January 17, 2006

  

A Publication of the Economic Development Corporation of Utah

 PRESIDENT'S MESSAGE

 RDA/EDA Reform



In our attempt to keep you, our members and partners in economic development, informed and up-to-speed on upcoming legislative issues that will most assuredly impact statewide ED efforts, today’s feature article explains what’s on the table and up for debate in terms of RDA/EDA’s. As one of our best “tools” for economic development, RDA/EDA legislation will be a closely watched issue and likely one to raise great interest from the various interested parties.

Today’s Economic Review also includes links to many of the ED-related news stories from the past week, as well as yet another of our informative Investor Spotlights. As always, if you have comments, suggestions or topics you’d like to see in the Economic Review, please contact us by clicking the “Comments” button on the bottom of this page.

Enjoy!

Jeff Edwards
Jeff Edwards
President and CEO

FEATURE STORY

EDCUTAH Legislative Priority #2: RDA/EDA Reform


Much has been said and written about the public criticisms of redevelopment agencies, especially regarding eminent domain and last year’s Supreme Court ruling on property rights. Last year, when Gov. Jon Huntsman Jr. signed Sen. Curtis Bramble’s RDA reform bill (SB184) into law, mayors across the state were up in arms. Taxpayers, on the other hand, claimed it as a victory for property rights. Some observers say the fact that few parties were happy with the legislation suggests it was a good step toward reform. However, SB184 cut much of the muscle out of the old RDA Act, including these significant changes:
  • RDAs could no longer be used for sports stadiums, soccer or otherwise.
  • RDAs could not use eminent domain to condemn property. (Local and state agencies can still use eminent domain for public projects such as schools, water lines, road widening, water treatment plants, etc.—improvements necessary for the public good.)
  • RDAs could no longer be extended in terms of time and size.
  • RDAs could no longer be used for recreation or cultural facilities.
  • A moratorium was imposed on the creation of new retail RDAs.
SB184 was beneficial in that it called for a legislative task force to review RDAs and propose a permanent solution. For nearly a year now the Utah League of Cities and Towns, among others, have reviewed the RDA issue and drafted a possible solution. Like SB184, the proposed legislation will not make everyone happy; nonetheless, we believe it to be a balanced approach to RDAs and a key to future economic development.

In the new legislation the moratorium on retail RDAs would be lifted. On the other hand, eminent domain, one of the most controversial issues involving retail RDAs, was abandoned. Note: the existing process of creating and using EDAs remains essentially intact.

Randy Sant, economic development director for Sandy City and a member of the RDA legislative task force, says the draft legislation has three important tracks:

 Track  Purpose
1. Economic Development Job creation
2. Renewal Renewal of blighted areas
3. Community Development General municipal development

The Economic Development track hasn’t changed from existing law, with the exception of a tighter definition of “job creation.” Under the proposed legislation a job would be defined as one paying above the county median wage, unless otherwise approved by the Taxing Entity Committee (TEC). Funding would be by property tax increment, based upon job creation. However, no increment would be available for retail development.

The Renewal track strengthens the definition of “blight,” specifying that vacant ground does not qualify for the blight designation. Funding would be by property tax increment for the entire project area.

Both the Development and Renewal tracks would require two separate TEC meetings for each project, to evaluate the development, developer pro forma, budget, etc., and to vote on the project. These tracks also require annual TEC meetings to review approved projects and assess project progress. Both tracks would also require super-majority approval by the TEC—a minimum 6-2 vote in favor of a project.

Last week’s edition of the Economic Review featured an interview with EDCUTAH Chair Scott Anderson, discussing USTAR, one of EDCUTAH’s top legislative priorities. (Click here to go to the USTAR web page.)

Future articles will cover tax reform and more specifically, reforms to corporate and sales taxes. Subsequent newsletter features will also cover EDCUTAH support for the GOED budget and increased education funding.

Sant says the Community Development track is the most advantageous and less restrictive part of the new bill, but could also mean less RDA money for a project. Under this track a city or county could initiate an RDA project with its own tax money, without having to meet the blight criteria, and without having other taxing agencies, such as county governments, school districts, special improvement districts, etc., on board. However, an opt-in feature allows for negotiation with other taxing agencies to expand the RDA and thus increase the amount of money available. Opt-in would be facilitated by a resolution or interlocal agreement with the governing body of the tax increment being used.

The bill also has provisions for all three tracks to access state incentive funds as outlined in HB-11, which was passed into law in 2005.

The draft legislation is voluminous—90 pages—and will most certainly face numerous revisions as it moves through the legislative process. Nonetheless, EDCUTAH supports the efforts of the Utah League of Cities and Towns and others involved in drafting the measure. Further, we hope EDCUTAH’s partners will view the legislation as a balanced approach to RDAs and a key to Utah’s economic development future and preserve this important tool in the practice of economic development.

CALENDAR

Jan. 23-26:  Snowsports Industries America (SIA) Trade Show (Las Vegas)

Jan. 27:  GOED Tech Breakfast (Click here for more information)

Feb. 10-12:  EDCUTAH Site Consultant Event (Park City)

March 8-9:  Big Business and Technology Expo (Orem)

April 6-7:  Utah League of Cities and Towns Spring Convention (St. George)

April 9-12:  BIO 2006 Annual Conference (Chicago)

April 23-26:  CoreNet Global Summit Spring Convention (Philadelphia)

May 3-4:  Salt Lake Chamber Business-to-Business Expo

May 21-24:  ICSC Spring Convention (Las Vegas)

IN THE NEWS

Business Headlines from the Past Week

Real Estate Investments Soar

- Real estate investors are snatching up everything from office buildings and apartments to retail stores and industrial warehouses in Utah, setting a record in total investment transactions in 2005 that exceeded $1.6 billion. Last year's investment sales showed a 130 percent increase over 2004's sales at $679.8 million, according to a report released Thursday by Salt Lake-based Commerce CRG. (Morning News)

Commercial Real Estate a Mixed Bag in Weber, Davis Counties

- The commercial real estate market was a mixed bag in the Top of Utah last year, according to a recent report from one of the sector's top local companies. Retail properties in Davis County fared better than those in Weber County, while office spaces in both counties struggled to stay full, according to the 2005 year-end report from Commerce CRG. (Standard-Examiner)

Retail Sales Increases Were Better than Expected

- Retail sales in Utah and across the country rose to better-than-expected levels in November and December, led by gains in clothing and electronics, the National Retail Federation said. It was the industry's third-best holiday season in 10 years. (SL Tribune)

Micron Changes Come in a Flash

- A joint venture between Micron and Intel, which will manufacture flash memory cards for digital devices like portable music players and digital cameras, could translate into hundreds of new jobs, says Micron spokesman Daniel Francisco. All 500 Micron employees working at the plant will retain their jobs, and Micron officials say the new company could create many more jobs at the facility in the future. (Morning News)

Hispanics Called an Untapped Market

- It isn't enough to have a glossy marketing plan or even a hot new product. To capture the rapidly growing Hispanic/Latino market, Utah businesses will have to do more, understand more and be more involved. (Morning News)

Utah, Texas Hold Promise as the Next 'El Dorado' of Energy Discoveries

- A World Energy Monthly Review analyst has identified Utah’s Northern Paradox Basin as one of two promising areas of domestic oil production. (Business Wire)

Economy in Dixie Booming

- Washington County business leaders reviewed "the good, the bad and the ugly" of a tumultuous year during an economic summit that attracted more than 600 people to sunny St. George. The "good," according to Lecia Parks Langston, a state regional economist, included a broad-based, booming economy in 2005 and a job growth rate of 9 percent. (Morning News) (Utah Business Magazine)

Southern Utah Economy Hinges on Resources

- More than any other factor, economic growth in Southern Utah hinges on water, Ron Thompson, general manager of the Washington County Water Conservancy District, said during the Washington County Economic Summit. (Spectrum)

SL Chamber: Legislature Should Invest in Infrastructure and Economic Development

- The Utah Legislature needs to focus on investing in infrastructure and economic development and less on tax cuts, the head of the Salt Lake Chamber of Commerce said. "Our plea for the Legislature is ... you have got to invest this or we are going to lose our economic advantage in the future," said Lane Beattie, president and CEO of the chamber. "If we don't, in today's economic world we will fail." (Daily Herald)

Legislation Gives Tourism Office More Money to Sell State

- The Utah Office of Tourism will spend more than $7 million on marketing this year and unveil a new logo and slogan to the Legislature on Feb. 8. (Spectrum)

Utah Labor Market Tight; Economy Hot

- A tight labor market is putting the squeeze on Utah's small-business owners, according to the Zions Bank's Small Business Index. However, the report said the state's economy is "rockin' and rollin'," and job growth is occurring across the board, most notably in higher-paying industries. (Morning News)

Soaring Uranium Prices Renew Exploration

- Motivated by soaring prices for nuclear fuel, a Canadian company has received permission to look for uranium deposits in Utah. (Daily Herald)
(SL Tribune)

Davis Tourism Figures Touted

- More tourists and meeting planners are choosing Davis County as their destination. The Davis Area Convention and Visitors Bureau, now in its third year of operation, helped fill more than 50,164 room nights in the county in 2005, which amounted to a $14.5 million economic impact on hotels, restaurants, gas stations and other local businesses. (Standard-Examiner)

Utah Job Growth Among Fastest in the U.S.

- Utah is adding jobs at one of the highest rates in the country but whether wage increases in the state are keeping up with other states has yet to be seen. Employment growth in Utah rose 3.6 percent from the third quarter of 2004 to the same period in 2005, the fourth-highest rate of job growth nationwide, the Federal Deposit Insurance Corp. (SL Tribune)

Home Depot Buys Chem-Dry

- The Home Depot Inc., the nation's largest home improvement store chain, has purchased Logan-based Chem-Dry to add to its home installation business. (Morning News) (Daily Herald)

Orem Company Signs $100M Deal With Sanyo

- An Orem company on Thursday reached a $100 million software licensing deal with Japanese home appliances giant Sanyo. AuctionVideo.com Inc., an Orem provider of Web-based telecommunications software, has entered a joint venture deal with NTT-Data Sanyo to license its audio-video cellphone technology as a key feature in Sanyo's digital VideoCellphone. (Daily Herald)


INVESTOR SPOTLIGHT


Joe Knight, CFO/Owner of Setpoint CompaniesName/Title: Joe Knight, CFO/Owner

Company: Setpoint Companies

Company's Mission: Fierce, fast technology, creative approaches, and a "no surprises" way of doing business.

Education: BA Economics, Brigham Young University; MBA Finance, University of California, Berkeley

Growing up: Palo Alto, Calif. and Provo (Provo High School)

Family: Married with 5 boys and 2 girls (ages 4 to 18)

Hobbies: Reading, outdoor sports and spending time with my family.

Motivations/ambitions: I love to be involved in creating business opportunities and creating opportunities for the people within Setpoint. I just want to continue to develop and grow businesses that I can be proud of.

Why economic development is important: It drives our communities and way of life. It can create opportunities for talented people to grow and develop a business. Setpoint started as a belief that two young engineers, Joe Cornwell and Joe VanDenBerghe, could start a business that did things differently. I was able to support that dream as an early owner and partner in a business that opened its books to its employees and showed them what it really means.

Hottest economic development issues you see: In Utah, we need to be competitive with our health insurance for small businesses. I could save over $200,000 a year in health care costs by moving this business to California or Colorado where health care regulations are more friendly to small business.

Improvements in economic development you’d like to see: Improve the state health care insurance laws (see above); this issue is really hurting our business.

Proudest moment: Talking my wife into marrying me.

Most embarrassing moment: There are so many it’s hard to pick just one.

Favorite book: I just wrote a book with my partner in my training business called 'Financial Intelligence: A Managers Guide to Knowing What the Numbers Really Mean' (Harvard Business School Press). So it now is my favorite. I highly recommend it.

Favorite mentor: My father.

Your personal motto: Nothing comes to mind.

Anything else you’d like to share: As a result of making Setpoint an open financial company, I have learned how to teach financial and business concepts. I own a business called The Business Literacy Institute with a partner, Karen Berman (co-author of the book). At BLI we provide customized finance and business strategy training to many major corporations. I have really enjoyed the opportunity to train and speak on business literacy around the world and share the passion I have developed for it through my involvement here at Setpoint.

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