Saturday, January 17, 2015

FUNDING OGDEN'S RENEWAL: Preserving Utah's Historic Legacy

In the last 15 years, Ogden has come a long way in picking itself up by its boot straps.  Yet, some of the issues the community faces require more help than we can provide ourselves at the moment.  So, this year I will be requesting a significant one-time appropriation to fix an intractable problem that has afflicted Ogden for decades.  The request will be for $2.5 Million from the state to focus on historic preservation and unit reduction in Ogden's historic downtown neighborhoods.

To understand the problem, we have to look back in time.  Ogden experienced a significant economic boom from 1870-1960.  This 90 year span of prosperity saw Ogden become one of the prominent cities in the West, even rivaling Salt Lake City as a destination location.  Of course, this tide of good fortune was hitched to the railroad. And thus, it makes sense that when the railroad began to sputter as an economic engine, Ogden's economy began to sputter in tandem.

From 1960 to the mid 1990's, Ogden's economy suffered as industries fell into obsolescence and job opportunities disappeared.   Early in the decline, the loss of jobs meant that people had to leave the city to find employment elsewhere.  Also, outdated housing stock pushed home buyers into new construction homes in the suburbs.  This outward migration of people put pressure on the city to stay viable as a livable community.

Unfortunately, also during this period, city leaders made some serious missteps in how they managed the movement of people.  During the boom times, the city increased its zoning density to accommodate the need for people to live close to industry.  Yet, during the bust, they maintained these high density zoning policies in hopes of attracting more people to the city center.  This policy gave rise to the flop house.

1890's Victorian Home Converted to 6 Units in 1950's
 Many of the great historic homes of the city were converted into multi-unit housing.  This process continued well into the bust era as landlords tried to maximize their revenue streams.  The results have not been pretty.

As this subdivision and density increase wore on, even as jobs and incomes declined, Ogden's mix of housing took some dramatic turns.  Today we see the legacy this has created in the housing stock.

Ogden, Utah - Occupied Housing Statistics - 2010 Census

The state average for owner occupancy is 70%.  So, there is quite a bit of room for improvement.  In addition, due to the wear and tear on the existing buildings, vacant properties are abnormally high as well.

Ogden, Utah - Vacant Housing - 2010 Census

Typically, natural vacancy rates hover around 4%-5% for homes that are tenable.  So, with 9% of the housing stock being vacant, we know there are problems that need to be resolved.  Typically, these surplus vacant homes are in disrepair and need renovation.

Examples of homes that need attention and preservation are prevalent:

Arts and Crafts Era Home Converted to 3 Units

Victorian Era Home Converted to 4 Units

Victorian Era Home Converted to 3 Units

Victorian Era Home Converted to 4 Units
The purpose for the requested funds is to bridge the market gap that exists between multi-unit homes and their single family counterparts.  When a homes is subdivided, the value of that property is based on its ability to generate rent revenue rather than its value as a home.  This inherently increases its market value beyond what it would be normally.  That increase means that owner occupants who want to restore these properties into homesteads cannot afford to do so because the the cost to purchase and repair far exceeds what the market would value the home after it is restored.  It is a losing proposition from the outset.

So, it is proposed, to bridge this market gap, that a grant be extended to homeowners who want to eliminate units in some of these older properties.  The program would offer homeowners $20,000 per unit that is eliminated.  The money would be available to owner occupants or non-profits selling to owner-occupants for unit consolidation purposes.  Owners would be able to work on the property themselves and would provide the financing for purchase and additional repairs.  Ogden City will administer the program much like it does the Own In Ogden program today.

Ogden City has done a lot of heavy lifting with restoring some of the most onerous properties in the city.  They have over a decade's experience now understanding what is involved with the process of rehabilitating these old homes.  Here are some examples:

However, unlike past years where the city was heavily involved in the purchase, repair, and resell of these properties.  The requested funds will be leveraged to accomplish more in a shorter period of time.  Over the past 13 years, Ogden City has spend approximately $210,000 of taxpayer funds for every home that it has restored.  In that time, the city has spend about $2.5 Million on 12 homes.  Though a noble effort, that is still a lot of slow and heavy lifting.  

By leveraging the private market however, much more can be accomplished in a shorter period of time. The proposed funds will repair approximately 50 homes with an average of $50,000 invested per house.  It is estimated that this would also be accomplished in a much shorter 5 year time frame. The program would eliminate 125 substandard housing units in the city.

There are many obvious benefits to this program.

1.  Historic Preservation

Each year the city loses historic housing to fires caused by faulty electrical work.  Multi-unit housing is often a scene of makeshift repairs and shoddy craftsmanship which puts these homes at serious risk.  Preserving our legacy for a future generation is a benefit to all Utahns. 

2.  Improved Tax Assessed Values and Property Tax Revenues

Many of these multi-plexed homes are assessed at values less than their market value.  This is partly due to the age of the properties and the fact that building permits have not been pulled for improvements made to them.  Their value is depreciating over time.  But, given the level of improvements that will be made to the property, permits will be pulled and the tax assessed values will increase to reflect the improved state of the properties.  This increase will create a long term return on investment for the monies invested.  

3.  Improved Neighborhood Stability

This program is not desiged to be a handout to the Ogden Community. Rather, it is designed to create a critical mass of rejuvination and restoration so that the community will be able to sustain these efforts without the assistance of the State in the future.  By stabilizing the neighborhood and bringing new energy to the community, it should provide a stable base for Ogden to care for its own neighborhood revitalization needs moving forward.  

4.  Decreased Student Mobility

Ogden School District has a distinct problem with student mobility.  Due to the exaggerated number of rental units in the city, it is no surprise that students move frequently when their parent's leases expire.  Reducing the unit count in the city will help reduce student mobility in the areas where the homes are being repaired.  Lower mobility will help improve school performance. 

5.  Improved Income Demographics and Sales Tax Base

Since the individuals restoring these homes will have disposable income.  The increased spending at local business and in the community should help foster commercial development and improve sales tax revenues.. 

6.  Increased Humanitarian Resources

The healthiest communities are those that have balance.  In Ogden's case, there is a large disadvantaged community that has been squeezed together in a small space.  This creates stress in the community since there are few individuals with resources to assist the urgent needs of the underprivileged.  As a member of the community who serves these disadvantaged individuals in charitable settings, I have first hand knowledge of how the imbalance of people in the community adversely affects those in need.  Reducing units and restoring these historic properties will undoubtedly provide homes for individuals who have the resources to serve their neighbors and help lift the community as a whole.  

7.  Increase in Construction Jobs

Finally, given the amount of work that needs to be done to these homes, construction jobs will ultimately be created while the work is in progress.  This is a brief but still important component in understanding the return on investment this program creates.  

I look forward to presenting this case to the Economic Development Appropriations Subcommittee this session.  Ogden City and Weber County officials have pledged their support.  It is time to heal Ogden's neighborhoods for the next generations to come.  

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