Mayor Marcus Stevenson's Monthly Message (August 2023)
Affordable Housing: What is it, how does it get developed, and what other programs exist?
While the term “affordable housing” gets thrown around a lot, there is often misinformation and confusion about what affordable housing is, and what it isn’t. I intend to give a quick overview about what is defined as affordable housing, how affordable housing gets developed, and what other programs Midvale City offers to those who may be struggling to afford housing or maintain their home.
What is Affordable Housing
“Affordable housing” most often means housing where the household income is 80% or less of the area median income (AMI), and the household does not spend more than 30% of their income on housing, including utilities. This definition is based on research that shows when families spend more than 30% of their income on housing, it becomes challenging for them to meet other essential needs such as food, healthcare, and education.
The “area” within AMI, is Salt Lake County, as Federal law requires municipalities to use the county’s median household income when calculating eligibility for various housing programs. In short, with the household AMI in Salt Lake County being $82,200 per year, a housing unit that costs $19,680 per year would be affordable for a household making 80% AMI ($65,600).
Midvale’s median household income is only around $66,000 per year, which is significantly lower than the county’s, meaning a larger portion of our residents are eligible for housing programs, and are more likely to need them. This is important to note because sometimes “affordable housing” can create negative assumptions about what type of people live in these units, but according to this, the average Midvale resident could need this assistance. Midvale City recognizes that 80% AMI doesn’t meet the needs of many in our community, so we often focus on incentivizing projects that are reserved for households that earn 60% AMI or below.
How does Affordable Housing get Developed
While there is a significant need for more affordable housing, cities are constrained by state and federal laws in how we can directly affect housing prices. In short, cities can reduce housing costs by reducing fees or building more densely to meet the demand – we are not allowed to implement rent control or mandate affordable housing through zoning. Because we cannot mandate affordability, this means to bring in affordable housing units, it often happens by incentivizing developers.
While these incentives are an important piece of the affordable housing puzzle, cities must negotiate with developers on both a monetary amount and the length of time that units remain affordable. In the simplest terms, the more money that a city invests, the longer the units will remain affordable. This balance means that many affordable housing units that are privately built only remain affordable for 5-20 years.
Last year, Midvale City invested about $1.7 million to bring in new affordable housing units, and this year we plan to invest at least $1.9 million. These two investments will add 81 new affordable units, bringing our total number of affordable units up to almost 1,800. These investments will further help ensure that we meet the needs of all our residents.
Midvale City’s funding for affordable housing primarily comes from the Redevelopment Agency (RDA) and its project areas throughout the city: Bingham Junction, Jordan Bluffs, and Main Street. I explained RDAs and how they are funded in my December 2022 article, where I described how our RDA must contribute 20% of its revenue to support affordable housing projects and initiatives. Our financial contributions, combined with Salt Lake County, the State of Utah, the Federal government, and private investments combine to fund needed affordable units in our community.
What Else is the City Doing
In addition to incentivizing affordable housing through monetary contributions to housing projects, Midvale is in the process of starting new programs for first-time homebuyers and current homeowners, also funded through our RDA. These new programs should be up and running by the end of 2023.
Down Payment Assistance Program – this program will provide affordable or forgivable loans for low to moderate income first-time home buyers in Midvale City. The program seeks to provide equitable access to home buying, provide education to Midvale residents on home ownership, and increase home ownership in Midvale City. The program will provide up to $20,000 per loan for non-Midvale residents and up to $25,000 for Midvale residents or employees of a public entity within Midvale. To qualify, the resident or employee must have lived in Midvale or worked for a public entity located within Midvale for at least one year.
Home Repair Loan Program - is designed to provide funding for improvements to address emergency repairs, eliminate blight, conserve energy, and preserve the housing community within the city limits of Midvale City. Funds are available on a first-come, first-served basis for those who are low to moderate income.
The Big Picture
Whether it be our kids looking to stay in the area they’ve grown up, our adults who may be struggling to keep up with the rising housing costs, or our seniors who may be on a fixed income, Midvale should be a community, where regardless of your income level, you can find housing you can afford. We’ve historically been a welcoming community, and we’ve played our role in providing affordable housing, and it’s important that we continue to play this role while ensuring that our community is given the support that we deserve.