Lawmakers look to boost Wyoming housing supply with carrot, not stick

To support affordable housing, lawmakers next week are scheduled to examine a suite of tools including leasing of state lands for development, focusing infrastructure investments and using innovative financing arrangements.

The Wyoming Legislature’s Joint Corporations, Elections and Political Subdivisions Committee will study various strategies to increase the state’s housing supply during the legislative off-season, also known as the interim session. Twenty-five people, from city administrators to county commissioners to statewide housing advocates wrote legislators asking for action that could produce housing legislation next year.

In setting “housing policies” as the committee’s No. 3 topic for study in the next nine months, the Management Council suggested more carrot than stick to increase affordable housing, which a recent assessment concluded is needed in the Equality State.

The council recommended the committee examine laws to designate state investments — in infrastructure, for example — and methods to lease state land for housing as two ways to incentivize the construction of lower-cost homes. It recommended lawmakers also study creation of a state fund for infrastructure like sewer, water and roads that would enable construction.

At its first meeting scheduled for April 22 and 23 in Lander, the committee also will consider tax increment financing, a method of earmarking expected increases in tax revenue to jump-start development.

Absent from the Management Council’s order is any direct mention of curbing local zoning and development regulations statewide. Last year, a legislative regulatory reduction task force proposed such a law that would override local rules and restrictions on many accessory residential units and make construction of them a landowner’s right.

The Wyoming Community Development Authority that seeks to launch families into their first homes completed a statewide assessment earlier this year that now should be acted on, Scott Hoversland, the agency’s director, said. Wyoming urgently needs a plan, he said, to answer the question “How do we entice developers to come into the state to start building those homes?”

25 requests

Most of the 25 requests for the interim affordable housing study included identical language calling for collaboration among stakeholders, incentives for developers and new funding and buying mechanisms. The letters also said the committee should look to remove regulatory barriers and streamline permitting — language the Legislature’s Management Council did not adopt in outlining the study topic.

The WCDA’s 300-page statewide needs study released in February undergirded the requests. It recommended a suite of actions, including removing regulations that allow neighbors to protest developments. The study also recommended boosting cities’ zoning and development authority beyond their boundaries to aid growth.

Wyoming also should incentivize local governments to increase housing density, the study says. The Statewide Housing Needs Assessment does not appear to call to statewide rules mandating such increases, saying those decisions should remain the purview of local governments.

“Local decision-makers should review and deregulate housing density restrictions to address local issues,” according to the Wyoming Community Development Authority’s study.

Local governments should have access to infrastructure funds and should seek public input earlier in the development planning process to reduce friction and controversy, according to the WCDA assessment. They also should create “financial tools” to subsidize infrastructure costs and consider buying manufactured housing.

Eight communities including Gillette, Laramie, Cody, Cheyenne and Teton County are already employing some of these strategies, the study states.

“Economic development is being stifled because of lack of housing supply,” WCDA’s Hoversland said. Developers of million-dollar homes know they’re getting more profit out of a high-priced unit than a $200,000 starter home, he said.

“We’re not seeing any of those around in the market,” he said of the lower-priced unit. “Once you get that, then you can move up that [housing] scale.”

A severe crunch

The state development authority aids first-time homebuyers by providing low-interest loans, among other services. Interest rates are one of the barriers to home ownership, responsible for increasing monthly mortgage payments beyond the reach of younger and less affluent buyers.

Households that spend more than 30% of gross income on housing are considered cost burdened, Hoversland said. Those rates have been near 2%-3% in the recent decade but are now twice that, putting “a severe crunch” on buyers.

Homebuyers could use more support, he said.

Wyoming is one of only three states that doesn’t have a statewide housing trust fund,” Hoversland said. “There is no money coming from the state.”

Building codes also are a consideration, he said. Strict regulations, whether addressing safety or community needs, cause developers to look for venues where construction is less complicated or expensive, he said.

Simplifying those codes and rules or reducing costs associated with them, “that’s more or less a local issue,” Hoversland said.  At the WCDA, “we don’t have anything to do with that.”

Management Council also asked lawmakers to examine Tax Increment Financing, a method of establishing districts where investments are paid back in part from the increased tax revenue generated from new development. Such arrangements have their own impacts, however, sometimes depriving local governments of future tax revenue.

That prospect could make towns and counties wary as they already anticipate revenue losses through new property tax relief laws, Hoversland said.

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Report: Wyoming needs more affordable housing, but challenges differ by county