Report To The Utah Legislature - A Performance Audit Of The Division Of Housing And Community Development - 2012 Page 17
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33Typically, the OWHLF board loans money to nonprofit organizations
that already own or buy land, so they may construct low-income
Nonprofit
organizations’ projects
housing projects on that land. These projects are evaluated by the
are required to follow
HCD staff using their published “Program Guidance and Rules”
published guidelines.
manual and are then approved by the OWHLF board. However,
statute gives the HCD director the ability to do any act necessary or
reasonably implied, including the purchase of land for low-income
housing, with the approval of the board.
The Federal Department of Housing and Urban Development
(HUD) distributes HOME funds to states to increase the availability
of low-income housing. HUD encourages states to grant or loan the
money to develop or rehabilitate housing for low-income people. In
Utah, the OWHLF distributes these funds. HUD rules allow states to
purchase land with federal funds, but only for a specific goal of
constructing low-income housing. Land-banking is not permitted
under federal rules for HOME funds, but it is allowed and used for
Neighborhood Stabilization Program funds, which HCD also
administers. There is also no prohibition on using state funds for land-
banking. Roughly half of the Olene Walker funds used for low-
income housing come from the federal HOME program. HUD also
encourages states to contribute matching funds. Use of Utah’s state
matching funds is controlled by state, not federal requirements.
HCD became aware of the property as a potential site for veteran
HCD used $2,276,000
housing because of a veterans group’s interest in the land. In 2007,
for a non-traditional
the OWHLF board purchased the South Salt Lake property for
purchase of land in
$2,276,000. HCD used only state funds, which did not fall under the
South Salt Lake.
federal restrictions. Accounting codes identify and track whether
federal or state dollars are used for each project, and these codes
identified the funds used for the South Salt Lake purchase as state
funds. The board’s intent was to construct low-income apartments on
the property for chronically homeless veterans, as part of the division’s
goal to end chronic homelessness. This purchase was the first and
only time to date that OWHLF funds have been used to purchase
property directly.
The South Salt Lake City Council has opposed the use of this land
by HCD for low-income housing. Because of this, the city council has
not approved the plans for the property. As a result, the land has been
land-banked by default. HCD management states that other projects
Office of the Utah Legislative Auditor General
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