Public infrastructure districts, or PIDs, are a relatively new tool in Utah used to pay for development with bonds. The Military Installation Development Authority has four in its Wasatch County project area.
Combined, those PIDs and MIDA itself have bonded for roughly $1.1 billion in Wasatch County since 2020, public disclosure documents show. About 75% of those bonds belong to the PIDs.
MIDA leaders say the authority’s work is safeguarded by “extreme oversight” and annual third-party audits. State Auditor Tina Cannon, meanwhile, argues it’s risky to concentrate that much debt in such a small area.
She told KPCW in June that general obligation bonds statewide are currently under $1 billion — a record low.
MIDA’s project area director for Wasatch County, Heather Kruse, said in a June interview the bonds in the East Village area are intended to accelerate the construction timeline.
“That’s why you’re seeing over a million square feet under construction there in the skier village,” she said. “We’ve got the skier services; we’ve got the five Cormont buildings, which anchor the bottom portion of the village, all starting construction, either in permitting or underway. You’ve got the Four Seasons that’s well underway, the Waldorf Astoria well underway as well. And that is because we had this influx of cash revenues that could help get those construction contracts underway much, much quicker.”
MIDA spokesperson Kristin Kenney Williams said payments are on schedule for each bond. She said more of the debt will be repaid once the Military Recreation Facility area generates more revenue.
“It is clear in the MRF project area that there are revenue projections that can pay this debt,” she said in a July email.
A 2021 market study published in bond disclosure documents estimates that by 2040, the project area will include over $4.4 billion in residential and hotel taxable value.
Cannon said she has specific concerns about bonding for resort development.
“When you see that type of concentration of debt in this small space, it’s just a general red flag, because you’re assuming that there will continue to be a very high level of demand for high-end vacationing in that area,” she said. “This is not typically what you would see for military-type projects. And when you have a year of snowpack like we just did, that can always impact an entity’s ability to repay a bond that is dependent upon snowpack.”
The auditor has been outspoken about her concerns with PID financing. As of June, PIDs had issued $3 billion in debt statewide in 16 months.
In March, Cannon’s office advised local governments to proceed carefully when developers ask to create PIDs, citing Summit County’s bankrupt golf resort Wohali as a cautionary tale.
PIDs avoid placing the financial burden of future growth on existing Wasatch County taxpayers, and the debt isn’t included on MIDA’s balance sheet. Laura Lewis, MIDA’s bond advisor, said in June the bonds’ structure leaves all the risk with investors.
“There’s a large risk section about all the things attorneys can dream up that might happen, but in no way can a bondholder come back to the state of Utah or to Wasatch County or to MIDA and say, ‘We demand that you do something to raise revenues to pay us,’” she said.
She said there is no risk that property taxes will be raised to pay for the bonds.
Cannon said although local governments may not bear legal liability if a project goes south, PID projects exist in the context of their surrounding communities.
“If things did not go well, of course there will be ripple effects throughout the community at large – how could they not?” she said.
MIDA chief financial officer Paula Eldredge said she’s not worried.
“We watch all of the indicators, we take action [...] when there are things that are within our control, and we are encouraged by the rate of development and especially private investment in our project area,” she said in a June interview. “It gives us a great deal of confidence for the future.”
MIDA was created to serve the military and spur economic development. In Wasatch County, the Grand Hyatt Deer Valley and the SkyRidge equestrian center each offer military benefits.
Development in the area includes numerous other hotels, homes and Deer Valley’s new base area. The resort will open seven new ski runs and one new lift this winter, on top of 80 runs and seven lifts introduced last season.
Deer Valley Resort is a financial supporter of KPCW.
