The Utah government will soon begin a new pilot program that involves selling select parcels of state-owned land for the purpose of developing owner-occupied condominiums, according to a top state housing official.
Steve Waldrip, senior advisor for housing strategy for Utah Gov. Spencer Cox, said the state will soon begin a program that would take vacant and unused parcels owned by the state government — beginning with land owned by the Utah Department of Transportation — and sell the land at below market rates so the land can be used to develop for-sale condos.
Waldrip initially described the program during a panel discussion Tuesday morning at Urban Land Institute Utah’s 4th annual Housing Summit.
“UDOT has created a list of available properties,” he said during the Tuesday summit. “We’re doing this as a pilot, a very limited pilot, to start, and hopefully over the next six to 12 months, that very limited pilot will expand to include greater opportunities with other state agency lands.”
Waldrip emphasized that the parcels that could be sold would be underutilized government properties that contribute nothing to the area’s tax base. He said the program would utilize pieces of land across the Wasatch Front rather than limiting the program to Salt Lake City or another single municipality.
“These aren’t parks,” Waldrip told the panel. “These are dirt lots, these are parking lots. These are places that are just sitting vacant and not providing any public benefit, either direction, either as a public amenity or in the private market.”
UDOT commonly owns land next to its rights of way that sit unused. At times it has allowed community gardens and other non-permanent uses on the land. Waldrip’s announcement on Tuesday marked a new approach to that land.
In an interview with Building Salt Lake, Waldrip said the program was made possible by House Bill 360, which carved out the ability for state surplus property to be sold, used or leased for moderate income housing.
The bill defined moderate income housing as a dwelling that is, “offered for sale to an owner-occupier at a purchase price affordable to a household with a gross income of no more than 120% of the area median income for the county in which the residential unit is offered for sale and is deed restricted for no fewer than five years.”
However, the bill also defines moderate income housing as units that can be rented at or below 80% AMI.
Waldrip added that HB360 also allows for the payment of the property to be deferred until the project is completed. He added that means that UDOT or whatever public agency, “will still recoup their cost for that land, whatever their cost is, but they’re not going to get a windfall. That windfall is going to be passed through to the public.”
Waldrip said the primary goal for this pilot program is to create for-sale condos, though, depending on the lot size available, other types of housing could be built on the property. He added that because the program would be selling UDOT land, many of the parcels ripe for this program are near transportation corridors and would be infill lots.
“The primary use of this will be for those infill pieces,” Waldrip told BSL. “There will be projects that will have, potentially, town homes and even some single family housing on it, where appropriate.”
Given that UDOT also operates some of the highest-trafficked, highest-speed arterials on the Wasatch Front, it also means any homes built during the pilot program will likely sit next to busy, car-dominated corridors.
As of Tuesday, Waldrip said the pilot is still in the works, as the state wants to limit the scope of the program and make sure there’s a thorough review process before it begins. He said the state will screen proposals from developers to ensure each parcel is used to its full potential.
The price tag for each piece of land would be set by an appraisal, which would determine the sale price for each parcel. He said by doing that, the state can offer the land to be sold at below market value in the hopes the savings will be passed on to the condo buyer.
“What we’re targeting is the delivery of units that are between 10-25% below market, and then preserving that value long-term so that the people who buy those units will be able to get the full value of what they purchased, but they won’t necessarily get a windfall of public funding, and that public fund will continue to provide benefits to future purchasers,” Waldrip said.
He hopes the pilot program can start by September.
“We’re going to keep it fairly limited. We’re not going to open up to the entire world, because that would be far too difficult to manage on a pilot program,” he said. “But we’ll have enough there that no one will have any concerns that there’s any favoritism going on. It will be an open process that we can then use to establish the best value on each of those parcels.”
The sale of state land for housing is a new approach for Utah, and the method comes just months after Utah U.S. Sen. Mike Lee’s push to sell federal land to create housing, along with years after then-Congressman Jason Chaffetz also tried to sell off federal land.
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