Honest Housing Policy Versus Plain Old Patronage at City Hall

Dallas City Council member Dwaine Caraway became part of the map at committee meeting Monday, gesturing to show how a proposed new housing policy would turn its back on his district.
Dallas City Council member Dwaine Caraway became part of the map at committee meeting Monday, gesturing to show how a proposed new housing policy would turn its back on his district.
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The Dallas City Council is debating a new housing policy. During this period of public input and debate, you should closely monitor your banking and credit card accounts, keep all valuables in a safe and locked place, ask any so-called Girl Scouts who come to the door selling cookies for ID and, if you have to leave your house or place of business for any reason, check every 10 minutes or so to make sure you’ve still got some pants on.

It’s that bad. Not the policy. The City Council. The policy’s probably great. It’s the council, man, the council. They’re the ones to keep an eye on.

The city’s chief of economic development, Raquel Favela, unveiled a long-awaited new housing policy Monday that seemed to make sense up one side and down the other. For example, under the new policy, the city would stop trying to run all the low-rent landlords in the city out of the rental business and instead start helping them finance improvements to their properties.

This is pretty much a straight-up rejection and disavowal of the initiative launched last year by the mayor to shut down the major operators of “affordable” (low) rent residential properties. And if this really happens and the city turns a corner here, perhaps we should let bygones be bygones.

That may be a hard thing to do for landlords like Khraish Khraish, whose legitimate, law-abiding business was savaged by the city’s so-called anti-slumlord jihad, but at least the new housing policy seems to be getting this one right at long last. The majority of people in this city who can afford only relatively low rents live in private-sector properties, not government-subsidized housing.

If we do not intend to replace all of that housing with tax-supported government housing, then imposing tougher building codes that have the effect of shutting down the private operators will simply put families out on the street with no place to go. Forget about whether that would be a smart or a stupid approach. It’s a morally rotten one.

So, good for the new housing policy. Off to a good start. But there are even better things in it — better and bigger. The new policy proposes backing the city out of the money giveaway business.

For decades, the city has been handing out millions of federal and local tax dollars every year as grants to developers to build affordable housing. Instead, under the new policy, the city would make loans.

And, look, you just get a whole different school of fish swimming up to your dock when you make the money a loan instead of a gift. For one thing, when it’s a loan, there are supposed to be some serious credit-worthiness requirements, along with a set of recognized industrywide reporting standards.

The shocking thing two years ago when the city auditor took a hard look at the city’s housing program was not merely the missing money, even though that was in the tens of millions of dollars, maybe in the hundreds of millions. The AWOL money was shocking, yes. The jury is still out on whether anybody will wind up in jail for that. But another thing the auditor found truly blew me away: no books.

The auditor’s staff asked to see the accounting for the many millions of dollars the city had been handing out every year to developers. The city didn’t have any bookkeeping for it that was of any use. The auditor asked to see the housing department’s accounting policy and procedures to see where things had gone south. The department didn’t have any policies or procedures.

Think about this in terms of sheer ice-cold nerve. Pretend it’s you. You are responsible for the disposition of hundreds of millions of dollars in public funds, some local, some federal. You don’t keep books. You don’t have a policy for keeping books.

So don’t you just figure you’ll be hauled off to the pen at any moment? Isn’t it really hard to get out of bed in the morning? Aren’t you thinking every minute how terrible it’s going to be when the G-men show up at your office, put you on your face on the floor and zip-tie you to the foot of your desk?

Aha. Not if you’re really stupid. Stupid and arrogant is always a bad combination. The M.O. of the old regime was marked by that criminal narcissism that makes people think they won’t get caught because they’re so much smarter than everybody else on Earth. Of course, I have to concede that they haven’t gotten caught yet. Fired, yes, many of them, but still free to move about the country.

Maybe they invented the perfect crime. Not double books. Not fraudulent books. No books at all. Why didn’t somebody think of this before?

This, however, is the exact seam in the fabric where we come back to what’s going on now and why you need to keep your hands on your money. At Monday’s unveiling of the new housing policy before a City Council committee, several council members expressed skepticism about it, and the chair of the committee, District 8 council member Tennell Atkins, moved successfully to put off a vote on it by the full council.

Over the past few months, Atkins and District 4 council member Dwaine Caraway have been applying behind-the-scenes pressure to stave off the part of the new policy that would back the city out of the big giveaways. They are particularly determined to shelter a group of entities called community housing development organizations.

CHDOs are a response to federal law, which requires that a local government that takes money from the U.S. Department of Housing and Urban Development set aside 15 percent of those revenues for affordable housing development activity carried out by nonprofit community groups. And it was a nice idea when somebody had it. Who knows the needs of a community better than people in that community?

Sadly, over the years, this nice idea, like so many nice ideas, has turned out in practice to be fairly disastrous because nonprofit community groups are hardly ever developers. Like, never. Developer, after all, is a real thing. One has to know how to develop.

From multiple audits going back decades, we know for sure now that it’s a very bad idea, indeed, to give away millions of dollars to people who don’t know how to develop and then expect them to develop something. What they develop are problems.

Based on local experience, Dallas probably could compile some kind of public service pamphlet listing types of people who definitely are not developers. Preachers, for example, are not developers. City Council members with backgrounds in community activism are not developers. Hyper-gregarious operators of drug rehab programs with mysterious 10-year gaps in their resumes are not developers. I would venture to suggest that very few newspaper columnists are developers.

Raquel Favela, Dallas' chief of economic development and neighborhood services, spoke at Monday's council committee meeting.
Raquel Favela, Dallas' chief of economic development and neighborhood services, spoke at Monday's council committee meeting.

A really great place to look for developers is among developers. When you deal with people who do it for a living, you can ask to see what they have developed before.

This is not to say that there are no good or worthy nonprofit developers. But the really good, clean ones, like Habitat for Humanity, operate much more efficiently than the sloppy ones, build at a dramatically lower cost per unit and have additional income streams independent of City Hall.

The CHDO apparatus, however, provides one very important service to some City Council members. It serves as a channel for millions of dollars in public funds over which council members exercise almost exclusive control within their council districts. Most of the white North Dallas council members use their control to keep CHDOs out of their districts because they don’t want any subsidized housing there anyway.

I know I will be called a racist for saying this, so, go ahead, call me a two-bit Steve Bannon, but in the mainly minority southern Dallas council districts where CHDOs are welcome, the CHDO funding stream has been a major source of political patronage for council members. Juice.

Otherwise, given the CHDOs' record of abject failure over the years, it would be impossible, frankly, to understand why council members like Atkins and Caraway would continue to defend them. A man who is a close observer of the affordable housing scene said to me recently, “Every time they [the CHDOs] get a subsidy for a home, another family [or two or three] never gets a home. A home [or two or three] never goes on the tax rolls. Opportunities are lost forever.”

A hallmark of the CHDO projects is that typically, they are carried out in the middle of economic deserts with nothing nearby with which they can connect. If they ever get completed, they are soon withered to economic crisps by the hot winds of poverty all around them.

Well-established national wisdom on turning around urban districts is that new catalytic projects should be near something else that’s already working — a transit station, a big church, something up and running — with an aim of building outward into the desert from a starting point of success, sort of like laying down rocks to cross a stream.

Two such projects proposed in the new housing policy would be in Caraway’s district. And yet he complained loudly in Monday’s meeting that the new policy turns its back on his district.

What the new policy does, without ever explicitly stating so, is turn its back on the CHDOs. They aren’t gone, because they can’t be gone under federal rules. But they are no longer a primary mechanism.

So right now is when we find out what kind of guts this council has. Will Atkins and Caraway bluff it out of this important change of direction? The city manager has placed a gleaming sword on the table. Will the council pick it up and use it to cut our pants off? I hope for the best, but my personal mantra for the weeks ahead is going to be, “Just be careful.”

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