Houston Housing Dept: Key to success was discarding “burdensome” zoning laws
Exorbitant housing costs are the #1 reason ex-Californians cite for leaving; yet Houston, Texas continues steadily gaining residents and was ranked the #3 metropolitan area for population growth in 2020. Opp Now spoke with Ray Miller—Houston’s Assistant Director of Multifamily & Public Facilities in the Housing and Community Development Department—about Houston’s flourishing housing market and local takeaways for SJ.
Opportunity Now: What are some of the biggest strengths of Houston’s housing market?
Ray Miller: While there remain permitting requirements and certain design standards that apply to housing construction, Houston is widely known for its no zoning requirements. Development in Houston is primarily market driven while dealing with limited entitlement restrictions like neighborhood deed restrictions and minimum lot sizes. Over the last twenty years especially, this has allowed for housing construction in parts of town that were previously mostly commercial and industrial. Without excessive or burdensome zoning requirements, developers can covert or repurpose units immediately. There’s no delay in waiting for local approval. There are also no extra costs involved in that process.
Additionally, Houston reaps the built-in benefits of having a lot of available land—600 square miles of city area. Unlike in San Jose, housing construction isn’t limited by compressed geography. However, Hurricane Harvey has dramatically impacted Houston’s landscape. We were always cognizant of flood zones, but this hurricane revealed some extremely vulnerable places in the city where people thought it was safe to take risks in housing, but it ended up not being a good idea.
The advantage of more freely building housing is that competition and land prices are kept low. For instance, developers can construct dense single-family homes that are much cheaper than detached townhome-style houses with 5000-square lots.
[Brenda Cabaniss, Houston Housing Dept’s Public Information Officer: Additionally, Houston has a great administration that is championing and building affordable homes. From the beginning, Mayor Turner has expressly committed to serve the city of Houston and its residents; for instance, he’s promised that before the end of his term to have on the ground or committed 3,000 homes for LMI households. His passion is motivating our department and city to leverage land acquisition, and we’re making huge strides.]
ON: Does Houston face any challenges in its housing market?
RM: Of course. First, some of these advantages are also double-edged swords and present their own challenges. In the past, development has happened where it shouldn’t in Houston—for example, in environmentally-sensitive areas; and we pay the price for those mistakes. Overall, we are learning how to prevent these oversights while retaining a market conducive to construction.
Second, we’re certainly not immune to market forces, which have effected nationwide housing affordability challenges. Since the COVID-19 pandemic began, housing demand in Houston has exceeded available supply, reflected in a 10% price increase. So we’re starting to see a widened affordability gap in Houston, as well as across the country. Median incomes haven’t kept up with our rising housing costs.
ON: Has Houston learned from other cities’ markets?
RM: I belong to a coalition of Texas cities, in which housing department members conduct site tours of other cities. Through this coalition, I’ve visited Austin several times. The city invests a lot of public and local money into housing, which is frequently placed right within workplace corridors. And during those trips, I toured the Robert Mueller Municipal Airport Redevelopment a couple times, which was redesigned years ago for greater affordability and accessible transit.
Coming back to Houston, we acquired ten acres of land within the Hardy Yards commercial development adjacent to the workforce downtown and Metro light rail line; we plan to construct 200 homes there, 50% being affordable housing options.
In general, from Austin, we’ve learned to take the opportunities available to us. We’ve learned to put Houston’s land to good use for local residents. High-priced developers like to build costly housing projects on new acquisitions, but we’ve learned to preserve land specifically for working/LMI communities.
ON: Do you think Houston’s success can be applied to other cities, like in the Silicon Valley?
RM: We’re starting to see momentum pick up on the national scale as far as no zoning regulations. This doesn’t mean every city is throwing out their zoning standards. However, many communities are starting to rethink land use and how much control a planning department should have over a site. Across the United States overall, zoning restrictions are being reevaluated to help promote housing affordability.
ON: What is your top suggestion on how SJ’s local government can keep housing prices affordable?
RM: It’s crucial for cities to review ordinances to ensure there’s no policy in there that isn’t providing the intended result or imposes onerous restrictions. If San Jose doesn’t do anything else to strengthen the market, they should explore their policies. It can go a long way.
ON: Talk to us about over-restrictive housing legislation. How have you seen such policies in action?
RM: Housing policies are created with good intentions of increasing aesthetics and walkability, sometimes drainage and infrastructure as well. But there can be a price to pay for these standards, as they can constrain what developers can do, how far they can build.
We’re going through that right now in Houston. We just revised Chapter 9 ordinances, in which developers must treat any impervious cover (can’t absorb water) to properly hold and discharge water. This requires additional water storage like underground detention, retention ponds, or other systems to prevent runoff. These requirements add tremendously to construction costs.
To give another example, some want to transform a section of the Third Ward into a historic district. This would involve preserving the landscape and housing, thereby putting extremely burdensome requirements on homeowners who didn’t ask for this change. This decision would also impact the cost and maintenance of homes long-term.
In sum, best-intentioned policies at times have unanticipated negative outcomes.
ON: How can cities determine which housing policies are too onerous?
RM: It’s important to listen to the developer community. They will be the first to tell you which local ordinances are burdensome, over-restrictive, or not providing some kind of “bang for your buck” and return on investment. Again, these policies could have the best intentions in mind but may not be driving results.
ON: What is the key to establishing affordable rental housing, seeing as though that’s your specialty?
RM: This is a challenging topic and something we’re still exploring to sustain solutions. Houston is an affordable place to live if you’re earning the median income level (around $55,000-80,000/year). With that income, you can purchase a relatively good-sized home or rent a fairly sizable apartment. If you’re below the area median income level, there’s still housing options, but it’s not an ideal situation.
During the oil boom years ago, Houston built hundreds of thousands of units with single working men in mind. Since then, this huge stock of existing units has become the primary source of affordable rental housing ($400-500/month, mostly C and D class apartment styles in fair and poor condition). However, these models are getting old and starting to deteriorate; and right now, there’s not enough city subsidy to go around to rehabilitate or remake them. Of course, we make sure habitability standards hold bad owners accountable, but it’s hard to keep up with everyone in a city of this size.
We’re also operating with a $450 million grant, funded through the U.S. Department of Housing and Urban Development (HUD), to repair housing stock lost through Hurricane Harvey. We’re looking to utilize that, and other sources such as tax credits, to establish thousands of new units marketed to LMI households and try repairing aging housing rental units.
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