During a June 2 meeting, San Marcos City Council voted in favor of an annexation of 21.73 acres and three related rezoning proposals for a property behind the Tanger Outlets, all of which will be subject to a second council vote July 6.

A total of 49.5 acres of land are associated with three zoning changes for a development called parcHaus, with roughly 27.8 acres already within the city limits.

The largest piece of land under consideration for rezoning is 29.66 acres and would be changed from general commercial zoning and future development district zoning to Character District-4 zoning to allow for a 290-unit housing project.

The development would pay no taxes for the first three years of operation due to affordable housing offerings, and payments equivalent to city taxes would be redirected to the San Marcos Housing Authority beginning in the fourth year of operation.

The SMHA, which will operate the property once open, will also receive a $250,000 payment; a $25,000 yearly administration fee; 15% of cash from capital events, such as a refinance or sale; and commissions on future sales.

San Marcos ISD would also receive an annual $50,000 contribution from the developer.

Mayor Jane Hughson expressed concern about the city not receiving tax money from the development, which would be exempt for as long as the SMHA operates it.

"I understand that this can benefit the San Marcos Housing Authority, but without property taxes the people who live there—and it sounds like there's going to be hundreds—they're still going to want to use our library, our parks," Hughson said. "They're still going to expect police and fire service, and this will provide us no income to put toward those efforts."

Dave Holland of Provident Realty Advisors, which is developing the project, said the project's tax value would be in the ballpark of $331,000 per year.

Holland noted it was not traditional affordable housing and was instead targeted toward middle-class housing.

"It is not truly affordable housing; it is the missing middle," he said. "It's a gap between the very low-income tax credit-type projects to the upper end."

Documents submitted to the city by the developer state parcHaus would provide workforce housing for teachers, retail workers, single parents and recent graduates.

According to Holland, the agreement with SMHA had not been finalized by June 1, but would hopefully be inked before the zoning's second vote, which was a concern for Place 1 Council Member Max Baker, who expressed a desire to see it completed before rezoning.

Units of parcHaus would be one- and two-story homes with fenced yards. Some units would include attached garages, and amenities include a pool area, fitness center and clubhouse.

Of the 290 units, half would have market-rate rent, 25% would be reserved for applicants earning 70% of the median income in the area and 25% would be for people making 60 percent of the median income.

Depending on the applicant's eligibility, the average rent for units, which have one to three bedrooms, would range from $1,300-$1,700 in today's market, according to the Holland. ParcHaus is expected to be complete in roughly two years, and the rent is not locked into current market levels.

Baker and Place 2 Council Member Saul Gonzales voted against the zoning.

Holland told City Council a plan did not yet exist for a 9.66-acre section of the property bordering the outlet mall. Its existing zoning, which mirrors the previous proposal's, would be changed to Character District-5. CD-5 zoning is intended to allow residential, retail, service and commercial uses.

A third division of land up for rezoning is 10.19 acres and is intended to become a runoff detention area for the development. It would be rezoned Character District-1.

The second and third zoning proposals were passed unanimously.