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San Antonio

City fees blew up affordable single family deal in San Antonio

Mayor wants to stem sprawl, but urban infill is too expensive

City Fees Blew up Affordable Single Family Deal in San Antonio

(Photo Illustration by The Real Deal with Getty)

A piece of property that’s for sale near downtown San Antonio highlights the difficulties of infill development in the city.

The 6.8 acres at 1354 Menefee Boulevard was under contract to a developer who had planned to build single-family affordable housing, the San Antonio Business Journal reported.

Even though entitlements were in place, the developer ditched the idea to build 42 homes because it couldn’t afford a $140,000 tree mitigation fee, Urban Capital Strategies José Niño told the outlet. Niño’s firm is brokering the property’s sale, and he declined to identify the developer.

“Smaller projects like these require all the same regulatory conditions and requirements as a larger project, so fixed costs are more concentrated,” Niño said. “And when you’re trying to deliver product to underserved communities, it’s challenging to make the numbers work. Developers say, ‘Our land costs and development costs are the same as for a mid-priced community.’”

San Antonio Mayor Ron Nirenberg wants to reduce urban sprawl, according to the city’s growth-management plan, which was rolled out this summer.

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“We should be encouraging — through policy and resource planning — infill growth,” Nirenberg said.

But the majority of new housing developments are outside the city limits, in its extraterritorial jurisdiction, the outlet reported. 

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That’s because the closer one gets to downtown San Antonio, the more difficult it is to develop, given the area’s higher land prices and labor costs. When expensive fees are added to that, sometimes it means deals won’t pencil out.

Niño said he met with city officials recently and suggested that if they want developers to build infill affordable housing, the city should make concessions. 

“Smaller projects like these require all the same regulatory conditions and requirements as a larger project, so fixed costs are more concentrated,” he said.

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Affordable HousingInfillSan AntonioSingle Familysprawl