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Regulatory Barriers to Affordable Housing Task Force

MINUTES OF THE

    REGULATORY BARRIERS TO AFFORDABLE HOUSING TASK FORCE
        Tuesday, September 23, 1997 - 9:00 a.m. - Room 405 State Capitol
    
                

Members Present:
    Sen. Robert F. Montgomery, Co-chair
    Rep. Ron Bigelow, Co-chair
    Sen. L. Alma "Al" Mansell
    Sen. Pete Suazo
    Rep. Eli H. Anderson
    Rep. Wayne A. Harper
    Comm. Gayle Aldred
    Mr. Gary R. Crane
    Mr. Richard Moffatt
    Mr. Jack Nixon

Members Excused:
    Mr. Paul Neuenschwander    
    
Staff Present:
    Joseph Wade,
        Research Analyst
    Robert H. Rees,
        Associate General Counsel
    Barbara A. Teuscher,
        Committee Secretary

Note:    A list of others present and copies of materials distributed in the meeting are on file in the Office of Legislative Research and General Counsel.

1.    Call to Order and Approval of Minutes of August 19, 1997
    
    Chair Montgomery called the meeting to order at 9:00 a.m.

     MOTION:    Commissioner Aldred moved to approve the minutes of the August 19, 1997 meeting. The motion passed unanimously.

2.    Presentation of City Housing Study - Rep. Harper distributed a handout from which he gave his presentation. Rep. Harper said he has been working with West Jordan City on implementing to H.B. 295, "Providing Affordable Housing." West Jordan City has been the target because of its particular ordanance or land uses. Referring to the handout, Mr. Harper reported that the document is prepared by West Jordan City and the statistics are provided by realtors, the construction mentor, and the West Jordan City Building Department. There are approximately 400 condominium units existing and approximately 700 units that have been approved within the last three or four months. He then highlighted to pie charts showing the number of lots by size and zone size. Rep. Harper said the equal distribution of smaller home sizes and lots, coupled with 17.5% of West Jordan's housing stock in apartment and condominium opportunities, has allowed for all income segments of the Salt Lake County housing market to benefit from the positive attributes and enjoyment of choosing to reside within West Jordan.

    In summary, Rep. Harper informed the committee that West Jordan City has 54 percent of its single family and approximately 16.5 percent of its other housing stock dealing with affordable housing. He expressed concern with the committee looking at the present situation that is unmanageable instead of waiting until every community has its study completed to see who is or is not doing affordable housing. Rep. Harper reminded the committee that the Legislature has granted authority to municipalities, counties, and political subdivisions to handle issues based on need, demands, and expectations of the people.

    Committee discussion followed Rep. Harper's presentation.

    Responding to a question about impact fees, Mr. Crane said in addition to Sen. Poulton's request for a legislative audit on impact fees, the League of Cities and Towns has hired Utah State University to do an in depth independent study. Preliminary figures have been received. He said over 20 out-of-state and in-state consultants have been consulted. Mr. Crane indicated some cities have not complied with several aspects of the bill , however, most cities are complying. The report is expected to be completed by October 1, 1997. The League would like to present this study to the committee to inform the committee of its findings.

3.     Discussion of Draft Resolution - Mr. Rees reminded committee members that at the August meeting the draft resolution was adopted in concept encouraging congress to increase the amount of private activity bond cap and low income housing tax credits allocated to Utah. He explained the resolution.

    Mr. William H. Erickson, Executive Director, Utah Housing Finance Agency, said that when we talk about items it is a fact that anything that contributes to higher costs, cash outlay on a monthly basis of low income families, or reduces the monthly outflow requirement of a low income family increases affordability. The two proposals contained in the resolution, the mortgage revenue bond and the low income housing tax credits are resources that Congress has awarded to all states in the nation with the Tax Reform Act of 1986. They are the key financing resources that have put thousands of lower income Utah Families into either their first home or into affordable rental apartments. Mr. Erickson emphasized that these resources are critical to the ability of Utah to continue to provide affordable housing. The resolution is to recognize the dwindling resource, to go back to Congress to show them that the Governor of the State of Utah and the Legislature jointly view this as a critical resource.

    Sen. Mansell spoke in favor of the concept of the resolution but would vote against it.
He explained he does not want this to be the only recommendation of the task force.

    Chair Montgomery spoke in favor of the motion. One of the major aspects of accumulating affordable housing is the cost of servicing mortgages and that the resolution will be very helpful. He would hope that further recommendations to the full Legislature will come out of the committee.

     MOTION: Commissioner Aldred moved that the committee vote in support of the resolution as a task force recommendation to the Legislature. The motion passed. Sen. Mansell voted against the motion. Rep. Anderson was absent for the vote.

4.    Utah Economic and Business Review Reports:
    "Housing Prices and Affordability in Utah" and
    "Losing Ground - Housing Affordability and Low-Income Renters in Utah"

    Mr. James Wood, Senior Research Analyst, Bureau of Economic and Business Research,

University of Utah, indicated that he is the author of these reports. Mr. Wood discussed some of the conclusions in the studies.

    In discussing the first report, Mr. Wood indicated that rents in Salt Lake County have increased 60 percent since 1990 and moderated in '95 and '96. There are accelerating rates do to the decline in new apartment construction. New construction statewide is down 45 percent. The last conclusion from the first report was that we do need a reliable source for rental rate data. He indicated that there is a need for a routine survey of the metropolitan and non-metropolitan area looking at rates and developing good survey techniques.

    Mr. Wood reported that the second report examines the recent increases in housing prices on single family homes. He stated that housing prices have increased more in the last five years than in any other state and noted that the data comes from a federal government source. If the data is taken from 1980 - 1987, Utah ranks tenth with an average annual price increase of approximately 5 percent over that period. In conclusion, Mr. Wood indicated that there is not a wide spread housing affordability crisis for most Utah households. Existing home price sales have been near record levels and home ownership rates in Utah have increased over that period. Mortgages have been below 8 percent for the last four or five years making it possible for people to afford homes. Mr. Wood emphasized that the affordability index measures only the condition of the medium income families and that there is little consolation for lower income families. He indicated that apartment structures declined 45 percent but that it is not a reflection of market conditions.

    Chair Montgomery said affordability to the first home buyer with very low income is real and getting worse. One of the interests of the committee is to try and improve that situation.

    Rep. Harper asked Mr. Wood if he has recommendations for the task force. Mr. Wood stated that any initiative should begin at the state level and for the committee to look at what other communities and states have done in their efforts to increase low-income family housing. He said that there needs to be more uniformity in local zoning and regulations.

    Rep. Harper asked what can be done to reduce the ordinate amount of pressure on elected official in answering questions on these issue. Mr. Wood recommended starting with implementation and enforcement and indicated that these ordinances are not only local but effect the general welfare of the state.

    Sen. Mansell explained that the reason for inflation on housing has taken place is not the lack of availability. The key is affordable new housing.
    
    Ms. Karen Silver, Salt Lake Community Action Program, said that her agency does foreclosure counseling. She said that the agency is seeing people in higher and medium homes that are able to maintain payments. Ms. Silver indicated that there is more selective zoning that is exclusionary to families and recommended looking at our marketing issues and localities.

    Ms. Carmen Hamilton, Mortgage Specialist/Key Bank, shared with the committee an unfair incidence that she had witnessed regarding zoning.

    Chair Montgomery questioned whether the state has a responsibility of requiring local government to prevent these kinds of exclusionary practices. He said that this issue may be an area that the committee should get involved in.

    Ms. Linda Fox, Public Affairs, said that her agency has talked with a number of production homebuilders discussing what they are trying to accomplish in the market place. Some of the frustrations are price of land and the process of getting approvals. Ms. Fox stated that if there is legislation, it has to be incentive based rather than something that punishes local government.

5.     Redevelopment for Affordable Housing - Chair Montgomery introduced this agenda item. Ms. Alice Steiner, Utah Redevelopment Agency Association, and Executive Director, Salt Lake City Development Agency addressed the committee. She distributed a handout from which she gave her presentation. She discussed the statutory purposes of redevelopment agencies: 1) improve blighted areas, both residential and commercial; 2) encouraging economic development which results in new jobs for the state as a whole; and 3) encourage development of affordable housing. Ms. Steiner then explained the process of developing redevelopment and economic development plans.

    Chair Montgomery asked Ms. Steiner if there are any regulatory barriers that would increase the agencies chances to divert moneys into affordable housing. Ms. Steiner's reply was if communities felt they had an obligation to provide affordable housing they would view affordable housing as a more viable plan in the community.

    Committee discussion followed Ms. Steiner's presentation.
    
6.    Discuss Task Force Priority Topics - Committee members completed a survey prioritizing potential discussion topics. The results of the survey were provided to the committee.

     MOTION: Rep. Bigelow moved that the task force at its next meeting discuss the topics in the order the task force prioritized the topics. The motion passed unanimously.
                                            
7.    Future Meeting Dates - The task force discussed the following two meeting dates:
    Tuesday, October 14, 1997 at 9:00 am
     Monday, November 10, 1997 at 9:00 a.m.

6.    Adjourn - Rep. Harper moved to adjourn. The motion passed unanimously. Chair Montgomery adjourned the meeting at 12:01 p.m.

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