Can SLC support the construction of more “missing middle” houses to alleviate the housing shortage?

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As the housing shortage continues, Salt Lake City is preparing a long-discussed package of zoning changes aimed at spurring construction of more affordable homes, particularly smaller ones.

The new incentives include adjustments to existing rules for most of the city’s residential, mixed-use and commercial developments to make more of the available land and create a new balance for property owners – a balance that officials say the city has could gradually help the country get out of its real estate crisis.

Property owners who agree to include in their construction a certain number or ratio of housing units that are affordable to residents with below-average income would also be granted the right to construct more housing units, increase building heights, and in many areas Enjoy freedom of design. They would also receive expedited review of their permits at City Hall, among other benefits.

The move is being considered as Utah suffers from what economists say is the least affordable housing market in 50 years.

While still evolving, the affordable housing incentives will mark the city’s biggest push yet to use zoning to encourage construction of the so-called missing middle – homes with smaller, lower-cost profiles, including microapartments, townhouses, Cottages and terraced houses.

The Salt Lake City Council is currently reviewing zoning incentives for possible adoption this fall, with the latest package being prepared for its first major public hearing Tuesday night.

After more than four years of drafting and debate, the strategy is a thornier and more contentious part of the city’s broader anti-gentrification plan.

This far-reaching roadmap, known as Thriving in Place, which is also nearing implementation, aims to reduce the number of residents displaced from the city by rising rents or development, and existing ones to better maintain housing.

Residents and low-income advocates gave strong criticism in May 2022 to an earlier version of the housing incentive plan supported by Mayor Erin Mendenhall and now in the hands of the City Council.

Much of the opposition spoke about how the changes could impact existing neighborhoods and that affordability would not be addressed deeply enough.

The proposals have since been substantially revised by city planners based on input from a specially convened focus group of community leaders, planners, developers, housing experts and other stakeholders.

These changes now effectively require qualified developers to either build even more affordable units in their mix or make those units more affordable to reach tenants earning 30% of the area’s average wage. The group also called for changes to encourage the construction of multi-bedroom apartment buildings and to do more to preserve existing homes.

More units, cheaper

If passed, the incentives will be far-reaching, although officials say it’s hard to predict how many owners will pursue them, especially given rising interest rates and volatile construction costs. And estimates suggest that new construction projects that take advantage of the incentives probably won’t emerge for another one to three years.

However, by adopting this development approach for affordable housing, the introduction of the concessions also means that any series of tailor-made adjustments to the zoning rules will take effect on all parcels in the city with this development plan, essentially in one fell swoop.

Affordable units created under the incentives are subject to a 30-year term. Owners would have to ensure the units remain affordable and report annually on how they meet requirements. The city is also considering a strict enforcement system, including hefty fines and other sanctions for those who don’t comply.

For affordable homes for sale, the city plans to have a first option to purchase such units when they come on the market.

City planners say the latest version of the incentives will allow developers to build more homes at cheaper prices while providing benefits as land costs rise.

“One of the biggest obstacles for many affordable housing developers is the sheer cost of land,” city Planning Director Nick Norris said at a recent hearing.

“By adding the incentives,” Norris said, “it helps them close the gap that they have and gives them a little bit more of an advantage than a market-rate developer might have.”

The incentives also allow for more units in some of the city’s single-family residential areas and eliminate density rules for areas where multifamily construction is already allowed, so-called RMF districts. According to senior city planner Sara Javoronok, these changes could encourage individual homeowners to build and provide the potential for additional income and wealth building.

“Larger developers and investors will continue to build larger projects,” Javoronok said by email, “but the incentives postpone this to some extent by providing existing property owners and smaller developers the opportunity to build additional housing.”

For those already building affordable homes, she said, “This will create more housing units than would otherwise have been built.”

Impact on existing neighborhoods

Much of the criticism voiced last year focused on concerns that new construction resulting from the incentives could alter or disrupt the character of existing neighborhoods, which could exacerbate pressure on parking and utilities such as water and sewer.

When it comes to parking, Norris said the city faces a “value decision about whether we want to require more cars or allow more housing.” We have decided to allow more apartments.”

What’s more, he said, Salt Lake City has seen a significant decline in household size in recent decades in terms of sheer residential carrying capacity, meaning there are fewer residents per home.

“Many of our neighborhoods were built to accommodate many more people than currently live in them,” Norris said. “That’s why many places have the capacity to provide water and sewer, etc., because they were built to accommodate more people than currently live in our neighborhoods.”

In the city’s single-family residential areas and those that allow duplexes, the incentives would allow several additional housing types, such as three- and four-family homes, as well as townhomes and cottage communities.

But additional height is not allowed in those zones, Javoronok said, and existing rules regarding setbacks from adjacent properties or yard requirements will not change. And while the new rules won’t change the zoning area, she said, those offering affordable housing units will be able to build more homes in the same area.

Areas now zoned for multifamily residential use also would not receive additional height under the incentives, she said, but would be exempt from rules on certain square footage per apartment. Other districts that allow multifamily housing, including the city’s transit zones, could add one to three stories to their plans in exchange for more affordable housing.

In some cases, new homes would also be allowed in commercial areas, but the city is carefully designing this aspect of the incentives. Authorities want to do this in a way that does not create market dynamics that could displace existing companies.