San Antonio’s tremendous economic growth is undeniable, and the success of the City’s housing incentive programs is objectively measurable.
The Center City Housing Incentive Program (CCHIP) was created in June 2012 to spur economic development. It maintains the momentum of urban core growth, which in turn generates revenue by creating new development. It has been on hold since January as a result of the mayor asking City staff to include more affordability components.
That charge includes one glaring hurdle: CCHIP is a mechanism for economic development, not a program meant to sustain affordable housing. There are other ways of addressing the need for more affordable housing.
When my Council colleagues and I discussed CCHIP on Nov. 14, it became clear that a plan for tackling the housing affordability crisis in San Antonio is elusive, and the consequences of pausing CCHIP can now be argued. The decision has brought new downtown housing development to a screeching halt and, with it, diminished economic development and investments for the entire city.
It is important to understand that every dollar invested in our downtown results in about $13 in returns for the City to spend on neighborhoods, infrastructure such as sidewalks and drainage, arts and culture, components of our equity budget, and affordable housing. We must not simply spend money on programs we believe will work but, rather, on programs that are proven to work.
First, we must consider land value.
Creating affordable housing on highly valued land is costly and inefficient. The Neighborhood Improvement Areas identified by the City for investment of a $20 million component of the 2017-22 $850 million bond package align with the Bexar Appraisal District’s 2018 commercial and residential land value certified roll. The map below shows a number of areas adjacent to downtown that have lower land values where affordable housing units can be built and thrive.
But creating affordability will take a combination of strategies and incentives.
Whereas a healthy residential real estate market has about a six-month housing supply, San Antonio has only a three-month supply, which puts pressure on the market and raises prices. A housing bond could serve as a potential solution, but as the City charter currently does not allow the use of bonds for housing or home repair, such a bond would require a charter amendment.
Although we have seen fewer homes demolished – down from about 120 per year to between 80 and 90 – since restructuring the Building Standards Board in 2016, we must do more to preserve our current housing stock in order to increase affordable housing. Federal and City general fund dollars have been allocated to safeguard existing housing. For example, the Under 1 Roof program will save more than 1,000 homes with an aggregate budget of $13.3 million.
The San Antonio Housing Trust Public Facility Corp. has been used to offset 100 percent of property taxes as set by State law. These projects target both 80 percent and 60 percent area median income residential distribution and provide funds for new development opportunities. This program also struggles to place affordable housing in areas with higher land values.
Zoning and land use planning also are critical to the development patterns of the city. Without corrective zoning measures, homeowners in disadvantaged areas are burdened with costly fees and regulations out of their control that contribute to unaffordability.
Special zones like Tax Increment Reinvestment Zones, Empowerment Zones, and Promise Zones look to geographically address areas that need special attention by capturing resources for reinvestment. Brooks-City Base TIRZ in Southeast San Antonio, for example, led to jobs, schools, and increased development.
Incentives and fee waivers can provide some support while creating economic development in targeted areas. CCHIP is now proposing 25 percent of its incentive go toward an affordable housing pool over the “contracted period,” which would support affordable housing citywide.
I will continue to advocate for a renter’s task force to help provide insight into the needs of our entire community. The City can bring forth ideas on affordability, but the voices and needs that should rise to the top are those of our residents.
Costs are unavoidable, but in order to understand affordable housing, we must start with what it actually costs to build housing.
Construction labor costs are the biggest variable across geographical areas. In recent years, we have seen a drop in the supply of workforce, which drives up the cost of labor. The impact of Hurricane Harvey will be felt for years as our labor force shifts its focus to rebuild areas around Houston.
Construction product pricing fluctuates based on availability and market demand. Materials like copper, steel, gypsum, and others affect construction budgets differently from one year to the next.
Design changes can be made to adapt to market forces, but in the case of affordability, there is little opportunity to adapt an already lean product. Time is money, and the speed at which something can be constructed has a direct impact on costs and the economies of scale.
Land valuation is determined by ad valorem – or “according to value” – taxes. In the State of Texas, this is a function of the appraisal districts under the Texas comptroller’s office.
To combat many of these restrictions, the City must incentivize innovation and entrepreneurship.
Housing products have not changed for decades, and it is time to explore opportunities to design with a modern approach. The City should incentivize disruptive strategies by startups and small businesses to innovate while helping remove existing barriers. This undertaking should be incubated by sound economic development policies that support equity as well as social justice initiatives.
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Aside from my experience building homes as an architect, the lack of affordable housing in one of San Antonio’s most historic neighborhoods was the first issue I faced as a councilman. Affordability must continue to play a profound role in shaping the programs and policies we create and support as a compassionate, equitable, and forward-thinking city.
Affordable housing is a complex matter we as a city must have the vision and courage to tackle. I respect the approach of neighborhood organizations across San Antonio and commend the mayor and Council for their willingness to take on the challenge. We have an opportunity to craft thoughtful affordable housing solutions for the citizens of our city.
Together, we will lead the way on this challenge that is so fundamental to our future. We must create a complete and long-term strategy to address affordable housing that utilizes all available resources. Our efforts should also align with our SA Tomorrow Comprehensive Plan, including the 13 identified Regional Centers. There is an opportunity to find a balance between maintaining economic development tools such as CCHIP and working together to build a sustainable and meaningful approach to affordability.
Most assuredly, there is a need to mine all available resources to address our housing needs, but we should not conflate the original purpose of our incentive programs. We should be open to all strategies to create the housing future we desire. Our community should be encouraged to utilize its resources to support this effort, and I stand ready to help facilitate our movement towards affordability for all. The time for a bold vision is now, so let’s keep building together.