City Hall

Dallas Has Been Openly Funneling Affordable Housing Money Out of Downtown for Years

HUD spent four years building its recently unveiled case against the city of Dallas, compiling statistics and gathering evidence to show that for years the city been illegally promoting residential housing segregation.

Evidence that the city was steering affordable housing outside of downtown, the claim that formed the seed of HUD's investigation, was right out in the open all along.

Dallas' City Center TIF, a redevelopment zone that encompasses most of downtown, has a $5 million pot of money earmarked for affordable housing. The condition? It had to be used outside the TIF district.

Karl Zavitkovsky, the director of the city's Office of Economic Development, offered a brief explanation.

"When the City Center TIF was formed in the 1990s, an affordable housing line item was created in the budget and financial plan," he wrote in an email. "The initial TIF plan specified that the affordable housing line item could be utilized to support affordable housing citywide. This policy was subsequently modified and funds allocated to affordable housing in the City Center TIF must now be expended on downtown projects."

The city says it is still in the process of reviewing answers to followup questions on how the money was spent and why it was set aside in the first place, which Unfair Park submitted nearly a month ago.

Reached Monday, Karl Stundins, who works under Zavitkovsky and oversees the city's TIFs, declined to comment further, citing pending litigation.

Documents available on the city's website provide some clues. At least $1.1 million, for example, went to the city's Affordable Housing Cost Participation Program, which focuses on financing single-family homes in some of the city's poorest neighborhoods.

See also: The Feds Say Dallas City Hall Has Promoted Racial Segregation in Housing Projects for Years

A 2007 presentation explains that land downtown was too expensive, and building affordable housing elsewhere "maximizes the public benefit" of affordable-housing dollars.

This is weird in a couple of ways. One is that City Center appears to be the city's only TIF -- it stands for tax-increment financing -- with such a provision. There are others areas (e.g. Maple/Mockingbird and Fort Worth Avenue) with pots of money set aside for affordable housing, but those are limited to projects within a district's boundaries.

The other is that it seems to go against the very nature of TIFs, a form of tax break designed to spur development by funneling future tax revenue gains created by redevelopment back into the neighborhoods that generated the revenue in the first place. So why send cash elsewhere unless it's seen as an economic benefit for the district?

See also: How Dallas City Hall Put Us Back Behind a 25-Year-Old Eight-Ball on Segregation

Former City Councilman Craig McDaniel, whose district included much of downtown and who was involved in the creation of the City Center TIF, says he doesn't recall the $5 million affordable-housing set-aside but that he and other policy makers at the time were genuinely interested in creating a mix of housing options -- upscale condos, but also low- and moderate-income apartments -- downtown.

Part of the reason for that was the then half-decade-old Walker consent decree, in which a federal court required the city to demonstrate that it was taking steps to desegregate housing. Part, McDaniel says, was that they believed an economic diversity was necessary for downtown's success.

Aside from the $5 million, McDaniel says the City Council included a provision requiring developers to make a certain percentage of their units affordable. By the city's own admission, however, the number of affordable units "has not kept pace with market rate units."

"I think the delivery fell short. I don't know whether the numbers didn't come about as we had hoped we would, don't know whether it was because we got out-negotiated or done an end-around by developers who took advantage of our programs and didn't deliver," McDaniel says.

See also: Dallas City Hall Claims HUD Was in on Local Misdeeds. They Were Still Misdeeds.

The city seems to be taking steps to change that. The TIF was recently renewed with an additional $6.5 million devoted to affordable housing. All of it, as Zavitkovsky noted, is to be spent in the district. The renewed focus seems to be working.

Send your story tips to the author, Eric Nicholson.