Wednesday, March 14, 2018
Developing Incentives
Posted By Babs De Lay on March 14, 2018, 11:00 AM
Let's talk about some affordable housing realities. I know I've pointed out during the past year that affordable housing is rare and getting harder to find. This isn't just a Salt Lake City problem; it's a big city problem throughout the U.S., especially in areas with booming tech and other profitable industries.
Seattle is a great example of what could be coming our way. They've had a massive population influx in the past two decades, and The Seattle Times declared, "Amazon so dominates Seattle that it has as much office space as the city's next 40 biggest employers combined." With that much office space comes thousands of employees who need a Google's worth of housing. GeekWire noted last October that Seattle was indeed the nation's top real estate market thanks to tech giants like Amazon (and, oddly to me, local breweries—there's one microbrewery per every 19,000 people). They add, "12 percent of workers are employed in a STEM [Science, Technology, Engineering, Math] job."
Seattle city officials have been desperately trying to work with developers to deal with the housing crunch and massive rents. They came up with what they call the "grand bargain," which would allow builders/developers put in taller and denser buildings in core areas of Seattle if they include housing units that blue collar folk could afford.
Honolulu, San Francisco, New York and Washington, D.C., have laws in place requiring developers to include affordable units in their construction plans. Salt Lake City is trying to do the same. Here's the rub, though: When you require a developer to put, say, 20 percent of its new-construction inventory as low-income housing, the developer has to pass on their rent loss to the other 80 percent of tenants. If rents in a new building were planned at $1,500 for each two-bedroom apartment, and a law mandates that 20 percent of the units could only rent for $800 per month, then $700 would have to be added onto the other rentals. Thus: Rents are going up.
Bringing this all home, Utah County is marketing a $200-million "Mountain Tech" commercial and industrial development right off the Pleasant Grove Boulevard freeway exit, with 10 buildings expected to mar the landscape.
The Silicon Slopes might be great for our economy, but its terrifying for renters in both Utah and Salt Lake counties.
About The Author
Babs De Lay
A full-time broker/owner of Urban Utah Homes and Estates, Babs De Lay serves on the Salt Lake City Historic Landmark Commission. A writer and golfer, you'll find them working as a staff guardian at the Temple at Burning Man each year.
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