One city’s recipe for purposely turning its downtown into a slum

One city’s recipe for purposely turning its downtown into a slum
The future for San Antonio? New York City's South Bronx

What’s the opposite of gentrification? That is what the city of San Antonio is planning for its prime downtown parcel.

Offering government housing credits to a local developer, the city is nearing a deal to subsidize more apartments for low-income tenants.

Originally envisioned as a New York-style Central Park, the remake of the 1968-vintage Hemisfair Park could end up resembling the South Bronx instead.

Hemisfair’s first planned residential component is a 163-unit complex where half the apartments would be reserved for tenants earning less than 80% of the city’s median household income.

With an income ceiling of $40,000 per household, prospects for robust development are dimmed, if not doomed, real-estate experts say.

“It fails at urban revitalization because it distorts who’s going to use that prime real estate,” says Kathleen Hunker, analyst at the market-oriented Texas Public Policy Foundation. She predicts that government subsidies to the developer will “ruin innovation and crowd out competition” at other Hemisfair projects.

AREA Real Estate took the inside track by default when a rival San Antonio firm, Hixon Properties, bowed out.

AREA will receive low-income tax credits through federal and state programs. The credits typically are converted to equity for the developer.

Hunker isn’t sure that’s a winning proposition for AREA or the city. “It may not make enough economic sense to do this subsidy,” she said.

Mallory Primomo Baird, a San Antonio real estate broker, questioned the strategy of imposing income restrictions on half the units at the eight-story apartment complex.

“I disagree with that percentage being allocated to one specific project,” she said, suggesting that 15% to 20% across multiple properties would be more reasonable.

“It is important to think about who they want to fill these low-income units,” Baird said.

The Hemisfair neighborhood, anchored by the newly expanded Henry B. Gonzalez Convention Center, could be fertile ground for developers — without interference from social engineers at City Hall.

Nearby, the regentrifying Southtown district is racking up some of the fastest residential appreciation in San Antonio.

A stone’s throw from Hemisfair Tower, the Alteza high-rise luxury condominiums command prices ranging up to $3 million. Nearly sold out, Alteza’s experience indicates a demand for more.

AREA’s apartment project is expected to cost $25 million. Under a public-private partnership, the firm would pay an annual land lease of $155,000 to the city.

Rents for income-restricted tenants would run about $1,000 a month.

“A $1,000 rent would price the studio units well below what is available in most of the city’s new multifamily developments,” according to the Rivard Report.

“P3s (public-private partnerships) represent the worst in corporate welfare and usually involve cronyism and even corruption,” said Terri Hall, president of Texans Uniting for Reform and Freedom.

“This isn’t really even a competitive bidding process, especially when you consider only two firms were short-listed and one of those backed out.”

The Hemisfair partnership, with bipartisan backing at the 2013 Legislature, allows the city to reconfigure parkland at the downtown venue without the consent of voters. The enabling bill was sponsored by Democratic state Sen. Leticia Van de Putte, a protégé of former San Antonio mayor and current U.S. Housing and Urban Development Secretary Julian Castro.

Jeff Judson, a Republican challenging House Speaker Joe Straus, R, in next year’s primary, said the principle of “local control” in Texas is too often invoked to “violate the free market and promote rampant cronyism.”

“It is the biggest sin of the Republicans. They are almost as guilty as the Democrats in their level of violations,” Judson said.

Nick Reed, spokesman for the Libertarian Party of Texas, asserted that the San Antonio City Council needs an overhaul.

“Having housing you can afford is big. But creating dependency on government to do it is building a castle on top of sand,” he said. “Coercion gets thing done in the short term, but ultimately is not healthy and not sustainable in free and open societies.”

Reed suggested that voters “elect officials who believe in the free market.”

Read more by Kenric Ward at Watchdog.com.

Kenric Ward

Kenric Ward

Kenric Ward is a national correspondent and writes for the Texas Bureau of Watchdog.org. Formerly a reporter and editor at two Pulitzer Prize-winning newspapers, Kenric has won dozens of state and national news awards for investigative articles. His most recent book is “Saints in Babylon: Mormons and Las Vegas.”


Commenting Policy

We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse.

You may use HTML in your comments. Feel free to review the full list of allowed HTML here.