Heber City Asks School District To Share Tax Revenues For Next 20 Years
Heber City has announced a plan to revitalize its downtown area. It involves a 20-year economic development strategy that requires regular contributions from local taxing entities, with the majority of funds coming from the Wasatch County School District.
Heber City is asking the Wasatch County School District board for help financing a 20-year redevelopment initiative.
The two entities began talks the city hopes will secure more than two-thirds of the funding it needs to create what it calls a more “vibrant” downtown.
Heber City officials say the vision to revitalize its downtown is based on a study of what residents want. That vision depends on the school district agreeing to contribute tax revenues over the next 20 years.
Heber has already designated 80 acres in the heart of the city as a community reinvestment area, or CRA. Now it needs the school district, county and water district to agree to a financial strategy to pay for reinvestment projects there.
In a pitch to the school board last week, Heber City Manager Matt Brower told school board members the CRA would allow the city to generate an estimated $36 million in property-tax revenue without raising tax rates or reducing yearly tax revenues.
“The CRA is not a new tax,” he stressed. “It is not an increase to an existing tax. It is not form-based code, a zoning ordinance or a land-use code. The CRA is not an initiative to tell property owners what to do with their property. The CRA that we proposed does not have condemnation powers.”
He proceeded to explain how the CRA works. It’s a strategy based on a set of rules the Utah State Legislature recently passed to give cities the ability to use tax-increment financing in economic development.
Instead of raising taxes to increase revenue, the city would incentivize developers to invest in properties, raising those property values and eventually, property-tax payments. As an example, Mayor Kelleen Potter said the city had unofficially negotiated to build a road into a mixed-use development in town if the school district agrees to help the CRA, which could be a key to persuading a large grocery store to open there.
The properties in the 80-acre project area, or CRA, currently generate $2.4 million of the $50 million the school district receives in total property taxes each year. Heber City is asking the school district to agree to using that $2.4 million number as a base figure, and to give the city 80% of property taxes beyond that amount that come from within the CRA for 20 years.
City officials projected that during that time, the school district would generate an additional $26 million to reinvest in downtown projects.
According to City Councilman Mike Johnston, the school district offered its own projection that by following the plan, it could contribute $40 million in newly generated taxes beyond the yearly base amount in that time.
Brower, the city manager, said the city was relatively conservative in its calculations, which could account for the difference in the projections.
Just before the meeting adjourned, school board member Kimberly Dickerson voiced reservations about using money meant for school funding on city development.
“You know, we’re in the education business. How does this educate our kids? Tell me why we would make this decision when our priority is to educate children,” she said.
Brower responded, “We believe that if you support the CRA, it will in the long game generate more tax revenues for you to do more building maintenance, build more buildings, provide teachers' salaries, provide the things that you need to be successful at teaching those students.”
The city estimates if the school district agrees to contribute to the CRA for the 20-year period, its property-tax revenue in the downtown area would increase to $6 million, up from $2.4 million, in 2041. At that time, the school district would begin to receive 100% of the revenue beyond the $2.4 million base amount, instead of just 20% of it according to the proposed agreement.
City projections say without the CRA, the school district’s property-tax revenue would increase to $3.3 million.
The city and school district will continue talks, and city officials say they hope to reach an agreement by the end of the year.