After intense debate, Utah House OKs plan to impose fee on cities that don’t offer affordable housing

(Scott Sommerdorf | Tribune file photo) JF Capital’s Moda Granary Place, which will offer affordable housing, is well underway on the northeast corner of 300 West and 700 South, January 3, 2018.

The debate over a bill to fund homeless shelters in Utah came down to whether cities should pay what is essentially a penalty for not having enough affordable and low-income housing.

Some lawmakers and representatives from Utah’s cities said they can’t easily influence the kind of housing that’s built within their boundaries. So imposing a fee on those cities with less than the statewide average of affordable housing, they said, would essentially tax them for something outside their control.

But the majority of House members agreed with the bill put forward by Rep. Steve Eliason, R-Sandy, whose city could face among the highest penalties for lacking affordable housing. HB462 passed 49-15 and is on its way to the Senate.

“At the end of the day, the answer to homelessness is housing, housing, housing,” Eliason said.

State and federal data show several cities in Salt Lake Valley are well below the statewide average of housing units affordable to residents making 50 percent and 30 percent of the median income.

The money raised by HB462 would pay for operating homeless shelters in Utah. Half the money would come from a fee — imposed by withholding a portion of eligible cities’ share of state sales tax — and the other $3.3 million from the state’s general fund.

Cities that either host a homeless shelter or have more than the statewide average of affordable and low-income housing would be exempt from the fee. Currently, Salt Lake City, Midvale, Ogden and St. George have shelters. South Salt Lake will have one next year as the state moves to close the 1,100-bed shelter in downtown Salt Lake City and open three smaller ones.

Rep. Karianne Lisonbee, R-Clearfield, proposed stripping out of the bill the penalty for cities lacking affordable and low-income housing units. Her version of the bill would have instead taken $6.6 million from the state’s general fund every year to cover costs of running the shelters.

She and other opponents of the fee said Eliason’s bill wasn’t incentivizing cities to build more affordable housing.

“It is a mandate that the cities must either forgo sales tax revenue or require developers to build affordable housing,” she said. “Cities and towns should not be taxed or given a fee to pay for the operation and maintenance of homeless shelters that are nonprofit.”

Two lawmakers who are developers — Reps. Brad Wilson and Mike Schultz — said there are cities that don't welcome low-income housing, and cities needed to help the state in its effort to reform homeless services.

“There are currently several cities that I know of ... that do not meet the current statutes that are on our books right now to provide affordable housing in their communities,” Schultz said. “They know this, and they still choose not to zone with the current statutes.”

“This is a commitment that cities need to make and they don’t want to,” Wilson said. “But they have a responsibility, at times, to partner with us.”

Affordable-housing advocates said they were hopeful that the House’s decision to move ahead with Eliason’s bill showed that lawmakers recognized housing as a critical piece of keeping people out of homelessness.

“It was a really healthy and engaged debate on the floor,” said Tara Rollins, executive director with the Utah Housing Coalition. “The bottom line is they agreed [that having] housing people can afford in their communities is important.”

Feb. 26: Bill emerges to fund homeless shelter operations and push affordable housing by charging fees of cities that don’t provide such housing

Utah cities that don’t have a homeless shelter or enough low-income housing would pay into a pot of money that would help run the state’s homeless shelters under a much-anticipated bill that was unveiled over the weekend and passed a committee vote on Monday.

The bill would raise $6.6 million, half coming from the state’s general fund and half from cities that have less than the statewide average of affordable and low-income housing and don’t have a homeless shelter. House Speaker Greg Hughes, R-Draper, has called HB462 must-pass legislation.

Shelters receiving the money would have to commit to matching it with private donations under the bill. The state is preparing to close the 1,100-bed shelter in downtown Salt Lake City next year and open three smaller shelters with 700 total beds.

Rep. Steve Eliason, R-Sandy, who is running the bill, said he wanted to create an incentive for cities to facilitate development of low-income and affordable housing.

“This bill would have been so much easier to draft if I would have just said $6.6 million from the general fund,” Eliason said. “But it [would do] nothing to address the issue of helping people step out of homelessness and back into the community.”


Raise $6.6 million for homeless shelters in Utah. Half would come from the state's general fund. The other half would come from cities and towns that have less than the statewide average of affordable and low-income housing. Shelters would have to match the state funding with other donations. - Read full text

Current Status:

Filed Law Introduced in House House Committee House passage Senate Committee Senate passage Governor's OK

Eliason has spent months looking for a way to raise the money. If a city faces a fee for lacking affordable housing, HB462 would take it out of the sales taxes that would otherwise go to the city.

Cameron Diehl, executive director of the Utah League of Cities and Towns, said the Legislature would create holes in city budgets in a year when the state has more than a half-billion-dollar budget bump from congressional tax changes and a booming economy.

The bill caps at $200,000 the fee for large cities that have no homeless shelters and less than the average of low-income and affordable housing units. Eliason said only three or four cities would hit that cap at current levels.