The fund recently nabbed, for $2.3 million, the former ASARCO (American Smelting and Refining Co.) property, 3422 S. 700 West.

A bankruptcy court approved the purchase Friday, said Gordon Walker, director of the state division of housing and community development, on Tuesday. The closing is pending.

The land, adjacent to the county jail, is earmarked for apartments to house homeless military veterans. That would exempt it from the city's property-tax rolls, placing the facility in the same category as 30 percent of the 7-square-mile suburban city.

In a June 27 letter to the Loan Fund's board members, South Salt Lake Mayor Bob Gray asked them to consider looking elsewhere.

"The [presence of the] homeless facility is not my major concern," Gray wrote. "My concern is how this proposed tax-exempt development adds to the plight that is consuming the city of South Salt Lake."

While sales-tax revenues are used to compensate for the city's paltry property-tax intake, legislation last year changed that distribution. The new formula depleted South Salt Lake's coffers by about $2 million - and the council was forced to increase the city's property tax rate by 134 percent.

"No one is opposed to helping chronically homeless vets find a place to live, but it doesn't have to be in South Salt Lake," Councilman Bill Anderson said. "We have the lowest household incomes along the Wasatch Front, and now our tax rate is in the top three."

The recent land buy is part of the state's 10-year plan to end chronic homelessness, Walker said, adding that no developer is on board and preliminary plans have yet to be drawn up. He estimates the property could hold 250 to 300 one-bedroom units, similar to Salt Lake City's Sunrise apartments for the chronically homeless. It opened in March on 600 South near 400 West.

To become a reality, the South Salt Lake project would require broad, collaborative support, along with a variety of funding sources, Walker said. He said the state has 1,600 homeless veterans.

"We're just trying to do the best we can to meet the needs of people, particularly those who have served our country and protected our freedoms," he said.

At the same time, he hopes to lessen the effect on South Salt Lake coffers.

"In my meetings with Mayor Gray, the tax issue is very significant," Walker said. "We've been exploring ways to help meet their needs. We're not trying to make it so one community bears the burden."

cmckitrick@sltrib.com

Tax exempt

South Salt Lake's major tax-exempt properties include Salt Lake County's garbage transfer station, emergency operations center, adult jail and juvenile facility, the Oxbow Jail, Utah Transit Authority's headquarters and bus garage, the Roper rail yards, Granite School District offices and ancillary facilities, the Central Valley Water Reclamation Facility and Grace Mary Manor - 100 units under construction to house the chronically homeless.