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City Funds Could Lure Apartment Developers to Build More Affordable Housing Projects

The Funding Program is Still Taking Shape, But Officials Have Designated Reinvestment Zones
May 14, 2018
Dallas' first housing policy - adopted by the City of Dallas last week - could help bring more affordable housing to the city with the help of a housing trust fund that specifies neighborhoods targeted for redevelopment and property tax freezes for low-income area and incentives for low-rent landlords.

The 181-page housing policy, approved 15-0 by the Dallas city council, creates the basis for city staff, councilmembers and developers to begin creating adequate affordable housing for a workforce population in Dallas, said Linda McMahon, president and chief executive of The Real Estate Council, an advocacy group for the real estate industry in Dallas-Fort Worth.

"We are just at the starting point where the hard work has just begun, but this is the first step of firm action," McMahon told CoStar News. "There is a severe shortage of workforce affordable housing units in Dallas and some of the old ways of operation are not creating as many affordable homes."

Based on an analysis of Dallas' housing market, officials found the city was short about 20,000 affordable housing units. About six out of every 10 residents spend roughly one-third of their income on housing.

According to the U.S. Department of Housing and Urban Development, affordable housing is defined by housing that costs occupants no more than 30 percent of his or her income on gross housing costs, including utilities.

Even though affordable housing hits single-family homes more so than multifamily apartments, McMahon said the housing affordability of Dallas hits real estate in a different way, with workforce housing bringing more economic development to an area.

"Businesses want to relocate to an affordable market for their employees," she added.

Along with bolstering the number of affordable and low-income housing units in North Texas, McMahon said apartment developers can also educate city staff about the gap in funding affordable housing versus market-rate apartments.

"The affordable housing crisis is not going to be solved by city government," she said. "It takes collaborative work with city staff working through the numbers with developers."

There is a need for workforce housing in the Big D. Dallas-based Hamilton Properties Corp. has seen this firsthand with a steady supply of would-be residents on the waiting list designated for affordable housing units within the Lone Star Gas Lofts. The loft-style apartments are only one of nine communities delivering affordable housing to the City of Dallas since 2010.

Only about 8.6 percent of apartments within Dallas' city limits are considered designated as affordable housing for residents, according to CoStar data. Since 2010, Fort Worth has developed more affordable housing units, by roughly 200 units, compared with the number of affordable apartments built in Dallas.

To help build up the affordable housing supply in Dallas, the city plans to create a housing trust fund with the aid of would-be transferred tax increment financing dollars unencumbered by existing agreements. The details of the program are still taking shape, but this could help create affordable housing pockets in targeted reinvestment zones, including The Cedars, Dallas Midtown, Redbird, Pleasant Grove and the southern gateway of downtown Dallas.

"We have a good starting point, but there's a lot more work to be done," McMahon said. "At least we have a policy approved, which was a heavy lift for city staff. This is the first step to firm action."


Candace Carlisle, Dallas-Fort Worth Reporter  CoStar Group   
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