Fillmore CRA offer does not get support
School District Rejects Tax Increase Funding Proposal; the county is looking for a hotel, more advantages
Fillmore City officials twice last week failed to persuade other local governments to sign an additional $ 2 million tax funding proposal to fund infrastructure development in a new reinvestment area 60 acre community (CRA) on the north side of town.
County commissioners said they wanted to work on a better deal for the county before signing an interlocal deal with Fillmore. Millard School District board members – they hired an outside consultant to analyze the city’s proposal – couldn’t even muster a motion to vote on the plan at their regular meeting last Thursday.
Fillmore’s proposal calls for paying up to $ 2 million worth of sewage infrastructure over 20 years to a developer who wants to build a new travel and fuel center as well as a possible hotel and RV park where a Chevron gas station is now located along I-15 and Cedar Mountain Road.
The developer would install a new sewer line under the highway and pay it up front in exchange for a 75% reduction in property taxes over two decades.
Fillmore officials see this opportunity as a way to stimulate economic development and broaden its tax base while costing little or nothing in return for other local tax entities (the county, school district, and fire district). County officials are not so sure about the idea. School board members are convinced they don’t want it. So far, only the fire district has signed.
Fillmore Mayor Mike Holt told city council members last Tuesday that the developer was already on the verge of pulling out of the project as the county and city do not appear to be able to come to an agreement quickly.
Commissioner Dean Draper has attempted to address some of Millard County’s concerns about the project, of which there are many.
Fillmore in better financial shape than the county
First, he suggested that Fillmore’s finances are in much better shape than the county’s.
“Millard County is operating on a deficit budget this year. We borrowed $ 1 million from our capital funds to create and finance our budget this year, ”he said, before detailing the impact of the decline in property tax revenues from the region’s largest taxpayers. .
The Intermountain Power Project, long the county’s largest taxpayer, has lost $ 103 million in assessed value this year on its own, driving a hole in the county’s revenue that is likely to get worse before it gets better.
Draper then detailed the riches overflowing from the city’s coffers, the fruit of Fillmore’s stoic frugality. The city’s sewer fund contains $ 2.9 million; its electrical fund contains $ 13 million, Draper said.
“You have $ 14.362 million available which is unrestricted. The main feature of this project is to pass this sewer line under the highway, so that it can promote development, ”Draper explained professively, punctuated in turn by recitations of the current law. of State. “That estimate is $ 1.2 million to $ 1.5 million to torpedo this (sewer line) under (the highway). This $ 2.9 million in your sewer fund indicates that this is something for us that can be undertaken by the city itself.
Then there is the question of benefits.
An analysis of the proposal by the county showed the county would only receive $ 2.94 in benefits for every dollar invested in tax breaks, Draper said. MSD would get only 33 cents on the dollar, although strangely, its share of the additional tax funding represents the lion’s share of the proposed infrastructure funding, some $ 1.175 million over the 20-year period, which could explain the coldness of school board members. The fire district would earn 15 cents for every dollar invested.
Fillmore, on the other hand, would behave like a bandit, Draper suggested, earning $ 8.02 per dollar invested – to be fair, however, the project’s impact on city services would also be greater than on other tax entities.
The main concern and question raised by county and school district officials was why Fillmore opted for land tax breaks as a way to fund the sewer project when so many other options were available to him. them.
TIF as the first option?
Draper said the city could easily charge future developers an impact fee that would recoup any investment the city itself made. City officials then detailed in The Chronicle Progress the myriad of reasons why this would be a bad idea – it would be financially risky, on the one hand, and it would set a terrible precedent, meaning that every future developer who went approaching the city could expect a similar guarantee of infrastructure aid.
Holt reminded Draper during last week’s discussion that the county was not in the infrastructure business for similar reasons.
Returning to the county’s concerns, Draper also mentioned other alternatives for funding the sewer line, including funding from community block grants, Community Impact Board loans and grants, or through new shows. of bonds.
He and other officials also noted that the state had several pots of new money thanks to federal COVID assistance – $ 1.4 billion through the American Rescue Plan Act tax relief fund; $ 136 million in the Coronavirus Investment Projects Fund; and $ 1.1 billion through ARPA’s Local Tax Recovery Fund, which is specifically targeted at local state governments.
State lawmakers and officials from the Utah County Association have made it clear recently their willingness to accept requests from municipalities for COVID relief funds specifically for sewer and water supply projects. State Senator Derrin Owens, who represents Millard County in District 24, attended the committee meeting last week and reiterated the state’s desire to fund large water supply projects and sewers. .
A better approach?
Finally, Draper said he believed the best next step would be to bring together officials from different tax entities to discuss funding for the proposed project and come to a fairer deal for all.
“It is not a will on our part to thwart growth. We would love to cooperate, but it has to be seen in light of things that are going to benefit the county, ”said Draper.
The commissioner suggested that the county could accept the funding proposal if the city and the developer agree to certain phased steps – for example, the county would contribute a lower percentage of property tax funding in the first five years and increase that contribution. the following years. whether the developer was successful in meeting the agreed benchmarks.
Draper said the county, for example, is more in favor of hotel development in an early phase, although the initial proposal calls for the fuel center first and perhaps the hotel later, which Draper called it “nebulous” since not all hotel development seems guaranteed by the proposal.
If Fillmore officials were disappointed with the way the county committee meeting went last week – and they were – then they were really deflated after their proposal was rejected by the school district .
Ironically, the consultant hired to report to the school board, D. Burke Jolley of Park City, warned school district officials last week that among the less than desirable outcomes of voting for or against such a project was political pressure that officials could meet as a result.
“One of the most difficult aspects of any tax increase funding proposal is the political consequences of supporting or rejecting the project and the relationships you have with other elected officials,” Jolley said. “I have been involved in many projects and school board members can put a lot of pressure on school board members who want this project to happen. ”
Jolley said school board members are in an unenviable position and the money spent on tax breaks can easily be spent on higher priority items.
The district has debts of around $ 8 million, for example. And education funding per student in Utah is at the bottom of the barrel – the state ranks 50th in the country, beating only Idaho in an all-state ranking and Washington, DC Jolley’s. asked if board members would ever be able to ask Fillmore City to help build a new elementary school or any other expensive project. Unlikely, which means that such tax increase proposals are often one-sided when it comes to school districts.
Asked about his reaction on Monday, Holt said he believed school board members made their decision before the meeting and that officials generally “don’t know how these things work.”
MSD board member who represents Fillmore, Adam Britt, said he has contacted several companies that may be affected by the project, including existing RV parks in the city. The owners told him they didn’t even hear about the project until it was in the newspaper, Britt said. They also wondered where the city was when they needed help funding their own business plans.
Holt said he had heard from these business owners, whom he described as “excited.” Still, the mayor says he’s just trying to do his job, broaden his city’s tax base, spur growth, and help other tax entities with new revenue at a time when it looks like Property tax flows that the region has long relied on are shrinking.
“All I’m trying to do is grow the city, build a tax base so that when we start losing PPI, we have something in place to help,” he said. he declares.