Mixed-Income Apartments in the Works for Historic Friedrich Property

A Dallas-based developer plans to build a four-story, 347-unit apartment complex on long-vacant, near Eastside property previously occupied by the Friedrich air conditioner company. Several attempts to renovate or redevelop the buildings have failed over recent decades, but the new $65 million project – with an affordable housing element – received a critical nod of approval Wednesday.

The original 1923 building on East Commerce Street and others that were added on to the structure through 1956 are listed on the National Register of Historic Places, but City Council in 2015 approved the property owner’s controversial request to have the local historic designation removed from the non-original buildings.

Those will be demolished to make way for the apartment complex if its design and funding are approved by various boards and commissions. The historic building is part of neither the current proposal nor pending sale to the developer.

A City board directed staff Wednesday to start negotiating an agreement with the developer, Provident Realty Advisors, for an incentive package worth up to $1,745,000. The funds will come from the Inner City Tax Increment Reinvestment Zone (TIRZ), which was set up by the City in 2010 to encourage revitalization in the historically neglected area.

The Friedrich Lofts would have one- and two-bedroom units, 173 of which would be market rate and 174 of which would be affordable – meaning those units will be priced for people earning 60 percent to 80 percent of the area’s median income (AMI). The plan is still preliminary, and depends on a number of financial factors, but developers told the board that rents for affordable units would range from $667 to $1,144. The average market-rate unit would be about $1,400. There will be 14 units for 60 percent AMI residents and 160 units for 80 percent AMI residents.

“It’s going to happen,” Councilman Cruz Shaw (D2) told the Rivard Report after the unanimous action from the 11-member board, which comprises elected officials and citizens. “We’ve had great discussions with the developer and the community members around there. Folks in the district have been asking for this for a long time.”

Often called an eyesore by neighbors and community leaders – including board members Mario Salas and Bexar County Commissioner Tommy Calvert (Pct. 2) on Wednesday – the vacant buildings were purchased almost two decades ago by John Miller of Dallas. The City expressed interested in developing the property for school district offices in the early 2000s, but that deal never came to fruition.

Miller plans to sell the property, save for the historic building and lot, to Provident once the firm finalizes local and federal funding sources, said land use attorney James McKnight, who is representing Miller. A separate sale and plan is likely in store for the historic building.

“We’ve been trying to make [the property] marketable for a while,” said McKnight. “The idea of course is to get these [apartments] in first and the activity will follow.”

Provident is seeking funding from the San Antonio Housing Trust Public Facility Corporation, the U.S. Department of Housing and Urban Development (HUD), and other local fee waivers in addition to the city’s TIRZ. The developer also will have to get approval from the state’s historic preservation office to demolish the structures, as they are still federally designated as historic, said David Holland, vice president of Provident.

“The building is unsafe and it’s an eyesore,” Holland told the Rivard Report after the TIRZ board meeting. “I think the real issue is going to be on the mitigation side of it or what we’re going to be putting in its place.”

Friedrich Lofts would feature a 725-spot parking garage, resident clubhouse, gym, computer lounge, patio spaces, and a pool.

The state historic preservation office doesn’t approve or deny particular projects, said Cory Edwards, a deputy historic preservation officer for the City. “They are going to look to see if there is an adverse effect to historic resources” and may require mitigation efforts as part as permission to proceed with demolition and construction.

Such efforts could include architecture that acknowledges the property’s history, photographs and plaques that tell its story, and other creative ways of letting residents and visitors know what was once there, Holland said.

“I don’t expect there to be much issue with the demolition portion of it – [the community is] going to be more concerned about what we’re going to be putting up,” he said. “We have in our concepts given a nod to the historic nature of the building with the same kind of roof details, window details, [and] brick stylings.”

The San Antonio Conservation Society, which was against stripping the dilapidated buildings of historic designation in 2015, would prefer to see renovation rather than demolition of the structures, said Vincent Michael, the society’s executive director.

“We’re always in favor of reusing historic building whether they are designated or not,” Michael told the Rivard Report.

The Conservation Society also was concerned that without the designation, proposed projects would not have to be reviewed by the Historic and Design Review Commission. The property is outside the boundaries of the official Dignowity Hill Historic District. But because the project would use City incentives, City staff confirmed, it will have to go through the process that looks specifically at design and historic/neighborhood context.

“I’m glad that the HDRC gets a chance to look at it,” Michael said.

The affordable housing gap in the San Antonio area and how the City and Bexar County incentivizes development are being examined by task forces, commissions, agencies, and private nonprofits. The demographics of Dignowity Hill, an historically low-income, black neighborhood, is rapidly changing as public and private investment increases in San Antonio’s urban core.

Done correctly, however, these investment and developments can be a win-win for neighbors new and old, said Brian Dillard, outgoing president of the Dignowity Hill Neighborhood Association. The property, although located on a former bustling commercial corridor, sits within its boundaries.

“I hope they start talking to neighborhood associations,” he said. “I hope they take the lead on this project and make sure the community has some ownership.”

The recent controversy over a proposed apartment complex next to the historic Hays Street Bridge, Dillard said, illustrates the importance of neighborhood collaboration. HDRC rejected those plans. McKnight also represents the property owner/developer for that parcel, which is mired in community protest and an appeal pending review at the Texas Supreme Court.

“That’s every city in the country right now, it’s not just here,” Holland said of the conversations about housing affordability and neighborhood displacement. “We run into that in Denver, we run into that in Dallas, Fort Worth, Austin, New Orleans – there’s a huge need for [affordable housing] and we’re happy to be a part of it.”

City staff will craft an agreement for the TIRZ funding that the Inner City Tax Increment Reinvestment Zone board will review at a future meeting. Then the incentives will go to City Council for final consideration.

Provident has developed projects across the nation, but Friedrich Lofts would be its first full development in San Antonio. Its construction company has worked here before, including on a multifamily project underway near the University of Texas at San Antonio’s main campus.

Friedrich moved its air conditioner manufacturing operations to the Pan Am Expressway in 1971, then relocated again in 2011 near the San Antonio Airport on Reunion Place. Although it still has employees in San Antonio, Friedrich has since moved manufacturing to Mexico.

Mark Outing, who has owned Mark’s Outing burger joint across the street from the former Friedrich building for 13 years, is looking forward to the redevelopment of the property.

“I think it’s great,” Outing said. “This has literally been an eyesore since we’ve been here. … It would be great for the community to revitalize it and bring some life to it. I’m all for it.”

The vacant building has attracted some criminal activity and vandalism, he said, adding that he’s had to replace his windows a couple times. “Kids, you know, they want something they can do – and there is a vacant building for them.”