The Tooele County School Board has decided to split the cost of a retail development project in Tooele City with the City and Tooele County.
The School Board voted to fund $1.25 million of a $2.5 million budget by the Tooele City Redevelopment Agency for a property tax increment funded package to attract a developer for a retail project on 1000 North west of Wendy’s during the School Board’s meeting Tuesday night.
The proposal, included with the board’s agenda for the meeting, had the school district contributing $1.79 million of the $2.5 million redevelopment agency project budget.
Board Member Scott Bryan pointed out that Tooele City will get a portion of its contribution to the project back through increased sales tax, but the school district does not get sales tax.
“I would feel better if we were splitting that $2.5 million incentive,” Bryan said. “I propose that we limit our district’s participation to half of that, or $1.25 million and the other entities cover the difference of that.”
The other taxing entities in the project area include Tooele City and Tooele County.
Along with Tooele City’s tax increment contribution to the project, the City is also discounting the sales price of the property to the developer by $1 million, said Randy Sant, Tooele City’s economic development consultant.
The project area’s budget comes from property tax increment. The amount of property tax paid to taxing entities is frozen at the amount collected in the base year of the RDA project. Additional property tax collected over the base amount from an increase in property value, called “increment,” goes to the RDA to pay for infrastructure, incentives, and other projects in the RDA area. The increment is kept by the RDA for a defined time span after which 100 percent of the property tax goes to the entities.
Along with approving the $1.25 million in tax increment from the school district, the School Board also agreed to a maximum 15-year lifetime for the project’s collection of tax increment.
The RDA’s budget for the 1000 North project area shows that by 2022, or the third year of the project area, the value of the property, which includes both commercial and residential development, would reach $46 million.
The tax increment financing would be only collected from the commercial part of the project, which is an estimated $31 million of the $46 million total value.
“We want our taxpayers to realize that we aren’t taking this lightly,” said Carol Jensen, school board member. “We realize the tax burden, but we want to support economic development and recognize the importance of economic development in our county.”
Over the 15-year lifetime of the tax increment financing for the project, a total of $6 million would be collected from the property owner due to the school district’s property tax rate, according to the RDA’s project budget.
Under the agreement approved by the School Board Tuesday night, $1.25 million of that would be kept by Tooele City’s RDA and the balance, $4.75 million, would go to the school district.
How much property tax the property would generate without the RDA project and if retail would come to the area anyway is a “chicken and egg argument,” according to Sant.
“However, the property is currently owned by Tooele City’s Redevelopment Agency, so nobody is getting any property tax from the property right now,” said Sant.
The reduced participation by the school district from the proposed project plan will not jeopardize the project, according to Sant.
“The project will go forward as planned,” he said.