A recent news story reports that the Dallas City Council is about to revisit the affordable housing issue, to which I would offer a small correction. This would actually be a case of the council re-revisiting affordable housing, possibly even re-re-revisiting. The affordable housing issue gets so many visits, you’d think it was somebody’s rich uncle with a bad ticker.
Maybe it is, if you drop the rich part. This is the uncle who never gets well. The story is not just about Dallas. I have been covering affordable housing programs since I was a young reporter in Detroit, when newspapers were still hot type.
At some point, you’d think such a remarkable, widespread long-term, consistent record of abject failure would prompt somebody to wonder if there might not be something wrong with the basic concept. And somebody in Dallas does.
But he’s the guy, wouldn’t you know, with whom nobody in the local affordable housing ecosystem wants to talk. He’s a person who actually does affordable housing as a business. Or did, I should say.
Khraish Khraish is no longer in the low-rent landlord business. Born in London, educated here at the prestigious Greenhill School where he was a classmate of our current mayor, holder of multiple advanced business degrees from the University of Texas, Khraish at age 42 has now backed out of and shut down the very successful private market affordable housing business his father started, selling off most of his former rental properties to his long-term tenants.
Three years ago, Khraish was among several large-scale landlords targeted by the former mayor and City Council in a campaign to drive them out of business. The theory was that they were all ruthless scavengers who minted money by ignoring housing laws and charging poor people rent at blood-sucking rates. Khraish was depicted on TV sharing a split-screen with a large rat said to have nibbled off the toe of one of his hapless tenants.
Some of the targeted landlords may have been guilty. Most were demonstrably not. The accusations against Khraish were especially heinous lies. His lawyer, John Carney, brought a rat expert to court who testified that the rat on TV came from a pet store.
Carney introduced medical records to show that the allegedly nibbled tenant, a diabetic, had made frequent visits to the ER about his toe, which did indeed have to be amputated, but nowhere in the voluminous medical chart was there any mention of a rat bite.
Every single charge and accusation brought against Khraish, he and his lawyer eventually rebutted and defeated. His rental houses did not violate city building codes. The rents he charged were among the lowest in the city. His tenants were loyal for decades. In the end, he sold most of his houses to them. I would argue Khraish is one of the brightest, most principled players I have ever encountered in the housing business in Dallas over many years.
But the damage was done. When I bring up his name now with people who half-remember the story, they say, “Oh, yeah, he’s that foreign guy whose tenants were all dying of rat bites.” That’s how it works. You may beat them in court. You never beat the stink.
When I saw the story about the City Council re-revisiting, I couldn’t help wondering. They made human sacrifices out of these people who were housing more low-income working people than they were, doing it successfully without a nickel of public subsidy and at a profit. So now why do they want to revisit?
Revisit what? To do what? Did some rascal sneak back in there and rent a house to a poor person?
Today and tomorrow I’d like to do some of my own revisiting, starting today with a conversation with Khraish. But it’s not all Khraish, and it’s not all bad news.
If anything, I think now in looking back I may have become so personally invested in some of these battles that I missed important ideas. Tomorrow I want to share a conversation I had this week with council member Lee Kleinman, who looks at all of this less microscopically, more telescopically.
The first thing I asked Khraish was, hey, the City Council wants to re-revisit affordable housing, so do you think they should start by talking to somebody who’s actually been in the business? I said: “If they did that, if they came on bended knee (Khraish is already laughing on the phone) and said, ‘Mr. Khraish, what can we do to expand the inventory of affordable housing?’ what would you tell them?”
“Well, first of all,” he said, “they wouldn’t have to come on bended knee. That’s No. 1 But let me just preface this by saying, ‘But they won’t come.’ No matter what. I still maintain my kryptonite status at City Hall.”
The first thing he suggested was understandably personal: “The most important factor in expanding inventory in affordable housing would be not to persecute and legally prosecute those offering it,” he said.
Then without my asking, he went immediately to the question that was really on my mind anyway: Is there some fundamental underlying cause or force that explains our serial failures to get anything done about affordable housing in spite of our cyclical revisiting?
“Here’s what I think is the real issue,” he said. “Everybody is paying lip service to this issue of affordable housing, but it’s not in City Hall’s best interest to have a lower rather than higher property tax base.
“Even though everybody likes to say we need affordable housing, the truth is that the city does not want it. What City Hall wants is as high a median housing price as possible.
“The constituents who would be occupying these houses do not make political contributions and are less likely to vote than higher income constituents. So there is absolutely no political incentive whatsoever to provide affordable housing in the city of Dallas.”
We talked about another aspect of the problem having to do with various incentives to encourage higher-end developers to include affordable in their projects. It’s an idea, we are told, that has worked well in other cities.
A comprehensive housing plan adopted by the council in May 2018 included elements of a concept called inclusionary zoning, by which the city grants additional zoning rights to developers in exchange for a certain number of affordable units. Mixed projects based on that concept are already in development.
But Khraish is skeptical the idea can be scaled to produce enough units to make a real dent in the city’s shortage of affordable housing. He says renting to working-class people of limited means is a very specialized business, one he learned from his father. It requires hands-on personal contact between landlord and tenants, so that problems can be foreseen and arrangements made to resolve them. Poor people need more attention, he says, than tenants at the higher end of the economic scale.
“Asking the guys who have never done affordable housing and have only done higher-end to now do affordable housing is like asking a heart surgeon to do knee surgery,” he says. “They can’t do that. They don’t know how to do that. They’ve never done that.”
Toward the end of our conversation, Khraish referenced a quote he had seen from North Dallas City Council member Kleinman, talking about houses that pay their own way in terms of city services and houses that do not. The idea is that some houses have values too low to produce enough tax revenue to pay for the city services they consume. I called Kleinman later, and he said he did say what Khraish remembered him saying, and we will talk about that here tomorrow.
For Khraish, it’s another nail in the coffin of City Hall’s credibility on affordable housing: “Regardless of what anybody in City Hall says about the desire to provide affordable housing,” he said, “they don’t want to do it in actuality. It doesn’t provide a workable budget for the city government and its bloated bureaucracy.”
Too many years covering City Hall have taught me that this looks very different from inside City Hall, although it may wind up meaning the same thing. Inside City Hall, the permanent staff people charged with devising a budget every year look out from their building’s precariously tilted windows and see rushing up toward them a rippling sea of human hands, all grasping at them for money.
By no means are all those the hands of poor or even middle-class people. No one remembers now, but 13 years ago wealthy oilman Ray Hunt, who recruited and bankrolled our current mayor, demanded and was granted by City Hall a $6.3 million tax cut to encourage him to build his new headquarters tower inside the city. But he asked for and was granted the tax break after the building was already under construction.
That’s called snap your damn fingers and get it.
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Especially when it’s Ray Hunt doing the snapping, City Hall always wants to be in a position to oblige. But how does City Hall respond when people at the other end of the scale need a break?
Khraish told me something remarkable about the families to whom he has sold his former rental houses in West Dallas: “In a couple years,” he said, “the amount of money my homeowners are going to pay in property taxes per year is going to exceed the amount of principal and interest they must pay.
“I’m telling you, it’s sick. It’s sick. And it’s sick because it’s done by design. They know that these communities in Dallas cannot afford higher property taxes, and so that’s why they raise them the most, so they can get them out.
“Get them out. That’s what the whole point is. How do you raise the property tax base unless you get out the existing population and build something new and shiny there? And how does that jibe with your whole supposed lip-service mantra, ‘We need affordable housing?'"