Developer, attorneys answer questions during city council

EPHRAIM—A partner in the Camino-Verde Group, the company developing Ephraim Crossing, along with the company’s attorneys answered questions about how a proposed public infrastructure district (PID) would operate during a city council meeting last week.

But the real details were in a 24-page document titled “Governing Document for the Crossing Public Infrastructure Districts Nos. 1 and 2,” which included in agenda documents for the meeting Wednesday, March 4.

City council approval of what will probably be a somewhat revised document would kick off operation of the district, a structure that could generate property tax money earmarked to help Camino-Verde develop arterial roads.

Mike Ballard, the partner in the company, said he expected a city council vote next Wednesday, March 19, on the Governing Document. “After we get approval from the city, we go before UIPA,” he said.

The UIPA is the Utah Inland Port Authority, a state agency. UIPA’s mission is to identify “project areas” that are expected to bring economic growth to communities and then help private entrepreneurs create the growth through a mechanism called “tax-increment” or “property-differential” financing.

In tax-increment financing, a PID figures out how much property tax is coming to a defined project area. That base amount continues to go to the jurisdiction in which the project area is located.

Meanwhile, the PID issues bonds to cover development costs. As years go by, as bond proceeds are spent to develop the area, and as property tax collections increase, the increase, or “increment” is earmarked to pay off the bonds.

Ephraim Crossing is a 300-plus-acre planned community. Besides a proposed Intermountain Healthcare hospital, it is expected to include single family homes, townhomes, apartments, a daycare center, a grocery store, a hotel, offices and industrial plants, to name a few features.

Under the governing document, the PID would be authorized to sell up to $15 million in tax-exempt bonds. Ballard said the money would be spent on up to six arterial roads in the development, for curb and gutter along the roads, and for a walking greenbelt along two of the roads. Finally, Camino-Verde hopes to purchase an identification sign for the development as a whole.

“We may be the smallest community in Utah that’s doing one of these PIDs,” Ballard said in an interview with the Messenger. “We think we’ve got an exciting development…By us putting in this infrastructure, the city is going to generate property tax and sales tax. The sooner we get it in, the sooner the city makes money.”

If the Ephraim council approves the Governing Document, it will, at the same time, appoint three property owners in the project area as trustees in what will be known as District 1 of the PID. One will be appointed to a four-year term and two to six-year terms.

District 2 won’t be organized right away, Ballard said. “For now, we’re just doing one district. We may do another one in 3-4 years, if we do it at all.”

As Ephraim Crossing develops and more homes are built, the appointed positions will transition to elected positions. Only people who own property within the project area will be eligible to vote in the trustee elections.

During earlier council meetings, Ballard and a UIPA official both said property in the project area would be taxed at the identical rate as other property in Ephraim City. The only income source the PID would tap, they said, would be the tax increment (which the Governing Document calls the “property tax differential.”).

However, the Governing Document says, “The districts may impose a mill levy on taxable property within its boundaries…as a primary source of revenue for repayment of debt service.

“The district may also rely upon various other revenue sources as authorized by law. At the district’s discretion, these may include the levy of ad valorem taxes, use of property tax differential, the power to assess assessments and the power to impose fees, penalties and charges…from time to time.”

That attracted Mayor John Scott’s attention. He suggested that the city council, not just the three-person Board of Trustees, should approve any tax increase in the project area.

Aaron Wade, one of the attorneys for Camino Verde, said he felt taxing powers could be safely vested in the PID trustees. He added that use of any funding mechanism other than the tax increment was unlikely.

“It’s a release valve,” he said, a backup method for paying off bonds in case the state outlawed tax-increment financing or there was some other problem with the strategy.

“It’s not our plan to do this (turn to other funding sources),” Ballard said, “but the underwriter and our attorney said this was the language that was needed” as an assurance to pension funds or other investors who might purchase the bonds.

Mayor Scott’s other concern was with language that said a PID had eight years from when it was created to issue its first bonds. Scott said he didn’t want development in Ephraim Crossing to be delayed that long.

Initially, the mayor said he wanted bonds to be issued within three years, but at the request of Camino Verde attorneys, he agreed to a five-year time lapse between creation of the PID and issuance of bonds.

“Our commitment is to try to sell bonds, easily within the first three years,” Ballad said. He said the company’s target was to sell the first bonds between now and June. But he said the company appreciates time to do a second round of bond sales a few years from now.