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Hotel Robt E Lee in Shadow of Frost Tower to Get $8.5 Million Renovation

Hotel Robt E Lee (right) faces Frost Bank Park. The future Frost Tower (shaded in the center) will be cater-corner to it.

by Adolfo Pesquera

San Antonio (Bexar Co.) – City Council agreed it would not object to a tax credit application for the renovation of a 94-year-old, 10-story apartment tower for low income seniors that sits cater-corner to the selected site for San Antonio’s newest skyscraper.

The Thursday vote not to obstruct the $8.5 million project is an action required by the Texas Department of Housing and Community Affairs before the state agency will accept an application for a 4 percent housing tax credit. On this project, the tax break would have a value of $2.5 million.

If the TDHCA Governing Board approves the project in December, the owner of Robert E. Lee Apartments at 111 W. Travis St. will upgrade all 72 units. The owner, RELEE Partners LP has agreed to restrict rents to persons with incomes that are 60 percent of the area median.

This concerned several councilmembers, since there are tenants on incomes substantially below the 60 percent median income threshold.

Mayor Ivy Taylor pointed out that the city is not a financing partner on the project and has little say beyond choosing whether or not to object. Taylor said councilmembers should be realistic and understand that some tenants may have to move. If the project is obstructed, she said, the building will continue to deteriorate.

Assistant City Manager Lori Houston said that if the owners cannot submit the tax credit application, their alternative is to sell the property. Given the prime downtown location, any buyer would likely convert the building to market rate rents or sell each unit as a condominium.

Councilman Rey Saldaña questioned whether in fact the property could be converted to market rate.

Houston said the owners have held the property for 20 years, operating it as an affordable income residential community for seniors. She said they would prefer to continue to own it and keep it available to low income tenants. But she assured council there was no restriction stopping them from doing a market rate conversion, and they do have offers to sell.

She added that under a memorandum of understanding with the city the owners will work with city staff in identifying a retail tenant that would be appropriate for the senior community. Also, the owner is planning to create a community center in part of the ground floor, which is currently not being utilized.

The majority of renovation cost involves upgrading the bathrooms and kitchens of the rental units. However, because this is a historic building, restorations to the exterior will go through review with the Office of Historic Preservation and the Historic and Design Review Commission, Houston said.

Taylor added that the owner is open to changing the name. This was originally a hotel and the neon light sign at the entrance still says Hotel Robt E Lee. It is named after Robert Edward Lee and buildings with his name have been controversial of late because of Lee’s role as commander of the Confederate Army of Northern Virginia and later general-in-chief of Confederate forces during the American Civil War. A local high school by the same name was recently renamed.

The Robt E Lee was built in 1922-1923 and is known for its iconic rooftop sign, which includes the words “Air Conditioned.” It was one of the first buildings in Texas to have air conditioning and has 74,305 square feet of living area.

Its entrance faces the Frost Bank park and the Frost Bank Building on the south side of the park. The Frost Tower, a glass skyscraper currently under design, will also face the park on its western border.

The scheduled construction phase is from March 2017 to March 2018.

RELEE Partners LP is a holding of The Richman Group of Companies based in Greenwich, Connecticut. Richman Property Services Inc., which handles property management for Richman assests, is based in Tampa, Florida. The San Antonio Express-News has reported that JHM Group of Stamford, Connecticut will oversee the renovations. JHM has expertise in distressed real estate and affordable housing.

Unlike the 9 percent housing tax credit, a 4 percent HTC is not competitive, meaning applicants are not scored against other regional applicants, and the amounts available are not based on a state’s population.

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adolfo@virtualbx.com