The owners of an office building in northern Dallas have filed a lawsuit to try to block an affordable housing apartment complex from being built next door.
The development, called Cypress Creek at Forest Lane, has drawn fierce opposition from homeowners in nearby neighborhoods. Fair housing advocates say the development would offer a rare chance for lower- and middle-income renters priced out of a high-opportunity area of the city.
The lawsuit, filed by FC Investments, Ltd, is challenging an arrangement between the City of Dallas and the developer, Sycamore Strategies, that would allow the project to go up despite deed restrictions that preclude apartments from being built on the land. Five other companies that are part of the deal are also being sued.
In their lawsuit, the office building owners argue that’s not lawful, calling the effort to circumvent the deed the restriction a “civil conspiracy” and arguing that “the City, Owner, and Developer engaged in a joint meeting of the minds by which they set out to unlawfully violate” state government code. The lawsuit contends that building the apartments would amount to a breach of contract.
The office owners did not reply to KERA News’ request for comment.
Philip Kingston, a lawyer for Sycamore Strategies, panned the lawsuit as little more than NIMBYism (Not In My Back Yard) dressed up in legal language.
“However much legal sophistry is put into documents that are filed with the court, it's my allegation… that this is really just an attack on affordable housing,” Kingston said.
The City of Dallas declined to comment on the lawsuit, and representatives for the other companies being sued did not respond to requests for comment.
The office building owners are asking District Court Judge Eric Moyé to block the city from buying the land and to stop the developer from building the apartments. They argue that, if affordable apartments are built next door, it “will greatly impact and lower the value and damage the use of” the office building they own.
“The only adequate, effective and complete relief is to maintain the status quo, and restrain Defendants from proceeding with the City's acquisition of the Owner's property, and the development of the Cypress Creek at Forest Lane project,” the lawsuit stated.
While opponents of affordable housing often argue it will diminish nearby property values, research indicates home prices typically increase near new affordable housing developments. The effects on offices or other building types aren’t as well studied.
Years of delays
In 2021, Cypress Creek at Forest Lane was awarded lucrative federal Low-Income Housing Tax Credits despite opposition from local politicians who sought to kill the deal. But the project has been stymied for years by opposition from homeowners living in nearby neighborhoods, even though the closest houses are about a quarter of a mile away, and by a 1976 deed restriction that precludes apartments from being built on the land.
The apartments would be built within a chunk of land that was placed under a restrictive covenant in 1976 by a developer who planned to turn it into an office park. FC Investment’s office building is in that same deed-restricted chunk of land.
The deed restriction says the land can “shall be used solely for office buildings, hotels and motels, and restaurants,” unless the owners of at least 60% of the property in the deed-restricted area agree to change those rules. Over the decades, that’s happened, and other businesses have been built in the area once limited to the deed, but the other property owners have opposed the apartment project.
To get around the deed restriction, the developers sought to partner with the City of Dallas because a city can ignore restrictive covenants for a “public purpose.” Kingston said building affordable housing falls squarely within that definition of public use.
In a meeting this summer, one of the office owners, William Roth, told the Dallas City Council he not only thought the city had no legal right to ignore deed restrictions blocking the apartments, but that thought the site was a poor choice for housing because it was next to a busy highway and surrounded by businesses. That’s despite its location in census tract considered a “high opportunity” area due to its relatively low crime rates, access to transit and nearby jobs.
“Please don’t fall into the trap of approving a bad location, a bad business deal for the city, and most importantly, committing to the long-term, real detriment of those families who’ll be forced to live in this undesirable, isolated project,” Roth said to council members in June.
At that meeting, the council passed a resolution greenlighting a plan in which the city would buy the property with funds assembled by Sycamore Strategies, and then lease it to the company, which would build the apartments.
“I think the black-letter law of the State of Texas going back over 100 years says 100%, no deed restrictions” are binding on the city in this case, Kingston said.
Conspiracy, theoretically?
In its lawsuit, the owners of the neighboring office building owners argued that the law is, in fact, on their side.
“This scheme is incorrect and flies in the face of well-established legal precedent,” the lawsuit states.
The lawsuit calls the developers and city working together a “civil conspiracy,” arguing that “The City, Owner, and Developer engaged in a joint meeting of the minds by which they set out to unlawfully violate” state government code to circumvent the deed restrictions.
The lawsuit contends that if the city takes ownership of the property and the property is built, it’d amount to an illegal use of eminent domain and count as a “taking” in violation of the office owners’ property rights.
“It’s very, very strange to sue a private seller to say ‘you can’t sell your property because you’re in a conspiracy with the buyer,’” Kingston said.
He panned several other elements of the lawsuit, saying it lacked legal muster on several counts.
Affordable opportunity
The development, if it’s ever built, is slated to have nearly 200 units. Just under half would rent at market rates, between $1,500 and $2,300 a month depending on the size of the apartment. The rest would be subsidized.
Fair housing advocates have cheered the project because about half of those subsidized units would be affordable for low- and very low-income renters, accessible to voucher-holders, and in a neighborhood with a relatively low poverty rate and near a host of opportunities and amenities rarely available to the city’s poorest residents.
Dallas has a shortage of more than 33,000 homes that low-income renters can afford, according to the Child Poverty Action Lab. That’s expected to more than double by 2030.
The rest of the subsidized units will rent at rates affordable to more middle-income renters who still can’t afford market rate, like mail carriers, preschool teachers and probation officers.
Kingston said the city, the current land owner, Sycamore Strategies and its partners are still negotiating the terms of the deal, but said all parties are bullish on the chance to bring affordable housing to an area where options are scarce.
Got a tip? Christopher Connelly is KERA's One Crisis Away Reporter, exploring life on the financial edge. Email Christopher at cconnelly@kera.org.You can follow Christopher on Twitter @hithisischris.
KERA News is made possible through the generosity of our members. If you find this reporting valuable, consider making a tax-deductible gift today. Thank you.
