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SALT LAKE CITY — Sen. Jake Anderegg, R-Lehi, describes himself as a "conservative, borderline Libertarian Republican from Utah County," so he recognized efforts to entice cities to build affordable housing "may not be within my bailiwick."

Yet Anderegg is sponsoring a bill that would create a new incentive for cities to zone for affordable housing, amid a time when experts say Utah is facing a more than 45,000-unit affordable housing gap.

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That incentive? If cities don't pick two strategies out of a list of 25 options to allow moderate-income housing within their communities, they'll miss out on being eligible for about $700 million in annual state transportation investment funds — money coming primarily from the motor fuel tax that the state controls.

Anderegg said his bill, SB34, gives cities a "gentle nudge" to include affordable housing in their city plans "while at the same time giving them the freedom to say we don't want to do this."

"It's a big enough carrot that not doing it feels a little bit like a stick," he told the Deseret News in an interview in the Senate chamber this week.

Anderegg's bill cleared its first legislative hurdle Thursday. It advanced out of the Senate Economic Development and Workforce Services Committee with unanimous approval.

The bill is the work product of the Utah Commission on Housing Affordability, which was born out of legislation passed last year that tasked a 20-member group of state leaders, housing experts, developers, city representatives and business leaders with tackling the state's ever-tightening housing crunch.

The bill includes a "basket" of options from cities to choose from, Anderegg said, including zoning to allow mother-in-law apartments, encourage high-density housing near major transit corridors, reduce parking requirements and allow for single room occupancy projects. The list goes on.

"We've said cities only have to do two of the 25," Anderegg said. "But you don't have to. If you don't, then you're not eligible (for the transportation money)."

The bill also would also call for $20 million in one-time funds and $4 million in ongoing money into the state's Olene Walker Housing Loan Fund, a state fund used for low-interest lending for affordable housing construction. The fund offers "gap financing" to developers to help finance low-income units.

Gov. Gary Herbert in his budget proposal already called for more money into the Olene Walker fund, to the tune of $15 million one time and $2 million annually.

So "why is a conservative Republican from Utah County running this bill?" Anderegg asked.

"Growth is the single biggest issue in my area," the Lehi resident said, crediting the state with working hard to attract high-tech businesses to Utah's Silicon Slopes.

"But these guys are getting paid Silicon Valley wages," Anderegg said. "This engine we have fed for a decade or two that has added to these jobs … but now we've got these guys from the Bay Area looking at half-acre land in Lehi for half a million dollars, and they're like 'Sold! That's a great deal.'"

Meanwhile, born-and-raised Utahns are getting priced out, Anderegg said. Over the Christmas holiday, the senator said four of his nieces and nephews told him they're looking for jobs out of state because "they can't afford a $380,000 condo."

"We can ignore the problem and say it 'doesn't exist' and 'fair markets are free markets,'" Anderegg said. "We've already artificially inflated the market through our incentives for economic development. To say, 'Well that would be government interference' and over here we don't, that's disingenuous. It doesn't make sense."

The new "incentive" for cities and the funding SB34 would provide "would go a very, very long way" for affordable housing in Utah, but by no means is it the "silver bullet," Anderegg told lawmakers on the Senate committee Thursday.

"There is not a single city that isn't dealing with this, whether (they) want to acknowledge it or not," he said. "This is a serious issue."

He added: "Government is not going to completely solve this issue, but the government can play a very significant role in helping to alleviate this."

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The bill saw wide support Thursday. Representatives from the Utah League of Cities and Towns, the Wasatch Front Regional Council, the Salt Lake Chamber, and the Utah Association of Realtors all spoke in favor of it.

"We have a housing gap — a supply and demand problem across all spectrums of housing," said Abby Osborn, Salt Lake Chamber vice president of government affairs. "We know from (a recent Kem C. Gardner Policy Institute) report that this is our biggest economic threat if left unaddressed."

Mike Ostermiller of the Utah Association of Realtors said, "We love this bill, and we wish that we loved it more."

"It doesn't go far enough, but it is an excellent first step," Ostermiller said.

The days when Utahns can afford a home in a safe neighborhood close to work where they can be "proud" to raise their family "might be over," he added. "Those days are threatened, so we've got to keep working."

But some expressed misgivings with the bill.

They included Justin Swain, a Herriman resident who was among a group of residents who filed a referendum application in Salt Lake County earlier this year to stop a nearly 8,800-unit development from popping up near his city called Olympia Hills.

The high-density development would have brought an estimated 30,000 residents to about 930 acres — a proposal that sparked outrage from residents before it was vetoed by former Salt Lake County Mayor Ben McAdams.

Steve Griffin, KSL

Swain said his group, Utahns for Responsible Growth, support "balanced growth" and affordable housing efforts, but not when it goes too far, like he said Olympia Hills did.

"I know that the word 'force' may not to be correct, but to withhold tax funds in trying to get (cities) to do this just doesn't seem right," Swain said.

Rep. Dan McCay, R-Riverton, voted in favor of the bill, thanking Anderegg for "trying to restore some free-market principles" to local zoning — which he said is "not free-market, whether you like it or not." When land use decisions are made based off of "what we don't like" instead of "what's right for our communities," he said, "it's not healthy."

"This fear we have of high density, the fear we have of building anything that's different … those days are behind us," McCay said. "We have got to start looking to the horizon on how we're going to solve some of the bigger problems."

The bill now goes to the full Senate for consideration. Email: kmckellar@deseretnews.com Twitter: KatieMcKellar1