DEPARTMENT: Center City Development & Operations
DEPARTMENT HEAD: Lori Houston
COUNCIL DISTRICTS IMPACTED: City Council District 1
SUBJECT:
Economic Development Incentive Agreement for the Maverick Building
SUMMARY:
This ordinance authorizes an Economic Development Incentive Agreement between the City of San Antonio and 400 East Houston Street, LP for the rehabilitation of the Maverick Building located at 400 E. Houston Street.
BACKGROUND INFORMATION:
The Maverick Building, listed on the National Register of Historic Places, was built in 1921 as an office building with first floor retail and a barber shop in the basement. It was converted in 1996 to low-income housing with loan assistance from the City of San Antonio and the federal Community Development Block Grant program in the amount of $1,071,000. Since that time, the apartments within the building have fallen into disrepair and the retail space has not been actively leased for decades.
The new owner, 400 East Houston Street, LP is proposing to invest approximately $5,000,000.00 to renovate all 85 multifamily units and reactivate the approximately 6,000 square feet of street-level retail space. The rehabilitation of this property will provide local workforce housing, create new retail value along an important section of Houston Street, and reenergize a historic and iconic building.
ISSUE:
The relatively small number of units and their lower absolute rents present financial challenges to the redevelopment of the Maverick Building’s housing component. There is also a perceived lack of pedestrian traffic that potential retail tenants will need to overcome since there is no parking in the building. In order to ensure the project’s success, 400 East Houston Street, LP has requested financial assistance in the form of development incentives for both the multifamily and retail components of the project.
Staff is recommending a development incentive package totaling approximately $941,710.70 that will support the rehabilitation of the historic building, its re-entry into productive use, and the reactivation of a prime corner of Houston Street.
ALTERNATIVES:
If City Council does not approve the development incentive package, the City will need to identify alternative funding mechanisms to support the successful rehabilitation of the Maverick Building.
FISCAL IMPACT:
The total economic development incentive package equals approximately $941,710.70. The incentives include a waiver of eligible City fees estimated at $24,342 as per the City’s ICRIP policy, a 15-year tax reimbursement grant valued at approximately $415,753.05 funded from the project’s ad valorem property tax increment, a 5-year forgivable loan of up to $120,000 for the street-level retail funded from the Inner City Incentive Fund, and a release of the City’s lien and forgiveness of the CDBG loan balance of approximately $381,615.65. The Community Investment Committee recommended approval for the forgiveness of the CDBG loan balance during their meeting on May 20, 2015.
The developer is also seeking economic assistance from the Office of Historic Preservation in the form of a 10-year historic tax abatement. The historic tax abatement, if applicable, allows the developer to pay no City taxes for 5 years, and then 50% of taxes on the full value of the property for an additional 5 years. This incentive may be applied in parallel to the tax reimbursement grant referenced above, but the total amount of the tax reimbursement grant will only rebate taxes paid to the City on the improved value of the property for the first 15 years. The tax reimbursement grant is contingent upon approval by the Houston Street TIRZ Board at their next available meeting.
RECOMMENDATION:
Staff recommends approval of the Economic Development Incentive Agreement with 400 East Houston Street, LP for the rehabilitation of the Maverick Building at 400 E. Houston Street.