Schools OK tax incentives now to reap cash later

PROVO — Emotions ran high when Provo city and school district officials met recently for a crucial breakfast meeting. When the air cleared, the sides had smoothed the way for the announcement of a downtown, nine-story Zions Bank Financial Center.

Without the approval of the Provo Board of Education, the developer would not be planning to break ground next month for the office tower at 196 N. University Ave.

A new twist in Utah redevelopment law requires school boards to approve projects — to effectively to become partners in them — before cities can give property tax incentives to developers.

Since the Legislature changed the law last year, school boards have proved willing to give up millions of dollars in the short term in exchange for a future windfall. Essentially, they are making investments that help developers improve properties that then will generate millions more in property taxes for school districts and, therefore, Utah schoolchildren.

The Provo school board agreed to surrender $1.6 million in new property taxes created by the office tower for the first 12 years, with the money footing half of the bill for a parking garage on the site. Last year, the Alpine Board of Education voted to give up an estimated $14.1 million over 23 years for two hotels and a convention center in Pleasant Grove that school officials believe will spark additional development — and therefore millions more in property taxes. And this month, the Nebo school board approved a $1.3 million incentive over 20 years to help Wasatch Wind build massive windmills at the mouth of Spanish Fork Canyon.

Those decisions pleased lawmakers who crafted the new law forcing cities, absent a finding of blight, to get school board permission before giving incentives to a redevelopment project. The new partnerships are called Community Development Areas.

"In the past, school districts were at the mercy of cities," said Sen. Curt Bramble, R-Provo. "We wanted to give them power to say no, but we also expect them to look at projects and expect them to be reasonable.

"The school boards so far seem to have been willing to weigh the proposals and have taken a reasonable, professional approach."

They're also asking tough questions.

"They are tough," Provo Mayor Lewis Billings said of the Provo school board. "It's like having a second City Council."

"They scrubbed us down pretty good," PEG Development president Cameron Gunther said.