Last week I talked about the increase in residential housing activity in San Antonio and how I felt the historically low interest rates played a part in that. Today, I want to touch on the Annexation 360 Program and the analyses produced by HR&R Advisors and Public Financial Management on said annexation program.
San Antonio’s Annexation 360 Program is a plan to extend the city limits in five areas during two phases. Phase one will be the I-10 East, I-10 West, and 281 North areas while Phase two will be Highway 151 and the Highway 90 area. The reason for this is to both provide more convenient public services to the areas mentioned above and generate more revenue for the city through property and sales tax of the area. Phase one annexation is said to begin November of 2017, although the official timetable is yet to be finalized. Mayor Ivy Taylor recently commented, “We’re still going slowly, which I think is better, to take the time to be thoughtful about what we’ll do and weigh out all our options,” January of this year.
The city projected a 15% population growth from 2010 to 2020 for I-10 East, 69% for I-10 West, 379% for Highway 151, 87% for 281 North and 78% for Highway 90. The city also projected the I-10 East and Highway 90 areas will have expenses that exceed revenue from the annexation. Annexation will give the city more tax revenue and allow for more federal grant funding since it’s allocated based on a per capita basis.
HR&A Advisors felt the city’s projections were too optimistic on revenue gained, underestimated costs associated with expansion and both HR&A and PFM felt the city’s proposal needed alternative scenarios explained such as a situation where growth either stagnates or exceeds the historical trend. Additionally, HR&A felt the analysis needed to “evaluate risk of downside scenarios”.
HR&A addressed the nation-wide trend of population growth. Across the nation, more and more people are moving back into the city to be closer to the technological jobs that are offering the most attractive salaries as well as vibrant downtowns. HR&A say that traditional manufacturing jobs and industries are dying out, giving way to the entrepreneurial and technologic based companies that are so popular today.
The fascinating part is San Antonio appears to be an outlier, an exception to the norm, “4% of San Antonio’s college educated young professionals live downtown compared to the national average of 12.7%,” (HR&R Associates). San Antonio is still moving out to the suburbs and most credit this to the location of the major companies within the city. Due to the location of the city’s industries, there is still plenty of demand for single family residential homes. I believe this to be another reason we are seeing a growth in new home construction, in addition to historically low mortgage rates.
HR&R and PFM warn San Antonio to be wary of any predictions of population growth because of the city’s unique nature. It is hard to say whether the growth will continue to trend towards the suburbs or fall in line with the national trend of moving back to urban living.
The city still believes property value in the 5 target areas will increase. Home builders are sure to hear this news and want to commit more efforts to even more starts for the rest of 2016 and 2017. Due to San Antonio increasing its boarders further into the suburbs, the city is growing in size while simultaneously lowering in density. Ultimately, home builders like hearing, “the national trend of urban growth has not taken hold in San Antonio, which ranks among the fastest growing cities in America while remaining one of the country’s most suburban metropolitan areas,” (HR&R Associates).
It’s hard to say what the future of San Antonio is but the city still appears to be one of the nicest climates for individuals looking to purchase real estate.
Sr. Data Analyst
The Schrader Group