Is Dallas losing its livability?

Cost of living grows with city

By DAVID TARRANT / The Dallas Morning News
and DAVID DILLON / Special Contributor

First of two parts

As she considers where to live in Dallas, Lisa Paine looks at the surge in high-end homes and condos that is remaking many neighborhoods.

"Who can afford all those high-priced condos?" she asks.

Amid an upscale housing boom, the city faces a shortage of quality, affordable housing for folks like Ms. Paine, an insurance company customer service agent. The North Dallas apartment complex where she lives will be torn down and replaced by a retail development.

Some residents see apartments as one of the city's biggest problems, but many experts say such apartment complexes and affordable single-family homes are critical to the city's economic vitality and quality of life.

Dallas already lacks at least 30,000 units of affordable housing, according to a mayor's task force. That increases housing-cost pressures on families. In 2005, 42 percent of the city's households were "cost-burdened," paying more than 30 percent of their gross income on rent or mortgage expenses. That was up from a third of households in 2002, according to an analysis by the research arm of Dallas' Foundation for Community Empowerment.

The problem will intensify as newcomers pour into the region. In the next 30 years, North Texas can expect to grow by 3.5 million residents.

About 500,000 are headed to Dallas, including a substantial number of young people and immigrants. That's equal to 220,000 new households, about the size of Plano and Garland combined.

Nearly half of the households will need housing assistance – either in the form of direct subsidies or city programs that create more affordable housing. "They're coming," said Theresa O'Donnell, Dallas' development director, referring to new residents. "Either we stick our heads in the sand, or we find a way to provide for them."

The lack of affordable housing is not just affecting the very poor. It is also having an impact on middle-income households – those making between $53,000 and $80,000 annually in the Dallas area.

"Firefighters, nurses, police officers, teachers, health care workers and other middle-income earners are increasingly finding it difficult to live in the communities where they work," said a Federal Reserve Bank of Dallas report. The term "workforce housing" is often used to define housing that is affordable to such occupations that are a critical need in any community.

Patricia Saldaña, a registered nurse at Baylor University Medical Center at Dallas, would be priced out of her neighborhood near Belmont and North Henderson avenues in East Dallas if she were looking to buy there today. More and more, the small homes are being torn down and replaced with larger homes priced in the $300,000 to $400,000 range.

She bought her home 10 years ago for about $50,000. Now it's valued well over $200,000. "I couldn't afford it today," said Ms. Saldaña, a widow with a 3-year-old son. She has only a five-minute commute to work, which allows her more flexibility and family time. That's not the case for a lot of her colleagues. "We have a lot of nurses that live an hour away."

When rent or mortgage costs exceed 30 percent of a household's gross income, it begins to affect the family's ability to pay for food, health care, clothing, education and transportation. A shortage of affordable housing also hurts the vitality of a city as a whole. Commuting from lower-cost homes outside the city adds to pollution and traffic congestion, and contributes to employee absenteeism and turnover.

"If we don't build affordable housing, we're going to lose our employee base," said Don Williams, chairman of the Foundation for Community Empowerment, a nonprofit focused on development of the city's southern sector. "It's in the interest of Dallas to recruit and retain employers by providing affordable housing close to the workplace."

The idea of workforce housing "assumes that businesses need a workforce close by," said Betsy Julian, a Dallas lawyer and director of the nonprofit Inclusive Communities Project. "This is an issue of family values, how much time people spend with their families. People want to get close to a place where they can live and work – where there's not a huge mismatch between where they work and live."

Since the late '90s, more than 1,500 Dallas homes have been torn down and replaced, including many in East and North Dallas, according to city records. Whole blocks in East Dallas have been leveled – with affordable homes and apartments replaced by upscale townhomes and so-called "McMansions."

The median sales price for single-family homes in Dallas for the first four months of 2007 was $159,000. With property taxes and homeowners insurance, the monthly mortgage on such a home would be about $1,400. That's typically beyond the means of middle-income workers and their families.

Part of the problem is that incomes are not keeping up with home values. Between 1990 and 2005, median home values in Dallas rose 55 percent, but the median household income increased just 32 percent.

The situation is particularly grim for renters. More than 55,000 Dallas renter households (22 percent of all renter households) paid more than 50 percent of their monthly gross income for housing costs in 2000, according to a University of Texas at Austin study.

Though renters make up the majority of Dallas residents, their choices of where to live are narrowing fast. Thousands of apartments from North Dallas to Oak Lawn and Old East Dallas are being torn down and replaced by upscale housing units. Mayoral candidate Ed Oakley is even running on a teardown platform, vowing to take back the city from "crime-ridden apartments."

For Ms. Paine, the crime is that Dallas seems to be turning its back on people like her. Ms. Paine and other residents of Timbercreek's 1,000 apartments – including many working-class families – face eviction after the City Council voted to rezone the area for a 450,000-square-foot Trammel Crow development.

For the past 14 years, Ms. Paine has lived in a $455-per-month apartment near Northwest Highway and Skillman Street. The apartment is not just affordable – it has been a joy. Her balcony overlooks a creek and green space filled with hundred-year-old trees. Mornings she enjoys a cup of coffee while listening to blue jays and woodpeckers, and evenings she walks down to the water to feed the ducks. She expects to get her eviction notice in July. "Nobody gets the view that I have for that money," she said.

Ms. Paine, 46, says she can't find anything affordable near her job in Frisco. She doesn't know where she'll go next, but wherever it is, she knows she'll have competition. "To dump 2,000 people in that market – that's a lot of people looking for a place to live."

One of Ms. Paine's neighbors, Tracey Villegas, is a single mother who works as a bank clerk in Plano. She likes her one-bedroom apartment at Timbercreek, because it's close to major shopping centers, freeways and a new elementary school. "My family is nearby, my job is not too far away and I'm in the middle of everything here," Ms. Villegas said.

Another neighbor, Cindy Hall, 51, who is disabled, likes being close to bus routes and DART. "If you live on Social Security, you can't afford a car," said Ms. Hall, who has lived at Timbercreek for two years. "I'd like to find something around here, but I don't know."
Competitive edge

The city has always prided itself as attractive to business. But shortages in affordable housing make it harder for companies to attract workers, causing cities to lose their competitive edge.

"Employers need access to a diverse base of employees, where you do have a mix of people and a creative environment," said Lyssa Jenkens, chief economist at the Greater Dallas Chamber. Cities have to be "competitive from an employer's point of view and attractive from a resident's point of view. We need a full complement of workers and families to be a vibrant, interesting and attractive area."

When businesses look to invest in a place, "they look for workforce housing," said John Fregonese, the urban planner who wrote the city's new comprehensive plan, Forward Dallas. "Especially in Texas, it's labor that drives new business. The best thing you can do is invest in education, housing and cool neighborhoods."

Stu Jackson, human resources manager for Schepps Dairy, says a workforce that lives nearby helps with employee retention. "If we ran a ZIP code analysis, we'd find that probably 75 percent of our employees live within 12 miles of the dairy," which has been in near Fair Park for more than 50 years.

The ideal is to have affordable housing dispersed all over the city. But opposition to affordable housing initiatives rises in more affluent sectors of the city. Neighborhood groups see it as a destabilizing force that depresses property values. Developers see it as an indirect tax on them and unwarranted tampering with the free market. Politicians would just as soon avoid controversial legal and policy issues that could cost them votes.

"I think we can work that out if we really want to. But the history of Dallas is putting the public housing and affordable housing in one area," said Ann Lott, president and chief executive officer of the Dallas Housing Authority. "It's going to be hard to break that pattern. You have to fight the neighborhood organizations, and you also have to make inroads at City Council. The council was elected by people who don't want affordable housing. Everybody says we need it, but it's hard to get people to do it."
Sense of urgency

Dallas is relatively affordable compared to with other major metropolitan areas on the East and West coasts. But it can't afford to neglect the issue much longer, said Ms. Jenkens, the Dallas Chamber's economist.

"We're in a period of tremendous growth," she said, noting that the region added 180,000 new residents last year – a pace of 500 newcomers a day. "So we're going to see tremendous pressure on our land values in a way we're not accustomed to seeing."

Historically, Dallas has mostly taken a "hands-off" approach to affordable housing – letting the market deal with the issue. "Political willpower at the top, political leadership here – for the most part, it's been uninterested," Mr. Williams said. "The sense has always been [that] the free market will take care of it."

That began to change in 2002, when Mayor Laura Miller appointed the Task Force on Affordable Housing. The task force reported that moderately- priced housing stock was vanishing and low- and moderate-income families were being squeezed into a few declining neighborhoods with deteriorating housing and few jobs.

Jerry Killingsworth, a former banker, took over the housing department in 2002. The successful 2006 bond package included $42 million to spur economic development and affordable housing in the city's southern sector. But the mayor placed a moratorium on the use of federal tax credits for affordable multifamily housing until an FBI investigation is complete.

Key policy changes, adopted by dozens of other cities nationwide, have not been put into action here.

A 2006 affordable housing report card from the University of Texas gave the city Cs and Ds on six key measures, including leadership, production and public outreach. "Dallas has not made the city's housing needs a priority. Lack of commitment has undermined the resources needed to confront housing problems," the report stated. "Thus, in a high-growth city, housing resources are declining and production is limited."

Dallas also can't continue to rely on the federal government, either, which has been cutting back funds for housing and economic development. "They've been cut every year for the last three years, and we don't expect to see increases anytime soon," Mr. Killingsworth said. "We'll just have to look for other sources of funds to make up the difference. The money the feds provide, if it's all you rely on, is just a drop in the bucket relative to the need."

Said Mr. Williams said: "The debate in Dallas has to shift from 'We don't do subsidies,' to 'We will make investments that will pay dividends,'" he said. Unwilling to wait on the city, a group of 30 business and community leaders are is pushing for big changes to help stimulate affordable housing and economic development.

One proposal from Mr. Williams' foundation calls for investing $100 million, raised from federal, state and municipal governments, commercial lenders, foundations and other nonprofits, for new affordable workforce housing. The funds would target the southern sector.

Mr. Killingsworth said it was too early to comment on the foundation's proposal. Nearly all of the city's housing funds – more than 90 percent – come from the federal government, and it's insufficient to meet the city's needs, he said.

Public investment can help leverage new housing and economic development, particularly in the southern sector, where historically it has been notoriously hard to attract private developers, Mr. Killingsworth said.

"If we put a $100 million in, you would hope at a minimum to get $1 billion" in new development, he said.
Political will needed

It's a slippery term that gets tossed around loosely. But experts agree that without strong political will, the affordable housing problem will continue to fester.

"The construction costs [for affordable housing] are so high that the private sector cannot do the job by itself," said Eleanor White, president of Housing Partners, a Watertown, Mass., consulting firm specializing in affordable housing.

Cities with successful affordable housing programs share certain principles, including strong City Hall advocacy, significant public funding, in-house expertise and creative partnerships with neighborhood groups and developers.

Specifically, this means:

• Having a strong City Hall voice for affordable housing. In 2001, Boston Mayor Thomas Menino launched a citywide housing initiative to create 17,500 new units by this month. So far, the program has produced approximately 16,500 units, of which 4,500 (27 percent) are affordable.

Under Denver Mayor John Hickenlooper, the city's downtown is experiencing a housing boom that includes a full spectrum of affordable and market-rate residences. He calls affordable housing a “truth of city life” and speaks persuasively about its connection to healthy, thriving communities.

• Putting your money where your mouth is. Austin just passed a $55 million affordable housing bond issue. Phoenix has passed three smaller affordable housing bond packages in recent years. In Dallas, most affordable housing funds come from the federal government; local funding is minimal. Bond money has been spent on improvements to infrastructure and for land acquisition and not directly for the building of affordable homes.

Putting clear, coherent programs and policies in place at City Hall, so that builders and developers can get the help and expertise they need to do affordable housing.

Neal Sleeper, the master developer for the Cityplace area, said there needs to be more collaboration between the private and public sectors to do affordable housing. "These are very specialized projects, first to know how to finance, and second to know how to operate," he said. "Most people seem to have a hard time to figure out how to put together the mix of private and public financing."

Dallas tends to move from one big project to another, rather than developing strategies to carry out long-term goals, said Mr. Fregonese, the urban planner. "The cities that are successful with affordable housing have in-house expertise" that can help show developers how to produce such projects and still turn a profit, he said.

• Not taking no for an answer. As Dallas lawyer and housing advocate Betsy Julian says, just because you don't have an inclusionary zoning, doesn't mean you have to settle for nothing. You trade and haggle. Dallas, on the other hand, has not shown the political will to extract even modest concessions from housing developers.

A 2006 report to the City Council shows that since the late '90s, the city has provided nearly $125 million in tax increment financing and tax abatements to eight downtown housing projects without getting a single affordable unit in return.

Forest City Enterprises, the mega-developer of the Mercantile Complex on Main Street, received $62 million in TIF money and tax abatements without providing one affordable unit. The story is the same with the Dallas Power and Light building, Republic Center and other high-profile housing projects. The same is true of Uptown, another housing boom with no bottom rung, and of East Dallas, where mansions and upscale condos have transformed neighborhoods.

• Seeing the city as a home and not just a place to make money. "Developers here [in Boston] have a stake in a city that works. Most were born here, and are raising their kids here," said Jeanne Pinado, a Boston community housing leader. "They don't want to let it turn into a city of haves and have-nots. And that makes a huge difference. They don't just drive in from the suburbs to do deals."

Dallas has always promoted its can-do spirit, that every day is a new opportunity to succeed. The opportunity to succeed is still there, but the window is closing fast, Mr. Killingsworth said. "If we want affordable housing in Dallas, we're going to have to require it," he said. "Every day that goes by is another day of opportunity lost."