San Antonio Express-News (Sunday)
Road to affordable housing often bumpy
Despite millions of dollars in additional public money, developers in San Antonio are struggling to build affordable housing amid rising interest rates and construction costs.
Five years ago, San Antonio voters approved a bond package that included $20 million for the city to acquire properties and partner with private developers to build mixed-income housing.
Since then, three housing projects have been completed, all last year, using that money while a fourth has been delayed, reflecting the difficulties of building affordable housing even with significant public funding.
About $19 million of the $20 million bond has been allocated for those projects and any remaining funding is expected to be used for a complex on San Pedro Avenue, a city spokesperson said.
It’s become more expensive to finance construction projects amid rising interest rates and construction costs. But developers also often must contend with pushback from neighbors. And for those seeking to use tax credits, the process is highly competitive.
The pending project involves Franklin Development, which plans to partner with an arm of the San Antonio Housing Trust, a city nonprofit, to replace a tire shop and office building at 419 and 425 San Pedro Ave. with 80 apartments.
The trust’s involvement means the complex would be exempt from property taxes in exchange for providing units for families earning less than the area median income, or AMI.
Four25 San Pedro would have a mix of apartments for residents making up to 30, 50 and 60 percent of the AMI. The developer would partner with SAMMinistries to offer services for physical and mental health, substance use, job
training and life skills.
Four25 San Pedro would have on-site case managers, a food pantry, meeting spaces, a children’s play area, security, a dog park and other amenities. It’s also near bus stops.
Pairing affordable housing with services often leads to better outcomes for residents, Ian Benavidez, deputy director of the city’s neighborhood and housing services department, told the board of the city’s urban renewal agency.
Franklin was chosen in 2020 to redevelop the San Pedro sites. The city bought the properties for
about $2 million and planned to sell them to the developer for $500,000. The city would also provide about $2.6 million of reimbursement for costs such as infrastructure improvements.
Franklin submitted a pre-application to the state for tax credits but opted not to move forward, in part because of a problem related to school requirements and nearby residents’ concerns, Benavidez said.
Franklin had proposed efficiencies or one-bedroom units for youth aging out of programs and for elderly residents, said Abe Juarez, president of the Five Points Neighborhood Association.
The neighborhood already has multiple such buildings, and the group wanted the complex to attract families, Juarez said. The complex will now consist of two- and three-bedroom units.
Franklin plans to seek tax credits, which the
$27.6 million project is contingent upon receiving. The affordability figures could fluctuate.
But there’s still a funding gap, and Benavidez said they will look at various potential sources.
“It’s not just that costs have gone up, and they have gone up,” Franklin senior partner Ryan Wilson told the board. “We’re dedicating a lot of resources operationally to supportive housing, which is very expensive.”
Franklin hopes to begin construction in 2024 and complete the complex in 2025.
“We are still early in the process, but we are looking … financially to make sure this project will happen,” Benavidez said.
The other three projects built with help from city bond money include the Park at 38Thirty, which was constructed by Franklin in partnership with the housing trust.
That 196-unit complex near the South Texas Medical Center is for families earning up to 60 percent of the AMI.
They also teamed up on Greenline North near Brooks on the Southeast Side, where 141 of the 292 units are for residents at that same income level.
Terramark Urban Homes worked with the housing trust on a 24-unit complex called West End on Frio on the near West Side. Ten of its units are for families making up to 50 percent of the AMI, and two are for those earning up to 80 percent of the AMI. The rest are rented at market rates.
About $19 million of the $20 million bond has been allocated for those projects and any remaining funding is expected to be used for the San Pedro complex, a city spokesperson said.