City Council will vote on a request to remove the historic designation from large sections of two vacant industrial properties in the Eastside on Dec. 17, but it will have conflicting recommendations from City staff and two different commissions to consider.
The owner of two historic industrial complexes in the near-Eastside, the Friedrich Building and Merchant’s Ice House, won Zoning Commission approval of his requests to remove a majority of their buildings' local historic designations on Tuesday. John Miller of Dallas aims to make the buildings easier to modify or demolish and therefore market to prospective buyers and/or developers.
But Zoning Commissioners agreed that the historic designations were impeding development of the deteriorating properties, each of which take up an entire block, and could spark long-awaited investment in the Eastside.
"There's been very little interest in the property," said land use attorney James McKnight, who spoke on behalf of Miller at the meeting. "When a company takes on a property of this size – six acres for the Friedrich, five acres for Merchant Ice – they're really looking at the risk and the uncertainty that they have and one of those is that as long as that historic designation is in place, there's another discretionary board that has approval over their project."
Despite local, state, and federal incentives for historic redevelopment projects – the designation creates an economic hardship for the owner and potential developers, he said. So far, the developers that have expressed interest in the properties were looking into building market-rate apartment complexes that would feature some retail or commercial space.
"It is an extremely difficult process to buy an historic building and meet all of the regulations that are required," said Commissioner Cecilia Garcia. "It's hard even when you have a property that is worth of saving – and these structures really don't have any historic significance."
The request would leave the local and state designations intact for the structures that make up the iconic facades as well as building signs, though a portion of the Merchant building's non-historically designated signage could be compromised.
If approved by City Council whatever development occurs on the undesignated portions of the city blocks will be able to proceed without review by the HDRC, said OHP Director Shanon Shea Miller.
"There will no public design review required," Shea Miller said, because the structures are not technically in any historic districts or River Improvement Overlay.
These recognizable portions of the complexes, which occupy small corners of the city-block complexes, "will not be touched," McKnight told the Commission. "This is not a request for demolition, this is just a zoning request. ... We are simply trying to get a development on the property (by) removing impediments."
Miller has owned the properties with a group of investors for about 16 years and, according to McKnight, has come close to closing deals but developers drop out when faced with the associated costs having to rehabilitate "historically insignificant" structures and go through the HDRC's demolition and design review processes. Miller and his associates won approval from HDRC in September 2014 to demolish half of the 14 structures that make up the Friedrich complex after presenting plans that showed new construction would preserve the building’s exterior and more than half of its overall structure.
The Merchant’s Ice complex at 1305 E. Houston St. was on track for redevelopment into a 262-unit, 120,000 sq. ft. apartment complex last year, but that deal fell through when the developer was unable to attract a partner or buyer willing to finance the project, McKnight said.
Those plans never made it to HDRC, said Shea Miller, and the owners haven't gone through the proper process to demonstrate economic hardship – which HDRC requires in order to grant demolition of a historically designated building.
"Our feeling is that there is a process in place for reviewing demolition and reconstruction of designated properties (through the OHP) and we would recommend that they use that process," she said after the meeting.
But Commissioners and several citizens that signed up to be heard, including Eastside business and property owner Charles Williams, said it's "about time" the Eastside received private investment.
"I've watched it for 57 years – every thing is happening downtown and near downtown," he said. "One block past Cherry Street and it looks like you're in a different world. That's insulting. Millions of dollars are being spent right across the tracks ... it's time for change and the time is now."
Longtime Eastside resident Nettie Hinton said Dignowity Hill and surrounding near-Eastside neighborhood is being "targeted for really ugly apartment/condos meant for the anticipated arrival of affluent Millennials and empty nesters" but what the low-income area needs, she said, is employment opportunities.
"What San Antonio's long suffering low-income communities need are jobs in the inner city," Hinton said. "Jobs developed in the historically commercial properties such as the Friedrich and Merchant. City leaders and yes, owners of buildings, need to be creative and not succumb to plucking the low-hanging fruit."
She suggested that the City create some sort of incentive package for developers that bring in retail and commercial spaces, just as there is for residential infill projects.
"How about cybersecurity? How about something like what they did at Walzem Road – where Rackspace (redeveloped an) abandoned shopping mall?" she asked hypothetically after the meeting. "Why not think creatively and do somethings that would allow it to be a site for real jobs in the 21st century."
The City, however, has taken a "housing first" approach to urban core development, banking on the theory that once people start living downtown, businesses will follow.
"It starts with housing and mixed-use comes after — we need more rooftops," Councilmember Alan Warrick (D2) told the Rivard Report during a phone interview Tuesday night. Warrick is also Hinton's nephew.
If a developer wanted to build something there today, he said, they would have to charge far more per unit and "the Eastside market can't support that yet," adding that it would be several years, if not a decade before developers could charge as much as places along the Broadway/Pearl Corridor do.
"These (market rate) spots are ideal for density that will take pressure off the historic neighborhoods," he said.
Warrick also said that the bigger picture, the one that HDRC perhaps wasn't seeing, was that "we're going to need to make room for half a million people downtown (by 2040) — will we have built options for those people (in the urban core) before they build them out further away from center city?
"This only offers a clear paying field for developers to come in," he said. “While other parts of the city are thriving, these properties less than a mile from the Alamo, are sitting vacant.”
The Dignowity Hill Neighborhood Association will also be weighing in on the matter before Council on Dec. 17. While there is no official stance from its board yet, said representative Liz Franklin, the association will likely change its position from opposing the de-designation to supporting it after a swell of residents from the greater Eastside showed up to a meeting to advocate for the change. About 38 people supported the historic designation removal out of more than 40 attendees, she said.
"That can't be dismissed nor should it be because they have every bit of voice to weigh in on what impacts all of us on the Eastside," Franklin said.
They're cautious with their support, however, because "once Mr. McKnight and his folks sell (those properties), it's a slippery slope" and there are limited mechanisms in place beyond trusting them, to hold them to good, respectful design.
"In a leap of faith, we're believing that leadership and our public officials will watch the project," she said.
*Top image: Friedrich Refrigeration building on East Commerce Street. Photo by Scott Ball.