A New Leader at HUD: Julián Castro Has Invigorated San Antonio as Mayor

6 min read

San Antonio developer Dan Markson expects many positive things if local Mayor Julián Castro becomes the next HUD Secretary, having witnessed the results of his administration’s policies since 2009 in housing, downtown redevelopment, and other areas. City officials who have worked with the mayor feel the same.

At a White House ceremony on May 23, President Obama announced his nomination of Castro to serve as the next Secretary of the U.S. Department of Housing and Urban Development (HUD). If confirmed by the U.S. Senate, he will succeed Shaun Donovan, whom the president nominated the same day to be Director of the Office of Management and Budget.

During the ceremony, the 39-year-old Castro remarked on his upbringing and vision.

“My brother, Joaquin, and I grew up on the West Side of San Antonio, taking public transportation and living in rental homes as we grew up. And it was there that both of us got a sense of what is possible in America, and an understanding that just because you were of modest means does not mean that your aspirations or your opportunity ought to be limited. It means you can have the talent to succeed and achieve the American Dream.

“After five years as mayor of my hometown, I know this much. We are in a century of cities. America’s cities are growing again and housing is at the top of the agenda. I look forward to being part of a department that will help ensure that millions of Americans all across the country have the chance to get good, safe, affordable housing and to reach their American dreams.”

In his third term as mayor, Castro has overseen a fast-growing city of 1.3 million people that is the second largest in Texas and the seventh most populous in the U.S.

From his first days in office, he has dreamed big – and encouraged others in San Antonio to do the same. In 2010 he assembled a wide variety of stakeholders – community and business leaders, residents, and others – and charged them with imagining how they would like the city to look by 2020. The initiative, SA2020, produced a roadmap of specific goals to achieve in San Antonio by 2020 in 11 areas: arts and culture; civic engagement; community safety; downtown development; economic competitiveness; education; environmental sustainability; family well-being; health and fitness; neighborhoods; and transportation. A nonprofit, also called SA2020, was formed to foster actions to realize the goals and track progress toward them. (For details, go to http://www.sa2020.org)

Markson, a regional partner and Senior Vice President of Development at The NRP Group, a Cleveland, Ohio-based apartment developer, general contractor, and property manager with a presence in 13 states, participated in the collaborative brainstorming that was part of SA2020. He indicated that Mayor Castro and his administration have drawn up strategic plans for promoting and guiding development throughout San Antonio, have adopted incentives for development of new mixed-income multifamily housing in downtown and other targeted areas, and have tried to create a “cool factor” to make the city more vibrant and appealing, especially to young professionals. Markson says the result of the “visioning” effort was “a paradigm shift for figuring out what it took to bring development into the core.”


Downtown Housing Goal, Incentives

One goal of SA2020 is an additional 7,500 housing units in downtown San Antonio by 2020. When Castro first took office there were about 3,300 units.

The Castro administration has adopted several sets of incentives for new development, according to city officials Lori Huston and John Dugan. Huston is Director of the Center City Development Office, which oversees and promotes development within a 5.2-square-mile area that includes San Antonio’s central business district and the surrounding neighborhoods.

“Our downtown strategy is really a housing first strategy,” says Huston. The idea is to increase the number of people living downtown – which in turn will attract new retail and employers – by first adopting policies that encourage the development of new multifamily rental housing. This, then, should spur development of multifamily for-sale condos.

A new downtown multifamily housing project automatically receives waivers of the city’s development services and water/sewer hookup fees and a 10- to 15-year rebate on property taxes, and is eligible for a low-interest loan based on the number of housing units. In addition, a forgivable loan is available for mixed-use projects with housing and either commercial, office, or retail space.

In exchange, developers must maintain rents on at least 10% of a project’s units at the first-year rent level for 10 to 15 years. There are no restrictions on rents or rent adjustments on the remaining units. The notion is that while the initial rent on the restricted units may be at market, before the end of 15 years it should be significantly below market. “In this way we can preserve some housing units for the young professionals, people on fixed incomes, and workforce development,” says Huston.

Since 2010, in the downtown area, 19 housing projects have come online, are under construction, or are in the planning stages, adding 3,100 units.

The city has adopted incentives such as fee waivers for new multifamily housing development within a broader, 85-square-mile inner-city area, according to Huston and Dugan, the city’s Director of Planning and Community Development. The city channels much of its federal HOME and CDBG dollars to projects in this area. San Antonio also has a local housing trust fund providing $1 million to $2 million annually.

In addition, the city has received a Choice Neighbor-hoods grant and Promise Zone designation.

San Antonio is expected to grow by another million people in the next 25 years. “That’s a huge increase that we have to plan for, and to do it in a way that is consistent with this 2020 vision,” says Dugan. “That means emphasizing smart growth values, infill development, mixed use, affordable housing for a wide range of people, and increasing the range of products available in the city.

“We’re managing new development, looking at growth centers, and the redevelopment of inner city neighborhoods. All those things are coming together with a new kind of emphasis on planning and anticipation of the future here. And that’s certainly one of Mayor Castro’s major legacies from my perspective.”