Utah’s housing market is currently suffering from a severe imbalance of record price spikes and an unprecedented shortage of housing units. The housing crisis is particularly acute for renters, where available apartments are hard to come by. For tenants who are lucky enough to find rental accommodation, they can anticipate regular and substantial rent increases.
Tenants in general, and particularly the lowest income tenants, have borne the brunt of the economic impact resulting from the COVID-19 pandemic. One of the biggest challenges for low-income individuals and families is the shortage of affordable housing. Nationally, 24% of renters spend more than half their income on rent, leaving very little money for necessary expenses like transportation, food and medical care.
There is a massive shortage of affordable housing in Utah. According to the State’s Affordable Housing Report, released in 2020, there is currently a shortage of 40,725 affordable housing units in Utah. In March 2020, the National Low Income Housing Coalition estimated that Utah had only 31 affordable housing units for every 100 very low-income renter households.
The term “affordable housing” can be a misnomer for many people. At first glance, some think the dilapidated, downtown, concrete, bunker-like “projects” are affordable housing. These same people might be surprised to learn that the American Institute of Architects annually awards design prizes for cutting-edge affordable housing projects. Likewise, the data supports the fact that affordable housing does not negatively impact the value of surrounding homes.
The term “affordable housing” covers a wide range of household and individual incomes. According to the Department of Housing and Urban Development, a “very low income” is a four-person household whose income is less than 50% of the area’s median family income. In Weber County, for example, this would equal $35,637 in annual gross income for an individual. To put that number into perspective, starting salaries for teachers in Weber County aren’t much higher.
The LIHTC (Low-Income Housing Tax Credit) program is the most important resource for creating affordable housing in the United States today. Created by the Tax Reform Act of 1986, the LIHTC program provides state and local LIHTC awarding agencies the equivalent of approximately $8 billion in annual budget authority to issue tax credits for the acquisition, rehabilitation or construction of rental housing for low-income people. households.
Besides the altruistic benefits of LIHTC, the economic and fiscal benefits of this affordable housing program are enormous. According to the National Association of Home Builders, the LIHTC program has generated $310 billion in local revenue and $122 billion in tax revenue and supported approximately 3.25 million jobs over the past 30 years. In Utah, the economic impact generated by affordable housing is equally impressive.
Our development team has just completed a 105-unit affordable housing project in Ogden, dedicated to people aged 62 and over. The development of this project has supported 187 jobs, created an economic impact of $34,168,631 on the state and local economy, and is expected to have an annual impact of $1,400,000 on local tax revenue. More importantly, the demand from potential tenants has been amazing. Most Weber County affordable housing projects have a two to three year waiting list for potential tenants, and very few affordable housing projects are seniors only.
The private sector, community leaders, elected officials and city staff must do more to meet the unprecedented demand for affordable housing in Utah. Zoning restrictions, expensive permits and fees, and general attitudes about affordable housing need to be reviewed. If we want our teachers, police, firefighters, college graduates, and seniors to have safe, clean, and affordable housing, we all need to prioritize how best to achieve that goal.
Bill Knowlton is a fourth generation real estate professional in Utah. He is a real estate lawyer and developer, with a focus on affordable housing.