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.