Neighborhood Stabilization Overlay District.

It may sound like just another boring zoning designation. But the mere mention of the proposed teardown ordinance strikes fear into the hearts of homebuilders and real estate agents specializing in the practice, while at the same time giving hope to homeowners who want to protect their neighborhoods from becoming zero-lot-line suburbs-in-the-city.

The proposal has made its way through both the Zoning Ordinance Advisory Committee (ZOAC) and City Plan Commission and has generated much interest and controversy along the way — even prompting the ZOAC chairman and District 13 plan commissioner, real estate agent Carol Scott, to recuse herself from the debate because of complaints about her financial interest in its outcome.

But for all its controversy, the version of the ordinance recommended by the City Plan Commission last month and now on its way to the City Council appears as if it would do little to slow down the proliferation of “McMansions” in Dallas .

The ordinance was born out of a public outcry for an end to the oversized houses springing up in many established neighborhoods of East and North Dallas . The Single Family Housing Task Force, a group of industry representatives and homeowners put together by the City Plan Commission, proposed the ordinance as a way to “preserve the existing character of single-family neighborhoods by imposing alternative yard, lot and space regulations to ensure that new construction is compatible with existing structures.”

It was designed to be easier to obtain and less restrictive than a Historic or Conservation District. Unlike a Conservation District, it’s not intended to regulate architectural style or building materials, but instead will regulate the “bones” of a neighborhood through the scale and placement of homes on a lot. Additionally, it covers parameters such as garage placement, setbacks, and pavement coverage on the lot

Janet Tharp is the interim assistant director of long-range planning for the City of Dallas . She says the overlay was designed with both homeowners and homebuilders in mind.

“It’s a way for neighborhoods to exercise some control with the least amount of restrictions on new development,” Tharp says.

Yet the Plan Commission recommended that much of that “control” be taken out of the overlay ordinance.

In the original proposal, neighborhoods able to obtain a majority (50 percent plus 1) of homeowners to sign the overlay petition would have been given the authority to put restrictions on how high and how many stories new houses can be, as well as the floor-to-area ratio (or FAR), which determines the “footprint” of a structure.

In an 8-3 vote at the Aug. 11 Plan Commission meeting, these restrictions were removed from the proposal.

Or as Commissioner Neil Emmons described it: “I absolutely didn’t support the amendments, and the chairman did everything possible to eviscerate the proposal.”

But Emmons was one of the eight who voted to pass the ordinance, reasoning it’s better to have a positive recommendation for a flawed ordinance than having it delayed in the Plan Commission. Emmons says he hopes the City Council reverses some of those changes.

Not only did the Plan Commission weaken the ordinance to the point of almost insignificance, some of the amendments, if adopted by the City Council, would make the overlay much harder for neighborhoods to pass.

Plan commissioner Bill “Bulldog” Cunningham recommended that 75 percent of the neighborhood’s homeowners be required to sign the petition instead of the simple majority required in the original proposal. Also, he suggested that “neighborhoods” as defined in the overlay ordinance apply to a minimum area of five acres instead of three, as proposed by ZOAC. The minimum neighborhood increment in the original proposal was a single block face of 500 feet.

Katherine Seale of Preservation Dallas wonders what the point would be of passing the ordinance as recommended by the Plan Commission.

“If you’ve taken out the FAR, story, and height limits, I don’t know that there would be a huge incentive to get something like that to pass, especially with 75 percent of homeowners to initiate a process just to maintain setbacks and garage locations.”

Others saw the original proposal as anti-development.

The tougher restrictions concerned Michael Campbell, a Lakewood resident and Realtor who owns Spirit River Homes and manages the Keller Williams real estate office at Mockingbird Station.

"The revitalization of older neighborhoods, especially areas like East Dallas, Oak Lawn and, to a certain extent, the Park Cities, has been going on for 25-30 years,” he says.

His concern with the original overlay proposal was that it would “create such an air of uncertainty in our neighborhoods that the builders will just go away.”

“Uncertainty is not a friend of development,” he adds. “It’s a huge economic gamble anyway to do spec building, but to put a whole ‘nother layer of uncertainty on top of that — it just dries it up. That’s my huge concern."

But Ken Lampton, a Lakewood resident and RE/MAX real estate agent specializing in the Lakewood, M-Streets, and Lower Greenville area, disagrees with Campbell ’s assessment. He says homebuilders and real estate agents specializing in residential teardowns have painted themselves into a corner by creating miniature real estate bubbles in the neighborhoods they target. Now they must build bigger and bigger houses to maintain the same profit margins, creating the need for the stabilization overlay.

“Like a shark, they have to keep swimming forward in the water to breath,” he says. “People don’t realize how fast this gains steam. Every six months, the prices go up, so more and more builders move in. It spirals until it explodes and crashes.

“I’m not saying it will anytime soon. I’m just worried about what happens when the process finally gets disturbed by high interest rates, or whatever. We could end up with a bunch of empty lots or empty houses.”  

Another area of concern for Lampton is increased pressure caused by new development on residents with fixed incomes. When property values rise, so do property taxes, resulting in long-time residents being priced out of their own houses, even though they have paid off their mortgages.

“These older homeowners start looking for builders to sell to,” Lampton says. “Appraisers accidentally become the allies of builders by bringing these houses on the market for builders to buy.”

But the rising property tax argument cuts both ways, says Paul Urrutia, director of government affairs for MetroTex Association of Realtors, which represents 11,000 Realtors in the greater Dallas area.

“ Dallas is in a budget crunch. We should not prohibit or slow down growth. The city is going to need the increase in tax revenue this new development will bring. If property-tax revenue is not what is anticipated, the city could adjust the property-tax rate. Then people citywide will be affected, and the burden will fall on homeowners.”

Now it’s up to the City Council to decide if the overlay will actually deal with the problem that initiated its creation — the proliferation of zero-lot-line teardowns.

The City Council will likely consider the Neighborhood Stabilization Overlay at its Sept. 14 meeting at the earliest.  

UNDERSTANDING THE OVERLAY DISTRICT     

 

If the Neighborhood Stabilization Overlay District passes the City Council, how would it play out for a neighborhood able to obtain 75 percent approval from residents?

As it stands, there are two parts to the district:

1. The Prevailing Standards Overlay — according to the original proposal, once the petition has been certified by the city, a Prevailing Standards Overlay goes into effect for six months with the option of a six-month extension. This interim overlay governs development in the neighborhoods until the permanent standards of the stabilization overlay are set. The prevailing standards would restrict garage placement, paving surface, and setbacks to within 10 percent of the predominant structures in the area. It would be up to those applying for building permits to conform to the prevailing standards.

2. Permanent Standards — After a period of six to 12 months of prevailing standards, a permanent stabilization overlay would place more specific restrictions on the above categories. For example, garages might be required to be rear-entry and attached to the house. Setbacks could be set at a specific distance as well.