Rage Against The Multifamily Machine — Resident Pushback Increasingly A Challenge For Apartment Developers

Across the U.S., residents tired of urban development, density, traffic and housing costs have launched an outright war against developers to either reshape, curtail or stop apartments from coming into their communities. 

In New York, developers have been yelled out of the room by area residents when trying to propose anything related to affordable housing.

In the nation's most expensive housing markets, tenants desiring more rent affordability are trying to wrest some control away from developers by protesting and pushing for laws that limit developer power.

At least a dozen protesters were arrested in Austin Aug. 8 after pushing back against a vote to allow a developer to bring taller buildings and a mixed-use development into their community, KXAN reported. Residents reportedly were concerned about losing affordability in the area. 

Even in the supposedly development-friendly Dallas-Fort Worth area — where population has boomed to well over 7 million residents, spurring demand for more housing — citizens are aggressively fighting certain multifamily projects in the North Dallas suburbs. 

"We have seen a more difficult entitlement process in DFW over the last decade," JPI CEO Brad Taylor said. "Sometimes we succeed in our necessary entitlements; sometimes we don’t."

JPI is one of the Dallas area's most prolific multifamily developers, with more than 5,000 units under construction, according to an August press release. 

"[Resident pushback] is everywhere," Dreien Opportunity Partners CEO Sam Ware said. "It makes no sense, and it will dramatically hurt job growth. This is where 60% of the workforces live, and the HOAs and anti-groups appear to have a limited understanding of how much [apartments] are needed." 

Citizen participation has derailed some prominent multifamily-centric projects in the Dallas Metroplex.  

When the Allen City Council met in August to vote on developer Wolverine Interests' plan to build a multifamily-centered mixed-use project known as Allen City Center in the suburb's central business district, residents showed up in unison to protest.

One resident took to the microphone and asked city council members not to “drink the Kool-Aid on dense, urban development." 

After citizens’ impassioned pleas, a majority of the council voted to kick Wolverine Interests' plan back to square one. Wolverine can still come back to the table with a revised plan, but it has to fit in with the city's overall vision for the CBD. 

Allen City Council member Chris Schulmeister told Bisnow he voted against moving the Allen City Center project forward because it wasn't the right fit in terms of density levels in its current form. Schulmeister said he is a supporter of multifamily, but felt the "density of the apartments was just too much relative to the retail" proposed by developers.  

A few miles away in Plano, Texas, a lawsuit is still pending after years of squabbling between residents and the city to prevent the Plano Tomorrow plan from taking effect in its proposed form.

Residents filed the suit alleging the plan includes too much density and reshapes the suburb into an apartment-focused urban city with the inclusion of too many multifamily units. 

At one point, it seemed the parties had reached a consensus after mediation, but no agreement materialized. Both sides in the dispute are now waiting for a judge's ruling on a motion in the case, according to a city spokesperson. 

"I think more and more in these North Texas cities, residents are getting fed up with [dense development]," Frisco resident and real estate agent Brandon Burden said. "They are showing up more to the City Hall meetings, they are speaking out during citizen input."

Burden ran for city council two years ago on a platform that promised to curtail dense apartment development in the North Dallas suburb. He fell short of winning in a runoff special election by roughly 400 votes. 

Some residents have told Burden they will leave the city when their kids graduate from high school. With the pressure on, Burden sees more grassroots candidates running on the anti-density platform in the future.  

This kind of anti-development pressure is relatively new in DFW, likely because these suburban cities are only recently reaching the level of density that has driven resident backlash in other metros.

"We’re seeing a greater level of community participation in the development process in suburban cities, and that’s to be expected as cities mature," said Angela Hunt, a shareholder with Munsch Hardt Kopf & Harr's real estate section in Dallas.

Hunt leads the law firm's zoning and land use practice and has extensive experience handling government real estate and zoning issues. 

The density issue was just reaching critical mass when Burden ran in 2017 for Frisco City Council, he said. As a result, he quickly gained supporters among residents who agreed with him on multifamily oversaturation in Frisco. 

But even with all of the protests from Frisco citizens, Burden can't recall one large project that was stifled at the city council level. 

"When you look at how they voted on all of the density, they allowed every bit of it to pass. There is nothing that has been rejected. They have passed everything that has come from [Planning and Zoning], but they have changed the parameters of the design and what it looks like. So, in other words ... they want the density, they just want it to be pretty."

Burden points to Plano as an example of what can cause a change eventually. Plano residents recently elected two candidates who spoke out against urban density during their campaigns. 

"[Frisco has] an open seat next year, we have another open seat in 2021, and I'm hoping that we will start to get one or two candidates elected that will go with the whole anti-density theme until we get at least some traction."

The pushback can be cyclical based on the volume of construction. City of Plano Director of Planning Christina Dorrance Day said she remembers a similar multifamily surge and subsequent citizen pushback in the 1990s in Plano. 

"I do think any time there has been a big increase in building that has also corresponded with an increase in awareness and concern from the community," Day said. 

DFW is leading the U.S. in apartment construction, according to RENTCafé. The company is tracking 22,196 apartment units to be built in DFW in 2019, an incredibly high number (second-place Seattle is on track to deliver 13,682 units), but supported by DFW wooing 131,800 new residents between 2017 and 2018, according to U.S. census data. 

According to one researcher, residents' fear of multifamily development make sense because developers in general are failing to deliver apartment high-rises or complexes that fully leverage the benefits of public transportation.

Peng Du — a visiting assistant professor at the Illinois Institute of Technology and a part of the Council on Tall Buildings and Urban Habitat Academic Office — and his colleagues created an in-depth report comparing urban multifamily developments to single-family homes in all facets from energy to density. 

Du said while multifamily is necessary to deal with population growth and demand, developers often get it wrong by creating communities that are not transit-oriented; therefore, the projects end up creating dense traffic patterns and congestion issues. 

One of the major protests against Allen City Center involved fears over traffic congestion from the apartment units, and it is a common refrain in pushback against new dense multifamily projects. 

Du sees the right kind of urban development as a project that effectively reduces the number of parking spots and traffic through use of viable public transportation in proximity to the project. 

The Case For Multifamily

Even if residents are tired of multifamily, developers are keen on it and see its rising economic value and contributions to the community. 

"Many multifamily units cost $200K to $350K to build," Ware said. "To build an average home in DFW is $260K. Most apartment dwellers have no children and are no burden on the school district, yet they pay as if they did in taxes." 

Though Schulmeister sided with residents to vote against a dense multifamily project in Allen, he said apartment development is needed in DFW.

"When you look at the census reports, we are in high growth mode for this area, and multifamily is what millennials are seeking and we have to be able to compete against neighboring cities," Schulmeister said.

He said he believes when done right, apartments inside mixed-use developments allow for more flexibility to lower tax rates on homeowners. He wants to revisit plans for Allen's CBD and said he hopes developer Wolverine Interests takes an active role in trying to create a project that works for the area. 

JPI's Taylor also said apartments are needed now more than ever in DFW. 

"DFW is a diverse and rapidly growing metropolitan area and our communities need a balanced housing policy that provides a variety of housing choices to meet residents’ lifestyle needs," Taylor said.

"According to the [National Multifamily Housing Council], more than 37 million Americans are building their lives in apartment homes. They include young professionals starting out, empty nesters looking to downsize, workers wanting to live near their jobs, married couples without children and families building a better life."

Craig International President James Craig, whose company has historically developed in the McKinney area, said multifamily is going to continue to be in demand because cost issues related to housing will persist in DFW.  

“Housing unaffordability is not going away, and mobility continues to be a challenge," Craig said. "More and more people want to live in a walkable environment where there’s a mix of uses, horizontally or vertically integrated, in close proximity. Characteristics such as these are what make communities sustainable, and sustainability is an integral part of keeping communities viable long term.”  

Ending The Battle

So what is the message residents and city councils are sending to developers, and what is the solution to this growing controversy?

City residents like Frisco's Burden want cities and developers to find more creative solutions for affordable housing. 

"We do need alternative forms of housing, but we don't need the overbuilding of it," Burden said. "And I think that what we are seeing right now is multifamily is a lot of what we build and the feeling that most citizens have is that we are overbuilding it. We need to cut back on the amount." 

Developers also need to engage more heavily with residents as projects creep closer to existing neighborhoods and developments, which is happening more as communities run out of land or become fully landlocked. 

"New greenfield development in young suburbs with few residents will meet less resistance than infill projects in more populous, already-developed areas," Hunt said.

"As communities grow, developers have to anticipate residents’ desire for greater input in the entitlement process and plan for robust community engagement. It takes more time and requires more flexibility and creativity on the developer’s part, but generally results in a better project that’s embraced by the community."

Developers should always be mindful of how involved they are at the grassroots level, Day said. 

"I think there are development companies that have been operating that way [working closely with residents], so for those that have been ... it is not going to be a change," she said. "But for people who might not have been operating that way, it may be a change."

For developers to succeed in development-wary areas, they must bake transparency and flexibility into the process. 

"At all times, we endeavor to be fully transparent with various city staff members, neighbors, elected officials and others," Taylor said. "Our goal is to clearly communicate the JPI vision for each project, then listen to any concerns and thoughtfully respond to all questions. If we are unable to accommodate a request, then we should explain why. Success is achieved by building trust with various parties, and transparent communication at all levels is key." 

Munsch Hardt Kopf & Harr Senior Land Use Planner Lindsay Kramer said developers need to engage more closely with community stakeholders, city staff, residents and elected officials early on.

It takes more than holding meetings and reaching out — developers in a tough spot have to build consensus, and when appropriate change their course of action. 

"Being able to show that you’ve worked with the community and responded to reasonable requests can help a developer identify allies in the community who can also be a voice for support for the project," Kramer said. "Depending on the project complexity, it may also be beneficial to engage with planning and land use professionals who can work with your design team to address issues like project scale, amenities and layout that may help reduce project opposition."

Day recommends developers create time to engage meaningfully with the city and citizens, especially when they are building during a construction boom that has caught the community's attention. 

"I think that building in a cushion of time is probably a good thing because the awareness of the big boom cycle that has happened in the multifamily market has driven concern, and people do have a level of interest and are going to care about the quality of the product," she said. 

Craig said developers are more than willing to work with residents at every step of the process, but residents keeping an open mind about multifamily also is necessary to get cities and citizens on the same page. 

"If the mindset from the very start is that 'all apartments are bad' not very much can be accomplished," Craig said. "I think it’s important to understand that a lot of these projects are lifestyle communities. People are gravitating towards these developments both out of want and need. Whether it’s young, professional, recent college grads with student loans or empty nesters looking to downsize with low maintenance, there is a demand for this product in the market."