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Park City's Affordable Housing Bonds Potentially Impacted By Tax Reform Bill

Utah State Capitol
KPCW Radio

After pressure by Gov. Gary Herbert and House and Senate leadership at the start of the 2019 general session, the Utah Legislature’s race to change state tax law in less than two weeks begins. 

The long-awaited tax reform bill had its first hearing Friday. Sponsored by Wasatch and Summit Counties Rep. Tim Quinn, House Bill 441 lowers the sales tax rate while adding sales tax to a wide variety of services. The Heber Republican has reportedly been working on the bill, with other key players, for months.

At nearly 300 pages, the far-reaching impacts of the bill are difficult to summarize, but the purpose of the reform is to put more dollars into the state’s general fund, which Quinn says has depleted as the economy has evolved from product-based to service-based. Under the new legislation, everything from haircuts to landscaping to legal services will be taxed. The bill also features a small cut to the state income tax as well as tax credits for individuals in poverty and retirement, and families with children.

HB 441 was the only item on the agenda of the House Revenue and Taxation Committee Friday, and the committee room was packed with lobbyists from businesses whose services will be affected. Jon Bronson, managing director of public finance for Zions Bank, mentioned Park City by name in his testimony. He’s helping Park City with its sales tax revenue bond that the City Council approved in January for affordable housing. Bronson says he loves this bill and hopes it passes, but he’s concerned about how it will affect Park City’s bond. He says HB 441 creates uncertainty for bond holders because Park City will use sales tax revenue to pay them back—and the lower rate could change the flow of that revenue.  

"Park City has recently issued about $27 million of sales tax revenue bonds for affordable housing," Bronson said. "We haven’t closed that deal yet, and so we’re going to have to approach disclosure on that. We’re not quite sure what to say to [bond holders] because we’re not quite sure what the expanded base and the lower rate is going to mean to Park City.”

After nearly two and a half hours of discussion to the bill, Quinn had a fiery response to those asking for exemptions to their services and for the bill to be held and studied more.

“Representatives, I’m one of the most junior members that’s sitting here in this room today, but even I know that that’s a tactic they use every single bill that is being contested," Quinn said. "'This is being rushed, we need to send this to interim.' Let me translate that for you: kill it. That’s what that means. It doesn’t mean to study this further. It means that we want to stop the bill.”

The committee voted 12-2 to forward HB 441, with both Republicans and Democrats in support. The bill will next be heard on the House floor.