Government Hill project awarded $2.1M

City funding sought for infrastructure upgrades for apartments in Government Hill — a neighborhood near the Pearl where property values are surging — recently thrust the debate over which developments should receive public dollars back into the spotlight.

A group of investors and developers led by JJ Feik plan to build 281 studio, one- and two-bedroom apartments, a parking garage and retail space outside Joint Base San Antonio-Fort Sam Houston.

It’s expected to cost about $78 million and will be near buildings they renovated for office and retail tenants, including a brewery. They applied for $2.1 million from the Inner City Tax Increment Reinvestment Zone for the project, the Residences at Grayson Heights.

A TIRZ is a mechanism in which increases in property tax revenue from land within the zone are used to reimburse developers for public improvements.

At a June 16 meeting, several City Council members balked at the request, which was approved in a 7-3 vote.

Councilwoman Teri Castillo said she is concerned how the market-rate development will affect residents in the neighborhood, where homes are being renovated, and prices and values are soaring. The average value of a single-family home in Government Hill rose from $78,208 in

2015 to $158,748 in 2020, according to the Bexar Appraisal District.

The 78208 ZIP code in Government Hill had the third-highest increase in median home prices during that period, an ExpressNews analysis of San Antonio Board of Realtors data found. It rose 153.7 percent to $212,500.

“Public dollars should work for public good,” Castillo said. “Yes, the city of San Antonio is quickly gentrifying, but that does not mean that we should continue to feed the beast.

“No doubt this is going to have a ripple effect in the surrounding neighborhoods.”

As part of their agreement with the city, the developers must contribute $500,000 to an affordable housing fund to help with home rehabilitation in Government Hill. Castillo pointed to the city’s repair programs and how many homes could be rehabilitated with $2.1 million.

Councilman Jalen McKee-Rodriguez, whose district includes the development, said he was conflicted. It was in the works long before he was elected, and neighborhood associations and previous council members supported it, he said. But “I still believe that any incentive going to a private housing development should come with some form of affordable housing.”

McKee-Rodriguez said he was ultimately comfortable voting for it because of the amenities, including a public park and street lighting.

“This is the last of my inherited projects, and so moving forward, I want to be clear that I’m looking for substantial community buy-in and feedback,” he said. “I want to see public spaces and community benefit to include deep affordability and/or a significant level of investment in the community.”

Councilman Mario Bravo said he is worried about energy consumption and the limited funding for the TIRZ to distribute. Bravo said he wants to see developers go “far above and beyond standard building practices” for energy efficiency and the Residences at Grayson Heights missed the mark.

“I fully recognize that we need to build housing at every cost level and that we need more housing,” he said. “But this project didn’t stand out to me in any way, and so for me to want to invest public dollars toward this, I would want to see something that’s catalytic.”

Councilman John Courage said “growth should pay for growth.”

“If this is a market-rate private development in an area that is certainly able to stand on its own after it’s become a multibilliondollar valued area, I can’t see why the city would be adding $2.1 million,” he said.

Councilman Clayton Perry and Mayor Ron Nirenberg said the city needs more housing of every kind.

“We are phasing away from this kind of development, but in my view, we have to complete what we started,” Nirenberg said. “We also have to make sure that we’re mindful of facilitating every level of housing development.”

“I think it would do this area a tremendous boost, especially right outside Fort Sam Houston,” Perry said.

The group developing the complex includes Feik and Tim Sanford, who own and operate Paradigm Management, and real estate consultant Robert Hunt. In an interview, Feik said the development will benefit the community by adding housing, parks and space for businesses, and by generating more revenue for the TIRZ.

Rents will be about $400 less than apartments closer to Pearl and along Broadway, he said.

The group is putting about $3.6 million into infrastructure improvements and spending more than $1 million on green building measures.

Feik said he’s sympathetic to residents struggling to keep up with rising costs.

But “to lay that at the feet of the developer versus to say, ‘What can we do as a community, as a city and and a state to address some of these issues’ — I think our energies are better spent coming together on that subject,” Feik said.

He expects the apartments to appeal to workers at Fort Sam, students in the Alamo Colleges District and young professionals.

“There’s a host of businesses that are in this area, and the demand generators are there to support additional housing,” Feik said.

The City Council granted the request from the developers of the Residences at Grayson Heights for $2.1 million from the Inner City Tax Increment Reinvestment Zone, though some council members had reservations.

Courtesy rendering