Wasatch County places a bet with MIDA, and still gets some tax revenue in the deal
The Utah Military Installation Development Authority’s Wasatch County Mayflower project is a lot of things.
It’s 100 hotel rooms accessible to members of the military and their families. It’s the other 287 rooms to be used by the public in part to help subsidize the military’s preferred rate rooms. It’s a handful of luxury developments popping up around the Jordanelle. It’s an investment for Wasatch County and a way for the entity to enact its decades-old plan for the area.
Asked how the MIDA project currently underway affects the county and its taxpayers, County Manager Dustin Grabau said he could spend as little as 10 minutes on the topic or as much as two days.
This conversation fell somewhere in the middle, though much closer to the first option than the latter.
MIDA, he explained, existed as a state entity before it formed a relationship with Wasatch County.
According to MIDA’s website, it was created in 2007 to push economic development across the state through public and private partnerships to further military initiatives.
The beginning of its first project — the Falcon Hill National Aerospace Research Park — predates the association, which was created in part because the research park was located in two counties and four cities, creating a challenge for the Air Force in coordinating “land use, local taxes, municipal services, and economic development.”
“The Utah Legislature created the Military Installation Development Authority to act as a single authority to interface with the Air Force,” the website reads.
Wasatch County comes into picture
While its first project provided a valuable military asset through the research park and bolstered the state’s economy through developing a valuable research park combined with revenue-generating commercial activity with, the second aims to accomplish similar goals through a military recreational facility that would allow members of the armed forces the opportunity to participate in activities they might otherwise not have access to.
Activities like skiing.
“At the same time the Air Force approached MIDA for assistance in finding a suitable location for the new MWR facility, Wasatch County was engaged in strategic master planning to develop 4,700 acres surrounding the Jordanelle Reservoir,” MIDA’s website states. “Within this recreation development area, 14.5 acres for the MWR facility was identified.”
MIDA, Wasatch County and Extell Development entered a three-way relationship in order to ensure each party’s needs are meant — the development of the Mayflower Motel, the tax revenue that would come from the development and an recreation facility that would turn service members’ heads.
Building a hotel and an enjoyable recreational community, however, takes money.
Wasatch County’s financial role
“The whole project is subject to tax increment financing,” Grabau said. “Tax increment financing is when you set a base rate of value of the existing property or what it was valued at prior to a change, and then when the changes come, that additional growth above the base value is called an increment.”
Essentially, tax revenue collected by the county from developments within the MIDA project is paused at what it was before its incorporation into the project. The difference between the base amount the county receives and the amount paid goes toward the development of the project.
“That increment is one of the primary revenue sources for the MIDA project and its priorities,” Grabau explained. “Overall, Wasatch County gets a portion of the property taxes and a portion of the sales taxes in lieu of our portions of the property tax.”
While 100% of the county tax increment goes to MIDA, other entities that collect taxes from the project area — such as Wasatch County School District — receive 25% of their respective increment and pass the other 75% along to the MIDA development.
The agreement is not unique to MIDA, and in this case lasts 40 years from the time a development enters into the MIDA project to fund things like infrastructure and provide developers with partial reimbursement for groundwork they build not just for their own projects, but the community as a whole.
“The reason why you do it is because otherwise projects wouldn’t have happened in those areas,” Grabau said. “The county has been talking about building a resort-centered area there for probably approaching 40 or 50 years.”
And just because taxing entities won’t receive the entirety of their respective revenue from the MIDA project developments for about 40 years doesn’t mean there won’t be a return on investment until then.
The 25% of the increment some entities collect even before their full return on investment, Grabau explained, will likely become significant in the coming years, and other taxes MIDA is uniquely able to issue in its project area.
“We’re budgeting next year to receive in excess of $200,000 in revenue from the MIDA project area,” including some from sales tax, Grabau said. “We expect that to grow over the next years.”
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