Prompted by state legislation creating a new type of tax increment financing (TIF) district around transit stops, Salt Lake City’s Redevelopment Agency (RDA) is getting ready to submit their second proposal to Capitol Hill for a Housing Transit Reinvestment Zone (HTRZ) for 125 acres in west Downtown.
The first, successful HTRZ application from Salt Lake City established a zone around the 900 S TRAX station in the Central 9th district. The public-sector juice offered to private-sector development is significant – developers are guaranteed 40% reimbursement of the increased tax revenues collected by the RDA, and can get up to 90% cash back by meeting affordability, design, and other public-interest benchmarks.
The potential development outcome is impressive. The RDA claims that over 10,000 dwellings, 1 million SF of commercial space, and nearly 2 million SF of office will be built as a result of 15 years of TIF reimbursement in the Central Ninth/Granary area.
The new, proposed Rio Grande HTRZ, for which growth projections are yet to be released, is centered on UTA’s Salt Lake “Central Station” at 600 West and 300 South.
The oft-derided, bare-bones facility is in the early stages of redevelopment into an enhanced passenger experience for TRAX and FrontRunner passengers, part of a high rise office development to house UTA’s new administrative HQ.
While UTA seems to be retaining its indifference to the rising swell of support for the Rio Grande Plan, other entities are getting on board. Last week the Salt Lake County Council issued a resolution endorsing the Plan.
In the capitol city, council members confirmed to Building Salt Lake that they are being lobbied by Rio Grande Plan organizers for a declaration of support and are preparing action.
Yet RDA staff on Tuesday placed in front of the RDA Board/City Council a tax increment reimbursement plan for the area adjacent to the Rio Grande Depot that transfers up to 90% of new revenue generated to developers – severely restricting new money for public sector projects, and reserving none for the Rio Grande Plan.
The new HTRZ
This is how, on a basic level, TIF (tax-increment financing) works:
The other taxing entities in Salt Lake City’s orbit are the school district, library, water districts, mosquito abatement, and the County.
The terms for the RDA’s participation in the new Rio Grande HTRZ were set in the city’s Central 9th application, which set a precedent that was then adopted into the HTRZ Tax Increment Reimbursement Policy adopted by the RDA Board in late 2023.
For the 25 years of the zone, developers can cash back, up to 90% of the city’s increased property tax that goes to the RDA “reimbursed.”
It’s a nice perk, and leaves the city with only 10% of the new cash to spend on public improvements in the district, assuming developers take advantage of all the incentives offered them.
How much money are we talking about? According to city budget analysts, in 2023 the TIF collection for Depot District, the former name of the RDA’s Rio Grande area, was $7.2 million. Other areas:
•Downtown: $24.5 million
•State Street: $5.7 million
•9-Line: $3.4 million
•Inland Port: $1.8 million
•North Temple: $5 million
•Granary: $1.4 million
What does that mean for the tax increment potential for the new Salt Lake Central/Rio Grande HTRZ? Somewhere between the $24.5 million of Downtown and the current $7.2 in the Depot District. If the RDA gives away 90% of that to developers, will much be left for public sector improvements?
The RDA’s development plans
While the Station Center Rio Grande area west of Downtown has had the benefit of RDA programs, planning, and subsidies for decades, the city hasn’t been able to spark much development on its 15 acres.
But now it’s in a federal Opportunity Zone, offering significant tax incentives to investors, and a new state-sanctioned HTRZ that will offer tax-increment reimbursement for up to 90% for 25 years.
Separately, the RDA has signed what it hopes is a catalytic anchor for the district with USA Climbing for a national training center, publicly-accessible gym and plaza at 300 South and 500 West.
In addition, the SLC RDA also seems very responsive to Utah Transit Authority (UTA), owns 38 acres it also hopes to develop in the area, including the new “Central Station” project at 600 West.
Showing urbanist ambition, the RDA has raised eyebrows with its renderings that show significant densification of the area, most of which would need zoning ordinance changes.
What the Agency will ask from developers in exchange for upzones, if anything, is yet to be signaled. The RDA’s usual menu includes building up to 20% of units at some level of affordability, mid-block walkways and public-accessible spaces, and ground-floor activation.
In the Rio Grande, the Agency Board has committed to the redesign and rebuild of 300 South with public money.
But what happens if the RDA gives away 90% of its tax increment to developers–what’s left for other priorities in the district?
The funds still available for RDA spending will be allocated according to the most recent Rio Grande area visioning plan, staff told the Board on Tuesday. It’s a Christmas tree hanging full of ornaments, unlikely to be fulfilled with the limited TIF funds that the RDA is reserving for itself.
Public benefits?
The menu of benefits provided to the public that developers can choose from to qualify for a full 90% refund of the RDA’s increased property tax collection in the Rio Grande district include the following:
- On site energy generation
- Activated ground floor space
- Affordable housing: 10% at 60% AMI or 20% at 80% AMI
- Structured parking
- Public art and enhanced building design
- Livability: creation of permanent jobs, incorporation of public green space, affordable commercial space, or adaptive reuse of historic structures.
Do these seem rigorous? The RDA Board, creators of the list, seems enthusiastic to subsidize developers for the provision of any and all public benefits. If so, it means that only 10% of the RDA’s increased property tax revenue will be available for public improvements.
“Large Scale Capital Investment” includes contributing only to the Green Loop on 500 West and the TechLink TRAX extension along 400 West.
Next steps: submission to the state in the next few weeks, then review with GOEO’s consultant, back to the committee for amendments and/or approval, then a interlocal between RDA and city “as early as next year,” says RDA staff.
TIF collection levels – will anything be left for public priorities?
Compare the new Rio Grande 125-acre TIF zone to the State Street TIF area, consisting of 729 acres, which created just over $5 million in property tax increment for the city in 2023: even if the RIo Grande area tripled that amount to $15 million a year, the public money available at 10% would only be $1.5 million.
That’s not enough to rebuild any street or lay necessary utilities for new higher-density projects.
And what about a contribution to bury the rails and open up over a hundred over 100 additional acres for Downtown-proximate development?
RDA staff say, with their actions, they’re currently not interested in the Rio Grande Plan.
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