North Dallas City Council member Lee Kleinman would have me believe that his being near the end of an eight-year term limit on the council has freed his tongue. I am trying to remember Kleinman with a tongue that was unfree. In any case, he was typically iconoclastic this week when I asked why Dallas doesn’t have more affordable housing:
“I guess I’m saying this from the position of a council member who’s term-limited,” he said on the phone, “but it is my view the single-family neighborhoods have too much power over the zoning process.”
Why does he have to be term-limited to say something like that? Well, because saying anything that would get the single-family neighborhoods mad at him is sort of political suicide in Dallas. And there is a reason for that.
If you go back a bit in time, the real estate development interests who used to dominate City Hall didn’t get urban living at all. They saw the city’s older neighborhoods as what they called “used housing,” and they rode roughshod over them.
To survive, the neighborhoods had to get meaner and more combative than the developers, which was no small task. In fact, my own reflex when I heard Kleinman start talking was to think, oh, sure, here it comes, screw the neighborhoods, let out the dogs, turn the whole city into tenements.
But. He starts with a key point — one echoed in most of the serious reading I have been able to find on the so-called affordable housing shortage. Strictly speaking, it’s not an affordable housing shortage. It’s a housing shortage, driven by a number of factors, especially land cost, construction cost, supply and demand.
One of my favorite sources for solid, non-ideological thinking on these topics is the nonprofit called Strong Towns, headquartered in Brainerd, Minnesota. Last year, Daniel Herriges wrote a piece for Strong Towns called, “Why Are Developers Only Building Luxury Housing?” in which he basically said they’re not. They’re just building the housing that’s dictated by all those factors I listed above.
When it’s brand-new, they call it luxury, but if you look closely, it doesn’t have elevators or private bowling alleys. It’s just new. For a while.
Housing prices get lower — closer to affordable — as housing stock ages, a process Herriges calls filtering, as in filtering downward. But the filtering process gets short-circuited when an area “gentrifies,” a process I know well from living in old East Dallas for so long.
Supposedly our part of town has seen massive gentrification in the last 20 years, but I don’t see any lords or ladies cruising around in Rolls-Royces. What I do see is a lot of well-employed young families happy to afford old houses that probably would have made their suburban parents turn up their noses. But this is the way middle-class people can afford to live in the city now, and who wants to live 30 miles out?
The knee-jerk reaction of people very much like myself ... well, myself ... has been to believe that developers won’t build affordable housing because they’re greedy. Herriges makes the point in his Strong Towns piece that, greedy or not, construction cost alone in most of the United States puts an average-size apartment in the $1,500 to $2,000 a month zone the minute it’s ready to rent.
Then, he argues, you start adding on additional costs, not the least of which is the time it takes a developer to get through the zoning and entitlements process before she or he can even clear the lot. That time costs money. Then legal fees. In Dallas, City Hall lobbyist fees. Then there are the very expensive code requirements.
All of those additional costs, Herriges argues, give the advantage to the big developers who can spread their expenses out over multiple big projects. The developer who tends to get pushed off the table is the small- to mid-sized operator, who otherwise might actually be able to do some good.
The best opportunity to expand the affordable inventory without turning the place upside down, Herriges suggests, is in the existing residential neighborhoods, not with huge block-busting buildings but with housing in the middle range — duplexes, maybe four-plexes or accessory dwelling units, called ADUs, which we are never to call mother-in-law houses (maybe for fear that’s what they might become).
All of those mid-range solutions set off the fire alarms in the aspirational single-family urban neighborhoods, where duplexes are associated with the bad old days before we lords and ladies moved in and gave the place some class. When former East Dallas council member Philip Kingston and his wife championed an ADU ordinance, they were practically accused of arson and ax murder.
Some years ago, an astute observer told me something about myself and my neighbors that still rings true. So many of us are refugees from the suburbs, terribly proud of ourselves for becoming so urban in our maturity. But we tend not to realize how much of the suburban template we bring with us.
In particular, we tend to think that a good, solid neighborhood is one where things are uniform, as they were, of course, in the suburban developments that spawned us. We are oppressed by houses that are bigger than our own, which we call McMansions, and we are worried about little back houses that are smaller, which we call … well, I call them mother-in-law houses, sorry. A significant way to enable and expand the affordable housing supply would be learning to live with more housing diversity.
Yesterday, I talked here about Khraish Khraish, a private sector affordable housing provider who was hounded out of the business by City Hall. Between the aggressive, sometimes bogus use of building codes and soaring tax assessments, City Hall probably has shut down way more affordable housing units in recent years than it has created.
So if City Hall can use policy and enforcement to reduce the supply of affordable housing, why can’t it use the same tools to push things in the other direction? The fact that the market realities are challenging doesn’t mean we have to surrender to them.
Kleinman said, “I think one way to attract more developers to dealing with affordable housing is to liberalize our zoning laws, so that developers can build in more places in the city. We have very strict and extensive zoning laws in the city that really are highly controlled by the single-family neighborhoods, and that precludes us from developing a lot of units in places that we could.”
Uh-oh. I don’t like that idea. But I need to be frank about why. I don’t like it because I think he means my neighborhood, and I don’t think we’re up to it. It seems like yesterday we were still a slum.
But as a liberal who goes around saying we have an affordable housing crisis, I guess I ought to at least own up to my own part of it. I could help by fighting to bring back duplexes in my own neighborhood. I promise to let you know when I start doing that.
Kleinman has always been a moderate, business-oriented conservative, but another of his ideas is maybe more redistributive than anything we liberals have come up with so far. He proposes a citywide system of development “certificates,” sort of like licenses to develop, that could be sold on the open market.
Let’s say you have to turn in 10 certificates to get permission to build a mid-rise tower, for whatever use, residential or business. If you make half your building affordable housing, the city gives you 15 certificates for free — the 10 you need plus five you can sell.
The next person wants to build a tower with no affordable housing in it. She has to go buy 10 certificates on the certificates market, at whatever price the market thinks they’re worth.
“It’s market based,” Kleinman says. “If there’s a shortage of them, the price goes up. The impact is going to be on all development, whether it’s residential, commercial, a gas station, warehouse, everything.
“There are two ideas behind that. One, it’s a way to spread the pain around. And two, it would change the current bias we have against residential development in Dallas.”
Kleinman argues that the overall City Hall regulatory burden is much greater on residential than commercial development. “Currently, if you want to build a commercial building and you want zoning or you want entitlements or you want economic development or anything like that, so long as there is no residential in there, you don’t have to deal with our housing department.”
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The granting of free certificates to affordable housing developers would help to offset that bias, he says.
North Oak Cliff council member Chad West is talking about a related idea that would collect fees on development to fund an affordable housing trust fund. I will come back to that soon in a future column.
In the end, no matter how we approach this question, we will have to confront certain obdurate realities. One is that creating affordable housing in new construction will require fat subsidies from somebody somewhere. The stuff just costs a lot to build. The only way to offset those costs will be with generous subsidies. Maybe the things Kleinman and West are proposing will help us get there.
But the other is that uniformity and exclusivity make life meaner for the working poor by pushing them further to the margins. I don’t know if that’s a housing issue so much as a moral one.