Major vacation destination proposed for SITLA land previously eyed for desert golf course in Kanab

Real estate development has become the trust’s main moneymaker under the leadership of David Ure, who retires in March.

(Courtesy photo by Kane County Water Conservancy District) Retired Utah lawmaker Mike Noel proposes building a luxury golf course at this site outside of Kanab on state-owned land beside Jackson Flat Reservoir. The Utah School and Institutional Trust Lands Administration is instead expected to partner with developers to build a major vacation destination on this land.

A state-owned parcel retired Utah lawmaker Mike Noel hoped to sculpt into a luxury golf course in Kanab will instead be developed into a dense vacation hotspot called Mineral Village under a proposed development lease going before the Utah School and Institutional Trust Lands Administration (SITLA) board next week.

The ambitious real estate development, which beat out Noel’s dream of a destination links-style course, was kept under wraps until this week when SITLA staff posted the agenda for the board’s Jan. 20 meeting.

Construction is projected to take 15 years and the development is expected to generate $15.7 million for the state.

Occupying 101 acres just south of Jackson Flat Reservoir, Mineral Village would include a 128-room hotel, 200 vacation rentals and 137 lots for single-family homes, according to the proposal submitted by Mountain West Development Group, a little known firm registered to a Bountiful address.

A message left at the firm’s office Wednesday was not returned.

Noel had hired acclaimed golf architect David McLay Kidd to design the course, which would have been built by the Kane County Water Conservancy District — which Noel has headed for decades — and operated in partnership with the county and the city of Kanab. Many Kanab residents opposed the idea because of its heavy reliance on public funds that they say could be better spent on things other than a golf course few locals would use.

But in the end, it was SITLA’s strict contracting rules, not public opposition, that deflated Noel’s vision for attracting high-spending tourists to the scenic southern Utah town. Under requirements crafted specifically to prevent sweetheart deals for politically connected people, SITLA was obligated to seek better offers after Noel’s water district submitted a proposal to incorporate SITLA’s parcel into the 200-acre golf course.

At least two superior proposals — defined as what makes the most money for SITLA’s beneficiaries — were presented to the trust, while the golf course did not make the initial cut for consideration.

SITLA manages 3.4 million acres scattered around the state to support public schools and other state institutions. Under reforms adopted in 1994, the agency has so successfully prioritized revenue generation that it has since put more than $2 billion into the trust fund.

The Mineral Village project exemplifies SITLA’s pivot toward real estate development under the leadership of Director David Ure, who announced his March 2022 retirement on Tuesday. Under Ure’s 6-year watch at the agency’s helm, the dominant source of its revenues shifted from oil and gas to real estate development.

Last year, development overtook minerals as SITLA’s No. 1 revenue source, $34.5 million versus $30.5 million, according to its annual report. In 2016, by contrast, mineral extraction raised nearly twice as much revenue as real estate development, $35.7 million versus $19.7 million.

Even as oil and gas revenues cratered in the last few years, the trust has raised record amounts of cash, topping more than $100 million last year. The lion’s share came from real estate projects, mostly in booming Washington County. Most of these proceeds were deposited in a trust fund, which produces income that is distributed to Utah schools on an annual basis.

The beneficiary of the Kane County project would not be schools, but rather The Miners Hospital, an arm of the University of Utah set up in 2003 to care for workers injured in Utah’s mines. The project’s name was selected to honor that beneficiary.

SITLA is to receive an increasing percentage of the gross sales prices of Mineral Village’s vacation units and homes, according to a staff memo to the SITLA board.

“Minimum sales prices are set to protect guaranteed returns to the trust, where average single-family homes will be at $650,000 per unit and vacation village units will sell for an average price of $550,000,” the memo states. “Revenue to the Trust is expected to be $4 million and $5.1 million, respectively from these two components of the development lease.”

The hotel would be completed in the project’s seventh year. In exchange for a 14.6% “membership interest,” SITLA would give the developers the 5-acre patch on which the hotel would be built.