Yesterday morning, the Dallas City Council unanimously approved its first housing policy aimed at addressing affordable housing. It took a while, but we’ve finally put on our big boy pants. You may recall back in January the city rolled out a Market Value Analysis that measured housing across Dallas to map the varying levels of housing and costs. There wasn’t a lot of shock on the large scale of Northern Dallas being better off than Southern Dallas. But the block-by-block analysis identified specific areas where an affordable housing policy might do some good.
Armed with that information, the city held many community meetings to discuss the findings and gain input on ways to address affordability in Dallas. Nearly 39,000 people participated on those in-person and call-in meetings.
The results of these efforts identified several issues … (download full policy here)
Despite all the building of the past few years, Dallas has a 20,000 housing unit shortfall in both purchase and rental housing. It’s not hard to see why in 2017 the median home price swelled by 9.1 percent, in part because available housing only grew 3.6 percent. Scarcity increases price.
Meanwhile, 60 percent of Dallas families, regardless of income, are cost burdened by their housing costs. This means they spend more than 30 percent of their net income on housing costs. This forces people to leave Dallas for cheaper suburbs that increase commute times and transportation costs, in effect burdening them in another way.
Adding to unaffordability are developers snatching any postage stamp of land in hot neighborhoods at exorbitant prices while leaving poorer neighborhoods begging for more housing. Cheap land and high building costs in areas with less economic power aren’t as profitable as projects in wealthy neighborhoods that generate top dollar. And so far, the glut of luxury apartment building shows little sign of abatement.
Dallas’ Coffers Can’t Fix it All
They say there isn’t enough money in the city kitty, so they’ve prioritized their activities in the housing plan. There are Redevelopment areas, Stabilization areas, and Emerging Market areas. Stabilization areas are pockets of affordability within areas of much higher housing stock. The goal here is to shore those properties up so they can withstand developer onslaught. The other two area types are what they say.
Some of the program offerings will be monies and/or financing made available for owner-occupant homes and apartment improvements. The thought being that upgraded properties will help the overall neighborhood while keeping gentrification at bay (in those areas with that problem).
There’s also a provision for teachers, police, fire, and emergency medical providers to qualify for a Targeted Homebuyer Assistance Program. For existing homeowners, there’s an option to waive property tax increases for 10 years provided an investment in their property totaling more than 25 percent of its value is performed.
As you can see from the lead graphic, the policy passed unanimously. City council wanted to do the right thing, but as we know, the devil is in the details and implementation. Many in low-income areas are afraid of the change this policy brings (the devil you know and all), but fingers-crossed this is better than the status quo.
Before the painfully long chatter and vote by council, there were speakers from the public putting a face on low-income housing many equate with addicts, hookers, and the shiftless. Those speaking told of productive careers cut short by illness or injury who are now unable to work. Their meager assistance checks have certainly not kept pace with the rampant increases in living expenses Dallas has “enjoyed” these past few years. Others were working beyond full-time at poorly paid jobs. As I’ve asked repeatedly, how far away should a retail or Amazon warehouse worker have to live from their job?
Texas Ain’t California
One caution came from the city council meeting. Rickey Callahan spoke of Texas or Dallas mirroring California’s proposition 13 initiative dating back to 1978 which freezes assessed values at purchase price. Increases were tied to the rate of inflation and limited to two percent a year. The goal was to enable people not to be priced out of their homes by quickly rising property taxes.
It sounds good, but with 40 years of data on its effects, Dallas might want to tread carefully. Prop 13 has kept people in their homes longer to avoid the tax bite of a new home. This impacts mobility and stalls the housing ladder. Obviously, Prop 13 reduces municipal tax revenues which in California sends cities to the state for additional funding. Texas, unlike California, has no state income tax that generates revenues that can be tapped at the state level. The result even in California has been the invention of new taxes to try to make up the property tax shortfall.
City council members should know that Dallas already doesn’t generate enough revenue to meet its needs, limiting property taxes would shrink an already deficit situation. I can just see Dallas holding annual billion dollar bond hearings.
Callahan should look at other municipalities faced with runaway property valuations and their resulting property taxes. In Vancouver, Canada, for example, homeowners can freeze their taxes and even stop paying them all together. When they do that, the tax is still owed, it’s just paid (with one percent interest to cover administrative costs) when the home is sold or the owner dies. Ensuring the city still gets paid from the proceeds of a sale or transfer of property keeps the money in the system and minimizes or eliminates the need to invent more taxes to make up shortfalls.
Otherwise, here’s hoping Dallas has just taken its first step to provide housing to all of its citizens.
Remember: High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement. In 2016 and 2017, the National Association of Real Estate Editors recognized my writing with two Bronze (2016, 2017) and two Silver (2016, 2017) awards. Have a story to tell or a marriage proposal to make? Shoot me an email email@example.com. Be sure to look for me on Facebook and Twitter. You won’t find me, but you’re welcome to look.