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Opinion

The new responsible banking ordinance in Dallas is a step towards racial equity

Southern Dallas would be better served by more capital for homeowners.

Prior to serving on the Dallas City Council, I didn’t know as much about housing developments as I do now, but I did know a lot about life south of Interstate 30. I grew up in Pleasant Grove. Our community is an economically disadvantaged, majority-minority area with pockets of significant concentrations of low-income apartments; just take a drive down Bruton Road between St. Augustine Drive and Masters Drive, or along Great Trinity Forest Way between U.S. Highway 175 and Pemberton Hill Road.

It’s no surprise that these areas have been designated as “Targeted Action Area Grids.” These TAAG areas are mostly dispersed south of I-30 and get extra police attention because of high crime and violence.

Since I’ve been a member of the Dallas City Council, most of the developers that have approached me are interested in utilizing low-income housing tax credits to fund apartments, but I’ve consistently pushed back. Moreover, banks contribute to this problem by investing in many of these subsidized apartments, rather than investing directly in individuals and small businesses in southeast Dallas and other underserved areas. Allowing low-income tax credit housing to substitute for home loans south of I-30 is modern-day redlining and prevents minorities from gaining wealth through homeownership.

I-30, the highway that runs across Dallas from Mesquite to Grand Prairie, is more than a physical barrier separating the northern and southern parts of the city. It’s an arbitrary boundary that divides the city’s mostly white population to the north from the city’s mostly Black and Latino communities to the south.

It’s also an economic barrier, fostering economic growth in North Dallas and contributing to economic decline in South Dallas. For decades, the practice of redlining was used by the mortgage industry to deny loans to applicants based on their race. This discriminatory practice disproportionately affected those living south of I-30, resulting in far fewer mortgage and small business loans to Blacks and Latinos. The book The Color of Law provides an in-depth history of the practices American governments used to racially segregate cities.

The Fair Housing Act of 1968 made it unlawful to discriminate against protected classes in housing transactions and the Community Reinvestment Act of 1977 requires federal regulators to encourage banks to meet the credit needs of low- and moderate-income individuals and reinvest in the minority neighborhoods that banks have long ignored. But instead of lending directly to individuals south of I-30, banks have chosen to invest their dollars in low-income apartments (helping them meet CRA standards) while benefiting from low-income housing tax credits, which I believe is another type of redlining.

Lending to a developer for low-income, multi-family developments is not the same as lending to single-family homeowners. And a bank’s loan portfolio should be informed by the risks to which it is exposed. But southern Dallas’ residents would be better served with more home loans.

It is well known that going from renter to homeowner is life-changing. It’s the foundation for building wealth, increased economic development, good schools, and public safety. Not only does owning a home dramatically impact the lives of homeowners and their families, but it also builds confidence in a community and creates the type of change that generally wouldn’t be possible without a bank that’s willing to lend to all credit-worthy individuals.

Although the city can’t regulate banks, we have a responsibility to combat inequity. That’s why my City Council colleagues and I, along with the city’s chief financial officer, the city attorney’s office and community members worked to develop a Responsible Banking Ordinance. This ordinance allows the city to evaluate lending practices of banks that want to be the depository for more than $250 million of the city’s tax dollars and requires banks to disclose information about residential and small business loans given to borrowers in underserved areas. The goal is to help overcome systemic barriers and the lingering effects of redlining and other discriminatory practices.

Dallas can only reach its full potential when everyone shares in the wealth our economy generates. More mortgage lending south of I-30 would allow wealth to grow and businesses to increase economic development throughout our city. If done correctly, the Responsible Banking Ordinance could ease the tax burden of people across our city and improve our everyday lives, regardless of our skin color, or on which side of I-30 we live. It’s a step in the right direction.

Jaime Resendez is a Dallas City council member representing District 5. He wrote this column for The Dallas Morning News

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