For decades your Taxpayers Association has worked to protect the tax base of Utah school districts from community reinvestment agencies’ (CRA) tax increment financing (TIF) schemes that create winners and losers among competing businesses, all at the expense of Utah school children and  taxpayers who have to fill the gap.

TIFs became common across the U.S. more than half a century ago to eliminate blight and brown fields,  which could have never been cleaned up because of low or negative market values. This blight was an economic cancer, lowering the value of surrounding properties and the general community. The legitimate purpose of TIFs was to use the property taxes generated from the incremental difference in value of the property between its negative value and value after improvements to pay off the costs of the cleanup.

However, the tool for eliminating blight slowly became a tool to grant financial favors for the development of pristine properties which needed no subsidies. At its worst point, cities were using TIF to win the location of large retail establishments such as shopping malls, big box stores, and auto malls. Cities learned that their budgets could be advantaged from the massive increase of sales tax revenues, but TIF for retail developments haven’t created a single new retail job or result in increased sales of a single new car or gallon of milk. TIF used for retail simply redistributed where those sales took place. Despite the strong efforts of the League of Cities and Towns and the TIF lobbyists, your Taxpayers Association was gradually able to convince legislators to rein in the use of TIF for retail, convincing them that retail needs no subsidy. School district and other property taxes of other taxing entities should not be available for cities to grow their retail sales tax base.

Still, TIF abuses continued, leaving schools, counties, and special taxing districts with no voice in giving up their increment to the city council, which sits as the redevelopment agency board. So your Taxpayers Association with the help of strong legislative sponsors, worked for legislation to give a voice to the taxing entities whose increment was taken without their consent via a public vote in order to participate in a TIF. 

The most shocking result of this was that almost universally, local school boards voted to affirmatively give their tax increment from the development for twenty years or more.That results in nearly two generations of K-12 students passing through the school district without the benefit of the property taxes generated by the project. 

Tooele School Board Abandons Kids, Teachers & Taxpayers

One of the most egregious and unnecessary abuses of TIF was approved by the school board of one of the most underfunded school districts in the state: Tooele School District.

Josh Romney, president and founder of the Romney Group, asked the school district to consider a tax incentive financing package that would take 80% of the future increase in property tax revenues for the next twenty years from a proposed 1,300-acre proposed Lakeview Business Park in Grantsville City. While the 80/20 split proposal would allow the school district to keep $36.6 million in property tax over the 20 year project, the Romney Group would keep $146.3 million.

Your Taxpayers Association advised the school board to seek an expert third party analysis to help them understand the tremendous advantage they were giving the developers over anything any other school district could possibly give for the size of the project. The school board refused to even consider our recommendation in part because the Romney Group was threatening to pull the project if the district took the time to study the proposal. Like a used car salesman the group was making a “today only” offer. The Association told the school board that the proposal to give the developer $146.3 million is twice what the Romney Group could receive if they built the same value business park in Salt Lake City’s northwest quadrant.

It’s not that difficult for anyone to understand. Here’s how the math works: The most recent property tax rate in Salt Lake School District is .003732.  The most recent property tax rate imposed by Tooele School District is .007904. That means if the Romney Group were to build the same value project in Salt Lake’s Northwestern Quadrant, it would take more than 40 years to receive the same benefit from Salt Lake District that they would receive in 20 years in Tooele. If the project were proposed in the Snyderville Basin of Park City School District with a tax rate of .002763 the Romney Group would need to take the 80% tax increment for 57 years. It would be unthinkable for Salt Lake and Park City school boards to approve such a proposal and therefore it should have been unthinkable for the Tooele School Board.

Tooele School District is one of the poorest school districts in the state. Its low property tax base per student requires a much higher tax rate to produce anything that approaches the revenue generated by a much lower rate in other school districts (the legislature is slowly addressing these types of inequities). The district’s general fund spending in the 2018-19 was just $8,347 per student compared to Salt Lake at $12,293 and Park City at $15,750. For Tooele to give up twice the amount that Salt Lake City District could possibly give over the same twenty years is asking too much, we told the board.

According to your Utah Taxpayers Association’s 2020 School Spending Report, Tooele School District’s $261,690 assessed value per student ranks as second lowest value per student in the state following South Sanpete. At the other end of the scale sits Park City School District with $3.3 million in assessed value per student and Salt Lake School District with $1.2 million in assessed value per student. (We should recognize the Tooele School Board for their great work this year in convincing the Utah School Boards Association to take a neutral stance and not oppose on SB104 (Fillmore) which enabled passage of legislation expanding property tax equalization funding for poor school districts.)

However, regarding the Romney Group TIF proposal, in spite of the evidence produced by your Taxpayers Association, the motion to approve the give-away passed 5 to 2.  Yea: Kathy Taylor, Scott Bryan, Maresa Manzione, Melissa Rich, Alan Mouritsen, Nay: Julia Holt, Camille Knudson. The Romney Group is laughing all the way to the bank. Because of its extraordinarily high tax rate and cheap land prices, the school board will continue to be an easy target for similar TIF proposals.

Legislation Needed to Limit TIF Take in High Tax Rate School Districts

Your Taxpayers Association is working with Representative Merrill Nelson who represents much of Tooele School District to draft legislation limiting the amount of tax increment that can be taken from high tax rate school districts. The legislation could, for example limit school tax increments to the statewide average school property tax levy. In the case of Tooele School District, this would have reduced the amount taken by the Romney Groupfrom $146.3 million to $98.5 million while more than doubling the district’s $36.6 million take to $84.4 million.

Tooele Bond Election May Be At Risk

Tooele School District is one of the fastest growing districts in the nation and despite school overcrowding, voters who already pay the second highest school tax rate in the state voted last November to reject a $190 million bond proposal for new schools. The board is looking at options of a school bond for 2020 as well. Given the school board’s decision to give the Romney Group $146 million, it’s unclear whether taxpayers will be willing to approve the much needed bond.