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Council rejects affordable housing project

Thursday, December 5, 2019

The San Marcos City Council has given a thumbs down to a potential affordable housing development with a 4-2 vote. 

After a potential affordable housing development was placed back on council’s agenda Tuesday, councilmembers decided to vote against offering a resolution of no objection to the submission of an application for low-income housing tax credits to the Texas Department of Housing and Community Affairs for the development. San Marcos Mayor Jane Hughson and councilmember Ed Mihalkanin voted in favor of offering the development a resolution of no objection. 

The project — Lantana on Bastrop Multifamily Housing Project — would be located at the intersection of South Old Bastrop Highway and Rattler Road. It's an income-restricted project applying for a housing tax credit program through the Texas Department of Housing and Community Affairs (TDHCA). The TDHCA “awards tax credits to eligible participants in order to offset a portion of their federal tax liability in exchange for the production or preservation of affordable rental housing.”

Previously, no exemptions from local taxes were provided under San Marcos’ Low Income Housing Tax Credit (LIHTC) Policy. On Nov. 6, the San Marcos City Council approved an amendment to the policy which allows the applicant to ask for an exemption from local taxes if the project meets the criteria listed in the policy. 

The developers would be partnering with the San Marcos Housing Authority for the project, which would give the Authority $1,381,962 over a period of 4-5 years, as well as $150,00 per year through 2035, according to documents provided by the San Marcos Housing Authority. 

“This would greatly enhance our opportunity to help those individuals who are least able to help themselves and I term these people as people who are at the bottom end of the economic ladder,” Albert Sierra, director of the City of San Marcos Housing Authority, said during public comment. “We’re talking about people who are 30% of income and down below that, so I encourage, we encourage, your vote of no objection to this resolution.”

Councilmember Melissa Derrick expressed concern with the amount of 70% Average Median Income units proposed in the development. Of the 216 proposed units, 22 units would be 30% AMI, 22 units would be 40% AMI, 60 units would be 50% AMI and 112 units would be 70% AMI. 

“They have no units at the 60% and then more than half of the units are at the 70% which is not affordable to the people in our community,” Derrick said. 

Hughson, who voted in favor of the development, noted that the development is currently in the ETJ, meaning the city would not lose any existing tax base. 

“While 122 (units), which is a little over the total, the rest (of the units are) in that 30-50% and we’ve got people who need that housing,” Hughson said. “We would be losing future tax base but this is in the ETJ now and even if it were in the city it’s vacant land, so we’re not making much on taxes or wouldn’t anyway. So it would be future tax base which is kind of what we do with incentives for jobs-based businesses.”

Mihalkanin also voted in favor of the development. 

“Out of the eight criteria that is being asked for, six out of the eight are being met,” Mihalkanin said. “In addition, the developer is working with a local, well-proven entity, the housing authority, that has an excellent track record. So for me, I’m supporting this. I understand the concern of the certain percentages but it’s meeting so much of what we say we want. I mean if it was meeting two out of the eight, even with the local partner, I could see the hesitation but meeting six out of the eight criteria, for me, this would be a benefit to our community.”

Councilmember Mark Rockeymoore said he is “concerned about the perception that we need to accept everything that comes across our list in regards to the types of development that we’re receiving.”

“San Marcos is the jewel of Central Texas and as councilmember Derrick said, we’ve got people coming in line after line after line who want to develop here.” Rockeymoore said. “And I believe that if we’re going to do this (tax exempt) for the first time then we should do it right and we should make sure that we get everything that we want to set a standard for everyone else who comes in.”

City Manager Bert Lumbreras told council that “as we tackle this big issue of workforce affordable housing that housing at a lot of levels is really needed.”

“I think Mr. Sierra could probably say that there is a huge need for the folks that he serves in the community and it is something that is going to continue to increase and get you know more in the future,” Lumbreras said. “I think you would also find in our housing study that we did that because San Marcos is so far behind in our overall housing you really are talking about creating opportunities for housing at a lot of different levels.” 

“The only value I could give to you is there is a definite need for a lot of housing at a lot of income levels whether its at the 60% or the 70% level.” Lumbreras added. “And I think there’s a lot of value with the relationship here with the housing authority.”

In other business, council received a staff presentation and held a public hearing regarding Ordinance 2019-45, which amends various sections of the City’s Land Development Code to address typographical and technical errors, implement recommendations of the Historic Preservation Commission to restrict the painting of masonry in the downtown historic district, and to implement changes in response to new laws enacted during the 2019 Legislative Session. 

Likewise, the ordinance amends Section 86.188 of the San Marcos City Code to require new development to have underground electric utilities, to require overhead electric service installations to be on steel poles, and to establish certain standards for electric easements.

After discussion and direction to staff, council voted unanimously to approve Ordinance 2019-45 on the first of two readings, with a second reading scheduled for Dec. 17. 

San Marcos Record

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