Council Approves Expanded Housing Incentive Policy With Eye Toward Affordability

San Antonio City Council on Thursday approved changes to a pair of downtown development incentive programs, making one available citywide and expanding the other to 13 defined regional centers.

After a yearlong suspension and review process called for by Mayor Ron Nirenberg, the programs now feature greater emphasis on creating affordable housing, which was Nirenberg’s goal when he paused the Inner City Reinvestment and Infill Policy (ICRIP) and Center City Housing Incentive Policy (CCHIP) in December 2017.

The policy changes passed 8-2 with Councilman Rey Saldaña (D4) and Councilwoman Ana Sandoval (D7) voting against the changes.

The ICRIP program was expanded for use throughout the city and renamed the City of San Antonio Fee Waiver Program.

City leaders and others in the past raised concerns that CCHIP, which provides developers tax abatements, fee waivers, and low-interest, forgivable loans as incentives to spur housing construction in the city, was being used to create housing that many San Antonians couldn’t afford, leading Nirenberg to call for a pause and evaluation of the programs.

“There has been a real concern that we could be victims of our own success,” Nirenberg said. “In fact, we’ve seen it [with too] many families already, a concern that the decade of downtown could turn into the decade of displacement – something that no one on this City Council will allow to occur.

“A year ago we came together to hit the pause button to ensure that we are striking a better balance between the overall need for more housing in the center of our city and at the same time recognizing the necessity for more affordability, but we should no longer delay.”

While the reworked programs were approved, some Council members and citizens who spoke at Thursday’s meeting said the changes didn’t go far enough in helping to create affordable housing. Council members also expressed concern over direct and indirect resident displacement through development and rapid neighborhood change.

Councilman Roberto Treviño (D1) supported the changes and promised to monitor how they are working and ensure the City studies the issue of resident displacement.

“There is no reason why the study can’t take place while the program is underway,” Treviño said.

The CCHIP policy will be reviewed again in two years. Assistant City Manager Lori Houston told Council that City staff would monitor the programs’ performance and report to a Council committee about them at least once each year. Council could also choose to review the program sooner, Houston said.

Cynthia Spielman, a member of the Beacon Hill Area Neighborhood Association and a founding member of the Tier One Neighborhood Coalition, spoke in opposition to the programs. Spielman emphasized she was speaking for herself and no particular organization.

“This is incentives for housing for the wealthy at the expense of the poor and using our public dollars to benefit for-profit developments,” Spielman told the Council. “This is not a good way to create a vibrant downtown or a downtown that most of us envisioned. We deserve better from you.”

One of the most significant changes to the policy excludes luxury housing units, defined as those for sale at a price above the Federal Housing Administration’s loan limit (currently $359,950), or rental housing with average rents above $2.75 per square foot.

Sandoval said she believes the policies have been improved over the past year but she could not vote in favor of them because she wanted Council to take more time to engage and inform the public, especially because expansion to 13 regional centers was only recently introduced.

“There is no silver bullet for affordable housing, and this will not be that silver bullet,” Sandoval said. “This is one of many tools.”

Councilman Greg Brockhouse (D6), who in October 2017 filed a Council Consideration Request to review the City incentives for residential and commercial projects, supported the changes.

“City Hall doesn’t build housing, nor do we create jobs, but we can slow it down and discourage development and job creation with mandates that demand businesses solve our social challenges,” Brockhouse said. “CCHIP and ICRIP have changed for the better and today’s vote was a step in the right direction.”

Saldaña called for a delay of Council’s vote earlier in the week. He pushed before the vote to base more of the layered incentives around families making 60 percent of area median income (AMI) instead of 80 percent AMI.

Houston said the policy would not be affordable if a higher percentage of incentives were dependent on a 60 percent AMI standard. She added that developers of certain projects might circumvent the requirements for affordable housing entirely if the standard was pushed to 60 percent AMI by building at six stories or higher, which meets CCHIP’s standards for density.

“We wouldn’t have additional funding to support that 60 percent AMI,” Houston told Saldaña. “That 80 percent is important. It really is important to have that workforce housing downtown.”

Earlier in the week, the COPS/Metro Alliance urged City Council to delay its vote to provide more time for citizens to understand the changes to CCHIP and hold at least one meeting completely dedicated to public input. The group also sought more details about a proposed affordable housing fund created within CCHIP and asked for a study of displaced residents caused by development using CCHIP incentives since the policies’ inception in 2012.

While Nirenberg and some Council members spoke with members of COPS/Metro Alliance about the policy changes this week, ultimately none of the group’s requests were immediately acted on.

“It is not enough that the Mayor and City Council give taxpayers their ‘word’ … to prevent direct displacement,” reads a COPS/Metro statement released after the vote that outlines a number of items the organization wants the City to act on. “The Mayor’s staff has told us he wants quarterly updates on the CCHIP program. We will expect those to be transparent and public.”

Council approved expansion of CCHIP to 13 regional centers around the Metro area including Brooks, the Greater Airport Area, Highway 151-Loop 1604, Lackland AFB-Port San Antonio, Northeast I-35-Loop 410, Medical Center, Midtown, Stone Oak, Texas A&M-San Antonio, and University of Texas at San Antonio. The program also expands to parcels of land within one-quarter mile of transportation corridors identified in the VIA 2040 Plan.

The area in which CCHIP incentives are available downtown shrinks from 5 square miles to 2.6 square miles. The changes also instituted a system in which different levels of incentives are available based on tiers and location within the city.

• Tier 1 will cover everywhere within .91 miles of the Central Business District and provide maximum incentives to projects including an affordability component.
• Tier 2 will require 10 percent of units committed to families making 60 percent of area median income (AMI) and 10 percent committed to families making 80 percent of AMI or be above five stories.
• Tier 3 will require 20 percent of units committed to families making 60 percent of AMI and be limited to the 13 regional centers and VIA transportation corridors.

CCHIP won’t be available in the regional centers until each area has completed its public input and planning process and had its land use plans adopted by City Council. City officials said this week that process should be complete for each of the regional centers by the end of 2019.