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 go in-depth into the inner workings of redevelopment agencies and how the funds essentially raise themselves.
Utahns have long been known for their self-sufficiency. This reputation of preparedness comes from decades of smart economic decisions and financial readiness. That’s why we know that if any state can tackle the housing affordability crisis, it’s Utah. One money-smart way to begin the process is by using tax increment financing (TIF), a solution that pays for itself.
Redevelopment agencies in Utah have used tax increment financing for over half a century to spur economic development. Tax increment financing is used to help finance investment, generally for 20 to 25 years, 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.
As economic development occurs in the project area, property values rise, and property tax revenues increase. The incremental increase in property taxes above the “base” amount provides the funding for redevelopment. The tax increment funds often finance an RDA bond for infrastructure development — roads, sidewalk, utilities, sewer, etc. — or the funds can be used to pay for land and construction of affordable housing within the RDA.
In the past 50 years, more than 13,000 housing units have been facilitated by tax increment financing in Utah cities, enabling hundreds of thousands of residents to have safe and affordable housing. Best of all, the project areas continue to provide funding decades after being built and do not require approval at the ballot box or from federal agencies or politicians. Every penny made is put right back into improving Utah’s housing options.
Tax increment financing is an efficient and viable solution to Utah’s housing crisis that aligns with Utahns values of financial preparedness and self-sufficiency. By providing a self-financing method of development that continues to invest in itself, TIF can be a vital step in our journey towards closing the housing gap.
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 gchinn@slchamber.com.
