Oak Cliff, pictured here in 2018, where new development is colliding with old. (Photo by Creagh Cross)

Real Estate

Why Is It So Hard For Dallas to Address Affordable Housing?

Amid scandals, setbacks, and few incentives for developers, the city admits it needs to make changes. Now it's time to see whether they finally happen.

When he was in college, Michael Geblein wrote “Rent” on a piece of tape and stuck it on a jar where he put his loose change. It was a joke until it wasn’t. Early last year, he had to dip into it.

Geblein, 26, earns a salary of $48,000 at his marketing gig in Dallas. Rent for his Uptown apartment is more than $1,800, over half his monthly income after taxes. Before the pandemic, he drove Uber to make extra cash, but he stopped in March. By May, he cashed in his change to pay rent. Shortly after, he created an account with DoorDash.

“I had to do something,” he says, “and delivering food seems safer than driving strangers.”

Geblein is planning to move north of Dallas, knowing it will extend his commute. He says he’s struggled to find other housing options he can afford in the city. He is hardly alone. The Nelson family has already moved. Mark, a 32-year-old EMT, and Sarah, a 31-year-old social worker, work in Dallas and commute about 45 miles from their home in Farmersville, where they live with their two children.

“We just couldn’t find a big enough home in our price range,” Mark says. “The drive can be tough, but it’s what we have to do.”

Stories like these are part and parcel to Dallas’ ongoing struggle with affordable housing. Since acknowledging a shortage of 20,000 units in 2018, the city’s varied efforts to address that deficit haven’t worked. Plans to deliver as many as 6,000 units per year over the last three years were stymied in part by audits, corruption, controversy, and market forces the city has struggled to control.

Dallas is low on land, and affordable options for middle-income residents are becoming harder to find. The future looks bleak for the Gebleins and Nelsons of Dallas: people who earn a decent living yet can’t afford housing in the city where they work.

“People on council and people I talk to in my district are realizing that the middle group is the one we need to be focusing on,” says Chad West, the North Oak Cliff representative who was until recently the chair of the Housing and Homelessness Solutions Committee. “They’ve seen the numbers, and quite frankly, they’ve seen how scary the future looks. They know we need a change.”

Several developers and city employees interviewed for this story say there are steps Dallas can take to incentivize development for the middle class. But doing so requires willpower, creativity, the reining in of city council influence, and bringing in lots and lots of money.

“Our housing department has a $20 million budget,” says David Noguera, the city’s director of Housing and Neighborhood Revitalization. “$20 million doesn’t get you very far.”


Some developers can’t even agree on what the term “affordable housing” means.

“I went to a conference and no one could agree on what is affordable,” says Cyrus Zadeh, a Dallas-based developer. “Some people think it’s only for people on food stamps.”

It’s not, although you wouldn’t know that if you took a cursory glance at Dallas’ history. Large swaths of southern Dallas were redlined for decades, meaning the federal government wouldn’t back loans to develop in areas where many Black and Latino residents lived. Developments in northern, Whiter parts of the city prospered. Meanwhile, the suburbs ballooned as freeways made it easier and faster to get there.

“Racism is the key driver of our history of housing segregation,” says Dr. John Siburt, the president and chief operating officer of CitySquare, a housing and homelessness aid nonprofit. “Racist policy concentrated poverty in certain neighborhoods and wealth in others.”

The city has relied heavily on federal low-income housing tax credits, known as LIHTC, to incentivize development for low-income residents. City Hall also favored nonprofit housing corporations that accepted federal money to build houses in southern Dallas. These developments were concentrated in parts of town that didn’t have access to jobs or transportation. The city for years had expended public resources concentrating poverty.

In 2018, the city released its first comprehensive housing policy, which revealed a shortage of roughly 20,000 affordable units. The policy found that nearly 58 percent of home sales in 2017 were priced between $300,000 and $1 million. It found that six out of every 10 Dallas residents spent more than a third of their income on rent, the federal barometer that defines what is “affordable.” The city decided to close the gap by promising to build thousands of affordable homes each year for the next three years. But over the next fiscal year, only 320 qualifying homes were built.

The city wasn’t doing right by its poorest residents, nor was it motivating new development for the middle class. With little available land and poor supply, housing costs have only increased in Dallas.

City Hall hasn’t exactly made it easy on itself, either. The process by which developers receive building permits has been broken since the pandemic began last March. Multiple developers interviewed for this story say they have waited up to four months for building permits in Dallas but received the same permit in a matter of weeks in other cities. It’s easier to work elsewhere.

While the North Texas region issued 16 percent more permits in 2020 compared to 2019, the city of Dallas issued 36 percent fewer. Of 18 nearby cities, Dallas was the only one to see significant drops in new permits issued.

“The most valuable resource any developer has is time,” Zadeh says. “It’s nearly identical in cost for me to develop in Seagoville or Farmersville, and there, it’ll take half the time.”

The COVID-19 pandemic eliminated the city’s standard in-person review system and confined staff to their homes. According to a staffer, employees struggled with the city’s flawed permit application and review software, often because they were working on computers that are 15 years old. The city manager has vowed to get them new equipment.

“We’re expecting to be down to a one-to-two-week turnaround by early spring,” Noguera says of the city’s permit problem, which has a backlog that could take about three months to work through. A “concierge” system is also in the works for permit review. Of course, that alone won’t remedy the city’s longstanding housing supply problem.

A study released late last year brought more bad news. By 2045, 270,000 Dallas households will experience problems like overcrowding or face a cost burden. In other words, more people will be forced to share homes to afford rent or a mortgage, and more Dallas residents will spend more than 30 percent of their income on housing. Meanwhile, housing prices in Dallas increased by more than 12 percent since last year; the average house now costs more than $315,000. Councilman West is worried.

“We’ve got a lot of programs for people who make less than 80 percent AMI, but not a whole lot of tools for people in the middle,” West says.

“AMI” reflects an area’s median income: a measure of a city or community’s income distribution, as assessed by the U.S. Census Bureau. Families who earn 100 percent AMI are considered average, and families who earn less than 30 percent AMI are eligible for housing vouchers. In Dallas County, a family of four earning 80 percent AMI will earn roughly $70,000 annually. People like Geblein and the Nelsons are finding fewer options that fit their income.

“We’re really just at the beginning of addressing affordable housing,” West says.


Dallas hopes one answer is the overhaul of its land use plan. By looking at which areas Dallas can rezone for new types of development, city staff hope to turn areas of the city into land upon which developers can build.

The city would point to the area east of Deep Ellum, between Fair Park and Baylor University Medical Center, as an example. Until August 2018, this was heavy industrial work and some defunct factories. The city rezoned the area, allowing in new businesses, restaurants, and shops.

That’s the kind of outcome the city says will come from this new land use plan: city-initiated rezoning that opens up new land for affordable housing. Once the land is available, urban planner Patrick Kennedy says the city should leap at the opportunity to develop middle-income housing—and allow smaller scale developments.

“The city can expedite the rezoning and permitting process to catalyze the small-scale investors who build things like fourplexes and duplexes, which we know are popular with the middle-income group,” Kennedy said. “Catalyzing that small-scale investor is really important.”

Kennedy also advocates for the use of public land. If, for instance, a private developer gets a permit to build on a Dallas ISD property, perhaps it will also build a new school.

The city is beginning with land near transit. Staff has identified parcels that the city and DART own that could one day contain housing. There are 877 city-owned parcels located within a half mile of a transit station, a priority location going forward.

The city will soon issue a request for proposals to fulfill this housing challenge: 1,000 new units priced for individuals making between 30 percent and 120 percent of the area median income, which would be between $17,500 and $72,408, for an individual.

Kennedy adds that those strategies have to be accompanied by density.

“We need housing supply and a revitalization strategy that creates real neighborhoods with jobs, amenities, and access to transit,” he says.

To get there, the city has to avoid the pitfalls of the past. Bishop Arts is a prime example of rezoning gone awry, which revitalized a neighborhood but inflated the price to live there.

“It created housing, but it was all market rate,” Kennedy says. “The nature of the market is, once people are renting at two dollars per square foot, the next project is going to want it at $2.05. That creates an inflationary process, where rents go up, which is basically the opposite of what we want.”

“We’re really just at the beginning of addressing affordable housing.”

Councilman Chad West

Part of this is financing. According to figures from The Real Estate Council, investors are generally looking for a yield of somewhere between 6.5 percent and 7 percent. Projects with affordable units “struggle to obtain financing through traditional investor partners,” according to TREC.

Including affordable units in developments often means losing money. Investors don’t like losing money. On a 338-unit low rise development, renting 20 percent of those to individuals who earned 60 percent of the area median income would cost the project about $12.6 million. Even setting aside 5 percent of the units—just 17 total—would mean walking away from $3.1 million. This is the so-called “funding gap” the city must work against as it seeks to bring these to market.

State law forbids Dallas from enforcing any kind of rent cap, but the city can pick and choose which developers it works with. They can also give those developers as many options as possible to motivate more units for a variety of incomes.

“We’re telling developers, ‘You can build affordable units, you can cut a check for an affordable housing fund, or you can allocate part of your land for those affordable units and then partner with a nonprofit to do it,’” Noguera says.

That was one of the recommendations Noguera made during a Housing & Homelessness Solutions Committee meeting in late January. While no concrete action items emerged from the meeting, Noguera and his colleagues presented a list of possible ways to incentivize development: a “fee in lieu” program (which involved paying into an affordable housing fund rather than actually including the units in the development), the other options detailed above, and an amendment to the city’s housing code.

TREC would like to see reductions in parking requirements, fee waivers, tax abatements, a land trust that would allow for land to be developed without the developer having to buy it, and creative use of investments from tax increment finance districts.

Currently, projects receiving financial incentives from the city are required to lease 10 percent of their units to tenants with housing vouchers. This possible amendment would remove that requirement, theoretically opening up more units for middle-income folks through more creative avenues.

Those potential changes are half the battle for Noguera, who admits he also has to work with city council and their dealings with developers. The scandals—which, in recent years, have included everything from poor staff oversight to low-income housing developers allegedly bribing council members for votes favorable to their projects—are troubling to him, partly because he says city council members shouldn’t even be talking to developers as often as it appears they do.

“I can’t protect someone from themselves,” he says. “I can only advise them. We’ll inform the council members that we’ve received an app(lication) from a developer, and they should hold off on having any communication with the developer until we review their app.”

Siburt, the CitySquare president, says he has learned to navigate the politics of affordable housing. He says he is frustrated by what he sees as a lack of “political will” from the city council.

“Currently, the harsh reality is that there’s not political will to do affordable workforce housing at scale, or it would be getting done,” he says. “City Council will voice en masse [a] shared agreement that we need affordable housing, but there’s not always a willingness for that housing to be in certain council districts.”

Part of the struggle for developers, Siburt says, is that they, “have to be willing to persevere and try anyways.”

To “persevere” would usually mean leaving money on the table. It’s much more profitable for developers to build high-end units, particularly given the lengthy wait for permits. Another example discussed in that late January committee meeting showed that developers stand to lose as much as $240,000 per year by including just 10 800-square foot affordable units in a housing development in Preston Center.

The Lomax Container Housing Project
The shipping containers are 300 square feet.

For now, persevering also means avoiding city subsidies altogether, which is partly how CitySquare’s recently announced shipping container project will come to fruition.

The Southeast Dallas development will include 19 300 square-foot units made of repurposed shipping containers. These homes will be rent-restricted for people who earn 60 percent AMI, which is about $36,000 a year. These units will rent for about $906 a month. Utilities and internet are included.

At roughly $3 per square foot, these apartments surpass the average dollar-per-square foot cost in the city, which currently hovers around $1.30. Plus, residents will still be using a little over one-third of their paycheck on rent. That is right at the cusp of being rent-burdened in what is intended as affordable housing, a problem that highlights the city’s lack of housing stock.

“Admittedly, 19 units does not solve the supply problem,” Siburt says. He calls the shipping containers “one solution among many.” The others just haven’t arrived yet.

Kennedy, the urban planner, is no fan of the units’ size and design, but he and Siburt do agree on a key point: creating affordable housing at all price points and income levels will take the kitchen sink.

“There’s a way to nibble around the edges of this issue, but to really move the needle, you need to throw everything you can at it,” Kennedy says. “In terms of solutions, you have to use all of the above.”

And, of course, you have to see it through. Whether the many Gebleins and Nelsons stick around to see it remains to be seen.

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