How Booming Salt Lake City Can Keep Housing Affordable

The city of Salt Lake City, Utah, is booming.

Between 2010 and 2014, Salt Lake City gained 4,400 new residents, doubling its pace of growth over the previous decade. Now the city’s population is rapidly approaching 200,000, in a metro area pushing 1.2 million people. Planners anticipate this growth continuing, with another 30,000 city residents by 2030.

As its employment base (especially the technology sector) grows — along with the University of Utah, whose main campus sits on foothills just two miles from downtown — Salt Lake City is no longer just attracting new residents from the rest of Utah, but from all over the country.

In particular, a high proportion of newcomers are millennial workers looking for an urban lifestyle — with the unprecedented proximity to natural amenities the city uniquely offers in the scenic Intermountain West.

It should come as no surprise, then, that Salt Lake City is also experiencing the largest building boom in its history, with even more housing in production today than its original period of urbanization in the first half of the 20th Century.

Unfortunately, even this unprecedented building boom is not enough to keep up with the city’s increasing housing demand. Salt Lake City is experiencing record-low vacancy rates, housing affordability is a challenge at nearly every price point — and homelessness is a major concern.

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What’s worse, this housing shortage is exacerbating economic segregation. Between 2011 and 2014, rental rates increased two times faster than wages of renters, and home sales’ prices increased four times faster than the wages of homeowners.

At the same time, barriers to development — such as density limitations, prohibitions on different types of housing, and other regulations — are also contributing to the housing shortage. Many of these regulations were created at a time of population contraction, and are no longer relevant to today’s conditions.

The city also believes that more affordable housing within its boundaries can reduce auto emissions, which contribute to the region’s significant air-quality problems. In a 2016 survey, 52% of commuters from outside the city indicated they would consider living in Salt Lake City if housing were more affordable.

Taken all together, that picture is why Salt Lake City Mayor Jackie Biskupski, as a participant in the Rose Center for Public Leadership’s Land Use Fellowship, sought out the Rose Center’s advice on potential changes to its land-use regulations, zoning, and development review processes that would encourage housing development to meet demands for affordability in this period of rapid growth.

In particular, the city asked the Rose Center to focus on the East Downtown neighborhood. Once the most densely populated in Salt Lake City, but now home to a mix of buildings and surface parking lots, East Downtown is strategically located between Downtown and the University of Utah. A light rail line runs along its southern edge, connecting the two major destinations — all in all making East Downtown a major opportunity area to explore policy changes and new approaches.

Additionally, the neighborhood includes remnants of its original apartment buildings (some of which have converted to commercial uses) among office buildings that were allowed to encroach from the Central Business District under previous zoning, and historic single-family homes along with denser mixed-use development along the 400S light rail corridor.

While East Downtown already has the highest transit ridership of any Salt Lake City neighborhood (and a fair amount of multi-family housing), its zoning limits non-residential uses and greater development intensity. Passed in the 1970s and 1980s as a result of perceived development pressure that never quite came to fruition, the change resulted in very little reinvestment in the area and made most of its existing structures non-conforming.

While it includes historic districts, East Downtown offers development opportunities in other places, including aging commercial buildings, surface parking lots, under-utilized mid-block areas, and infill parcels.

East Downtown also struggles with a common Salt Lake City redevelopment challenge: few of its 10-acre blocks are penetrated by alleys or through-streets so parcel configuration has evolved in a random pattern, and they are gridded by 132-foot wide streets that pose challenges for pedestrian-oriented development and lack a natural classification system or modal hierarchy.

(A note on those wide streets: The LDS Church’s second president, Brigham Young, who led the Mormon pioneers to Utah, platted the city this way so that each 10-acre block would support a self-sufficient homestead and the streets would be “wide enough for a team of four oxen and a covered wagon to turn around.”)

What did the Rose Center’s panel of visiting experts have to offer? After touring the neighborhood, visiting some recent projects, and meeting with about 75 representatives of neighborhood residents and businesses, local institutions and philanthropies, housing advocates and developers, and City staff and elected officials, they saw great opportunity for East Downtown to become a highly connected, mixed-income, mixed-use neighborhood, and presented a set of strategic recommendations in a livestreamed presentation.

Engaging the community and key partners (especially the University) is critical to achieving success.
In a renter-dominated neighborhood like East Downtown, it can be difficult to engage stakeholders but that kind of demonstrated support is critical to the City being able to move ahead confidently with regulatory and policy changes. The panel offered some ideas about how to do that and asked the City team to review what local techniques have shown promise in the past, and offered them successful examples from other places.

The panel also thought that a neighborhood like East Downtown, situated between the CBD and the University, should be a choice housing destination for university faculty, staff and graduate students—especially with its convenient light rail connection. They urged the City and University to begin discussing shared community and economic development goals for the area (which already includes a number of University facilities and properties) and offered examples of other town-gown collaborative neighborhood revitalization efforts from around the country as inspiration.

Zoning regulations should be simplified to remove barriers to development.
Salt Lake City has had some success piloting a form-based approach to zoning in some places along its light rail lines, such as Central Ninth, which the panel toured. The panel thought that the conditions in East Downtown, where there is more ambiguity around land uses but concern about new development fitting in with remnant historic urban fabric (regardless of whether it’s in a designated district), makes the neighborhood particularly ripe for a form-based approach.

The panel also heard from developers with concerns about predictability of the review and permitting process, and urged the City to use its plans, regulations and policies to de-politicize such decisions as much as possible based on what it already has adopted.

Facilitate the preservation and adaptive re-use of heritage buildings for naturally occurring affordable housing and neighborhood character.
Older buildings are usually more affordable to rent than new construction, which comes with debt from land purchase and construction as well as and investors that need to get their returns. The panel urged the City to make regulatory changes and incentivize the adaptive re-use of desirable older buildings to maintain the neighborhood’s historic built form and character.

Use incentives to provide public access and infrastructure to enable infill opportunities on large blocks.
The unique layout of Salt Lake City’s blocks and streets poses challenges for infill, but these could be eased by incentives that help redevelopment underground utilities and provide cost-sharing for infrastructure and access planning at the time of the first redevelopment project of scope on the block.

There’s a relationship between land use strategy and housing strategy: Office development can substantially fund affordable housing.
Salt Lake City’s major source of funding for its housing trust fund today is a portion of revenue from tax-increment financed redevelopment projects. The panel noted that by definition, office projects will produce a much larger increment. So to maximize this funding source, the City could continue to allow larger-scale office development in the neighborhood where it fits in with existing development patterns to generate much more subsidy for affordable housing than retail or market-rate housing can.

In addition to TIF, the panel offered a matrix of financing tools that the city has direct control over for consideration.

Housing partners (non-profits, developers and City) need to regularly evaluate the fundamentals and financial gaps around mixed-income housing.
The panel provided a housing economics 101 and 201 lesson, namely: in a housing market in a state of crisis like Salt Lake City’s (vacancy levels under 5%), downward housing market pressure will make housing even scarcer for more affordable units. This is because, facing a shortage of supply at higher price points, higher-income households will outbid lower-income ones for cheaper housing.

The city has been previously focused on its greatest housing price-point need, at 40% of area median income (AMI). But the panel urged the City to increase the total amount of housing to help all price points, and stressed that multi-family rental is the most cost-effective way to provide housing that is affordable to the average working person, noting, “The rules of supply and demand always beat regulation.”

The panel felt that with a clear vision and best-practice tools, Salt Lake City has the talent and expertise and leadership to achieve its housing goals. Keep reading CitiesSpeak for updates and to learn about other cities’ land use challenges and opportunities.

Now in its ninth year, the Daniel Rose Land Use Fellowship is an annual program of NLC in partnership with the Urban Land Institute that provides technical assistance on a local urban development challenge in four large U.S. cities each year. In addition to Salt Lake City, the 2017-2018 cohort includes Richmond, Virginia, Tucson and Columbus, Ohio.

GideonBerger_2017june_DC.jpgAbout the Author: Gideon Berger is the program director for the Daniel Rose Fellowship in the Rose Center for Public Leadership in Land Use.