Federal Reserve Bank report not favorable to Galveston

Lazaro Valiente, with Pro Gutters, measures a length of rain gutter for one of the scattered-site public housing buildings at 73rd Street and Heards Lane in Galveston on Thursday, March 23, 2018. A report from the Federal Reserve Bank of Dallas holds Galveston as an example of what not to do when rebuilding housing after a hurricane.


Cities seeking to rebuild their housing stock lost during Hurricane Harvey should use Galveston as a lesson of what not to do, according to a new report released this month by the Federal Reserve Bank of Dallas.

The report, called “Seizing the Opportunity for Equitable and Inclusive Redevelopment,” states that slow rebuilding of public housing after Hurricane Ike in 2008 has put Galveston at a disadvantage when it comes to taking advantage of economic growth in the greater Houston area.

It notes that, as the 10-year anniversary of Hurricane Ike approaches, only about 50 percent of the public housing torn down after the storm has been replaced.

“The result of this inaction is a community that is less economically diverse and a city that is likely to face serious workforce challenges in the coming years as it seeks to compete in one of the fastest-growing regions in the nation,” the report states.

The report was written by Kevin Dancy, an attorney in the Federal Reserve Bank’s Community Development Department. The department’s mission is to support economic growth by “promoting programs and policies that stabilize neighborhoods, assist small businesses and improve the financial stability of low- and moderate-income households,” according to the bank’s website.

The Federal Reserve is the central bank of the United States. It has branch offices in 12 U.S. states. In addition to setting the federal interest rate, one of the official purposes of the Fed is to promote consumer protection and community development policies.

The reports notes the long, and contentious, road the city took to getting public housing rebuilt. That included local opposition to rebuilding plans, legal threats, actual litigation and fights with the federal and state governments that delayed the actual start of public housing construction until 2014.

Galveston tore down 569 public housing units after Hurricane Ike in 2008. Of that, 144 have been replaced with two new mixed-income housing developments and another 97 are scheduled to be replaced as part of the Texas General Land Office’s scattered-site housing programs.

The report notes that Galveston has one of the worst rates of income mobility in Texas, and that between Census estimates in 2010 and 2015, the number of households with incomes less than $50,000 decreased on the island, while the number of high-income households increased.

“As of 2015, the island’s population had yet to return to its pre-Hurricane Ike levels, but, noticeably, the island added more upper-income residents,” according to the report.

The data shows that people in lower-income groups have yet to return, and as rents and property values increase on the island, they could have more trouble living here in the future, according to the report.

The lack of low- and middle-income housing on the island could have a “great impact” on the city’s workforce in the future, according to the report.

“If individuals who fill lower-wage jobs are unable to find adequate housing on the island, they are likely to seek housing and employment opportunities elsewhere,” according to the report. “Ultimately, this will result in fewer workers on the island who can fill the service jobs that are vital to supporting a thriving tourist industry.”

The report was commissioned after a request by nonprofit groups to the federal reserve, Dancy said in a phone interview on Thursday afternoon.

“This has been a culmination of about two years of research,” he said. “There are recurring themes, one being that it is very difficult for people of lesser means on the island to really thrive, and opportunities are becoming smaller and smaller.”

Several Galveston officials reached Thursday — including Galveston Mayor Jim Yarbrough — didn’t know about the Fed report, they said.

Jeff Sjostrom, the president of the Galveston Economic Development Partnership, said he questioned some of the conclusions made in the report after a quick initial read.

“It’s really hard to compare Galveston after Ike to New Orleans after Katrina,” Sjostrom said about one part of the report. “I think there were a lot more positive lessons that came out of Ike.”

Sjostrom, who acts as the city’s top economic development official, did agree that Galveston had issues providing affordable workforce housing, but said that problem was something that pre-dated even Hurricane Ike.

Yarbrough expressed similar sentiments.

“That’s been a problem for Galveston for 50 years,” Yarbrough said. “When I was a kid, people began to leave the island because they could go to Texas City and La Marque.”

Yarbrough said the city is making efforts to increase affordable housing now, both through the public housing program, and in the development of land near Scholes International Airport and in city neighborhoods north of Broadway.

He agreed that elderly and low-income people forced out of Galveston by Ike have probably been priced out from returning.

“I don’t think the lower economic end of the scale can afford to live on Galveston without some kind of subsidy,” he said.

Dancy said he hoped other communities would use the report during Harvey recovery, and put an emphasis on finding nonprofit groups and businesses, like banks, that will help preserve low- and middle-income populations before it’s too late.

John Wayne Ferguson: 409-683-5226; john.ferguson@galvnews.com or on Twitter @johnwferguson.


(12) comments

Susan Fennewald

Well... Dickinson, League City, Friendswood etc won't have that same problem resulting from the slow rebuilding of public housing since they don't have any public housing.

Randy Chapman

Texas City and LaMarque both graciously accepted Galveston's gang members and crime problems when Galveston failed to rebuild its public housing.

David Schuler

What a crock! Did the study attempt to analyze the effects of school quality, public transportation, expensive flood insurance, and high taxes on 'blue collar workers" ability to live in Galveston? I suspect not. It's all about using the public housing club to - once again - batter the residents of Galveston.
The GDN should identify the non-profit organizations that requested the study. I'd bet it's the same ones that have been pushing PH from day one.

David Schuler

Ok, read the study online. Basically a restatement of the PH rebuilding process by a biased TSU lawyer who hates gentrification. Towards the end, there is a note that of the approximately 50,000 jobs on Galveston, about half are performed by workers who live off the island, So nine hundred subsidized units are going to make a difference? Again, what a crock.

Elizabeth Beeton

The feds and the low-income housing advocates never criticize the cities that have no public housing, such as League City, Friendswood and Dickinson in Galveston County. No, they always reserve their criticism for the cities that have public housing, like Galveston. Those that have no public housing get a free pass; those that have it can never do enough. This just reinforces the commitment of the cities who have no public housing to keep it that way!

Susan Fennewald

Another irony (?) - the public housing advocates that caused such problems for Galveston are from Austin. In the wake of the bombings there, the news came out that Austin is one of the "white-est" cities in Texas.
Though with the latest census estimate - Galveston is approaching very low numbers of African-Americans. Presumably NOT due to loss of public housing since the number of African Americans in Galveston has gone down since we opened some of the new public housing.

David Blumentritt

Reminds me of a conversation several years back before Ike with a homeowner with his house for sale and we were looking to possibly buy since my daughter was about to start classes at TAMUG. He was black and had a family and he made the statement "You white people want to move on the island and we all can't wait to get off of it. He wouldn't explain why he felt that way I guess because he might scare off a buyer.

Gary Miller

No city can improve by providing public housing. Residents of PH end up thinking they are entitled without limits. Cities trying to increase population or income with PH find welfare checks don't repay the cost. PH residents demand taxpayer funded services without paying their share.

Susan Fennewald

The report says "Galveston has taken an innovative approach to boosting tourism and has incorporated Airbnb.. into its economic development strategy. The increased incentives and attractive rewards provided to owners of short-term rental properties on the island has undoubtedly led to more property owners listing their homes as vacation rentals instead of pursuing the stability of the long-term affordable housing market."

Has the city issued incentives? I know we didn't ban them, but I hadn't noticed actual rewards and incentives.
Does anyone know?

Mary Branum

There are so many arguments to negate this report as well as question the sources. Yes property taxes have risen exhorbitantly for non owner occupied properties. This is a taxing authority issues. In addition, there were thousands of vacant properties prior to Ike and still are - be it whatever reason, owners/heirs do not want to repair properties. There are the same amount of vacant/derelict properties in my neighborhood as were prior to Ike. No one will sell! Just let them fall down. To the slum property owner across the street from my home - 20+ years vacant and deteriorating. What are your intentions?

Tourism has saved this City. There are no incentives for vacation rental property. If anything, we pay the highest in property taxes and insurance. It is these owners who have taken terrible properties, repaired, cleaned up and improved the neighborhood aesthetics. Many have reverted to full time residential properties.

Why is Galveston always mentioned as "not doing enough"? We are a barrier island with only so much allowable infrastructure. Are these same questions asked of Padre or Mustang islands or islands in Florida and off the East Coast?

maydell trimarchi

My husband and I were one of the couples who left the Island that Mayor Yarbrough is referencing. Nothing has really changed in regard to affordability. There was public housing when we left in 1978, so I do not believe that public housing is the issue.

My husband and I would not qualify for public housing nor do we want to live in public housing. I think it is very unfair to Galveston that the public housing is not spread throughout the county as are the elected officials.

You can see all the old houses that were rebuilt with government money after Hurricane Ike by their rusting outside lifts. Was that the best way to rebuild a city?
They are no more appealing than public housing.

Galveston certainly needs affordable housing to attract workers, but not just for low income jobs, but for a strong middle class as well. The haves vs. the have nots has never successfully sustained a vibrant community.

maydell trimarchi

Please note that comment that states it was submitted by Maydell was actually submitted by her daughter, Toni McCoy, at tlmccoy2

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