OGDEN — As Ogden City works through a handful of new tax-incentivized redevelopment areas, officials there are finding a need to educate the public on exactly how the often-used tool works.
In the past year, the city council has approved the Adams Community Reinvestment Area — which includes a related venture called the Nine Rails Creative District — and the Continental CRA.
Encompassing both the downtown and the neighborhood immediately east of it, the two redevelopment districts could include more the $360 million in new construction.
Meanwhile, progress is being made on the city’s west Ogden Trackline RDA, which includes a mix of new commercial, manufacturing and light industrial space at Weber County’s former and long dormant livestock yard in west Ogden.
The city is also considering standing up a new RDA at the Ogden-Hinckley Airport.
“We’ve had a lot of activity over the last year,” said Ogden Deputy Director of Community and Economic Development. “We’ve been busy.”
As that activity has accelerated, members of the city council say they have received questions from constituents about why and how the RDAs used and how effective they are.
Cooper explained the ins and outs of RDAs at a recent city council meeting, answering questions from the public that were submitted to some council members.
The redevelopment districts work by freezing the tax valuation for all taxable properties inside an area of land that’s been targeted for reinvestment.
For a specified time period or up to a certain dollar amount, future increases in property tax revenue are used in the redevelopment effort, a mechanism called Tax Increment Financing.
The TIF money is offered to developers as an incentive to build and it can be used for things like street and utility improvements, hazardous waste removal, property acquisition and the demolition of blighted buildings.
In Ogden, RDAs usually collect those tax increases from the city, Weber County and the Ogden School District.
Ideally, when the duration or dollar thresholds are met, new development in an RDA has increased tax valuations in the area and the governmental agencies see a new stream of cash that may not have otherwise been there.
The process has often been referred to as a “deferred investment” by the different taxing entities involved.
On top of new and greater tax value, Cooper says the redevelopment/TIF tool is the best method for offering potential developers “true equity” and is necessary to stimulate needed development where the private market will not.
“Right now, in terms of the Ogden market, it’s difficult to see private development happen because we have a low ceiling in terms of incomes and a high floor in terms of expenses,” he said. “So that margin a developer would need to make an investment worthwhile ... doesn’t always make sense.”
Cooper said the city currently manages 19 TIF districts, with 12 of them established before 2000. By 2026, the all districts stood up before 2000 (plus the South Wall RDA, which was established in 2011) will expire.
“(Our total) is on the high side as it relates to the entire state,” Cooper said of the city’s RDAs. “I think we have the most (or) the second most of all the redevelopment agencies in the state. But our approach is not ‘are there too many’? it’s ‘are they effective?’”
One shining example of an effective RDA, Cooper said, is Business Depot Ogden.
The BDO RDA was established in 1998, a year after the federal government gave the land and buildings associated with Defense Depot Ogden to Ogden City.
The former military installation closed in 1997 during the Department of Defense’s Base Realignment and Closure process. The land was deeded free of charge to Ogden City, who entered into a public-private partnership with Salt Lake City-based real estate developer the Boyer Company.
The RDA and the city partnership with Boyer resulted in the 1,118 acre business park seen at the site today.
“When we received that land from the federal government ... it was valued at a little over $22,000,” Cooper said. “As of 2019, it will have approximately $475 million worth of taxable value, not to mention 6,000 jobs. (BDO) is the poster child for how to do things right.”
The city also collects lease revenues from the development, which Cooper said rivals the use of tax increment when it comes to money used to support maintenance costs and overhead associated with new development.
When the district expires later this year, the city, the county and the school district will receive a torrent of cash that likely wouldn’t have occurred otherwise.
On the opposite end of the spectrum, Cooper said, is the Golden Links RDA.
The 1.4-acre district was established to provide a loan for the Ogden Odd Fellows Manor for a not-for-profit housing project for the elderly and disabled.
The Golden Links RDA is set to expire this year, and will yield a total of just under $9,000.
“I’m sure it had some benefit at the time they enacted it,” Cooper said. “But in hindsight, that’s one we look at and say ‘there are some lessons to learn there as far as what not to do in the future.’”
Cooper said there is a certain level of risk associated with TIF, but he thinks the bigger risk is doing nothing at all. Without many of the city’s RDAs, he said, there would be fewer jobs, decaying infrastructure and difficulty in maintaining satisfactory service levels.
“We’ve seen that over a period of decades,” he said. “As the railroad industry and other supporting industries waned and the economics of the Ogden market changed, there was a tremendous amount of disinvestment. 25th Street was a victim of that.”
Mayor Mike Caldwell said his administration knows RDA specifics “can be very complex,” but said the have yielded mostly positive results.