This is an archived article that was published on sltrib.com in 2015, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Draper • The City Council has unanimously approved a deal that will provide up to $3.1 million in incentives to the Larry H. Miller companies to relocate two new-car dealerships and an office building to a vacant 15-acre parcel at 11400 South Lone Peak Parkway.
The agreement promises the company 50 percent of the city's sales-tax revenue from a Ford dealership and a second undisclosed dealership for 10 years, up to a cap of $3.1 million. Meanwhile, the city could make $10 million in extra tax revenue, according to a cost-benefit analysis commissioned by Draper.
The report by Lewis Young Robertson & Burningham said the net fiscal benefit would be more than 7,500 percent larger than leaving the vacant land west of the Karl Malone Toyota dealership as it is, subject to just $8,086 in annual property taxes because of a greenbelt exemption that treats it as agricultural land. All while the city "carries little to no risk," it said.
The analysis, however, was based on a 62 percent-38 percent split of sales-tax revenue apportioned in the city's favor. An economic development expert familiar with such agreements said Draper's offer of a full 50 percent is more generous than is typically offered.
Cities hungry for tax revenue are aggressive in trying to recruit car dealerships because of big-dollar sales and the fact that Utah's tax-distribution formula is based partly on the location of the retailer.
Miller Family Real Estate LLC has estimated that the two planned dealerships have potential combined annual sales between $50 million and $180 million.
The Miller Ford dealership is relocating from Sandy. No information was available about the dealership and Larry H. Miller spokeswoman did not return a call seeking comment.
The Utah Taxpayers Association has criticized such deals because they don't create new economic development, but rather shift jobs and businesses from one community to another.
The contract with Miller Family Real Estate got initial approval in September. The final agreement was OK'd last week along with a plan to vacate a portion of 300 West that runs through the property and creation of a special commercial district zone comprising 28 acres. There were no dissenting votes on the package of resolutions, and a small audience of residents made no comment during public hearing periods on the project.
Consultants said the plan "will bring development to an underdeveloped and underutilized property. … If LHM does not purchase this property, it is unlikely to be developed in the foreseeable future."
Citing the existing Toyota dealership across the street, the analysis said "an additional car dealership in that location would not negatively affect the look or feel of the area or the city."
One of the biggest compromises highlighted during council discussion was altering the city's lighting-intensity requirement from a maximum of 55 candles to an average of 35 candles.
"We took a study of some of the dealerships we have in this region to figure out what are the maximums, what are the minimums," said Dee Hansen, representing Miller Family Real Estate. "On some of the others, we're up to as high as 79 candles, the max, so we feel it was a great compromise to get to the 35 over average."
Draper Community Development Director Keith Morey said the Miller group has agreed to comply with the city's requirement for keeping the signage "considerably shorter" than that of the Karl Malone dealership.
The company wanted the location to be visible from the nearby highway, Hansen said, but "in the end, it was determined that we just can't be visible from the freeway."
"We've abandoned the idea [of freeway visibility]," he said.
The group proposed a 75-foot sign, which is 43 feet lower than the Karl Malone sign, at an intersection sitting 18 feet lower than that of its competitor's sign base.
Councilman William Rappleye commended the company for its willingness to work with the city.
"I see you've made some compromises, which I think is gracious on your part," he said. "Hopefully the neighbors will appreciate them."
Rappleye and fellow council members said they hope the business will be successful, with Councilman Alan Summerhays noting that the project will bring a "great" tax benefit to the community.
City Manager David Dobbins recommended $200,000 in impact fees be spent on installing a traffic light at the intersection where Karl Malone Toyota has its southern access point on Lone Peak Parkway, about 500 to 700 feet south of 11400 South.
"This will help improve traffic flow to the area and access to the businesses," Councilman Bill Colbert said.
Twitter: @mnoblenews, @danattrib