San Marcos City Council votes to support tax credits for two income-restricted projects

The City Council is supporting two new affordable housing developments. (Community Impact Newspaper)
The City Council is supporting two new affordable housing developments. (Community Impact Newspaper)

The City Council is supporting two new affordable housing developments. (Community Impact Newspaper)

Two income-restricted housing projects will be coming to San Marcos after a unanimous vote at the Feb. 5 City Council meeting. In addition to obtaining the city’s support for federal tax breaks, the projects will be the first to receive a new local tax exemption to encourage the development of affordable housing.

After multiple discussions, revisions and additions, both the Lantana on Bastrop Project and the Redwood Multifamily Housing Project gained the support of the San Marcos City Council.

“This being our first possible project to pass for getting the tax incentive we needed to make it a model project to set a precedent for others that come to our city,” Council Member Melissa Derrick said before voting to approve the Lantana project.

Both projects will be the first to receive a local tax exemption under an amendment recently adopted into the city’s affordable housing policy. In addition, both projects received the city’s support on applications for a Low Income Housing Tax Credit, which is administered through the Texas Department of Housing and Community Affairs.

Once completed, the Lantana project will provide 216 apartment units, with 22 units restricted for residents making 30% of the area median income, which can range from $19,900-$37,500 in San Marcos, depending on the number of people per household, according to the city website. The remaining units will be reserved for residents making 40-60% AMI or less. The developer will have the option to raise the permitted AMI for renters to 70% for some apartment units if demand is present.


Mission DG, the developer of Lantana, has partnered with the San Marcos Housing Authority, which will be a general partner of the development owner and the landlord. The planned project will also provide supportive services and shuttle services to its residents, which is part of the required criteria for developers seeking local tax exemption.

In lieu of taxes, the developer will give the city an annual payment of $11,000, according to the resolution approved by council.

The Redwood Multifamily Housing Project, the second project the council voted to support, will develop 296 apartment units. From these, 30 units will be restricted for residents making 30% AMI or less. The remaining apartment units will be restricted to residents making 60% AMI or less.

LDG Development, the developer of the Redwood project, will be required to make an annual payment of $75,000 in lieu of tax with an increase of $1,500 each year throughout the life of the project, according to the resolution.

Over a 20-year period, the Redwood development will bring $1.79 million to the city, according to documents provided by the developer.

The Redwood project's developer set a memorandum of understanding with the Hays-Caldwell Women’s Center to reserve five units at 30% AMI or less for transitional housing. In addition, the developer has also agreed to carry out a program with Splash Coworking and provide classes for its residents, which may include finance, literacy, life skills improvement, professional development and health and wellness workshops.
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