Public must benefit if taxes lure businesses
Promoting economic development is often a high-stakes bidding war. Our job, as elected officials, is figuring out how to structure public participation through tax incentives to achieve maximum return on the public investment, crafted by means of a transparent, open and accountable process.
Our priority as county elected officials is to be careful stewards of public funds and to be accountable for spending taxpayer dollars. Everyone wants to "own" the vision and game plan that result in the next Silicon Valley, with its thousands of high-paying jobs and innovative spin-offs. Salt Lake County actually has a realistic hope of doing just that, as part of the already-growing "Silicon Slope" here in Utah.
Our job is to figure out how tax incentives can bring the best return on the public investment, and to be transparent and accountable as we do that.
Meeting those goals we believe requires a new model. As Salt Lake County mayor and Council members, we view our participation with Draper City, through a Community Development Area agreement, as a good step toward that better public/private model.
Draper City has signed contracts for a future development area that could look much like what is already taking shape in Lehi and American Fork infrastructure designed to meet the needs of tech giants such as Microsoft, Adobe and eBay.
The location is near a newly completed mass transit stop and therefore already makes use of substantial public investment in high-speed rail. Before choosing to partner on economic development with the city and contribute tax increment funding for Draper's bonding effort, we asked ourselves these questions:
1. Will the economic activity result in job growth?
2. What's the return on investment for the taxpayer?
3. Is the process transparent, open and accountable?
Over the past two months, the mayor's office has worked closely with Draper Mayor Darrell Smith, his staff and development team to negotiate the terms governing Salt Lake County's participation. Using 2012 as the base year, the county's share will contribute 70 percent of the project's new tax revenues for up to a 20-year term.
The county is offering an additional incentive of 5 percent if Draper builds affordable housing within the project area. However, if the value of the project area is not worth at least $600 million by the year 2023, the county's overall contribution decreases to 50 percent of tax increment for the remaining project term.
After further review of the FrontRunner Community Development Area budget projections, the county has decided that it will cap its total tax increment contribution; will not be liable for payment until Draper agrees to contribute at least 75 percent of its tax increment over a minimum of 20 years (which Draper has done); and Draper will not be able to seek additional county funds to cover any project funding gaps.
The Draper Redevelopment Agency must prepare an annual progress report and certify the taxes generated by the project.
As elected officials whose first responsibility is ensuring the most bang for each taxpayer dollar, we see this agreement as a more fiscally responsible approach. With this project we are laying a foundation for Salt Lake County to compete as a technology development hub, leveraging the taxpayers' already significant investment in mass transit and increasing the number of good-paying jobs for our college graduates.
Ben McAdams is mayor of Salt Lake County; Jim Bradley and Richard Snelgrove are county councilmen.