Small-business owners in Hemisfair, La Villita and Southtown said they’re all for Project Marvel — so long as long as the City of San Antonio’s Public Works Department has nothing to do with surrounding infrastructure improvements.
City officials are eager to build public support for Project Marvel, a proposed $4 billion sports and entertainment district anchored by a new downtown Spurs arena, ahead of Nov. 4 public vote on funding the sport facility.
However, owners of several high-profile downtown-area businesses tell the Current that Public Works’ construction on South Alamo Street, now more than two years behind schedule, has broken their trust the city is capable of pulling off an undertaking on the scale of Project Marvel.
“It’s not just mistrust anymore, it’s a deep distrust,” said Jody Bailey Newman, owner of Southtown fixtures the Friendly Spot and Bruno’s Dive Bar. “People are afraid to have infrastructure improvement happen in front of their business, not because they don’t want the improvement, but because they don’t trust that the city will manage the project with them in mind.”
Bailey and others said that during a Sept. 3 meeting held with city officials, City Manager Erik Walsh admitted the city had “lost control” of the South Alamo project and its contractor, Sundt Construction.
A city spokesman denied Walsh made the comment. However, Bailey and at least two other witnesses who were at the meeting disagree.
Small-business owners argue that the construction, which began in December 2022, has damaged their bottom lines. Moreover, while the city has set up its so-called Stabilization Active Construction Grants to offset the financial damage, the business owners said the program’s requirements are outdated, cumbersome and disqualify too many people.
However, San Antonio’s Development Services Director Michael Shannon told the Current the construction delays aren’t the city’s fault. Further, the area remains easily accessible to pedestrians, who are free to patronize nearby businesses.
“We — through every phase of the project — are creating an accessible path, either across La Villita to Hemisfair, through a [crosswalk] that’s being maintained, or up and down one side of the street on South Alamo,” Shannon said.
Shannon added that he’s walked through the construction several times and felt safe doing so.
“Yes, it’s a construction zone,” he said. “But, we have barriers to keep people safe walking through that.”
Shannon chalked up the delay in the street upgrades to “unforeseen utility work” — the same problem the city blamed for long-delayed construction projects on the St. Mary’s Strip and around Market Square.
Sundt Construction is the same contractor in charge of the work near Market Square. Meanwhile, SpawGlass was the company the city contracted with to complete the St. Mary’s improvements.
The delayed completion of both of the Market Square and St. Mary’s projects resulted in closures of nearby businesses — something those around South Alamo may be inevitable as that construction drags on.
“I think the city has done stuff to learn from some of these [utility] issues,” Shannon said. “I think we as a city have tried to address that, and moving forward, we’ll have fewer of these unexpected, unforeseen issues on these projects.”
Conditional support
Despite Shannon’s assurances, Blush Restaurant & Bakery owner Efren Moreno said small-business owners no longer trust the city complete construction work on time. That could result in unforeseen backlash against the proposed Spurs arena project, he added.
“If the Spurs are responsible for the construction, then I have a lot more faith in this being done in a timely manner, because they have deadlines,” Moreno said. “The NBA is going to set deadlines about when things have to be open and running. The City of San Antonio seems to have not learned from all their mistakes from Broadway to St. Mary’s, to now South Alamo. The city doesn’t have a clear pathway to avert all of these issues.”
Moreno said he and other downtown business owners are in favor of Project Marvel. So long as the city keeps its hands out of the construction, or at least hires better contractors.
Both the Zona Cultura and South Alamo Street projects were part of a 2017-2022 Bond Package, which came with a $60 million price tag. Both sets of street upgrades aim to improve “pedestrian amenities,” according to the city’s website.
The South Alamo Project was originally supposed to wrap up around December 2024, Shannon told the Current. However, under the city’s new timeline, construction will be completed in “Spring 2026.”
“When the contractor went in there, [they found issues] with the very old underground utility infrastructure,” Shannon said. “They found issues underneath there that were not foreseen in the original design. So, a redesign had to happen, which took a long time to get situated and get back on track.”
When asked why the city didn’t consider consider the possibility of finding the outdated infrastructure after the St. Mary’s Strip debacle, Shannon said officials are working to prevent the same issue from happening again.
“There are some agreements that will happen on projects moving forward, some individual agreements really defining how we and our utility partners … . You know, we have to work together better and are working together better,” he added.
Holding contractors accountable
Shannon didn’t elaborate on what those agreements are, nor did he mention specific city plans to hold contractors accountable if they can’t complete work on time.
Following backlash over the St. Mary’s delay, then-District 6 Councilwoman Melissa Cabello Havrda passed an ordinance that would allow the city to impose fines and other penalties on contractors who blow past deadlines. Dubbed the Responsible Bidder Ordinance, the measure also bars the city from doing business with firms that can’t deliver on time.
Just the same, Shannon said the Responsible Bidder Ordinance couldn’t be used with regard to the South Alamo project because the measure only applies to “low-bid contracts.”
Under state law, municipalities such as San Antonio must accept the lowest bids for certain projects, according Shannon. Cabello Havrda’s ordinance allows the city to reject trouble contractors, even if they place the lowest bid.
“This wasn’t a low bid project,” Shannon said of South Alamo. “But, we do have ways to use past performance in considering them for future projects, even if they’re not low bid.”
The city could hold Sundt accountable via a liquidated damages clause, according to Shannon. That would enable the city to dismiss charges over the original dollar amount of the contract if city officials deem them unnecessary.
However, the exact amount the city could recoup won’t be finalized until the project is finished, Shannon added.
Meanwhile, area business owners said they’re losing patience — and a lot of money.
Barely hanging on
Revenues for the San Antonio food, beverage and hospitality industry is down 10% to 15% this year, Box Street Street Social owner Daniel Treviño told the Current.
However, Teviño said his Hemisfair restaurant, located in the heart of the South Alamo Project, is facing even stronger headwinds due to the construction.
“We’re down 35% or 40% some weeks,” he explained. “It’s really hurting.”
Treviño said he worries that as construction drags on, diners will stay away and try other places, permanently hurting not just his business but all of those in Hemisfair.
Even though the San Antonio Economic Development Department’s specialized grants can offer businesses in La Villita, Southtown and Hemisfair up to $35,000 to offset construction-related losses, some said they’re not worth the hassle.
To qualify, businesses must have been open for at least two years, which automatically disqualifies some, including Blush Restaurant and Bakery, which began serving just a month before construction began.
The other issue is the grants rely heavily on business’ revenues to determine whether they qualify.
“If [a business’] sales revenue numbers are higher, that doesn’t necessarily mean that profit margins went up,” Blush’s Moreno said.
Friendly Spot’s Newman said restaurants have been forced to raises prices due to inflationary pressures, which can inflate their revenues. Meanwhile, those higher revenues are being eaten up by pricier food costs, utilities, property taxes and other expenses.
“Friendly Spot has more sales this year than last it did last year because we’ve had to raise our prices because the cost of goods has gone up,” Newman said. “But, that doesn’t mean we’ve made more profit.”
Business owner Renee Fernandez, who was denied a construction grant, said the process appears arbitrary.
Fernandez owns both Hola! and Azuca Nuevo Latino, both of which are located just steps from Hemisfair and experienced significant business declines due to the construction.
Although Azuca Nuevo Leon landed $30,000 grant from the city, Hola!, located at the intersection of South Alamo and East Cesar Chavez Boulevard, was denied.
“They did not give me any information why, other than that they were sorry,” Fernandez said.
The city did not directly respond to the Current’s questions about why the grant system had seemingly left some businesses empty-handed.
Mitigating damage
District 1 Councilwoman Sukh Kaur, whose district includes the South Alamo Project told the Current her office is working with businesses to mitigate the damage.
Small-business owners affected by the ongoing construction voted in August to delay the complete closing of the South Alamo and East Cesar Chavez intersection until after the holidays.
“The vote was to pause, so we are pausing that intersection construction,” Kaur said. “So, they’re just going to be doing the opposite side [of the insertion] in November. They’re not going to close that intersection.”
In the meantime, her office is working to design signs that will remind and encourage both locals and tourists that, despite the construction, locally owned businesses at Hemisfair, La Villita and Southtown are still open.
Still, businesses such as Treviño’s Box Street continue to struggle as they wait for the project to finally wrap up.
“I’m not here to speak ill of Sukh, because it’s not her fault,” Treviño said. “But, I do feel like the city as a whole, as a collective, is not really paying attention to what’s going on down here. Or maybe they’re starting to now. But let’s get this thing going.”
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