New Utah housing bill would put $35M into rental assistance and more low-income apartments

(Leah Hogsten | Tribune file photo) Construction workers at the site of Liberty Townhouse Apartments, an affordable housing project located at 500 South and 700 East in Salt Lake City, as seen Sept. 17, 2019.

Utah’s latest attempt at easing a statewide housing shortage is a $35.3 million proposal to fuel more construction of affordable homes and help families struggling to pay rent.

SB39, now before the Legislature, would spend nearly $15 million on crucial loans to help developers of affordable housing build up to 2,300 apartments for low-income tenants through the state-managed Olene Walker Housing Loan Fund.

Another $5 million would go to preserving existing low-income housing units across the state that might otherwise be torn down or refurbished and rented at higher rates.

And, in a direct effort to reduce homelessness, the bill would put $15 million into rental assistance for somewhere in the range of 3,000 families, with $5 million of that cash targeting school-aged children facing eviction because their family is not keeping up with rent.

The bill would also devote an additional $300,000 toward helping with pre-development costs of affordable housing projects in rural areas.

[Related story: Renters’ rights bills face an uphill battle in a state Legislature full of landlords]

According to SB39′s sponsor, Sen. Jake Anderegg, the state’s leading housing analysts estimate that Utah lacks 45,000 to 55,000 single-family homes and rental dwellings within financial reach of blue-collar workers and residents earning below average wages.

With rising construction costs, fully closing that gap would be at least a $3.5 billion effort, the Lehi Republican said.

“I don’t think it’s the proper role of government for us to try to solve the entire thing,” Anderegg told Senate colleagues. “But I do think we can focus on our portion, which is that lower income level, those that really are in a position to need some assistance.”

Concerns already are surfacing over the bill’s price tag, in light of what lawmakers predict will be a tight budget year. The marquee housing bill on Capitol Hill last year, SB34, had its $24 million spending piece stripped in the final days of the session.

“This is a pretty significant ask,” warned Sen. Dan McCay, R-Riverton, the lone opponent of SB39 as it cleared a Senate committee this past week.

McCay said the measure also fails to address what he sees as a more substantial obstacle to affordable housing — city zoning rules — and does not do enough to steer housing projects toward land adjacent to major transit lines.

Anderegg argued that financing for new affordable apartment construction and rent subsidies of around $200 a month to keep families from eviction were more effective uses of taxpayer dollars than adding $150-a-night beds at the state’s homeless shelters.

“This is an ounce of prevention that helps us avoid 10 pounds of intervention,” he said. “I can honestly say this is not a handout. This is a help up.”

SB39 is getting praise from Utah’s business and real estate industry lobbyists as well as homeless, elderly and disabled residents advocates.

“We’ve done a good job keeping up with growth in many ways,” said Jacey Skinner, general counsel and lobbyist for the Salt Lake Chamber, which is a major supporter of SB39. Yet with the state’s healthy economy and rapid population growth, Skinner said, housing “is one area where we have not managed it so well.”

Bill Tibbetts, with the nonprofit Crossroads Urban Center, which provides services to the homeless, said SB39’s rental aid was “a big step toward reducing the number of nights kids spend in homeless shelters in Utah.”

The nonprofit housing authorities for Salt Lake City and Salt Lake County recently began accepting new applications for so-called Section 8 rental vouchers, under a federal program. They got 900 requests the first day, and, within two weeks, the waiting list was at 2,000.

“Across the Wasatch Front, the need for rental assistance is substantial,” said Zach Bale, chief program officer for Housing Connect, formerly known as the Housing Authority of Salt Lake County.

The bill awaited debate by the full Senate as of late Friday.

The ideas, Anderegg said, reflect the second year of study by the state-created Commission on Housing Affordability, a five-year task force made up of business leaders, city officials, planners, homebuilders and housing advocates.

The bill’s $30.3 million one-time contribution to the Olene Walker fund would be followed by another $10 million per year after that. That cash infusion, some said, eventually could lower the state’s overall housing shortage by as much as 10%.

And because the fund focuses on gap financing, each dollar it loans to developers is typically matched with $15 from other sources, a top official said. And the money is repaid.

“To be able to put up $15 million and get 2,300 units of affordable housing [for residents] at 60% or below of area median income is a big win,” said Jonathan Hardy, director of housing and community development at the state Department of Workforce Services.

“That’s really making our dollars stretch,” said Hardy, who oversees the loan fund.

He also said that housing is a priority for Gov. Gary Herbert.

“There’s a great need,” Hardy said. “If we really want to solve issues for low-income residents, housing is just a critical component.”

Rep. Kim Coleman, R-West Jordan, said she has started to question some of the underlying data that supports claims that Utah has a housing crisis.

In a video posted on social media, Coleman said economists appeared to be overestimating the number of Utahns who can’t find an affordable home. She recounted a legislative briefing in which she was told her own living arrangement — a home with members of three generations, including two college-age children, one of them a missionary — could be defined as four households instead of one.

“That is not a crisis; that is a family,” Coleman said. “It is a false assumption that if there was more and cheaper housing, that all of these people would leave from under my roof.”

That flaw in defining family units, she added, appeared to be driving what she called “crisis spending” for more affordable homes.

“We don’t know the actual numbers. Therefore, we can’t measure the crisis or if there even is one,” said Coleman, who is running for Utah’s 4th Congressional District seat, currently held by Democrat Ben McAdams.

An economist at the University of Utah’s Kem C. Gardner Policy Institute said the think tank’s influential 2018 study on Utah’s housing markets, which first highlighted a gap of tens of thousands of homes, did not include so-called doubled-up households in its analysis of demand.

Grown children living with their parents, elderly relatives or even friends sharing a living arrangement “are not counted” in the study’s wider analysis of market demand outstripping housing supply since 2008, said U. professor James Wood.

Utah’s high birth rate and in-migration to the state are key drivers in housing demand, Wood said. Still, a historic increase over a decade in the number of households that are doubled up, he said, is certainly a symptom of a wider housing crunch.

“They cannot afford to get into a home or even an apartment. I mean, it’s as simple as that,” Wood said. “I’ve got kids in my own basement with this problem.”

He pointed to other real-time, market-based indicators — historically low vacancy rates, diminished inventories of available homes and the shrinking number of days houses stay up for sale — as underscoring a housing gap.

“There’s a convincing case that we do have a shortage," he said. “Shortages are happening in high-growth areas all across the country.”