Should Dallas’ Development Incentive Funds go Toward ‘For-Sale’ Homes Instead of Apartments?

About $4.4 million has been collected since May for a little-known affordable housing incentive program known as the Mixed-Income Housing Development Bonus.

The MIHDB fund was created by the Dallas City Council last year to provide incentives like changes in height, floor area ratio, density, or parking reduction in exchange for on-site affordable units.

Developers can also pay a “fee in lieu” instead of providing those affordable units — so some of the developers getting the incentives aren’t providing affordable housing, but they are paying into the fund, which is designated for affordable units. 

“We’ve had four developers take advantage of the fee in lieu, but we’re still seeing the majority take advantage of the on-site bonus,” said Assistant Director of Housing and Neighborhood Revitalization Thor Erickson. “It’s important to note that both are still viable options to the development community and we’re not seeing it skewed one way or another.”

Allocating Funds For Single-Family ‘For-Sale’ Homes vs. Apartments

Fees collected go into the MIHDB trust fund for the purpose of creating, preserving, and improving Dallas housing, explained Jessica MacKinnon, Housing and Neighborhood Revitalization senior research analyst. 

MacKinnon said her team consulted Dallas Housing Policy 2033, surveyed the Housing Policy Task Force, researched housing trusts in 44 other cities, and interviewed program staff to develop recommendations on how to use the trust fund. 

The city’s housing policy calls for an equity strategy in target areas, increasing production, and improved affordability for a broad mix of incomes. 

Several council members at a March 21 meeting of the Housing and Homelessness Solutions Committee told staff they want the funds allocated to “for-sale” affordable homes for the lower end of the Area Median Income scale, rather than apartment complexes. 

Based on MacKinnon’s research, stakeholder priorities include homeownership opportunities, strong communities, and stability. 

Those surveyed said they wanted more funds allocated to the Senior Home Repair Program, Home Improvement Preservation Program, and Dallas Homebuyer Assistance Program. 

Divvying up The Mixed-Income Housing Development Bonus

Staff is recommending about 45 percent of the trust fund go toward development, 10 percent for homebuyer assistance, 15 percent for neighborhood revitalization, 15 percent for home repair, 5 percent for pilot programs, and the remainder for administrative costs. 

Staff wants to immediately make about $2.5 million available in the department’s Notice of Funding Availability, advertised to developers for local projects. Additionally, staff suggested immediately increasing the budget of the Senior Home Repair program by $1 million — a measure widely supported by the council members in attendance at the housing committee meeting. 

But District 12 Cara Mendelsohn said she didn’t think some of city staff’s recommendations aligned with the feedback they received. 

“I think the Housing Policy Task Force got it right,” she said. “But then when I look at the recommendations and I see development at 45 percent, you’re developing long-term rental affordability. That wasn’t anything the Housing Policy Task Force said. We have lots of different vehicles for that. What I think you’re missing is addressing the homeownership issue that we have here.”

Mendelsohn suggested smaller lots and smaller homes that people can afford. 

“Instead of giving the land to the land bank and asking other people to develop it, we might need to assemble that land, purchase it and chop it up in a whole different way than we’ve been doing so we have more affordability for homeownership, not for multi-family low income,” she said. 

Rather than marketing to those who earn 80 to 120 percent of the Area Median Income, they ought to “drop it down and look at the 50 to 60 percent [of the AMI],” Mendelsohn said. 

“That’s actually the missing middle that is not stable,” she said. 

Notice of Funding Availability 

Council members Jaynie Schultz, Paula Blackmon, Paul Ridley, and Chad West also supported homeownership programs and some variations of higher density. 

“Would reimagining our 1950s-era zoning on single-family lot sizes help us with achieving more homeownership in the City of Dallas?” West asked. 

The simple answer, according to Assistant Director of Planning and Urban Design Andreea Udrea, was yes. 

“There are some things in the code right now that could help,” Udrea said. “We have the possibility of adding [accessory dwelling units] subject to Board of Adjustment approval. The way the code is structured is more for new development in a sea of open space. It’s not really written to help with redevelopment or infill.”

Director of Housing and Neighborhood Revitalization David Noguera said city policies dictate that staff does not solicit homeownership opportunities for households earning less than 60 percent of the AMI. 

“If that’s a conversation you want to have about going lower, I’m happy to do that,” he said. 

Assistant Director of Housing and Neighborhood Revitalization Darwin Wade said the city advertises monthly through the Notice of Funding Availability (NOFA) and encourages developers to build for-sale homes, but they can’t control what private developers want to build.

“A lot of what comes to us is multi-family,” Wade said. “We are looking to increase for-sale housing in the City of Dallas. That’s something that we strive for each month when we meet with our developer community. I definitely think we can look at some more innovative approaches as it relates to our NOFA. If that’s the will of the council, I think leadership and our department will come up with some innovative and creative ideas to do that.”

Ridley underscored a need for the council to be involved in such decisions. 

“After all, we’re the body with the money and we ought to be able to purchase what we want to purchase,” he said. “I think that calls for some direction to the private sector. We’re going to collaborate with re-platting and zoning approvals for what we want to accomplish. It seems to me that NOFA is a very reactive process. You’re just reacting to what the private sector wants to build, not what we want to build.”

District 2 Councilman Jesse Moreno said he wanted to make sure the city council members are being good stewards of the funds. 

“This is too big of an opportunity to not get right,” he said.