Why Dallas Should Support 4-Plexes By Right

Full story with Imagery: https://medium.com/@WalkableDFW/why-dallas-city-council-should-support-4-plexes-15937fab6d48

If you haven’t heard, five Dallas city council members signed a memo asking city staff to explore amending the zoning code to allow up to four (4) housing units on all residential property.

Why?! You may ask. After all, the single-family home is a man’s (sic) castle! It’s the American Dream!

I am going to frame this argument on three of my core principles of urban development, which are the American Dream is about Upward Mobility, the pathway to success available to all, not the symbol of success. This is for a different column, but all too often the high transportation costs associated with low density car-centric development is a barrier to upward mobility.

The other two principles I will touch upon are first, leveraging public investments to maximize the private value potential of land. This is at the heart of the argument which I will get to momentarily. The third principle appropriate for this piece is about instilling, allowing, and availing the maximum possible amount of choice in the market. With understanding that cities are multi-dimensional social and economic markets, means of exchange, and therefore choice is required in housing type, neighborhood character, and transportation mode — and no, no other transportation mode is useful if the car is centered in your infrastructure networks.

Simply put, we need density to support our infrastructural burden.

Dallas would not be the first to lower the barriers to adding new housing or what we call “Missing Middle” housing, which is all of the housing types (such as granny flats, duplexes, four-plexes, townhomes) between single family homes and 250+ unit multi-family buildings. When there are high barriers from zoning, permitting, and finance, this type of housing is difficult if not impossible to deliver but fills an important gap in housing attainability.

Cities around the country are waking up to appropriately address some of their challenges by allowing for additional units on residential-zoned properties and in some cases also eliminating minimum off-street parking requirements in one fell swoop as Sacramento has done. Minneapolis, Portland, and Austin are also well out ahead on these fronts. But, we shouldn’t do this because others have. We should do it because it is right for Dallas in this moment and a needed step for Dallas to grow as a more resilient, prosperous, and equitable city in the future.

— — — — — — — — — — -

An aha moment in my career occurred as a student visiting The Kentlands in Gaithersburg, MD, a New Urbanist development in suburban DC. I asked a question about affordability (this is early 2000s) and our tour guide offered the example that a recent college grad was able to finance the purchase of one of the larger courtyard homes with detached garage off an alley and a small apartment unit (or granny flat) above. She lived in the garage unit and rented out the main house at the rate which covered her full monthly mortgage payment. I was like Dorothy stepping out of a black and white world onto the yellow brick road. There could and should be many types of housing and ways to afford a roof over your head — and you should be able to tailor it to your lifestyle and momentary station in life.

Another more local example: I was recently talking to a friend and neighbor who moved to Dallas 2–3 years ago. He bought an 8-unit apartment building for roughly 100k/unit. He lives in one for free, rents the other seven units to cover his note. Here is the interesting part: he kept all of the same tenants, kept their rents flat, and maintains leases in perpetuity. His monthly payment won’t change for the most part (except for any property tax and assessment changes) so why does he need to rapidly increase rents. It’s more important to him to maintain full occupancy and long-term tenants that have mutual trust and care for the property.

This is the downstream effect of “Missing Middle” as a product typology, which is Missing Middle as market niche between capital-A Affordable (read: subsidized) housing and new-build market-rate housing. The variety of age and size, only allowed through more permissible zoning fosters greater true affordability, improves neighborhood and social stability and allows for filtering of price points to match a range of income levels so that just about anybody who desires to live in this or that particular neighborhood can do so. Neighborhood choice breeds neighborhood character fostered by the self-selection of people who choose to live there.

Lastly on this point, capital-A Affordable, subsidized housing presents so many bureaucratic hurdles and barriers that it can never deliver the quantity that is needed (minus a level of public investment that is unlikely and probably overly top-down) so other tools are necessary, allowing the broader marketplace to deliver the spectrum of needed housing.

In this particularly piece, I won’t be getting into the evolution and creation of single family zoning as a response to federal courts preventing zoning land by race in the 1920s, which wasn’t fully eradicated until redlining was struck down nearly five decades later. Instead, I am going to focus on what you really care about: paying taxes, which if you think about the city as a business is that business’s revenue. If we further that analogy, we as residents are all shareholders in this corporation (incorporated as a municipality, quite literally) and our board of directors is the city council, who then have a fiduciary responsibility over the business of the city.

The city has revenue and expenses. Being in the state of Texas, municipal revenue primarily comes from property taxes and expenses are comprised of providing services (libraries, police, parks, etc.) and maintaining infrastructure. As we all know, costs rarely go down. Inflation aside, since all things decay over time, maintaining status quo gets more expensive by nature.

Since 2000, Dallas has experienced two of its slowest growth decades since incorporation and is capturing less regional growth than the proportion of it population. Given the rapid growth of the region, this is not due to lack of demand, but lack of housing and neighborhood choice. Look no further than the point I often make that given Dallas has so little walkability that any improvements in that area cause massive price spikes in real estate; evidence of pent-up demand rather than lack thereof.

Meanwhile, the city’s infrastructure continues to age — what is often referred to as deferred maintenance during bond election season. When bonds are used for basic maintenance, you can have a pretty good sense that your city is upside down financially, a symptom Lewis Mumford calls ‘Necropolis’ for a dying city “though no stone has yet crumbled.”

In this case, the costs of car-dependent infrastructure exceeds what a spread out tax base (due in no small part to that very same car-dependent infrastructure and the incentive car-dependence does to spreading out land uses) can produce in municipal revenue.

Let’s redefine these terms of revenues and costs. Our collective commonwealth of incorporated private land, which produces the revenue via property taxes necessary to run the city, as our URBAN ASSETS and the infrastructure that gives value to that private land as our URBAN LIABILITIES since we have to maintain that infrastructure.

The revenue from our assets should exceed our annual liabilities. There is a reason the 1912 City Plan of St. Louis states that “art and science of urban design is to maximize the private potential of land.” Designing, building, and maintaining streets and parks isn’t just about transportation and recreation, but those streets and parks give value to the private land (or should anyway), which in turn generates a municipal revenue stream to keep up those streets and parks.

If the streets are designed in such a way that the highest and best use is a parking lot, vacant land, or some other low density, unproductive land use, then the streets should be designed in a different way…or else we won’t be able to maintain the parks.

When assets exceed liabilities you can invest and build things like the gorgeous public school buildings of the early 20th century. Compare and contrast to public schools with trailer classrooms and bond elections every few years.

When revenues don’t exceed liabilities, we stop spending to maintain our liabilities or infrastructure and we end up with terrible, pot-hole ridden streets that often lack amenities like sidewalks and street trees. And when that becomes unconscionable, we can raise taxes directly or in a de facto manner by increasing assessments while keeping or even reducing the tax rate (one interesting way too much single family zoning increases assessments is that it creates scarcity of land for new investment and construction of every other type of use, all competing for less and less land, raising land prices and in turn assessed land values).

The third and most sensible option however, instead of letting things decay or increasing property taxes, is to encourage inward and upward growth in the form of density. And I should caveat the term density with my colleague Brent Toderian’s term ‘density done well.’ What that means is all property exudes positive or negative values onto its surroundings at a level proportionate to proximity and density done well are the kinds of buildings that have a positive impact on surroundings.

‘Density Done Well’ is also the most productive land use in terms of tax revenue per acre.

In other words, a good urban building emits higher values to its surroundings which raises adjacent value compelling investment and improvement which then results in reciprocal value creation back to the initial good urban building. This is the synergy of urban places. Bad private property — be it a parking lot or Pruitt-Igoe (bad density) exudes a negative value onto its surroundings leading to disinvestment which then reciprocates in a vicious rather than virtuous circle.

If Dallas wants to be known as a ‘pro-business town’ we should also be smart business-people and encourage productive urban growth, not just allowing any kind of development.

The proposal by five city council members aware of their fiduciary responsibility to allow more density via the gentle density of duplexes and four-plexes is about lowering the barriers to inward growth, growing our tax base, reducing your tax burden, allowing more diversity of choice and customization into the housing market. In another blog post, I will cover how single family zoning ensures either decline or gentrification with little in between, prevents aging in place, erodes social capital and cohesiveness, and increases homelessness. This is strictly about the business case for increased density.

No single answer is ever the magic bullet. Allowing for more units on residential property should come with permitting relief and other resources that help residents invest in their own property and add additional units, whether they lack the professional or trade skills, the financing, or the time and patience for viscous permitting process.

Also, allowing four units on all residential properties is not going far enough. We should also allow unlimited housing units (that the market and height restrictions can bear) on all commercial, public, and industrial research land (which is basically warehouses). I say public land not to mean parks as you might fear, but instead schools, libraries, DART parking lots, and Dallas Housing Authority land to name a few. Instead of those trailer classrooms, the private sector could build a new school (without a bond) in exchange for providing 300 housing units on a site.

Dallas Housing Authority, which owns some incredible yet unproductive property as a tax exempt entity, could partner with the private sector to provide MORE affordable units in exchange for market-rate units in a mixed-income development. On one site, I calculated DHA could increase their number of affordable homes from 200 to 250 in a 1500 unit mixed-income, mixed-use development: improved housing conditions, more amenities, and job opportunities on-site for their residents.

Later this year, we can get into the property rights case for allowing more housing units and how single-family zoning weaponizes the zoning process as a way for people to control the property rights of others, which is not only wrong but should be challenged in court since the legal basis for zoning is to limit the effect of noxious land uses on the public. More housing for all is not only a public good and the right thing to do, it’s the smart business thing for the city of Dallas to do lest we continue our slide towards Necropolis.

The American Dream.City

Announcing the AmericanDream.City, a think-tank and blog associated with The Human Ecosystem dedicated to exploring ideas for building cities with upward mobility in mind.