Politics & Government
Planning Commission hears updated plans for controversial affordable housing idea
Matt Hemmert | Lehi Free Press
The Planning Commission heard more details about a controversial zoning proposal during its monthly work session on October 3. After nearly two hours of discussion and multiple meeting extensions, the commission and the city determined that more work was needed on the proposed zone.
The city presented the commission with a Critical Homeownership Overlay Zone (CHOZ) concept on August 22, 2024. At the time, the commission had many concerns and questions about the idea, including the time it had to review the city documents and new code section. The agenda item was ultimately tabled to allow staff to revisit the concept and modify the proposed development code section.
In the October 3 work session, Lehi City Planner Brittany Harris provided detailed background information missing in the August commission meeting. Harris explained that the state of Utah directed counties and municipalities to implement strategies to meet housing availability and affordability issues for residents who earn less than 80% of the area’s median income. The mandate from the state includes either the dedication of a local funding source to moderate-income housing efforts or the adoption of new development ordinances that require 10% or more of new homes dedicated to moderate-income housing. Harris further explained that the failure of a county or municipality to implement a strategy and achieve its associated housing goal could result in state fines of $250 per day.
In response to the state mandate, the city chose the latter as a written strategy provided to the state agency overseeing municipal compliance. Harris explained that submitting the strategy and commitment drove the development of the CHOZ framework. Over the next nine or ten months, various city departments and community members fleshed out the framework.
After Harris briefly reviewed the CHOZ plan, Commissioner Emily Lockhart discussed other ways to address the housing issue without this type of government intervention in the real estate market.
“Do we have to get to the point where non-profits are stepping in and filling this role?” Lockhart asked. “I’m trying to find a way to let the market take care of it.”
In speaking to a non-profit arm of a large real estate developer that works to provide affordable housing projects, Harris explained that the for-profit arm donated land to the non-profit project, but that was just one approach of many needed.
“We need as many different things as we can do to find solutions,” Harris responded. “We’re going to learn things along the way [with the CHOZ] and have to change things and maybe come up with something better in a year or two. We’re just trying to take steps forward.”
Bringing the discussion back to the city’s proposal, Commission Chair Greg Jackson pointed out a disproportionate shift of the subsidy burden while questioning not cutting into a developer’s profit margin.
“What we’re saying is, we’re not going to allow the property owner to really know the true value of their property–for what it’s going to be [worth] on the market,” Jackson said. “What we’re ultimately doing is subsidizing, but instead of having the community bear the burden of the subsidy, we’re putting that burden on exactly one individual who sells that property [to a builder], as the savings are passed on to the builder who then doesn’t have to change their profit margins to be able to provide housing.”
For instance, if a landowner sells 10 acres to a builder with the land zoned for one-acre residential lots for an aggregate density of 10 homes. Before purchasing the land, and without disclosing such to the seller, the builder planned to apply for CHOZ designation and subsequently did so after the purchase. Under the CHOZ, the city then agreed to allow the builder to build 15 homes at fixed pricing instead of the original limit of 10 homes at market-driven pricing. The builder then sold the homes without any decrease in its per-home profit margin, notwithstanding a reduced home price due to a per-home decreased land cost. In this example, the previous landowner experienced a meaningful profit loss on the original sale, commensurate with the difference in value between 10 acres zoned for 10 homes and 10 acres zoned for 15 homes. That loss of profit to the previous landowner, the increased profit to a developer, is the “subsidy” that encourages developers to apply for CHOZ incentives.
“The best argument for this, thus far, is being able to throw this back in the face of a developer that wants to ask for a zone change [for higher density],” Jackson said after much more discussion about the mechanics of the CHOZ. “We have another option if your desire is to really provide more housing for Lehi.”
The city and the commission reached another sticking point in the discussion when the CHOZ equity lock component was raised. The commission’s concerns echoed those raised in the August 22 meeting.
“This is the hard part for me to grasp,” Lockhart said. “If I understand correctly, the government is telling me that an asset I own cannot be realized for ‘x’ amount of time.”
Harris explained that this is provision was created to avoid first-time home buyers buying a home at a CHOZ-reduced price, seeing the home as an investment, and reselling it quickly at market prices.
The city and the commission needed more time to review and discuss the revisions to the CHOZ code section made after the August 22 meeting. All parties will continue discussing and debating the CHOZ concept in the commission’s next public meeting on October 10.
