Utah is considering a plan to directly help low-income residents pay their rents

In a major escalation of efforts to combat the state’s housing crunch, Utah lawmakers and advocates for affordable housing are proposing the creation of a state voucher program to help low- and moderate-income residents pay their rent.

The proposal is part of a larger bill headed to Capitol Hill that would seek a total of $35.3 million for vouchers, housing development loans and other steps aimed at addressing a dire lack of houses and apartments affordable to those making below-average incomes.

The federal Department of Housing and Urban Development runs several housing-assistance voucher programs based on income, but this new state program would target residents who don’t qualify for those, officials said.

A draft bill seeks $10 million for the voucher system, which will be debated by the Utah Legislature when it convenes in January. But officials said Friday they would also look at paying voucher costs with up to $5 million yearly drawn from the state’s unclaimed property fund, along with additional cash set aside by lawmakers.

The unclaimed property fund, overseen by state Treasurer David Damschen, is a holding account for money left unclaimed by residents in dormant bank accounts, old stock certificates, uncollected insurance checks and similar assets whose owners can’t be located.

Between $15 million and $20 million of that fund is reportedly already diverted each year for public education in Utah.

Sen. Jake Anderegg, who co-chairs the state’s Commission on Housing Affordability, said coupling the new rental voucher proposal with a reliable way to pay for it would significantly raise its chances of being approved during the upcoming legislative session.

But even if it is fully funded during the 2020 session, the voucher system would likely be run as a limited pilot program at first instead of being put in place statewide, said Jonathan Hardy, director of the state Division of Housing and Community Development.

“In terms of vouchers,” Hardy said Friday, “even $10 million is a small amount.”

Lawmakers also said they were reluctant to create new layers of state government to administer a rental voucher system. So their proposal for now is to assign it to an existing agency within the Department of Workforce Services or to city and county housing authorities across the state.

But that, in turn, raised questions about equity and spreading the assistance fairly between residents in urban and rural areas.

The bill unveiled Friday also seeks an additional $20 million one-time cash infusion for the Olene Walker Housing Trust Fund, which provides gap financing to developers of affordable housing projects across the state. A similar funding proposal during the 2019 session on Capitol Hill failed to pass.

The Olene Walker Fund, meanwhile, is temporarily out of money for the year after allocating nearly all its reserves to housing projects during just one mid-July meeting.

“I’m trying to get us as much money as I can,” Anderegg, R-Lehi, told fellow commission members on Friday. But finding ongoing cash sources these days, he said, “was like finding unicorns.”

Under a federal law known as the McKinney-Vento Homeless Assistance Act, thousands of families with school-aged children now get financial help in coping with looming homelessness. State officials believe that existing program may help them tap state dollars earmarked for public schools to offer assistance to Utahns struggling to remain in their homes.

“We can easily make the argument that a stable home makes for a more stable educational opportunity for these kids,” Anderegg told colleagues.

State courts handle approximately 400 eviction cases per month, according to data provided to the commission, and nearly 80% of those cases are prompted solely by financial hardship for the tenants.

Recent studies have highlighted an estimated shortage of nearly 45,000 affordable dwellings in Utah. Rents continue to climb even as developers build thousands of new apartments across the Wasatch Front, thanks in part to heightened demand for homes fueled by population growth and the state’s healthy economy.

Jim Wood, economist, housing expert and senior fellow at the University of Utah’s Kem C. Gardner Policy Institute, told commission members that Utahns at the lowest incomes — those earning less than a third of the region’s median wages — were most in need of voucher assistance. Including moderate income residents in the voucher program, Wood said, “sounds a little exclusive.”

Commission members said income eligibility rules for the voucher system could be determined in part by which arm of state government ends up administering the program.