Housing Considerations

DEEP ELLUM DALLAS SERVICE CENTER

Public Policy

HOUSING CONSIDERATIONS

Deep Ellum has historically been home to many artists, musicians and small business owners who enjoy the low cost of living in the area while having close proximity to the heart of Deep Ellum and Downtown Dallas. As the housing inventory increases from the current 5,800 residents to full build out, it is important that housing options are not only targeted to the highest end of the market but also meet the demand to allow those who have historically lived in the neighborhood to remain. The redevelopment of the Central Service Center is uniquely situated to meet that demand as the City of Dallas has a number of options to incentivize and help provide a wide range of pricing options.

Deep Ellum Foundation Housing Goals The Deep Ellum Foundation has created a number of Strategic Goals that should guide the City of Dallas in their implementation of housing options:

• The Deep Ellum Foundation desires to ensure that new housing options being provided do not only supply the higher end of the market but also provide options for those long term artist, musicians and workers who have called Deep

Ellum home for years.

• The Foundation’s plans to measure success by tracking the ratio of housing units available in Deep Ellum by different income brackets.

• The income brackets recommended to track were 60%, 80% and 100% Average Median Income. Residents also mentioned 40% AMI. We selected 60% as the baseline for this investigation.

• We recommend tracking the 120% AMI level which opens up housing options for many of the work force employees in the area.

Rent Levels per Income Bracket The chart below shows the income limits for the different % AMI brackets along with their monthly rent burden at 30% allocation of income to housing cost. This is updated annually by HUD.

Percentage of Average Median Income*

Unit Type***

Efficiency Income Level

Rent Level 60% 80% 100% 120%

$34,920 $46,550 $58,170 $69,804

$873 $1,164 $1,454 $1,745

1BR Income Level

Rent Level

$37,410 $49,875 $62,325 $74,790

$935 $1,247 $1,558 $1,870

2BR Income Level

Rent Level

$44,880 $59,850 $74,790 $89,748

$1,122 $1,496 $1,870 $2,244

3 BR Income Level

Rent Level

$51,870 $69,175 $86,424 $103,709

$1,297 $1,729 $2,161 $2,593

* Dallas AMI based on a family of four (4) - $83,100 ** Rent levels based on 30% of income level *** 1.5 persons per bedroom / 1 person per efficiency

New Construction and Challenges to Affordability • Providing housing at a rent level that can be attained by a larger portion of the renter pool has proven to be very difficult due to raising land, construction and labor cost without alternative financing vehicles or incentives programs.

• The City of Dallas has implemented a Comprehensive Housing Policy to attempt to provide options to address the housing shortages in these income brackets. Many of their policies (ie. voluntary inclusionary zoning or density bonuses) will not be as effective for the Deep Ellum Service Station because this area already has entitlements that allow for high density, urban construction.

• Due to high construction cost, it is extremely difficult to provide affordable housing in Type I concrete construction.

Having wood frame construction as a part of the development plan lends itself to the possibility of providing mixed income housing options with reasonable City investment or abatements.

Public Policy Recommendations on Housing

WE RECOMMEND PROVIDING 20% - 30% OF THE NEW HOUSING STOCK ON THE DALLAS SERVICE

CENTER TO BE WITHIN THE 60% - 120% AMI RANGE. This could be increased more depending on the financial incentives and deal structure made with the City of Dallas. Below are the tools that can currently be used in order to help bridge the funding gap or incentivize developers to provide mixed income housing developments.

Housing Toolbox

• Deep Ellum TIF – The Deep Ellum TIF has the ability to provide funds to developers for providing housing units at 80% of AMI. This can be done on a case by case basis

• Chapter 380 Agreement – Grants can be awarded for providing a percentage of affordable units in new developments.

• Public Facilities Corporations (PFC’s) – Chapter 303 of the Texas Local Government Code allows for 100% tax abatement for developments providing 50% of housing units at or below 80% AMI. This requires a ground lease structure where the City of Dallas would retain ownership of the land and provide a 75 - 99 year ground lease to the developer. The City of Dallas is currently working on the creation of a city controlled PFC which could be utilized for this goal.

• Low Income Housing Tax Credits – Federal tax credits are issued to developers of qualified residential projects.

To qualify, among other things, the projects must offer a specified percentage of “affordable” housing units. The

“affordability” of the units is based upon those units being restricted to only those renters below certain threshold income levels (tied to HUD-determined median income). Developers typically sell these credits to third-party investors in order to raise capital for their projects. This could be used to target the lower income levels below 80% AMI.

• Creative Public/Private Partnerships – With the City of Dallas owning the land they have the ability to structure unique arrangements to incentivize affordable housing. This could be as simple as a reduce land cost, lower ground lease rent, waiver of permits and fees, fee in lieu for affordable housing redevelopment in other parts of Deep Ellum and/or other unique arrangements.

The City of Dallas should provide time and the ability for the Deep Ellum constituents to give input and feedback on how their neighborhood is going to be redeveloped. This collective approach ensures that the redevelopment will be something the City of Dallas and Deep Ellum is proud of for decades to come.