Inner City Developer Ed Cross: Great Cities Have Great Downtowns

I first met Ed Cross on the sidelines of a near-downtown grade school soccer field. I was rooting for our son, Alex. He was rooting for his son, Teddie. Don’t ask me who won; it didn’t matter to us and I don’t think out boys cared very much, either. It was all about being there. Now, 15 years later, there is no developer in the city of San Antonio I respect more for his commitment to urban development. Most developers ply the suburbs. Cross has consistently worked to build and rebuild the inner city. We need more developers like him. He’s also stayed  involved in a host of causes, ranging from improving the lives of the homeless to advancing the arts and design community. You can delve more deeply into his professional bio here.

The below article was written in response to District 9 Councilwoman Elisa Chan’s e-letter to constituents reprinted here two days ago. Chan, who represents the Stone Oak area, is challenging a proposal for the city of San Antonio to provide incentives to accelerate the building of downtown residential housing units. You can read Chan’s letter elsewhere on this page. A previous Rivard Report article looked at the high cost to taxpayers of subsidizing suburban sprawl and asked why downtown subsidies weren’t justified now. The Rivard Report welcomes additional submissions on this topic.–Robert Rivard

By Edward A. Cross II

As a downtown developer and broker, it’s my strong belief that the city’s path to long-term, sustained economic development is through investment in downtown and the core city. San Antonio must continue to be a destination city for millions of visitors, but it also must become a city where educated professionals want to live, work and raise their families. Great cities have great downtowns.

Mayor Julián Castro has declared this The Decade of Downtown. He knows the money we invest in the core city is just that: an investment that will pay good returns for generations to come. That’s why I respectfully disagree with District 9 Councilwoman Elisa Chan and her position that investing in greater residential density downtown is a mere subsidy and not part of a larger public-private partnership in which all boats rise in the same tide.

Other cities have made this investment and are now reaping the benefits, which is why I circulated a widely respected Brookings Institute study on the same subject earlier this year. HR&A Advisors, of New York, was hired by the city to explore ways we could invest in our downtown to spur economic development and improve the quality of life for locals. Increasing residential housing density, they concluded, is key.  City investment in downtown San Antonio is not a high-risk venture. Anyone who has seen the intense demand for new residential units coming on-line from the Broadway Corridor down through Southtown can see the market is there.

I understand the jobs versus housing question posed by Councilwoman Chan. But consider this: For the decade spanning 1995-2005, when AT&T was at its peak in terms of employees working in downtown San Antonio, not a single housing unit was developed downtown. In fact, whether you look at downtown or the suburbs, jobs do follow housing. Before the advent of all those subdivisions and gated communities now ringing Loop 1604, now-familiar neighborhoods such as Stone Oak, Inwood, and Rogers Ranch were empty and undeveloped. Jobs came after the housing. Only in the last few years have we seen the development of major retail, lodging and office space, such as new headquarters for the three energy giants: Valero, Tesoro and NuStar. The same will hold true downtown if market rate housing can take root.

Look at our two most visible projects downtown: More than half of the residents at the Vistana on West Houston Street and 1221 Broadway, near the Pearl Brewery work outside of downtown. The authors of the Brookings Institute study estimated that 15% of all households would consider living downtown regardless of where they work.  We have residents who work at USAA, Tesoro, UTSA, and other suburban workplaces. Many have no other option, of course.  By providing that group of residents a choice of downtown housing, we have reduced demand for more apartment projects in District 9, a concept Councilwoman Chan has publicly endorsed.

The incentives that I and other inner city developers receive are only partially cash grants. Mostly they are waived costs, such as building permits, sidewalk closure fees, impact fees, and property tax abatements. Those tax abatements are only for the City of San Antonio and Bexar County. We do pay school taxes from the very outset, and the abatements themselves phase out over time and become a significant, long-term source of income to the city and county. In fact, my understanding is that downtown is a net exporter of tax revenues to the city. While our residents may be mobile, the buildings themselves are not.

As to how long the incentive system should last, I strongly endorse the numerical goal of 7,500 new residential units that is contained in the HR&A proposal. The projected out-of-pocket costs should be calculated, budgeted and a time frame for achievement determined.  As we close in on reaching the goal, a report on the effectiveness of the incentives should be performed to decide whether to continue the incentives, modify the program or to end it, hopefully because it has succeeded in creating a self-sustaining market, which is a goal all of us share.

Again, I appreciate Councilwoman Chan’s probing questions about the incentive program, but I also fear that the issue could become a divisive one between downtown and suburban interests. The fact is we have invested greatly as the city has expanded geographically to the north, northwest and northeast over the last three decades. Now is the time to invest equally in our downtown, the core city, an investment that will pay dividends not just for one or two city council districts, but for the entire city.