Monday, August 15, 2005

The Overlay: Myths vs. Realities

A zoning overlay is simply a temporary legal tool, which individual neighborhoods within Dallas can choose, or not choose, to self-determine their own basic standards for new construction, while more comprehensive zoning guidelines are reviewed.

First of all, you can download/read the actual Zoning Overlay documents HERE.

The Stabilization Overlay and Zoning Tool, which have passed the Dallas Plan Commission (August 11) and will later be considered by the City Council are a somewhat unprecedented move. Typically, individual neighborhoods can regulate control building practices and style through deed restrictions and/or a "conservation district" plan. But for many neighborhoods of Dallas, the existing deed restrictions have expired, so any incoming builder has no restrictions on the size or layout of new houses. Passing a Conservation District or changing zoning are complex processes that take time (2+ years).

We support the Zoning Overlay and will attempt to demystify this simple (yet controversial?) tool.

Market forces have fueled the acceleration of new construction. New construction is a positive sign for the economy, but there are other factors creating the boom. Interest rates hit an all time low. This is a great thing for many people buying their first home, or upgrading to a house for improved location, space or ameneties. At the same time, we've seen volatility in other types of investments such as the stock market, so both individuals and institutions are investing in real estate, as it appears to be the only solid investment with guaranteed rates of return. These forces are causing the real estate "bubble" phenomenon in established urban neighborhoods: the more investment in property and new construction, the higher the prices go, and so on, and there is an incentive to build bigger houses and destabilize some city neighborhoods.

EVERY ONE OF US agrees on one thing: We wish there didn't need to be a Zoning Overlay.
  • Developers and sellers of new houses are doing a booming business, and this well-financed industry certainly doesn't want an overlay. They are applying pressure at the state level (Austin), as well as locally, to stop neighborhoods from regulating or self-determining new construction standards. There are responsible developers and realtors building and selling compatible houses, but there are extreme exceptions that require some form of control.
  • Residents of existing or established neighborhoods wish there were no need for a Zoning Overlay. They wish many developers had shown a tiny bit of restraint and consideration both in their building practices and in the tremendous size of the houses they build. Unfortunately, it appears that the supersize building trend is accelerating in many neighborhoods. Something must be done, as the builders have shown no desire to responsibly self-regulate their practices.
Given all of the messages flying around on this issue in the media and in advertising venues, it is important that each of us understand specifically what a zoning overlay would affect, in order to make a more informed decision about the future of our neighborhoods.
  • A zoning overlay is not a blanket city-wide restriction on big houses. It is a tool for individual neighborhoods to determine their own standards for new houses. You will have neighborhoods that prefer to allow McMansions of any size -- how the Overlay will affect zoning depends entirely upon the will of the people in your specific area.
  • A zoning overlay does not automatically prevent teardowns and new construction. Houses can and will still be torn down, and new ones can be built in their place. The new houses can be bigger than neighboring houses and more costly, however there is a temporary maximum limit on certain dimensions imposed. For some older or more historic neighborhoods, the individual area can use the tool to help keep new houses within reason.
  • A zoning overlay does not prevent you from upgrading and renovating your house! Imposing some limits on new construction encourages reinvestment, renovation and add-ons to existing houses, rather than teardowns.
  • A zoning overlay does not erode the value of your home. In reality, it protects the significant investments you (and your neighbors) have made in your homes, beyond the mere value of the land it sits on. An experienced appraiser will tell you that neighborhoods with stable development plans see far more reinvestment in the original structures.
  • A zoning overlay may not reduce your property taxes. The lack of restrictions has caused land values to increase far more than house values in some areas, so an overlay may limit the acceleration of land taxes somewhat, while house taxable value may appreciate. In general taxable values will still increase in urban areas.
  • A zoning overlay will not "discriminate" against current McMansion owners. It does not take away your existing property rights, whatever type of home you live in. Nor is it designed to somehow create a "block war" among neighbors. It does give us a way to decide on the future of a neighborhood together. Without an overlay, we don't have a democratic way to self-determine the character of our neighborhoods.
  • A zoning overlay will not make it impossible to build higher-priced homes. We would all like to see new houses that are not just bigger - but better. With unregulated construction and a housing boom, you have thousands of crews building as fast as possible, and often the quality of these new homes suffers. We believe that a new house can achieve higher value to customers, and positively lift the value of surrounding neighborhood, by including better features, materials, energy performance and ameneties besides just tons of square feet.
Who should decide? The residents, or the developers?
It is important not to get sidetracked and fall into the builder/realtor trap of debating the "economic impact" of overlays, or whether cheaper old homes should or should not be torn down to make way for expensive new homes.

The time and place for that debate is among neighbors when they decide whether they want an overlay or not, and they are best suited to have that debate as they have the keenest eye on the desires and values of their own neighborhoods. If a builder or realtor lives in my neighborhood and wants to vote against an overlay if my neighbors propose one, that's fine. But if that builder or realtor does not live in my neighborhood, then they should butt out of our business and keep their economic impact analysis to themselves.

We should focus on the fact that approval of the Overlay ordinance does not impose an overlay on anyone. It just makes it an option available to neighborhoods, if they want it.


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