Some rural Utah renters say affordable housing program took their homes, equity

The following story was reported by the Utah Investigative Journalism Project in partnership with KSL.com.

SALT LAKE CITY — A Weimaraner is typically a big and rambunctious hunting dog. Beckie Gregg counted herself lucky to have a beautiful, silver-gray Weimer she named Zoe, who had all the intelligence of the breed but without all the drama.

"I always said I was never going to be an old lady with a pissy little dog," Gregg said.

She picked up her new puppy after her ex had walked out on her and Zoe followed her from Panguitch to her new home in Tropic, Garfield County. Gregg was renting the home in a program put on by Utah Housing Corporation called CROWN, for credits-to-own, that allowed low-income renters to build up equity in the homes they rented for 15 years and then have the opportunity to buy them and earn the equity.

In May of 2017 Gregg had to put Zoe down. In her backyard she and a neighbor burying Zoe had only dug a foot down when water began seeping in. She was so rocked by sadness at the time it was more of an annoyance than anything. But three years later that water would resurface as a much bigger issue when it was finally time to buy her home. A home inspector found puddles of murky water pooled around the base of the foundation, so she asked Utah Housing for an engineer to look at it. She worried she wouldn't be able to get a loan on the home.

"I can't do anything until this is resolved," Gregg said.

She said she felt like Utah Housing just gave her the runaround for weeks.

With 2020 coming to a close and the world still gripped by the pandemic, four households of renters would lose their chance to buy their homes — and the opportunity to earn the over $600,000 in combined equity they had built up.

The good news, they were told, was that a new nonprofit wanted to buy the homes and would still offer the renters the chance to buy the homes from the new owner.

"The buyer has indicated they will allow you to purchase the home, under similar terms as if the home remained in the CROWN program," wrote Utah Housing employee Chelsea Hunt to Gregg in an Oct. 28, 2020, email.

Gregg found out that was not true — after she lost the opportunity to close on her home. She was 70 then and now is a 74-year-old renter uncertain how she will stay in the home into the future.

Utah Housing in a statement said the CROWN program helps approximately 70% of renters purchase their homes, with median household incomes of only $33,824.

"Where else, or how else, do Utahns at these income levels achieve homeownership at such levels of home cost?" the statement reads. "Simply put, they don't."

Tammy Bowman was another frustrated renter in the program.

"They stole our equity and they didn't give us the opportunity to go forward," she said.

'As is'

The Utah Housing Corporation is a public entity created in 2015 by the Utah Legislature and given financial independence and the power to issue tax-free bonds.

Its CROWN program has a lot of moving parts.

Utah Housing awards federal tax credits to an affordable housing project. An investor buys the federal tax credits and the proceeds of the tax credit purchase puts equity into the project.

It brings down debt liabilities for the investor and brings down costs for building the homes and makes them affordable for low-income renters. The renters live in the homes for 15 years, at which point the loan has to be paid off on the homes.

In January 2020, Gregg and Bowman were getting their paperwork ready for the final realization of a dream. Bowman and Gregg signed the real estate purchase contracts with the caveat that they would not accept the homes "as is," because of the standing water under their homes.

Utah Housing in a statement claimed that it was unclear Gregg would not buy her home "as is" by providing a picture of one line on Gregg's contract where "as is" was circled. Gregg's full contract, however, also showed that she wrote "exception of 4" near her initials to indicate she did not agree to item No. 4, the "as is" condition. She also repeatedly talked with Housing Corporation officials about how she couldn't purchase the home "as is" even if she wanted, since it was unlikely she would be able to get a traditional loan with the potential of her home sinking into the mud.

On Oct. 28, 2020, Utah Housing employee Hunt told Gregg a new nonprofit buyer would close in two weeks if she couldn't, but that she still would have the option to purchase the home later on.

Gregg, Bowman and the others were still gripped by anxiety but held out hope that they still could buy their homes. They figured there was no way so many different groups dedicated to housing low-income people would abandon them.

'Nothing atypical'

The renters' hard deadline landed on Nov. 17, 2020. Two days later, the new buyer, Sharlene Wilde of Neighborworks Mountain Country Home Solutions, sent an email to Utah Housing Vice President Susan Van Arsdell who oversaw the deal.

"Are we obligated to sell the homes to the tenants for a certain amount of time?" Wilde asked.

Van Arsdell told her that while Utah Housing had "indicated to the tenants" that would be the case, ultimately "it is your decision."

The Utah Investigative Journalism Project sought to find out who exactly made the assurance that was passed onto renters that they would still be able to buy their homes from the new owner.

Van Arsdell no longer works for the agency and did not respond to a request for comment.

Jonathan Hanks, the current director of Utah Housing, said, "There was nothing atypical" about the way these homes were sold.

When asked about assurances made to renters, Hanks went into careful detail about how Utah Housing couldn't extend the CROWN program in the new deal nor could they require the new buyers to make that offer. But the renters say this detailed explanation was not given to them.

Sharlene Wilde did not respond to an email query. When approached at her office in Orem she refused to comment and threatened to call the police unless a reporter left immediately.

David Damschen, Utah Housing's president, is the former state treasurer. He said selling the homes to the nonprofit was the agency's Plan B. Plan A was always to sell to the renters.

"We're planning for Plan A, we want to create homeowners," Damschen said. "And then we get into year 15, 16 and we've got to fish or cut bait."

Utah Housing oversaw the deal and was working with the current owner of the properties, Western Region Nonprofit Housing Corporation, to get the homes sold so Western wouldn't be left holding the bag on paying off the loans.

In reviewing more than 300 emails, communications showed Van Arsdell felt the pressure to have the homes sold by the deadline.

Selling to the nonprofit meant a single transaction. A sale to individual tenants would have meant working with each one to help them close on the homes. But the emails show repeatedly that Utah Housing decided against ideas that would have helped the renters.

On April 7, 2020, Van Arsdell pushed back against the idea of a two-month extension being given to the renters on purchasing the properties because of the pandemic. She thought the extension should be offered only if renters could prove they were facing a financial hardship.

After all, Van Arsdell wrote, "It is human nature to procrastinate."

On Oct. 27, 2020, Hunt asked Van Arsdell about extending a deadline for some of the renters to be able to buy their homes until after Utah Housing finished making repairs on the homes.

Van Arsdell worried that doing so for all the renters would interfere with plans to sell to Sharlene Wilde's nonprofit.

"We need the time to work thru purchase/closing details with Sharlene and (Western Region), so I prefer to keep the 11/15 date," Van Arsdell said.

On Nov. 13, 2020, Hunt sent an email to Van Arsdell to let her know that one of the renters who couldn't qualify for a loan because of credit issues had family living with her who wanted to purchase the home. But due to an "oversight," they were not on the lease and not given the opportunity to purchase.

Allowing them to purchase the home under the CROWN program would have delayed the sale for at least six months. Instead, Utah Housing decided they didn't qualify because they weren't on the lease, even though that was described in the emails as a mistake.

In a recent interview, Hunt said if they allowed that family to do so, then other people could also claim to have been living at one of the homes when they hadn't and take advantage of the program.

"It has to be documented," she said.

Then there was the matter of the water under Gregg's house.

In an Aug. 28, 2020, email, Hunt told Van Arsdell that Gregg had asked for a soil report, and attached a soil report to an email in preparation to send it to Gregg.

Van Arsdell nixed the idea of sending the documents to Gregg. Instead, she told Gregg to reach out to the owner Western Region, even though she knew that Western Region did not have the soil report.

Utah Housing representatives said in a recent interview that a soil report would not likely have helped Gregg get a loan because a lender would not ask about it. Gregg, however, had been told by an appraiser that she would need this report, especially after her inspection found water under her home.

Utah Housing said that only the owner, Western Region, could agree to provide it to Gregg.

But in none of the email records did Van Arsdell inform Western Region that Utah Housing had the records Gregg was requesting.

Utah Housing in a statement argued that Gregg had indicated she could not get a loan for the home regardless. This was true initially, Gregg said, when she learned the purchase price was more than she expected. But she also told Utah Housing she was exploring a reverse mortgage and had turned in the real estate purchase contract.

In emails, Van Arsdell told Gregg sump pumps would be installed under her house. But without the soil report, Gregg didn't know if a sump pump wasn't just Utah Housing slapping a Band-Aid on a much more serious problem.

The soil report, obtained by the Utah Investigative Journalism Project, shows the soil had issues but was not on wetlands or a floodplain. Still, the report was from 2003 and Gregg says it needed an updated assessment from an engineer.

"If UHC had gotten (an engineer) and done this right, then we could have gotten our loans closed," Gregg said.

'Robbing a bank'

While Van Arsdell held the tenants to the Nov. 15 deadline to purchase the homes, Mountain Country Home Solutions didn't close on the deal until seven months later. Utah Housing even loaned money to Mountain Country Home Solutions to buy the homes and gave it all the equity that would have gone to the renters if they had bought the homes — $611,579.

Utah Housing Vice President Hanks pushed back against the idea that the program would rather sell to nonprofits than the tenants because then "we're not getting the mission done that we want," Hanks said.

But selling to a housing nonprofit can potentially benefit the mission of Utah Housing better than if the renters buy it. If Gregg had bought her house and then later sold it, she would keep all the profit. If a nonprofit like Mountain Country Home Solutions buys the homes and then resells them, a portion of those funds would go back into a Utah Housing community fund to help support more affordable housing.

Dave Johnson of Western Region alleges that Van Arsdell never seemed interested in selling the homes to the low-income renters.

"Utah Housing preferred selling to the nonprofit (Mountain Country Home Solutions) rather than allowing any of the renters to buy it," Johnson said.

"We were willing to sell it to all of the tenants, but Utah Housing said 'no.'"

On Aug. 28, 2023, Utah Housing specialist Amber Gallagher spoke to a meeting of CROWN program participants and joked that with the boom in housing prices, many tenants were getting such a deal it was like they were "robbing a bank."

"The whole point of the program is to help them build equity and wealth but maybe not that much," Gallagher said. "We feel that much (money) could be better served in our community fund or going into other affordable housing projects."

While Hanks said the deal was normal in many regards, there were unique challenges. It happened during an unprecedented global pandemic. Also, CROWN programs typically involve a housing authority that can better assist renters get ready to purchase their homes. Western Region just develops affordable housing and typically doesn't provide that kind of guidance.

Damschen stressed that building homes for rural Utahns is a critical but small piece of what Utah Housing does, noting the agency has helped more than 100,000 Utahns get into their own homes. But 95% of the federal tax credit financing goes to apartments in more urban areas.

Those developers, he said, "would love to see this program go away."

"They would love to have us just create more renters and finance more rental housing," Damschen said. "But we're going into these challenged rural communities, with challenged economies and we're providing housing to low- and moderate-income folks, many of whom will struggle (to purchase the CROWN homes)."

Utah Housing officials said they regret that Gregg wasn't able to purchase her home. When asked if the program provided enough information to assist tenants, Housing Director Hanks responded: "100%"

In the August 2023 CROWN meeting, however, Gallagher told a room full of CROWN partners that Utah Housing was working on improving communications.

"We don't have a great disclosure to give to our tenants that explains the program," Gallagher said. "We really want them to go into it with eyes wide open so they know what they are working for and to know what they can earn if they complete the program successfully."

Hanks clarified to say that Utah Housing is 100% supportive of helping tenants purchase their home, but "there's always room for improvement."

Utah Housing will have the opportunity to make improvements with future CROWN deals. Gregg and the other Tropic renters, however, won't have another chance to buy their homes.

Gregg had complained to lawmakers and county commissioners who said they could do little about the state program as long as it followed county ordinances.

"I do not have any family. I am really struggling, still having to work, to pay rent on a house that was supposed to be mine, supposed to be my safety net," Gregg wrote in an email.

Even if the homes are not worth keeping, Gregg said Utah Housing could still do right by the renters.

"We want to be compensated for the theft of our homes and equity," Gregg said. "UHC clearly has the ability to compensate us."

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