 Introduction Downtown Dallas has long been a hub of business activity, attracting companies with its vibrant urban environment and economic opportunities. However, there has been a troubling trend in recent years: businesses are increasingly leaving downtown for areas like Uptown Dallas, a Public Improvement District (PID) in Dallas just north of downtown, and surrounding communities. This exodus is driven by recent elevated crime rates and persistent homelessness issues, which undermine the quality of life and economic vitality in the heart of the city. To address these challenges, it is essential to adopt market-driven solutions that can effectively reduce homelessness and crime, ensuring that downtown Dallas remains an attractive location for businesses and residents. Details about Dallas, Texas Dallas has a rich history and a dynamic cultural scene. According to U.S. News & World Report, the Dallas-Fort Worth metroplex is the fourth largest in the country, with over 8.1 million residents. Dallas offers diverse attractions, from world-class museums and performing arts venues to professional sports teams and a burgeoning food scene. The city is known for its friendly residents and a blend of Texas pride with cosmopolitan offerings. However, the city faces significant challenges. Dallas has a higher cost of living than the national average, and housing prices have surged in recent years, making it less affordable for many residents. The median home price in Dallas is significantly higher than in many other parts of Texas, contributing to the economic strain on residents. These factors, combined with issues related to crime and homelessness, have impacted the city's overall attractiveness as a place to live and work. According to the U.S. Census Bureau, Dallas has a population of 1.3 million and a median household income of $58,231. The poverty rate is 19.3%, which is higher than the national average. The city's population is diverse, with 42.3% identifying as Hispanic or Latino, 29.1% as White, 24.3% as Black or African American, and 3.6% as Asian. The city's demographics highlight the need for inclusive and effective policies to address its socio-economic challenges. Overview of the Situation in Dallas Dallas has faced significant challenges in managing crime and homelessness, particularly in its downtown area. The 2023 Community Survey conducted by the City of Dallas revealed that 75% of residents identified homelessness as a major problem, with 61% citing crime as a significant issue. Despite efforts to provide services and support for homeless individuals, the lack of market-driven, charitable pathways hindered by excessive government planning with insufficient shelter beds and resources for a necessary policy force has perpetuated the cycle of homelessness and associated criminal activities. Crime and Homelessness Data The Point-in-Time (PIT) count by Housing Forward reported 4,244 homeless individuals in Dallas and Collin counties in 2023, a slight decrease from previous years but still a substantial number. The Supreme Court case City of Grants Pass v. Johnson, which addresses the regulation of homeless encampments, underscores cities' legal and logistical challenges in managing homelessness. This case highlights the complexities of balancing humanitarian concerns with public safety and urban growth. Crime rates in downtown Dallas have also been a concern. Reports indicate that prostitution and petty theft are rampant, contributing to a perception of insecurity among business owners and residents. Efforts by the Dallas Police Department to curb these issues have failed due to resource constraints and the sheer scale of the problem. A spike in murders in 2023 has exacerbated concerns. While overall violent crime was down 8% in 2023, murders increased by 15%, with 32 more killings compared to the previous year, bringing the total to 246. This surge in violent crime highlights the urgent need for effective solutions to improve safety in the city.  Impact of Supreme Court Decision The upcoming Supreme Court decision in City of Grants Pass v. Johnson could have significant implications for Dallas's policies on homelessness. The case addresses whether cities can criminalize sleeping in public places with insufficient shelter beds. If the Court rules against such criminalization, Dallas may need to revise its approach to managing homeless encampments and focus more on providing adequate housing and support services. This decision could force Dallas to increase investments in affordable housing and social services to comply with the new legal standards. It may also prompt the city to explore innovative, market-driven solutions to address homelessness more effectively. Daniel Roby from Austin Street Center noted that the lack of sufficient shelter beds is a critical issue, and a ruling in favor of the plaintiffs could highlight the need for more robust support systems for homeless individuals. Businesses Leaving Downtown Dallas The impact of crime and homelessness on downtown Dallas is evident in the number of businesses relocating to Uptown Dallas and other surrounding areas. The Uptown Public Improvement District (UPID), established in 1993 and renewed multiple times, includes about 2,181 properties, primarily business, office, and residential. Managed by Uptown Dallas Inc., UPID enhances public safety, builds and maintains public infrastructure, and improves common areas and pedestrian amenities. The current term lasts until December 31, 2026, with the annual budget and assessment rate requiring a public hearing and City Council approval. The UPID is a Dallas tax increment financing (TIF) zone that allows for part of the property taxes collected to be paid for improvements in the zone. TIFs are costly endeavors that centrally plan areas at taxpayers' expense instead of allowing the marketplace to work. Notable companies such as Invesco, Goldman Sachs, Deloitte, and Bank of America have decided to move their offices out of downtown, citing better security, amenities, and business environments as key reasons for their decisions. While these businesses may be leaving for reduced crime and homelessness issues, they also seek privileged tax situations in places like Uptown at a high cost to taxpayers. TIFs and other tax privileges that pick winners and losers should be eliminated so businesses are on a level playing field and the cost of government spending is not redistributed to other taxpayers. Invesco Invesco plans to move into 58,464 square feet at The Union, a premier office and retail space in Uptown Dallas. Invesco has been in downtown Trammell Crow Center for over a decade. The move is driven by a need for a more secure and attractive business environment. The estimated cost to build the new office space is $1.5 million. Invesco's relocation is part of a broader trend of financial firms moving to Uptown. Goldman Sachs Goldman Sachs has been a fixture in downtown Dallas for many years. They plan to leave 300,000 square feet in the Trammell Crow Center for new offices under development in the nearby North End project, set to open in 2027. This move will significantly impact the occupancy rate of the Trammell Crow Center, potentially dropping it to 62% if no new tenants replace Invesco and Goldman Sachs. Deloitte Deloitte, another major financial services firm, has also relocated to Uptown, joining a growing list of companies seeking better security and amenities. Deloitte has maintained offices in downtown Dallas for several decades, contributing significantly to the local economy. Bank of America Bank of America is relocating about 1,000 workers from its iconic downtown skyscraper to a new office tower in Uptown. The move to the Parkside Uptown Tower, a 30-story building overlooking Klyde Warren Park, is driven by the need for a more modern, amenity-rich work environment. Bank of America's departure from downtown Dallas will leave a significant vacancy in the 72-story Bank of America Plaza, impacting local tax revenues and economic activity. The adopted total property tax bill for this building at 901 Main St, Dallas, Texas 75202, was $2.96 million. Impact on Local Economy and Tax Revenue If businesses leave the City of Dallas, their departure affects the immediate economic environment and has long-term fiscal implications. These businesses' property and sales taxes contribute substantially to the city's budget. A decrease in this revenue could lead to budget cuts in essential services or costly tax hikes, further exacerbating the issues of crime and homelessness. Also, Walmart's downtown office closure, involving the relocation of over 1,200 employees, exemplifies the economic toll of these relocations. Walmart has been in downtown Dallas since the early 2000s. They have decided to consolidate their operations, asking employees to relocate to other U.S. markets, including its headquarters in Bentonville, Arkansas. The departure of such a major employer will result in a substantial loss of local tax revenue and economic activity. The estimated annual tax revenue losses below from the movement of specific businesses from downtown are derived from the typical contributions of these large businesses to the local economy. However, it should be noted that these businesses moving to Uptown will still be collected by the City of Dallas and other local governments but at a lower rate, given the TIF situation. For example, Invesco and Goldman Sachs, both significant financial institutions, contribute through property taxes and sales taxes. Walmart's substantial workforce and sales generate significant sales and property taxes by consumers and workers. Using conservative estimates, just these four businesses could provide $7.5 million less tax revenue for downtown Dallas annually. While this is a relatively small share of the City of Dallas’ $1.8 billion general fund budget for FY 2023-24, these revenue losses will continue to grow if these issues in the downtown area persist.  Comparisons with Other Cities
The situation in Dallas is not unique. Cities like San Francisco and Los Angeles have faced similar issues with crime and homelessness driving businesses away. For example, California has seen many businesses relocating to states with more favorable economic conditions, such as Texas, due to high costs and regulatory burdens. This trend underscores the importance of addressing underlying issues to retain businesses and ensure economic vitality. Interestingly, despite Dallas's economic potential, it did not make the list of best places to live in the United States according to a recent ranking by U.S. News & World Report. In contrast, other Texas cities like Austin, McAllen, El Paso, Corpus Christi, Brownsville, San Antonio, Houston, Beaumont, and Killeen were all ranked among the top 150 cities to live in the U.S. This discrepancy highlights the need for Dallas to address its underlying issues to enhance its attractiveness and livability. Economic Principle: Voting with Their Feet Businesses and residents relocating due to unfavorable conditions is often called "voting with their feet." This concept, rooted in economic theory, suggests that individuals and businesses will move to areas that offer better opportunities, lower costs, and higher quality of life. When the cost of staying in a particular location—due to high taxes, crime, poor services, or other factors—becomes too high, people and businesses will relocate to more favorable environments. As Ilya Somin explains in his article "Voting with Our Feet,” “People 'vote with their feet' by choosing which state or local government they wish to live under, thereby ensuring that states compete to attract residents by offering better services at lower costs." In the case of downtown Dallas, businesses are leaving because the cost of dealing with crime, homelessness, and outdated infrastructure outweighs the benefits of staying. This migration can create a negative feedback loop: as businesses leave, the local economy suffers, leading to reduced tax revenues and further cuts in public services, which in turn can exacerbate the very issues driving businesses away. Creating a more conducive environment for businesses through targeted, market-driven reforms is essential to break this cycle. Market-Driven Solutions To reverse the trend of businesses leaving downtown Dallas, it is crucial to implement market-driven solutions that address homelessness and crime without relying excessively on government intervention. Here are some recommended strategies:
The departure of businesses from downtown Dallas to areas like Uptown indicates the pressing issues of crime and homelessness that need to be addressed. By adopting market-driven solutions and fostering public-private partnerships, Dallas can create a more secure and supportive environment that attracts and retains businesses. It is essential to move beyond government-centric approaches and embrace innovative, market-based strategies to sustainably reduce homelessness and crime, ensuring downtown Dallas's long-term economic health and vibrancy. References
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Vance Ginn, Ph.D.
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