Forget the Fourth of July — for local affordable housing advocates, July 10 is the day to set off fireworks.

That’s when the paperwork will be signed to put in place the intricate financing structure to build Four25 San Pedro, a low-income apartment complex geared toward homeless families, which the city has been struggling for years to build.

After overcoming neighborhood opposition and state regulatory hurdles, as well as post-Covid economic headwinds, the complex got the green light last Friday from the San Antonio Housing Trust Public Facility Corp., or PFC, a nonprofit arm of the city which will buy the site to secure a crucial property tax exemption — only one out of a long list of public subsidies making the project possible.

The $30.4 million, 80-unit complex will be among the first in San Antonio to feature on-site services to help families experiencing homelessness, a type of housing known as “permanent supportive housing.” The services, to be delivered by SAMMinistries, will include a food pantry and access to a case manager, said Ian Benavidez, deputy director of the city’s Neighborhood and Housing Services Department.

Opportunity Home San Antonio, the local affordable housing agency, is contributing 25 housing vouchers, commonly known as Section 8, which will allow that number of low-income families to live there — and which will help secure a $3.2 million mortgage.

The city — which in recent years has taken a much more active role in developing housing to fight an affordability crisis — wants to build more complexes like it, Benavidez said. It is the last of four complexes to be built with funds from the city’s $20 million Neighborhood Improvements bond, part of the 2017-2022 bond package, which served as a model for the $150 million for affordable housing included in the 2022-2017 bond.

“This will be the first of this type: It will be the first transit-oriented development that also includes a mix of permanent supportive housing and low-income housing,” he said. “The reality is that we need permanent supportive housing and affordable housing all over the city… I’m hoping that this proves as a model.”

He expects construction to begin soon after the financing is secured and to be completed around December of 2025 — or more than eight years after the 2017-2022 bond passed.

‘A complicated dance’

The complex – at 425 San Pedro Ave., two blocks north of downtown – is a team effort between three of San Antonio’s largest public housing entities: the city, the PFC and Opportunity Home.

Upon passage of the 2017-2022 bond, the city went looking for places to build housing in the urban core, Benavidez said. The San Pedro site stood out because it is on the San Pedro Avenue transit corridor, he said; it will be on VIA Metropolitan Transit’s new Green Line, a 12-mile route running between the San Antonio International Airport, the downtown core and the historic missions, which is expected to begin operating by August 2027. 

The city found the property, a former tire shop, in 2020 and purchased it for $2 million.

The project was then sent back to the drawing board because under the regulations of the Texas Department of Housing and Community Affairs, nearby schools were rated too low for it to qualify for federal tax credits. The regulation is intended to prevent new complexes from being built in areas with failing schools, said Pete Alanis, executive director of the San Antonio Housing Trust.

It was redesigned to include only one-bedroom units because if it wasn’t oriented toward families it wouldn’t be subject to that regulation. But it then ran into opposition from residents of the nearby Five Points neighborhood who wanted more family units, leading the city to withdraw the tax credit application.

After the school ratings improved, the complex could proceed as first envisioned. Thirty-nine of the 80 units will now be three-bedroom with the rest two-bedroom. Sixteen of the units will be reserved for those making at or below 30% of the San Antonio-New Braunfels area median income of $88,600; another 48 will be for those making at or below 50 percent; and 16 for those at or below 60%.

The affordability restrictions will be in place for 40 years.

“It’s a complicated dance with a lot of partners, and we’re almost there,” Alanis said. “The concept for this project, being permanent supportive housing, and finding the right partners to bring to the table, the right piece of land, engagement with the neighborhood to make sure the neighborhood’s on board – it was a very long road to get here.”

The complex will include a children’s playground, a dog park, a resident garden, a fitness center and a community room.

The city and the housing trust are building it in partnership with the local multifamily builder Franklin Development, which will manage it.

The funding will come from a patchwork of sources — as is common for affordable housing projects, especially after rising interest rates and construction costs have strained budgets in recent years — including the following:

• $7.5 million from the 2017-2022 bond

• $17.5 million in federal low-income housing tax credits, administered through the TDHCA

• A $1 million loan from the San Antonio Housing Trust Foundation, another nonprofit arm of the city

• The $3.2 million mortgage secured with the housing vouchers

Permanent supportive housing

Alanis said that he expects a high number of Section 8 voucher holders to reside in Four25 San Pedro, on top of those using the Opportunity Home vouchers.

The complex will be one of only a handful of permanent supportive housing developments in San Antonio. The first such project, Towne Twin Village, opened last year on the East Side. The Hudson, an apartment complex on the North Side, now also features permanent supportive housing after SAMMinistries bought it in 2021. Another development, known as Acequia Trails, is in the works on the South Side.

Under permanent supportive housing, residents are “treated like anybody else who would go rent an apartment – they sign a lease, they have a place that is their own,” Benavidez said. “The additional layer of support in permanent supportive housing is they have access to all the resources they need to be able to stabilize themselves and continue to progress forward in their journey. That could mean that they take advantage of job training, or if they need help with substance abuse.”

Amid the economic disruptions wrought by the COVID-19 pandemic, some plans for new apartment complexes in the local area have failed, with developers unable to make the numbers work. But in building affordable housing, local agencies have the advantage of being able to fill funding gaps with public subsidies, Alanis said.

“There are a lot of (market-rate) projects that are not happening,” he said. “The reason why affordable housing is happening right now is because we still have money to help fill gaps… Without that money, these projects would not be closing.”