Recommendations for state action to prevent displacement of low income people from gentrifying neighborhoods

A group of us have been kicking around ideas to address the problem of the involuntary displacement of low income people from gentrifying neighborhoods in some Texas cities .

State Senator Royce West of Dallas, chair of the Texas Senate Intergovernmental Relations Committee, established a working group to come up with recommendations to address the problem of the involuntary displacement of low income people from neighborhoods that are undergoing economic transition.

This working group came about as the result of a hearing before  the Intergovernmental Relations Committee held in Dallas on March 27. The working group held its initial meeting in Dallas last Wednesday and in preparation for that meeting a group of the members representing low-income communities, academics and advocacy groups prepared a draft set of recommendations.

Wednesday’s discussion was widely ranging and very interesting. Considerable time was spent discussing how inclusionary zoning could be applied in Texas to guarantee that some portion of the housing and gentrifying areas remained affordable to the poor as well as how inclusionary zoning could open up housing opportunities and high opportunity, nontraditional neighborhoods to the poor.

Texas is only one of two states that prohibit inclusionary zoning through state law. This came about as a result of legislation enacted in 2005.

The working group discussed a variety of different tools in the areas of land use in planning, public funding, regulatory tools, etc. that could mitigate the negative effects of the displacement of the poor from these economically changing neighborhoods.

The next meeting of the working group will be in Austin in a few weeks. For more information contact me or Julie Franks, committee director of the Senate Intergovernmental Relations Committee.

Here is a discussion paper, prepared by housing and neighborhood advocates.  The paper represents our suggestions and not necessarily the views of the committee. At this stage the paper is more a laundry list than a refined proposal:

Housing Advocates Recommendations to Economic Displacement Working Group of the Senate IGR Committee

I. Proposed state policy on economic displacement and gentrification:

The policy of the State of Texas is to:

1. Promote housing opportunities for lower-income people and people of color in non-segregated neighborhoods while allowing for integration of low-income and ethnically segregated neighborhoods; and

2. Allow existing neighborhood residents to benefit from urban revitalization and neighborhood investment by preserving affordable housing opportunities and making it a priority to circumvent the involuntary displacement of the existing residents.

The key to a successful public policy is balance. Programs that target all housing assistance to lower-income people in existing low-income neighborhoods are inappropriate as they will reinforce segregated housing patterns. At the same time, a failure to plan and provide for affordable housing opportunities within gentrifying neighborhoods will result in the economic displacement of lower-income people of color and the re-segregation of the gentrifying neighborhoods as non-minority, higher-income communities.

As a first step, the State should adopt the public policy goal of creating and preserving housing opportunities for lower-income people in economically and racially integrated neighborhoods. Public resources must be used to further this goal. The State must then provide incentives, funding, and programs to cities and counties to develop plans to achieve this goal.

II. Four primary issues within gentrifying areas:

► Failure of cities and other governmental entities to engage in long-term planning and adopt policies that promote economic and racial integration in our communities. At the same time, city adoption of land use changes, policies, and investments in neighborhoods that result in the economic displacement of lower-income persons and the loss of affordable housing stock.

► Lack of public and private funding to purchase and control existing affordable housing and lack of funding to acquire land for development of new affordable housing. The best method of protecting a neighborhood from rising property values and speculative investment, is to provide for nonprofit control of land through mechanisms such as a community land trust.

► The virtual absence of funding programs that provide housing assistance to extremely low-income families. Within gentrifying neighborhoods the extremely low-income population, the disabled, and the elderly are the most vulnerable and usually comprise the bulk of the population suffering from involuntary displacement.

► Tax increases, although this is not the main issue, at least not for seniors over the age of 65.

III. Tools and policies to combat economic displacement and to promote the economic and racial integration of neighborhoods:

A. Land Use and Planning Tools:

1. Repeal the existing state ban on inclusionary zoning.

2. Require cities and counties to adopt a regional fair share affordable housing commitment, to adopt and carry out a plan to promote racially and economically integrated communities, and to offset the involuntary displacement caused by gentrification.

3. Require cities to consider affordable housing preservation as part of any redevelopment plan for a gentrifying or distressed area and to target a portion of any tax breaks or other government subsidies (such as TIFs, PIDs, or economic development agreements) to affordable housing preservation in the area.

4. Require TDHCA to administer the low-income housing tax credit program in a manner consistent with public plans to promote economically and racially inclusive communities and to provide for tax credit housing in high opportunity areas.

B. Funding Tools:

1. Require that all tax increment finance districts set aside 30% of funds for affordable housing. For TIFs in gentrifying areas, the funding should be used for a property acquisition fund to acquire property for affordable housing development and preservation.

2. Adopt a Texas Homebuyer Tax Credit, a property or franchise tax credit dedicated to helping lower-income families purchase a new home or an existing home that has been substantially renovated.

3. Allow cities to adopt a real estate transfer fee on properties being sold in gentrifying areas, and use the funding to create a land acquisition and housing preservation program for gentrifying areas.

4. Support the expansion of community land trusts by amending existing law to allow community land trusts to get a 100% tax break.

5. Expand the funding available to the Texas Housing Trust Fund and prioritize the funding on the production of affordable housing within gentrifying areas and the production of affordable housing in high opportunity, non-segregated communities.

C. Regulatory Tools:

1. Enact a law allowing cities to regulate conversion of apartments into condominiums. Condominium conversions can result in high levels of economic displacement in a gentrifying neighborhood. Many cities around the country have adopted local ordinances to help offset the economic impact of condominium conversions. There is currently a Texas law, however, that prohibits cities from singling out condominiums for any type of regulation.

2. Enact stronger housing preservation laws at least for government-funded affordable housing by allowing for a tenant right of first refusal, advanced notice, tenant relocation benefits, etc.

3. Enact an anti-discrimination law to prevent landlords from discriminating against tenants who pay their rent with a Section 8 housing choice voucher.

D. Miscellaneous

1. Establish a trigger based on the threshold of racial and economic segregation that would compel a city or county to adopt a “moving the opportunity program” to provide counseling and assistance to lower-income households to locate and obtain housing outside of racially and economically segregated communities. The state could fund these programs by providing for a 1% assessment on all new tax increment financing districts operating within the state.

2. Extend to city and county taxes the tax breaks that seniors get on their school district taxes when appraised values go up. (This gives seniors 100% protection from rising land values).

3. Clarify that negotiated incentives between cities and developers in exchange for affordable housing are legal, including in the context of zoning changes. The City of Austin argues it cannot use voluntary inclusionary zoning (and thus can’t negotiate incentives with developers) except in limited circumstances because it violates the state bar on “contract zoning.”

4. Adopt a vacant property receivership law to give community-based organizations the ability to acquire and rehabilitate vacant and blighted properties.

5. For publicly-owned owned land being redeveloped for housing, require that at least 25% of the homes be available for lower-income families.