Draper's ambitious plan to surround its FrontRunner station with a complex of high-rise office towers catering to high-tech companies secured Salt Lake County's financial support Tuesday.
The County Council signed an interlocal agreement with Draper that commits the county to give up $26.5 million to $39 million in new sales tax revenues generated over 20 years within the "Community Development Area (CDA)" around the station at 550 W. 12800 South.
The county is willing to make that sacrifice based on the premise that its investment will pay for infrastructure that will attract companies in the future and the tens of thousands they hire to those office towers, in the long term producing economic development returns that dwarf the original public investment.
Draper officials predict the largely vacant 345 acres, now valued at $6 million, will be worth $1.2 billion by 2035.
But if the project falls short of expectations, the agreement authorizes the county to reduce its contribution after 10 years.
It allows the county to opt out if the developer goes bankrupt. And it specifies that, during the diversion period, the county will pitch in an additional 5 percent of its sales tax from the area, provided the money goes toward affordable housing.
"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," said Mayor Ben McAdams.
His administration negotiated the agreement after taking office in early January. The council had endorsed the concept in December, but asked the new mayor to make sure the pact provided more protections for the county.
The agreement sets a cap of $39 million on county contributions of new sales tax. But if the project area is not worth at least $600 million in 2023, the county can cut the amount of revenue it gives up by 20 percent, reducing its outlay to $26.5 million.
The agreement also precludes Draper from asking the county for more money if funding gaps develop.
Draper Mayor Darrell Smith said city officials are pleased to have the county's support. "It's the right time," he said, "a good thing."
Added McAdams: "Growing our economy is one of the best things we can do to balance our budget and improve the quality of life for Salt Lake County residents."