2023 Legislative Session Recap

Utah Legislature invests record amount for housing, works to solve homes shortage

The Utah Legislature’s 2023 general session marked a record year for the housing industry. Lawmakers invested approximately a quarter billion dollars to promote housing programs and passed significant legislation to reduce red tape in development. Additionally, the Legislature created a new First-Time Homebuyer Assistance Program to help buyers and incentivize the construction of starter homes.

Utah Association of REALTORS® staff and Legislative Committee members spent countless hours reviewing hundreds of real estate-related bills and examining their effect on Utah REALTORS® and property owners.

Priorities this year focused on reducing the state’s housing shortage, supporting first-time homebuyers, and making it more cost-effective to create housing. The UAR also killed several bills that would have been detrimental to the industry.

Below is a summary of UAR’s advocacy efforts this session:

Bills to reduce the housing shortage

The Utah Legislature passed a trio of UAR-supported bills to boost the creation of housing in Utah. The bills incentivize the private sector to build housing at lower price points by reducing barriers to development, streamlining the development process, and creating consistent, statewide development standards.

House Bill 364 – Helps developers create low- and moderate-income housing

Reduces regulatory barriers at the local level that impede housing development. The bill helps cities implement moderate-income housing plans and be held accountable for those plans.
Increases funding for the state’s Low-Income Housing Tax Credit (LIHTC) program, which will attract capital and incentivize the creation of affordable housing units. The Legislature allocated more than $50 million to fund the program. In testimony to the House Business and Labor Committee, David Damschen with Utah Housing Corporation said the program could create 600-700 multi-family affordable housing units per year to address a 40,000-unit shortfall of affordable housing units.

“Each one of the elements in this bill are supply-side solutions that will create more housing,” said State Homeless Coordinator Wayne Niederhauser in testimony to the House Business and Labor Committee.

House Bill 406 – Reduces red tape in housing development

This bill reduces regulatory barriers that hurt housing supply and improves the local government approval process for subdivisions.

Creates statewide development standards to reduce costs and delays, including establishing standard road widths.
Helps eliminate boundary disputes surrounding annexations.
Clarifies that cities and counties can’t have consecutive moratoriums or have a moratorium in perpetuity to stop development.
Adds more certainty to the timeframe and approval process between cities and developers.

“The purpose of all of this is to reduce these barriers so there can be an increase in the supply of homes throughout the state,” said Rep. Stephen Whyte in a House floor presentation about the bill.

Senate Bill 174 – Streamlines the land-use approval process and allows more ADUs

Streamlines the subdivision approval process and saves costs by only requiring one initial public hearing before the rest of the development process is handled administratively without subsequent public hearings. Makes subdivision decisions administrative in nature rather than legislative with the goal of improving predictability and consistency for property owners and cities.
Implements a penalty for municipalities that fail to follow moderate-income housing laws.
Requires cities to allow internal accessory dwelling units (ADUs) in all new construction. ADUs provide affordable housing for renters and help make homeownership more affordable for homebuyers.

“This largely is a bill to improve and make uniform and transparent and speedy the land use approval process at the city level,” said Sen. Lincoln Fillmore during a presentation at the Senate Economic Development and Workforce Services Committee.

Bills to help homebuyers

Along with making it easier to build homes to reduce the housing shortage, lawmakers funded two assistance programs that help first-time buyers overcome homeownership hurdles.

Senate Bill 240 – Creates First-time Homebuyer Assistance Program

The Legislature allocated $50 million to create the First-time Homebuyer Assistance Program. The state will provide low- and moderate-income buyers with a loan up to $20,000 to assist with down payment, closing costs and/or an interest rate buydown, helping an estimated 2,500-3,500 families initially.

The program is for newly constructed homes priced at or below $450,000. Lawmakers specifically targeted new construction because they wanted to incentivize home builders to construct starter homes at entry-level price points.

“If we can incentivize a product for first-time homebuyers, this will actually increase the product supply in the market,” said Senate President Stuart Adams in a presentation about the bill on the Senate floor.

Lawmakers also wanted to avoid exacerbating the housing shortage by creating more demand without a subsequent increase in supply.

“The impact hopefully will be to actually drive the approval process from the cities and the construction process from the builders to focus on these first-time buyers,” Adams said.

There will be a lien on the property requiring homeowners to repay the funds when they sell or refinance. Repayment is either the amount received or 50% of the home’s equity, whichever is less. Amounts repaid will go to help future buyers.

Utah Housing Corporation will administer the program and establish rules. The program is set to go into effect July 1 at the earliest.

Shared Equity Revolving Loan Fund – Uses equity-sharing to keep payments affordable

The Legislature also supported buyers with an allocation of $5 million to the Shared Equity Revolving Loan Fund. This money will help first-time homebuyers get into homes through a shared equity program administered by the Rocky Mountain Homes Fund.

Here’s how it works: Low- and moderate-income buyers choose a home (either existing or new construction), and the fund purchases it on their behalf. Buyers put minimal money down (only first and last month’s payment for a reserve account) and receive a below-market interest rate and affordable payment. For example, the monthly payment on a $400,000 home could be $1,985, according to a handout presented to the Executive Appropriations Committee.

Like a traditional mortgage, buyers make payments to reduce their principal. When it comes time to sell or refinance (required within 10 years), buyers keep 100% of their principal reduction equity and 50% of any equity gained through price appreciation. The other 50% of the price appreciation goes back to investors and the fund to assist other buyers.

The program has previously helped healthcare workers, educators and public service professionals. With the Legislature’s new appropriation, funds will be available for first-time buyers, with veterans receiving priority.

Bills that protect property owners

The UAR also advocated for several important bills to affirm private property rights and protect homeowners.

Senate Bill 271 – Protects the right to co-own property

Last year, Utah began to see an alarming trend of municipalities regulating and prohibiting property co-ownership. Cities had either passed or were considering approving ordinances that would prevent or limit people from purchasing property with family, friends or any group of individuals wanting to combine resources to make housing more affordable.

Particularly troubling was the idea that government could choose who could and could not buy property and where they could buy it — actions in conflict with Utah’s Constitution that says, “All persons have the inherent and inalienable right … to acquire, possess and protect property …”

The regulations are also in conflict with the principles of the Fair Housing Act that protect a person’s right to choose where they live and buy property.

“It’s frightening that we have to run this bill,” said Sen. Mike McKell in testimony to the Senate Economic Development and Workforce Services Committee. “Cities get to regulate land use, but they don’t get to regulate who owns homes.”

Senate Bill 271 prohibits cities and counties from regulating co-owned homes differently from other residential units and prevents them from punishing those who co-own homes.

House Bill 211 – Prohibits predatory liens

This session, Utah became the first state to pass legislation to protect property owners from predatory liens and encumbrances, specifically prohibiting the practice of filing real estate service agreements in property records.

The bill addresses a trend that has been occurring across the country. Companies have been approaching homeowners with cash incentives to sign a residential service agreement that allows the company to encumber the property — in some cases up to 40 years. These encumbrances increase the cost and complexity of transferring real estate and getting financing.

House Bill 211, supported by UAR and the Division of Real Estate, protects consumers by prohibiting this practice and will go into effect May 3.

Defeated bills that would have hurt property owners

This year, there were several bills and proposals that would have hurt property owners and interfered with the right to transfer real estate. Here are several of the proposals we successfully lobbied against:

Proposals that would have made it harder to lease property

We killed a bill that would have eliminated mandatory treble damages in evictions. Utah’s strict and clear penalties help prevent evictions; however, this bill would have reduced the consequences for renters who violate their rental agreements, likely increasing evictions and discouraging settlements. This would have hurt both renters and landlords.
We killed a bill that would have interfered with private rental agreements, requiring 90 days’ written notice for a landlord to raise rent rather than what the parties originally agreed to in the lease. The bill would have resulted in conflicting dates and deadlines, creating confusion for both landlords and tenants and adding red tape to the rental process.

Proposal that would have interfered with the real estate transaction

We killed a point-of-sale radon testing bill that would have added red tape and roadblocks to real estate transactions by requiring a mandatory radon test before a home could be sold.

These are just of a few of the bills and proposals we worked on this session. To learn more about how you can get involved with pro-REALTOR® advocacy efforts, contact the UAR’s government affairs staff at (801) 676-5200. To learn more about the benefits you receive as a member of UAR, visit UtahRealtors.com.