Downtown Has a Great Future. Forget the Past.

Categories: Schutze

320px-Top_of_Rock_Cropped.jpg
Dschwen/Wikimedia Commons
Downtown Dallas might never look like this, but that's OK.
Had an interesting chat a while back with Dallas City Council member Philip Kingston about downtown office vacancy rates. Hey! What? It's what people like us talk about. Just be glad you didn't get stuck between us on an airplane.

It's interesting. Really. According to the Dallas Business Journal, Dallas still has a generally suck record on office rentals, with a vacancy rate that leads the nation among large cities. But things are getting better here faster than elsewhere, giving us a generally less suck record than we used to have. Like Nancy Pelosi says, you know.

So-called "office-using jobs" are growing here at twice the national rate, according to CBRE Global Research and Reporting , which has to be a good thing for people with office space to rent. The Dallas Morning News has reported that downtown retail is still anomalously suck given the good recent growth rate in downtown residential, but that's a glass half full if you look at it as opportunity -- a market ripe for the plucking.

Kingston told me he had chatted with a commercial real estate broker who was telling him that downtown is never going to be the region's Class A commercial center again. But that's a good thing, the guy told Kingston, because it means downtown can be a vast center of good solid Class B office space, restored or never decayed, and even Class C stuff capable of being bought and restored at profitable rates.

The Class B, in particular, can be home to back-office and regional operations, as opposed to headquarters -- the kind of enterprises more likely to be occupied by people who would also live downtown near their work. How many CEOs really want to live the auto-free life in downtown Dallas, as opposed to young worker bees? So embrace the worker bees, as Pelosi might also say, maybe.

In other words, we need to stop thinking of restoring downtown to a status it last occupied in the 1960s and early '70s, a half a century ago, as a cluster of corporate headquarters, and begin thinking of it instead as a good old-fashioned 21st century working class neighborhood.

Take that retail situation, for example: If you can pour enough people into apartments downtown while keeping the street-level rental rates less than sky-high, then you have the right medium for breeding all kinds of retail from bars to organic baby-food outlets. That seems to me like a much more likely scenario than the one City Hall seems to have pursued for the last decade, trying to recreate Manhattan somehow.

Not to wander back into the HUD racial segregation complaint story -- no, no, I promise, I know you're stuck next to me on the plane here, and I've already talked about the HUD case all the way from Dallas to somewhere over St. Louis, so I promise not to go on about it for too long -- but the vision of downtown as a working neighborhood is exactly what City Hall has missed and why it got in trouble with HUD. It's what the muckety-mucks on the Dallas Citizens Council just can't get straight in their heads.

The future of downtown is not as a center of top-end condos for limousine riders. Downtown is much more likely to bloom as a neighborhood for bicycle-riding hipsters and sipsters who want to live, work and drink according to a lifestyle that does not include DUIs or having to wake up too early. In other words, like the French.

Three years ago, just before he died, I had lunch with M. Thomas Lardner, the visionary developer who was an early force in the creation of Uptown, the smart and

mthomaslardner.jpg
Tom Lardner, visionary for downtown
fashionable Dallas apartment and office district just north of downtown, which on any given evening can be the closest thing to Paris you can experience without getting on an airplane and risking getting stuck next to me. I asked him what single policy he thought Dallas should adopt ahead of any other to make downtown bloom the way Uptown had. He told me the one thing Dallas should do first is find a way to subsidize rents for working people.

The secret to Uptown's success, he said, was always sidewalks full of young people, fully employed and able to afford a few drinks, not making enough money to pay high-end rents, living the walk-to-drink lifestyle if not always walk-to-work. Lardner said the high-end rent people are important too, but they don't get out as much, and when they do get out they don't look as good.

He and I did not know, as we spoke that day, that Dallas already had hundreds of millions of dollars in the till it could have spent to subsidize rents downtown for working people. But it didn't use the money that way, because it was afraid some of them might be black. In great sins, a major element is always stupidity.

OK, I'm done. Hey, wake up! I said I'm done.

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37 comments
GAA214
GAA214

Goddam Jim you should run for city manager. 

holmantx
holmantx topcommenter

HUD is mounting a systemic attack not confined to just Dallas.  The Leviathan has armed itself with a new weapon - "Affirmatively Furthering Fair Housing", also known in HUD circles by its acronym, AFFH.  It can be found in a proposed rule that was published on July 19 in the Federal Register.

It is grounded in Disparate Impact statistics and the City (no town, county or neighborhood association) will be able to fight it, or exert control over local housing policies.  The neighborhoods are being federalized.

In 2009 the Supreme Court struck down as unconstitutional race-based public school assignments made in order to achieve or maintain integration. It’s hard to see how race-based tenant selection and assignment decisions, made for similar reasons, could survive judicial review.

This new Executive Branch Law is being applied nationwide.  

Until it can be vacated, either through the courts or by Congress, it is best to just not take HUD money.

mavdog
mavdog topcommenter

There's a problem with the "embrace the suck" concept proposed.

The CBD contains about 15% of the office space in the Dallas market. Almost 25% of that office space in the CBD is vacant: 2.64 Million square feet of office space was leased so far in 2013, only 100,000 sf was leased in the Dallas CBD. In 3Q 2013 almost 1.7 Million square feet of office space was absorbed in DFW, but the Dallas CBD had negative absorption.

Bottom line is that even if the office space is cheaper, tenants are willing to pay more rent to be in other areas of DFW such as Far North Dallas, Las Colinas, West Plano/Frisco, Uptown, which all have rents that are from 15% to 50% greater than the Dallas CBD, and where the majority of space that was leased is located.

Repurpose the office buildings into residential, don't keep trying to retenant the office buildings that office tenants don't want to lease. The problem is conversion is expensive, and CBD residential rents are not high enough to pencil with these high conversion costs.

City incentives are necessary, tax abatement is the tool that can make the conversions turn a profit. CBD retail will never be successful until the critical mass of pop is reached, conversions are the vehicle to reach this pop density. The City will end up with more tax revenue and a CBD that has people, with people there can be successful retail.

logic4dallas
logic4dallas

You can't have a vibrant downtown area populated by HUD buildings. The people living there can't afford to shop, eat, or recreate in any of the area's shops.

The city of Dallas has grown an addiction to "easy" federal money for low income and PSH, not to mention populating 40% of lower downtown with property that generates zero tax revenue. They scratch their heads and wonder why the coffers are empty, tourists aren't flocking here, and businesses don't last in downtown. Any development is good development...right? Wrong.

Nobody wants to come downtown (let alone live there) to fight through the throngs of unmediated homeless to enjoy...well nothing. There are a few nightclubs, overpriced restaurants, parks that get old after about 30 minutes, no real grocery stores, or family centered entertainment. As long as there is not a broader variety of attractions and The Bridge is allowed to usher in constant waves of homeless that are allowed to have their run of the Farmer's Market area, downtown will only sputter alone.

This glowing love for Uptown is pretty ironic considering they basically bulldozed a historic black neighborhood and replaced it with over priced condos, apartments, and retail. Uptown is not a neighborhood. It is a collection of self centered elitist wannabes, that have no idea who their neighbors are and could care less about their neighborhood unless it affects them personally. The closest places I've seen to being an urban neighborhood in Dallas is perhaps Deep Ellum, Bishop Arts, and The Cedars. They have a few common traits. They do not glut on low income housing. They aim at the middle income group, they are community driven. They help the less fortunate but do not bow over to the PSH and homeless driven city agenda. And most importantly they are building long term sustainable housing and businesses.

holmantx
holmantx topcommenter

Use of taxpayer funds to incent (or disincent) development, people, conversions, or otherwise influence the private sector is nothing more than corporate welfare.  Neighborhoods revitalize on their own, including the CBDs across the nation.  Private money chases revitalization based upon changing demand.  Throwing public money at neighborhoods is not the prime motivator no matter how much we pat ourselves on the back.  Empty nesters and hipsters are piling into the downtown districts unrelated to fairness.  You might as well try and control house prices in Lakewood so those who cannot afford to live there (or any other neighborhood) . . . can.  Discrimination is alive and well however, it is 90% based upon class/income.  

Besides.  I think we can conclude that we do not have a very good track record of accepting federal monies with strings attached so long as disparate impact is the measure.  

Why?  Because disparate impact measures racial diversity when the principal determiner is the ability to pay rent, purchase a dwelling, and disposable income to frequent bars, restaurants and specialty retail.

I think I can name just about any large central business district in the nation and point out discrimination when Disparate Impact is used as the measure.

Google downtown Detroit, for instance.

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

Just so long as it doesn't become like one of the ghettos in Blade Runner ...


Besides, rent controlled apartments and other living accommodations do not work in the long run.  Eventually the controlled rents do not provide an acceptable rate of return and the race to the bottom begins.

Guesty
Guesty

Let's be clear about this, because I've seen similar posts on Frontburner suggesting that middle-class young people could somehow be the beneficiaries of these HUD subsidies (i.e. the people Lardner was talking about) if it were not for the discriminatory practices of the City.  (I think it was Eric Celeste who suggested that he would have liked to have had one of the subsidized apartments).


To qualify for HUD subsidies, a single person must have income below $23,000 in most cases (less than $14,000 in others, with some benefits rarely going to those making up to $37,000).  These are not the type of people that can afford to buy a few drinks or hit a restaurant at street level, even if their rent is subsidized.  


That isn't to say that the City didn't F-up: it did and the people responsible should be punished.  But HUD subsidized housing wouldn't have attracted the people you are suggesting create vibrant street level retail.  

J_A_
J_A_ topcommenter

I love this. It all sounds so romantical. I doubt it would actually happen but it's nice to read about on the day after Christmas when the office is a ghost town.

oakclifftownie
oakclifftownie

The secret to Uptown's success, he said, was always sidewalks full of young people, fully employed and able to afford a few drinks, not making enough money to pay high-end rents, living the walk-to-drink lifestyle if not always walk-to-work

Which works will until they have baby hipsters and migrate to the burbs

sosup
sosup

"The future of downtown is not as a center of top-end condos for limousine-riders. Downtown is much more likely to bloom as a neighborhood for bicycle-riding hipsters and sipsters who want to live, work and drink according to a lifestyle that does not include DUI's or having to wake up too early. In other words, like the French."


This is exactly right. Its sad that so many people, from City Hall, to the Forest City's of the world, thought the next step to downtowns resurgence was high-end apartments. Huge Wrong! The collateral damage by committing these "sins" is enormous already without adding the current HUD/FCA issues............

Myrna.Minkoff-Katz
Myrna.Minkoff-Katz topcommenter

Paris (France, that is) is hardly what comes to my mind when I'm anywhere in Uptown.   

Montemalone
Montemalone topcommenter

"...while keeping the street-level rental rates less than sky-high.."

Yeah, that'll happen.

wcvemail
wcvemail

@holmantx I agree with your first sentence 100% in the abstract, and so I hold my nose when I say that, in reality, so long as the money continues to be available, let's take advantage of it intelligently and legally, which would be best on a small scale. Seed money for retail shops, temporary and limited TIFs for all-income housing developers, and the like, would bring better results and cost less than the present multimillion dollar boondoggles and opportunities for graft and corruption.


Yeah, I know the ongoing, multi-verse blues song about such efforts (Fair Park Motor Museum is a capsule version of the failure of seeding small business,) but perhaps part of the inevitable Dallas-HUD settlement would be a transparent, honest, forward-thinking private/public shop to intelligently and legally disburse that money which we've already paid through taxes to the Feds.

Insert joke about Christmas bonhomie, hopeless optimism, etc., but it would work and might-could happen.

jobe3
jobe3

A false claims lawsuit just like the one against Dallas was filed against New Orleans, and the City of New Orleans fought it with motions for summary judgements because they had done the right thing, and could back it up! They put their evidence on the judges desk and he dismissed the case, the right way. The same cannot be said for Dallas, they desperately had to resort to public disclosures defense (everyone knew we were committing fraud here). It's their only defense when their guilty as hell.

So no, your claim everyone is guilty of same, is simply wrong and shortsided.

wcvemail
wcvemail

@ThePosterFormerlyKnownasPaul I don't know of any cases where rent control has worked in the long run, no, but I don't know of any cases where rent control has been allowed to taper off after inception, either. What about a timed expiration of, say, 10 years of rent control?

Such a program would populate the new development, with a wider variety of folks than non-controlled development, and build the resident base more quickly than purely free-market marketing. That quicker build-up and some judicious SMB seeding through tax abatements would bring in retail more quickly, which would then engender more of a "it's OUR neighborhood, let's take care of it" loyalty that would persist after the rent control and tax incentives expired.

A governing and disbursing board, required to disclose transparently, should be able to administer such a program, especially if constituted of a wider net of representatives than what Dallas has traditionally permitted into the closed circles. We haven't gone so far in this society that graft and corruption are guaranteed, have we? 

Myrna.Minkoff-Katz
Myrna.Minkoff-Katz topcommenter

@ThePosterFormerlyKnownasPaul   Rent control allows one to live in the lap of squalor.  But, but, but... it's Manhattan.

JimSX
JimSX topcommenter

@ThePosterFormerlyKnownasPaul 

I suppose we could argue all of your assumptions until the cows came home, along with what Guesty says below, but tell me if you would argue with this: if the federal government discovers that somebody is taking its money, not spending it on what the law says it should be spent on and then lying on official documents about what it's doing with the money, should the federal government not cut off the flow of money and seek restitution?

sosup
sosup

@Guesty 


Thanks for clearing it up in your mind, but your wrong in my mind. Plenty of secretaries, beginning firemen, police, retail staff, hotel workers make the kind of money you outline..................your just too detached from the working class to either know or remember...................especially in the current economic environment and of recent past.......

dsmithy3211
dsmithy3211

@Guesty It's unlikely, but it is possible.  Cf. East Austin (and to a lesser extent, Austin's South Congress/Lamar/First Street neighborhoods).  

dallasdrilling.wordpress.com
dallasdrilling.wordpress.com

@oakclifftownieExcept that it continues to work in Chicago on the North,West, and parts of the South side. You're right that they eventually move to the burbs, but if you have the right mix, you should have a conveyor belt of people moving in to the spaces previously occupied.

holmantx
holmantx topcommenter

@wcvemail @holmantx  


Anywhere in the nation, a developer is now able to submit an affordable housing plan and if rejected due to neighborhood opposition, he can blow the whistle for profit (15% to 25% of the HUD funds).

This is bad law.

Remember the NIMBY reaction to The Bridge mega shelter?  It's downtown for a reason - no voters.  Lots of opposition.  Activist associations haranguing their council members.  That's a big no-no now.  

There are countless examples of "community opposition" groups against all manner of assisted housing schemes all across the nation.

Like I said earlier, turn Lakewood Country Club into and assisted housing development and watch them go nuts.

And that is precisely what United States v. Sussex County was all about.

holmantx
holmantx topcommenter

@jobe3  


I suppose the City should also get its day in court?

But it appears that it was a team effort - whites and blacks, Democrats all came together in good spirit to milk a little HUD money in the name of the people who elected them.

But I would rather we just show contrition and administratively pay back the funds on properties HUD deems noncompliant.  Or obtain a Voluntary Grant Reduction on future projects, both of which HUD will do.  In other words, pay them off.

And since you mentioned New Orleans and its IDENTICAL situation where they prevailed, then let's examine NO's track record and just how they prevailed:

United States ex rel. Washington, III v. City of New Orleans, 2012 WL 956497 (Mar. 19,  2012). (granting summary judgment to City in False Claims Act case alleging that New  Orleans submitted false statements to HUD by stating that it would affirmatively further  fair housing. The court found that the city submitted evidence of several actions  designed to overcome impediments to housing choice including providing educational  opportunities regarding the need for fair housing, initiated lawsuits to enforce fair  housing laws, monitored execution of fair housing laws, investigated fair housing  complaints and produced an AI in 2010).

Hmmm.  Hey! Maybe we could do the same?

But then again, it appears NO is only batting .500 :

United States v. City of New Orleans, 2012 WL 6085081 (E.D. La. Dec. 6, 2012)  (denying motion to dismiss in case in which a nonprofit developer planned to convert a former nursing home into a 40-unit affordable housing development for people with  disabilities but the New Orleans zoning board repeatedly denied the developer’s  applications for variances. The court found that DOJ sufficiently pled that the city intended to discriminate or was improperly motivated in making discriminatory decisions by alleging that the city denied variances to the developers on three occasions largely because of community opposition, the board provided no explanation for the denials and that board members made statements demonstrating that they were aware of the  community opposition)

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

@wcvemail 

Despite the protestations to the opposite, we do not have free enterprise.  Economic activity is so distorted by the federal, state and local tax codes, we would not know what to do if the various government entities did not direct, steer, cajole and control economic activity through taxing and tax abatements.

To see an example of a centrally planned economy taken to the extreme just review the economic activity under Soviet Russia.  As one example, the Soviets developed radial keratatomy because it would be cheaper in the long run to surgically correct vision rather than provide eyeglasses for the life of the person.

A government should provide a level playing field for economic activities, not play favorites over which economic activity should occur with the available capital.


In my opinion, the reason why downtown Dallas is changing from a Class A to a Class B office space market is because the economic activity that occurs in the Class A market does not occur in downtown Dallas because the job classifications and pay grades of the people who fill those positions are not finding the amenities and government services that they demand, namely, streets, water, sanitation, police, fire, libraries, parks and most importantly SCHOOLS!


Instead the the City of Dallas has been whitewashing over the problems that we have, baking cakes and pastries while the peasants are going without bread.


Right now I have a 42+ foot tall duplex going up behind my house that violates all of the spacing and height requirements for an area zoned MF-2.  The most hilarious response that I have heard is that the 36 foot height limitation is that that is the "Average Height".  What in the H - E - Double Toothpicks is "Average Height"?


Does this mean that I can build a structure that is split level with one level 12 feet high and the other peaks out at 60 foot tall, and then have a building that averages 36 feet tall?


And do you seriously expect that a City Staff that comes up with this cockamamie bullhockey to be able to make sound economic decisions about succesfull development?

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

@JimSX@ThePosterFormerlyKnownasPaul 

Jim, I was only addressing the economic issue of rent controls.

I believe that once again the City of Dallas is in seriously deep doo - doo from some seriously bad errors in judgement on the issue with HUD.

Should the government be in the business of providing housing assistance to those who are unable to care for themselves?  Yes, I believe that it should; but that it should not be a growth industry.

To what level of need should housing assistance be provided is a completely different issue.

Guesty
Guesty

@sosup @Guesty That simply isn't true.


Starting firefighter salary in Dallas:  $42,000

Starting police salary in Dallas:  $42,000

Most secretaries working downtown start out at more than $35,000.  


You are absolutely right that there are poor service staff at hotels and poor working retail staff (also poor working support staff in offices).  But these people cannot afford to frequent surface level retail shops.  The bottom line is that if you make $23,000 a year, you almost exclusively cook for yourself (and bring your lunch with you to work), you probably shop at the cheapest big box retailer you can reach given your limited available transportation, and you effectively have no entertainment budget to spend going out on the town.  


And get this straight.  I grew up poor enough to be on HUD assistance, to rely on food stamps, etc.  I know what that life is about and do not view people who live it negatively at all.  I just know that life simply cannot sustain a vibrant retail economy, which was Jim's argument.  

hurleypic
hurleypic

Your getting false claims lawsuits mixed up with other civil rights charges that would be prosecuted by the DOJ for damages to the agrieved party!

sosup
sosup

@holmantx @sosup @jobe3 


I'm kinda bettin' Dallas wishes it could get off like that small, isolated deal...............

holmantx
holmantx topcommenter

@sosup @jobe3  


The City needs to settle like these guys:

United States v. Sussex Cnty., No. 12cv1591 (D. Del. Consent Decree filed Nov. 28,  2012) (consent decree in case alleging that the county’s planning and zoning   commission denied land use approval for an affordable housing subdivision proposed  by developer Diamond State Community Land Trust which had a disparate impact on  African Americans and Latinos. The consent decree requires the county to pay  $750,000 to the developer, reconsider the proposal using nondiscriminatory criteria,  enjoins the county from obstructing or delaying any affordable housing that is proposed  by the developer without a substantial justification that is neutral on its face and  consistent with applicable zoning laws and requires the county to take affirmative steps  to provide for future affordable housing, including formulating a fair housing marketing  plan and appointing a fair housing compliance officer)

holmantx
holmantx topcommenter

@sosup @holmantx @jobe3 


When "Community opposition" results in "Disparate Impact" proving discrimination, it is not winnable by the City.  Think about why neighborhoods form in the first place and how many times Neighborhood Associations (Kingston) move to thwart all kinds of development that may affect the Disparate Impact barometer.


Combined with any developer who has been jilted can now blow the whistle and win big, it just doesn't pay to take HUD money.


The City needs to just make this go away as painlessly as possible for the taxpayer.


And since they are all democrats, I suffer from no illusion that these elected officials will pay at the polls.  Everyone will be re-elected.

sosup
sosup

@holmantx @jobe3 


Oh, the second part of your comment makes it even worse for Dallas, given they lynched the 1600 Pacific in a similar fashion. 

jobe3
jobe3

No, that is not true. Hell, why don't you just argue to legalize fraud? Yes, it goes on in some circumstances, until their caught!

Guesty
Guesty

@jml47 @Guesty What does that have to do with whether people on HUD subsidies can afford to frequent downtown retail space enough to make any difference?  


The article you cite advocates subsidizing housing for those that earn only 30% of the median income in their area, which would mean they would earn only $14,000 a year in Dallas County.  Those people wouldn't do much to revitalize surface level retail space downtown because they couldn't afford to spend any money there.  


In other words, you are addressing an entirely different question than the issue raised by Jim.  You are suggesting that there should be more housing subsidies because there is great need.  I'm not sure I disagree, but I haven't studied the issue at great length.


Jim is suggesting that moving more people who are dependent on HUD subsidies to Downtown would held restore downtown.  I don't think the very poor, who are the only ones who receive HUD subsidies, are the people Mr. Lardner was talking about as being necessary to revitalize a mixed use neighborhood.  That doesn't mean we shouldn't do it, it just means that we shouldn't base the decision on Jim's argument that Downtown's surface level retail would significantly benefit.  Other than a McDonald's or 7-11, I don't expect it would do much of anything to increase retail activity downtown.   

jobe3
jobe3

42k qualifies for quite a few federal and state subsidy programs for housing!

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