There is no one singular solution to Utah’s Housing Crisis. Rather, the Kem C. Gardner Policy Institute has identified five “best practices” for meeting the housing affordability challenge in Utah. This article will discuss real-life examples of success stories in Utah that have utilized TIF to grow and develop.
When considering solutions to Utah’s housing shortage, there is always one significant barrier: money. Houses are expensive. This is especially true now, as land, labor, and material costs have skyrocketed in the past year. Luckily, there is one solution that literally pays for itself: tax increment financing.
Redevelopment agencies (RDAs) in Utah have used tax increment financing for over 50 years to spur economic development. It is used to help finance investment in a targeted geographical area designated as a project area. At the establishment of a project area, the current local property tax revenue from the land and structures within the project area becomes the “base” amount of property tax revenue.
Over years of economic development in the project area, property values rise, and property tax revenues increase. This incremental increase in property taxes above the established “base” amount provides the funding for redevelopment — financing infrastructure and construction. This process makes project areas a self-financing source of funding for affordable housing projects.
Not only is tax increment financing cost-effective, but is also proven to be effective in our state. For example, in 1996, the RDA of Salt Lake City created the West Capitol Hill Project Area. Since then, the project area has generated $5.8 million in tax increment financing, which has been used to revitalize the neighborhood, build a plaza and library, and develop 12 owner-occupied townhomes. Even now, 252 market-rate rental units and 12 two-bedroom units are under construction.
More recently, the RDA of Murray created the Fireclay Redevelopment Area in 2005, and the tax increment was triggered in 2014. Since then, the tax increment funding has raised $800,000 annually, and the project area has seen several large apartment communities with affordable and market-rate units. The area’s success prompted agreements with Hamlet Homes, Fireclay Investment Partners, and Parley’s Partners. Those agreements resulted in over 500 market-rate units and over 200 tax credit units.
Tax increment financing is an efficient and viable solution to Utah’s housing crisis. It provides a self-financing method of development and does not require approval at the ballot box or approval by federal agencies or politicians. Best of all, it gives redevelopment agencies the funds to work with other organizations on our common goal: to increase the supply of affordable housing.
As businesses, you can play a role. We will be sharing videos from trusted community partners that we encourage you to share widely — along with articles and blog posts with vital information on the housing crisis each Utahn now faces. Together, we will work to close the gap and ensure that we — and our children and grandchildren — can continue to access safe and affordable housing in our great state.
*If you would like to share your story of how the housing crisis is affecting your business, please reach out to Ginger Chinn, Vice President of Public Policy at email@example.com.