The City of San Antonio hosted its second public hearing Thursday morning that fleshed out the physical and financial details of one of the biggest downtown real estate deals in decades if City Council approves the project at its June 4th meeting.
The Weston Urban/Frost Bank/City of Antonio Public-Private Partnership (P3) includes the construction of a new Frost Bank office tower and at least 265 housing units by Weston Urban, the sale of the current Frost Bank Tower to the City to consolidate its geographically scattered staff, and the conveyance of various City properties to Weston Urban for its residential projects. The design phases of the tower and residential projects will begin after City Council’s approval of the Comprehensive Development Agreement next week.
Click here for a complete rundown of the transaction.
After Center City Development and Operations Department Director Lori Houston and the City’s Chief Financial Officer Ben Gorzell gave an overview of the P3, City Council heard from a handful of citizens on the project. All but one speaker offered enthusiastic support for the P3 and its three entities. Jack M. Finger, a staunch conservative and public meeting gadfly, was the only citizen that called for a dissolution of the deal.
“This project will no doubt be transformational and kickstart the market for residential, commercial, and retail growth in the urban core,” said Centro San Antonio President and CEO Pat DiGiovanni. “Combined with planned investments in San Pedro Creek and the revitalization plans Centro is developing for the center city’s new cultural district, the Zona Cultural, the Frost Tower project will forever change the landscape of the northwest quadrant.”
The project, if successful, will pave the way for other private entities to take a serious look at investing in San Antonio’s urban core and considering future P3, he said.
“Great things can happen when the public and private sector come together for the best of the community,” DiGiovanni said, citing the examples of the Museum and Mission Reaches of the San Antonio River and the Tobin Center for the Performing Arts.
San Antonio River Authority General Manager Suzanne Scott said the new tower will be an “anchor tenant” for the San Pedro Creek Improvements Project. As the first phase of the creek project completes in 2018, construction will have begun on the new tower.
“In the early days of the Museum Reach, few would have predicted the explosion of development that has occurred in the six years since that project has been completed,” Scott said. “But it took the early and substantial investment at the Pearl (by Silver Ventures) to raise the awareness and interest of the community and other investors into river improvements.”
The Weston Urban project represents the same kind of catalytic investment, she said, but this time the City is involved from the outset.
Council members Ron Nirenberg (D8), Roberto Treviño (D1) Shirley Gonzales (D5), Alan Warrick (D2), Mike Gallagher (D10), Joe Krier (D9), and Ray Lopez (D6) said they will be supporting the deal next week. Other council members, including Mayor Ivy Taylor, are reserving their comments until next Thursday’s vote.
“This will be, in my opinion, the most significant economic development vote I will cast,” Nirenberg said. “And I’m very excited to cast in favor next week.”
With so many projects going on in the same area, he said, it’s important to make sure it doesn’t disrupt local businesses in the area. “Are we going to make reasonable accommodations … to make sure we can get traffic in and out?” he asked.
“We’ve already started that coordination … to make sure we can construct the tower while San Pedro Creek is under construction as well,” Houston said. The process will involve closing a portion of Camaron Street, but “there will be continued coordination throughout this project to make sure that we’re not interrupting any businesses.”
Gonzales echoed support for the deal, but was curious about how a project of this size might impact the availability of SAWS Impact Fee and City fee waivers.
“We hope this will spur more investment, but I want to make sure … the potential benefits (fees and waivers) will be available for other private partnerships,” Gonzales said.
The estimated $670,000 SAWS Impact Fee Waiver and the $330,000 Inner City Reinvestment Infill Policy fee waivers for the new office tower will not be allocated until Weston Urban submits construction permits and paperwork to begin construction, Houston said. The same goes for the three housing projects.
“We have a budget from SAWS to provide $2-4 million on an annual basis for our fee waiver program,” Houston said.
As construction of the projects will be staggered, “we’ll have plenty more capacity for other projects.”
While the City will maintain control over the City Council chambers and relevant office space on the ground floor, the City will sell the Municipal Plaza Building to Weston Urban. The new office tower will be completed in 2019. Once Frost Bank moves into its new corporate headquarters its former tower will be renovated and made ready in 2020 for an estimated 1,200 City employees. Then Weston Urban will begin renovation of the Municipal Plaza building and announce whether the residential units will be rentals or for sale.
By Spring 2023, there will be 65 new housing units in Main Plaza, right next to San Fernando Cathedral.
As for the other properties, the vacant San Fernando Gym at 319 W. Travis St. and a parking lot at 403 N. Flores, those will likely be mixed-use, mixed income developments.
“We firmly believe diversity of housing stock is what makes a place special,” said Randy Smith, president and CEO of Weston Urban, to the Rivard Report on Wednesday as the deal was approved by the Planning Commission. “When everything is the same, it’s not special. But we can’t guess what the housing market will be like in 2019, four years from now.”
Once preliminary designs are complete for each project, they will still have to go through normal, public processes like Historic and Design Review Commission meeting and permitting.
“There are more opportunities for public input and public comment on the design,” Houston said.
Gorzell explained that the project will cost the City about $82.5 million, although it will save more than that over a 30-year period. The savings will be realized by eliminating other lease payments for City office space, and revenue earned from leasing excess tower space to third parties as well as revenue from the tower’s parking garage on nights and weekends. The net benefit should equal $2 million at a minimum.
“As we sit here and celebrate what we think is going to be the most catalytic (project),” Lopez said, “there are some other dominoes.”
Most importantly, he said, is the Federal Courthouse’s pending move out of Hemisfair and into a new building near San Pedro Creek on Nueva Street that has yet to be funded by Congress.
“Not everything is under our (municipal) control … I issue a challenge for us to double-down on that (to press the issue whenever possible because) we’ve never really been able to get traction on it. It’s a big part of not only what we’re doing on this side of the downtown area, but also what we do in Hemisfair,” he said.
*Featured/top image: The Frost Motor Bank, where Weston Urban will construct Frost Bank’s new office tower. Photo by Scott Ball.