Can SLC entice building of more ‘missing middle’ homes to help ease its housing shortage?

Package of new affordable housing incentives across Utah’s capital aims to encourage property owners to build smaller, more affordable housing. Will it work?

(Leah Hogsten | The Salt Lake Tribune) A Salt Lake City neighborhood just north of Liberty Park, October 20, 2020. A new zoning proposal before the Salt Lake City Council would create more incentives for building smaller affordable homes tucked into many existing neighborhoods.

This story is part of The Salt Lake Tribune’s ongoing commitment to identify solutions to Utah’s biggest challenges through the work of the Innovation Lab.

[Subscribe to our newsletter here]

As a housing shortage keeps bearing down, Salt Lake City is readying a long-debated package of zoning changes aimed at boosting construction of more affordable homes, especially smaller ones.

The new incentives involve tweaks to existing rules for most of the city’s residential, mixed-use and commercial areas to make more out of available land and to strike a new balance for property owners — one that officials say could gradually help lift the city out of its housing crunch.

Landowners who agree to include a certain number or ratio of dwellings affordable to residents at below-average income levels in what they build would also win rights to construct more units, increase building height and enjoy design flexibility in many areas. They would also see expedited review of their permits at City Hall, among other benefits.

The move is being contemplated as Utah endures what economists say is its least affordable housing market in 50 years.

Though still in flux, the affordable housing incentives will represent the city’s biggest foray so far into using zoning to encourage construction of the so-called missing middle — homes with smaller, less expensive profiles including micro-apartments, town homes, cottages and row houses.

The Salt Lake City Council is vetting the zoning incentives now for potential passage this fall with the latest package set for its first major public hearing Tuesday evening.

After more than four years of crafting and debate, the strategy is a thornier and more controversial piece of the city’s wider anti-gentrification plan.

That roadmap of wide-ranging policies, known as Thriving in Place and also nearing adoption, aims to reduce the number of residents getting displaced from the city by spiraling rents or development and better preserve existing housing.

Residents and advocates for people living on low-incomes gave a prior version of the housing incentives plan, which are backed by Mayor Erin Mendenhall and now in the hands of the City Council, a drubbing of criticism in May 2022.

Much of the opposition came over how the changes could affect existing neighborhoods and for not going deep enough on affordability.

The proposals have been substantially reworked since by city planners, based on input from a specially convened focus group of community leaders, planners, developers, housing experts and others affected.

Those changes, in effect, now require qualifying developers either to build still more affordable units in their mix or make those units more deeply affordable, reaching to tenants making 30% of the area’s median wages. The group also urged revisions to entice more construction of family-sized housing with multiple bedrooms — and to do more to preserve existing homes.

(Francisco Kjolseth | The Salt Lake Tribune) The Liberty Wells stake house, built in 1950, is pictured on Friday, June 23, 2023, before a planned redesigning by Ivory Innovations. The project is to include town homes and apartments, supporting the concept of the "missing middle" — homes with smaller, less expensive profiles including micro-apartments, town homes, cottages and row houses.

More units, more affordable

If passed, the incentives will be sweeping in their reach, although officials say it’s difficult to predict how many owners will pursue them, especially in light of rising interest rates and volatile construction costs. And the estimate is that new construction taking advantage of the incentives probably wouldn’t surface for one to three years.

But by taking this zoning approach to affordable housing, adoption of the perks will also mean that each set of tailored tweaks to zoning rules will become effective across all parcels in the city with that zoning, basically in one policy swoop.

Affordable units created under the incentives would be subject to 30-year covenants. Owners would be required to keep the units affordable and report annually on how they’re meeting requirements. The city is contemplating a strict enforcement system, too, including hefty fines and other sanctions for those who don’t comply.

In the case of affordable homes for sale, the city envisions having a first option to buy such units when they go on the market.

City planners say the latest version of the incentives will let builders add more dwellings at more deeply affordable levels, while also offering advantages on spiraling land costs.

“That’s one of the major barriers for a lot of affordable housing developers, is just the sheer costs of land,” City Planning Director Nick Norris explained at a recent hearing.

“By adding the incentives,” Norris said, “it helps them cover that gap that they have, and gives them a little bit more advantage than a market-rate developer may have.”

The incentives also allow more units in some of the city’s single-family residential zones and remove density rules for areas where multifamily construction is already allowed, known as RMF districts. Those changes, according to lead city planner Sara Javoronok, could encourage individual homeowners to build, with potential for additional income and building wealth.

“Larger developers and investors will continue to build the larger projects,” Javoronok said via email, “but the incentives shift this to an extent by providing opportunities for existing property owners and smaller developers to build additional housing.”

For those already building affordable homes, she said, “this will create more housing units than otherwise would’ve been built.”

Effects on existing neighborhoods

Much of the criticism that surfaced last year focused on concerns that new infill homes produced by the incentives could alter or disrupt the character of existing neighborhoods, worsening pressure on parking and utilities such as water and sewer.

With regard to parking, Norris said the city faced “a value judgement on whether we want to require more cars or allow more homes. We chose to allow more homes.”

What’s more, he said, in terms of sheer carrying capacity in residential areas, Salt Lake City has seen a sizable decrease in household size in recent decades, meaning, fewer residents per home.

“A lot of our neighborhoods were built to accommodate a lot more people than currently live in them,” Norris said. “Because of that, a lot of places have the capacity to provide water and sewer, etc., because they were built to accommodate more people than are currently in our neighborhoods.”

In the city’s single-family residential zones and ones that permit duplexes, the incentives would allow several additional housing types, such as triplexes and fourplexes as well as row houses and cottage developments.

But additional height isn’t permitted in those zones, Javoronok said, and existing rules on setbacks from adjacent properties or requirements for yards wouldn’t change. And while development footprints aren’t altered under the new rules, she said, those providing affordable units could build more dwellings within the same area.

Areas now zoned for residential multifamily uses also wouldn’t be allowed additional height under the incentives, she said, but would be freed of rules on specific square footages per dwelling. Other districts that allow multifamily buildings, including the city’s transit zones, could add between one and three stories to their plans, in exchange for more affordable homes.

New homes would also be allowed in commercial areas in some cases, but the city is warily crafting that aspect of the incentives. Officials want to do that in a way that doesn’t create market dynamics that might force out existing businesses.