Utah Housing Policy

Office of the Legislative

Auditor General

Utah Housing

Policy

Report No. 2023-16

Report to the UTAH LEGISLATURE

A Performance Audit of

A Case for Statewide Strategic Planning

and Accountability

Audit Subcommittee

President J. Stuart Adams, Co-Chair

President of the Senate

Senator Evan J. Vickers

Senate Majority Leader

Senator Luz Escamilla

Senate Minority Leader

Speaker Brad R. Wilson, Co-Chair

Speaker of the House

Representative Mike Schultz

House Majority Leader

Representative Angela Romero

House Minority Leader

Audit Staff

Kade R. Minchey, Auditor General, CIA,

CFE

Leah Blevins, Audit Manager, CIA

Jake Dinsdale, Senior Audit

Supervisor, CIA

Tanner Taguchi, Audit Staff

Whitney Fitzgerald, Audit Intern

Office of the Legislative Auditor General

olag.utah.gov

The mission of the Office of the Legislative Auditor General is to serve the Utah Legislature and

the citizens of Utah by providing objective and credible information, in-depth analysis, findings,

and conclusions that help legislators and other decision makers: Improve Programs, Reduce Costs,

and Promote Accountability

Office of the Legislative

Auditor General

Kade R. Minchey, Legislative Auditor General

W315 House Building State Capitol Complex | Salt Lake City, UT 84114 | Phone: 801.538.1033

November 14, 2023

TO: THE UTAH STATE LEGISLATURE

Transmitted herewith is our report:

“A Performance Audit of Utah Housing Policy” Report #2023-16.

An audit summary is found at the front of the report. The scope and objectives of the audit

are included in the audit summary. In addition, each chapter has a corresponding chapter

summary found at its beginning.

This audit was requested by the Legislative Audit Subcommittee.

We will be happy to meet with appropriate legislative committees, individual legislators,

and other state officials to discuss any item contained in the report in order to facilitate the

implementation of the recommendations.

Sincerely,

Kade R. Minchey, CIA, CFE

Auditor General

[email protected]

Audit Subcommittee of the Legislative Management Committee

President J. Stuart Adams, Co-Chair | Speaker Brad R. Wilson, Co-Chair

Senator Evan J. Vickers | Representative Mike Schultz

Senator Luz Escamilla | Representative Angela Romero

AUDIT SUMMARY

REPORT #2023-16 | November 2023

Office of the Legislative Auditor General | Kade R. Minchey, Auditor General

KEY FINDINGS

PERFORMANCE

AUDIT

RECOMMENDATION:

DTS should ensure it strives to reach the

performance metrics for critical incidents

that heavily impact agencies’ business.

AUDIT REQUEST

This audit was requested by

the Legislative Audit

Subcommiee to review state

and local policies related to

quality, eﬃcient, and eﬀective

housing in the state of Utah.

Our eﬀorts were primarily

focused on the middle of the

market where ﬁrst-time

buyers are hoping to aain

home ownership.

RECOMMENDATIONS

1.1 Time is running short to accelerate action on housing

policy.

1.2 Utah should adopt state-level measures and targets for

housing needs and construction.

2.1 The Legislature could change local land use regulations to

overcome regulatory limits on population growth.

2.2 To encourage statewide housing goals, Utah could

implement incentives and penalties for noncompliance.

3.2 Concerns about city compliance with speciﬁc requirements

and timeliness were largely unfounded.

UTAH HOUSING POLICY

1.1 The Legislature should require the creation of a state-level

strategic plan for housing in Utah, including goals to address the

current housing shortage and forecasted population growth.

1.3 The Legislature should consider the range of state-level

policy options presented in this report to create a program to set

and manage state-level housing production targets.

2.2 The Legislature should consider options to increase zoning

density on a wide scale within the state.

2.3 The Legislature should consider policy options to craft

additional penalties and incentives associated with housing

targets to better ensure local government compliance.

3.1 As part of any statewide housing strategic planning, the

Legislature should consider metrics to better track both actual

and potential housing production.

BACKGROUND

Utah's signiﬁcant population

growth—combined with

slower housing production—

has resulted in a shortage of

housing units.

Without enough housing to

satisfy demand, home prices

have increased, making it

diﬃcult for buyers to ﬁnd

housing at an aﬀordable price.

Because the lack of housing

aﬀordability negatively

impacts critical areas of public

policy, the need to address

this issue is a strategic

imperative for policymakers at

all levels of Utah government.

Summary continues on back >>

AUDIT SUMMARY

CONTINUED

Going Forward, Utah Needs

to Build 27,900 Housing

Units per Year to Keep Up

with Forecasted Growth

Our team analyzed both historic

building permit data and household

population forecasts. We found that

Utah needs near record levels of housing

construction over the next 20 years to

avoid a worsening housing shortage.

decentralized and are made at the county and city

level. There is currently no state-level forecast of

housing needs, or eﬀorts to set statewide housing

strategy or measure progress toward a common

goal.

2.2 To Encourage Statewide Housing

Goals, Utah Could Implement Incentives

and Penalties for Noncompliance

While 2020-2022 saw Utah cities issue record

numbers of building permits, cities that prefer

single-family homes or low-density zoning can use

their authority to stiﬂe multifamily or high-density

residential projects.

If statewide housing goals are created, housing

policy research shows that incentives and penalties

are needed to hold local leaders accountable to

those goals.

1.1 Time Is Running Short to Accelerate

Action on Housing Policy

A long-term analysis of city planning data highlights

the risk of running out of space for housing,

supporting the importance of strategies to deliver

more space-eﬃcient housing options.

If cities do not allow for the construction of more units

on less land, parts of the Wasatch Front could begin to

run out of housing capacity in less than 20 years.

1.2 Utah Should Adopt State-Level

Measures and Targets for Housing Needs

and Construction

The shortage of housing in Utah, and the economic

pain associated with it, are a collective problem.

However, the regulatory decisions that most directly

impact the pace of housing production are

REPORT

SUMMARY

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

,000

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

Residential

Units Permitted

per Year (Actual)

Projected Need for Residential

Units (Household Growth)

Table of Contents

Introduction ........................................................................................................... 1

Accelerating Housing Production Is a Strategic Imperative for the State of Utah ...................... 1

Local Governments Are Essential Partners with the State to Ensure Sufficient Housing ......... 3

Chapter 1 The Legislature Should Create

State-Level Housing Policy Objectives ..................................................................... 7

1.1 Time Is Running Short to Accelerate Action on Housing Policy ............................................7

1.2 Utah Should Adopt State-Level Measures and

Targets for Housing Needs and Construction ............................................................................ 14

Chapter 2 Facing Similar Housing Markets, Other States

Have Created Policy Focused on Local Governments ............................................ 23

Utah Has Recently Passed Policy to Increase Housing

Affordability, but Other States Have Gone Further .................................................................. 23

2.1 The Legislature Could Change Local Land Use Regulations

To Overcome Regulatory Limits on Population Growth .......................................................... 24

2.2 To Encourage Statewide Housing Goals, Utah Could

Implement Incentives and Penalties for Noncompliance ......................................................... 29

Chapter 3 Cities Differ in Their Attitudes and

Approaches toward Housing ................................................................................. 35

3.1 Some Cities Have Used Their Broad Land

Use Authority to Circumvent New Laws ................................................................................... 35

3.2 Concerns about City Compliance with Specific

Requirements and Timeliness Were Largely Unfounded ......................................................... 37

3.3 Data about Entitled Units Does Not Give an

Accurate Sense of Near-Term Housing ..................................................................................... 38

Complete List of Audit Recommendations ............................................................ 41

Appendices ........................................................................................................... 45

A. Wasatch Front Regional Council – Explanation of

Real Estate Market Development Model Analysis .................................................................... 47

B. Analysis of Residential Units Permitted from 1994-2022 .................................................... 49

Agency Response .................................................................................................. 55

Office of the Legislative Auditor General

Introduction

Accelerating Housing Production Is a Strategic

Imperative for the State of Utah

Utah’s significant population growth—combined with slower housing

production after the Great Recession—has resulted in a shortage of housing

units. Without enough housing to satisfy demand, home prices have increased,

making it difficult for first-time and lower-income buyers to find housing within

an affordable price range.

According to state demographers, Utah is expected to

continue to experience significant population growth. These factors lead housing

analysts to believe that Utah’s shortage of housing units will get worse before it

gets better.

Because the lack of housing affordability negatively impacts

critical areas of public policy—including the state’s economy,

labor market, and transportation—the need to address this

problem is a strategic imperative for policymakers at all levels

of Utah government. Rallying together to make the most of

today’s opportunities to wisely accelerate housing production

can help Utah overcome the effects of chronic housing

shortages that are also seen across the country.

This report makes the case that the Legislature is well positioned to establish a

state-level housing strategy—combined with proper legal incentives—to better

guide land use decisions made by local governments. Without an overarching,

unifying goal, Utah will miss opportunities to address the housing needs of a

growing population.

The Department of Housing and Urban Development deems housing as affordable when the

occupant pays no more than 30 percent of gross income for housing costs, including utilities.

Kem C. Gardner Policy Institute; see Chapter 1 for an expanded discussion of this point. Though

deficient housing supply is a driving component of Utah’s housing problems, other significant

factors—like mortgage interest rates and the cost of construction materials and labor—also

impact housing affordability.

Utah’s rapidly

growing population,

combined with

historically low

housing production,

has resulted in a

housing unit

shortage.

A Performance Audit of Utah Housing Policy

State Policymakers Have Already Acted to

Address Housing Affordability

Utah's political leaders have already set housing affordability as a policy priority,

stating that the construction of higher density, owner-occupied housing units

will enable upward mobility for young families, setting them on the path of

home ownership and equity. Leaders have warned that without smart policies to

keep up with the growth associated with a strong economy, there is a risk that

Utah’s future potential for prosperity will be limited.

Over the last several years, the Legislature has passed numerous bills to address

different aspects of the state’s housing problem, including the five highlighted

below.

Source: Auditor generated from Utah Legislature website.

In addition to the Legislature, other governmental entities are working to

address housing affordability issues.

 The governor has said, “We want to make sure that this is a place where

our kids and grandkids can live the same types of amazing lives we

have.” To that end, his office recently issued the Guiding Our Growth

survey to citizens, asking for input on the approach the state should take

to address our growing population.

Office of the Legislative Auditor General

 The Commission on Housing Affordability includes members from

several public and private entities who provide a diverse set of

perspectives and propose policy recommendations for the state.

 The Division of Housing and Community Development reviews

moderate-income housing plans prepared by local

governments. This function is intended to hold local

governments accountable for implementing required

housing measures.

 Local governments participate in crafting housing

legislation and are on the front lines of implementing

new housing initiatives.

Despite the work of these groups to address housing issues, the

information presented in this report shows that Utah could be

better positioned to provide affordable home ownership

opportunities for individuals and families.

Local Governments Are Essential Partners

with the State to Ensure Sufficient Housing

Municipalities and counties are key partners in addressing the housing shortage,

because statute grants them broad powers to control the pace and density of

housing development. Utah Code

spells out the sweeping authority given to

cities and counties concerning housing production, stating:

If a city and its leadership want to accommodate growth, they can use these

statutory powers to balance the need for housing with important factors such as

traffic, infrastructure, and projected tax revenues. Indeed, some Utah cities are

doing just that.

See Utah Code 10-9a and 17-27a, the Land Use, Development, and Management Acts for

municipalities and counties, respectively.

"To accomplish the purposes of this chapter, a municipality (or county) may enact

all ordinances, resolutions, and rules and may enter into other forms of land use

controls and development agreements that the municipality (or county) considers

necessary or appropriate for the use and development of land."

Utah Code 10

102(2) and 17

27a

102(1)(b):

Cities that want

growth have

exhibited the

ability to

accommodate it.

Conversely,

cities that do not

want growth can

control it by

limiting the pace

and type of

development.

A Performance Audit of Utah Housing Policy

However, if a city’s residents and leaders oppose housing growth, or if they want

only single-family detached homes—a recipe for trouble as Utah continues to

grow—the city’s elected leaders can use their statutory powers to stifle housing

construction, essentially pushing the problem to its neighboring governments.

This audit report summarizes policy ideas from across the country showing how

states can collaborate with local governments and provide incentives to motivate

desired outcomes.

CHAPTER 1 Summary

The Legislature Should Create State-Level Housing Policy Objectives

State policymakers have prioritized addressing Utah’s rapid growth and accompanying housing demand.

However, significant obstacles prevent Utah from achieving its housing goals. The increase in housing

demand has not been met with adequate supply. While Utah cities have approved record numbers of

residential building permits in recent years, Utah is still experiencing a housing shortage.

BACKGROUND

Other states are beginning to address their own housing shortages. Each state’s approach is different,

providing a range of state intervention and local control. Utah policymakers should consider the approaches

other states have taken to determine whether a combination of these policies would incentivize housing

production and improve affordability.

CONCLUSION

NO RECOMMENDATION

FINDING 1.1

Time Is Running Short to

Accelerate Action on

Housing Policy.

RECOMMENDATION 1.1

The Legislature should require the creation of a state-level

strategic plan for housing in Utah. This plan should define

success and include goals that specifically address the

current housing shortage and forecasted population growth.

RECOMMENDATION 1.2

The Legislature should consider amending the land use,

development, and management acts at both the county and

city level to clearly emphasize housing production and

affordability as primary goals of land use regulations.

RECOMMENDATION 1.3

With information gathered from strategic planning, the

Legislature should consider the range of state-level policy

options presented in this chapter to create a program to set

and manage state-level housing production targets.

FINDING 1.2

Utah Should Adopt State-

Level Measures and Targets

for Housing Needs and

Construction.

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

Chapter 1

The Legislature Should Create

State-Level Housing Policy Objectives

To address several broad topics related to housing in Utah, we have organized

our main research and policy findings across chapters 1 and 2 of this report. In

this chapter, we describe how local governments could be planning better for

future population growth and how state-level guidance is needed to set

meaningful policy targets and strategy. Chapter 2 explores local-focused housing

policy options the Legislature may wish to implement.

1.1 Time Is Running Short to

Accelerate Action on Housing Policy

A long-term analysis of city planning data highlights the risk of running out of

space for housing, supporting the importance of strategies to deliver more space-

efficient housing options. Utah’s record population and household growth has

outpaced housing production, leaving the state with a shortage of housing units.

Housing experts believe this shortage will get worse in coming years, and our

analysis supports this idea. This shortage is the main reason housing is

unaffordable for many Utah residents. We believe the Legislature should

consider taking action to orient leaders at all levels of government toward a

common vision for housing.

If Cities Do Not Allow the Construction of More

Efficient Housing Options, Population Growth Could

Begin to Exceed Wasatch Front Housing Capacity in

Less Than Twenty Years

A real estate market development model based on Wasatch

Front cities’ and counties’ current general plans shows that

Utah could begin to run out of space for housing in about

twenty years. This is because general plans for parts of the

Wasatch Front do not allow for enough housing to

accommodate projected population growth.

Because people tend to live together as family members, roommates, etc., demographers use

population data to calculate the number of households that form each year. Broadly speaking,

each household needs a home, so this is a key metric in any assessment of housing supply and

demand.

Models based on

cities’ and

counties’ general

plans, along with

demographic

projections, show

that Utah could

begin to run out of

space for housing

in less than twenty

years.

A Performance Audit of Utah Housing Policy

Statute requires local governments to create general plans to set long-term goals

for, among other things, the number of housing units they want to allow.

The

Wasatch Front Regional Council (WFRC)—as part of its transportation planning

responsibility—uses an aggregated version of that general plan data from each

local government within its jurisdiction to model residential demand and

simulate real estate development.

This work is done with the engagement of the

cities and counties in the area.

The WFRC real estate model is designed to distribute forecasted, annual county-

level population, household, and employment growth.

Importantly, the WFRC

model’s baseline scenario assumes that cities will allow more housing and other

development in city and town centers that cities have helped identify as part of

the Wasatch Choice regional vision process.

To show how critical these city and town centers are for future housing capacity,

we requested that WFRC run a ‘no-centers’ scenario with their model, removing

the centers from the analysis for cities that have not yet included them in their

general plan. In other words, because some cities have not formally committed

to—and are not bound by—the center-based planning work, we wanted to see

what may happen if the cities never adopt the centers as envisioned.

As Figure 1.1 shows, the resulting ‘no-centers’ model indicates that if local

governments in Salt Lake and Davis counties do not allow for more housing in

their general plans, they could begin to run out of space for housing before 2050.

We believe this paints a picture of a system in need of unifying targets and

strategy.

See Utah Code 10-9a-403 and 17-27a-401. Although city general plans are only advisory (see

Utah Code 10-9a-405), they represent the most concrete efforts to show “the long-term goals and

the proposed extent, general distribution, and location of land for housing for residents of

various income levels” (see Utah Code 10-9a-403(2)(a)(i)(A) and (2)(a)(iii)). In contrast, cities’

zoning maps reflect land types and uses currently in effect. Zoning changes often are checked

against the general plan to verify that the proposed change is in harmony with long-term goals.

The Wasatch Front Regional Council is an Association of Governments (AOG) and also serves

as a Metropolitan Planning Organization (MPO). The Council focuses its transportation analysis

and planning efforts on Weber, Davis, and Salt Lake Counties.

The Kem C. Gardner Policy Institute generates these growth forecasts as discussed later in this

chapter.

To explore these potential city and town centers, see the interactive Wasatch Choice map at:

https://wasatchchoice.org/vision-map/

Office of the Legislative Auditor General

Figure 1.1: A Growth Model Using Current General Plans Shows Salt Lake and Davis

Counties Approaching Full Capacity in the 2040s. If cities allow more space-efficient

housing on less land in city and town centers, the model shows that these two counties can

absorb population growth through 2050. While this is far from a perfect vision of the future,

we believe these results should spur discussions about policy action that is more ambitious,

coordinated, and strategic.

Source: Wasatch Front Regional Council; see Appendix A for the full text of the WFRC analysis.

As Figure 1.1 shows, current housing plans in Salt Lake and Davis counties do

not have enough room to accommodate official household growth projections.

The good news, however, is that if cities in these counties commit to strategies

like wisely planned city and town centers, where more housing units are built on

less land, both counties should be able to provide enough housing capacity to

meet forecasted growth through 2050. This potential for

meaningful change is key to the recommendations later in this

chapter.

Notably absent from Figure 1.1 are other Wasatch Front

counties and high-growth areas like Utah, Weber, and

Washington counties. These areas have undergone similar

modeling and were found to have enough capacity for

household growth through 2050.

However, additional details

about these growth models can provide useful context for both state and local

land use policy.

Weber County was included in the WFRC modeling analysis reflected in Figure 1.1.

Cities can plan

better to

accommodate

forecasted growth.

The Legislature

can help by setting

targets and

strategy.

A Performance Audit of Utah Housing Policy

Taken together, these factors paint a picture of a system in need of unifying

targets and strategy. Our audit team, along with housing policy experts, believes

that the state Legislature is best positioned to provide such

targets and strategies. We discuss this policy option more fully

later in the chapter.

It is encouraging that many local governments already seem

to recognize the need to increase housing density in strategic

ways. The WFRC cities’ stated intent to develop higher

density city and town centers, while not yet fully

implemented in local land use policies, is a clear sign that

conversations are already taking place to meet the challenge of

population growth by building more housing units on less

land.

The Legislature

may wish to create

policy requiring

more ambitious,

coordinated action

at the city and

county level to

ensure that land

use policies are

serving the long-

range goals of the

state.

Office of the Legislative Auditor General

Housing Construction Must Accelerate Significantly to

Keep Pace with Household Growth Forecasts

Looking to the future, state demographers at the Kem C. Gardner Policy Institute

(GPI)

predict that Utah will continue to see significant household growth

through the coming decades, as shown in Figure 1.2.

Figure 1.2: State Demographers at GPI Project That More Than a Million New

Households Will Be Formed in Utah by 2060. From 2020 to 2040 alone, more than

550,000 new Utah households are expected. Ideally, each household would have a place to

live.

Source: Kem C. Gardner Policy Institute, 2020–2060 Projections (rounded).

Comparing the significant growth forecast in Figure 1.2 against the historical

pace of housing construction gives a sense of the scale of construction needed to

keep up with Utah’s growing population. Figure 1.3 plots GPI data about

historical residential building permits next to GPI data about future household

projections. The comparison demonstrates that to keep pace with growth, Utah

will need more new housing units per year than what has been built in any prior

year since 1994 (except for 2005 and the period from 2020 to 2022).

The Kem C. Gardner Policy Institute is designated in statute as the official source for Utah

demography analysis and forecasts. GPI also produces authoritative analyses and forecasting of

housing supply and demand in Utah.

A Performance Audit of Utah Housing Policy

Figure 1.3: Going Forward, Utah Needs to Build 27,900 Housing Units per Year to

Keep Up with Forecasted Population Growth. More housing units per year are needed than

have been built in any prior year since 1994 (except for 2005 and the period from 2020 to 2022).

Source: Auditor analysis of GPI’s Ivory-Boyer construction database, household shortage calculations, and

household growth projections.

* See Appendix B for an analysis of residential units permitted from 1994-2022.

The magnitude of housing development required to erase the current housing

deficit and keep pace with projected growth is clear in Figure 1.3. Although

governmental entities do not directly build housing, setting the right mix of

public policy could create more favorable conditions to create housing at the

level needed to keep pace with population growth. To be clear, attempting to

build out of a housing shortage is a difficult task, and there are very few success

stories to draw lessons from. Nevertheless, because the supply shortage is the

root of the problem, increasing the supply of housing is an essential strategy.

Every additional unit provides a home for an additional family. We believe

policymakers at both the state and local level can take significant steps to create a

better environment for housing development.

Record Population Growth Will Likely Continue

to Outpace Housing Construction

To keep pace with growth, Utah will need more new housing units per year than

what has been built in almost any prior year since 1994. According to Census

2020 data, Utah’s population grew about 18 percent between 2010 and 2020. This

was the highest growth rate in the nation at the time and was well above the

national average of 7 percent.

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

Projected Need for Residential

Units (Household Growth)

Residential Units Permitted

per Year (Actual)*

Office of the Legislative Auditor General

Because people tend to live together as family members, roommates, etc.,

demographers use population data to calculate the number of households that

form each year. Broadly speaking, each household needs a home, so this is a key

metric in any assessment of housing supply and demand. Housing analysts at

GPI have compared data on Utah households against

the rate of residential construction since 2010 and

found that home construction has not kept pace with

growth. The shortage of housing units has ranged

from approximately 28,000 to 56,000.

Figure 1.4 shows these GPI estimates of Utah’s housing shortage over time. For

example, by 2017, there was a shortage of 56,230 housing units relative to the

increase in the number of households since 2010. With record housing

construction, the shortage fell to 28,415 in 2021 but, concerningly, GPI is

forecasting that the shortage will begin to climb again through 2024.

Significantly, at no point since 2011 has Utah had enough housing.

Figure 1.4: Utah Lacks Enough Homes to Keep Pace with the Growing Number of

Households. GPI analysts predict that the housing shortage will increase in future years.

Source: Kem C. Gardner Policy Institute.*

*The housing shortage is calculated by comparing annual residential construction permits against household

formation. When household formation is greater than unit construction, an annual housing deficit results

and is carried into the next year’s analysis where the process is repeated.

Even though construction outpaced household formation from 2018 to 2022,

reducing Utah’s overall housing shortage during that period (see Figure 1.4), GPI

estimates that Utah currently lacks around 28,000 units relative to new

households in the state since 2010.

56,230

28,415

37,255

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

10,000

20,000

30,000

40,000

50,000

60,000

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Utah's Housing Shortage

Utah’s shortage of

housing units has

ranged from

approximately

28,000 to 56,000.

A Performance Audit of Utah Housing Policy

1.2 Utah Should Adopt State-Level Measures and Targets for

Housing Needs and Construction

The shortage of housing in Utah, and the economic pain associated with it, are a

collective problem. However, the regulatory decisions that most directly impact

the pace of housing production are decentralized and are made at the county and

city level. There is currently no state-level forecast of housing needs, or efforts to

set statewide housing strategy or measure progress toward a common goal.

Aside from the immediate pain felt by individuals and families who cannot

afford to buy a home, unaffordable housing can negatively impact the larger

economy. One study shows that constraints on housing lowered aggregate

economic growth across neighboring cities because workers were less able to

access job centers.

Unaffordable housing near job centers can also lead to an

increase in traffic demand and congestion as people find homes elsewhere and

then must commute longer times and distances to work. Housing policy analysts

and academic researchers have also identified a strong connection between high

rent prices and homelessness.

After three years of population decline, a 2023

poll in California found that nearly half of respondents were

considering leaving the state, primarily due to the high cost of

living driven by high housing costs.

Multiple housing experts point to state government as the

best-positioned level of power to craft broad housing policy.

A state-level housing strategy—along with proper incentives,

and penalties (see Chapter 2)—could better organize

decentralized local government decisions toward meaningful

targets for housing production. It could also provide

important political cover for local leaders who can face intense

The Division of Housing and Community Development is currently working with the Kem C.

Gardner Policy Institute to develop five-year projections of future needs for moderate and

affordable rental housing.

Chang-Tai Hsieh and Enrico Moretti, “Housing Constraints and Spatial Misallocation,”

American Economic Journal: Macroeconomics 11, no. 2 (April 2019): 1–39.

Alex Horowitz, Chase Hatchett, and Adam Staveski, How Housing Costs Drive Levels of

Homelessness (Philadelphia: Pew Charitable Trusts, 2023).

Jenny Schuetz, How Can State Governments Support Healthier Housing Markets? (Washington, DC:

The Brookings Institution, 2021); Shazia Manji, Truman Braslaw, Chae Kim, Elizabeth Kneebone,

Carolina Reid, and Yonah Freemark, Incentivizing Housing Production: State Laws from across the

County to Encourage or Require Municipal Action (Berkeley, CA: Terner Center for Housing

Innovation, 2023).

A state-level

housing strategy

could better

organize

decentralized local

government

decisions toward

meaningful targets

for housing

production.

Office of the Legislative Auditor General

pressure from constituents who do not want smaller, more affordable housing in

their cities.

This problem is not unique to Utah and must be overcome to solve

the state’s housing shortage.

Given the scale of the problem, and the various stakeholders in the public and

private sectors, creating a broad strategic plan could be the best first step. A

strategic plan can gather smart ideas, set ambitious targets, and find relevant

performance benchmarks to correct Utah’s housing shortage. We see success

with such an approach in Utah’s Coordinated Action Plan for Water, produced

by multiple key stakeholders in 2022. We also see states like Oregon, Montana,

and others engaging in aggressive state-level strategic planning to combat

housing problems and preserve overall prosperity.

With a strategic housing

plan in place, the Legislature could then create the necessary statutory

framework to help ensure that the plan is implemented.

Other States Have Adopted a More Statewide

Approach to Address Housing Needs

Other states are employing a spectrum of state-level involvement to address

housing problems. In Utah, state-level regulation in housing is quite low

compared with that of the states we reviewed. The Legislature could adopt parts

of other states’ plans to create a regulatory system that meets the unique needs of

Utah and its residents.

The policy concepts we present here are relatively new, which limits our ability

to measure their effectiveness. There is a significant lag between enacting

housing policy and determining whether the policy is effective. It takes time for

state departments, local governments, and builders to determine how to

This attitude is commonly referred to as having a “not in my backyard” or NIMBY mindset.

Oregon’s Goal 10 initiative helped lay the strategy groundwork for legislation that followed. In

Montana, the governor organized stakeholders to strategize and craft legislation. In Connecticut,

a zoning atlas was created by academics and regional planners to provide better data on land use

regulations across the entire state. Utah is currently in the process of joining this effort to create

its own zoning atlas.

The Legislature should require the creation of a state-level strategic plan for

housing in Utah. This plan should define success and include goals that

specifically address the current housing shortage and forecasted population

growth.

RECOMMENDATION 1.1

A Performance Audit of Utah Housing Policy

implement the policy, additional time for implementation, and more time for the

market to respond to the changes.

Nevertheless, we believe that relevant ideas put in practice elsewhere may be

beneficial to Utah policymakers.

California has faced housing affordability problems for much longer than Utah

has. As a result, the state has been attempting to legislate solutions for years.

With California’s problems worsening, a significant revamp of state housing

policy was completed in 2017 and continued statutory amendments have

occurred since that time. Compared with other states, California is more

prescriptive and complex in its housing production goals.

In simple terms, California’s Department of Housing

and Community Development (DHCD) sets specific

goals for housing production. The goals are then

distributed to regional councils, which assign goals to

individual cities. In turn, the cities must then produce

rigorous housing plans according to state guidelines.

After a city submits a plan, DHCD reviews the plan

and ensures compliance with state statute and the

allocated housing targets. If the city meets all the

criteria, then its housing plan is certified. It is not

uncommon for DHCD and cities to go through three

to four rounds of review and revision.

According to DHCD, most cities are fully compliant with state requirements.

However, if a city refuses to comply with state requirements, there are multiple

penalties that could be applied, including:

Requirements for the plans include (1) estimating the specific housing potential of land parcels,

(2) committing to rezone the city to achieve housing targets, and (3) implementing housing

production strategies.

The approach of

distributing

statewide housing

goals to regional

governments

mirrors the way

real estate

markets function

and requires a

collective

approach to solve

a collective

problem.

California Takes an Intense State-Level

Approach to Housing Policy.

Office of the Legislative Auditor General

 Significant financial penalties up to $600,000 a month

 Decertification of housing element, leading to ministerial review

requirements for all developments

Despite the lengthy planning processes, this program has resulted in a

substantial shift in rezoning. Since 2017, cities in California have rezoned for

significantly higher densities compared to previous years. In 2021, it is estimated

that rezoning allowed for 500,000 additional units of housing. Compared with

rezoning that took place in 2014, which resulted in 50,000 additional units,

California’s 2021 rezonings are significant. Time will tell whether these changes

in land use regulation will result in more housing units and whether these new

units will improve affordability.

In 2019, Oregon began the process to create a statewide housing planning

program to assess housing needs. This would become the basis for the

Oregon Housing Needs Analysis (OHNA), enacted in 2023. Because OHNA

regulations have not been fully developed, it is difficult to

determine the effect that Oregon’s approach will have on the

state’s housing supply and prices.

The state’s role is to create housing goals in terms of housing

units. As in California, OHNA’s targets for housing

production are meant to be ambitious and motivate changes to policy.

OHNA is designed to compare a city’s progress on housing production to that of

other cities in the same region and peer cities of a similar population. Corrective

actions are taken only when a city is falling behind its peer cities or is refusing to

implement agreed-upon policy changes. Whether penalties are imposed after

corrective action is taken depends on if the city is acting in good faith with stated

housing production strategies. If a city willfully neglects its responsibility, the

state governing body issues an enforcement order to compel compliance with

stated plans.

Oregon’s program

is designed to

compare a city’s

progress to that of

other cities.

A Performance Audit of Utah Housing Policy

Instead of empowering an executive agency like California and Oregon, Montana

has recently taken a more policy-centered approach by passing multiple bills

that, broadly speaking, seek to make it easier to build housing. Some of the bills

forced certain cities to allow apartments, accessory dwelling units, and duplex

housing in more areas.

The Montana legislature also passed a spending package that includes slightly

more than $100 million for a housing infrastructure fund, about $50 million for a

mortgage assistance program, and $50 million in affordable housing loans. This

legislation passed with the support of the Montana League of Cities and Towns.

Montana’s new statute also establishes the importance of affordable housing as a

key purpose of planning in these terms:

Utah’s statute, by contrast, contains no reference to affordability among the

several purposes stated for land use, development, and management acts at both

the county and city level.

Making affordable housing a purpose for the

regulatory power of local governments could provide cities with both a mandate

and political cover to approve more affordable (i.e., smaller and denser)

development when existing residents seek to block it. Chapter 2 expands the

discussion of local-level policy options.

See Utah Code 10-9a-102 and 17-27a-102.

“Coordinated and planned growth will encourage and support sufficient housing

units for the state's growing population that are attainable for citizens of all income

levels.”

Montana Senate Bill 382 Section 2 (2)(a)

Office of the Legislative Auditor General

Utah Can Choose Variations of These Policy Options to

Create a More Tailored State-Level Approach

The approaches of California, Oregon, and Montana represent a sliding scale of

intensity in terms of state involvement in land use and housing development.

The Legislature should review options from other states and other comparable

options. A primary consideration for any pro-housing solution is the need to

ensure that the state can continue to grow and prosper. The Legislature should

not rule out ambitious options; instead, it should look to craft a solution that is

best suited for Utah’s circumstances and preferences.

When evaluating these options, the Legislature should expect to invest more

resources into the executive agencies tasked with carrying out any new

functions.

If executive agency action is needed in response to legislation in Utah, the Division of Housing

and Community Development within the Department of Workforce Services would be the most

likely agency for that. The division currently staffs the Commission on Housing Affordability and

monitors compliance with moderate-income housing plan laws.

The Legislature should consider amending the land use, development, and

management acts at both the county and city level to clearly emphasize

housing production and affordability as primary goals of land use

regulations.

RECOMMENDATION 1.2

With information gathered from strategic planning, the Legislature should

consider the range of state-level policy options presented in this chapter to

create a program to set and manage state-level housing production targets.

RECOMMENDATION 1.3

A Performance Audit of Utah Housing Policy

CHAPTER 2 Summary

Facing Similar Housing Markets, Other States Have Created Policy

Focused on Local Governments

Utah has made significant legislative efforts to encourage affordable housing, but other states have taken

more aggressive policy action to address housing underproduction. Although these policies are still

evolving—and their impact is not yet well understood—we believe Utah policymakers may wish to

consider these examples as an expanded list of what is possible. This chapter details policy options adopted

in other states that pertain to local government authority and process (whereas Chapter 1

recommendations focus on state-level policy).

Across the country, states are passing varied policies to increase the supply of affordable housing. We believe

that the Legislature should review policies on zoning reform as well as incentives and penalties from other

states and consider implementing similar programs in Utah.

BACKGROUND

RECOMMENDATION 2.1

The Legislature should consider whether to expand the

moderate-income housing plan requirements to include

forecasting benchmarks for household growth.

RECOMMENDATION 2.2

The Legislature should consider options to increase

zoning density on a wide scale within the state.

FINDING 2.1

The Legislature Could

Change Local Land Use

Regulations to Overcome

Regulatory Limits on

Population Growth.

RECOMMENDATION 2.3

The Legislature should consider policy options to craft

additional penalties and incentives associated with

housing planning and targets to better ensure local

government compliance.

FINDING 2.2

To Encourage Statewide

Housing Goals, Utah Could

Implement Incentives and

Penalties for

Noncompliance.

CONCLUSION

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

Chapter 2

Facing Similar Housing Markets, Other States

Have Created Policy Focused on Local

Governments

Utah Has Recently Passed Policy to Increase Housing

Affordability, but Other States Have Gone Further

Although Utah has made significant legislative efforts to

encourage affordable housing, other states have taken more

aggressive policy action, focusing on increasing housing

production. Although these policies are still evolving—and

their impact is not yet well understood—we believe Utah

policymakers may wish to consider them as an expanded list

of what is possible in this space.

This chapter details policy options adopted in other states

that pertain to local government authority and process.

Because data about the

effectiveness of these policies is limited, we rely heavily on scholarly work and

policy research, as cited throughout our analysis. The sections in this chapter

focus on specific policy examples in the following categories:

 Local land use regulations

 Penalties and incentives

Broadly speaking, scholars have found that pro-housing policy often develops

over multiple years through an iterative approach.

For example, the California

legislature has modified its Regional Housing Needs Allocation (RHNA) or

“housing element” law more than twenty times since 2017. These policy

iterations tend to happen as lawmakers find opportunities to refocus intent and

counteract noncompliance.

The recommendations in Chapter 1 focus on state-level policy, while this chapter addresses the

local level.

Shazia Manji, Truman Braslaw, Chae Kim, Elizabeth Kneebone, Carolina Reid, and Yonah

Freemark, Incentivizing Housing Production: State Laws from across the County to Encourage or

Require Municipal Action (Berkeley, CA: Terner Center for Housing Innovation, 2023).

The Legislature

may want to

consider housing

production policies

in other states as

an expanded list of

what is possible in

this regulatory

space.

A Performance Audit of Utah Housing Policy

Scholars also show that housing policy tends to enact

multiple strategies at once, as opposed to narrowly

focusing on small, targeted concepts.

For example,

Oregon’s and Montana’s recent housing legislation

implemented provisions related to state-level housing

strategy, city land use powers, city housing review

and approval processes, incentives for compliance, and penalties for

noncompliance. This broad approach is necessary because housing production

involves many complex, interrelated systems.

2.1 The Legislature Could Change Local

Land Use Regulations to Overcome Regulatory

Limits on Population Growth

As described in Chapter 1, Utah faces an acute need for more housing. We

believe the related findings in this chapter further support the need for the

Legislature to consider adjustments to local land use duties and authority to

create more opportunities for housing construction.

City and County Land Use Regulations Heavily

Impact How Utah Will Grow

Because statute gives cities and counties almost total control over land use within

their jurisdictions, local regulations collectively dictate how Utah can grow.

Although there are important reasons statute gives local governments this

power, studies and policy research have shown that restrictive land use

regulations can limit housing production, causing:

 Housing shortages (and related price increases)

 Stifled economic growth by constraining the labor market

 Expansion of urban sprawl as residents and workers seek affordable

places to live

Ibid., 9.

See Utah Code 10-9a-102(2); 10-9a-505(1); 17-27a-102(1)(b); 17-27a-505(1).

Joseph Gyourko and Raven Molloy, “Regulation and Housing Supply” (NBER Working Paper

Series 20536, Cambridge, MA: National Bureau of Economic Research, 2014); Edward L. Glaeser,

Joseph Gyourko, and Raven E. Saks, “Why Have Housing Prices Gone Up?” American Economic

Review 95, no. 2 (May 2005): 329–33; Maxwell Austensen, Janelle Jack, Charles McNally, Jaden

Powell, and Hayley Raetz, The Case Against Restrictive Land Use and Zoning (NYU Furman Center,

2022).

Typically, housing

policy involves

multiple strategies

and develops over

time through an

iterative approach.

Office of the Legislative Auditor General

In simple terms, local governments are required by statute to create long-term

plans to account for present and future needs, as well as growth and

development.

Under current statute, these plans are advisory only.

Local

governments are also empowered to create zoning districts to

regulate and restrict the type, size, and density of

development that can occur on a plot of land.

This includes

whether the land can be used for agricultural, industrial,

commercial, or residential purposes. Residential zones

establish minimum lot size, density (how many homes per

acre), and whether single-family or multifamily homes can be

built.

Pressure from citizens, along with other factors, has led local

legislative bodies to favor single-family homes on relatively

large lots.

Most of the land in Utah’s largest cities is currently

designated for single-family detached homes, which means certain areas could

begin to run out of space for housing before 2050.

The Legislature Could Tie Existing Land Use Requirements to Projected

Population Growth

In recent years, the Legislature has expanded certain city and county planning

requirements to include a moderate-income housing plan. Although this plan

requires goals and strategies to meet moderate-income housing needs, it is not

tied to population projections as seen in states with more aggressive housing

policies, like Oregon and California.

In those states, population growth targets are used to gauge whether certain

planning and zoning decisions will reasonably accommodate projected

population growth. For example, local governments in California are required to

submit plans detailing the specific locations where they will rezone land to

accommodate a specific growth number forecasted by the state. If locations fail to

plan or zone for their portion of the growth forecast, penalties are prescribed,

Utah Code 10-9a-401(1), 17-27a-401(1).

Utah Code 10-9a-405, 17-27a-405(1). Counties may adopt an ordinance mandating compliance

with the general plan.

Utah Code 10-9a-505, 17-27a-505.

Single-family home lots are typically larger relative to more space-efficient, “missing middle”

housing types like townhouses, duplexes, fourplexes, stacked triplex, cottage court units, etc.

See Finding 1.1 in Chapter 1 of this report.

Statute gives

cities and counties

control over

zoning. Currently,

most of the land in

Utah’s major cities

is zoned for single-

family detached

homes, which may

lead to certain

areas running out

of space.

A Performance Audit of Utah Housing Policy

such as withholding of certain state funding or the limited loss of specific land

use authority.

In light of our findings from Chapter 1 about Utah’s outlook for growth and

housing capacity, we believe the Legislature may want to consider similar

options to benchmark moderate-income housing plans to Utah’s official

projections for household growth. Doing so could allow local governments the

flexibility to accommodate their portion of Utah’s population growth as they see

fit.

To Spur Housing Production, States and Cities

Have Employed Upzoning

Zoning for single-family homes influences not only the capacity for growth, but

also the affordability of housing. Land costs factor heavily into the overall cost of

a home. As land prices increase, a house on a smaller lot will be less expensive

than the same house on a bigger lot. Denser housing, like townhomes or condos,

allows developers to disperse land costs over more homes, lowering the overall

cost of the home. This can also spur development by making projects less capital

intensive per unit. Figure 2.1 highlights this principle.

Figure 2.1: Denser Housing Allows Developers to Disperse Land Costs. By dispersing

the land cost, the overall cost of each home is lowered.

Source: Auditor generated.

Therefore, not only will denser zoning allow Utah to better keep pace with

population growth, it can also serve to reduce the cost of housing.

The Legislature should consider whether to expand the moderate-income

housing plan requirements to include forecasting benchmarks for household

growth.

RECOMMENDATION 2.1

Office of the Legislative Auditor General

We found multiple examples of states and cities attempting to remove zoning

constraints on housing production. Most of these efforts employ some degree of

“upzoning,” requiring local jurisdictions to allow more homes to be built on less

land. A few of these zoning reform bills are highlighted below.

If Oregon’s policy were implemented in Utah, there would be 39 large cities and

28 medium cities.

Due to environmental concerns, a county judge ordered a halt on upzoning in

Minneapolis. This ruling has not prevented upzoning forever; rather it requires

the city to prove no significant environmental impacts before moving forward.

Aggressive Upzoning in New Zealand Has

Spurred New Housing

Because upzoning efforts in the United State have been relatively recent, we were

unable to see whether they have been effective. However, in 2016, Auckland,

New Zealand, made an aggressive effort to upzone and consolidate land use

authority and research has been done on the impacts of those changes. Our

typical practice is to compare Utah to other states; however, this was not possible

Oregon statute considers medium-sized cities to be non-Portland Metro cities with a population

of 10,000-25,000. Large cities are non-Portland Metro cities with a population higher than 25,000

and Portland Metro cities with a population over 1,000.

A Performance Audit of Utah Housing Policy

due to a lack of comparable data. We therefore looked to relevant research in

New Zealand as it pertains to Utah’s housing situation.

Research shows that the Auckland upzoning resulted in an additional 26,903

dwellings permitted during the study period.

Much of this growth is in

attached (multi-family) units. From 2016 to 2021, there was a tenfold increase in

attached dwellings permitted in Auckland.

Because multiple factors can impact

the cost and relative affordability of housing, additional research is underway to

study the impact of these New Zealand policies on housing prices.

Utah’s recently passed First-Time Homebuyer Assistance program caps

qualifying properties at $450,000 to encourage builders to construct affordable

homes. Program administrators report that many applicants have purchased

townhomes or condos because, in today’s market, those are the units that first-

time buyers can afford. Although this example is not directly related to the New

Zealand housing policies mentioned above, it suggests that upzoning can clear

the way for housing units that are more affordable simply because they are

smaller and use less land.

Given the concerns regarding population growth described in Chapter 1, we

recommend that the Legislature consider upzoning options to increase zoning

density on a wide scale. This approach would create a uniform growth mandate

across all selected jurisdictions.

Greenaway-McGrevy R, Phillips P (2022), The Impact of Upzoning on Housing Construction in

Auckland, Cowles Foundation for Research in Economics, Yale University.

Ibid., 6.

The Legislature should consider options to increase zoning density on a

wide scale within the state.

RECOMMENDATION 2.2

Office of the Legislative Auditor General

2.2 To Encourage Statewide Housing Goals, Utah Could

Implement Incentives and Penalties for Noncompliance

Even if the Legislature enacts state goals and policies as recommended in

Chapter 1, local governments have broad control over

development within their boundaries. Cities that

prefer single-family homes or low-density zoning can

use their authority to stifle multifamily or high-

density residential projects. If statewide housing goals

are created, housing policy research shows that

incentives and penalties are needed to hold local

leaders accountable to those goals.

Incentives Can Encourage Desired Outcomes

Incentives encourage and support cities that take pro-housing actions. Most

incentive programs are tied to some sort of funding; however, others give

builders special privileges for affordable housing projects. Examples of incentive

programs in other states are listed below.

When considering policy options, it is important to implement both penalties

and incentives. Incentives, like infrastructure grants, can empower cities that

want to build more housing but lack the necessary resources. Incentives also

Madeline Baron and Lorelei Juntunen, “Oregon Housing Needs Analysis Implementation

Project—Task 10 Best Practice Review” (ECONorthwest, 2022).

If statewide

housing goals are

implemented,

incentives and

penalties will hold

local leaders

accountable to

those goals.

A Performance Audit of Utah Housing Policy

support cities and counties that are already considered “pro-housing.” However,

for cities and counties that are opposed to new development, incentives will not

be enticing. For these cities and counties, clear statewide goals and penalties may

be more motivating.

Penalties Can Support Compliance

Utah Code requires certain cities and counties to create a moderate-income

housing report and submit it annually for review by the Housing and

Community Development Division with the Department of Workforce Services.

Those that fail to do so, or fail to implement the plan, are ineligible for state

Transportation Investment Funds and must pay a penalty to the Olene Walker

Housing Fund beginning in 2024.

Other states, having experienced challenges with compliance, have implemented

more severe penalties. These penalties include fines, loss of land use control, and

developer overrides.

A few examples are summarized below.

A jurisdiction in Massachusetts can avoid these overrides if it meets one of three

requirements: 10 percent of its housing stock is subsidized, it has an active

housing production plan, or if it has dedicated deed restricted housing in 5

percent of the total area zoned for residential, commercial, or industrial use.

Commonly referred to as the “builder’s remedy,” this is where developers get special

development rights and can override city land use authority for projects in which a portion of

units are set aside for lower income individuals.

Office of the Legislative Auditor General

In New Hampshire statute, workforce housing is defined as for-sale housing

affordable up to 100 percent of the U.S. Department of Housing and Urban

Development’s calculation of “average median income” (AMI); for-rent housing

is affordable up to 60 percent AMI.

In Chapter 3, we discuss some Utah cities that appear to be attempting to

circumvent legislative intent. To encourage the addition of much-needed

housing, we recommend that the Legislature consider a combination of penalties

and incentives like the examples laid out in this section.

The Legislature should consider policy options to craft additional penalties

and incentives associated with housing planning and targets to better

ensure local government compliance.

RECOMMENDATION 2.3

A Performance Audit of Utah Housing Policy

CHAPTER 3 Summary

Cities Differ in Their Attitudes and Approaches Toward Housing

As described in Chapter 1, housing affordability is a statewide issue, yet land use control is concentrated in

cities and counties. Thus, cities and counties play a vital role in alleviating the housing affordability crisis.

We identified cities that are using their broad land use authority to circumvent new housing laws. However,

after meeting with various developers, cities, and counties, we found no widespread problems with statutory

compliance regarding specific developer concerns. Also, while the number of entitled units is an important

measure showing local government actions to approve housing units, we believe policymakers should better

understand the limitations inherent in the data.

BACKGROUND

NO RECOMMENDATION

FINDING 3.1

Some Cities Have Used

Their Broad Land Use

Authority to Circumvent

New Laws

NO RECOMMENDATION

FINDING 3.2

Concerns About City

Compliance with Specific

Requirements and

Timeliness Were Largely

Unfounded

RECOMMENDATION 3.1

As part of any statewide housing strategic planning, the

Legislature should consider metrics to better track both

actual and potential housing production.

FINDING 3.3

Data About Entitled Units

Does Not Give an Accurate

Sense of Near-Term

Housing.

CONCLUSION

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

Chapter 3

Cities Differ in Their Attitudes and

Approaches Toward Housing

It is difficult to make comprehensive statements about Utah cities and counties

because of the different approaches they take toward land use management.

Nevertheless, we believe that the limited city ordinances and processes we

reviewed as part of this audit can be informative for policymakers.

Some Utah cities exercise their land use authority to circumvent the intent of new

pro-housing laws while remaining technically within the bounds of the law. Such

examples suggest that policymakers will have to fine-tune housing policies

multiple times over several years. In addition, our limited review of specific

complaints against cities found no widespread problems with statutory

noncompliance

We believe that relevant metrics, as an essential component of a strategic plan (as

recommended in Chapter 1), will give the Legislature better insight into the

efforts of individual cities and counties and the state as a whole. With that in

mind, this chapter also discusses some limitations of using data about entitled

units to measure a city’s land use activity.

3.1 Some Cities Have Used Their Broad Land

Use Authority to Circumvent New Laws

Our audit process identified examples where we believe cities

used their broad authority over land use and development to

circumvent policy changes from the Legislature. These

examples illustrate why housing policy is often refined over

multiple years, as discussed in Chapter 2. The laws mentioned

here were broadly intended to ease the process of housing

construction, thus increasing the housing supply at a faster

rate with lower costs. By sidestepping these policies, cities are

voiding the intended purpose. This avoidance of legislative

intent is not uncommon in states that have had to repeatedly

return to housing legislation to close loopholes.

The first examples are related to House Bill (H.B.) 1003, which was passed in

special session in 2021 and prohibited certain design requirements for single-

family and twin homes.

Some cities across

Utah used their

broad authority

over land use to

circumvent recent

policy changes. By

sidestepping these

policies, cities are

voiding the

intended pro-

housing results.

A Performance Audit of Utah Housing Policy

Soon after the bill’s passage, the city of Springdale passed an ordinance to reduce

the maximum allowable size and height for certain residential units.

Property

owners can now build larger, taller homes only if they “voluntarily” comply

with the design standards that were outlawed by H.B. 1003. We also found that

some cities had not updated their ordinances to comply with the design

requirement prohibitions of H.B. 1003. One city explained that its design

standards, while still in their city ordinances, are not being enforced. We believe

that this city should repeal its noncompliant city code.

The Legislature also passed H.B. 82 in 2021 and S.B. 174 in 2023 to permit internal

accessory dwelling units (IADUs, also known as “mother-in-law apartments”) to

be built in any area zoned primarily for residential use.

In response, the City of

Lehi cited concerns about infrastructure capacity and passed a temporary

ordinance—the day before the law went into effect—to prohibit IADU

construction in its planned community zones.

We believe that such a sweeping

ordinance, albeit temporary, should have been founded on better analysis, and

we question a political subdivision’s approach to counteract the state

legislature’s intent in this way.

We believe that the policy-making authority of the

Legislature should not be circumvented as it was in

the examples above. More importantly, any future

policy creation should consider the broad powers

highlighted in these examples and be prepared to

limit pertinent powers and institute penalties when

there is evidence of circumvention. This cat-and-mouse pattern of policymaking

also occurs in other states that are seeking state-level solutions for housing

affordability. For example, California has followed this pattern of policymaking

with the Regional Housing Needs Allocation (RHNA) or

“housing element” law. Over the past five years, many

updates have been made to correct issues or loopholes

identified in different housing elements. For real change to be

made, policymakers should be prepared to annually adjust

and tighten housing requirements.

In two key residential zones, the city reduced the size of residential units from 5,000 to 3,000

square feet. The allowable height was reduced by 5 feet.

See Utah Code 10-9a-530.

The ordinance was passed under Utah Code 10-9a-504(1), which allows a municipality’s

legislative body to pass a temporary land use ordinance if there is a compelling, countervailing

public interest.

A cat-and-mouse

pattern of

policymaking is

not uncommon in

housing.

Policymakers

should prepare to

act as evidence of

circumvention

arises.

Office of the Legislative Auditor General

3.2 Concerns About City Compliance with Specific

Requirements and Timeliness Were Largely Unfounded

During our audit, interested parties raised concerns about whether certain cities

have imposed unreasonable development requirements or reviewed building

permits in a timely manner. These concerns warrant examination, because the

cost of a home can increase when unreasonably slow city processes add interest

costs on construction loans or when a city requires unnecessary materials or

design elements.

Although we were unable to substantiate accusations that cities had placed

unfair roadblocks in the path of development, this finding does not necessarily

mean that all cities are acting appropriately in terms

of requirements and timeliness. Some cities may use

some of these tactics to slow down development;

however, after reviewing all complaints that were

specific enough to allow follow-up, we were unable to

find evidence of cities acting in bad faith regarding

requirements and timeliness.

After narrowing the list of complaints to those we could vet, we met with

developers, cities, and other relevant parties to better understand the details. We

found the concerns to be largely immaterial. For example:

 A developer complained that a city’s site plan review was not done

according to statute, was redundant, and took far too long. We found that

the city’s process should have been faster but that the developer was not

correct in his understanding of the law or the city’s process.

 Concerns were shared about a city changing exterior window design

requirements between phases on a townhome development. The city

acknowledged that it had missed these window requirements during the

first phase of review. However, the city maintained that its mistake did

not exempt subsequent phases from the ordinance in question.

 We reviewed complaints that a city’s water requirements for a new

residential development were unreasonable. Given the nuance and

unknown variables at play, we do not believe the city’s requirements were

unreasonable.

 We also examined the review process for building permits in six large

cities following complaints of delays. We found a handful of examples

We reviewed

various complaints

about cities and

counties and found

them to be largely

immaterial.

A Performance Audit of Utah Housing Policy

where the permit review was delayed by a day or two, but the

overwhelming majority of permits were reviewed within the time limits in

statute.

3.3 Data About Entitled Units Does Not Give an Accurate

Sense of Near-Term Housing

Throughout the audit, we saw reports to legislators and the Commission on

Housing Affordability about “entitled units” as a key metric of what cities are

doing to combat the housing shortage.

While the number of entitled units is an

important measure showing local government actions to approve housing units,

we believe policymakers should better understand the limitations inherent in the

data.

First, many entitled units may not actually be built for years. For example, we

spoke with Eagle Mountain officials who told us that the city has nearly 10,000

units that have been entitled for more than twenty years. Such delays can happen

as developers work to plan the project, overcome obstacles, and obtain financing.

In some cases, the entitled units are a long way from the infrastructure needed to

build in the near term. Saratoga Springs officials explained that the city has

around 19,000 entitled units, but that some areas of the city, encompassing

several thousand of those units, are likely years away from having the

infrastructure needed to develop homes on that land. Understanding this,

policymakers can use entitlement numbers to lead conversations about areas of

the state where strategic infrastructure investments could unlock potential

housing units.

Second, the number of entitled units does not give information

about the density of future development. As our analysis in

Chapter 1 shows, proceeding with current plans—which

include many single-family detached homes—could lead to a

point where Wasatch Front counties begin to run out of space

for new housing. It is not prudent to build exclusively single-

family homes to the capacity of Utah’s scarce land for housing. To plan for and

accommodate growth, better information is needed about total capacity, and unit

density is the key element in the housing equation.

In this usage, a housing unit is considered to be entitled when the property owner has a legal

right, whether through zoning or a development agreement, to build the unit.

Information about

entitled units is

not the best way

to measure a city's

action on housing

development.

Office of the Legislative Auditor General

Finally, the Utah League of Cities and Towns has reported more than 160,000

entitled units from a sample of cities. While this number indicates concrete

efforts made by cities to allow potential housing, even if every

unit were built within the next twenty to thirty years, the

amount of housing would still fall short of actual need, based

on the population projections described in Chapter 1.

Instead of looking at entitled units as the main metric of

development, some cities track units that are more likely to

develop in the near future. We worked extensively with Saratoga Springs to

review its list of improved lots. These are lots for which infrastructure

improvements already exist and for which a building permit is the only—and

very likely—step remaining until construction. Several of the empty lots we

visited to vet this data now have completed homes up for sale.

As part of the strategic planning concept recommended in Chapter 1, we

recommend that the Legislature consider metrics to better track both actual and

potential housing production throughout the state. The Kem C. Gardner Policy

Institute already tracks the number of residential units permitted in the state, and

this information has been an invaluable resource for this audit. The Legislature

should consider requiring cities to produce data about improved lots or lots in

other stages of active development to better gauge both potential and near-term

housing production.

As part of any statewide housing strategic planning, the Legislature should

consider metrics to better track both actual and potential housing

production.

RECOMMENDATION 3.1

There are better

ways to track

housing units that

are on a more

realistic path to

completion.

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

Complete List of Audit

Recommendations

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

Complete List of Audit Recommendations

This report made the following seven recommendations. The numbering convention assigned to

each recommendation consists of its chapter followed by a period and recommendation number

within that chapter.

Recommendation 1.1

We recommend that the Legislature consider requiring the creation of a state-level strategic

plan for housing in Utah. This plan should define success and include goals that specifically

address the current housing shortage and forecasted population growth.

Recommendation 1.2

We recommend that the Legislature consider amending the land use, development, and

management acts at both the county and city level to clearly emphasize housing production and

affordability as primary goals of land use regulations.

Recommendation 1.3

We recommend that with information gathered from strategic planning, the Legislature

consider the range of state-level policy options presented in this chapter to create a program to

set and manage state-level housing production targets.

Recommendation 2.1

We recommend that the Legislature consider whether to expand the moderate-income housing

plan requirements to include forecasting benchmarks for household growth.

Recommendation 2.2

We recommend that the Legislature consider options to increase zoning density on a wide scale

within the state.

Recommendation 2.3

We recommend that the Legislature consider policy options to craft additional penalties and

incentives associated with housing planning and targets to better ensure local government

compliance.

Recommendation 3.1

We recommend that as part of any statewide housing strategic planning, the Legislature

consider metrics to better track both actual and potential housing production.

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

Appendices

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

A. Wasatch Front Regional Council – Explanation of Real

Estate Market Development Model Analysis

A Performance Audit of Utah Housing Policy

In WFRC and MAG's Real Estate Market Model (REMM), geographically-specific development

capacity ceilings are used as constraints as REMM simulates both future greenfield

development and potential future redevelopment of properties with existing structures. The

development capacity ceiling for individual parcels within the WFRC area is assumed to be the

greater of either:

1. the allowable density specified for that geographic area in each city's recent general

plans, or

2. a 'centers-based override' assumption, for parcels that are within one of the four types of

urban centers – whose boundaries and scales were developed collaboratively as part of

the Wasatch Choice Regional Vision – that the containing city has indicated are likely to

be reflected in future updates to their general plan.

In REMM, future growth in each Wasatch Front county is modeled separately in order to meet

the year-by-year county-level growth projections

forecasted by the University of Utah Gardner

Policy Institute's (GPI) Demographics group, in support of the Utah Population Committee (as

established in Utah statute). If the 'centers-based override' capacity additions (criterion #2

above) are removed from REMM's assumptions for allowable future capacity ceilings to create a

'no-centers scenario', the current version of the model is unable to develop enough housing

units in some counties to meet the future housing unit demand as forecasted by GPI. When this

capacity insufficiency happens in a future year that REMM is modeling, it adversely impacts the

results for that year and all subsequent years being modeled in the scenario. So, reaching the

capacity threshold for a future year essentially means that REMM can't perform future year

distributions from that year forward for the scenario. The year that the capacity insufficiency is

reported by the model should not be taken as an absolute milestone, but rather a relative

indicator. As REMM is grounded in existing market conditions and trends, it is not able to

foresee and apply all potential changes to the regional real estate market as this threshold is

approached.

The table below shows the amount of unplaced households, by county, under the conditions of

the ‘no-centers’ scenario. Currently, in the 'no-centers' scenario, Salt Lake County reaches a

capacity insufficiency first when the urban centers assumptions are removed, and is not able to

develop enough housing to meet growth, starting around year 2043 of the model. Davis County

reaches a capacity insufficiency beginning in the year 2048 of the model. In regional planning

discussions, it is perhaps more a commonly held belief that Davis County will run out of

GPI's population and employment projections are updated every four years, at the midpoint of

the four year cycle used by Utah's transportation agencies for long range planning. The next

projections update is expected in Spring/Summer 2025.

Office of the Legislative Auditor General

development capacity before Salt Lake County. One possible reason our scenario result does

not reflect this may be that the development capacities – in the general plan information

collected from Davis County cities in 2020 and used in REMM – already reflects some of the

higher capacities of the "centers-based override" layer that is turned off in the analysis of the

'no-centers' scenario.

In the case of both Salt Lake and Davis counties, the REMM model continues to redevelop

existing parcels and add new housing units past the year that it reaches the capacity

insufficiency threshold for the affected county. However, the deficit in the model grows larger

each year after this constraint is hit, through 2050, the current horizon year of the modeling

period used to support the Regional Transportation Planning period.

It is important to note that REMM's primary purpose is as a future growth distribution model that

allocates GPI's forecasted county-level household and job growth to the much smaller traffic

analysis zones used by the regional travel demand model. Although using REMM to explore

scenarios like this one is possible and potentially insightful, the resulting capacity

insufficiency results we are sharing should not be considered/presented as a projection

per se. Rather, the results are best communicated as a relative indicator of potential market

conditions that may need further understanding and attention.

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

B. Analysis of Residential Units

Permitted from 1994-2022

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

Listed here are the 30 Utah jurisdictions with the highest number of residential building

permits from 2018-2022. The data is sorted from largest to smallest in the Total column.

Figure B.1: The 30 Utah Jurisdictions with the Highest Number of Residential Building

Permits from 2018-2022. Of note, the top 10 cities accounted for 66,693 units permitted from

2018-2022. This was 43.3 percent of the state total of 154,132 permits during this period.

Residential Building Permits Issued (in units)

Jurisdiction 2018

2019

2020

2021

2022

Total

Salt Lake City 877 3,894 2,282 4,131 2,679 13,863

Lehi 1,444 1,587 1,080 2,198 2,249 8,558

St. George 1,357 1,511 1,847 1,620 1,493 7,828

South Jordan 1,092 1,044 1,272 1,796 924 6,128

Herriman 2,053 1,532 967 858 696 6,106

Eagle Mountain 854 1,113 1,339 1,674 1,069 6,049

Saratoga Springs 653 730 1,536 1,763 1,159 5,841

American Fork 377 539 769 2,323 637 4,645

Washington 553 1,164 929 960 735 4,341

10.

West Valley City 211 398 1,212 330 1,183 3,334

11.

Draper 898 606 779 226 719 3,228

12.

West Jordan 601 643 650 1,034 165 3,093

13.

West Haven 228 571 728 1,075 465 3,067

14.

Cedar City 419 291 596 845 864 3,015

15.

Hurricane 439 388 695 680 682 2,884

16.

Layton 499 354 796 544 601 2,794

17.

Spanish Fork 460 286 440 661 836 2,683

18.

Murray 240 228 238 1,000 795 2,501

19.

Syracuse 365 311 394 873 526 2,469

20.

Provo 388 337 675 674 371 2,445

21.

Orem 563 864 182 301 388 2,298

22.

Logan 211 480 814 181 373 2,059

23.

Vineyard 718 359 467 344 73 1,961

24.

Clearfield 196 109 347 960 321 1,933

25.

Payson 238 395 311 279 626 1,849

26.

Tooele 236 391 332 552 262 1,773

27.

Bluffdale 564 65 583 440 65 1,717

28.

Santaquin 214 231 430 571 254 1,700

29.

Salt Lake County 60 157 390 320 771 1,698

30.

Midvale 521 427 286 221 236 1,691

Source: Kem C. Gardner Policy Institute, Ivory-Boyer Construction Database.

This table lists the 30 Wasatch Front jurisdictions (i.e., those from either Weber, Davis,

Salt Lake, or Utah counties) with the lowest number of residential building permits

issued from 2018-2022.

A Performance Audit of Utah Housing Policy

Figure B.2: The 30 Utah Jurisdictions with the Lowest Number of Residential Building

Permits from 2018-2022.

Jurisdiction 2018

2019

2020

2021

2022

Total

1. Alta 0

2. Woodland Hills 0

3. Goshen 0

4. Uintah 13

5. Davis County 5

6. Harrisville 12

7. Holladay 7

8. Fruit Heights 13

9. Riverdale 10

10. Sunset 15

11. Washington Terrace 14

12. Huntsville 9

13. Cedar Hills 6

14. Elk Ridge 21

15. West Bountiful 35

133

16. Centerville 14

166

17. Alpine 31

178

18. Utah County 33

197

19. Pleasant View 36

272

20. Woods Cross 47

313

21. Farr West 55

108

338

22. Bountiful 103

106

382

23. South Weber 112

133

398

24. Cottonwood Heights 90

117

144

451

25. Lindon 85

136

115

511

26. South Ogden 174

182

516

27. Roy 123

116

114

112

526

28. Plain City 163

105

548

29. Clinton 118

109

121

152

583

30. Riverton 137

119

150

126

591

Source: Kem C. Gardner Policy Institute, Ivory-Boyer Construction Database.

The data on building permit approval shows exceptionally high levels of residential

construction from 2020-2022. As the next chart shows, 44 percent of the total 102,277

permits approved during this period were for single-family detached homes with

another 29 percent approved for apartment projects with 5 or more units. On the

surface, seeing such high numbers of residential units being built is good news when

the priority is to provide enough housing for all households in the state. However, in

light of the concerns about limited land and huge forecasted future growth, building so

Office of the Legislative Auditor General

many single-family homes could be seen as a concerning trend. Especially since

research from the Gardner Policy Institute is beginning to show that buyers earning less

than 80 percent of the area median income are still struggling to find affordable

housing.

Figure B.3: The Majority of Residential Permits Approved from 2020-2022 Were for

Single-Family Detached Homes and Apartment Projects with Five or More Units.

Source: Kem C. Gardner Policy Institute, Ivory-Boyer Construction Database.

The next chart shows the same breakdown of residential construction type back to the

mid-1990s. In all periods shown here, single-family detached homes dominate among

new residential construction. As our report makes clear, building more housing units

on less land seems to be a critical strategy; these numbers can give a sense of how that

approach may differ from the past.

44,970

29,167

20,589

4,159

1,468

1,379

545

Single-Family Detached

Apartments/ 5+ Families

Condominium/Townhome

Apartments/ 3 or 4 Family

Duplex/Twin Home

Other Residential Units

Manufactured/Mobile Homes

A Performance Audit of Utah Housing Policy

Figure B.4: In All Periods Shown Here, Single-Family Detached Homes Dominate

Among New Residential Construction.

Source: Kem C. Gardner Policy Institute, Ivory-Boyer Construction Database.

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Single-Family Detached

Apartments

Condo, Townhome, Duplex

Other Residential Units

Manufactured/Mobile Homes

Office of the Legislative Auditor General

Agency Response

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

A. Audit Response - Utah League of Cities and Towns

A Performance Audit of Utah Housing Policy

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 

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

 

  



 

  

 

 

 

 



  

  

  

  



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   





 





 

          

Office of the Legislative Auditor General





 

  

 



  



 



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

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

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  

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 











A Performance Audit of Utah Housing Policy

 





 



 

 













 

  















  





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  



  

 

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   







  

Office of the Legislative Auditor General



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

   

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



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 

 

 



 





   



 















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 

  



    

 

  





   





 



  



   

A Performance Audit of Utah Housing Policy

 





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Office of the Legislative Auditor General

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

B. Audit Response - Department of Workforce Services

A Performance Audit of Utah Housing Policy

Relay Utah 711 • Spanish Relay Utah 1-888-346-3162

jobs.utah.gov • Equal Opportunity Employer/Programs

November 6, 2023

Department of Workforce Services Response to A Performance Audit of Utah

Housing Policy

On behalf of the Department of Workforce Services/Housing and Community Development

Division, we would like to thank the Office of the Legislative Auditor General for including us in

this audit endeavor. The department provides staff support to the Commission on Housing

Affordability. In this role of support and in collaboration with the commission chairs, we can

assure the audit’s findings and recommendations are presented to the full commission as next

steps are identified.

We agree with the audit’s premise that a statewide strategic plan tailored to our unique

statewide needs should be a priority. In upcoming months, the department, in partnership with

the Kem C. Gardner Policy Institute, will be releasing a database that provides population

growth and housing deficit projections for municipalities with a population of at least 5,000. This

data paired with infrastructure, natural resource and land availability data will provide the

foundation for a statewide and local strategic plan.

Through the Housing and Community Development Division, DWS administers the federal and

statewide housing programs primarily through the Olene Walker Housing Loan Fund. The

department stands ready to work with the legislature and the Governor’s Office to implement

any new applicable housing policies, including the development of a statewide and local

strategic plan.

We look forward to continuing the conversation with other key stakeholders and the

Commission on Housing Affordability.

Christina Oliver, Division Director

Housing and Community Development

Department of Workforce Services

Office of the Legislative Auditor General

A Performance Audit of Utah Housing Policy

Office of the Legislative Auditor General

olag.utah.gov