A San Antonio developer’s struggle highlights how difficult it is to get affordable housing projects off the ground amid hiked interest rates and construction costs.
Alamo Community Group, led by president Brandi C. Vitier, aims to build 138 apartments at 811 West Houston Street across from VIA Metropolitan Transit’s Centro Plaza, just west of downtown San Antonio. But even with public financing in place for the project, called Cattleman Square Lofts, the nonprofit developer hasn’t been able to finalize a deal due to elevated costs and a recent leadership change, the San Antonio Express-News reported.
The units would be reserved for renters whose earnings are within 30, 50 and 60 percent of the area median income. Tax credits and funds from the city’s housing bond appeared to be sufficient, but sudden changes in the market have forced the developer to reevaluate its financial situation.
“When the deal was put together, it looks like one thing. But it takes like a year to do that, and in the meantime, interest rates just went up six times,” Alamo executive director Christine Drennon told the outlet. “Now partners are looking back and going, ‘Wait a second. We can’t afford the original deal that we put together. We have to change it again.’”
Alamo is trying to raise more capital for the project, and it’s even considered selling the Cattleman Square Lofts venture to another developer to build it.
Other affordable housing developers are enduring similar challenges. Franklin Companies, a group that assists nonprofits with affordable projects, is being more conservative and reducing its development activity because of concerns about where the funding will come from. As interest rates rise and construction costs surge, the financial feasibility of these initiatives is increasingly strained, Franklin’s Ryan Wilson told the outlet.
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The slowdown in production due to financial hurdles poses a significant concern, as demand for affordable housing continues to soar in San Antonio. Roughly 95,000 households in Bexar County spend more than a third of their income on housing and don’t have access to affordable units, according to a 2019 study by the city for its Strategic Housing Implementation Plan.
The city’s plan to address this issue includes a $150 million affordable housing bond, part of a $1.2 billion bond program. Although this initiative aims to alleviate funding challenges, developers are cautious about the uncertainties posed by the ever-changing financial landscape.
—Quinn Donoghue