Independent officer rules HDHO pertains to ownership, adds restrictions

Last week, the saga of the High-Density Housing Overlay reached a checkpoint when the hearing officer in the case handed over a ruling that was unfavorable to homebuilders and favorable to county officials.

Homebuilders argued that rules passed by the Grand County Commission in March improperly amended the HDHO ordinance. Bruce C. Jenkins, the hearing officer in the case, said that he agreed “in part” with the developers.

“However, in substantial part I find that the county’s interpretation of the HDHO ordinance is correct concerning sales of HDHO lots or units,” Jenkins wrote in his decision, released Friday, June 4.

The ruling undermines plans by local homebuilders to construct new housing for locals — projects accounting for nearly 300 new housing units. But county officials said the plans, if implemented as homebuilders designed, would hurt existing neighborhoods and the local housing market.

When Grand County officials learned in late January that a local homebuilder was looking outside the valley for the money needed to enable new housing, it set in motion a series of decisions that eventually led to the project getting kneecapped.

Courtney Kizer, a local homebuilder, and her husband Steve Evers wanted to build condominiums along Murphy Lane — a kind of project that allows a homebuyer to purchase just the building but not the land, resulting in a much more attainable investment for locals than typical housing.

Typically, a homebuyer must bear the cost of both the home they are buying and the land where it sits. Condominiums allow a homebuyer to cut their costs roughly in half by finding an investor with whom to share the cost. In exchange, the investor gets a share of the wealth when the property appreciates in value.

In many cases, condos are targeted to middle- to low-income buyers, and that was the vision Kizer and Evers had. However, as they began pursuing the project, they did not see enough interested money in Moab to make that happen.

In other words, they could only attain their vision for Murphy Flats by expanding their lens outside the county — to places like the Wasatch Front. If an investor from Salt Lake City wants to buy into the project and sell the buildings to local homeowners, how is that any different than a local investor doing the same thing?

For Kizer and Evers, there was no meaningful difference. Investors are investors, regardless of where from, they said. For county officials, the distinction was vital.

After learning of Kizer’s and Evers’s intentions, county officials got to work finding a way to change the project and to clarify or change (depending on who you ask) the underlying rule: the High-Density Housing Overlay ordinance.

Many of the officials were not involved in the development of the HDHO. The authors moved on to new jobs after receiving awards for the design of and coalition-building behind the ordinance; five of the seven elected officials who voted on the ordinance also left; the county attorney also changed.

The people who took over in their stead determined that the High-Density Housing Overlay would be too difficult to enforce if Kizer and Evers got their way. Their idea of selling to investors elsewhere in the state or even country also left a bad taste in their mouths: Were the units not intended to be for locals only?

But everyone agreed that they were only for locals. The units were intended to create a market for housing in which only locals could participate. What exactly that meant, it turned out, was divisive.

The disagreement ultimately came down to whether the HDHO limited who could own the units or who could live in them. Builders and the authors of the ordinance said that it was about who could live in them; county officials voted to make it about who could own them, as well.

When faced with pushback from the HDHO homebuilders, county officials recommended an alternative path. The developers could pursue investments from local businesses and nonprofits instead, or they could take a less traditional path of gaining outside investment in their local firms.

It wasn’t that a business couldn’t provide the financial capital for the projects; it was that the businesses had to be local, they said.

Kizer, Evers and others maintained that there was not enough interested money in Moab to make the projects work as planned and that the path of gaining outside investment in their own firms would relinquish needed control over the projects.

When the dispute went to Jenkins, a homeowner association and real estate lawyer based in St. George, he decided that the county was right about the key issue at hand. He also went a step beyond.

Jenkins said that not only is the ordinance about who can own HDHO units, but the ordinance also prevents local nonprofits and businesses from purchasing the units. An individual adult from such a corporation could still purchase units, though, but not with the benefits that come with corporate ownership.

The decision is the nail in the coffin for Kizer’s vision.

“Thats a wrap on Murphy [Flats] as a condo project,” she said the morning Jenkins handed over the decision. “We are not planning to appeal the decision but will instead just move on with our lives.”

To cut her losses, Kizer is pivoting to Murphy Flats as rental housing. It will change the project from a wealth-building opportunity for low- to middle-income individuals into a rent-collecting opportunity for middle- to high-income locals who are wealthy enough to afford to take on such a project.

“There are still investors interested in joining in with us on the project, but all want the project as a rental property,” Kizer said.

The change will ensure that the project gets off the ground and that it satisfies the letter of the law when it does.

Although the new project will satisfy the need for the projects to be locally owned, the people Kizer thought could purchase the units are no longer eligible. No outside investor is allowed to purchase the project, and no local investors want to back condominiums.

Instead, the only investors now allowed to purchase the project have a vision that differs from the homebuilders who planned it. The local investors don’t want condos; they want rentals.

In response to a request to commissioners for comment, Grand County Attorney Christina Sloan said that she had asked them “not to discuss matters in litigation until the appeal periods lapse.”

She also said that the commission would amend the HDHO rules and regulations at its meeting June 15 to remove provisions allowing for corporate ownership of HDHO units, as required by Jenkins. Sloan said that questions regarding the effects of the decision “will likely be answered” during discussion at the meeting.

With respect to the intent of the ordinance, Jenkins said the matter was irrelevant to the decision, as the code itself was clear enough.

Anticipating a denial of her own appeal in light of the Murphy Flats decision, HDHO homebuilder Jennifer Johnston said that she expects to file a lawsuit against the county in Moab’s district court. Johnston is the developer of the Peak View Subdivision on Spanish Valley Drive.