Eyeing the pitfalls of purpose-built student housing and CUPs

Purpose-built student housing has its own category in the San Marcos development code, and on Tuesday council held a brief discussion of the definition of that category to discuss whether it is adequate.

“We have discussed purpose-built student housing, and a few years ago we added that as a category to the code,” Mayor Jane Hughson said. “And as such we also require … a conditional use permit (CUP) for student housing.”

Hughson noted that one of the conditions is to provide a remedy to students if a new student housing project is not ready on time.

“And I think that’s some of the best work we’ve done, certainly for students,” she said.

As for the definition in the code — “one or more buildings, each containing two or more living units, that are designed, marketed, or used for the primary purpose of housing college students” — Hughson wanted a discussion to see if council felt it is adequate in the context of builders asking for CUPs.

“I’m concerned that it is not enough, but I don’t really know what we can do to make it that way,” she said. “Because this is whenever someone is asking early on in the project. The CUP will be requested long before you see building plans.”

The problem that Hughson sees, she said, is that if a development not intended as purpose-built student housing ends up becoming student housing, the city’s options could be limited. 

“The situation will be one way and a permit is approved … but things change, business models change, people change,” she said. “And for an alcohol use permit, if somebody had said they weren’t going to do outdoor music and now they are, it’s kind of easy to say we can change the condition. I don’t know how we can change the condition on something that’s already built.”

If a project is not meant as student housing but the non-student rental market isn’t there, then the projects owners have “bypassed the conditional use permit” that other projects are required to have.

Hughson noted that when the city’s planning department looks at building plans, if apartments are laid out with a bathroom in each bedroom, that indicates that it will be rent-by-the-room student housing. However, city planning chief Shannon Mattingly said, “When we’re doing the CUPs we’re not always at that point where they have building plans.”

Mattingly continued, “The problem is that a lot of times what might happen is maybe they don’t develop the complex with the bedroom-bathroom type style, but then it starts converting over and they start renting to students. That’s not something we necessarily control — who they’re leasing to.”

“And it’s not that we don’t want students to have a place to live. … We just want to make sure these are in the right places so as to not negatively impact the neighbors,” Hughson said. “It’s not that we don’t want student housing — we just need to make sure we’re getting it in the right place with the right situation.”

City Attorney Michael Cosentino said that if a developer starts out not needing a CUP but circumstances change, the city does have ways to bring the developer into compliance.

“They need to do their due diligence,” he said, noting that if they decide to market a property to students without the needed CUP, “It’s their risk.”

Cosentino said the city could withhold a certificate of occupancy if a project became purpose-built student housing without the required CUP. 

“I think the development community are sophisticated enough that if they don’t get the entitlements they need, most of the time they don’t buy the property,” Cosentino said. “So they’re at their risk if they proceed without a CUP.”

In the case of buildings that have been standing for a while, he said, the city could get an injunction or fine the developer $2,000 per day.

“You don’t want to have people who are occupying that innocently suffer,” Cosentino said. “You don’t want to go evicting people. So you put it on the developer.”

Council decided that the definition of purpose-built student housing as it is in Code SMTX is sufficient.

“I think we have the remedies there,” council member Melissa Derrick said.