City staff on Wednesday recommended revisions to policies that incentivize residential development in the urban core with a goal of encouraging more affordable housing.
City Council met for nearly three hours to discuss potential changes to the Center City Housing Incentive Policy (CCHIP) and Inner City Reinvestment/Infill Policy (ICRIP).
While most Council members said they support extending policies that incentivize development, some questioned whether the changes would in fact increase affordable housing in the downtown area and elsewhere.
Assistant City Manager Lori Houston presented the proposed revisions Council could consider for action as early as its Dec. 6 regular meeting. Some revisions to ICRIP include:
- Changing the name of ICRIP to the City of San Antonio Fee Waiver Program;
- Ensuring the fee waiver program applies only to affordable housing, owner-occupied rehabilitation, historic rehabilitation, and small business development, especially longstanding “legacy” businesses;
- Measures that ensure a single project does not end up with a disproportionate share of ICRIP funding.
Recommended changes to CCHIP include:
- Extending the program at least another two years to help the City collect data and evaluate the market and results of awarded incentives;
- Aligning the program with goals and priorities outlined in the SA Tomorrow comprehensive plan and the policy framework based on the Mayor’s Housing Policy Task Force recommendations;
- Reducing the square mileage of the CCHIP eligibility area by 50 percent and eliminating low- and medium-density neighborhoods to curb demolition of existing single-family homes for multi-family units;
- Introducing a two-tier system where incentives would be considered based on different factors, including the level of density proposed in a for-sale or rental development.
Projects that include a hotel or that could accommodate short-term rentals would not be eligible under the revised policy.
City Council in January approved a six-month suspension of CCHIP after Mayor Ron Nirenberg expressed concern that while the program had yielded affordability issues while spurring more housing in the urban core.
According to Houston, 64 projects have come to fruition thanks to CCHIP incentives, representing a total of $1.4 billion in investment. This has led to construction of more than 6,800 housing units that are completed or in the works, she said.
CCHIP has been successful in converting particularly challenging projects, such as 11 brownfield sites that had actual or perceived contamination issues, seven vacant buildings, and 13 former parking space sites.
“It’s difficult to convert a parking lot that’s making money everyday into a development,” Houston said. “Our incentives made that happen.”
But only 23 percent of the more than 6,800 new housing units in downtown are classified as affordable. Projects that have received help or are getting support from CCHIP include The Baldwin at St. Paul Square, the Museum Reach Lofts, and Acequia Lofts at Hemisfair.
Waiving fees under ICRIP has helped support construction of 10,000 urban core housing units, 42 percent of which are considered affordable.
Houston said the City hopes to boost affordable housing numbers, not only in the urban core.
Recommended policy changes include ensuring that at least 10 percent of total units in a new residential development be reserved for households earning at least or below 60 percent of the regional area median income (AMI) – $56,105, According to the latest American Community Survey in 2016.
Another recommendation would limit property tax reimbursement to 75 percent, with the remaining 25 percent allocated to a fund that would support affordable housing citywide.
Houston said it’s easier for developers to do most kinds of development, particularly affordable housing, outside of downtown because of land and construction costs, aging public infrastructure, and irregularly shaped properties.
“It’s very hard for a developer to do a project without a subsidy in general, but it’s even harder with you make affordable housing a requirement,” she added.
The recommended changes to the ICRIP and CCHIP policies had been reviewed by two Council committees and included input from stakeholders, including for- and nonprofit development organizers, as well as neighborhood associations.
“These recommendations being made today will ensure that ICRIP and CCHIP programs will continue to serve as economic development tools,” City Manager Sheryl Sculley said.
The mayor and some Council members said on Wednesday that CCHIP, since its launch in 2012, has succeeded in encouraging more residential density in the downtown area.
Nirenberg added the City must find a way to support housing developments that are affordable to more citizens and beneficial to taxpayers.
“I understand how complicated this issue is,” Nirenberg said. “I appreciate the effort at finding the answer, but I don’t want to lock ourselves into a long-term policy that we can’t go back and tweak.”
Councilman Rey Saldaña (D4) said the City needs the public to support increased housing density in the urban core, particularly affordable housing.
“If the public doesn’t feel like any strategy is relevant to them, that housing downtown won’t be affordable to the majority of San Antonio residents, they won’t be behind us and they won’t support it,” Saldaña said. “We have to make the very good argument that what we’re trying to do here will benefit the entire city.”
David Adelman, principal at local development firm AREA Real Estate, said he understands the need for affordable housing downtown and elsewhere, but revising the incentives policies alone will not solve the problem. Many parts of the existing policies have been positive for development, he added.
“Part of the challenge here is conflating the issue of incentivizing market-rate housing in the urban core and trying to solve for affordability,” he said.
Some Council members, including Greg Brockhouse (D6), questioned if CCHIP should continue to focus on downtown if it has already succeeded in driving up residential density in the urban core.
While he said he’d like to see more affordable housing in other areas, such as District 6, the City should not revise incentives policies with the main goal of increasing affordable housing options.
“Mr. Adelman said something I think is interesting, and that is why would you stop something that is working,” Brockhouse said. “Well, it is working only for one part of town. I can’t say I’d want to stop it, but I’d like to spread that out.”
Councilwoman Rebecca Viagran (D3) spoke in favor of the proposed fee waiver changes that affect neighborhood preservation, rehabilitation of owner-occupied developments, and small businesses. That effort to revamp the incentives policies is a step in the right direction overall, she said.
“This is the first time we’re reviewing this, so I think this is a good thing we’re moving forward,” Viagran added.
