Dallas

For Some in Dallas, Affordable Housing Isn’t All That Affordable

Nowadays, the phone at the Texas Tenants’ Union rings off the hook: Eviction courts are packed, and people are facing triple-digit rent spikes despite their incomes remaining the same. “There is nothing that is helping them at this point,” Sandy Rollins, the Texas Tenants’ Union’s executive director, said of renters.

One option, although not especially helpful, is what is known as the “affordable” units provided in the city’s tax increment financing districts, or TIFs. The trouble is that what the city calls “affordable” housing and what people in need can actually afford to pay “are two different things,” Rollins said.

And that’s assuming a qualified renter can even locate one of the so-called affordable units to begin with, as the city offers little help in matching tenants with available housing in its TIF districts.

TIFs are intended to incentivize private investment in neighborhoods with low property values. New development boosts property values, which means more property tax revenue, but TIFs allow developers to keep a portion of the added tax revenue — the “increment” — and use that money to support continued development in the TIF district. That’s the incentive.

There are 19 TIF districts in Dallas, according to the city’s website. The funds can go toward different things, such as improving retail and restaurant space, art galleries or office space. It can also go toward residential units. Some housing developments that receive TIF funding must set aside 20% of their units for families making less than 80% of the area median family income (AMFI).

In 2016, a policy was approved by the city that would reserve half of those affordable units for people with government vouchers intended to help low-income people pay their rent.

As of June, the estimated median income for a family of four in Dallas is $89,000. So, the maximum amount that a family of four can make to qualify for the TIF program is $71,200. Their rent in the “affordable” units is capped at 30% of that, or about $1,418 a month for a two-bedroom apartment before utilities. 

“Our expenses are just too high to stay here another year, so [we’re] getting ready to start the whole process again.” – Mary, Dallas resident

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The thinking is the new housing developments shouldn’t displace low-income earners who see their rents spiral as their neighborhood gentrifies thanks partly to the city’s helping hand.

But Rollins said that’s exactly what’s happening in Dallas. TIFs often go into low-income neighborhoods, usually home to people of color, boosting property values. That leads to higher rents across the board.

“The ripple effect through the community and the result is the more affordable housing stock disappears,” Rollins said. “If [developers are] getting public dollars there should be public benefit.”

But that public benefit seems doubtful in the TIF program. Consider someone on a fixed income, for instance. “The average Social Security check is about $1,550 a month,” Rollins explained. “Those folks should be paying maybe $500 a month in rent. Those units don’t exist. They’re not created by this TIF program.”

What does affordability look like then in the TIF program? One Dallas resident said learning an answer to that question was a grueling process. She and her family moved into an affordable TIF apartment only to fine themselves still struggling to make ends meet.

click to enlarge

Many TIF properties are difficult to get into.

Illustration by Sarah Schumacher

As it did for many, the pandemic put Mary, who asked that we use a pseudonym, and her family in a financial squeeze. Her husband has been the primary breadwinner while she’s stayed home to care for their two children, she said. Their income bracket made them eligible for housing assistance, but getting into a city-subsidized “affordable” home provided in the TIF program turned out to be difficult, confusing and time consuming. The units she found aren’t all that affordable either, Mary said.

Mary still lives in an affordable unit provided in one of the city’s TIF districts and asked that she remain anonymous to protect the safety and privacy of her family.

She used to be a home economics teacher at a high school in North Texas. She left to get her master’s degree with the intention of returning to teaching. But then she had to care for her mother, who’d been diagnosed with cancer. She got married not long after that and was working part time in the food industry. For the next five years, she worked her way up to a managerial position.

She resigned in August last year to be home with her children. With their household income cut in half, they needed some help, so they started looking for affordable units in Dallas Housing Authority properties or TIF mixed-income districts.

The whole process could be a lot easier, Mary said. She said the DHA website is good, but she’s never dealt with an actual person, “so, you also have to be tech savvy.”

She still hasn’t heard from DHA. But through persistence, she was able to get into one of the TIF apartments. Throughout that process, communication with the landlords was poor. She’d call places and not hear back. Some had waiting lists. Others told her just to keep calling until they had availability. To her, all of the affordable housing options in Dallas should have some kind of waiting list to let people know when they can expect to have a home.

“Out of every single [property] in the downtown area, only two of them had a waiting list, an actual waiting list,” Mary said. “Everyone else never called back after leaving messages. Some complexes never even answered, and I called repeatedly. Several other ones said I needed to call back every few weeks to see if they had available units.”

She said it was also hard to find more than just a single bedroom apartment in the neighborhood her family hoped to live in.

“Three of the properties I called only had one-bedrooms,” Mary said. “I was under the impression that it was supposed to be for families for the best living situation possible. We’re a family of four with two kids and a one bedroom just wouldn’t work for us, so that eliminated two properties off the bat.”

It took about two months before she finally found a two-bedroom apartment at The Statler. “We love it here,” she said. “We love the experiences we have here.”

Her husband works in the area, and there’s a school nearby her kids can attend.

Their lease ends in January, and they had planned to renew it, she said, but “our expenses are just too high to stay here another year, so [we’re] getting ready to start the whole process again.”

She’s glad she ended up where she did, but it could have been easier, and the homes could be more affordable. “I just feel like a lot of these properties aren’t being held accountable,” she said.

“I’m educated, I have a masters degree, I’m organized,” she said. “Some people are educated, but they’re not organized, and with this specific program, trying to get in one of these apartments you really have to be if you’re going to be calling back every few weeks and remember who you talked to and remind them you talked to them before. So, I think it would be challenging for anyone else, especially someone with a learning difference or someone with a language issue.”

She remembers finding the website with a list of properties that received TIF funds and had “affordable” units set aside. From there, renters are expected to call each one in the area they want to be in. Sometimes no one would answer, Mary said. Sometimes she was told her information would be passed along, but it wasn’t. She also said some properties didn’t seem to have Spanish speakers to help navigate the program.

“If it’s 10% of zero, you’re still getting zero units.” – Chad West, Dallas City Council member

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One place required a $325 application fee, which they paid. That’s a pretty penny for people seeking housing assistance. She said they were told there was only one person ahead of them, but they never got a call back. She called back in December to let them know they got into another one of the TIF units and needed their deposit back. They got it back, but it took months.

“I don’t see, if they’re operating like this, how they’re filling up those units,” she said.

Their rent is about $1,410, but they also pay another $100 for parking, and there’s a mandatory internet and cable fee, which costs another $125. They only need the internet, but they’re required to buy the package.

“So, we’re really paying $1,600 for base rent because then there’s also the mandatory trash and all those other fees that come up,” Mary said. And, they have bills on top of that.

“If someone is tight on money, it’s not effective to move them into this downtown housing but then have there be a required $200 on top of that. Maybe I should have known, but I didn’t,” she said.

These additional fees are not included in the market rent calculator, according to the city. Mary suggested the program have someone to walk people through the process and tell them about the additional costs.

“Once we got in and once we signed the paperwork, you know, it’s too late. Now we’re just really spread thin,” Mary said. “The money’s really tight.”

Now, they’re looking for something more affordable.

Another resident in one of the TIF units has had a different experience. Felecia Cox told the Observer she’s lived at one of the TIF properties for nearly four years now. In that time, she’s become the property’s resident relations coordinator. (She declined to say which one.) She said they require prospects provide their last four paystubs to make sure they qualify before they apply. This is because they have a $75 non-refundable application fee.

Cox said they only accept military vouchers. Aside from that, they set aside their studio apartments for the TIF program. Applicants also have to show they make three times the monthly rent. The units run between $1,150 and $1,300. Then, people have to re-qualify for the program every year. “People tend to stay in [the units] unless they get a new job or a raise in which they make too much to stay in the program,” Cox explained. “Most will then transfer into a one bedroom.”

Cox said she wanted the program isn’t for “those who need” or “expect a handout,” adding: “It’s not a voucher system, it’s not Section 8, no monetary transactions take place. It is a program for hard workers who, in my case, have gone through some hard times, dealt some bad hands, some through my choices, some through uncontrollable circumstances.”

***

click to enlarge City Council member Chad West found that the number of affordable units in some districts was small. - COURTESY CHAD WEST

City Council member Chad West found that the number of affordable units in some districts was small.

courtesy Chad West

Page Jones, a spokesperson for the city, said Dallas monitors the properties to ensure they remain in compliance with the incentive agreements. That includes properties incentivized with TIF funds as well as any other city programs.

“As for the specific process to apply for income/rent-restricted units, those questions should be directed to the property managers,” Jones said. “The city is not involved in the vetting of tenants.”

There have been some issues with TIF and other affordable housing incentives over the years. But those issues haven’t exclusively been caused by developers. The city has fallen short on its end of the TIF deal in the past.

In 2016, the city amended its housing code to require developers wanting funding from Dallas (this includes TIF money) to lease 10% of their units to housing voucher holders. If they couldn’t lease those units to voucher holders, they would stay vacant.

The result has been fewer affordable units and housing options in general.

City Council member Chad West said the 2016 policy was passed with good intentions. “The reality of it is the developers stopped using the TIF money for affordable projects,” West said. It’s not that they didn’t want voucher units. It was just a hard process.

“There was a lot of red tape. It became to where it wasn’t attractive for them to do it,” West said. “It just wasn’t working. If it’s 10% of zero, you’re still getting zero units.”

Then, there’s the scenario developers Larry and Ted Hamilton found themselves in that led them to sue the city in 2019. The attorney representing them in the lawsuit was Philip Kingston, a former member of the City Council.

According to news reports, the suit was over Lone Star Gas Lofts, a historical complex that fills the downtown block between The Statler and First Presbyterian Church. The Hamiltons partnered with another developer named John Greenan and the nonprofit CitySquare.

The standards were different when the Hamiltons signed their TIF agreement. They were allowed to choose the total number of units and the level of affordability.

“The affordable housing standard typically required by the city in the Downtown Connection TIF district prior to this project was that 10% of the units in a multifamily building would be set aside for moderate-income affordable housing,” the lawsuit said. “Moderate-income, as that term has been used by the city’s Housing and Economic Development Departments, means the least affordable threshold at which HUD will still recognize the units as affordable for purposes of meeting the city’s duty to affirmatively further fair housing.”

The Hamilton development would include units for people making less than 80% AMFI.

The property would eventually have 230 residential units. Most of those, 170 of them, were for tenants making far below the area median income, with rents going for anywhere between a few hundred dollars a month and a few thousand. For providing such affordability, the developers lost out on money they would’ve made from charging full prices. They were fine with that, as long as the city cut them a check for $8 million from the Downtown Connection TIF in summer 2018. But they didn’t get the money, so they sued.

Larry Hamilton told The Dallas Morning News at the time their development created half of all the affordable units in the whole TIF district, but the city wasn’t holding up its end of the deal, which was to hand over 5% of the TIF funds, the $8 million.

After filing the lawsuit in 2019, Kingston told the News, “CitySquare and Hamilton Properties have created more affordable housing in downtown than anyone and asked only for 5% TIF funding. And if they can be treated this way, I don’t know who will come help us solve this housing crisis.”

The Hamiltons ended up winning the bulk of their suit in December 2019. There’s still ongoing litigation concerning claims for default interest and attorney fees, totaling about $900,000, according to Kingston.

***

In 2020, the Observer wrote about a set of annual reports detailing expenditures on new developments in each TIF district. When those reports came out, West, former chair of the Housing and Homelessness Solutions Committee, asked for a breakdown of how many of those developments included affordable units. As the Observer wrote at the time, “The answer, in some districts, is not many.”

The Vickery Meadow TIF district had recently seen developers build 325 new housing units with city subsidies. None of those units were affordable. Other districts also didn’t meet the 20% affordability requirement. Developers used city money to create 500 units in the Design District, but only 11% of those were considered affordable.

This didn’t surprise housing advocates like Rollins, who told the Observer at the time: “There’s really no strings attached. It’s basically city subsidies for market rate and luxury units that should be satisfied by a bank loan.”

The city’s rules offered developers seeking TIF funding an alternative. In lieu of building affordable apartments, developers could pay the city fee or agree to build affordable housing at other sites. For example, developers in the Design District and Vickery Meadow paid a combined $1.5 million to the city in lieu of creating affordable units in their projects.

The $1 million the Vickery Meadow developers paid was meant “to support the development of affordable housing within the District,” according to the TIF’s annual report. Nearly half of that money went into a development that didn’t move forward and the rest was put into a city-controlled trust fund “to be used to make loans” to build housing throughout Dallas.

About $33 million in city subsidies helped pay for The Shops at Park Lane, a $323 million complex with 585 apartments and more than a million square feet of retail and office space. The only thing missing was the affordability, since the developers paid the city $1 million in lieu of affordable units.

The city eventually stopped taking these kinds of payments from developers, but a fee-in-lieu policy is once again making its way back into city policy.

The city has expanded its Mixed Income Development Bonus program that is meant to increase affordable housing development in Dallas. To make that happen, developers need more incentives, according to city staff. One of those incentives is now a “fee in lieu” option, which allows developers to pay into an affordable housing fund rather than setting aside affordable units in their projects or having to accept voucher holders in 10% of their units. 

“There’s really no strings attached. It’s basically city subsidies for market rate and luxury units that should be satisfied by a bank loan.” – Sandy Rollins, Texas Tenants’ Union

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How is this supposed to provide more housing and affordability in Dallas? Take the 10% voucher requirement for city subsidized residential developments, for example. When the developers don’t fill those units with voucher holders, they remain vacant and limit housing options even more. Having developers pay a fee instead could fund more affordable housing and free up those units previously reserved for voucher holders.

In other words, developers who were given a tax incentive in exchange for building dubiously affordable housing can pay a fee to duck that requirement. That fee would then be used to offer incentives to build the affordable housing that the first incentives failed to deliver. Presumably, those incentives would lead someone to actually hanging wall board somewhere.

If that sounds like the city is creating some sort of incentive ouroboros, a snake forever devouring its own tail, take heart. The city has a plan. For developers who don’t pay a fee in lieu or build off-site affordable housing, the policy includes stronger language the city hopes would make it more likely that voucher holders get into the units set aside for them.

Now, any housing development that receives a subsidy or financial reward from the city must “make best efforts” to lease up to 10% of the units to voucher holders for 15 years.

Here’s what best efforts look like: The developer has to register as a vendor with local providers of housing vouchers and submit “evidence of compliance” to the director of the department administering the financial reward.

The city also approved another policy recently which reduced parking requirements for apartment developers. The thinking behind this is that some apartment complexes have more parking lots than they need because they were meeting requirements set by the city. Now, apartment developers can build more density with fewer parking spots, lowering their costs. Developers who get this privilege either have to build on or off-site affordable units or pay into a city fund to build more affordable housing.

But it all concerns Rollins. Before the pandemic, Texas Tenants’ Union was looking into affordable units provided in TIF districts. She said they found many wouldn’t take vouchers, so it’s concerning to her that developers will be able to just pay a fee to get out of building affordability.

In Dallas, Rollins said, housing policy is a developer-driven policy, not one that looks at and addresses needs of tenants. “What happens to the people happens to the people,” she said.

Maybe the new policies will lead to the creation of more affordable housing in Dallas and ensure voucher holders have an easier time getting into the units set aside for them in city-subsidized projects. But, there’s still the other 10% of units in TIF developments that are aimed toward families like Mary’s – those making 80% AMFI.

“For the rest of us, it’s definitely not affordable,” she said.



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