The $1.8 billion in projected economic benefit from relocating the Utah State Prison may be accurate, but it’s based on shaky assumptions, a local legislator says.
Rep. Merrill Nelson, R-Grantsville, said the actual numbers may be far less, according to a study completed by the Office of the Legislative Fiscal Analyst. Nelson requested the study.
“The original economic projections for the Draper prison site were too high,” he said.
Nelson released the LFA study along with a press release Tuesday afternoon.
The $1.8 billion figure came from the state’s Prison Relocation Commission’s consultant, MGT of America, a Tallahassee, Florida-based criminal justice and public safety-consulting firm.
MGT found that after the 700-acre Draper prison site is fully developed with a mix of retail, light industrial, high tech, and residential uses, it would be responsible for $1.8 billion in total economic benefit.
Furthermore, development on and associated with the site would create $94.6 million annually in state and local taxes, according to MGT’s findings.
The legislative fiscal analyst was able to reach approximately the same numbers as MGT using the same economic modeling software and assumptions as MGT.
However, after changing three key assumptions, the LFA found that the economic benefits of moving the prison were significantly reduced.
In opposition to MGT’s assumptions, the LFA ran economic modeling software with the assumptions that: New retail development would compete with existing retailers in the state, retail development would not create new households, and initial capital development would not lead to additional induced capital development.
The LFA study found that by the end of the 10-year redevelopment period in 2029, the vacated prison property would produce only 3,700 jobs — one-fifth the MGT estimate; wages of $315 million — one-third of the MGT estimate; GDP of $557 million — less than one-half of the MGT estimate; and combined state and local tax revenue of $36 million — about one-third of the MGT projection.
Only 70 percent of the projected new tax revenue would go to the state, according to the LFA study.
The LFA report shows that MGT’s economic projections for redevelopment of the current prison site hinge upon three critical assumptions that may not be valid or as reliable as other assumptions, according to Nelson.
Given the uncertain and unreliable economic impact of moving the prison to a different location, any decision regarding prison reconstruction should be based primarily on what is best for the prison, for the Department of Corrections, and for needed criminal justice reform, rather than on economic redevelopment of the existing site, said Nelson in his press release.
“I requested the LFA do this study to ensure that we are carefully examining all assumptions,” he said. “Their findings demonstrate that MGT’s initial economic development projections can be questioned. We must be cautious moving forward on this critical issue and be sure that moving the prison is in the best interest of the state.”