If Houston Wants To Become More Inclusive, It Should Consider These Four Steps

Bill Fulton | @BillFultonVta | April 25, 2017

Image via flickr/Joe Wolf.

This blog post is based on the paper “Can A Market-Oriented City Also Be Inclusive?” by Kinder Institute Director Bill Fulton. 

Houston is a city of contradictions. It’s diverse yet segregated. It’s prosperous yet home to many low-wage workers. It’s affordable, compared to cities on the coasts, yet many people have a hard time making it. And it’s a city known for a free-market approach to development, yet there are lots of regulations and many financial incentives that affect what gets built.

Can all these contradictions be reconciled to help make Houston a more inclusive city?

That’s the question I tried to answer last week when I participated in a conference on inclusive communities at the Joint Center for Housing Studies at Harvard University.

I was on a panel with people from Chicago and Washington, D.C. Although all three cities are different – Chicago is growing slowly, Houston is growing quickly, and D.C. is growing and urbanizing quickly  – the problems they face are remarkably similar.

Houston has a reputation as one of America’s most affordable cities, at least for housing. Compared to cities on the coasts such as New York, San Francisco, Los Angeles, and Washington, Houston is relatively affordable. According to Zillow, the median home value in metropolitan Houston was $310,000 in 2016. This is compared to $610,000 in the Los Angeles market and $535,000 in the Washington, D.C. market. Price increases in Houston have been modest in recent years because of a slump in oil prices.

There’s no question that the Houston housing market – especially the suburban housing market – provides opportunity for people with good blue-collar and white-collar jobs. But the big picture masks growing inequality and disparity that is at least as bad – and perhaps worse – than the national average.

Since 1980, Houston has seen a startling increase in the concentration of poverty, with almost 40 percent of all Census tracts in Harris County now suffering from concentrated poverty, meaning 20 percent of more of the households in that tract are households in poverty, according to Kinder Institute research.

 Residents of Houston and Harris County also suffer from geographical disparities on almost every social and economic factor ranging from health to income. Some neighborhoods still feature income diversity, but most of these neighborhoods consist of moderate- and low-income residents of color. Affluent neighborhoods – especially affluent white neighborhoods – are increasingly segregated by income from the rest of the Houston region.

In his new book, The New Urban Crisis, Richard Florida ranks metro Houston 7th nationally in his “segregation and inequality index” – trailing only New York and Los Angeles among large cities and ahead of San Francisco and Washington, D.C. In this way, Houston is becoming less inclusive – that is, lower-income residents, including low-wage workers, are either being consigned to high-poverty neighborhoods or pushed to distant locations far from jobs.

Like many other cities, Houston also appears to be suffering from a displacement and gentrification problem, at least according to anecdotal evidence. Most of the Census tracts with increased concentration of poverty are not in central Houston – that is, inside the I-610 Loop – but, rather, in between the I-610 Loop and Beltway (Houston’s second looped highway) meaning they are between six and 15 miles away from downtown Houston.

Though suburban in built form, most of these neighborhoods are actually located inside the City of Houston’s boundaries. For example, Gulfton – formerly a “young singles” apartment neighborhood just outside the I-610 Loop near tony Bellaire – became a “port of entry” neighborhood after the oil crash of the 1980s, with immigrants and refugees from all over the world now living there. But the housing available there is not top-quality: It’s aging apartments – some of them badly aging – dating back 40 to 50 years.

These would seem to be overwhelming problems even for the more aggressive city and county government. But the interesting thing about Houston is that it’s a city without zoning and with a reputation for a market-oriented approach to urban development. That means many of the tools available to most cities – for example, “inclusionary housing,” or requiring all housing developers to provide some affordable housing – are not available to the city of Houston.

So what can Houston do? Plenty. Just because Houston has no zoning doesn’t mean the city has no tools available. Here are four ideas – all of which have been embraced by Houston Mayor Sylvester Turner’s policy transition committees or other important players – that could help align the city’s practices and incentives with the goal of increasing inclusiveness:

1. Align Economic Development Incentives With Inclusiveness Goals

Houston actually does provide financial assistance to real estate developers in the form of so-called “380 agreements’ – economic development agreements to provide financial assistance to developers. However, these incentives are not aligned with goals of inclusiveness. The city rarely seeks, for example, affordable housing in return for economic development incentives. This could be an important aspect of Turner’s “Complete Communities” initiative, which will focus city resources on five underserved neighborhoods, including Gulfton and the Third Ward.

2. Align Regulations With Inclusiveness Goals

Although Houston does not have use zoning, the city does have a wide variety of conventional development regulations that drive up the cost of housing development and make the city less inclusive – notably parking and setback requirements. The city should relax or adapt such regulations in specific locations where it hopes to encourage inclusive development. Previous efforts – such as the transit-oriented development overlay option – have not been widely used. So such regulatory relief must not only serve the goal of inclusiveness but also prove sufficiently powerful to be an attractive alternative to developers.

3. Use Government And Institutional Landholdings Strategically To Pursue Inclusiveness Goals

In the absence of zoning and strong incentives, the use of landholdings can be extremely powerful. In close-in locations in Houston, much of the land – especially vacant lots and parking lots – is owned either by government agencies such as Tax Increment Reinvestment Zones (TIRZ) or institutional entities such as churches. The city can move a long way toward inclusiveness by working with these entities to make at least some of this land available for affordable housing.

Such an effort is already under way in the Third Ward, where a community land trust including some TIRZ and institutional land owners may be formed as a result of the joint efforts of neighborhood leaders and Houston philanthropies under the auspices of the Emancipation Economic Development Council.

4. Create A Broad and Comprehensive Approach to Inclusiveness Including Both Underserved and High-Opportunity Areas

Responding to concern about high-opportunity areas, the Turner administration is already considering a series of steps to encourage broader distribution of affordable housing, including more effective use of federal housing vouchers. Using this approach – and the steps outlined above – the city can create a comprehensive inclusiveness policy to not only encourage affordable housing in affluent areas but also mixed-income housing opportunities in historically underserved areas.

Such a policy can take advantage of Houston’s traditionally market-oriented approach combined with the public policy levers that are available to the city and related entities.

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