Utah's Republic

Also check out a superb write up on this topic from Alpine School District Board Member Paula Hill on this same topic:

http://paulahill4u.wordpress.com/2011/01/23/geneva-ura-lehi-high-committees-agenda/
GENEVA URA, LEHI HIGH, COMMITTEES, AGENDA
Filed under: Uncategorized — paulahill4u @ 5:22 am
GENEVA DEVELOPMENT

About the Vineyard URA, or tax benefit to develop the old Geneva property, the short answer to your questions is that we got skunked. The Board and the District agreed that the demands were too stiff, and both sides were maneuvering for the best terms. We worked with a committee from Utah County, the town of Geneva, Alpine School District, the Utah State Office of Education, a representative of all other taxing entities such as the water district, and an at-large member. Three votes would stop it, and we felt confident that ASD and the USOE member held a strong hand.

Oops. They called a vote, the USOE voted in favor, and it was suddenly all over.

The longer answer, although not very technical, is that the developer needed tax breaks to be able to accomplish the massive clean-up and build the ambitious commercial/residential design sitting on the drawing board. The proposal was exciting and attractive, but the concessions asked were pretty generous. In particular Alpine School District was resisting the unheard of length of time, 40 years, and the residential component, where property taxes from the 2300 housing units projected would be reinvested with the development while the district would still be required to educate the children from those homes.

The third problem was the roll-back, or using the tax base from 2006, before the power plant was built, when the property was worth considerably less. Representative Curt Bramble, Provo, passed a bill rolling back the tax rate for the property, which had the effect of raising the tax rate on the entire district. Now that the redevelopment is moving forward, watch for your next tax bill to reflect a $15-17 increase for the average household for a private developer to make big money improving the town of Geneva with your tax dollars.

Anderson Development had scaled back to 35 years (that’s still two generations of school children) and was preparing other mitigations when the bargaining was suddenly all over. While this is certainly political, it seems that each party was doing his job in representing the interests of those they worked with. We will all enjoy driving along I-15 and seeing a charming little development in place of blight. But I do not understand the roll-back, nor the USOE abandoning us.

I wrote earlier about seeing two columns, one for what we get and one for what we give. The money guys have done this, and the conservative estimate is that this deal will immediately cost ASD $30 million. Boo, hiss.

Note the vote was 5 to 2 on January 18, 2011. See the agenda here:

http://www.vineyard.utah.gov/rdaminutes.htm

There were 8 potential votes. The voting was as follows:

Aye:
Nathan Riley (Vineyard City),
Jim Carter (Vineyard City),
Larry Ellertson (Utah County),
Dave Pitcher (Central Utah Water) and
Larry Newton (Utah State Office of Education).

Nay:
Guy Fugal (Alpine School District)
Rob Smith (Alpine School District)

Absent:
Gary Anderson (Utah County).

Note they are required to get 2/3 of the vote from any quorum to pass the $300 million tax break, so if Gary Anderson had shown up and voted against it then it would have failed. Note also that if any one of the 5 votes in favor had voted against it would have also failed.

The most egregious vote in favor was Larry Newton from the Utah State Office of Education. They had misled Alpine School District into believing that they would not vote for it unless Alpine School District was supportive, but then surprised them at the last minute and voted for it, and still have not provided any explanation why the sudden change of view.

In other words, our taxes were just raised by $300 million, and the only one of the five votes who represent us who voted in favor was Larry Ellertson on the Utah County Commission.

I would encourage you to call or email Utah County Commissioner Larry Ellertson and ask him why he just raised our taxes $300 million in Alpine School District. Larry’s email is larrye@utah.gov , and his direct dial is 801-360-4305.

Here is an article I wrote on this topic last Summer:

http://www.heraldextra.com/news/opinion/utah-valley/article_4ff275c7-cc36-5187-a8ae-8e00befea572.html

Developers frequently ask school districts to assist in the redevelopment of land. The developer typically asks the school district to provide property tax rebates to the developer’s project, which decreases the costs of the project, making it more economically feasible (or profitable). The justification given for the tax rebate is that the project will generate more tax revenue in the future for the school district, so the school district should “invest” in the project by giving the developer a tax rebate.
Possibly the largest such tax rebate in the history of Utah ($300 million) has recently been requested from Alpine School District by Anderson Development through the town of Vineyard for the proposed redevelopment of the old Geneva Steel site. Based on my read of the Utah Taxpayers Association’s review of the request, I believe the Alpine School Board should support approximately half of the proposed $300 million rebate through a redevelopment agency (or “RDA”), but the second half is not justified and should be rejected by the Alpine School Board.
When evaluating a proposed redevelopment project, school boards should ask two questions. First, does the land have negative value? That is, would a developer have to pay someone to transfer ownership in the property? If the answer to that question is, “Yes,” then an RDA may be appropriate.
The second question is this: if the RDA is not approved, will the transactions on the redeveloped site take place in the greater community? If the answer to this question is, “No,” an RDA can also be appropriate. Unlike most RDAs, the Geneva RDA has elements relating to both questions.
The former Geneva site is riddled with useless infrastructure, from deep concrete bunkers to tainted dirt. These relics of the steel plant have imposed negative value on the property. Based on Anderson Development’s projections, about $150 million worth of the improvements contemplated in this RDA are necessary to bring the site to a condition comparable to other greenfield sites. That much of the proposed RDA is appropriate, and should be approved. Without such approval, the land could remain any eyesore for generations to come, and harm the economic development of Utah County.
But Anderson Development is apparently not content with that level of taxpayer investment. They want the Alpine School Board and other taxing entities to grant another $150 million in taxpayer subsidies for their project. This additional investment by the taxpayer is not justified because the transactions contemplated by that investment will occur in the greater community, whether or not this Geneva RDA is approved.
Over the 40-year term of this RDA, Anderson Development hopes to build office parks, retail space and housing. Whether labeled as residential, office space or storefront, all the development contemplated in this portion of the Geneva RDA is retail. Tax subsidies do not stimulate retail economic activity; rather, they rearrange which city reaps the sales taxes associated with the retail activity.
If the Alpine School Board participates in the second $150 million of the Geneva RDA, the district will get nothing in return. Consumers won’t increase their spending because of the new retail location. Every transaction in the proposed Geneva RDA will occur somewhere in the greater community without that subsidy. The transactions may be in Lehi or Orem, but they will occur. In other words, if the Alpine School Board approves the second $150 million request, they will essentially be shifting millions of dollars from existing cities and businesses in the Alpine School District to the city of Vineyard and Anderson Development. So, while this request clearly makes sense for both Vineyard and Anderson Development, it does not make sense for all the other cities and businesses in the district.
The plight of the Cottonwood Mall illustrates the folly of retail RDAs like the second half of the Geneva RDA. Almost two years ago, the Granite School Board approved an RDA to subsidize the redevelopment of the Cottonwood Mall. The Cottonwood Mall proposal would have used nearly $100 million over 20 years to facilitate retail, office space and residential units.
Although the subsidies were approved, no redevelopment of the Cottonwood Mall has taken place. The reason for the failure is simple: tax subsidies do not change the amount of consumer spending. They merely move an economic transaction from one place to another. They spur no new economic activity.
In summary, the Alpine School Board should separate the proposed Geneva RDA into two $150 million pieces. The piece that eliminates the site’s negative value is appropriate, and the Alpine School Board should participate. The second piece, which subsidizes economic activity that would happen without the subsidy, is inappropriate, and the School Board should reject it.
• Joel Wright, of Cedar Hills, is an attorney.

I actually agree with everyone on this issue.

Glad I was sitting down. ;)