The Granite School District Board of Education has scheduled a vote on the future of the Cottonwood project on Tuesday, January 15 at 7 PM. We encourage concerned citizens who support this project from all areas of the Salt Lake Valley to attend this important meeting. If you can't attend, please call your school board representative and ask them to vote YES.
Visit the district website for more contact information and the names of your elected representatives: http://www.graniteschools.org/.
A YES vote means more dollars for students in the entire Granite School District. Overall, the District will receive over 500 percent increase in revenue above what it is receiving today. If the project does not move forward, the district’s share of the resulting tax revenue will most likely drop. Ask your representative to vote YES.
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I just spoke with Galene Gandy of the school board for 45 minutes. She was very informative and helpful and I learned a lot. Let me share a summary of what she said, as it will inform several aspects of what’s being discussed here.
First, she said that most people who call her with an emphatic position, either for or against the RDA / TIF appear to be lacking great pieces of the picture, so she appreciated the more open-minded, inquisitive discussion.
She said that the Taxing Entity Commision consists of eight members. She is the GSB’s representative to the TECs. An official of the district is another. The two of them will always vote the way the GSB as a whole voted prior to the TEC meeting. There is also a rep. from the state board of ed. This rep. usually votes the same as the two people from the school board, but not necessarily. There are five other reps. from the other taxing entities, for a total of eight. Six votes in favor are required to approve any RDA, rather than a bare majority. This is a change that the legislature made two years ago so that the school boards would have more ability to vote against RDAs that weren’t good for the school district. This particular vote is the first big one that Granite has had since that law was changed. So the GSB does have the ability to kill this RDA if the state board rep. votes with them.
How does the board feel about this RDA? She said that only two of the seven members have publicly announced how they will vote. One was in favor. One was opposed. The other five are still not certain. She said that in general, all the school board members feel like they represent the whole district, rather than their area constituencies, and that they are all trying to do what’s best for the district. They are all open to hearing from residents of Holladay. She said she’s only heard from two people total who live west of Redwood Road.
She framed this vote as a “but for” question. That is, would this property be developed but for the requested RDA? She said that obviously none of us know. She said that if the board votes in favor of the RDA there will always be people who feel like they needlessly gave away a whole bunch of money. If they vote against it and the project doesn’t happen there will always be people who feel like they killed a great project. If they vote against it and the project does happen then everyone wins.
She said that there are some projects where it’s very obvious that no good development will happen there without an RDA incentive. They aren’t seeing this one as obvious.
She framed it very strongly and clearly in terms of the great unknown – is this RDA required in order to make the project happen? She doesn’t know, but they are making efforts on multiple fronts to arrive at an answer with GGP. For one, she said that the district’s financial people on one side and GGP and Holladay City on the other side are going back and forth on the amount of RDA. She said GGP had offered a 75/25 split rather than the 78/22 during the 20 years of TIF. They also offered 18 years instead of 20 years. She said that neither of those is a big enough concession to sway any votes on the school board, though. So GGP is definitely willing to, and actively is negotiating on the amount. In my opinion we should urge Holladay City to actively work to talk GGP down to an amount that Granite will accept.
Another thing they are doing to address the big “but for” question is that GGP asked if it would be helpful if they shared their numbers with a competing developer and asked that developer what the profit margins would be, given those numbers. This is an effort to help the school board know whether GGP is bluffing. She said that that effort would be very informative. So if any of you have the ear of someone at GGP, please encourage them to quickly do this.
A third thing they are doing to become more whether the RDA is needed or not is asking Holladay / GGP to run the numbers again with various “what ifs”. The two said they would do so, but this hasn’t happened. So if any of you want to be helpful, find the right people and let them know that getting back to Granite with these “what if” numbers would really move things along.
What about the political aspects of this? She said that there are people in the legislature who are against any school board participation in RDAs, such as Howard Stephenson of the Utah Taxpayers Assc. She agrees that he is a powerful legislator and that he is against Granite’s participation in the RDA. She said she was contacted by him and asked to read his editorial in the January newsletter of the association: (http://www.utahtaxpayers.org/NEWSLTTR/PDFs/2008/jan08.pdf ). However, she said that there are also many people on the legislature who will hold the school district hostage if they DON’T vote for this RDA, so she feels like politically, it’s a wash and she thinks the board members will vote on the merits of this RDA, ignoring the two directions of political pressure.
She said that one board member questioned whether the school district ought to be subsidizing high-end housing and high-end shopping. But other than that, the general attitude is that the nature of the project is irrelevant and it’s all about whether the RDA will yield the best return or not, which in turn is a question of what or who to believe and what or who not to.
So that pretty much summarizes my conversation with her. Carole Cannon has tried to get back to me, but I haven’t spoken with her yet. The other five haven’t replied to my email yet.
Now, my opinion of the Utah Taxpayers Association newsletter editorial is that it contains about as many “FACTS” as the pro-GGP fans on this blog. It’s just as extreme and scary against RDAs as this blog and the publishers of last week’s mailing are extreme and scary in favor of this RDA. But both have quite a bit of truth, too. So the tack that I’m taking is to encourage Holladay and Granite to keep talking GGP down in their RDA amount to the point where it’s palatable to enough people.
Dave McAllister
Dave,
You are right, there are two different blogs presenting totally different positions. However, it remains unclear as to why the Taxpayer association does not accept an opinion contrary to their own. I appreciate the efforts of the Holladay Chamber to present facts and then accept differing opinions. As for the Granite School District, shouldn’t they make a decision based on the merits of the proposal and the impact it will have on the children they serve? In a state where gambling is outlawed should we allow a district to roll the dice and gamble on such an important issue? What if… What if… How about taking a sure thing and going with an increase of 500%. Why gamble? I vote we take a sure thing.
Holladay resident with kids who attend Granite Schools
Galene Gandy just added more fuel to the “ Lets split the district” effort. I think it would be a huge mistake to split the district by he comments rally the thoughts of others that the West side has more say than the East. Sounds like they might be right.
Hi Purple cow,
That's a good question, but with a yes/no vote on the current proposal I don't think it's possible to avoid a gamble, and neither did Mrs. Gandy. Choosing to approve the full amount of RDA is safe in the sense that it helps ensure that the project will happen and, as you say, will be a big increase in tax revenue over the mostly vacant mall. However, it's still a gamble in the sense that we're losing most of the tax revenue and maybe we didn't have to lose that money. She pointed out that lots of people would be mad if they made and lost that gamble.
I guess you and I are both interested in reducing the risk. The biggest gamble would be to decline any RDA funding and either win if they build the project or lose until a future project comes along. The next biggest risk is to accept the current 78/22 terms and give up lots of money, maybe without having to. The even less risky approach is to keep negotiating with GGP, as is actively happening now, reducing the amount of money we're giving up until a) we know they will still build the project if that amount of money is approved and b) we know that amount of money will be approved by the TEC. Then we know exactly what we're giving up and what the outcome will be, and it will be less loss of money and fewer angry people than with the current proposal.
And regarding splitting the district, please make sure not to misconstrue her position. She really feels that the school board members listen to and represent everyone in the district, regardless of where they live. For example, I live in Holladay and her area is Magna and she listened to me for 45 minutes. They want to do what is best for the whole district, including Holladay, not just their own areas of it.
The west side isn't saying anything at all about this matter, so it's us that they're listening to, and lots of us are telling them to vote for this and lots to vote against it.
In my opinion, the worst of all worlds would be to both split the district and approve this RDA. If the district is split we have a far smaller tax base, so the Cottonwood project would be a proportionally larger part of it. It would probably be the single largest development in it. Losing 78% of the income of the single largest development in the smaller district would be a bad legacy to leave.
- Dave (three kids in Granite schools)
Dave,
Do you work for a living? Yada yada yada. It is plane and simple… if they vote yes there is no gamble.
Maybe we're talking about gambling two different things. If you're referring to gambling with whether the project gets built or not, you're right. Voting for it gets it built.
But the school board, and many other people, are also concerned about money. If they vote to approve the TIF they are making a $65M gamble.
Dave,
Does this 65 million just appear for them to invest? Nope! Unless the project gets built there is no money. Yep that’s right no 65 million. Let me ask you this: if I gave you 100 dollars and then asked for 22 back would you still be ahead and how much would you have if I didn’t give you a penny? I personally would love that kind of return on money I never invested in the first place. Sorry ya can’t win the numbers don’t lie. Time to study for a PHD in economics.
Sure, but you're assuming that unless we give them the 78% back (not the 22%) then nothing gets built there for the next twenty years. Is that what will actually happen? You don't know the answer. Neither do I. Neither does the school board.
"Would this development occur but for the use of tax increment financing?" This is the big question that the RDA law requires the Taxing Entity Committee to answer. This is explained very nicely in the following RDA study by the Utah League of Women Voters: http://www.lwvutah.org/Studies/RDA%20Study%20revised.pdf See page 7 for an explanation of the "but for" question.
They're trying hard to get the answer, but in the end it will be their best determination, not a crystal ball answer. The answer is easier to get the more GGP comes down in the requested amount, though. So that's what they need to keep doing.
So what you are saying is if they give us $ 100 and we give them $78 back it is a bad thing. Please help a poor farm girl understand
It could very well be a bad thing or not, because no one is sure what the alternative is. If the alternative is to have $0, then keeping $22 is better. If the alternative is to keep the full $100 then only keeping $22 is far worse. And we don't know which alternative will truly happen.
Here are two ways in which just giving them the RDA financing without it actually being required would be a bad thing. And again, we don't know for sure whether it is required or not.
a) It wouldn't be fair. Why should we give GGP $65M when their competitors on the other three corners of that intersection are paying their full fair share of taxes? Why should GGP be given this money when PRI isn't getting any for doing an even bigger redevelopment of City Creek Center? Would it be fair to give me a 78% property tax rebate for building on a vacant lot next door to you if my lot was in a flood plain, when you are paying your full property taxes?
b) If the school board only gets $1M per year with the TIF instead of $4M per year without it, that would be a lot of money to give up. To put that in perspective, the new Wasatch Junior High is about $12M. If Granite District doesn't approve the TIF and the project gets built anyway, then Granite could build one additional junior high every three years. If they give up those funds then they could only build one additional junior high every twelve years. Likewise, assuming 3200 teachers in the district, if they have $1M per year with the TIF and put it toward teacher salaries, it would be a $312 per year raise. But if they had the full $4M per year they could give each teacher a $1250 raise.
Similar examples could be given for all the other taxing entities and how they could use the full amount of tax dollars. So do you see why the school board needs to exercise fiscal responsibility and find out for sure whether this project would be built anyway, without RDA financing, or whether it is truly required, and if so, what is the minimum workable amount? If they just gave away all that money unnecessarily, they would be selling our children's birthright for a mess of pottage.
I agree with purple cow. Why should we gamble? What does someone else besides davemc have to say?
I'm leaving now, but let me say one more time that CAN'T choose not to gamble. Agreeing to the RDA is about a $4M per year gamble.
Talk to someone on the school board and they'll agree. Read the League of Women Voters document. It does a good job explaining the unavoidable gamble that approving an RDA entails.
Cheers.
When the Chamber of Commerce adds a response it is written and approved by a member of the board of directors. The information provided on this blog has been checked and crosschecked for accuracy. It is our intent to provide a forum where the public can gain access to vital information. The debate now seems to focus on the “but for” issue. If any of the taxing entities doubt Holladay’s own experts who have concluded that the infrastructure investment is accurate GGP is openly offered to provide a third-party confirmation.
Our opinion continues as follows:
An Educated Decision
In a few days the Granite School District Board will be asked to approve or disapprove Holladay City’s request to use TIF (Tax Increment Funding) for the redevelopment of the now defunct Cottonwood Mall. The potential impact of their decision has created debate between special interest groups who are fighting over this. At stake are a half a billion dollars, Holladay City’s economic future and millions of education dollars.
Constructed in the depths of a favorite local-fishing hole, and opened the same year John Glen circled the earth, The Cottonwood Mall introduced Utah to a new “climitized” shopping experience. Forty-five years later many things have changed. Having outlasted its usefulness, Glen’s Friendship 7 capsule is now an antique adorning the ceiling of an aerospace museum and the walls of one of the first malls built west of the Mississippi are being retired brick by brick. In the coming weeks, the only reminder of this shopping focal point and community-gathering place will be the clay bottom of the fishing hole it once replaced. Rebuilding a new gathering place and the fond memories that will soon follow is not going to be easy. While Holladay remains one of Salt Lake County’s most prized addresses, building codes that allowed the initial mall construction have changed. Awaiting the current developer are federal, state, and local codes that mandate a massive investment in infrastructure (flood plain, high water table, bridges, underground utilities, replacement of antiquated utilities, and updated building and seismic specifications). In laymen terms… the old mall was built in a dynamic earthquake region with the majority of the site well below the Cottonwood Creek flood zone.
General Growth Properties is asking for TIF funding to assist them in the necessary infrastructure upgrades. Without these funds the developer will be forced back to the drawing board and the property will remain vacant for several more years. During this delay, income tax, property tax, and sales tax revenues would be drastically impacted, resulting in fewer tax dollars for education, transportation and commercial services. This would mean higher taxes.
Rattling their sabers the loudest against this project is the Utah Taxpayers Association who suggests that if this project is denied, it will be built by someone else. Alternative plans could include a Big Box development but it would only provide minimal tax and revenue streams, similar to the current levels, and a project like this would create three times the traffic impact the current proposal creates. Still, any alternative development will require assistance for infrastructure costs and would not come for several years.
The Granite School District has an important choice to make, Currently, the mall generates about $171,000 per year in funding for its students. If they approve the TIF, the Granite School District will receive an average of $900,000 per year for the next 20 years. This equates to a 500 percent revenue increase. The way these dollar amounts are calculated can be confusing, but here’s the bottom line. If this plan is rejected or even if another development comes along years later, it translates into fewer dollars for the entire Granite School District. Students at Olympus, Eastwood, and Churchill will be impacted, but so will students at Kearns, Taylorsville and Granger. The only downside to the Granite School District comes if they vote against the new Cottonwood.
Let us all hope that the Granite School Board sees the value of this project to the entire school district. A new Cottonwood will be good for Holladay, the county, the state and ultimately, the students they serve.
Thanks for your insight from a board member who will vote on this issue. Her logic is truly shortsighted and scary.
So, what I understand from your call with Galene Gandy is that she is willing to risk millions of dollars in "hopes" that someone will come along, and make sure that "everybody wins." The "But For" question has been answered by the city and the developer, but for some unknown reason, she thinks they are misleading her. I can see doubt in believing the developer, but it seems that the city has no interest in pushing a bad deal. Why would the city of Holladay push a deal that was bad for their community? What would that gain? Why are the people closest to the issue so wrong? It reminds me of a time in my career when I learned that my perspective from down below the summit was much different than my boss who saw the entire panorama from his position above. It wasn’t that he was smarter than I; he just had an expanded view, well beyond what I could obtain. He had all the facts and at some point, I had to trust his judgment, even though I saw things differently and disagreed. Now in my professional life, when I am often at the summit, I try and remember this about those I lead. They can never know all I know, but I have their trust.
So, again, Galene Gandy is willing to risk millions "hoping" (which really means, she does not trust the city or the developer) that someday, some developer (who would have to first buy the property from GGP) will take the risk GGP has already invested in. I guess she thinks that after all the meetings and explanations, she is being misled.
"She said that there are some projects where it’s very obvious that no good development will happen there without an RDA incentive. They aren’t seeing this one as obvious." I am astounded by such a remark. She really didn’t say that, did she? Did she give you an example of one that qualified? Sounds like something right out of the Utah Taxpayers Assocation playbook.
The fears of those opposed to this project are based on unknowns that can never be known for certain. One certain fact is that without this project, GSD gets $37,000 per year for the foreseeable future.
GSD was willing to spend millions to rebuild an unnecessary school that is located in the middle of a geographic area that will jeopardize three other schools, spending millions unnecessarily, while at the same time may vote to give up a 500 percent increase in tax revenues because they HOPE someone else will come along and "everybody will win."
Talk about a gamble. The GSD board, if they vote NO, will remind me of the way I play the stock market, buy when it's high and sell when it is low. Seems like they should have saved the money from Wasatch and invested it into the school district by improving facilities for all and now they are on the verge of giving up money that would have the same impact.
Someone said, “Vision is the art of seeing the invisible.” Making the right choice requires having such vision, not hoping someone will come along and bail you out. Voting NO is leaving the tough choice for others who will ultimately make the decision you should have made, but possibly years later.
Thank you Holladay Chamber for sponsoring last night’s open house. My Husband could not attend so I was dispatched to find out what this issue was about. At the suggestion of Scott I drove past the old mall on my way home. We live in Taylorsville but I grew up next to the old drive-in on 9th east. It has been years since my last trip to my old cottonwood colts stomping grounds and I was sad to see an empty mall. Please tell everyone that I think the mall needs a makeover.
Marry Robertson Taylorsville (but still a colt at heart)
Davemc,
I believe today's AP article answers your "but for" question.
Scott
General Growth Eyes Major Refinancing
General Growth Expects to Refinance Nearly $5.61 Billion of Debt; Analyst Upbeat on Plan
January 09, 2008: 12:51 PM EST
NEW YORK (Associated Press) - General Growth Properties Inc. expects to refinance nearly $5.61 billion in short-term debt coming due in 2008 and 2009 as long-term fixed-rate loans, the mall real estate investment trust said Wednesday.
As of the end of 2007, the mall REIT had refinanced $359 million, or just 6 percent of its total 2008-2009 maturing debt. It remains confident it can refinance the rest using $4.87 billion in property collateral in 2008 and $5.53 billion of property collateral next year.
Additionally, the REIT said its unencumbered properties and developments will add at least $2.5 billion in financing value. Further, it has put several suburban office buildings on the market and will reduce its $2.3 billion development plans if necessary. (RDA funding for the mall is imperative or we will loose it)
In a research note Wednesday, Goldman Sachs analyst Jonathan Habermann said he believes General Growth will meet its debt obligations and reiterated his "Buy" rating on the stock.
"While GGP's debt maturities may appear large on an absolute basis, they comprise a relatively moderate percentage of the company's overall debt load," he wrote.
The REIT's efforts to refinance its short-term debt comes as lenders tighten standards due to diminishing interest in assets backed by commercial mortgages. A spike in residential foreclosures has made investors leery of securities backed by all types of real estate.
More than $50 billion in risky commercial loans could default if they're not refinanced this year, according to Jones Lang LaSalle Inc.'s capital markets group. Most of these loans are interest only with high loan-to-value ratios.
Shares of General Growth fell 75 cents, or 2.2 percent, to $33.17 in afternoon trading. The stock has lost 36.7 percent in the last 52 weeks as REITs overall struggle with a slowing economy and credit disruptions
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