Dear City Council Members Who Fought For Tougher Rental Housing Standards:
It’s not your fault. The mess that Mayor Mike Rawlings has stirred up with landlords and tenants in West Dallas is not the product of the rental housing reform that you passed last month.
Nor is it evidence necessarily that landlords can’t meet your new standards and still make money. In fact this all comes from things you council members have never even been given the option of voting on.
If you listened to the audio recording we published here yesterday of a July 2015 meeting between Rawlings and a major West Dallas landlord then you know the mayor didn’t even want to discuss the issues that subsequently became part of your revisions to Chapter 27 of the housing code.
When you people hammered out the new rental housing code, you were all about living conditions — dry roofs, decent air conditioning, good wiring and plumbing, a system of owner registration so that tenants and the city could know who to hold responsible and where to call when things go bad.
In July 2015, when the mayor met with Hanna and Khraish H. Khraish, the father-son team who own and operate some 400 rental houses under the company name HMK Ltd., your new rental ordinance was still a year from passage. But the Khraishes actually tried to talk to Rawlings about some of the same issues. They think they do a good job maintaining their houses but take a bad rap from city inspectors, so they wanted to talk about it with Rawlings.
But Rawlings cut them short. He wanted to talk to them about selling their houses. He even referred to some kind of program he seemed to know of that could be used to help the tenants buy the houses from the Khraishes.
Yesterday pretty much the instant that story hit the internet, I heard from multiple people with deep knowledge of low-income housing in Dallas. They all assured me almost none of the Khraish renters could become homeowners under any program they knew of, public or private, nor did they think the older properties owned by the Khraishes could be mortgaged under any program they knew of.
The first problem is credit-worthiness. You don’t get a mortgage just because you’re poor. Even the nonprofits only give mortgages to people they’re sure can and will pay them back, and that doesn’t include a lot of people paying $300 a month rent. The trick is to find somebody paying more like $1,000 a month who has never missed a rent payment and then find a way to convert that to a mortgage payment.
Second problem is the house. It’s got to last the life of the mortgage. Houses built 70 years ago under obsolete standards and by obsolete building methods can’t make it no matter how you patch them up.
So what the mayor wanted to talk to the Khraishes about was mainly their willingness to sell to somebody. Just sell. To anybody. Somebody. Maybe to soften the deal a little at first, some pretense was maintained at the outset that this was about home ownership. But really it was just about selling.
That’s not Chapter 27. The minimum housing standards reforms you passed were about holding landlords to a level of performance, not squeezing them to sell. The only mention of home ownership you heard yesterday in your housing committee briefing was about new developments near transit and employment, not a one-by-one buyout of existing housing stock.
Buying up low-rent housing stock accomplishes one thing: It evicts the renters. That’s the real irony of the mayor’s campaign of vilification of the Khraishes. They’re shutting down more than 300 of their rental properties because the mayor has persuaded them they can’t stay in business at those sites, effectively putting more than 300 families out of their homes. The mayor has castigated them for the cruelty of kicking out their tenants.
But if the mayor had his way and forced the Khraishes to sell, all of those same families would be out on the street that way as well, with virtually nowhere else to find housing in the city at the same rents. Those families have been toast one way or the other ever since the mayor focused on their houses.
So where is all of this pressure to sell coming from? Two places. One is a private investment fund authored by the mayor called Impact Dallas Capital, reported to be worth $30.5 million a year ago with a goal of raising another $70 million. The other is the mayor’s High Impact Landlord Initiative, which is part of his Grow South program. All of these activities have the laudable purpose of improving the economy of the city’s economically depressed and ethnically segregated southern sector.
Laudable but also very personal. The mayor is a successful former CEO. The initiatives he has devised on his own for the southern sector express his own views and experience as a business person. Again, listen to the audio we published yesterday.
In that recording, the mayor gives the Khraishes his own view of West Dallas, where they own a lot of property: “Now this is a very important area for us,” Rawlings tells them, “because growth’s comin’ (laughs) down Singleton and across Margaret Hunt Hill [Bridge]. I assume you have felt the impact with a lot of things that are changing.”
He tells them: “I think the whole neighborhood is not as good as it needs to be. So everybody has kind of got to raise their game.”
What he is expressing is the view of a developer. He looks at an entire part of the city that historically has been one sort of an area, and he thinks about what he could do to help turn it into a different sort of area.
I’m not saying he’s wrong. I’m just pointing out that none of that is what you council persons set out to do by reforming the rental housing codes.
But let’s say you had. Let’s imagine that you had taken as your goal the conversion of West Dallas from a very low-income single-family rental (cottage) area to a more prosperous owner-occupied and/or densely developed district for people with more money.
You know very well that you could not even have approached that goal without a bruising encounter with issues of gentrification and displacement. Anyone can see that the families who occupy the low-rent houses in West Dallas today will have no place inside the city to live the minute those properties cease to be available to them at low rents.
That kind of massive displacement is a painful social issue you would have been forced to negotiate had you considered adopting policies that would have caused it. Those folks would have found you. And, of course, those folks are finding council person Monica Alonzo at raucous community meetings now and giving her a piece of their minds.
According to its web page, the mayor’s High Impact Landlord Initiative calls for, “City Departments to work together to identify the most prolific owners of single-family housing rental properties in Dallas.” My Webster’s defines prolific as “producing many young or much fruit,” which I’m sure the mayor does not mean, but we can guess what he does mean: the biggest operators at the low-rent end of the market. (Hint to mayor: Next time you scan the appraisal district database, search under “Medrano.”)
Long before you council members cobbled together your rental reforms, the mayor called in landlords he decided were the eight biggest operators of that type of business in the city and asked them to sign a voluntary pledge allowing city inspectors greater access to their properties. The Khraishes agreed to most of the terms of the mayor’s “voluntary” agreement but declined to agree to allow inspectors to enter into their tenants’ quarters without notice.
What followed was an all too typical Dallas City Hall inspection blitzkrieg — more than $50,000 in mowing fines and more than 70 nuisance citations. The city had to refund all of the mowing fines when the Khraishes were able to show that none of the fines had been levied legally against them, and exactly one of the 72 nuisance citations held up but was rendered moot when the Khraishes demolished the property.
Yes, your Chapter 27 reforms did play a role in the decision of the Khraishes to shut down 300 rental properties. You imposed potential fines of several thousand dollars a day per property and also subjected landlords to criminal penalties.
Even at that, Khraish H. Khraish has told me his company might have been able to negotiate the new law, were it not for the obvious message from the mayor. You can hear it in the recording. The mayor makes it plain he wants them to cease being the owners of their own land.
So the message from the mayor — not from you, City Council, but from Rawlings — is that the only way the Khraishes and other so-called high impact landlords can shield themselves from unending oppression by City Hall is to sell. Repairing their properties and meeting all of the new standards you set in your ordinance will do nothing to protect them.
You heard him. Growth’s comin’. Everybody has got to raise their game. The low-rent landlords are out of luck, but so are their tenants. They all have to clear a path for the mayor’s impact fund. I know you didn’t even get to vote on that. It strikes me — Does it strike you? — that you council members have a lot less to do with what really happens in this town than you might think.