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The San Antonio City Council passed resolutions of support for 13 proposed affordable housing developments competing for state tax credits on Thursday.
The decision put each of them in close competition for the two to three developments in the San Antonio region to which the Texas Department of Housing and Community Affairs (TDHCA) is likely to award the 9% Housing Tax Credits.
The 9% Housing Tax Credits make up one of the primary ways that affordable housing is developed in the U.S. The tax credits work by offering a way to offset a portion of their federal tax liability in exchange for the production or preservation of affordable rental housing.
Developers who awarded the tax credits typically sell them to private equity investors, who take the tax credits in exchange for financial support for the development, often in the form of equity.
The tax credits come from the U.S. Internal Revenue Service but are administered by states.
When a developer applies for a 9% Housing Tax Credit in a municipality, that city government then decides whether to pass a resolution of support or not. These resolutions add points to the developers’ applications — a project’s total points are how the state picks who gets the highly competitive tax credits.
The council’s recent practice regarding these resolutions is to offer approval to all proposed developments. But several city council members suggested they should change that practice moving forward to support only the projects they felt were best for the city if they were to be picked by the TDHCA.
San Antonio Housing Trust Executive Director Pete Alaniz explained why a more selective approach may be better when so many proposed projects have the same points score.
“There are some very good projects that are listed here, and you know, that’s one of the reasons why, if we have an opportunity, if there’s a situation where there’s a tie like this, council can provide more policy direction on what types of projects they want to probably have prioritized,” he said. “And I think if you want to see those really high-quality projects, maybe make some policy tweaks next year that can make sure those projects do rise to the top.”
The council also debated over whether to approve or reject a resolution of support for a District 9 proposed development after concerns of a lack of community outreach from the developer before the vote.
The council ultimately delayed their decision for that project, the 78-unit Encino Rio Lofts, until next week after city staff informed them that the developer had pulled their application for the resolution. If the developer does not change their decision to pull their application, the city council will not have the chance to vote on it next week.
Now with so many proposed projects having a tied points score, it will be up to the state to break those ties and decide which are awarded tax credits. Those that are not awarded the credits will likely not proceed with affordable housing or proceed at all.
