Fort Worth zoning commissioners continue stealth dorm case

By Scott Nishimura

Fort Worth zoning commissioners on Tuesday continued for one month a complicated city-initiated move to reduce the number of permissible, unrelated adults living in single-family homes around TCU as a way to combat the growth of so-called “stealth dorms” housing university students.

On a motion by Commissioner Gaye Reed, the commission voted unanimously to continue the case 30 days until their November meeting. The commission, on a request by one speaker, added Tanglewood/Overton Park to the proposed map so the city can contact the neighborhood associations and send out appropriate notices to the property owners.

Numerous speakers argued for and against the overlay, but Reed, whose district represents the area around TCU, echoed Commissioner Wanda Conlin, who said the debate “hasn’t cooked enough.”

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“I think a lot of good points have been brought to the front today,” Reed said. “I think it is a great start….There are a lot of ramifications on both sides.”

The city staff is proposing to pare the number of permissible adults living in single-family-zoned homes in the overlay, which comprises several neighborhoods around TCU, to three from five.

It’s also proposed three options on how to treat existing properties that would be affected, including some number designed and built to house as many as five unrelated adults – five-bedroom homes with multiple baths, a kitchen, and no common area, and leased by the room to students.

One would grandfather all existing properties indefinitely, unless the owner discontinues leasing to more than three unrelated adults or abandons it for at least one year. A second would allow a 15-year grandfathering, until the end of 2029. The third would all no grandfathering, with a transition period lasting until June 1, 2016.

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Local realtors and builders associations are opposed to the lack of grandfathering.

Political consultant Bryan Eppstein and former TCU Board of Trustees Chairman John Roach, who both live on Alton Road near TCU and have had problems with student tenants in a neighboring property, proposed a compromise five-year grandfathering.

“It would give (property owners) five years to recoup their investment,” Roach told the Zoning Commission during its three-hour hearing.

“From an investor’s perspective, there’s no guarantees,” he said. “There’s risk or reward. I’ve had investments that didn’t work out. Some of them didn’t work out because of government” regulation.

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Owners of the investment properties said they’d lose 40 percent of their rents if the city passes the overlay with no grandfathering, the values of their properties would plummet, and they’d face losing their properties.

In general, they told the Zoning Commission they hold short five or 10-year loan notes with balloon payments.

Their bankers have already told them they won’t refinance the notes when the balloons become due, the investors told commissioners.

“I would not be able to refinance, my investors wouldn’t give me more (money), I’m going to foreclose,” Chris Powers, who has been investing in income property around TCU for as many as nine years, told the commissioners.

Michael Dike, another investor, told commissioners that passing the overlay with no grandfather would set a “terrible precedent” for the city. “People may try to regulate and solve their problems based on the precedent,” he said.

Several of the investors stressed to commissioners that real estate investing is what they do for a living for their families. They said they’ve complied with the city’s rules in building their businesses, and they argued the city would be opening itself up to lawsuits that the overlay with no grandfathering amounts to an unconstitutional taking of property.

“We’re playing by the rules, explicity playing by the rules,” Glenn Leimbach, an investor and retired airline employee who told commissioners he turned to real estate as a way to salvage his family’s nest egg after his pension was torpedoed in his employer’s bankruptcy. “I’m not hiding anything. They city told me I could do this.”

Neighborhoods including Frisco Heights in the overlay have seen an increasing number of newly built “stealth dorms” over the last five years and, in some cases, conversions of existing homes.

They’ve complained of the loss of historic homes torn down to make way for the new construction, the loss of neighborhood character, litter, noise, and parking problems. They also note TCU continues to build more on-campus housing to get more students to live on campus. That will kill the market for off-campus housing nearby, the neighborhood advocates say.

“Demand is going to level off, supply it looks like is going to continue to increase,” Gregg Cantrell, a TCU history professor who lives in the Frisco Heights, which has been under siege by development, told commissioners. “It’s a classic speculative bubble that’s building around campus.”

For cheaply built properties, he said, “they won’t be able to fill all the rooms, maintenance will be cut, eventually they’ll sell them when become less profitable, properties will deteriorate, and the neighborhoods will pay the price.”

Maddie Reddick, the student body vice president for external affairs at TCU, told commissioners that students in a petition would support an overlay if it included a grandfathering through 2029.

“The amount of affordable housing around campus will greatly decrease if this passes,” she said. “It will not fix the problem. It will simply push students out to the edges of the zone, where there will be development.”

And businesses around the campus would be hurt by the loss of sales, she said.