City of San Antonio
Our first meeting of the day was with Mr. David McGowan, of the Center City Development Office and former student of Professor Forgey, Mr. Richard Milk, of the Planning and Development Services Department, and Mr. Jesus Garza, of the Planning and Development Services Department. They discussed with us that San Antonio’s economic base centers around the local military bases, tourism (especially downtown), and the medical districts along the 151 Corridor. San Antonio is looking for catalytic development, major development projects that will energize the city with jobs and tax revenues. Specifically they are trying to find and attract developers that will work in the CBD, and have created more incentives downtown to generate interest. Downtown is very much a tourist driven community, with predominantly larger hotels, where outside of downtown is a completely different set of circumstances and dynamics for development. San Antonio uses a form based code – SMART Code. The city’s code has a lot of optional provisions, which limits how it regulates development.
There are currently 30 TIFs & PIDs (Public Improvement Districts) within the city. To encourage reinvestment and infill projects, the San Antonio offers numerous incentives. They wave all city fees, like permit fees of about 3%, offer a single point of contact with the city, and the creation of a land bank, where the city will purchase land and can turn around to sell it to the party of the city’s choosing. The city might donate the property, sell it, or negotiate something in between with a developer. Historic preservation also helps stimulate property reinvestment.
Sprawl is an issue that the city is trying to combat. Associated fees, or impact fees, haven’t slowed growth outside the CBD. Congestion is one of the main problems San Antonio faces with regard to sprawl. But the city is not at the tipping point of the populous migrating back to the CBD. To inspire this migration, the schools in and around downtown need to improve, because this is one of the major deciding factors for such a move. San Antonio is trying to attract charter schools to the inner city and is currently in a testing phase. Trinity University is also trying to help the public schools in and around downtown.
Ms. Betty Feldman, City Architect for San Antonio, first briefed us on her history as a private architect and how she transitioned to the public side. After surviving numerous economic downturns in a field that was extremely susceptible to recession, Ms. Feldman decided that she wanted a more stable and steady career, one only the public sector could provide.
Mr. Laurence Doxsey, Director of the Office of Environmental Management, joined her in discussing San Antonio’s sustainable initiatives. He worked in Austin’s Green Building Program and even rode his bike to our meeting, so he knows and lives “green.”
San Antonio is second only to Austin when it comes to Texas MSAs and sustainable development. It likes to ease the public into changes of policy and law, and sustainability is no different. They pass plans that introduce the public to initiatives that will eventually become resolutions and full-fledged regulations. Mission Verde is one of these resolutions that were eased onto the public. It is the city’s first step into building “green.” One thing it states, is that all future city buildings with be “green,” but not necessarily LEED certified. San Antonio’s hot climate does not lend well, as we were told, to green roofs. Green roofs need to be watered, which is less sustainable as the water evaporates instead of hydrating the plant life. The USGBC and LEED are big proponents of green roofs and thereby are not San Antonio’s best course of becoming more “green.” The city is also starting to write sustainability into its code for private development.
The city has started the PACE Program, Property Assessed Clean Energy, for both residential and commercial properties. The program is primarily for retrofitting existing properties. PACE uses bond money for low interest loans, typically $5,000 or more) that fund sustainable, retrofits and permanent improvements to the property. The city will have a lien on the property until the loan is paid off.
A tree planting initiative offers $50 off one’s electric bill for planting a tree that shades a building. Other initiatives San Antonio is starting to implement are within the transportation sector. They are trying to create a bike share program, for employees and the public, working on car share studies, and having a more fuel efficient fleet, including the heavier vehicles.
For our last meeting, we met with Ms. Sylvia Cortez and Mr. Ray Herrera, Chief Inspectors from the Planning and Development Services Department. With them we discussed the permitting and inspection process. They specifically investigate properties that are working without a building permit. If someone is found to be working without a permit, the fee is doubled and if the project is historic, there is an additional $500 fee. But the city is willing to work with you, giving some leniency. Building permits are not always needed, historical buildings for instance, require a certificate of appropriateness is instead. Inspectors are made aware of infractions by public policing, or complaints that are called in.
Legally, all work on a building must have a building permit and be completed by a state certified (licensed) contractor. These strict policies may seem as overkill to most, but they are in place for the life and safety of the public, to protect us from injury that may be occur from shoddy electrical work, substandard carpentry, etc.
Guenther House
We were given a great recommendation for lunch, the Guenther House. It was the Pioneer Flour Mill’s founding family’s home. In addition to being a historically restored structure, it serves patrons many delicious dishes, especially those whose main ingredient is the mill’s chief export, flour.
1221 Broadway
The city officials suggested that we visit 1221 Broadway. It is a project that went bankrupt and is an example of how not doing one’s due diligence can cause a project to fail. It all started from one ill-fated decision that led to another and eventual disappointment for the project’s initial developer, Mr. George Gies.
Despite the project’s unfortunate short comings, it has amazing potential. It is beautifully positioned along the Museum Reach section of the River Walk, has excellent visibility from 2 major highways, and sits on a major arterial that leads directly into downtown San Antonio.
After initially purchasing the property on the courthouse steps, years of litigation, numerous lawsuits and counter suits, Mr. Ed Cross was finally able to procure control of the property. It is a series of unfinished concrete and concrete block skeletons, with an unfinished steel parking structure in between. The final mixed-use product will accommodate, condominiums, apartments, offices, retail at the ground level, and parking.
The Vistana
Mr. Cross, CEO of Cross & Company, quickly ran us through his wonderfully crafted Vistana project. The Vistana is a 530,000 sf mixed-use building that includes 247 apartment units, 25,000 sf of retail space, a 500 space parking garage, and 100+ mini storage units. It has an extremely well thought out, coordinated, and efficient floor plan, from the ground retail through the 4 floors of parking to the apartments up to the roof. It is also the first successful mixed-use apartment project in downtown San Antonio.
In order to finance the approximately $60 million project Mr. Cross competed life (insurance) companies against each other for a non-recourse loan, with a long term amortization period and a long term balloon note. Two parcels of land were purchased for approximately $40 per square foot. A bank, who owned and occupied one of the parcels, sold it to Mr. Cross with the stipulation that they would occupy the corner retail space, requiring 3 drive aisles through the building. Another drive aisle was added for a CVS, who ended up reneging on their deal shortly after the financial markets collapsed.
Mr. Cross’ background is in offices and warehouses, where he learned to minimize CapEx (capital expenditures) and tenant improvements (T.I.). This led to the decision to make loft style apartments, with stained concrete floors, where after a tenant moves out, minor cleaning, and a good sweeping, the apartment is ready for the next tenant with minimal turnkey costs. Another way he is minimizing these costs, is that he is incentivizing the leasing agents’ commission and pushing for more tenant renewals.
Two types of tenants were kept in mind when decisions were being made for the project, “Nurse Betty” and the “Knuckle Head” as Mr. Cross affectionately refers to the young professional male. Interestingly enough, Mr. Cross’ marketing assumptions and study were fairly accurate. The current resident demographics are predominantly males in their twenties, many straight out of college, in other words “knuckle heads.”
The apartments are 98% occupied. There are 247 apartment units in the building and about as many different rental rates. This can be attributed to each unit’s location within the building, floor and side of the building/view being the primary factors for price differences. Most of the units are 1 bedroom, with some large studios, and 2 & 3 bedrooms thrown in. There is a huge penthouse, 2 bedroom, 2 bath unit named The Tower that Mr. Cross envisions renting out to someone the likes of Manu Ginobili (S.A. Spurs guard) or another sports star, preferably one who is either single or currently without kids. He wanted the apartments to have that “Wow!” factor when tenants walked in. To accomplish this, the units have high ceilings, large windows with amazing views, and great finishes.
The nearly 500 space parking garage has only 280 spaces being utilized. This was a problem, until Mr. Cross realized a simple solution was to use the excess 200 plus spaces for two other buildings that he plans to develop adjacent to The Vistana. Much of the nearly 25,000 sf of retail space sits vacant. Had the market not collapsed, it would most likely be 100% leased. Mini storage units are available for the tenants, located on the parking levels. However, the tenants are not currently utilizing this added amenity, probably because the demographic doesn’t have anything to store. Single young men straight out of college rarely have a lot of possessions in which they need storage space for.
After his meeting with the city, Mr. Cross was kind enough to join us for drinks on the River Walk. Here he was able to relax and discuss his history, his lessons learned, his approach to development, 1221 Broadway, etc. in more detail. About 7 of us, asked questions and listened intently, as one does when a wise sage speaks. As I write this I, regrettably, cannot recall one specific thing he imparted to us. I do, however know this knowledge has already ingrained itself deep within, to be recalled at the time it is most needed.
The River Walk
One of the best ways to wind down a day is with a good meal and good company. Professor Forgey, Vishal, John and myself were already on the River Walk, so it made the most sense to stay there for dinner. We found a nice little Italian place that we could over look the River and the Walk. Afterward, we played pool and threw darts at this little dive we found on street level.
The River Walk is such an amazing place. From the designer’s point of view, it’s just this series of beautiful, perfectly scaled spaces, views, and textures. It combines the best from man and nature. From the investor’s, it is an amazingly successful venture, with huge returns. From the planner’s, how could you ask for a more used, more loved, more vibrant place? From the city’s, it is a huge economic generator, producing huge tax (sales, income, & property) revenues for the public and policy makers. It’s no wonder that it vies for the most visited tourist attraction in Texas and also no wonder that so many architects and planners use it as a precedent to study when water is involved.
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