A Southside landowner is suing the City of San Antonio and Toyota over a 2003 agreement that gave the automaker rein over how property surrounding the plant is used.
Attorneys for Fermin Rajunov of Southside Affordable Development recently filed a petition in state district court after the city refused a rezoning request that would allow him to build apartments near Toyota Motor Manufacturing, Texas.
The 34-acre property sits within a 3-mile radius of the Toyota plant where development is controlled by what’s known as the Starbright Agreement.
Named after the city’s code word for the economic development initiative to attract the automaker to San Antonio, the agreement includes terms that govern issues such as utility rates, permits, annexations — and a zoning buffer around the 2,000-acre truck plant.
Calling it unconstitutional and illegal, attorney David Prichard of the San Antonio law firm Prichard Young said the agreement amounts to “contract zoning,” whereby Toyota has veto power on development requests within the roughly 3-mile buffer.
An attorney for Toyota declined to comment and referred the Report to company spokeswoman Kelly Stefanich.
Stefanich said zoning decisions are the responsibility of the City of San Antonio, not Toyota, and she could not comment on whether other U.S. plants have similar buffers or why a zone was created in San Antonio.
“We remain focused on being a good neighbor, corporate citizen and community leader,” she stated in an email. “We are proud to employ 3,800 team members in San Antonio, facilitate operations for 23 suppliers onsite which provides jobs for more than 5,600 employees, all working daily to build quality vehicles and products for our customers.”
Starbright was part of the city’s all-out effort to ensure the top automaker in the world would select San Antonio for its plant. In exchange for city, county and state economic incentives and other assurances, the truck plant would bring thousands of jobs and suppliers and attract more manufacturing to the city.
Local business groups and politicians lauded the plant as a game-changer for the underdeveloped and underinvested South Side.
Situated along State Highway 16 and Watson Road, next to a single-family housing neighborhood, the Southside Affordable Development property is zoned commercial and up for sale.
The potential buyer, Louis Poppoon Development & Consulting, is planning affordable multifamily housing with 700 units. Rents would be “at below-prevailing market rates to working families and senior citizens,” according to the petition.
Prichard said Councilwoman Adriana Rocha Garcia (D4) initially supported the zoning change. After a subsequent meeting with city officials, she declined to back it. The councilwoman did not return a call for comment.
Another council member, District 8’s Manny Pelaez, wrote an email to Rajunov in June saying he was “sorry to hear” that the city declined a request to move the “infamous Toyota buffer line.”
Pelaez, who represented Toyota as senior counsel in those early talks with the city, empathized with the landowner’s frustration going back 20 years.
“I was in the room when COSA teams and Toyota [teams] promised each other to never let that line move without giving Toyota the ability to veto,” Pelaez wrote. “Toyota extracted a promise from COSA to never move the line without their consent. This was made with the sometimes implied and sometimes explicit threat of never expanding the plant.”
Pelaez added that both the city and the automaker expected at the time they might one day be sued because of the Starbright Agreement.
Pelaez declined to speak with the Report due to the pending litigation.
In recent years, the zoning commission approved at least two rezoning requests near or within the 3-mile plant radius, both to allow single-family residential development.
But city staff recommended denial of a previous similar request in 2020, according to someone with knowledge of the rezoning issue. The zoning commission agreed with the change to residential and council passed it only after tense discussions, the person said, because Toyota got involved.
Rajunov is a business owner advocate and president at Cultiva Financial, which specializes in financial solutions for small and medium-sized businesses, according to his LinkedIn profile. He acquired the land at Highway 16 and Watson Road sometime between 2001 and 2002, Prichard said.
In 2022, Rajunov sought, with other homebuilders’ approval, to subdivide a tract of land he owned, also near Highway 16, for what would become The Preserve at Medina, a neighborhood of single-family housing.
Prichard questioned why Toyota would require the buffer around its plant. “They talk about fumes, they talk about smells, they talk about traffic, they talk about lights,” he said. The studies don’t back that up, he added.
It appears the company’s Plano plant, built in 2017, has no such development-restricting buffer.
“What I say is if they wanted to have this buffer, they should have bought up all the property when they bought the land [for the plant],” Prichard said.
Instead, Toyota entered into what Prichard describes as a contract zoning agreement.
Contract zoning is defined in various ways by legal sources as a land use regulation in which a governing body and a property owner agree to a zoning classification in exchange for certain promises or zoning exemptions.
Starbright documents state that Toyota has the right to impose upon the 3-mile buffer zone “appropriate land use guidelines that satisfy Toyota regarding use, density, setback and other restrictions.”
Prichard argues that zoning is a city function given to it by the Legislature. “And it needs to be used with great discretion and it needs to be used properly,” he said.
After the attorney announced the lawsuit on the steps of the Bexar County Courthouse, City Attorney Andy Segovia provided a statement:
“Inflammatory rhetoric does not substitute for facts and sound legal arguments. There have been many zoning cases in the area surrounding the Toyota facility. Some have been approved and some have not, but always with consideration of factors allowed under zoning laws. We will defend the lawsuit and rely on the facts rather than hyperbole and misinformation.”
In 2007, Toyota gave its approval for the Texas A&M University-San Antonio campus, the boundaries of which are within a mile or so north of the plant.
The green light came with the stipulation that there be no residential dwellings, including multifamily complexes and dormitories, located within 3 miles from the center of Toyota’s project site. Texas A&M-San Antonio has since built student housing on campus.
Prichard pointed to those conditions to show that Toyota is in control of development near the plant. If the company signaled its approval of Southside Affordable Development’s plans, Prichard said he believes the city also would support it because of the housing aspect.
“What we need is quality, high-end, affordable multifamily housing,” he said. “Everybody will tell you that — all of the city fathers will tell you that. Well, you’ve taken that off the table.”
The buffer zone is at odds with the increasing demand for housing in San Antonio and has detrimentally impacted such investment, said Stephanie Reyes, CEO of the Real Estate Council of San Antonio, which advocates for professionals in the industry.
“There is no doubt Toyota is an important part of our economy,” Reyes said. “It has directly and indirectly supported jobs and small businesses, so we should do what we can to protect its investment. However, this needs to be balanced against the greater needs of the entire community.”
According to a source with knowledge of the rezoning case, the agreement has affected the landowners and developers said it also has had far-reaching consequences for the entire city, likening it to a ticking time bomb.
Lack of development in the area also has impacted transportation needs. In March, Toyota partnered with VIA Metropolitan Transit to expand its on-demand rideshare service to help bring in workers from their homes in other parts of the city.
The buffer affects the city’s investment in basic infrastructure like roads, sewer and water, the person said, which go underutilized when development is limited in a place like the South Side that could grow like it has in other city sectors.
