City Council Suspends Downtown Housing Incentives, Funds Task Force

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Children play in the fountain outside of the new Cellars apartments at the Pearl.

Bonnie Arbittier / Rivard Report

Children play in the fountain outside of the Cellar at Pearl apartments at the Pearl, a luxury housing project completed in 2017.

City Council on Thursday approved a six-month moratorium on some development incentives aimed at urban-core housing. Mayor Ron Nirenberg initiated the pause in December 2017; Council's approval makes it official.

The Center City Housing Incentive Policy (CCHIP) was initiated in 2012 to encourage housing developments through tax reimbursements and rebates. While the incentives succeeded in adding more housing stock downtown, Nirenberg said it created some unintended affordability issues.

"There have been some unhealthy consequences of the Housing First model in its current form, which is the subsidization of housing that the general public can't afford," Nirenberg said. "We want a downtown for all people, and so the benching of the CCHIP is intended to help us refine the policy."

The moratorium isn't absolute, said John Jacks, director of City's Center City Development and Operations department, but any incentives awarded to CCHIP during the next six months will need City Council approval.

The City set a goal in 2010 to introduce 7,500 new living units into the downtown area, Jacks said.

That goal has nearly been meant, due in part to several large apartment complexes along Broadway and the Museum Reach of the San Antonio River. The Can Plant and Cellars at the Pearl projects received more than $13 million through CCHIP, but have rental rates starting at more than $2 per square foot. 

Credit Human Federal Credit Union received a nearly $6 million incentive package to build its 10-story headquarters near the Pearl. Inspired by this and other projects, Councilman Greg Brockhouse (D6) requested a review of all City development incentive programs in October 2017. He questioned whether the City needed to incentivize more growth around the successful mixed-used development just north of downtown.

Center City Development and Operations Department Interim Director John Jacks explains how the Virtual Valet app works.

Bonnie Arbittier / Rivard Report

John Jacks, director of the Center City Development and Operations Department

"It's good to take a step back and think," Jacks said, adding that his department will look at which projects CCHIP incentivized and analyze its overall performance. The review comes at a good time, he added, because the program was scheduled to end in June.

On Thursday, Nirenberg acknowledged that the incentives should have been halted earlier. The review period will give Council members time to figure out if the policy can be used to create more affordable housing, if it should be moved to a different area of town, or if it should continue at all.

The Mayor's Housing Policy Task Force, which was established in August last year to formulate policy recommendations for issues like affordable housing, neighborhood revitalization, and gentrification, will also discuss the incentive program.

City Council also accepted a $200,000 grant from the San Antonio Housing Trust to fund some of the task force's functions on Thursday. The trust aims to provide affordable housing to revitalize neighborhoods in the downtown area.

According to the City's grant ordinance, the funding will be used for three primary purposes: $36,000 for organizing the task force meetings, $25,500 for community workshops, and $135,000 for consultant services.

During a task force meeting on Tuesday, chairwoman Lourdes Castro-Ramirez said five technical working groups would begin their work on Jan. 23. Each of the groups has a different focus: housing for all, barriers to housing development, financing mechanisms, integrated housing systems, and building and maintaining identity in neighborhoods.

"We've invited well over 100 people to be involved in this process," Castro-Ramirez said. "We have about 80 people that are eager and ready to be part of these discussions in helping us come up with recommendations."

The task force is expected to present a formal policy recommendation to the Council in May, and Nirenberg believes its work will help determine whether or not incentives in programs like CCHIP are right for the City's housing needs.

"The housing policy task force was created expressly to provide guidance on these issues," Nirenberg said. "It won’t be directed by politics. It will be directed by data."

7 thoughts on “City Council Suspends Downtown Housing Incentives, Funds Task Force

  1. Here we go, just as suspected …….. build it and they will come…………..all the politicians, especially City Manager, Sculley and staff and inner City fat boys (i.e. HEB,Frost, Graham Weston) crying because their motives to bring themselves in the limelight of glory and praise for a spectacular 300 years of San Antonio celebrations are dying. The reality of too much incentive to developers and promised expectations that everyone wants to live downtown – wrong!! This is Texas not New York! Texans like wide open spaces and cold a/c in the summer, not some wide rainbow colored sidewalk that replaces room for our dearly beloved autos, to take a stroll in 110° temperatures . Plus meager salaries or no salaries at all, don’t fit the downtown Sculley salary lifestyle! ……. and now we even pay City Council members to vote Yes to all the giveaway programs! Simply put, Sculley and team have even had to spend more of our $ hiring outside team to find a way to MAINTAIN the SUSTAINABILITY of all this cluster mess.

    • what the City Manager makes for her living has nothing to do with the HIGH rents in the downtown area except the greedy landlords that want more money from the lower and middle class tenants, it will get worse then when these landlords go to eat in the downtown restaurant’s they will have to cook and serve themselves as the tenants in their apartments will be working some where else

  2. This is crazy. Why are we stifling development? Have you walked the river walk from downtown to the pearl? There’s parking lots next to our river? Finally a couple of new complexes get built and Broadway appears as if it might come back to life and we do this 180? We need to encourage downtown and broadway development to support the restaurants and bars, encourage more Mom and pop shops. Let’s face it living near the city center has always been more expensive than living in the periphery. That will probably never change. If we are going to add a million people it would be nice if we could center most of that development in areas where there is already infrastructure, not in an ever sprawling giant suburb of what we now call the 7th largest city. If it’s to expensive to build near the city center than broadway will continue to look deserted between downtown and pearl, and when there’s not a convention in town the river walk will continue to feel dead with no locals.

  3. Score one for the north side real estate community.

    The reason that downtown rental rates are this high is due to increased demand and limited supply – basic economics – to which the only solution is to increase supply.

    Despite a historical lack of demand in downtown from locals, the tourism industry propped up property values beyond most developers interest, hence the need for incentives. This lack of demand also led to a large amount of low income individuals living in the urban core, who are being displaced due to the now high demand to live in an urban and connected lifestyle. This market economy problem is not going anywhere, as this urban demand cycle will continue for a long time, and any action limiting supply will only exacerbate the affordability problem.

    Good luck San Antonio. Enjoy watching your talented youth flee.

  4. Terrible idea. I agree with the posts above. You can’t just make downtown more affordable. Why isn’t the city trying to make the dominion more affordable? The area could me made more affordable with more housing supply. This is supposed to be the decade of downtown! If we want our downtown to prosper with more grocery stores and local shops, we have to encourage more housing in the area with long term residents. This should also bring down prices. I may be in the minority here but having downtown as the most expensive real estate should always be any cities goal. It means it’s where ppl want to be. We may have to incentivize developers in order to lure them to build in a more expensive area than say the sea world or medical center areas. City council please rescind this so we don’t lose any ground in our path to becomes world class city.

  5. Maybe the city should put all the additional taxes received from these incentivised projects into a seperate accout first, then “pay back” the city for the original incentives from that account. Do it with all the incentivized projects, see which are most profitable, and keep putting our money there.

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