Suburban developer NewLeaf Homes typically builds homes far outside of Loop 410, where land and construction are less expensive, but an "unprecedented" new arrangement with the City of San Antonio – a first-of-its-kind trade-off – has turned NewLeaf President Fred Ghavidel's attention to the inner city.
For every 10 homes NewLeaf builds in the new Katy Way Subdivision outside of Loop 410 on the far Eastside, it will build one affordable home within the Wheatley area EastPoint Promise Zone and sell it for no more than $120,000. In return, NewLeaf will receive $300,000 from District 2's infrastructure budget to subsidize the suburb's new sidewalks. The deal was unanimously approved on Thursday by City Council.
In the unlikely event that NewLeaf is unable to sell the inner city home within one year, it will donate it to San Antonio Affordable Housing, Inc. (SAAH), the nonprofit arm of the City's Office of Urban Redevelopment that acquires and holds properties to develop affordable housing in targeted areas of the City.
“Our goal is to have zero vacant residential lots on the Eastside, and we can accomplish this by being creative and pioneering new methods," stated Councilman Alan Warrick (D2) in a news release. "This is not a cure, but definitely a viable solution that will significantly impact the problems of vacant lots in the inner city.”
During a phone interview after the vote, Warrick said he was very doubtful that NewLeaf will have any problems selling the homes. "They're going to be snapped up very quickly," he said.
The homes will not have any income restrictions on them, but they will be required to be owner-occupied – which prevents out-of-town flippers from getting in on the deal, Warrick said.
The first two vacant lots slated for construction are owned by SAAH at 127 and 131 Gabriel St, several blocks south from Union Pacific's Eastside rail yard. Once the new homes are sold or donated, NewLeaf will select two more SAAH lots and continue year by year until eight homes are built. NewLeaf will build 88 homes during the first phase of the Katy Way Subdivision located on Foster Rd. and will likely expand onto adjacent land for subsequent phases. If this arrangement works out, Ghavidel said, they'll look into doing more as the land could host up to 300 single-family homes.
"In return for helping us out there, we'll help (the City) with infill housing," said Ghavidel, who is a native San Antonian. "It's a good opportunity to get involved. If (the homes) don't sell, then that will set us back a little bit but in return we're getting ($300,000)."
NewLeaf currently has 12 different single-family suburb developments from San Antonio to Helotes and others in development, and the homes range in price from $160,000 to $340,000. Ghavidel said he might be able to sell the inner city homes, which will be three bedroom-two bathroom single-family homes designed to more closely resemble homes in the area, for even less than $120,000.
"There hasn't been much new affordable construction in the inner city, especially in downtown," he said. "Maybe there's a demand if we can get the price point right."
The City is focused on incentivizing urban development through a number of different incentive packages that include tax abatement and fee waivers, but the price point of suburban sprawl – where developers can get more bang for their buck – makes more economic sense.
While suburban sprawl is a concern, development outside the inner city will happen no matter what as San Antonio braces to accommodate 1.1 million new residents by 2040. Warrick's strategy is to leverage that growth to help out struggling inner city neighborhoods and to demonstrate the demand for infill development.
"If you look at the homes popping up in Dignowity Hill there’s nothing affordable about them," Warrick told the Rivard Report after the meeting, adding that this arrangement allows for a more diverse, affordable housing stock and "provides an opportunity for us to shift policies. We don’t need to keep looking out, we need to look in to downtown.”
The deal will complement several local and federal agency investments and designations including the San Antonio Housing Authority's Wheatley Choice Transformation Plan as well as the federal Promise Neighborhood, Choice Neighborhood and Promise Zone designation that comprises Eastpoint.
"This hasn't been done before," Transportation and Capital Improvements Assistant Director Debbie Racca-
Top image: 127 and 131 Gabriel are vacant lots owned by SAAH that will soon be developed into two single-family homes. Image via Google Maps.