PROVO — A developer wants to build a nine-story, $38 million office tower a block north of Provo's Wells Fargo Center, but he'll take the project to Orem if the Provo School District doesn't agree to help financially.

Mayor Lewis Billings and Cameron Gunter of PEG Development presented their case Tuesday to the Provo Board of Education, saying the district's contribution would pay off for schoolchildren both immediately and in the long run.

Gunter said the redevelopment project for about half a block of downtown Provo would lose money — and therefore wouldn't be built — unless the school board votes to give back $1.5 million in property taxes the project would generate in its first 12 years.

The office tower would be built on the east side of University Avenue on the north end of the block between 100 North and 200 North. That property now generates $18,712 per year for the Provo School District.

The office tower would eventually generate more than $200,000 a year for schools. If the school board agrees to give 71 percent of that new income to the project for 12 years, the other 29 percent still would immediately put $86,482 in school district coffers every year, said Provo Redevelopment Agency director Paul Glauser.

That increase would give the school district an extra $770,000 over the 12 years of the agreement.

In 2022, after the agreement expired, the tower would generate $237,408 a year for the school district.

Billings and Gunter said it needs the money from the school district to help pay for a parking garage required for the project.

Gunter told the school board he has a real opportunity to develop in green space in Orem near I-15. A parking garage wouldn't be necessary there, making the site more profitable, but Gunter is willing to redevelop downtown Provo land instead because he believes continued redevelopment in the downtown area eventually will allow him to charge higher rents than he could at the Orem location.

Being wooed by Billings and Gunter is new for the school board, which discussed the proposal in a closed session. A vote is expected next week.

Before 2006, cities could force redevelopment projects on school districts. State Sen. Curt Bramble, R-Provo, said more than $100 million in property taxes earmarked for school districts instead goes each year to redevelopment projects created before the new law was passed.

The law, spearheaded by Bramble, is not intended to end the practice but to allow school districts to become full partners in developments they feel will benefit public education.

The Alpine School District recently agreed to participate in a Community Development Area in Pleasant Grove. The Alpine Board of Education agreed that a proposed hotel and convention center could keep 85 percent of the new property taxes it would generate for the school district.