City Council members Thursday overhauled two programs that gave millions of dollars in incentives to downtown housing developers but that critics say neglected San Antonio’s need for affordable housing.

By an 8-2 vote, council members approved major changes to the Inner City Reinvestment and Infill Policy and the Center City Housing and Incentive Policy to expand the programs’ reach beyond downtown and create affordable housing requirements for projects that receive the incentives.

District 4 Councilman Rey Saldaña and District 7 Councilwoman Ana Sandoval voted against the package. An earlier motion by Saldaña to delay the vote for 30 days to allow more time for public input failed.

“As a community, we have to continue working to expand the supply of housing at every income level and in every part of our city,” Mayor Ron Nirenberg said before the vote. “This new and improved policy will help us to accomplish that goal.”

But several grassroots organizers and neighborhood leaders rejected that take on the changes. They said the programs would subsidize downtown housing for the wealthy, displace poorer residents and make housing unaffordable for the type of people the city wants to attract downtown: millennials and recent college graduates.

“This is incentives for housing for the wealthy and ... using our public dollars to benefit for-profit developers,” said Cynthia Spielman of the Beacon Hill Neighborhood Association. “This is not a good way to create a vibrant downtown or a downtown most of us envision, and we deserve better from you.”

The city’s Neighborhood and Housing Services Department is working to develop a strategy to provide financial assistance to residents and businesses displaced by developments that have received city incentives. Projects that are directly forcing residents out of their neighborhoods will not be eligible for Center City Housing and Incentive Policy incentive funds, officials say.

“If there are reports that any incentive program is at fault for displacement, we will act immediately to mitigate and end that displacement,” District 1 Councilman Roberto Treviño said. “You have my word on that.”

High land prices and construction costs made building downtown housing difficult, even with incentives provided through the original CCHIP, said Bill Shown, managing director of real estate for Silver Ventures, which developed the Pearl.

Though he supported the changes passed Thursday, Shown said they may have made downtown housing development more difficult, “to the point that there may not be much if any additional central city housing.”

The programs emerged from then-Mayor Julián Castro’s push for a “Decade of Downtown.” The idea was to encourage the construction of market-rate housing downtown — long an area geared primarily toward tourists and the hospitality industry — in order to draw residents, companies and new retail to the center city.

The Inner City Reinvestment and Infill Policy, or ICRIP, waives city and San Antonio Water System fees for developers who build in low-income and undeveloped neighborhoods. Under CCHIP, developers receive property tax rebates and construction loans, forgivable under certain conditions, to build housing in the urban core.

Supporters of the programs and downtown development say they worked. Since 2012, the programs have stimulated at least $4.4 billion worth of investments and led to the construction of at least 10,000 housing units, 230,000 square feet of retail space and 28,000 square feet of office space. CCHIP has given out almost $102 million to developers since 2012.

But the programs drew criticism from council members who questioned whether the city needed to continue subsidizing housing projects downtown, leading Nirenberg and council members to pause CCHIP last year.

Nearly 60 percent of all city housing development incentives, or $80.7 million, has funded market-rate housing projects downtown, at the Pearl, in the Broadway corridor and in River North areas, a 2017 San Antonio Express-News analysis shows.

Critics also questioned why the city was funding housing projects considered economically out of reach for many residents.

CCHIP awarded the upscale Cellars at Pearl apartment complex $3.7 million in incentives, where the average rent was $3.14 a square foot when it opened last year. San Antonio’s average rent sits at $1.16 a square foot, recent figures from rental housing research company Austin Investor Interests show.

The rules package approved Thursday would bar housing units for sale at $360,000 or more or apartment complexes with average rents of $2.75 a square foot or higher from receiving incentives.

Under the proposal, the city will rename ICRIP the City of San Antonio Fee Waiver Program and establish fee waivers of up to $250,000 for affordable housing projects and up to $150,000 for owner-occupied rehabilitation, historic rehabilitation and business development projects.

CCHIP will keep its name but undergo a significant overhaul as it’s renewed for two years. The program will adopt a three-tiered system tailoring incentives for areas in and around downtown as well as 13 employment centers around the city.

A quarter of property tax revenue from projects that receive CCHIP incentives will go into a fund to support affordable housing projects, expected to generate $1.1 million in annual revenue. Developers of those projects will have to set aside a certain percentage of units for affordable housing, depending on where they build.

Housing projects built in a 1.73-square-mile region surrounding the downtown Central Business District must set aside 10 percent of their units for households making 80 percent of San Antonio’s area median income. They’ll have to dedicate another 10 percent for those making 60 percent of the area median income — or plan to build taller than five stories.

Councilman Saldaña said the city risked subsidizing a glut of market-rate housing if it couldn’t find a way to encourage more housing for families earning 60 percent or below the area median income.

“If we’re going to be serious about the issue of a diverse downtown, we have to put up or shut up if we want that as our goal,” Saldaña said.

Joshua Fechter is a San Antonio-based staff writer covering retail and tourism. Read him on our free site, mySA.com, and on our subscriber site, ExpressNews.com. | jfechter@express-news.net | Twitter: @JFreports