Dallas Housing Policy Amended to Fill More Financing Gaps For Affordable Home Construction
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Community development corporations like James Armstrong’s Builders of Hope want to provide affordable housing in underserved areas, but they say they can’t do it without assistance from the city such as a land transfer or forgivable loan — or both.
To alleviate that pressure and help get more rooftops on the way, Dallas City Council recently changed its housing policy to allow forgivable rather than repayable loans and permit a land transfer as well as homebuyer assistance to be implemented on the same project.
The Dallas Single-Family Homeownership Development Program (HOME) is used by just two local builders, both of whom have criticized its utility.
Assistant Director of Housing and Neighborhood Revitalization Darwin Wade said the policy amendment makes the program more user-friendly and profitable for the two certified Community Housing Development Organizations (CHDOs) who use it, Builders of Hope and Joe Dingman’s Notre Dame Place Inc.
“We provide these gap financing tools and we are tasking [the developers] to help us provide affordable, attainable, and equitable housing to all Dallas residents,” Wade said. “That’s what we do each and every day when we come to work as public servants.”
District 12 Councilwoman Cara Mendelsohn has repeatedly reiterated her support for affordable housing in areas where it’s needed, but said she doesn’t like “layering” the DHAP and Land Transfer Program and providing assistance to just a few people.
The City Should be Filling Only One Gap, Mendelsohn Says
Mendelsohn outlined in a Feb. 14 Dallas City Council meeting her concerns with amending the program guidelines.
“The Dallas Homebuyer Assistance Program and the Land Transfer Program shouldn’t be layered assistance programs,” she said. “If we’re assisting someone through one program, that should be the gap that we’re filling. If there’s such a big cavern that it needs both programs, they might not be ready financially to own a home. What we’re doing is pouring so many resources into so few people when we really should have the ability to serve more.”
It creates a loss of revenue for the city to the tune of about $3.3 million per year, she added.
Mendelsohn was the only council member who had reservations about amending the program.
Councilwoman Gay Donnell Willis said she was appreciative of Armstrong and Dingman for helping to stabilize affordable housing in communities where it’s desperately needed.
Councilwoman Jaynie Schultz said there often are multi-layered approaches to purchasing a home at any price point, “whether you’re seeking assistance or getting it through a mortgage or other support from family or friends.”
“I didn’t know that we as a council had passed a vision or any kind of thing that said you could only get one source of funding to purchase a home,” she said. “That argument is challenging to me.”
Dallas Community Housing Development Organizations
Affordable housing, in U.S. Department of Housing and Urban Development terms, is intended for families that are below 80 percent of the Area Median Income. The sales price cap on homes meeting that criteria is $315,000, Wade told the council.
“A lot of our families cannot afford $315,000 because they are burdened with consumer debts, car notes, and that type of thing, so that affordability shrinks .. Those are the things we’re looking at,” Wade said. “That’s why we have to have down payment assistance programs to fill that gap from whatever the family can afford through a mortgage and whatever the sales price is.”
A family that meets the 80 percent AMI criteria has a household income of about $82,000 per year, Wade said.
Councilman Chad West said he hoped the amendment would make the program viable “and help us as a city actually meet the housing policy that we passed and said we all support and help further homeownership for people across the board.”
“I want to enable as much homeownership as possible,” West said.
Housing Director Cynthia Rogers-Ellickson explained that the Land Transfer Program allows the developer to provide an affordable product. The DHAP then offers a direct subsidy to the homebuyer through down payment and closing cost assistance.
Wade said they sought to improve the policy in response to the “issues and challenges” faced by the two certified CHDO developers.
“We know that single-family homeownership is a council priority,” Wade said “We want to spur additional affordable housing in the single-family space. These two CHDOs are faced with the option to continue to build affordable housing with decreasing profits impacting their performance or they have the option to walk away and not even use the homes set aside that we are required by HUD to provide to those nonprofit CHDO developers.”
It’s a win-win for the city and the housing department, Wade added. If the city isn’t providing assistance to CHDOs, it could lose funding, which will in turn reduce the number of affordable housing options for homebuyers, he said.
Councilwoman Schultz called the policy before the amendment “unnecessarily rigid.”
“[It] is not in the best interest of the city and it’s certainly not in the best interest of the developers that are trying so hard, particularly in southern Dallas, to build new single-family housing, which is what people who live there want the most,” she said.
