With a vision of “housing for everyone,” real estate developer Peter French, CEO of Rising Barn, took another step forward on his plans for a novel single-family housing concept in one of San Antonio’s oldest neighborhoods.
French presented plans for his innovative housing project, Porter Street Greens, at the Eastside’s Denver Heights Neighborhood Association meeting last weekend. The concept behind five modular homes on Porter Street was met with generally positive responses from area residents and representatives from the District 2 Council office.
When the project is complete in six months to a year, the homes at Porter Street Greens will be offered at less than $150,000 with no down payment to buyers who meet income qualifications but don’t qualify for other housing subsidies. Buyers would not, however, own the property outright.
One factor driving the affordability of the homes is a unique “co-terminus” land-lease model in which the mortgage and lease are linked, a model that is as yet unknown in San Antonio. The land upon which the homes sit would be owned by Austin-based nonprofit BCL of Texas and its wholly-owned subsidiary, Community Builders of Texas.
That was an issue some Denver Heights residents wanted to know more about at their recent meeting.
“What it means, functionally, is that your mortgage, or ownership of your home, is conventional and looks like any other mortgage, and you would have a long-term lease that is co-terminus [the same length as the mortgage],” French explained. “The reason we’re contemplating this structure is to mitigate exposure to tax increases, which are happening nationally and in particular in Bexar County. We are looking for new models and strategies on how to help protect people against being priced out of homes.”
The homes at Porter Street Greens include five, contemporary-style, detached houses in varying size, between 392 and 2,600 sq. ft. The net-zero, energy-efficient homes open on to a shared courtyard, or green space, and together occupy one 12,000-sq. ft. lot.
The lot itself is vacant and surrounded by investor properties.
Porter Street Greens is similar to courtyard communities French has already developed at Plum Creek in Kyle, Texas. But, here, the development is French’s solution to a demand for a type of housing that currently does not exist in the San Antonio market.
Currently, there is a “missing middle” in the housing market, he said, with little entry-level housing for sale, and none available for potential buyers who make less than $100,000 a year. “Today, there are nine homes on MLS [multiple listing service] priced at $150,000 or less and 23 million-dollar homes,” French said.
“The median household income used to be half of what a house cost. That ratio is what invented and sustained the housing market for 50 years. But the San Antonio ratio is now 3:4.”
In addition, houses have not only grown in price, but also size. The average starter home in 1950 was 953 sq. ft. Now, it’s more than 2,500 sq. ft. Yet during that time, the number of people occupying a house shrank.
“So it costs more to build and it’s also more expensive to buy,” he said.
This land-lease arrangement is one way to keep costs down, French said.
“It would make the building materials tax exempt so that’s a savings there, and the nonprofit landowner would be exempt from property taxes on the land,” he said. “Partnering with a nonprofit makes us eligible for grants and preferential mortgage opportunities for the buyers. There are potential savings for us as builders that we pass along to the buyers.”
The home value, however, would still be subject to taxes.
French admits they are still working through all the details of the land-lease, with several different structures being discussed. “But the intent is to help preserve the affordability of the units,” he said.
It’s also another way French is fulfilling the Rising Barn vision to disrupt the lengthy real estate process and remove barriers to home ownership. “I want the process to be a great experience for people. So much goes into finding a lot and building a home and to meeting someone’s elevated expectations,” French said. “This does seem like the way to combat that.”
At Plum Creek, courtyard-style communities, or mini neighborhoods within neighborhoods, are also changing the way people live – from homes in loop-land suburbia with front-loaded garages and privacy fences to smaller homes and more open and shared space.
“I think one of the most valuable lessons we learned is the power that physical environment has to shape our social environment,” French said. “When you transition to a place where it’s obvious the scale is built for human beings, it humanizes you and you become more attuned to the people around you. It gives people permission to behave the way humans are biologically intended to.”
Interest in ownership at the five-unit Porter Street Greens has been growing, French added, though not every potential buyer will be eligible due to income limits. He is working with the Ella Austin Community Center to pre-qualify buyers who already reside in the community, and is looking for additional sites on Porter Street and around town to replicate the concept.
Aubrey Lewis, president of the neighborhood association, who invited French to attend their meeting, likes the fact that Porter Street Greens gives people the opportunity to own a home. “For years, you could go out and look for a home and it would be affordable, but nowadays, it’s not affordable,” Lewis said. “His presentation showed how one to two people living in an apartment who would like to own property could move forward.”
French said he is also interested in creating such communities for like-minded groups.
“If you’re a nonprofit or a school or a vet[eran]s group, or whatever, we’d like to identify other groups that want to build for their constituency,” French said. “How can we engage larger groups of folks to participate in building a great place?”
The next step toward making Porter Street Greens a reality is requesting a zoning change from RM-4 (residential mixed) to IDZ (infill development zone) that French said will allow some flexibility in how it’s developed.
