San Antonio Express-News (Sunday)
Builder eyes SW Side — and reimbursements
Anational homebuilder wants to fill 250 vacant acres on the Southwest Side with more than 1,200 singlefamily homes — many projected to be priced at less than $265,000 — and is seeking reimbursement from the city for public upgrades.
Lennar Corp. is eyeing two projects with a combined price tag of more than $170 million.
It wants to build 603 houses with two-car garages on nearly 130 acres at 9400 Somerset Road and across Interstate 35. The project is expected to cost upward of $77 million, Verónica Soto, director of the city’s Neighborhood and Housing Services Department, recently told the Planning and Land Development Committee. And on 122 acres west of I-35 and Fischer Road, Lennar is seeking to build 657 houses. The project’s anticipated cost is $94 million, she said.
At both communities, half the houses would be priced between $225,000 and $265,000, 25 percent would cost between $175,000 and $244,000, and 25 percent would be over $265,000.
In April, Miami-based Lennar applied for creation of tax increment reinvestment zones for both developments and sought $44.4 million in reimbursements for public infrastructure, including sewer, water and drainage work, and street and sidewalk construction.
Increases in property tax revenue from land within the zone would be used to reimburse the developer for public improvements. Both Lennar zones would have 25-year terms with the city participating at an 85 percent rate, meaning 85 percent of the increment is put into the zone funds.
At the time the application was filed, home prices were projected to be from $150,000 to more than $241,000. Since then, housing costs have risen about 40 percent and Lennar has adjusted its selling prices, Soto said.
District 9 Councilman John Courage said his calculations indicated Lennar would have a sizable potential profit with each house and asked why the company is not covering the infrastructure costs itself.
City staff and John Lohr, vice president of land acquisition at Lennar, said the cost of building the houses would be “quite a bit above” Courage’s calculation. While the developer requested about $44.4 million worth of reimbursements, the city estimated the company will recapture about $10 million for each community, said Ian Benavidez, assistant director of Neighborhood and Housing Services.
The company has started on the first phase of the Somerset community, Lohr said.
Job growth stemming from Toyota’s plant, TJX Cos. Inc.’s distribution center, Navistar’s future facility and a planned Amazon delivery station is increasing demand for housing on the South Side, he added. The lack of sewer infrastructure in the area is among the reasons there is ample undeveloped land.
At least one of the areas is in an “opportunity zone” under a program established as part of former President Donald
Trump’s 2017 tax overhaul. It’s
intended to generate investment in underserved neighborhoods.
Investors and companies can get tax breaks on capital gains if they put capital in long-term investments within the tracts. The program has been criticized for primarily benefiting investors instead of residents; research has shown mixed economic conditions within some zones.
Lennar declined to comment. The creation of both TIRZs will go to City Council for approval.
Rural land sales skyrocket
People are snapping up large parcels of land in rural Texas.
Rural land sales in the first quarter increased 37 percent statewide from a year ago, pushing prices up 9.5 percent to a record $3,251 per acre. Total
volume hit $1.99 billion, an increase of more than 38 percent, as buyers nabbed 612,699 acres.
“These developments mark one of the most active times in the history of Texas land markets as urban-based buyers seek out rural retreats,” said Charles Gilliland, research economist at the Texas Real Estate Research Center at Texas A&M University.
“The pandemic-inspired lockdown prompted a growing number of individuals to review their lives and seek out a more relaxed mode of living.
“Anecdotal reports from market participants have pointed to a desire to escape the problems faced by cities mired in political and social unrest. In addition, some buyers seem to be concerned about governments’
ability to sustain its debt burdens.”
Transactions in South Texas increased 73.5 percent, but prices remained fairly steady, dropping 0.35 percent to $3,950 per acre. In a region encompassing Austin, Waco and the Hill Country, sales jumped 39.81 percent and prices increased 7.07 percent to $4,424 per acre.
Activity surged 103.97 percent in West Texas, 48.34 percent in the Gulf Coast-Brazos Bottom area, 31.6 percent in Northeast Texas and 17.76 percent in the Panhandle and South Plains. Far West Texas was the outlier, with transactions down 22.61 percent because of the pandemic’s effects on the oil and gas industry.