Here’s the net-net of the proposed Republican plan to “lower” our taxes. Mortgage interest deductions would be capped at mortgages $500,000 or less (half the current $1 million) for primary residences. Mortgage interest deductions for second homes would simply vanish. You may be thinking this doesn’t sound bad and you may be mostly right.  While I suspect the $500,000-plus market is relatively smaller than the sub-$500,000 market, the rub may be with the second home deduction.  After all, how many soon-to-be retirees have a $400,000 primary residence and a $250,000 second home?

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Screen Shot 2016-12-06 at 11.28.55 AMThis is one of the biggest pickles Dallas, or really any U.S. city, has been in.

As we have mentioned, the police and fire pension is asking the taxpayers of Dallas to make up a $1.1 billion shortfall. At the same time, the police are SUING Dallas for $4 illion in back pay, IF they are victorious in ther lawsuit.

The mayor of Dallas has personally filed a lawsuit against the fund, asking it to put a halt to the DROP program, which he maintains is bleeding it. And the Dallas City Council will be hashing it out all day tomorrow.

A real estate connection: the mayor’s lawyer, by the way, is Mike Gruber, husband of Dave Perry-Miller’s Diane Gruber, father of Dave Perry-Miller’s Becky Gruber.

There are a trifecta of issues to consider, and Jennifer Staubach Gates sent the entire briefing to her email list. That woman is the queen of transparency.

On the one hand, we have the police filing suit against the city of Dallas, the taxpayers, in a lawsuit that goes way back to 1994, more than twenty years ago. The lawsuit is over a pay differential: that is, the police say that every time the city gives one member or group of members (such as new recruits) on he force a raise, everyone on the force gets one. Whole new meaning to “Let the force be with you.” Dallas says no, but a stupid state law from 2005 is fueling that flame.

We have put the briefing up for all to read. Of note: (more…)

floresrawlings

How badly has our real estate market been harmed by this news? Why did he wait until now, or was Rawlings’ timing impeccable?

The news about Dallas’s Police and Fire Pension System goes from bad to worse. And it continues to be negative national news that could potentially hurt our housing market. In particular, the Wall Street Journal ran a backwash of Dallas Morning News reporting blaming everything on the “bad real estate investments.”

Those “bad real estate investments” are not the whole reason why the fund is in trouble and asking taxpayers for $1.1 billion. It’s mismanagement, and an incredibly thoughtless accounting trick that has enabled retirees and mature pensioners to essentially rob from the young.

In that recent New York Times piece that has the world talking about “Dallas’ bankruptcy”, the blame is put on the state legislature in 1993:

To many in Dallas, the hole in the pension fund seems to have blown open overnight. But in fact, the fuse was lit back in 1993, when state lawmakers sweetened police and firefighter pensions beyond the wildest dreams of the typical Dallas resident. They added individual savings accounts, paying 8.5 percent interest per year, when workers reached the normal retirement age, then 50. The goal was to keep seasoned veterans on the force longer.

Guaranteed 8.5 percent interest, on tap indefinitely for thousands of people, would of course cost a fortune. But state lawmakers made it look “cost neutral,” records show, by fixing Dallas’s annual pension contributions at 36 percent of the police and firefighters’ payroll. It would all work as long as the payroll grew by 5 percent every year — which it did not — and if the pension fund earned 9 percent annually on its investments.

Buck Consultants, the plan’s actuarial firm, warned that those assumptions were shaky, and that the changes did not comply with the rules of the state Pension Review Board.

The DROP accounts were like savings accounts with a guaranteed interest rate. But few news reports critiqued it. . The media only blamed the “shaky real estate investments.(more…)

Real Estate Story

Dallas earthquake

If tornadoes are not bad enough — and they are really, really bad –— we have to worry now about earthquakes in North Texas. With the recent identification by seismologists of the two-mile fault line near the Trinity River at the center of the activity, many homeowners are wondering about the safety of their houses.

The biggest January (2015) quakes were measured around 3.6 or 3.7, which is relatively minor, but with this ancient subsurface fault reactivated from Irving to West Dallas, nobody can say whether that’s the biggest we’ll see in North Texas.

Dallas earthquake

So I got in touch with two area experts and asked what Dallas-Fort Worth homeowners need to know about how their homes are built, and how much quaking a North Texas house can handle.

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YWCA

YWCA Immediate Past Board President Catherine Z. Manning, left, and Ebby Halliday Acers. Photo: Ebby Halliday Realtors

Dallas community leaders, including Mayor Mike Rawlings, gathered yesterday morning to celebrate the opening of the new YW Women’s Center at Ebby’s Place, named after the grande dame of Dallas real estate, Ebby Halliday.

Empowering women to improve their lives is the bottom line, which is why the YWCA chose Ebby as its namesake, says Jennifer M. Ware, CEO of YWCA of Metropolitan Dallas.

“Ebby so beautifully represents what we do here and has such a great reputation and philosophy in her company of giving back,” Ware said. “Throughout her career, she has lifted other women up and educated people in her company about the importance of giving back to the community.”

YWCA

Outside the new YW Women’s Center at Ebby’s Place. This photo and all below: Candy Evans

YW Women’s Center at Ebby’s Place will provide programming, services, and resources that serve working poor women looking to make life better for themselves and their families. The center will offer programs that help women become strong mothers, advocates for their own breast health, successful in the workplace, and financially secure.

Ware, Rawlings, and Dallas City Council members Adam Medrano and ​​​Jennifer Staubach Gates cut the ribbon for Ebby’s Place around 10 a.m. yesterday at the renovated 20,000-square-foot building, located at 2603 Inwood Rd., between Maple and Denton Drive.

The center is adjacent to the Inwood/Love Field DART Rail Station and one block from a DART bus stop, offering access to all women throughout the community, including more than 286,000 women and girls battling poverty in Dallas County.

“The stats are heartbreaking,” Ware said. “Here in Dallas County, one in three single-female-led households live below the federal poverty line. The mission of Ebby’s Place is to begin changing those stats by helping women to gain financial independence.”

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In September 2014, Headington Companies began razing a 129-year-old building in downtown Dallas, and proceeded to demolish almost an entire block of historic storefronts along Main and Elm streets. Photo: Harry Wilonsky/Dallas Morning News

In September 2014, Headington Companies tore down a 129-year-old downtown Dallas building as part of the development of The Joule, also demolishing almost an entire block of historic properties nearby. Photo: Harry Wilonsky, Dallas Morning News

Last September, the Dallas preservation community let out a collective gasp as an entire block of century-old buildings was demolished by Headington Companies as part of the Joule’s expansion plans. Because of the way historic preservation is handled in Dallas, there was no time to discuss alternatives with the bulldozers or the company that employed them. They rolled into place and had their work done in a week.

At the time of the razing, Dallas Morning News Architecture Critic Mark Lamster wrote a scathing column, We regret to inform you that your city has been destroyed, calling the demos “acts of vandalism.” Preservation Dallas, a 43-year-old nonprofit dedicated to the protection and revitalization of the city’s historic buildings, neighborhoods, and places, called it “wanton destruction.”

But out of that surprising event (Headington Companies had received a Preservation Dallas award just the year before), a conversation started about how we take care of our historic buildings in Dallas, particularly in downtown.

“We shouldn’t be able to demolish a 100-year-old building in a matter of a couple of days,” said Katherine Seale, the former executive director of Preservation Dallas and chairman of the Downtown Historic Preservation Task Force, which was authorized by Dallas mayor Mike Rawlings in response to the demolitions.

Seale chose the 11 members of the task force, with includes members from the development, preservation, design, and planning communities, as well as city hall. They have been meeting since January to discuss what changes need to happen to the way Dallas does preservation to better protect our city’s history.

“Historic buildings are downtown’s greatest asset,” Seale said. “They should be treated like precious infrastructure.”

With the task force’s recommendations, approved yesterday, they just might be. They voted on nine recommendations (the executive summary is at the bottom of this post) to take place in incremental stages. Those recommendations will go before the Dallas City Council for approval in coming months.

“I couldn’t be more pleased—it was unanimous,” Seale said. “It’s an incredible outcome from a broad base of people that represent different interests and they all agreed on the recommendations.”

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Real Estate Story

United States Seismic Zones

 

With the ongoing earthquakes in North Texas, and recent identification by seismologists of the two-mile fault line near the Trinity River at the center of the activity, many homeowners are wondering about the safety of their houses.

The biggest January quakes were measured around 3.6 or 3.7, which is relatively minor, but with this ancient subsurface fault reactivated from Irving to West Dallas, nobody can say whether that’s the biggest we’ll see in North Texas.

Shakemap 1-6-2015

So I got in touch with two area experts and asked what Dallas-Fort Worth homeowners need to know about how their homes are built, and how much quaking a North Texas house can handle.

(more…)

It’s on the lips of just about every mom in my neighborhood: What will this home rule proposal mean for our failing neighborhood elementary? Will it mean we won’t have to spend an arm and a leg for private school, or uproot our family for the suburbs?

That’s exactly what’s happening right now, and Dallas Mayor Mike Rawlings wants to stanch the flow of Dallas’ middle class hemorrhage before the city bleeds out. His impassioned plea is one worth listening to.

“You’ve got to just speak the truth. The problem is that everybody is moving out of town. … This is the big elephant in the room,” Rawlings said in an interview with the Dallas Morning News editorial board this week.

We see it all the time when checking out listings in sought-after suburbs or in Dallas neighborhoods where parent groups have worked their tails off to reinvest in ailing campuses in areas where the housing stock is perfect for families but the schools … not so much. Good schools are a selling point. Underperforming schools act as a repellant. Add to the equation that homeowners are already funding these failing schools through property taxes, and the problem is even more galling. This is the major takeaway from Tod Robberson’s blog post:

[Rawlings] suggested that the dysfunctional school system was a major — if not the major — impediment to our city’s growth and development. It is a deterrent to middle class families considering a move here. Bad schools and school management drive down property values. It’s a civil rights issue.

“Economically, it’s a train wreck…,” he said. “It is broken, and we have got to admit that.”

The key point in his remarks was the breakdown over the past decade in taxpayer funding for DISD. We’ve spent $13.9 billion on public education in DISD. That breaks down to $3.5 million per college-ready student during that time period.

If this were a business, and those were the results based on that expenditure, Rawlings said, “Everybody should be fired who had anything to do with this.”

Now, if home rule does turn the district around, it won’t be an overnight fix. It will take years for Dallas ISD to become the kind of district that attracts middle-class families rather than sends them fleeing once their children reach school age, considering that these are the households who really can’t afford to pay for their child’s education through taxes and then again through private school tuition. It seems like a more logical solution than splitting the district up, which was proposed by East Dallas families through the White Rock ISD facebook page. The two strategies, based on what the commission comes up with, may not be mutually exclusive, though.

While home rule may not be a magic bullet, it has at least started a citywide conversation about the dire consequences of doing nothing.

What do you think? If Dallas ISD makes progress with changes on the district level, can the city turn it around, or is the damage already done?