A Dallas developer traded affordable housing to build higher. Will others?

Alliance Residential

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When Alliance Residential proposed a new apartment project in the Knox-Henderson area, the powerful Oak Lawn Committee group gave them some assignments: win neighbors’ support and add affordable housing.

Several iterations later, Alliance won unanimous City Plan Commission and City Council approval of its 335-unit complex with 34 affordable units.

Now, city leaders are resuming efforts to make similar deals a possibility for developers in some parts of Dallas. Under the proposal, called incentive zoning, developers would have the right to build denser projects without having to go through the onerous multi-step public hearing process.

The rules, which would be guided by the city’s newly passed comprehensive housing policy, have the potential to reshape swaths of the city. And the Alliance project serves as a model of sorts for what city officials hope to accomplish.

City Council member Philip Kingston, who also challenged Alliance to accept vouchers, said during the May 23 hearing for the Alliance project that incentive zoning "could be a big benefit for our affordable housing policy as well as for the development community."

Nick Wilhelmsen, Alliance Residential’s development director, said the affordable component of his project created "a really good opportunity for people that might work in that area, who might work in service industry jobs that might otherwise be priced out of that market.

"It gives them an opportunity to live near where they work and possibly walk to where they work."

The City Plan Commission’s Zoning Ordinance Advisory Committee has been trying to iron out the incentive zoning rules with city staff since 2016. The panel took a break while waiting on the city’s comprehensive housing policy, but picked it up again Thursday.

The details, like the city’s zoning rules, will be complicated to sort out. Kingston told his council colleagues to give input about their parts of the city. He hoped to have the ordinance done by the end of the year.

As the proposal stands now, the zoning would apply to about 11,000 acres of land in Dallas under some specific zoning categories, such as MF-1(A) and MF-2(A), which have height restrictions of 36 feet. But the density bonus wouldn’t apply to some planned development districts, including Oak Lawn’s PD-193, which the Oak Lawn Committee, a neighborhood group, is designed to protect. That means the Alliance project still would’ve had to go through the same process regardless of the policy.

Plan Commissioner Tony Shidid, the chair of ZOAC, said he wants to get the ordinance right because of the major impact it could have on neighborhoods.

"We’re trying to come up with a set of rules that applies to thousands of acres in the city of Dallas when many of them are really context-specific," he said. "That’s what makes it difficult. Honestly, we sit around and spend many, many hours thinking about the unintended consequences of what we’re doing."

In the current proposal, affordable housing means that families making 80 percent of the area median family income — $73,400 for a family of four — would be able to rent a unit for between $896 and $1,450. Those rents would change as the median income of the area changes. But the units would have to be kept within "affordable" ranges for a set period of time, such as 15 years.

Developers could still go through the City Plan Commission and council if they want a zoning change without providing affordable housing, which affects profitability for developers and their financiers.

Incentive zoning follows the city’s other swings at incentivizing affordable housing, such as affordable housing requirements for developments receiving subsidies from tax-increment financing districts, commonly known as TIFs. The comprehensive housing policy also includes other tools that are aimed at creating 20,000 new homes and bringing back the middle class. Council member Mark Clayton called the lack of affordable housing is "the biggest malignancy we have in this city."

But the details of incentive zoning could prove difficult, politically and practically.

Zoning consultants and others encouraged city staff to look into incentives to encourage the use of housing vouchers and eliminating the height-restricting residential proximity slope, which restricts heights of buildings near single-family homes. Some fear a net loss of affordable units if older, cheaper complexes are razed for new buildings even with the policy.

Sam Merten, the chief operating officer of downtown homelessness center The Bridge, wanted the city to focus on incentives for permanent supportive housing.

"While I love to see us having opportunities for the middle class, there are a lot of people living on $19,000 a year or less," he said.

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