Free-market advocates say San Antonio’s “market rent” program is boosting consumer costs and amounts to a “subsidy for the rich.”
Attempting to encourage housing downtown, the nation’s seventh-biggest city is subsidizing developers and setting “market rents.”
By City Hall’s definition, market rents are $2 per foot. By city rules, downtown developers must offer 10 percent of their new housing units at that rate for 15 years. Effectively, the city is setting a rent floor of $1,600 for an 800-square-foot apartment.
With those conditions come municipal subsidies that enable developers to receive an 8 percent return on their investment.
Assistant City Manager Lori Houston calls it “housing rate preservation.
“We’re incentivizing downtown development,” asserts city spokesman Jeff Coyle.
Jeff Judson, a local businessman and senior fellow with the conservative Heartland Institute, isn’t buying San Antonio’s “robust incentive program.”
“Is it the city’s public purpose to subsidize developments for the rich?” he asks.
Noting the rising property tax bills and correspondingly high vacancy rates in residential and commercial buildings downtown, Judson said the city “makes infill development time-consuming and expensive, and then they subsidize it.”
Judson points to the trendy Pearl brewery district, where the city subsidized residential developers to the tune of $2.50 per square foot.
City Hall’s “market rate” program artificially, and needlessly, inflates the cost of doing business, he asserted.
“If they just deregulated the process, I have no doubt that the Pearl area would take off at this point on its own,” Judson told Watchdog.org.
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Kenric Ward ([email protected]) is a reporter for Watchdog.org. An earlier version of this article was published at http://watchdog.org/270120/market-housing-prices/. Reprinted with permission.