School Board Not Ready to Make a Decision on CRAs

By Zak Podmore

(Crossposted in the San Juan Record)

The developers in San Juan County who are hoping to partner with the San Juan School District on two hotel construction projects will have to continue to wait on a decision from the school board.

At the December 4 meeting, board members suggested they didn’t have enough information to decide whether the district should enter an interlocal agreement with two local Community Reinvestment Agencies in a program meant to spur economic development.

“I don’t know enough hard facts and figures with each project to actually make a good decision,” said school board member Lori Maughan.

Merri Shumway, the board vice president, repeatedly echoed that sentiment throughout the meeting. “I don’t have enough information yet,” she said. “Who are the investors? Who are the owners? Who is going to lend the money? What are the down payments?”

Two projects are currently under consideration for the tax reimbursement program. Jared Berrett is developing Bluff Dwellings, a $6 million, 54-unit resort that is already being constructed in Bluff. The San Juan County Commission approved the plan for the Bluff Dwellings Community Reinvestment Area (CRA) in May.

Bluff Dwellings is requesting $458,000 in tax reimbursement over a 15-year period. Berrett would spend $300,000 to construct a new turning lane on the highway, and the remainder would go to utilities infrastructure such as electric and water connections.

Berrett said at a July school board meeting that he received notice of the need for turn lanes as he navigated the building permit process in 2016, and after planning for his project was well under way. He added that without the turn lanes, his project can get approval to open only 18 of the 54 rooms. Construction has continued on the full 54-room resort while the school board debates the CRA’s approval.

In Blanding, outgoing County Commissioner Phil Lyman and a group of unnamed partners are seeking funding for a potential 70-unit Marriott Fairfield Inn and Suites, which could cost $9 million. The hotel would be located in what the Blanding City Council has designated as the North Project Area west of Highway 191 across from the Blanding Cemetery.

The Blanding project is seeking up to $1.25 million in reimbursement for building a variety of “horizontal infrastructure” improvements, including roadways, parking, curb and gutter, storm drains, utilities, and landscaping, according to a presentation given to the school board in July.

The next step in the process for both CRAs is to negotiate an interlocal agreement between the taxing entities, the reinvestment agencies, and the developers.

If approved, 75 percent of new property taxes that are assessed for the developments after they are complete will be reimbursed to the developers through the CRA until the infrastructure costs covered by the plan are paid back. The other 25 percent will go to taxing entities, including the school, health, and water districts.

CRAs have long been used on the Wasatch Front to incentivize development in blighted areas, but they have not yet been used in San Juan County.

“We’re in uncharted territory,” Superintendent Ron Nielson said at the meeting before discussing CRA projects in other school districts. Jordan School District, he noted as an example, just signed a deal with PayPal to help bring a data center to the area. Nielson said that while they may exist, he hasn’t heard of a CRA model being used for hotels elsewhere in the state.

Lyman told the Record that flagship hotel projects “are marginal, especially in San Juan County. It’s a toss-up whether this thing is going to be a success or huge financial disaster.” A CRA helps developers secure loans, Lyman explained. “If a city wants a development, they’ll do a CRA.” The Blanding City Council has already signed on to the first stage of the process.

In an letter to the editor of the Record on October 3, Lyman called CRAs “a sweetheart deal for the municipalities” who are “able to obtain matching public funds to build even more streets, install more streetlights, improve water, power, and sewer facilities etc.”

At last week’s meeting Shumway suggested that she would, in theory, support infrastructure improvements that would be owned and used by the city or county.

But she raised questions about how the tax money would be spent according to the Blanding plan. “It says parking [in the presentation],” she said, reading off her laptop. “I can’t even begin to be apologetic for not wanting to pave a parking lot for one motel when we have a couple of motels right here in Blanding that have gravel parking lots. I’m not interested in providing those kinds of things while not bringing in money to the school district so we can pay salaries.”

Lyman disputed that interpretation after the meeting. “There’s no parking lot” included in the CRA, he said. “That’s somebody’s inflammatory rhetoric to try to put a bad spin on it.”

In a Powerpoint presentation that was given to the school board in July, the largest “reimbursement expense” listed as part of the Blanding CRA is $550,000 for “roadways/parking.” The second largest expense, at $350,000, is defined as “civil work/landscaping.”

Blanding City Manager Jeremy Redd wrote in an email, the CRA “could include parking lots if approved.” First the city needs to work out an agreement with taxing entities, Redd said, and then members of the Blanding City Council “will get to review and approve the exact request from a developer.”

Board member Nelson Yellowman questioned whether it was worth incentivizing seasonal jobs for hotel workers.

Shumway said she would like to see overall economic development in the county. “I don’t know the answer to this, but would [the new CRA developments] decrease the value of existing businesses?” she asked.

Jake Brown, manager at the Four Corners Inn in Blanding, told the Record he was concerned a CRA would give an “unfair advantage” to new businesses over “locally owned and operated motels.”

“I don’t think it’s right that local government would take tax money, most of it intended for public schools, and then use it to help subsidize a franchise hotel,” Brown said. “I’m not against competition, but this is government-funded competition.”

Jim Sayers, a member of the Bluff Town Council, spoke against the Bluff Dwellings CRA during the public comment period at Tuesday’s meeting.

San Juan County’s Community Reinvestment Agency–made up of Commissioners Phil Lyman, Bruce Adams, and Rebecca Benally–voted to approve the Bluff Dwellings CRA in May, several months before the town of Bluff was incorporated. Future projects within the city limits would be decided by a new agency made up of Bluff council members, including Sayers.

“For something that directly benefits youth, I think the CRA is probably a good bet,” Sayers said. “I think when it is applied to private enterprise, it looks a lot like corporate welfare to me, and it looks like a GoFundMe page for politically connected insiders in this case.“

Lyman said, “I wish [the school board] would just make a decision rather than, you know, float this false narrative and debate it and criticize developers and people. Just say yay or nay, thumbs up or thumbs down…For me, the project will probably hinge on that because I don’t have a million and a quarter dollars to throw away.”

At Tuesday’s meeting, the school board passed a list of guiding principles for CRA projects on a “first reading basis.” Shumway was the sole vote that was opposed.

Shumway said she is thinking about what’s best for her constituents and the students in the school district as she weighs the CRAs. “I want to be fair to people who pay taxes to San Juan School District to help pay salaries for all of our teachers and support staff. We’ve got to balance that in here as well.”

Update: The original version of this story erroneously said that Berrett received notice of the need for turn lanes after construction on his project had started. In fact, he told the school board that he knew UDOT was going to require him to pay for the turn lanes for a 54-unit resort complex as early as 2016. We regret the error. The story has been updated.