Controversial Friedrich Lofts project gets go-ahead on eve of council shake-up

Council members, including 3 outgoing, voted 3-1 with 1 abstention in key vote

San Antonio – On the eve of a city council shakeup, a controversial housing development project on the near East Side got the approval it needed to go forward from a board of five council members.

The council members on the San Antonio Housing Trust Public Facility Corporation Board voted 3-1 on Monday, with one abstention, on a key financing vote that will allow the developer of the Friedrich Lofts project, Provident Realty Advisors (PRA), to get financing through the U.S. Department of Housing and Urban Development. While not directly part of the issue at hand, Monday’s vote means that the 75-year tax exemption for the property can continue.

The vote happened despite the misgivings of numerous people who signed up to speak against the project, which they do not believe will bring truly affordable housing to residents in the area.

Friedrich Lofts (Friedrich Lofts)
The non-historic portion of the Friedrich Complex outlined in red will be part of the Friedrich Lofts project.

Several speakers noted that four new council members will be sworn in on Tuesday, including District 2, where the project is located.

“For you to come in and try to push this down the throat of the people, It’s just un-American. It’s un-Christian. And you ought to be ashamed of yourself,” TC Calvert of the Neighborhoods First Alliance told the PFC board members.

The development will transform a large, non-historic portion of the dilapidated and vacant Friedrich Complex on East Commerce Street into a 358-unit housing complex. Half of the units - 179 - will be reserved for people earning either 60% or 80% of the Area Median Income (AMI) as defined by the U.S. Department of Housing and Urban Development, while the other half will be set at market rate.

The vote was originally scheduled for June 8 but was delayed after concerns about affordability were raised. Only 14 units were originally priced for the lower, 60% AMI threshold, costing between $767 and $987 in monthly rent, depending on the size of the apartment. The other 165 were priced for people earning 80% AMI.

The numbers in the deal approved Monday bumped the 60% AMI units to 24, and reduced the number of 80% AMI units to 155. In return, the financial terms were also adjusted to reduce the amount of equity the PFC holds in the project, though it will now collect fees anytime the private equity in the project is sold throughout the duration of the 75-year lease.

The developer added 10 60% units for a total of 24, ranging from $767 to $987 in monthly rent.
The updated financing terms give the PFC a cut of any equity sales, but lower its stake in the project, reducing annual cash flow.

San Antonio Housing Trust Executive Director Pedro Alanis told board members the upcoming council turnover would mean they would not have a quorum to discuss the issue until new members are placed on the board, which he expected to happen in late August or early September.

Any further delay could jeopardize the private money behind the project, he said, which would cause the project to grind to a halt.

Additionally, the PFC’s attorney, Jim Plummer, told board members that as part of purchase of the property, the PFC had forced the seller to dismiss a lawsuit they had filed against the City of San Antonio.

If we are not able to pay the balance of the sales price, we would be in default under our purchase agreement, and the seller would be able to reclaim the land and would be theoretically be able to reinstitute his lawsuit against the city of San Antonio. And that was approximately $20 million lawsuit against the city,” Plummer said.

Of the five council members on the PFC board, three will be ceding their places on the dais to someone new on Tuesday: District 1 Councilman Roberto Treviño, District 3 Councilwoman Rebecca Viagran, and District 5 Councilwoman Shirley Gonzales.

District 4 Councilwoman Adriana Rocha Garcia and District 9 Councilman John Courage both won reelection and will remain on city council.

Treviño was the lone vote against the financing deal, saying the cost to subsidize the project was too high given how much affordable housing would be created.

Rocha Garcia abstained from voting, telling KSAT that she did so because she did not know how the incoming District 2 Councilman, Jalen McKee-Rodriguez, felt about the project.

Viagran, Gonzales, and Courage voted in favor of the deal.

Three of the five council members on the San Antonio Housing Authority Public Facility Corporation Board will be leaving city council on Tuesday.

I would love nothing more than to delay this project for the next council member,” Gonzales said. “I think, you know, maybe certainly not like the last thing that I want to do on this council is have a discussion about a controversial project like this. But the reason I support it, and I always have, is because I have had the pleasure of working with seven different District 2 council members, and they all supported it.

McKee-Rodriguez did not weigh in on the issue, though he told KSAT afterward, “I’m very disappointed. I don’t believe that this development meets our affordable housing needs.”

The councilman-elect said “it has been a very rough transition” and that he was being briefed on another issue during the PFC meeting. Asked why he didn’t send in a written comment, McKee-Rodriguez said “a number of parties dropped the ball,” including himself.

“I will be sworn in tomorrow, but there’s still ways to come to them that comes with being a council member-elect,” he said.

About the Authors:

Garrett Brnger is a reporter with KSAT 12.