,” said Councilman Mario Bravo (D1).
Councilman John Courage (D9) questioned whether the city would have come up with a more favorable deal if it had sought new proposals from other developers.
“I’m reluctant because we didn’t go out to bid,” Courage said. “I don’t know if we got the best deal, but I won’t disagree that this one may be better than what we had a few years ago. But I think we are always trying to strive for the best like Coach Pop [Gregg Popovich] says.”
Courage also asked what recourse the city would have if the project is not completed on time.
City Attorney Andy Segovia said that because an agreement with Zachry was already in place, terminating that contract would have resulted in legal issues and going out for other bids would have delayed the project. Also, there are consequences for not meeting deadlines written into the agreement.
“Under contract law, you can’t have penalties per se, but you can have remedies that compensate you for … delay costs or not meeting their obligations,” Segovia said. “So we have those baked into the agreements.”
Council members voted unanimously to approve the agreement. Construction is set to begin in March 2023.