Builders say affordable developments get housing waiver ‘scraps’

Habitat for Humanity volunteers and staff recently place part of a home’s lattice in the Lenwood Heights community. Last year, the West Side development received a portion of $335,000 in SAWS impact fee waivers that was awarded to the nonprofit. BEN OLIVO / FOLO MEDIA

Editor’s Note: The description of how the SAWS fee waivers for the ICRIP program is allocated was incorrect in the original version of this story. Also, this story has been updated to reflect that an across-the-board waiver of SAWS fees for affordable housing could be considered by City Council as early as this fall.

The housing commission requested that $1.2 million be set aside for affordable housing developments, but the request never made the city’s budgeting process. Instead, CCDO created a new rule that allowed for half of the ICRIP waivers to be set aside for affordable housing and nonprofit projects such as charter schools or if Goodwill wanted to build a facility; the other half would be reserved for other types of projects such as commercial.

If you’re trying to build affordable housing beyond the downtown area, obtaining incentives from the city of San Antonio may prove difficult.

That’s because San Antonio lacks an incentives policy for affordable housing, and the city’s housing commission is trying to fix that.

The 15-member commission argues that affordable housing projects outside the center city aren’t getting their fair share of $3 million in “impact fee waivers” set aside by the San Antonio Water System (SAWS) every year. These funds cover the cost of infrastructure upgrades necessary to provide service to a new development.

For a developer, receiving such waivers can mean a savings of hundreds of thousands of dollars.

The problem for affordable housing developers is that a sizable chunk of the $3 million has already been carved out for other projects (mainly downtown housing) before they’re able to apply for the waivers. Or, as one of the housing commissioners puts it: “affordable housing gets the scraps.”

This is how the waiver system works:

Three types of projects are eligible for SAWS waivers: Inner City Reinvestment and Infill Policy projects (which include affordable housing); downtown housing (from the Center City Housing Incentive Policy [CCHIP]); and economic development projects (the recruitment of jobs to San Antonio, for example).

COURTESY CITY OF SAN ANTONIO

As a matter of policy, San Antonio privileges downtown housing projects. This has been the case since the late 2000s, when Mayor Julián Castro declared 2010 and beyond the Decade of Downtown. The strategy was — and still very much is — to offer incentives to developers looking to build apartments, condos, etc., in the city’s core. Boost downtown’s population and the rest of the center city’s revitalization — retail, infrastructure upgrades, etc. — will follow, goes the thinking. Thus, CCHIP was created.

Under CCHIP, city officials can allocate portions of the $3 million in SAWS waivers for potential downtown housing developments years in advance. Also, as economic development opportunities arise, those waivers are taken from the $3 million and doled out as needed.

However, if you’re a developer of affordable housing, the rules are different. Every year, you must apply Oct. 1 for your portion. What’s up for grabs at that point is what’s left after downtown and economic development projects have taken their slices of the $3 million.

Members of the housing commission are asking that a new policy take shape: Reserve a third of the annual allocation — $1 million of the $3 million, most years — strictly for affordable housing developments. That way affordable housing projects throughout San Antonio won’t interfere with the city’s downtown housing goals, they say.

“We are a nuisance to them,” said Natalie Griffith, president and CEO of Habitat for Humanity of San Antonio, who also serves on the commission. “We are taking resources that they have to try to attract businesses coming to San Antonio, to try to get more downtown (development), and we shouldn’t be having to compete with that to put affordable housing on the ground.”

The “one third” rule is one of several recommendations written by Griffith and proposed by the Housing Commission to Protect and Preserve Dynamic and Diverse Neighborhoods that they say will yield more affordable housing units. By the city’s own study four years ago, San Antonio has a shortage of roughly 150,000 affordable housing units. The members of the housing commission who are pushing for this policy change say that more affordable housing units can be built if those projects are given more incentives or financial help.

What makes San Antonio so economically segregated — the prosperity gap between the near West Side and Stone Oak is the widest in the country, one recent study shows — is its lack of mixed-income communities. Nimbyism notwithstanding, many experts view affordable housing developments strewn across the city as a way to level the playing field, so to speak.

In a public meeting last week, members of the commission and city officials debated the recommendations.

Ramiro Gonzales, interim assistant director of the city’s Center City Development and Operations Department, agreed that an affordable housing policy is needed. But he also defended the current distribution strategy for the $3 million in SAWS waivers.

“You all are working to develop an affordable housing policy which does not exists today,” Gonzales told the commission. “But there was a policy on downtown redevelopment, which is why that exists today and it functions that way.”

He argued for what he called a comprehensive affordable housing policy, and told commissioners that executing the “one third” policy now would have the reverse effect on affordable housing.

Remember that downtown housing projects are awarded their SAWS waivers sometimes years in advance. So portions of the $3 million for 2018, for example, have already been saved and set aside for downtown projects. Triggering the “one third” policy now would mean that affordable housing would receive a third of the leftovers, Gonzales said.

“We have allocations all the way to 2020 right now,” Gonzales said.

After Gonzales made his point, several members of the commission requested a list of the projects set to receive waivers in the coming years.

“We might be able to understand it better if they can say, ‘Here’s what’s been allocated and here’s what it’s been allocated to,'” Griffith said.

Gonzales told the commission that CCDO would provide the list.

Last year, the housing commission and CCDO had a similar conversation.

The housing commission requested that $1.2 million be set aside for affordable housing developments, but the request never made the city’s budgeting process. Instead, CCDO created a new rule that allowed for half of the ICRIP waivers to be set aside for affordable housing and nonprofit projects such as charter schools or if Goodwill wanted to build a facility; the other half would be reserved for other types of projects such as commercial.

“We wanted to speak to the concerns and recommendations of this body,” Gonzales said.

The policy change yielded more dollars for affordable housing projects.

In the city’s fiscal year 2015, $121,942 in SAWS fee waivers went to affordable housing. In FY 2016, the number rose to $199,998.

In 2016, after the Oct. 1 deadline, city officials awarded $582,664 in SAWS waivers to affordable housing projects. Habitat for Humanity received $335,000 of those SAWS waivers.

“I’m happy that I got mine, but I’m disappointed that others didn’t,” Griffith said.

Another issue is timing.

All sides seem to agree that an across-the-board SAWS fee waiver for all affordable housing projects is the way to go. Anticipating SAWS’ response — that the rate payers will have to foot the bill — city officials and commissioners agree that policy change could be challenging.

City officials talked after the June 27 Housing Commission meeting and agreed that a policy change that would give affordable housing an automatic SAWS fee waiver could be discussed before City Council as soon as November, the same time when SAWS could be discussing potential rate increases with the council.

The uncertainty of the situation is why, Griffith argues, the “one third” rule and the commission’s other The recommendations need to be executed ASAP:

“This is a change that they can make to the existing program now,” Griffith said. “We’re not asking for any more in that program — in the whole impact fee waiver system — than what is already there.

“If the city thinks they need more for economic development and downtown development, they can go back to SAWS and say they need more.”

ben@folomedia.org

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