The median sale price for homes in Salt Lake City rose from $259,000 in 2015 to $489,750 in September 2021—a 48 percent increase according to utahrealestate.com. Housing in Salt Lake City has become increasingly less affordable due to various factors such as zoning regulations.
However, Salt Lake City wants to do something about that. The city’s Planning Division is proposing zoning amendments that, if passed, would incentivize the construction of affordable housing by modifying the existing zoning requirements.
The proposal, “Affordable Housing Incentives Zoning Text Amendment,” would increase deed-restricted affordable housing units for individuals with incomes at or below 80 percent of the area’s median income (AMI) for a family of four, which was $73,750 in 2021.
According to Nick Norris, director of the Planning Division, the proposal includes two types of incentives. The first increases development potential by allowing more building height or allowing additional types of housing. “This incentive will more than likely benefit those developers who are already building affordable housing that is typically tied to an affordable housing lending program,” says Norris. The incentives would allow more units to be built, which could decrease the cost per unit to build, and the cost of land would be spread over more units.
The second incentive shortens the approval process by allowing staff-level approvals instead of having to obtain approval through the Planning Commission. The same development standards would apply, but the staff would be the final decision-maker for affordable housing projects. “A developer who is not intending to build affordable housing would not be able to utilize this incentive.”
Who benefits from the proposal?
Norris says the biggest benefactors are the thousands of people who need more affordable housing. “There are not currently enough affordable homes for the high number of people who cannot find housing that they can reasonably afford.”
The other benefactors, he says, are affordable housing developers because they may be able to lower their cost per unit and therefore, provide more affordable housing units than if the incentives weren’t in place.
But the proposal has faced backlash. According to Norris, some think the proposal does not go far enough in creating more affordable housing. Norris says those individuals would like to see the incentives be tied more deeply to affordable homes and to require a higher percentage of affordable units.
He also says there are others who think the proposal will change the character of their neighborhood for the worse. Some people believe the proposal will lead to more demolitions of historic buildings. For instance, one concern is whether the city will be able to enforce the proposal if someone uses the incentives but then doesn’t stick to the agreement to keep the units at the agreed-upon level of affordability.
On Wednesday, May 11 at 5:30 pm, the Planning Commission held a public hearing. The intent was to hold an initial public hearing so the Planning Commission could hear the issues and give the planning staff direction for addressing the issues.
“We received a lot of comments and we’re still assembling those comments into themes so we can figure out what additional information and research we need to do. Then [we will] determine what kinds of modifications may need to be made for the proposal.”
One example Norris gave is the concern over the enforcement issue. He says they are aware of it and the need to figure out a way to address it. The commission plans on working with its enforcement teams and others involved to come up with enforcement tools and processes.
In order for the incentives to be passed, the planning commission needs to make a recommendation to the city council. After that happens, the city council process will take place. Ultimately, it will take the majority vote of the city council for the proposal to be adopted.
The challenges of affordable housing in Utah
“I think the important part of this proposal is that it recognizes the challenges the city is facing when it comes to current and future residents having access to housing they can afford. Regardless of the outcome of this project, this is an important discussion that we need to have as a community to determine how important this issue is and to what extent we are willing to go as a city to try to improve housing costs for those that cannot afford it.”
Norris says that even though we are seeing a lot of new housing being built, there hasn’t been enough supply to keep up with the demand, and low vacancy rates mean property owners can charge more because the tenant pool is deep.
While we are getting a lot of market-rate housing, the need for more affordable housing continues to increase because of how rapidly housing prices are going up, he says. Using incentives will help increase the supply of affordable housing because the incentives allow the public dollars being invested into housing to go toward more units, reducing the land cost per unit. He says those dollars are going to those who are willing to build affordable housing.
“In Utah, the affordable housing toolbox is limited; for example, the state prohibits cities from using rent control, so when faced with housing affordability issues, there are only so many carrots and sticks that can be used.”
Norris says the incentives are catered to those that want to build affordable housing. Those who aren’t planning on building affordable housing will not benefit from the proposal. Neither will the owners of other market-rate housing.
To learn more, visit the Salt Lake Planning Commission’s page on the Text Amendment, Affordable Housing Incentives.