Tierrabyte: How City Development Incentives Pay Off

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The Baldwin at St. Paul Square Apartments is located at 239 Center St.

Bonnie Arbittier / Rivard Report

The Baldwin at St. Paul Square Apartments is located at 239 Center St.

Downtown development incentives in the form of construction loans, city fee waivers, or reimbursed taxes totaling $93,250,854 have generated more than $375 million in property taxes since 2012, an analysis by the Rivard Report shows.

The City uses development incentives to attract developers or potentially job-creating companies by reducing the cost of construction of a new building, or the expansion of a business.

The data shows that most developers pay around five times more in property taxes than they receive in incentives over the lifetime of an agreement.

The data, which the Rivard Report obtained from the City of San Antonio through a Freedom of Information Act request, shows a total of more than $16 million paid by developers in property taxes and sales taxes distributed to educational entities and the Alamo Colleges District, more than $400,000 in taxes to local transportation and infrastructure authorities such as VIA Metropolitan Transit, and more than $200,000 in taxes towards water management organizations such as the San Antonio River Authority.

Hover over each project location in the map below to see the value of the incentives for each project, and the property taxes owed by a developer during the lifetime of the incentive agreement.

Economic incentive programs can be controversial. Earlier this year, City Council approved a six-month pause on the Center City Housing Incentive Policy (CCHIP) aimed at incentivizing housing development in the downtown core, due to concerns that the program attracted development that was not affordable to most San Antonio residents and that incentives were no longer needed to encourage development. During the moratorium, CCHIP incentives require approval from City Council rather than City staff.

When active, the CCHIP lets the City reimburse property taxes paid by all developers up to a total of $4.6 million, annually. Developers can also apply for utility fee waivers, low-interest loans, and other discounts through CCHIP.

But last month Teeple Partners turned down a CCHIP agreement worth $8 million for a proposed residential tower at Flores and Dolorosa streets after the company determined the project was not financially feasible despite the incentives.

The data also shows which development projects generated the most property and sales tax revenue for local government entities and school districts.

Under CCHIP, the City receives sales tax in addition to property taxes from a project if it features retail. The City of San Antonio’s current sales tax rate is 8.25 percent, 6.25 percent of which goes to state government, and the remainder is distributed to local government organizations.

Voter-approved sales tax initiatives like Pre-K 4 SA also receive proceeds from sales tax collected from a project. According to the policy, .125 percent of sales tax collected from development projects would go to the City run pre-K program.

The Arts Residences, a residential tower being built at North St. Mary’s Street and Lexington Avenue, is expected to generate $89,843 in tax revenue for transportation and flood control organizations, $32,444 for water management authorities, and $1,952,349 to educational institutions annually through the life of the agreement, which expires Dec. 31, 2035.

The project’s developer, Thompson San Antonio Investors, received the largest City incentive package currently active – more than $10 million in the form of reimbursed taxes, city fee waivers and SAWS fee waivers– and will pay more than $49 million in property taxes by 2035, according to the data.

Seven properties show no record of property taxes being paid since 2012, according to the data. These properties are tax exempt, and include The Baldwin, The ’68, (formerly Acequia Lofts), and the Tobin Lofts. Properties can be considered tax exempt if they feature affordable housing, or are owned by a tax exempt entity, such as the Alamo Community Colleges District.

City Council is expected to consider changes to the CCHIP in September.

7 thoughts on “Tierrabyte: How City Development Incentives Pay Off

  1. To get apples to apples, the stream of future tax payments should be discounted to present value using a discount factor at least approximating anticipated inflation over the period.

  2. The Rivard Report has certainly demonstrated that CCHIP has certainly helped fill the coffers of government entities to the tune of $375M since 2012. Good for them! But, could we also suggest the Rivard Report take a deeper dive and show the impact on residential property taxes surrounding these developments and more importantly, the level of affordability of these developments? The Baldwin (tax exempt) which is referenced in the article range in price from $1075-$1640 for a 1 bedroom, $1935-$2620 for a 2 bedroom.

    Is this the new “affordability” from CCHIP?

  3. Who says the Baldwin with those rents is affordable? How can this be “affordable” when they are so much more than the average rent in San Antonio? Do folks making enough to afford those units really have a hard time finding places? Isn’t this the apartments that you see getting built everywhere already? Why is there a tax exemption for that? What does this cost the poor kiddos at the schools in less money for books and stuff? Also, who is bringing in the cheese here? Seems weird….

  4. Disappointed that this article doesn’t 1. Address the effect these developments have had on the greater economy (wages, jobs and gentrification) and 2. Hold city staff accountable for pushing a policy that castrated citizens by bypassing city council in the first place. That policy was the product of bureaucrat Pat DiGiovani and his sidekick Lori Houston and it resulted in expanding our affordable housing deficit and pricing people out of their homes.

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