For years, Dallas has had a strategy to deal with vacant lots owned by people long delinquent on their taxes. Acquire the property and sell it to developers. The city sets one condition: The developers must build houses for sale to low-income homebuyers.
But this week — after some debate — the City Council tweaked the rules of the land bank program to also allow construction of rental housing and commercial development on the lots.
Before, the city targeted empty lots zoned for residential use. Now it can also scoop up land meant to be used for businesses.
“Housing is the primary purpose, but the Texas land bank statute allows more than housing,” David Noguera, the head of the city’s housing department, told council members Wednesday. “So to the extent that the lot is located somewhere where it may be appropriate to have a commercial use, we have that flexibility.”
Some council members voiced concern about opening the gates for commercial development through a program designed to add affordable homes to a city where they are scant. By law, the land bank must create housing stock for families making 115 percent or less of the area median income.
“I understand [businesses] make stronger neighborhoods, but I thought this was to provide housing,” said Sandy Greyson, council member for Far North Dallas.
The current land bank inventory sits at about 200 lots. On Wednesday, the council approved use of $1.5 million in existing bond funds to buy more.
South Dallas’ Kevin Felder proposed using only up to 25 percent of those funds for commercial lots.
“I would like to cap it so we don’t go down the wrong path,” he said.
In the end, the council decided against setting a cap.
“The [housing] department needs the flexibility to bring projects that we look at individually and decide on their individual merits,” said council member Lee Kleinman of North Dallas, citing the need for places to buy food in some communities.
Noguera said the program’s scope was broadened to give the city another tool to improve blighted neighborhoods, not because developers demanded it.
The housing department will focus on buying lots in parts of the city named “reinvestment strategy areas” in the housing policy approved this spring. These neighborhoods include Vickery Meadow, The Bottom and Pleasant Grove, among several others.
How the land bank works
Under the land program, the city acquires empty land from owners who fall behind on their taxes and sells each plot to developers for fair-market value or at a discount — on condition that a home be promptly built and sold to a low-income buyer.
Before the city approves the sales, developers must submit a proposal stating what they wish to build, and at what price range. State law requires that a majority of the lots developed for home sales must go to families making 80 percent or less of the area median income.
Proposals must go before the council for approval before the city can transfer a lot to a home builder. That requirement will also apply to developers of commercial properties, so the council will have control over what gets built.
City staff had previously revised the land bank program after a 2016 investigation by The Dallas Morning News revealed that Dallas had sold dozens of lots to a Mexican entrepreneur with a theft conviction and questionable sources of funding. The man, Jose Santos Coria, had transferred some homes intended for low-income families to relatives who already owned houses.
Now, the housing department must vet homebuyers’ incomes before developers sell the homes. Before, the city didn’t collect information from homebuyers until the sale was complete. The city also made no effort to confirm buyers’ incomes.
Homebuyers will be required to live in their houses for a certain amount of time.
What housing advocates say
Dallas’ land bank is one of the oldest in Texas, and the city had a hand in shaping the 2003 state law that guides it.
John Henneberger, a fair housing advocate in Austin who worked with others on that law, said it isn’t a good idea for the city to be buying commercial property.
“It seems to us to be an overreach,” said Henneberger, co-director of the Texas Low Income Housing Information Service.
He said state legislators went past the narrow set of criteria that housing advocates sought and gave Dallas many concessions, like the ability to sell lots to for-profit developers.
Heather Way, a law professor at the University of Texas at Austin who was also involved in the land bank legislation, said commercial development itself is not the problem. She said what concerns her is a lack of safeguards to protect neighborhoods vulnerable to gentrification.
One safeguard is to require community input, Way said.
“It’s very easy for cities to overlook the social and racial justice impacts of policies like this … especially given that these lots that are going into the land bank are almost exclusively — not all, but almost exclusively — in low-income communities of color,” she said.
Noguera, the city’s housing director, said the public has several opportunities to weigh in on staff recommendations for land bank lots. The land bank board, the council’s housing committee and the City Council consider lot proposals in public meetings before a decision is made, he said.