A debate over recruiting retail with public money raged on Tuesday at the Utah Taxpayers Association annual conference.

At the core of the discussion is a dispute over what role government should play in luring retailers to set up shop within city bounds. Entrenched on one side are city leaders who say retail needs tax incentives to thrive, while school district leaders and taxpayer watchdog groups argue retail happens on its own.

"Utahns are very good at buying things, and the market is good at responding," said Mike Jerman, vice president of the Utah Taxpayer's Association. "Retail does not need to be incentivized."

The debate is particularly germane as the legislative Tax Task Force begins to tackle the issue of how — or even if — RDA dollars should be used to build retail. After the passage of a controversial RDA bill this year, retail RDAs are on hold for a year as the group finesses the state's use of property tax increments for development.

The bill also strips cities of the use of eminent domain for RDAs and prohibits RDA dollars from funding recreation arenas like soccer stadiums. Cities use RDAs to divert property taxes from school and city coffers back to project areas for infrastructure and development.

Randy Sant, redevelopment director for Sandy City, said those tax increments are vital to recruiting strong retail that brings jobs and economic growth in tow.

"Unless we have incentives, we're not going to bring business into the state of Utah," he said. "We can have all the educated people we want in the state, but if we can't build the infrastructure, we won't have economic development."

Of roughly 70 RDAs done in Utah in the past 10 years, Sant said 25 were created expressly for providing infrastructure improvements. Only two, he added, were established solely to give incentives to developers.

To keep up with growth, Sant estimated about $1 million new retail dollars would need to be funneled into Utah each year. The only way to meet that mark, he said, is to offer RDA dollars to commercial developments.

But Jerman said education is losing out in the battle for retail dollars. About $98 million in property taxes has been diverted to Utah RDAs this year, Jerman said, nearly half of which would have gone to schools.

"That's $49 million, right now, the schools would obviously like to have," he said. "We're already seeing a significant erosion of the property tax base."

Jerman also said city leaders are abusing the definition of blight — the criteria for creating RDAs — by labeling open fields and prime real estate as blighted.

"The truth is we don't have a lot of blight in Utah," Jerman said. "Why raise taxes to pursue open space and then subsidize developers to develop it?"

A few of the greatest offenders, Jerman said, are RDA sites in West Bountiful, Farmington and Provo. A handful of other RDA projects in Salt Lake County are also inappropriate uses of public funds, he said.

In Farmington, city officials set up an $18.5 million RDA on a 100-acre development tucked around the interchange where I-15, Highway 89, the Legacy Parkway and commuter rail will all converge.

That project area is a prime example of "sagebrush blight," Jerman said, where city leaders are stretching the definition of valid blight.


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