by Howard Stephenson
Cities are assaulting the Granite School Board with requests for education taxes to be given to developers. Holladay, South Salt Lake, Taylorsville and West Valley City are asking the school district to pony up more than $100 million over the next 20 years, so those cities can increase their sales tax base. Granite’s school board members should reject all these redevelopment projects. It’s hard to believe their appeals for ever increasing education funding, if they so willingly give away $100 million.
All of these projects are flawed, but Holladay’s Cottonwood Mall RDA is the worst offender. For this project alone, the city is asking for $52 million from the Granite School District. In its heyday, the Cottonwood Mall was one of the Salt Lake Valley’s premier shopping destinations. Created in 1962 as one of the nation’s first enclosed malls, it was the place to shop for decades.
Over time it has been outpositioned by the Fashion Place and Southtowne malls, both of which are located just off major interstates. With shoppers dwindling, one after another retailer left, and today only Macy’s remains. Holladay and the mall’s owner, General Growth Properties, hope to reinvigorate the area by investing $552 million in the property. This investment will build 500-plus residences, and more than half a million square feet of retail space.
By any objective standard, GGP’s plans are spectacular. It is exactly the kind of development that any community would love to have. However, the promises Holladay and the RDA backers are making are hollow. The proposed Cottonwood Mall RDA will not create one job, not one residence. Not one. Every square foot of retail and residential space General Growth Properties (GGP) plans on putting in this space will be built somewhere by someone without a subsidy.
Residential, office space and retail development follows population, economic activity and disposable income. They will naturally go where people are and have money to spend. Subsidizing a developer to build residential or retail space—even one as beautiful as what’s proposed here—simply rearranges where the retail and residential space goes.
In essence, GGP wants nearly $52 million from the Granite School District. In exchange, they’re not giving a single thing—because this retail, office and residential space will be done whether a subsidy is provided or not.
Holladay says the revenue stream they are projecting amounts to “found” money. That is simply not true. Holladay City and GGP didn’t discover hundreds of thousands of dollars just waiting for a right-thinking “investor” to pick up. They want to steal this retail and residential development from another city, perhaps Taylorsville, South Salt Lake, West Valley City or Magna, and put it on their land.
GGP says that this is the only project that will allow them to earn the kinds of returns on their investment that they expect, and even then they aren’t going to receive the double-digit return they typically aim for. That may be true—but should education taxes be used to subsidize GGP’s profits? We already spend less per student than any other state in the nation.
GGP and Holladay say that this site will remain vacant, or nearly so, without this RDA. GGP has even gone so far as to say that without it, they’ll tear down the buildings, challenge the property valuation, just to reduce their tax liability. To a certain degree, they’re being disingenuous on this point: GGP told the Taxing Entities Committee (TEC) that they wouldn’t sell this property for the approximately $30 million the site is currently valued at, even if the RDA doesn’t go through. (I’ll return to this point in a minute.)
I’m not an engineer, so I’ll take their word when they say there are substantial infrastructure costs that have to be borne before that land can be built on. But to assume that no one will build on that site for the next 20 years is just absurd. As Holladay Mayor Dennis Webb noted at last month’s TEC meeting, the LDS Church is putting $1 billion into the City Center project without any taxpayer subsidies. GGP and Holladay city have noted that Larry Miller might be interested in building on that property. A big box retailer might go on that property. Both of these are plausible uses for that land, and neither of them would require an RDA.
Of course, GGP “doesn’t sell properties,” as they told the TEC last month. At least, not usually. However, they were quite clear that there are circumstances in which they have sold properties, and would sell this property. The fact that GGP has contemplated a price at which they wouldn’t sell the land means that there is a price at which GGP would sell the land. And for discussions of Larry Miller to mean anything, even as something Holladay would prefer to avoid, they have to mean that GGP would sell the land to Larry Miller, for the right price. In other words, GGP has no more interest in letting that land go undeveloped, giving them no return, than Holladay, Salt Lake County, or the Granite School District does.
Finally, let me point out that this RDA is just the first of 5 RDAs already in the Granite School District’s pipeline that the Granite School Board will be asked to approve in the next several months. If the Granite School Board approves the Cottonwood Mall’s subsidy, how will they be able to oppose any of these other RDAs?
RDAs can be an appropriate economic development tool. When cities use them to steal residential and retail development from each other, as Holladay is trying to do with this one, they are nothing but a drain on taxpayer dollars. This RDA—and the other redevelopment projects currently before the Granite School Board—create no economic benefit, and will cost taxpayers and school kids tens of millions of dollars. I encourage the Granite School Board to vote “No” on all these RDAs.