The nexus of housing, local policy and the state

October 23, 2023 by Nicole Masson
Policy/Legislative

By Sophia Fisher, The Times- Independent, Moab https://www.moabtimes.com/articles/the-nexus-of-housing-local-policy-and-the-state/

(This article has been updated to reflect that one development, not two, is currently creating workforce housing units through the AEH ordinance.

This article is the first in a four-part series covering the intersection of housing policy and the relationship between local and state governments. Subsequent articles, published once per month through December, will delve deeper into these dynamics and explore ways to strengthen them.

Time was ticking in March 2022 when Carly Castle saw the email thread.)

It was March 31 and Moab City Council was preparing to vote on a major piece of housing legislation — the Active Employment Household (AEH) Requirement Ordinance — and Castle, the city manager, remembers receiving a long email thread just hours before councilors were set to vote.

Coming from property rights and development advocacy groups, the emails essentially warned the city that if they passed the ordinance, they could expect to see it revoked by the Utah Legislature within the year.

“The threat was … ‘You will be pre-empted at the Legislature if you pass this ordinance,’” Castle recalled. “‘So come to the negotiation table or you’ll expect to see legislation preventing you from being able to implement something like this.’”

Castle said she had “zero doubt” that the threat was empty. She remembers seeing prominent members of the state Legislature included on the chain, though in their roles as developers, not as public officials.

“I think seeing that email chain it was like ‘OK, tap the breaks,’” Castle recalled.

When Moab City Council met that evening, Mayor Joette Langianese announced the council would likely table the ordinance.

“We’ve gotten some comments from several important folks up north at the state Legislature, also with the Utah Association of Realtors, a property rights coalition group and local concerned citizens,” Langianese said. “And so, we just want to make sure that we have the opportunity to discuss this ordinance with them and hopefully come to some resolution.”

Indeed, that’s what the city and advocacy groups did, launching into months of closed-door negotiations. Last August, Moab City Council passed an amended AEH ordinance that survived its first legislative session earlier this year.

But the developments of early 2022 signal what some local government officials and staff have called a disturbing, and worsening, trend of state officials intervening in local housing policy. The interventions sometimes peel back existing laws, sometimes preclude municipalities from pursuing new ones. Some are single paragraphs; others are buried in omnibus bills.

But together, some say they represent a Legislature increasingly willing to override municipalities, particularly around policy that aims to ameliorate the state’s intensifying housing challenges.

At the same time, the state’s involvement in local housing policy can carry its own bright spots: a push-and-pull that strengthens policies, hands-on negotiation that can lead to stronger laws.

Still, with such a power imbalance it can be hard for local governments to rest easy. Castle said she’s not convinced the city’s AEH ordinance is safe.

“I wonder to what extent this is a ‘wait and see’ for that group,” she said. “…I don’t know if they’re thinking ‘When this doesn’t work for Moab maybe we’ll pre-empt them, or if it started spreading that’s when we’ll pre-empt them.’ But for now, it seems innocuous enough.”

‘A runaway problem’

When Moab City Council tabled the AEH in March 2022, the ordinance had already been in the works for months. It proposed reserving a portion of future developments in two zoning districts for occupancy by local workers and their families but didn’t mandate specific sale or rental prices.

Over the prior few years — starting in 2019 but gaining momentum during the pandemic — Moab had been losing workforce housing at an exponential clip. There were across-the-board spikes in the cost of housing and land, but the AEH targeted one specific situation: developers buying up historically low-density, affordable housing such as trailer parks, replacing them with luxury townhomes that maximized allowable density.

“We began to see an inverse housing correlation,” said Moab Planning Director Cory Shurtleff. “For every new development of housing we had, we were actually losing housing options [for locals].”

By the time the city council formally initiated proceedings for the AEH ordinance in late 2021, the city had seen at least six such development flips that brought online dozens of new townhomes.

“This is a runaway problem,” Shurtleff remembered then-Planning Director Nora Shepard telling the Moab City Council in 2021. “We’ve already lost a number of vital properties, but if we continue to not act, we could lose an unrepairable amount.”

That’s where the AEH came in: according to a 2022 analysis by BAE Urban Economics, the city would need to set aside 42.5% of new housing units across all zoning districts to maintain its existing proportion of local workers who live in the city.

The ordinance drafted in early 2022 trimmed that suggestion to 42.5% in just the two zones meant for multifamily and manufactured housing.

Shurtleff and Castle both described the policy as an attempt to stanch further loss of workforce housing, rather than a proactive method to build new housing.

“It was more about drawing a line in the sand of ‘no more, we can’t lose any more workforce housing,’” Castle said. “Because we’re realizing once it’s gone, we really have no feasible bedroom community to expand into.”

Indeed, the shadows of housing paucity were already apparent. Restaurants and businesses, many of them tourist-focused, cut hours or delayed opening dates simply because they couldn’t find staff.

“None of this was, ‘We think maybe someday this might be a problem,’” Shurtleff said. “We were already wading into it.”

A conclusion without consensus

Fast-forward to March 2022. After months of meetings and public hearings, the city was fast approaching a pivotal deadline: the expiration of the pending ordinance doctrine on April 10. Once that deadline passed, nearly 250 forthcoming housing units would no longer be subject to the AEH.

That was the main argument for simply passing the ordinance on March 31 regardless of the last-minute opposition. But city staff and officials realized that could put the entire concept of AEH-restricted housing at stake — not only in Moab, but across Utah.

“At the end of the day,” said City Councilor Luke Wojciechowski, “it’s more important that the ordinance actually works and can actually stand up to legal review if it were to get challenged, rather than just try to get it on the books.”

That launched months of negotiations between the city and the Utah Property Rights Coalition, the Utah Association of Realtors and the Utah Home Builders Association.

Through those talks, the city made concessions. They whittled the 42.5% down to 33%, relaxed parking and height rules and added a parachute clause that would free up AEH units if they couldn’t be rented after 120 days on the market.

Ross Ford, the executive officer of the home builders group, praised the city’s professionalism during negotiations but said he still disagreed with the ordinance’s underlying philosophy.

“We did really appreciate how good the city was to go ‘Well, we see some of your concerns,’” Ford said. “They honestly tried hard to address them. But honestly, they used the heavy hand of government to solve what is a very real problem … we believe there should be more of a market-based solution.”

Beyond disagreements about the role of government, the uniqueness of Moab within Utah proved both a point of consensus and divergence.

Castle said the advocacy groups recognized Moab’s statewide economic worth and its specific challenges with workforce housing — its isolation amid public lands, its lack of developable space — which proved a point of common ground. Ford agreed Moab faces particular challenges, but that every community in the state struggles with unaffordable housing and the association didn’t want to see the policy spread.

Ultimately, though neither side found the end product perfect, Shurtleff said the pressure actually benefitted the AEH ordinance.

“It’s almost like a diamond — the pressure around it was so tight that what was produced is very, very strong,” he said.

City officials also said they hope the talks strengthened Moab’s reputation among state officials.

“I think when we were done it was a good ending,” Langianese said. “… It felt like those guys … went back to the powers that be that they work with and said, ‘Moab’s reasonable. We can work with Moab.’”

‘Why did you anger the gods?’

The city council unanimously passed the AEH ordinance on Aug. 3, 2022.

Over a year later, the ordinance has survived one legislative session and is being used in one forthcoming development. Two others are providing workforce-restricted units without going through the ordinance; in total, 221 housing units restricted for workforce are in the city’s pipeline.

Castle said she’s hopeful the ordinance will survive 2024’s general session as well but realizes it will require constant work.

“In my experience, usually the controversies come up more when there’s actually a conflict rather than just a hypothetical one,” she said. “So it’s really important to have really good relationships with developers in the community.”

Ford said he doesn’t think the threat of a state-level rollback has entirely waned.

“We’re trying to patiently wait and say, ‘We disagreed with this decision; however, the decision was made,’” Ford said. “…I think that’s why the Legislature said, ‘Let’s back off for a little bit to wait and see.’”

When asked more broadly about the state Legislature and local housing policy, Ford called the relationship a “tightrope” act.

“The closer to the people that live in the community [are the officials who] make those decisions and have to live with those decisions, obviously the better those decisions are,” he said. “But sometimes a local community will make decisions that aren’t necessarily good for the state as a whole.”

That’s when the Legislature might need to step in, he said: if the policy starts creating bad outcomes in other communities.

It was that awareness of precedent that also stayed the city’s hand during the AEH development, Castle said. Upon receiving those emails on March 31, Castle said she worried that plowing ahead could hurt not only Moab’s laws, but also pre-empt those in other Utah communities. It’s a trend she said she’s seen before.

“We didn’t want to get so greedy that we ruined it before it could be developed or vetted by other communities,” Castle said. “You don’t want to take such bold action that they [state legislators] overcorrect, and it’s not just tailored to what you did … So all the other cities are like, ‘Why did you anger the gods?’”

This reporting project is made possible due to a grant from the Center for Rural Strategies and Grist.