Utah’s Housing Revolution: HB 37’s Density Boost for Builders

HB 37: Utah Housing Amendments
This bill is all about housing policy and development, aiming to boost housing supply, especially affordable and moderate-income options—while giving local governments and builders new tools and incentives. It tweaks incorporation rules, zoning flexibility, moderate-income housing plans, and state oversight. Here’s the rundown:

1. New Density Bonuses for Affordable Housing (Sections 4, 5, 10, 11)

• What’s Changing:
  • Single-Family Density Bonus (10-9a-403.2, 17-27a-403.1): Cities and counties can approve at least 6 units per acre (or 0.5 more than existing zoning if already at 6+) if builders meet affordable housing goals. Requirements might include:
    • 60% of units deed-restricted to owner-occupancy for 5 years.
    • 25% of units affordable (120% AMI for sale, 80% AMI for rent).
    • 25% of units ≤ 1,600 sq ft.
    • A 30-day “preferred buyer” program (e.g., first-time buyers).
  • Multi-Family Density Bonus (10-9a-403.3, 17-27a-403.2): Allows 20+ units per acre with similar conditions:
    • 20% more units than normally allowed.
    • Same 60% owner-occupancy, 25% affordable, 25% ≤ 1,600 sq ft, or preferred buyer options.
  • Local governments can sweeten the deal with extra incentives (e.g., fee waivers, expedited permits).
• Impact on Building:
  • You can pack more homes onto less land—great for urban infill or tight lots. Think townhomes or small-lot singles instead of sprawling estates.
  • Affordable housing mandates mean targeting lower price points, which could shift your buyer pool to first-timers or middle-income folks.
  • Smaller unit sizes (1,600 sq ft cap) push simpler, cost-effective designs—less luxury, more practicality.

2. Moderate Income Housing Gets Teeth (Sections 3, 6, 9, 12)

• What’s New:
  • Cities and counties must pick from a beefed-up list of 28+ strategies (e.g., rezoning, ADUs, density near transit, fee waivers) to hit moderate-income housing goals (80% AMI or less).
  • “Specified” areas (bigger cities, counties > 5,000 unincorporated) need detailed 5-year plans and annual progress reports. Non-compliance means losing transportation funds and paying fines ($250/day in 2024, $500/day in 2025+).
  • Big wins count triple: zones like housing/transit reinvestment or density bonuses meet the 3-strategy minimum alone.
  • Municipalities can’t force moderate-income units unless builders opt in with a deal or incentives.
• Impact on Building:
  • More pressure on local governments to re-zone or incentivize means more opportunities for builders to propose denser, affordable projects without red tape.
  • If your city slacks on reporting, transportation projects (roads, transit) could stall—delaying your site access. Plan ahead!
  • Voluntary moderate-income deals could unlock perks like waived fees or faster approvals—your call if the math works.

3. State Housing Plan Looms (Section 16: 63J-4-402)

• What’s Happening:
  • By December 31, 2025, the Governor’s Office of Planning and Budget (GOPB) must craft a state housing plan with regional goals, pushing collaboration, affordability, and infrastructure. Annual reports start October 2026.
• Impact on Building:
  • Expect a statewide push for housing production, potentially aligning local zoning with bigger goals. Could mean more funding or pressure for projects that fit the plan—especially near transit or in growing regions.

What’s the Impact on Home Builders?
This bill’s a mixed bag for Utah home builders—opportunities to build more and faster, but with strings attached if you chase affordability. Here’s how it hits your bottom line and workflow:

Opportunities

• Higher Density, Lower Land Costs: Density bonuses let you squeeze 6+ single-family or 20+ multi-family units per acre. That’s more homes on less dirt—huge if land prices are climbing (Salt Lake County’s median lot cost was ~$150,000 in 2024, per SLHBA chatter).
• Incentive Potential: Cities/counties can dangle carrots like fee waivers, tax breaks, or quick permits. Pair that with a density bonus, and your per-unit cost drops—maybe $5,000-$10,000 less on impact fees alone.
• Moderate-Income Flexibility: You’re not forced into affordable housing, but opting in could score you deals. Think ADUs or transit-zone projects—hot markets in places like Ogden or Provo.

Challenges

• Affordability Squeeze: If you go for density bonuses, 25% affordable units (e.g., $300,000 sale price for 120% AMI in Salt Lake, ~$75,000 income) cut margins unless incentives offset it. Luxury builders might sit this out.
• Smaller Footprints: 1,600 sq ft caps on 25% of units mean tighter designs—less room for high-end finishes or big profits. You’ll need efficient floorplans to stay competitive.
• Local Compliance Risk: If your city or county botches its moderate-income plan, transportation funds dry up. Delayed roads or transit could stall your subdivision—check your jurisdiction’s track record!
• Buyer Restrictions: Deed restrictions (60% owner-occupied, 5 years) and preferred buyer programs might shrink your market. Investors or flippers could balk, leaving you courting first-timers.

Practical Tips for Builders

• Scout Bonus Zones: Ask your city/county about density bonus areas—target spots near transit or commercial hubs for max density and incentives.
• Crunch the Numbers: Model a project with 25% affordable units and smaller sizes. If incentives (e.g., $10,000/unit in waived fees) cover the gap, it’s a go.
• Lean on ADUs: Accessory dwelling units are a moderate-income strategy cities love—add them to plans for easy wins and extra revenue.
• Stay Connected: Track the state housing plan rollout (late 2025). If it prioritizes your region, you could snag early funding or zoning perks.

Bottom Line
For Utah home builders, this bill opens doors to build more homes, especially in dense, affordable flavors, with potential cost savers like density and incentives. But it’s not a free-for-all—affordability rules and local compliance add layers to navigate. If you’re nimble and can pivot to smaller, owner-focused projects, you’ll thrive.