Amid a housing crisis, this Utah program is helping increase homeownership opportunities

Note to readers: As a community-funded paper, The Salt Lake Tribune has chronicled Utah’s housing crisis for years, but also looks to find solutions. In this series of stories, “Building Options,” we’ll look to outline the issue and why it matters, but also how a state program is showing signs of chipping away at the affordability crisis.

Shannon Isom cries joyfully every time she talks about being able to own her home in Hurricane.

After her divorce and move back home to southern Utah, she worked two jobs, seven days a week, to afford housing — but it still wasn’t enough to ensure stability for her two kids.

“I wasn’t getting anywhere fast enough, and everything kept climbing out of my reach,” Isom said.

Then along came Habitat for Humanity of Southwest Utah and her now-home in Hurricane Heights.

Hurricane partners with Habitat and other nonprofit housing organizations to create city-owned, affordable properties, incentivizes developers to build similar relationships with housing nonprofits and waives or defers impact fees — costs developers pay to mitigate the effects on public infrastructure, like increases in traffic and water use.

The ribbon-cutting for Isom’s home is featured in the city’s updated plan as one of the strategies it picked from about two dozen options that Utah’s largest communities can implement to comply — and find success — with the state’s moderate-income housing program.

The state program has resulted in thousands of homes for people looking to own in Utah’s market – one of the most expensive in the country.

Steve Waldrip, who serves as Gov. Spencer Cox’s senior adviser for housing, said the program is starting to “take root” after the state added accountability measures a few years ago.

It’s been important as government officials figure out how to deal with the new economic realities of housing, Waldrip said, like the median housing price being about six times what a typical Utah household makes.

“Municipalities are starting to take seriously the need we have for starter-level housing and starting to really consider how they can participate in that instead of feeling like they’re being backed into a corner,” he said.

Stacy Young, government affairs director for the Southern Utah Homebuilders Association, said it’s important for the state to take the lead and get cities to act, instead of putting it off and relying on other communities.

“I think it’s been really important to have that leadership and some actual incentives attached to working on this,” he said.

Strengthened amid the housing crisis

Utah, for years, has faced a massive housing shortage compounded by high interest rates and a lag in construction. Recent projections show the Beehive State will be 153,000 housing units short of demand by 2030.

Simply, there are not enough homes, condos and apartments in Utah. There is demand, but not enough supply. The solution, most experts and public officials agree, is building up Utah’s supply of housing options.

Utah’s moderate-income housing program has existed since 1996, but the state strengthened the program and increased enforcement through legislation in 2019 and 2022 after sharp increases in housing costs.

Waldrip, a former member Utah House of Representatives who sponsored the 2022 bill, said the program changes added more diligent reporting and accountability.

Before then, he said, the state’s role was only providing support if communities needed help – and no one was checking that they were “actually implementing and not just loosely planning.”

The program is intended to result in more housing affordable to moderate-income Utahns — households earning 80% or less of the area median income — in the state’s biggest cities and counties. Statewide, that income limit would be between $22,800 and $45,600 for an individual and $32,550 and $65,100 for a family of four, according to the U.S. Department of Housing and Urban Development, though median income varies by county.

It applies to 95 localities, comprising more than 90 percent of the state’s population. All but Vernal are west of the Wasatch Range.

Cities and counties can choose from more than two dozen possible strategies within the program, including zoning for higher density, community land trusts, providing mortgage assistance for public employees and making it easier to build accessory dwelling units.

To comply, cities with a fixed guideway public transit station – like a Trax or Frontrunner stop – must adopt five strategies, two of which must be transit-related. Other cities and all the counties must adopt three.

If they don’t, they lose access to some state transportation investment funds, and they get slapped with a penalty fee of $250 per day that goes to the Olene Walker Housing Loan Fund.

The penalty was in play when communities submitted their reports last year, and all the reports met the guidelines, said Sarah Nielson, a spokesperson for the division that oversees the program.

Compliance ensures the state spares the rod, but while Utah isn’t looking to spoil municipalities, there are incentives for participating in the program.

Cities and counties that go beyond requirements by one or two strategies, depending on how many they’re required to do, get the first crack at state transportation investment funds.

Forty communities exceeded the minimum requirements last year, Nielson said, with 39 qualifying for priority funding.

Tailoring needs to the community

Before the recent changes to state law and added accountability, Nielson said, some cities and counties were already implementing these strategies.

Local officials can be “reactional and self-interested” when it comes to housing, Young with the Southern Utah Homebuilders Association said. That’s especially true with affordable housing, he said.

It takes leadership like the state program to “head off a race to the bottom,” Young said.

While the state doesn’t have an exact count of how many units have resulted from communities codifying the strategies in the program, a Salt Lake Tribune review of a summary of municipal and county reports found that thousands of homes have resulted from or been preserved as part of the program.

Those reports include some particular data about success – like more construction in Hurricane and increased homeownership in most of Ogden.

One reason for that success is that communities can tailor their plans to the area’s needs.

Communities have “the opportunity to look at a pretty broad menu of things they can do to meet the requirements and then choose which ones they’re going to implement,” Nielson said.

Small, rural communities like Vernal have different needs than the state’s metropolis of Salt Lake City or the developing southern areas around St. George.

The Tribune spoke with leaders from four cities about the separate ways they’ve implemented the moderate-income housing program.

Ogden doesn’t have much room for new development, said Mike McBride, the city’s marketing and communications director, and has instead focused on safeguarding existing affordable housing.

That includes Home Sweet Ogden, a program where the city purchases older homes to remodel and new homes in older neighborhoods built consistently to the historic style. The city then sells those to people making up to 80% of the area’s median income. In Ogden, that’s $61,850 for an individual and $88,300 for a family of four, according to HUD.

Millcreek has made it easier to subdivide a duplex and to build accessory dwelling units, provided zoning incentives and eliminated the waiting period for subdividing multifamily projects.

“We’re trying to streamline the process, even in commercial zones,” said Francis Lilly, the city’s planning director.

Developers have said it made a difference in considering whether to build in Millcreek, he said, including in two projects with a combined 217 units where the city waived and reduced some fees.

Hurricane eliminated some fees for accessory dwelling units, added incentives for developers to include units that must be owner-occupied and capped the number of licenses for short-term rentals of whole homes.

Vernal enacted a mixed-use ordinance, which City Manager Quinn Bennion acknowledged isn’t earth-shattering for a large city like Provo or Salt Lake City but was “a pretty big step for us.”

The city of about 10,500 also reduced minimum lot sizes and setbacks — the minimum distance a building or structure must be set back from property lines — and is using community reinvestment funds to incentivize the development of lofts above downtown shops.

City officials pointed to increases in homeownership opportunities and driven-down prices as signs that the strategies are working.

Incentives have drawn developers to build more townhomes and apartments in Hurricane, said city planner Fred Resch III. That includes Lone Rock Condos, a 200-unit condominium complex with the option of Federal Housing Administration-backed loans.

“Some developments have long lead times, and it will take some time for these strategies to begin to see their full effect,” Resch said.

Ogden has seen “positive trends,” said McBride, including a 7% improvement in the quality of owner-occupied housing and increased homeownership rates in 19 of the city’s 23 census tracts.

In Vernal, officials are seeing some “movement on the horizon,” Bennion said.

For example, the city, which is about 170 miles from modern amenities along the Wasatch Front, enacted a new ordinance allowing mixed-use developments.

The change attracted a development company that plans to build Jurassic Heights and Raptor Heights. The projects will both have 10,000 square feet of commercial space on the ground floor and 18 Residential units on the upper floors.

‘Not meant to be the end-all-be-all’

But cities do face some barriers in enacting policies.

The “single biggest challenge,” Young said, is probably NIMBYism — short for “not in my backyard.”

People have “become a little bit disconnected from the challenges people face trying to get a co-hold in the housing market,” he said.

In Millcreek, there’s a mix of opinions, Lilly said, but “most people do recognize that there is a need for this.”

There’s “almost no opposition” by the end of the process, he said, though that could be partially because of where density is going — in newly established neighborhoods close to transit and commercial but not near a lot of single-family homes.

Young theorized that’s true elsewhere, too, and that NIMBYism is the “bulk of the reason” high-density projects get approved on the periphery of cities.

He said officials need to normalize change and think about how they’re framing the discussion.

Zoning changes often are “still pretty consistent” with the feel of an area, he said, but the perception often is that increased density and other changes represent a deviation from the norm instead of what they are – part of long-term planning.

Bennion, the Vernal city manager, encouraged officials thinking about changes to talk to contractors about obstacles to building in their communities, though he warns some of the feedback could be “a little harsh to hear because it’s our own code.” Regulations usually require some extra expense, he said, making it harder to pencil out affordable housing.

The program itself also has limitations, officials and researchers said.

“I think there’s only so much a city can do,” Lilly said, voicing his personal opinion. “Millcreek’s probably a good example of how we can really set the table as well as we can.”

It’s then up to developers to take incentives, he said, and he’s struck that “most developers aren’t interested in that tradeoff” to provide a lower price point and opportunities for first-time home ownership.

Incentive-based programs are a good complement but can’t replace or serve as a substitute for broader goals or rules, like a statewide strategic plan or zoning requirements, said Shazia Manji, a research associate at the Terner Center for Housing Innovation.

“These programs are not meant to be the end-all-be-all,” Manji said.

Manji studied Utah’s moderate-income housing program and similar programs in California, Massachusetts, Montana, New Hampshire and New York, and described them all as nascent – just coming into existence and beginning to display signs of future potential.

“They have not been evaluated for effectiveness, and it’s not yet clear which program designs will yield the greatest impact,” Manji and Rachel Ozer-Bearson wrote in the 39-page report on the six state programs.

The researchers added that Waldrip and program administrators in other states highlighted the importance of bringing developers, local officials, advocates, policymakers and others with a stake in the housing market together, and doing so early.

Utah does this through the Commission on Housing Affordability.

That commission advocated for a slate of new laws this year to address housing affordability as the state’s crisis continues.

Waldrip said the state’s strategic housing plan — something lawmakers recently mandated the governor’s office must develop by year’s end — is entering phase two in the interim session when lawmakers meet monthly to fill the gaps of the 45-day general legislative session.

“That’s where the rubber hits the road,” Waldrip said.

Communities and developers will have to “take a step to the middle and sacrifice a little bit from what they wish they could do,” he said, as the state makes a more defined – and maybe a little more proscriptive – plan.

The first phase of the strategic housing plan calls for updates to the moderate-income housing plan requirements and says the ultimate statewide plan will help guide those changes and other policy discussions.

The state needs to better align efforts, Waldrip said, and while there are better ways to do that than mandates, officials will need to make some adjustments to level the playing field and build consistency.

“We don’t build a road to a city boundary and then say, ‘You guys tell us where you want the road to go after this,‘” Waldrip said. “But that’s what we’re doing with housing.”

Everyone is feeling the need to step up, he said, because the community is getting “significantly worse” instead of getting better.

Most policymakers agree housing costs have lingered because of supply that can’t keep up with demand. Or, as Young put it, a “demand-side shock” that “walloped” the state.

The solutions will take more time to work than the problem did to set in, Young said.

“I think we all feel the crisis. I don’t think anyone’s sort of burying their head in the sand about it,” he said. “Unfortunately, supply is a lot less responsive than demand.”

Megan Banta is The Salt Lake Tribune’s data enterprise reporter, a philanthropically supported position. The Tribune retains control over all editorial decisions.