Salt Lake City offers millions in incentives for affordable housing on its east side, but developers aren’t going for it

(Francisco Kjolseth | Tribune file photo) The 1700 East block of Hubbard Avenue in Salt Lake City, located in one of what city officials have designated a “high-opportunity” neighborhoods, where they’re hoping to encourage construction of more affordable housing. The city's Redevelopment Agency is offering millions in developer incentives for building in these upscale areas but has so far drawn little interest.

Salt Lake City’s attempt to more evenly spread new affordable housing construction across the city continues to stall.

For two years running, developers have shown little interest in offers by the city’s urban-renewal agency of up to $4.5 million in incentives to build more reasonably priced homes in so-called “high opportunity” east-side neighborhoods. Similar incentives have proved far more popular for projects in the city’s center and west sides.

Limited available land in built-out east-side neighborhoods appears to be a big part of the problem. Yet the City Council, in its role overseeing the city’s Redevelopment Agency (RDA), remains reluctant to shift gears.

As the RDA took up loans for affordable-housing projects elsewhere in the city, several City Council members said they were wary of freeing the high-opportunity project cash up for wider use after the lengthy discussions that went into creating the policy.

“I worry that if we open this up too soon, we’ll miss out on opportunities on the east side,” said Councilman Charlie Luke. But, with the city’s ongoing affordable-housing shortage, “we will be criticized for this.”

Joe Post, division director at Housing Authority of Salt Lake City, told the RDA board that one of the authority’s own projects — City Plaza, located at 1962 S. 200 East, with up to 200 affordable dwellings — had narrowly missed being funded by the RDA, even as the $4.5 million remained on the table.

“If those funds could be opened up,” Post said, “we would apply for them.”

The RDA board voted Tuesday to approve spending a separate $6.1 million to assist with four new housing projects, none of them located eastward. That money, to be doled out in the form of grants and low-interest loans, will help either build or refurbish a total of 210 dwellings.

In exchange, those new or restored housing units will have rents kept within reach of residents earning 60% or less of the city’s median household income, now hovering slightly about $54,000 yearly. That segment of the population is said to be hit hardest by an ongoing housing shortage.

Tuesday’s vote gives taxpayer backing for Central Station Apartments, with 65 units at 549 W. 200 South; overhauling 80 units in Jackson Apartments, just west of the Salt Palace Convention Center; a project called SPARK!, with 80 dwellings at 1500 W. North Temple; and a 10-unit project at 501 E. 1700 South, called CDCU Liberty Wells.

But for a second year, the RDA’s Notice of Funding Availability has unsuccessfully dangled additional millions in hopes of spurring construction of affordable rentals in more upscale residential areas such as the Greater Avenues, east of Liberty Park, the city’s foothills east of 1300 East and in Sugar House.

Tammy Hunsaker, project manager for the RDA, said Tuesday the city had received a last-minute application for a project on the east side, but it had yet to be vetted by RDA officials.

The idea between steering projects to high-opportunity areas, city officials have said, is to locate subsidized housing in places where residents would have better access to resources — well-paying jobs, quality schools, reliable transit, more parks — to boost their chances of upward mobility.

The problem: High-opportunity residential areas in Salt Lake City are built out and land for construction is relatively scarce. Parcels that might be available are typically smaller, more expensive and harder to piece together, limiting the amount of housing that developers can build.

What’s more, many of the high-opportunity neighborhoods — selected by the city through a complex formula based on resident income, education, health, job security and other demographic factors — often fall within historic districts. That often makes demolishing buildings more difficult and city approval more time-consuming and costly.

The RDA first offered $4.5 million for east-side affordable housing in fall of 2018 and the money languished. In spite of verbal interest among community groups and developers, no financially viable proposals emerged, according to city documents.

The RDA floated the same offer again in June, with $10.6 million available for affordable housing citywide, $4.5 million for east-side projects. It has received 12 applications from developers — all for projects outside the high-opportunity areas.

City officials are now looking at expanding locations that would qualify for the funding to neighborhoods adjacent to or near high-opportunity areas or areas defined as “moderate-opportunity,” though some on the RDA board said they are not ready to make that change.

Councilwoman Erin Mendenhall told the board she instead favored offering city-owned land in high-opportunity areas for development. She also urged the RDA to pursue market-rate apartment projects that are already underway in east-side neighborhoods and offering those developers incentives to add more moderately priced apartments.

But for now, Mendenhall noted that the city continues to see affordable housing projects sprout up on the west side, underscoring a continuing need for incentives to spread those projects citywide.

“I’m not ready to put this [high-opportunity] money out there,” she said.