OGDEN — A new state law has set the stage for Ogden City to fund taxpayer incentivized development for longer periods of time.
Recent modifications to Senate Bill 6001, also known as Utah’s Community Reinvestment Act, authorizes Utah municipalities to extend the collection of tax dollars used on certain redevelopment districts for up to two years. According to the bill, the extension is meant to compensate for either a delay in the implementation of a redevelopment project or reduced tax dollars set aside for it, due to the COVID-19 pandemic.
“If there was a reduction in taxes that would have come through for tax increment, for example, then (the tax collection period) could be extended,” said Ogden City Council Executive Director Janene Eller-Smith.
So why is is this important for Ogden? As one of the oldest cities in Utah, Ogden is built out. The city often creates redevelopment districts, also called RDAs, to spur activity in economically dormant sections of the city. The city’s age, combined with its socioeconomic makeup, makes it so that Ogden usually has more active redevelopment districts than any other city in the state.
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.
Ogden has more than a dozen active RDAs. In just the last two years, 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 hundreds of millions of dollars in new construction. Meanwhile, progress is being made on the city’s 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.
While some have decried the development method for diverting (at least temporarily) tax income from government entities that need it, like school districts, the process has often been referred to as a “deferred investment” by the different taxing entities involved.
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.
On top of new and greater tax value, Ogden Deputy Director of Community and Economic Development Brandon Cooper has said the redevelopment/TIF tool is the best method for offering potential developers equity and is necessary to stimulate needed development where the private market will not.
The city has not said which redevelopment districts it might extend the tax collection period on, but Eller-Smith said it’s likely the city will do so.
“It’s likely there are one or two areas (the city administration) will be proposing,” she said.
Interestingly, the bill doesn’t require consent from the taxing entities that money is collected from, but Cooper said predetermined collection amounts can’t be surpassed under the new law.