Editors Note: This article was originally published in the April 10, 2024 issue of the Chronicle Progress. Some information may be outdated.
Delta City Council members heard a presentation last week that to at least one of them sounded too good to be true.
It was a proposal for the city’s participation in a new Millard Economic Development Board (MEDA) plan to create a self-replenishing infrastructure improvement fund using state funds distributed to the county annually.
The funds would be available for municipalities inside the county to go toward infrastructure projects—roads, sewer lines, culinary water—in specified project areas with the hopes that new growth would follow, replenishing the funds through new tax revenue the growth creates.
Adopted during the 2020 legislative session, the state offered third- to sixth-class counties $200,000 annually in economic development grant funds to be used how the counties saw fit, so long as they reported back to the state how the funds were allocated.
Stuart Clausen, co-founder of Utah Regional Growth Association, who specializes in tax increment financing for Utah counties, made the presentation on behalf of the MEDA board during Delta’s April 3 regular city council meeting.
He said while $200,000 a year doesn’t seem like much for infrastructure—half of the annual amount will go toward workforce training, in fact—over time the fund could finance significant infrastructure projects and help the city attract new industry or housing developments.
“I think the biggest limitation to any kind of manageable growth in communities like Delta and Millard County is infrastructure,” Clausen told council members. “And where are the funds to build the infrastructure?”
He said most of the state’s wealth is along the Wasatch Front, where developers are more easily able to absorb infrastructure costs. But in small counties like Millard and cities such as Delta, infrastructure looms over development like an insurmountable obstacle at times.
“You guys are grappling with issues that are very large and trying to figure out how to find a couple hundred thousand dollars…how do you make that happen?” Clausen asked.
He said the county has banked most of the state funds the last few years, so has a few hundred thousand dollars in grant funds available.
“In my brain, in the MEDA board’s brain, we knew that infrastructure was a big deal. A hundred thousand dollars for infrastructure is not really a big game changer, but we’ve been banking those dollars. Much to the chagrin of the state…But the MEDA board has advised the Millard County Commission to allocate 50 percent to this infrastructure fund,” he said.
With time, and smart, strategic bets, he said those funds could continue to grow and grow, benefiting a host of projects and growing the county and cities’ tax bases, at virtually little financial risk.
Cities could apply for the funds through the MEDA board, run infrastructure into an area where growth is desired and then recoup the funds as development takes hold, Clausen said.
Councilman Kelly Carter, who represents Delta on the MEDA board, said the funds are sitting unused. He thinks the city should figure out a plan to tap the new resource.
“There’s no other way for the county to use these funds. They are there,” he said.
Councilman KC Bogue was skeptical and didn’t seem to follow much of the presentation—admitting at one point he was wondering what exactly Clausen was selling the city. He said, for example, that even $1 million for infrastructure wasn’t much money.
Clausen agreed it would take time to build up the fund and hopefully keep it growing over many years, until eventually it reaches a threshold where it can fund significant infrastructure improvements across the board.
“First five years, it’s not going to be much. But if we can get the county to set this up…the MEDA board has approved it, the county has approved allocating money, now they need to find a project,” Clausen said.
He said the only risk was if the county made a bad bet on a project that did not lead to growth.
“The only risk here, the up front dollars, if you build the infrastructure and there’s no growth, then the money’s gone,” he told city officials. “It’s a gamble worth taking because it’s state dollars, not county or city dollars.”
Interestingly, the city has recently been grappling with a project under construction just outside city limits by local developers who wished to be inside the city, contributing to the tax base and taking advantage of city services.
But the developers could not come to terms with some of the costly infrastructure improvements the city requires. One major hang-up, for example, was the city wanted the developers to pave a dirt road—hundreds of feet along S 2500 E, to city standards at a cost that the project could not afford up front.
The city agreed to forego it’s own ordinance and give the developers extra time to come into compliance, but also needed a signed agreement in writing, with an enforcement mechanism—such as withholding water—if the developers didn’t meet the city’s timeline. Councilman Nick Killpack, during a recent discussion about the proposed agreement, said the city had been burned one too many times by developers in the past and so had to be strict with enforcing city code from now on.
The businessmen, Shane Church and McKay Christensen, decided to continue developing their light industrial projects outside city limits anyway, following less costly standards allowed inside the county.
Clausen’s presentation almost seemed to fit the developers’ issues with the city like a glove—though the funds available today would barely dent the cost of paving S 2500 E.
“This is not going to solve the immediate problem today. But a decade from now…if we’re strategic in making some smart bets… getting industrial space brought to Delta makes a ton of sense. There’s a ton of money coming and there’s a need for a ton of space. And you need housing,” Clausen told city council members.
Church said he was all in favor of a fund to help attract local growth, particularly after the experience he’s had wrestling with how to pay for improvements required by city code up front, when those funds likely wouldn’t be available until years after his project is compete and other businesses are sited on nearby parcels. Church operates a light industrial business called SFC Tech.
Christensen, who owns Predator Armor, among other businesses, said he was similarly dissuaded by Delta City’s infrastructure demands, especially after one interested business that owns property near where he is currently building simply decided the frustration wasn’t worth the effort to relocate to Delta.
“This money is sitting there doing nothing…most people have taken this fund and just bought one project and it’s done, build a road and it’s done. Millard County’s economic development board didn’t want to do that,” Carter said. “They didn’t just want to dump the money somewhere. They wanted somehow to make it work for itself. And this is a mechanism, you can put it somewhere and it pays itself back and the money’s there, you can use it again.”
Councilwoman Betty Jo Western said she heard the good parts of the plan but wondered if there was any down side.
Clausen there was virtually no down side for the city.
“There’s really no down side for you guys because you’re not being asked to pay and create the project area. The county’s going to do that. All you are being asked to do is to allow that to happen. The down side for the county is if we make a bad bet and the growth doesn’t come,” he told her.
Later Clausen said the city would also not see a dime in reduced tax revenue, that any new project area would maintain the city’s base rate, but that new growth would go toward replenishing the MEDA fund. Once the initial funds were repaid, the city could then collect the entire amount owed each year.
