Six years ago, San Antonio’s City leadership committed itself to the “Decade of Downtown,” by making more than $75 million in incentives available for the development of new housing units. This was a serious investment that is producing serious results. By the end of 2015, almost 6,500 units had been built or were in construction with more in the pipeline.
Downtown may be the heart of San Antonio but neighborhoods are its soul. Our focus on downtown development should be complemented with a “Decade of San Antonio’s Neighborhoods” that places an equally intense focus on supporting vibrant neighborhood housing markets.
A clearly defined housing policy is essential for the preservation and prosperity of neighborhoods, for the people that make our neighborhoods great and for the growth of our city’s economy.
The following are four specific policy recommendations that respond to the needs of San Antonians and our housing market conditions, which will strengthen our neighborhoods and promote economic growth.
1. Plan for significant and sustained investment in housing.
The 2017 municipal bond and the 2017 City budget will be our first opportunities to define and invest in a housing policy, but we must think about housing investments beyond the next fiscal year. A sustained investment strategy must build on any momentum established in the bond and the 2017 budget by prioritizing housing in future annual budgets. The City should then be prepared to build on its documented successes in a 2022 bond.
2. Leverage the private sector to promote broader participation in San Antonio’s vibrant housing market.
A true commitment to a strong housing policy demands both public and private investment. We must recognize that the private market will provide most of the financing for housing and that public financing is critical for ensuring that private investments contribute to a broadly shared vision of our housing market and our city. We must judge the effectiveness of our public investments by the extent to which it leverages and supports the private market to take a balanced approach that makes this City a great place to live, worship, work and play for all San Antonians. A balanced approach can benefit homebuyers, homeowners, and small multifamily developments in the following examples.
Partnerships with private lenders will provide more mortgages to first-time homebuyers.
San Antonio, like many other cities and states, has a long tradition of providing assistance to first-time homebuyers. Second mortgages and down payment assistance are important financing tools that a high-quality nonprofit lender can make available to a first-time homebuyer which, in turn, allow that buyer to qualify for a responsible first mortgage from a reputable bank, credit union, or mortgage company. Our local economy will thrive when more families can access mortgage financing for their first home with more affordable and sustainable terms.
Strengthen the private rehab market for single-family homes.
San Antonio has an aging housing stock with significant rehab needs, especially inside Loop 1604. As with mortgages, it has become more difficult to get a rehab loan. Compounding the problem is that the increased development of luxury housing in the metro area means that there are fewer quality contractors available for rehab work.
A high-quality nonprofit lender can make rehab a more financially viable choice for homeowners and homebuyers by providing a loan guarantee that would enhance their ability to get a responsible rehab loan from a bank or credit union.
It’s also important to target more public resources for low-income seniors who live in homes with significant rehabilitation needs. This can be a key factor, together with home-based services, for seniors being able to age in place, rather than in costly institutions that may not deliver the same quality of life.
More rehab activity will allow more contractors to specialize in the rehab market. This kind of investment, paired with a small contractor training program, would increase the pipeline of quality, skilled rehab contractors.
Make it possible to develop smaller multifamily housing.
It costs more per unit to develop smaller rental housing developments. A small multifamily housing incentive program targeted to projects under 100 units would help close financing gaps on projects that are designed to respect the scale of our neighborhoods.
3. Support a responsible and efficient real estate market.
Invest in housing counseling
Buyers that benefit from quality housing counseling services access more responsible and sustainable financing. Anyone who receives housing-related financing from the City should be required to participate in housing counseling in order to protect the City’s investment. Supporting wider availability of housing counseling in San Antonio will make for a safer and more efficient marketplace.
Use online tools and community outreach to increase transparency in the housing market
Unfortunately, any vibrant market attracts unsavory players. While San Antonio can be proud of its real estate and construction industries, we also have to acknowledge a long history of shady property tax lenders, predatory “cash now” home-buying companies, and unscrupulous contractors. Online and community-based platforms for communication are important tools with which consumers can protect themselves. There is a need to support robust, consumer-driven communication specifically related to San Antonio’s housing market.
4. Anticipate who will be squeezed by rising housing costs
Slow the rate of increase on property taxes for legacy homeowners
The Bexar County Appraisal District (BCAD) currently caps the rate of increase on the taxable value of a home to 10% for anyone with a homestead exemption. BCAD should implement a legacy homestead exemption that caps the rate of increase on the taxable value of a primary residence to 3% for legacy homeowners (families who have lived in their residence for 10 years or more) including when a home has changed hands among immediate family members. This property tax relief should diminish based on the value of the home up to a maximum value. The goal is to allow the owners of modest homes in areas with rising values the time to respond to market pressures.
Support vulnerable populations, especially in “hot” neighborhoods
A vibrant housing market inevitably creates situations in which vulnerable populations are squeezed by rising housing costs. The City should support independent research that anticipates the full implications of its public investments and drafts solutions on how the City can ease the foreseeable impacts of major investments on vulnerable populations. Further, the City should set aside flexible general funds to support vulnerable populations coping with such situations where they cannot be avoided.
With both national and local elections on the horizon, it is tempting to view every public policy issue through the lenses of partisan politics. With housing in particular, we do this at great risk to the economic future of our region. The costs of failing to address our City’s pressing housing needs will be high and generational in their impact.
On the other hand, there will be an enormous return on investment from a strategic use of public resources guided by well-crafted housing policy. We have the opportunity to strengthen our neighborhoods and improve the lives of San Antonians for decades to come.
Top image: Construction continues at 330 Clay St. on the development of 32 residential single-family homes. Photo by Kathryn Boyd-Batstone.