Houston makes the cover story of Governing magazine, exposing questionable TIRZ practices
Yep, that is the Fourth Ward with the Continental building behind it. When the magazine came in my mail, I did a double-take when I saw it, thinking those skyscrapers looked awfully familiar.
The story is quite long but absolutely worth reading (and don't miss the photo essay near the top). It talks about State Representative Garnet Coleman's efforts to stop gentrification of the Third Ward, what happened in the Fourth Ward, the pro-gentrification case from developer Larry Davis, Mayor White's program, former Mayor Lanier's take, and, most interestingly, what the TIRZ's are up to in Midtown and the Third Ward with "land banking".
First, the obligatory excerpts:
Gentrification, a phenomenon normally associated with coastal cities such as New York and San Francisco, is now heading inland, transforming inner-city neighborhoods from Milwaukee to Raleigh-Durham to Albuquerque. It’s even come to Houston, the three-beltway city that loves to sprawl. Since 2003, the number of Houston-area suburbanites “very interested” in moving into the city has doubled, according to sociologist Stephen Klineberg, who regularly surveys regional attitudes toward the city. Homebuilders are responding by blanketing neighborhoods close to downtown with three-story town homes and lofts.Now, back to that TIRZ stuff which is very concerning:
Such development is no accident. In the past decade, the public sector has invested upwards of $8 billion in the central area Houstonians call “the Inner Loop,” much of it geared toward making the city more enticing to affluent suburbanites. There’s an eight-mile light rail line, new football and baseball stadiums, a museum district that’s doubled in size, new downtown parks and fresh landscaping. Yet now that suburbanites are moving in, it’s not just Garnet Coleman who’s sounding the alarm. So are Houston’s mayor, Bill White, and many members of the city council — particularly those who represent predominantly African-American and Hispanic districts.
What concerns both White and Coleman and most critics of gentrification is the prospect of Third Ward residents getting priced out of their own neighborhood. Recent research, however, suggests that worry is overblown. Studying gentrification’s impact in Boston, Duke University economist Jacob Vigdor found that an influx of affluent newcomers had, if anything, merely contributed to Boston’s socioeconomic integration. “There is no evidence to suggest that gentrification increases the probability that low-status households exit their housing unit,” Vigdor concluded. Columbia University economist Lance Freeman found the same thing last year in a study of New York. In fact, Freeman found that residents of gentrifying neighborhoods were less likely to move than residents of non-gentrifying neighborhoods.
Those studies haven’t tempered fears that the Third Ward is on the brink of upheaval and the perception among policy makers that something must be done to tame it. What Houston is discovering, however, is how slippery an issue gentrification can be. The Third Ward today is awash with developers, politicians, neighborhood activists and longtime residents. Each possesses a financial, political or personal stake in what the Third Ward is to become. And each, in distinct ways, is working at cross-purposes. Not only do they disagree on how to solve the Third Ward’s gentrification problem; they can’t even agree on what the problem is.
Is gentrification, despite what the academics say, really a problem of displacement? Is it a natural and unavoidable consequence of market forces, or does it result from specific policies? Is it a problem of low wages or one of high-priced real estate? Does it require government intervention? That such a debate is playing out in Houston — a city famous for its lack of zoning and its developer-friendly ethos — is a testament to the passions and confusion that gentrification arouses. What really seems to be at stake is something quite nebulous: the character of a neighborhood. And in Houston, as in many cities, that is inextricably linked to questions of political power and race.
A public entity hiding what it's doing? A TIRZ that, instead of investing in improving a district, is using its money to actually impede improvement? I have to say, it all sound sort of fishy to me - something I'd love to see the Chronicle do a little investigative reporting on (not to mention City Council). Are we really sure this is what we want our TIRZs doing? For years I've noticed all these little improvements in Downtown and Uptown (sidewalks, signage, landscaping, etc.), but nothing in Midtown, and wondered why. Well, now I know: the Midtown TIRZ is using its funds for "land banking" instead of making district improvements. Is this really a good use of what are essentially public taxpayer resources?
The key to Coleman’s approach is money — money to buy land and take it out of circulation. To get it, Coleman is utilizing a quasi-governmental authority, deploying tactics that would make the legendary highway and bridge builder Robert Moses proud. If Moses manipulated the back channels of power in New York for the cause of promoting development, however, Coleman is doing the same in Houston in order to impede it.
Coleman’s vehicle is an urban investment tool known to most cities that use it as “tax increment financing.” In Houston, the arrangement goes by a different name — “tax increment reinvestment zone” or TIRZ. The idea is that as a depressed area redevelops, the resulting increase in property taxes pays for more improvements in the neighborhood. Houston’s city council has designated 22 such TIRZs in different neighborhoods, each with its own governing board. Typically, their goal is to spruce up sidewalks, lighting and landscaping, in hopes of attracting even more development.
One TIRZ, in a neighborhood known as Midtown, is acting a little differently. Midtown is a once run-down area of commercial warehouses just east of the Third Ward. It’s now transformed into a thriving neighborhood of apartments, shops, restaurants and nightclubs. The board of the Midtown TIRZ is divided between Coleman loyalists and appointees of Mayor White. The board has chosen to use almost all of its revenues — $10 million in the past five years — to purchase and then “bank” land in the Third Ward. “If you look at Midtown, that was all publicly induced — ain’t none of it affordable,” says Coleman. “Why can’t we do the same thing for people who need an affordable place to live?”
It’s a decidedly unorthodox arrangement, one whose very existence seems to be something of a secret. Coleman declines to say how much land the Midtown TIRZ has banked in the Third Ward. He’ll say only that he wants the land to be used for low-income rental housing, with deeds held by local churches and CDCs that could borrow against the value of the land in order to build more affordable housing. “Low-density rental is the only way for it to be affordable,” Coleman argues. “You keep the character of the neighborhood while providing affordable housing.”
In order to save the Third Ward, Coleman seems intent on freezing its current character and demographics in place. An essential part of his plan is to attach restrictive deeds to the rental properties to ensure that they are never sold to private developers or converted to condos. But is it really possible for a neighborhood to resist change? Fifty years ago, much of the area that Coleman now sees as his patrimony was a largely Jewish neighborhood. Only in the 1960s did the area become predominantly black. What Coleman is trying to do is keep it that way. He seems to enjoy the challenge. “Everyone said it couldn’t be done,” he crows, with obvious relish. “I said, ’Watch me.’ ”
Let's look at this from a purely economic perspective for a minute. There are some relatively small areas of land that could potentially gain a lot of value and add substantially to the tax rolls. There are plenty of poor areas of town that are not valuable, not going to be anytime soon, and could use lots of investment. Wouldn't it be wiser to let developers increase the value of the small area, and direct the incremental tax revenues to helping other, more run-down and less desirable neighborhoods (inc. more affordable housing)? Wouldn't that help a lot more people than locking the small areas of potential gain into low-value uses? To me, this seems like the worst kind of NIMBYism: "screw the needs of the rest of the city, I'm preserving my neighborhood at all costs." If Rep. Coleman's broader constituent base truly understood how much they were potentially giving up by freezing this land in time (money for schools, parks, libraries, community centers, clinics, sidewalks, lighting, affordable housing - the list goes on and on), I think they wouldn't be so happy.