howardnlby Howard Stephenson
The current problems of Salt Lake City’s downtown retailers are nothing new. Utah’s capital city downtown has made the news for more than 25 years as large retail centers are erected ahead of market demand and the existing businesses are placed in jeopardy.

The latest new center, The Gateway, came on line last year, just in time for the Olympics and has Nordstrom owners wanting to move their store from the ailing Crossroads Mall to the new, popular Gateway. The Salt Lake City Council has opposed the move and is actually willing to lose Nordstrom from downtown because the Council is afraid the move would generate an exodus of other retailers from the Crossroads Mall and the ZCMI Center.

But actions of the Salt Lake City Council in their role as a Redevelopment and Economic Development Agencies (RDA/EDAs) have actually contributed to the historical malaise of already existent downtown retailers.

When the ZCMI Center came online we saw the boarding up of Main Street shops further south and on Broadway. Then, when the Crossroads mall opened, we experienced a new phase of deterioration of existing retailers, including stress on retailers in the ZCMI Center. And now The Gateway is creating difficulties for existing retailers.

Over the years the city council has contributed to these difficulties as they gave RDA property tax subsidies to developers to entice them to construct new retail centers before their time. Redevelopment laws were originally enacted to eradicate inner-city blight, but in Salt Lake City’s case, they have actually created blight.

It is true that shopping patterns may have changed over the years, that people may prefer to shop where they live, not where they work, and if so, the Gateway only exacerbates the downtown problem. It may also be true that the two downtown “box” malls, ZCMI and Crossroads, are avoided because entering their parking structures is like entering a black hole; you don’t know how long it will take to find parking or how long it will take to get out. In contrast, parking at typical suburban malls is free, and shoppers can view parking availability from the street, before entering the parking lot.

But these are issues best left to those whose capital is at risk, not city officials who think they can ignore the natural laws of supply and demand by granting tax incentives to encourage investments in commercial developments ahead of the marketplace.

Salt Lake City is not the only city attempting to supercede the immutable effects of economic forces. Ogden City made a similar mistake several years ago in providing RDA property tax incentives for the construction of the Ogden City Mall which recently came under the wrecking ball — even before the RDA debt was retired. Now, the Ogden City Council is again attempting to dictate the new use of that property. Bountiful’s RDA-supported, Five Points Shopping Center has been a bust, but city fathers have decided to assist developers to reconstruct it into another “box” mall with another “black hole” parking structure. I predict another failure in the making.

The saga of Redevelopment and Economic Development Agencies (RDA/EDAs) increasing property taxes continues in Utah as more cities have taken action this year to divert more property taxes from schools. Utah Schools lose approximately $27 million annually in RDA/EDA subsidies to developers and city projects.

Taxpayers in Logan School district are paying higher property taxes this year due to Logan City’s RDA/EDA diverting revenue from Logan School district to subsidize the city’s redevelopment projects. In a year that school budgets are being reduced, the city council has decided to take even more money from school property taxes than before. This diversion of school tax dollars also affects other districts in the state as the statewide basic school tax levy produces less income statewide. Tax increases are never a good idea, but when they are disguised as school taxes and then diverted to fund RDA/EDA’s subsidies to private businesses it is clearly an abuse that must be stopped.

The Utah Taxpayers Association has been working for years to tighten Utah’s RDA/EDA laws to prevent abuses and to convince local school boards to be more discriminatory when voting on EDA/RDA projects. However, South Jordan City recently took advantage of a loophole in the law which allowed an RDA to avoid a vote of the Jordan School Board and extend the diversion of taxes beyond the original schedule. The loophole expired on June 30, and South Jordan barely made it under the wire.

South Jordan decided to take another $8 million from taxpayers to fund a new city-operated fitness center and park, which will result in increased property tax rates of various taxing entities,. More than half of the $8 million diversion will come from taxes levied by Jordan School District whose property taxes are already third highest of Utah’s 40 school districts. The city plans to build a huge park on 120 acres of land together with an aquatic and fitness center, skateboard park, playground, and a historical/cultural center. Rather than directly funding the projects out of their own taxes, South Jordan and other cities find it much easier to use RDAs to siphon off property taxes of other taxing entities.