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Utah affordable housing advocates celebrate $35M earmarked by Legislature

Funding is ‘the most money that housing has ever received,’ director says

Kier Construction continues work on Central Station, a development by Gardner Batt, at 549 W. 200 South in Salt Lake City on Tuesday, March 2, 2021. The 65-unit affordable apartment community will have studio, one-, two-, three- and four-bedroom apartments.
Kier Construction continues work on Central Station, a development by Gardner Batt, at 549 W. 200 South in Salt Lake City on Tuesday, March 2, 2021. The 65-unit affordable apartment community will have studio, one-, two-, three- and four-bedroom apartments.
Kristin Murphy, Deseret News

SALT LAKE CITY — Amid an ongoing housing crisis as the Beehive State’s population continues to grow, the Utah Legislature set aside $35 million for affordable housing projects this year, drawing gratitude from advocates.

“This is the most money that housing has ever received. Homelessness has received lots of funding in terms of building infrastructure that they need to support homelessness, but we also need to invest in the infrastructure of housing where people can live,” said Tara Rollins, Utah Housing Coalition executive director.

“We’re just thrilled. I think there’s a lot of developers out there that will be extremely happy to be doing additional planning for the future,” she said.

A University of Utah Kem C. Gardner Policy Institute report released in December found that the Wasatch Front is on the verge of a housing affordability crisis, and unless measures are taken immediately to address the issue, thousands of Utahns will be in danger of being priced out of the market.

Funding planned by the Legislature will go toward building and maintaining housing for those who need assistance.

The demand for housing in Utah is far greater than the supply, “so anything, any effort to increase that supply or maintain that supply as the preservation (of existing housing) goes is really important,” said James Wood, Ivory-Boyer senior fellow with the Kem C. Gardner Policy Institute.

Kier Construction continues work on Central Station, a development by Gardner Batt, at 549 W. 200 South in Salt Lake City on Tuesday, March 2, 2021. The 65-unit affordable apartment community will have studio, one-, two-, three- and four-bedroom apartments.
Kier Construction continues work on Central Station, a development by Gardner Batt, at 549 W. 200 South in Salt Lake City on Tuesday, March 2, 2021. The 65-unit affordable apartment community will have studio, one-, two-, three- and four-bedroom apartments.
Kristin Murphy, Deseret News

The Legislature plans on $10 million for gap financing of private activity bond financed multifamily housing. That money will likely be used for long-term loans that would eventually be repaid by developers to the state, Wood said. It will likely help finance between 100 and 125 new housing units “that would be relatively affordable,” he said, at about 10% to 15% below market rent for those who earn well below the median income.

The Legislature is also committing up to $25 million to match private dollars for the preservation and rehabilitation of affordable housing units for low-income individuals through the Utah Housing Preservation Fund.

“A lot of times as projects or units age, then a developer or an owner will do some rehab and then bring those units back onto the market at pretty high rents,” Wood said.

But the Utah Housing Preservation Fund provides a financial infusion to help restore units while preventing them from losing their affordable housing status. Wood called it a way to maintain previous investments into affordable housing.

“The important thing about preservation, we highlighted that as a best practice in the study … and one of the reasons it’s a best practice is because there’s not local opposition,” Wood said, as compared to the “NIMBY-ism” (not in my backyard) that often occurs when builders propose new affordable housing projects.

‘Getting our arms around this massive issue’

“We think the money we’re spending there is very well placed because it will have that leveraged effect. And if we do have a problem in Utah — and hopefully we tackle problems and try to solve them — but if there is a problem we have right now ... it’s housing affordability. And so the money we spend there I think will be well used,” Senate President Stuart Adams told reporters Monday.

“There’s multiple different aspects of (the funding). Some of it is going into the Olene Walker Housing Fund, which will allow people to be able to get homes easier, faster. Most of that money will be leveraged by the private sector both in financing and by additional donations,” said Adams, R-Layton.

Sen. Derek Kitchen, D-Salt Lake City, praised fellow lawmakers for prioritizing affordable housing this year — including one of his requests.

“I’m encouraged by the support of leadership in the Republican majority on affordable housing. It’s something we’ve been talking about for many, many years, and we’re doing something big this year. ... This will be leveraged, we have a lot of private sector dollars that are willing to step into the arena now,” Kitchen said.

“For the state of Utah to put out $50 million into affordable housing shows that we’re serious about getting our arms around this massive issue, because this is a workforce development issue, it’s a quality-of-life issue. I mean, this impacts every corner of our economy, so it’s the right thing for us to do,” he said.

His combined appropriation request with Rep. Clare Collard, D-Magna, for $15 million to the Olene Walker Housing Loan Fund for project-based rental assistance for permanent supportive housing projects was included in the budget in full. The funding will leverage $159.7 million in Private Activity Bonds and $89.5 million in tax credits to produce an estimated 1,578 affordable housing units, according to Kitchen and Collard.

“This is a huge deal,” Collard said in a statement. “This money will go a long way toward assisting the thousands of Utah families who are struggling to pay rent and facing eviction because of the economic downturn.”

In a statement to the Deseret News, Salt Lake City Mayor Erin Mendenhall said: “We are very pleased to see that the Legislature is allocating this significant sum toward affordable housing. The city does not operate as a housing developer, but we look forward to continuing to work with community partners like the Utah Housing Preservation and housing authorities to maintain and increase our city’s stock of affordable housing.”

Cameron Diehl, executive director of Utah League of Cities and Towns, called the funding another tool to augment cities’ efforts in affordable housing.

“The state is facing a challenge in both housing affordability and affordable housing, and ... they’re two separate issues but they’re interrelated. Housing affordability is the ability of individuals to keep up with the growing cost of housing in general, and affordable housing is housing that low- and moderate-income Utahns can afford,” Diehl said.

Over the last two years, there’s been a “growing divide” in the supply of housing for low- and moderate-income earners, Diehl noted.

“This effort from the state of Utah will help to preserve existing low- and moderate-income housing and to maintain and hopefully increase the supply of low- and moderate-income housing so that all Utahns, regardless of incomes, have housing available for them,” he said.

Cities have set aside money for affordable housing projects to assist in preservation and creation of housing for low- and moderate-income Utahns, Diehl said, explaining that it’s an “all hands on deck effort” by states, local government and private sector to facilitate additional affordable housing.

One need Wood, with the Gardner Policy Institute, still sees is help for those who make an “extremely” low income less than 30% of the median.

“And you can imagine trying to meet housing costs when you have ... a single parent maybe working two jobs and relatively low income jobs, and it’s really tough. They’re paying 50% of their income or more for housing,” Wood said. “We have about 40,000 (households) in Utah that fall into that extremely low income renters who have no federal state or county assistance.”

While some do receive housing vouchers, tens of thousands do not.

“That’s a group that’s really vulnerable to homelessness and doubling up and housing insecurity, so that’s the group I wish they would earmark,” he said.

But Wood expressed optimism for future years.

“The state is doing quite well financially. This year our tax revenues are higher than we expected and higher than they were a year ago, and I think we’ll have a good year in 2021 — so we’re going to have a good level of tax revenue. So I hope we can build on this and get additional funding,” Wood said.

Rollins said she hopes future work in the Legislature will focus on tenant-landlord law to ensure people can continue to afford living in their homes, “because we’re just seeing so many people rotate through apartments as well as school systems.”

Development grants

Sen. Jake Anderegg, R-Lehi, is proposing SB164, which would allow the state to conduct a surplus property inventory across counties, and figure out “what has a potential to fit this nexus” for affordable housing projects, he said.

“That helps those developers know exactly where they can go within those municipalities to address that need,” Anderegg told members of the Senate Natural Resources, Agriculture and Environment Committee on Tuesday.

The bill would also establish a grant program for developers on surplus properties, Anderegg said, as well as a pre-development grant in rural Utah. It would also help those with low incomes who are getting evicted by giving them representation, as the state is seeing a large number of evictions.

Under the bill, real property could be granted to developers who plan to use at least 20% of the housing units for affordable housing — which means those units would be available only to those who make no more than 50% of the area median income.

The bill carries an $800,000 fiscal note, which has been funded by the Legislature, Anderegg noted. The program would be carried out by the Department of Workforce Services.

“This is the now third year that the housing affordability commission has met. We held about a dozen meetings throughout the summer and developed additional concepts of what might be done to help address what I call the low end of the spectrum,” he said.

While Anderegg believes the free market will largely figure out how to address the housing gap, he said the bill would focus on those who make the “lowest median income.”

He said Utah has “dearth” of production of units for those at the lower income levels during a “supercharged market.”

Lexi Cunningham, with the Utah State Superintendents Association, said when the meeting opened for public comment that the bill will help students. “The families he was talking about are our students across the state and so we are appreciative of the efforts to create affordable housing in our districts across the state.”

The bill unanimously passed the Senate Tuesday evening. It will move to the House for consideration.

Rollins, with the Housing Coalition, called the bill a “win-win” because so many industries are interested in making it work — the transportation sector, the League of Cities and Towns, real estate agents, developers and other stakeholders.

Accessory dwelling units

Another bill this session, HB82, seeks to help with the affordable housing crisis by prohibiting municipalities and counties from establishing restrictions or requirements for certain accessory dwelling units with limited exceptions.

Most Utahns understand the need for that form of housing — many have either lived in a mother-in-law or basement apartment at a point in their lives, or rented one out to family members or friends in times of need, Ward noted. It’s important the state make the resource “easier” for people during a housing shortage, according to bill sponsor Rep. Ray Ward, R-Bountiful.

The bill would also ban homeowners associations from prohibiting the construction or rental of certain accessory dwelling units.

HB82 was held up in the Senate for several days after passing the House. After Ward said he spoke with senators about the bill in hopes it will get heard before the impending end of the session this week, the bill received a favorable recommendation from a Senate committee on Tuesday. It awaits a vote in the full Senate.

The December Gardner Policy Institute study cited a recent survey by the Terner Center for Housing Innovation at the University of California, Berkeley, which indicated that an accessory dwelling unit — sometimes called a “mother-in-law” apartment — rents for an average of 58% below market value. Analysts said they are an essential tool for delivering affordable units to the market.