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Salt Lake City faces a severe shortage of affordable housing, and this year’s mayoral candidates have vastly different ideas of how to bring more options on line.
Mayor Erin Mendenhall says her team has invested more in affordable housing than all prior administrations combined with an approach that yields the city a high return on investment.
Her most prominent opponent, former Mayor Rocky Anderson, says Mendenhall’s way of investing in housing lines developers’ pockets with public money, and Utahns would be better served if the city built its own housing.
First-time candidate Michael Valentine, meanwhile, says he would pursue a mix of the two plans.
Here’s what you need to know:
The plans
Mendenhall’s approach:
• Use public money, assets and other incentives to invest in private development that is already underway.
In exchange for infusing those projects with city cash or offering perks like discounted land, the developer then agrees to set aside a certain number of units and make them available for rent below market rates.
The mayor says this type of investment brings a good bang for the city’s buck because it takes advantage of private investment to serve a public need. Being a minority investor in large projects, she contends, helps the city get more units than it can by going it alone.
Anderson wants to:
• Use public money to fully finance and control housing developments.
By taking total control of a development, Anderson says, the city would be able to set rents at rates that would not be influenced by market forces. It also would allow the city to control the appearance of buildings.
Anderson wants the city to build several thousand housing units this way, but he doesn’t know how much it would cost. He says there are several ways to pay for it, such as borrowing money and issuing bonds, and he expects the state to chip in.
Valentine supports:
• Investing in private development but only if rent prices for affordable units are lower than what is currently available.
• Blanketing the city with a type of zoning that requires developers to set aside a certain number of units to be more affordable.
• Having the city’s Redevelopment Agency convert existing buildings it owns into public housing.
Valentine has coined himself the “Goldilocks candidate,” saying his housing plan blends the best parts of Mendenhall’s and Anderson’s approaches.
What they argue
Mendenhall characterizes Anderson’s approach as funding “the projects,” maintaining it bails the state out of its responsibility to help generate affordable housing.
On top of that, she says, Anderson’s plan is far too costly. She contends it is 18 times more expensive for the city to build housing from the ground up and eight times more expensive for government to retrofit an existing building.
Even so, retrofitting existing buildings, such as vacant motels, is a strategy to provide deeply affordable housing relatively quickly.
Get in the weeds • Mendenhall’s campaign arrived at that 18x number by dividing the administration’s housing investment (about $55 million) by the rough number of units created under the mayor’s watch (about 4,000) to arrive at a cost of $13,750 per unit. City staffers say a new unit of affordable housing costs at least $250,000 to build. That figure, divided by the city’s per-unit investment, comes out to about 18.
For the difference in retrofit costs, the campaign looked at the past four retrofit projects in which the city invested. Aides divided the total cost of those projects ($66 million) by the combined number of units (491) and arrived at a total cost of about $134,400 per unit. The campaign then divided the city’s investment in those projects ($8 million) by the total number of units to get a cost of about $16,000 per unit — 8x less than the total cost per unit.
The campaign’s calculation for retrofit costs includes the failed Ville 1659 project on North Temple near Redwood Road.
University Utah professor Andra Ghent, who teaches courses in housing affordability and serves as academic director for the Ivory-Boyer Real Estate Center, said the city’s estimate that a unit of affordable housing would cost about $250,000 is “in line” with her best guess for how much it would cost a government to build housing on its own.
”Of course, you’d get some cash flow on these units after they would be completed that would go back into government coffers,” she wrote in an email, “although it would not likely be enough to cover a ‘reasonable’ return on investment.”
Ghent, who is also a member of Salt Lake City’s planning commission and has donated to Mendenhall’s campaign, said building government-owned housing would require major upfront costs.
Stephen Goldsmith, Anderson’s former planning director, said there’s no single strategy that can solve the city’s housing woes. A mix of public housing and investment in private development, he said, is a better way to meet the housing need here.
Goldsmith, who has endorsed Anderson in this year’s race, said the upfront cost of government housing isn’t as daunting as it may seem because units could be built incrementally, not all at once.
Anderson says Mendenhall’s approach to affordable housing doesn’t result in housing that is actually affordable and instead subsidizes developer profits.
He snipes back at the mayor’s assertion that he is pursuing “the projects,” saying what he is proposing is nothing like the federally subsidized housing of decades past. Anderson says what he wants to build has been successful abroad and is gaining traction in the United States.
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