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R-012-2018 - Stadler Rail Community Reinvestment Area PlanR 18-2 REDEVELOPMENT AGENCY OF SALT LAKE CITY RESOLUTION NO. R-12-2018 Stadler Rail Community Reinvestment Area Plan RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY ADOPTING THE STADLER RAIL COMMUNITY REINVESTMENT AREA PLAN WHEREAS, the Redevelopment Agency of Salt Lake City ("RDA") was created to transact the business and exercise the powers provided for in the Utah Title 17C Community Reinvestment Agency Act (the "Act"). WHEREAS, on November 14, 2017, the RDA Board of Directors ("RDA Board") adopted Resolution No. *13 , designating a survey area ("Survey Area") to study whether project area development is feasible within the Survey Area. * ( R-13- 2017 ) WHEREAS, the RDA has determined that project area development is feasible within the Survey Area ("Project Area"), a boundary description of which is attached hereto as Exhibit A. WHEREAS, the RDA has prepared the Stadler Rail Community Reinvestment Area Plan ("CRA Plan") that is attached hereto as Exhibit B. WHEREAS, the RDA's purpose and intent with respect to the Project Area is to utilize tax increment funds derived from the Project Area to facilitate community reinvestment activities as further described in the CRA Plan. WHEREAS, the RDA Board of Directors desires to approve and adopt the CRA Plan. NOW, THEREFORE, BE IT RESOLVED, THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF SALT LAKE CITY MAKES THE FOLLOWING FINDINGS AND DETERMINATIONS REGARDING THE CRA PLAN IN ACCORDANCE WITH 17C-5-108 OF THE ACT: The creation of the Project Area: 1. Serves a public purpose; 2. Produces a public benefit as demonstrated by the analysis described in Subsection 17C-5-105(2); 3. Is economically sound and feasible; 4. Conforms to Salt Lake City's applicable general plan for the area; and 5. Promotes the public peace, health, safety, and welfare of Salt Lake City. 1 Passed by the Board of Directors of the Redev 10th day of April ,2018 gency of Salt Lake City, this Derek Kitchen, Chairperson Transmitted to the Executive Director on 4-11-2018 The Executive Director: does not request reconsideration requests reconsideration at the next regular Agency meeting. Approved as to form: Attest: City Recorder Jacqueline M. Bi skupski , Executive irector N k- Salt Lake City Attorney's Office Katherine N. Lewis Date: 2)1 tzLii Zw HB_ATTY-#68701-v 1-RDA_ Resolution_(Stadler Rail_CRA_Plan).docx 2 EXHIBIT A [Attach Boundary Description of Project Area] 3 Stadler Rail CRA: Project Area Map and Boundary Description A parcel of land located in Lots 1, 2 and 3 of Section 2, Township 1 South, Range 2 West, Salt Lake Base and Meridian, Salt Lake County, Utah, described as follows: BEGINNING at a point on the west line of 5600 West Street, said point being North 89°49'53" West 191.96 feet along the south line of the South Half of the Northeast Quarter of Section 2, Township 1 South, Range 2 West, Salt Lake Base and Meridian and North 00°02'27" West 1,418.02 feet from the East Quarter Corner of said Section 2, and thence North 89°50'27" West 2,328.76 feet; thence North 00°01'23" West 981.50 feet; thence North 82°53'00" West 747.21 feet; thence South 89°57'48" West 706.21 feet to the west line of Lot 3 of said Section 2; thence along said line North 00°00'19" East 103.50 feet; to the south line of the Salt Lake Garfield and Western Railway right-of-way; thence along said line the following seven courses: 1) North 89°57'48" East 1,320.19 feet to the west line of the East Half of said Section 2, 2) North 89°57'19" East 1,377.43 feet to a point on the arc of a 1,115.92 foot non -tangent curve to the right, 3) Easterly 38.28 feet along the arc of said curve through a central angle of 01°57'56" and a long chord of South 74°32'35" East 38.28 feet, 4) South 71°53'17" East 98.68 feet, 5) South 71°03'37" East 150.67 feet, 6) South 71°23'40" East 100.52 feet to a point on the arc of a 2,894.79 foot non -tangent curve to the left and 7) Easterly 670.18 feet along the arc of said curve through a central angle of 13°15'53" and a long chord of South 78°41'34" East 668.69 feet to the west line of the 5600 West Street right-of-way; thence along said line the following three courses: 1) South 00°14'08" East 499.01 feet, 2) South 09°33'56" East 203.34 feet and 3) South 04°41'58" East 233.81 feet to the POINT OF BEGINNING. Said parcel contains 2,733,413 square feet or 62.75 acres, more or less. Project Area Boundary EXHIBIT B [Stadler Rail Project Area Plan] 4 SLCRDA STADLER RAIL COMMUNITY REINVESTMENT AREA DRAFT PLAN INTRODUCTION Through this Stadler Rail Community Reinvestment Area Plan ("CRA Plan"), the Redevelopment Agency of Salt Lake City ("RDA) contemplates the creation of a Community Reinvestment Area ("CRA") to facilitate the use of tax increment financing ("TIF") as a funding mechanism to further the economic development goals of Salt Lake City. In addition, this CRA Plan will help facilitate the implementation of the community vision and land use plans established by the Northwest Quadrant Master Plan (Adopted August 2016). CRA Plan Requirements This CRA Plan complies with the community reinvestment project area plan requirements of Utah Code 17 C Community Reinvestment Agency Act. The RDA does not anticipate using eminent domain within the Project Area, and therefore is not conducting a blight study or a blight determination. Thus, the Project Area is authorized through interlocal agreements with individual taxing entities rather than by a taxing entity committee. Prior to adoption of a board resolution, the RDA Board of Directors ("Board") has determined this CRA Plan does the following: • Contains a map and boundary description of the Project Area • Contains the RDA's purposes and intent with respect to the Project Area • Serves a public purpose • Produces a public benefit per Utah Code 17C-5-105(2) • Is economically sound and feasible • Conforms to the community's general plan • Promotes the public peace, health, safety, and welfare of the community Plan and Policy Coordination Salt Lake City completed its Northwest Quadrant Master Plan in August 2016, which serves as the appropriate master plan to inform this CRA Plan. Page 1—Stadler Rail CRA Plan **DRAFT** SECTION 1: COMMUNITY REINVESTMENT ANALYSIS Section 1 conforms to the requirements of Utah Code 17C-5-105(1), and includes the following information: a) Project Area Boundary Description b) Existing Land Uses and Neighborhood Context c) Standards to Guide Project Area Development d) Furthering Purposes of Utah Title 17C e) Consistency with Community General Plan f) Elimination or Reduction of Blight, if applicable g) Specific Project Area Development h) Process for Selecting Participants i) Reasons for Selecting the Project Area j) Existing Physical, Social, and Economic Conditions k) Financial Assistance to be Offered to Participants I) Results of Public Benefits Analysis m) Historic Preservation Requirements n) Interlocal Agreement o) Other Information 1 (a): Project Area Boundary Description The Stadler Rail CRA ("Project Area") boundaries are shown in the map presented in Figure 1, and is contained in the following boundary description: A parcel of land located in Lots 1, 2 and 3 of Section 2, Township 1 South, Range 2 West, Salt Lake Base and Meridian, Salt Lake County, Utah, described as follows: BEGINNING at a point on the west line of 5600 West Street, said point being North 89°49'53" West 191.96 feet along the south line of the South Half of the Northeast Quarter of Section 2, Township 1 South, Range 2 West, Salt Lake Base and Meridian and North 00°02'27" West 1,418.02 feet from the East Quarter Corner of said Section 2, and thence North 89°50'27" West 2,328.76 feet; thence North 00°01'23" West 981.50 feet; thence North 82°53'00" West 747.21 feet; thence South 89°57'48" West 706.21 feet to the west line of Lot 3 of said Section 2; thence along said line North 00°00'19" East 103.50 feet; to the south line of the Salt Lake Garfield and Western Railway right-of-way; thence along said line the following seven courses: 1) North 89°57'48" East 1,320.19 feet to the west line of the East Half of said Section 2, 2) North 89°57'19" East 1,377.43 feet to a point on the arc of a 1,115.92 foot non -tangent curve to the right, 3) Easterly 38.28 feet along the arc of said curve through a central angle of 01°57'56" and a long chord of South 74°32'35" East 38.28 feet, 4) South 71°53'17" East 98.68 feet, 5) South 71°03'37" East 150.67 feet, 6) South 71°23'40" East 100.52 feet to a point on the arc of a 2,894.79 foot non -tangent curve to the left and 7) Easterly 670.18 feet along the arc of said curve through a central angle of 13°15'53" and a long chord of South 78°41'34" East 668.69 SI_.CRDA Page 2 — Stadler Rail CRA Plan **DRAFT** feet to the west line of the 5600 West Street right-of-way; thence along said line the following three courses: 1) South 00°14'08" East 499.01 feet, 2) South 09°33'56" East 203.34 feet and 3) South 04°41'58" East 233.81 feet to the POINT OF BEGINNING. Said parcel contains 2,733,413 square feet or 62.75 acres, more or less. Figure 1. Project Area Boundary 1 (b): Existing Land Uses and Neighborhood Context This section includes a general statement of the existing land uses, layout of principal streets, population densities, and building intensities of the Project Area and how each will be affected the Project Area development. LAND USES Existing: The project area consists of 62.75 acres of parcels that are currently vacant land. The property is zoned M-1 which allows for light manufacturing uses that protects adjacent sensitive lands and waterways. RDA Page 3 —Stadler Rail CRA Plan **DRAFT** Anticipated Changes: Through redevelopment and revitalization of the Project Area, it is anticipated that underutilized and vacant land will be transformed into a state-of-the-art manufacturing facility. The facility will retain existing up to 150 jobs in Salt Lake City, and create up to an additional 824 jobs during the life of the Project Area. The Project Area will also include investment in public infrastructure to service the facility and surrounding new development. LAYOUT OF PRINCIPAL STREETS Existing: The Project Area currently contains no streets. The Project Area is located immediately southwest of the 5600 West Street and Interstate 80 intersection. Anticipated Changes: The Project Area will include a street (150 South) that will provide access from 5600 West Street. POPULATION DENSITIES Existing: The Project Area currently consists of vacant land with no population. Anticipated Changes: Workforce population will increase in the Project Area due to redevelopment activity guided by the Standards to Guide Project Area Development (Section 1(c)). It is anticipated the population will be a maximum of 15.9 people per acre. BUILDING INTENSITIES Existing: The Project Area currently consists of vacant land with no buildings. Anticipated Changes: Over the first 10 years of the project area life, the Project Area is anticipated to contain a new manufacturing plant and office building supported by new infrastructure. The Project Area will also likely include new warehouse space, assembly halls, and fabrication facilities to support company operations which will total 950,000 square feet. 1 (c): Standards to Guide Project Area Development This project area plan references Salt Lake City's Northwest Quadrant Master Plan as its standard to guide the project area development. 1 (d): Furthering Purposes of Utah Title 17C By implementing this CRA Plan, the RDA shall leverage private investment with TIF to provide a redevelopment opportunity that will stimulate economic activity in the project area. .iRDA Page 4 — Stadler Rail CRA Plan **DRAFT** 1 (e): Consistency with the Community General Plan As standards to guide development, the RDA proposes to use the following goals as informed through the Northwest Quadrant Master Plan: Expand the region's economic base by supporting business recruitment, development, and job retention by building the Project which will retain existing jobs in the City as well as create new jobs. Preserve Areas for future office, industrial, manufacturing, research or distribution uses by constructing a manufacturing facility while encouraging and promoting sustainable practices by incorporating environmental features in the Project including use of recyclable building materials, installing solar panels, accommodations for bicycle commuters, water retention system, and systems that require minimal energy usage. Protect water quality by building a water retention system to minimize impact on Salt Lake City's storm water system. Create reliable, cost-effective, environmentally sustainable systems of utilities, public facilities and services by installing a lift station to control the Project's sewer system. Concentrate development near major transportation corridors by locating facility near a major interstate and freeway off -ramp. Promote the infill and redevelopment of underutilized areas by building the Project on vacant, underutilized land. 1 (f): ELIMINATION OR REDUCTION OF BLIGHT The RDA is not conducting a blight study to make a determination of blight. However, Project Area development activities are anticipated to redevelop vacant property. 1 (g): SPECIFIC PROJECT AREA DEVELOPMENT The anticipated project will consist of a manufacturing facility that will be approximately 950,000 square feet. The project will employ between 300 and 974 jobs over a four -phased build -out to take approximately 10 years. RDA Page 5 — Stadler Rail CRA Plan **DRAFT** 1 (h): PROCESS OF SELECTING PARTICIPANTS The RDA may enter into participation agreements (also known as tax increment reimbursement agreements) for the purpose of providing incentives in the form of TIF for Project Area development. The participant will go through an evaluation process in accordance with the RDA's tax increment reimbursement program and policies. The participant must provide sufficient evidence that tax increment funding is necessary for the proposed project to succeed. In addition, the proposed project must align with CRA objectives and involve significant private investment in order to assure adequate yield of tax increment. 1 (i): REASON FOR SELECTING THE PROJECT AREA The selection of the Stadler Rail Project Area is the result of reviewing a request from Stadler Rail to create the CRA per the RDA's Tax Increment Reimbursement Policy (Policy). The RDA Board of Directors initiated the CRA on November 14, 2017. The RDA has undertaken an independent financial benefit analysis that indicates the project will result in significant economic investment in the proposed CRA. The evaluation criteria for the project area (referred to as "Local Business") set forth in the RDA's Policy is as follows: a. The Local Business must commit to invest a minimum $12 million in private capital expenditures into the project. b. The Local Business must demonstrate the project will result in job retention and/or job creation. One of the following job creation/retention standards must be achieved: i. The minimum creation of one (1) full-time equivalent permanent job (created or retained) per $50,000 of eligible tax increment. ii. The creation or retention of jobs at an aggregate of 110% of the average Salt Lake County wage. c. The Local Business must demonstrate that the tax increment reimbursement is necessary for the project to succeed. d. The Local Business must demonstrate that it is an existing Salt Lake City -based business and the tax increment reimbursement will result in the business remaining or expanding in the City. e. The project must employ sustainable construction practices consistent with a reputable sustainable building program approved by the Executive Director. The RDA has concluded that the CRA creation meets the RDA's Policy by creating substantial economic benefits for the taxing entities. 1 (j): EXISTING PHYSICAL, SOCIAL, AND ECONOMIC CONDITIONS The property within the CRA boundary is current vacant. The physical condition of the property is undeveloped land adjacent to Interstate 80 and 5600 West. Some industrial uses are located immediately east of the proposed CRA. The Salt Lake International Airport is located just 4.5 miles from the proposed CRA, which could provide additional economic benefits to the project. Page 6 — Stadler Rail CRA Plan **DRAFT** The proposed CRA is also located in the Northwest Quadrant, and would benefit by close proximity of the proposed Inland Port. 1 (k): FINANCIAL ASSISTANCE OFFERED TO PARTICIPANTS To promote investment in the CRA, the RDA intends to use the following RDA program: TAX INCREMENT REIMBURSEMENT PROGRAM The RDA Tax Increment Reimbursement Program may provide project developers a tax increment reimbursement for the development of improvements that meet the goals and objectives of this CRA Plan and provide significant public benefit. Tax increment reimbursements shall be based upon the difference between the initial taxable value of a property prior to improvements and the increased taxable value resulting from said improvements. The developer will receive a percentage of the tax increment generated from its project for a specified time frame, and Salt Lake City and the RDA will receive the residual tax increment generated by the project. The RDA's portion will be used to pay its 10% required allocation toward housing per Section 17C-5- 307(2) of the Utah Code, plus other statutory and administrative costs. 1 (I): PUBLIC BENEFITS ANALYSIS SUMMARY According to the Utah Code 17C Community Reinvestment Agency Act, the RDA shall conduct a Public Benefits Analysis ("Analysis") to determine whether this CRA Plan will provide a public benefit. The RDA contracted with Zion's Public Finance, Inc. (ZPFI) to carry out this effort. The resulting Analysis, as completed by ZPFI, is attached as Exhibit A. 1 (m): HISTORIC PRESERVATION Since the property is vacant, historic preservations efforts are not applicable. 1 (n): INTERLOCAL AGREEMENT Per the requirements listed in Utah Code 17C, the Stadler Rail Project Area is subject to an interlocal agreement with taxing entities, rather than a taxing entity committee, because the RDA does not plan to use eminent domain to acquire property within the project area. 1 (o)(i): OTHER INFORMATION No other information is necessary or advisable. RDA Page 7 — Stadler Rail CRA Plan **DRAFT** SECTION 2: PROJECT AREA BUDGET Section 2 of this CRA Plan conforms to the requirements of 17C-5-303, and includes the following information: 1) Receipt of Tax Increment a. Base taxable value; b. Project amount of tax increment to be generated within the CRA; c. Funds collection period; d. Projected amount of tax increment to be paid to other taxing entities in accordance with Section 17C-1-410 (if applicable); e. If the area from which tax increment is collected is less than the entire CRA: i. A boundary description of the portion or portions of the CRA from which the agency receives tax increment; and ii. For each portion described in Subsection 1(e)(i), the period of time during which tax increment is collected; f. Percentage of tax increment the agency is authorized to receive from the CRA; and g. Maximum cumulative dollar amount of tax increment the agency is authorized to receive from the CRA. 2) Receipt of Sales and Use Tax Revenue (if applicable) 3) Project Area Funds to Implement this CRA Plan 4) RDA's Combined Incremental Value 5) Amount for Administration 6) Property Owned and Expected to Sell The Project Area Budget is attached as Exhibit B. SLCRDA Page 8—Stadler Rail CRA Plan **DRAFT** EXHIBIT A: FINANCIAL BENEFIT ANALYSIS RDA Page 9 — Stadler Rail CRA Plan **DRAFT** Salt Lake City DRAFT Cost -Benefit and Financial Need Analysis Stadler Development March 5, 2018 ZIONS ©EI PUBLIC FINANCE, INC. ®0 Salt Lake City Redevelopment Agency 1 DRAFT Public Benefit Analysis of Stadler Development COST -BENEFIT AND FINANCIAL NEED ANALYSIS STADLER DEVELOPMENT ©0 Zions Public Finance, Inc., has conducted an objective, third -party study of the public benefits associated with the proposed Stadler Development, in accordance with the requirements of Utah Code §10-8-2(3)(e) and Utah Code §17C-5-105(2)(a)(b) that satisfies the public benefit analysis requirement of creating a Project Area by a Redevelopment Agency. In addition, the Agency's application process requires an evaluation of financial need and this report addresses financial need from the standpoint of extraordinary infrastructure or other development costs that impact the relative competitiveness of the Salt Lake City site. Stadler is known throughout the world for its custom rail car design and production. The company's history goes back to 1942 when Ernst Stadler founded the company in Zurich, Switzerland. The company prides itself on its cutting -edge technology and trains that are uniquely designed for each customer in order to meet their specific needs. Today the company has grown to over 7,000 employees worldwide. The background of Stadler provides Salt Lake City with a stable investor with a worldwide reputation for quality. Legal Requirements If a Community Reinvestment Project Area (CRA) is created for the Stadler site, then it will not need to meet the requirements of Utah Code §10-8-2(3)(e) as shown below. In fact, currently proposed legislation is clarifying the long -held interpretation that this public benefits analysis is not a requirement within project areas. However, these requirements are similar in nature to those required in reinvestment areas, under Utah Code §17C-5-105(2)(a)(b). While this report follows the organizational format of Utah Code §17C-5-105(2)(a)(b), it also includes the basic requirements of §10-8-2(3)(e) as shown below: (1) what identified benefit the municipality will receive in return for any money or resources appropriated; (ii) the municipality's purpose for the appropriation, including an analysis of the way the appropriation will be used to enhance the safety, health, prosperity, moral well- being, peace, order, comfort, or convenience of the inhabitants of the municipality; and (iii) whether the appropriation is necessary and appropriate to accomplish the reasonable goals and objectives of the municipality in the area of economic development, job creation, affordable housing, blight elimination, job preservation, the preservation of historic structures and property, and any other public purpose. As required by law for the public benefits analysis under Utah Code 17C-5-105 (2)(a) and (b): (a) An agency shall conduct an analysis in accordance with Subsection (2)(b) to determine whether the proposed community reinvestment project area plan will provide a public benefit. (b) The analysis described in Subsection (2)(a) shall consider: (1) the benefit of any financial assistance or other public subsidy proposed to be provided by the agency, including: 2 Zions Public Finance, Inc. I March 2018 Salt Lake City Redevelopment Agency I DRAFT Public Benefit Analysis of Stadler Development ©o ©0 (A) an evaluation of the reasonableness of the costs of the proposed project area development; (B) efforts that have been, or will be made, to maximize private investment; (C) the rationale for use of project area funds, including an analysis of whether the proposed project area development might reasonably be expected to occur in the foreseeable future solely through private investment; and (D) an estimate of the total amount of project area funds that the agency intends to spend on project area development and the length of time over which the project area funds will be spent; and (II) the anticipated public benefit derived from the proposed project area development, including: (A) the beneficial influences on the community's tax base; (B) the associated business and economic activity the proposed project area development will likely stimulate; and (C) whether adoption of the proposed community reinvestment project area plan is necessary and appropriate to undertake the proposed project area development. The Benefit of Any Financial Assistance or Other Public Subsidy Proposed to be Provided by the Agency An Evaluation of the Reasonableness of the Costs of the Proposed Project Area Development Projected costs include public roads dedicated to Salt Lake City that will open up 184 additional acres for future industrially -zoned development. This will be a great benefit to the City and is grounds for consideration of public assistance. Other significant infrastructure costs include a sewer lift station, test track and industrial rail service and extraordinary site preparation costs due to the steep grading of the property and the existing canal through the property. Public Roads dedicated to SLC Sewer lift station Test Track and Industrial rail service Site Preparations* Construction Cost Completion Date $7M Phase 1 $500k Phase 1 $6.5M Phase 1 $5M Phase 1 Notes 7.48 Acres (5,000 I.f. of new road approx.) *Site preparation costs include relocation of 1,000' existing canal and significant grading costs 3 Zions Public Finance, Inc. I March 2018 Salt Lake City Redevelopment Agency I DRAFT Public Benefit Analysis of Stadler Development Stadler is currently working with all major utility companies to upgrade the capacity of service in the NWQ in coordination for efficiency and cost -savings. Dominion Gas — Stadler will provide a 1,000' long x 30' wide easement along the eastern edge of its property for Dominion Energy to install a new 8" HPE gas line. This high capacity list will be installed to service the projected needs for the NWQ. Stadler will also accommodate Dominion by allowing Dominion to stage construction equipment and laydown area (1,000'x60') for multiple months in order to bore the new pipeline under 1-80 freeway in the most cost effective manner possible. This construction is planned for Summer 2018. State Prison Sewer Line —Stadler is working with the State Prison team to align the necessary forced sewer main through the subdivision project being led by Stadler. Stadler will install casings and other required materials in the new subdivision roads where applicable in order to ensure the installation of the new Sewer Line is efficient and coordinated once timing permits. Stadler will also coordinate with the State for the installation of new casings under the Stadler Test Track and adjacent SLG&W tracks. This will allow the State to stage the future boring under 1-80 closer to the Interstate and save hundreds of linear feet (400' approximate) in expensive boring costs. Rocky Mountain Power — Stadler is coordinating with the local RMP design team to fulfill Stadler's Substation needs while also providing a new 138KVA power line to support the upcoming NWQ development. Stadler is working directly with RMP to make sure it can run on either frequencies available to help reduce RMP's decision matrix and simplify their analysis for the overall area to provide the most efficient power supply. Efforts That Have Been, or Will Be Made, to Maximize Private Investment Private investment in this project will be significant. In current dollars ($2018), the total investment in land and buildings is estimated at $174 million. Spread over 62.74 acres, this represents an investment of nearly $2.8 million per acre. TABLE 2:-";DEVELOPMENT PROJECTIONS- REAL PROPERTY (LAND AND'BUILDINGS) Phase 1 Manufacturing/warehouse bldg sf 225,000 Office sf 12,000 Lot # 1 Acres 37.71 Building Construction Price $44,000,000 Timeline 2018-2019 Phase 2 225,000 250,000 250,000 12,000 1 2 3 12.99 12.04 $50,000,000 $30,000,000 $50,000,000 2020-2022 2023-2025 2025-2030 In addition, there will be significant investment in personal property. Phase 3 Phase 4 4 Zions Public Finance, Inc. I March 2018 Salt Lake City Redevelopment Agency DRAFT Public Benefit Analysis of Stadler Development © 0 TABLE 3: DEVELOPMENT PROJECTIONS— PERSONAL PROPERTY Summary Table Cost per Unit Units Total Investment ($2018) Replacement (Useful Life) in Years Forklifts $100,000 3 $300,000 15 Overhead Cranes $166,667 36 $6,000,000 20 Backup Generator $250,000 4 $1,000,000 15 Yard Rail Locomotive $2,000,000 1 $2,000,000 20 Personal Computers $3,000 1,000 $3,000,000 2 Solar Panels $500,000 4 $2,000,000 30 Personal property values fluctuate from year to year due to depreciation values and equipment replacement schedules. On average, personal property market values average just over $85,000 per acre each year over the first 20 years of the project. Public participation in the project is expected to range between $8.8 million and $11.3 million depending on the percentage of increment that flows to the Agency. In comparison, Stadler will invest $174 million in land and buildings, plus an additional $14.3 million in personal property investment. The Rationale for Use of Project Area Funds, Including an Analysis of Whether the Proposed Project Area Development Might Reasonably be Expected to Occur in the Foreseeable Future Solely through Private Investment There are several reasons why the use of project area funds can be considered necessary and appropriate: • Extraordinary infrastructure costs and benefits to City • Attraction of a stable and growing company with a significant number of jobs and good wages • Relatively high property tax rates in Salt Lake City compared to other sites Extraordinary Infrastructure Costs and Benefits to City As shown above, there are extraordinary costs that accompany the Stadler development. These costs, including public roads, sewer lift station, test track and industrial rail service and site preparation, are upfront costs (Phase 1) and are necessary before Stadler will see any return on its investment. Further, the land dedication from PRI for the public roads and the design/construction by Stadler will create new access to 184 acres of industrial -zoned land that was previously inaccessible. This will provide a benefit to the City and will accelerate future development in that area. Stable and Growing Company Stadler has existed since 1942, founded in Zurich, Switzerland. Sales forecasts provided by Stadler, for the Salt Lake City site, are strong, as shown in the figure below. 5 Zions Public Finance, Inc. 1 March 2018 Salt Lake City Redevelopment Agency I DRAFT Public Benefit Analysis of Stadler Development ©0 FIGURE 1: STADLER SALES FORECAST FOR SALT LAKE CITY SITE 600 500 400 300 200 100 0 Sales Forecast (In Millions) 330 75 425 500 2015/2016 2017/2018 2019/2020 2021/2022 2023/2024 ■ Sales Forecast (In... Upon completion of Phase 4, Stadler expects to have created 976 full-time employees by 2027. The average wage, without benefits, for these jobs is $55,370. Wages will range from a low of $14 per hour, to $146,163 in annual wages (not including benefits). In comparison, the average wage in Salt Lake County is $50,596,1 suggesting that the average wage at Stadler will be 109 percent of the County average. During the first phase of development, 300 jobs will be located at the facility, with 150 of the jobs being retained from Stadler's current operations and 150 new jobs created. Comparison of Property Tax Rates Property tax rates in Salt Lake City are higher than in other cities in the County. This, therefore, adds to the cost of doing business in Salt Lake City. TABLE a: COMPAR.AT+,F PRo0FRTr TAX Comparative City Tax Rates Salt Lake City Bluffdale Draper Holladay Murray Sandy South Jordan South Salt Lake City West Jordan City West Valley City Bureau of Labor Statistics City Tax Rate 0.004286 0.001751 0.001460 0.001380 0.001759 0.001229 0.001900 0.002032 0.001975 0.004151 6 Zions Public Finance, Inc. I March 2018 Salt Lake City Redevelopment Agency 1 DRAFT Public Benefit Analysis of Stadler Development An Estimate of the Total Amount of Project Area Funds That the Agency Intends to Spend on Project Area Development and the Length of Time Over Which the Project Area Funds Will Be Spent Final incentives have not yet been determined between the Agency and Stadler. The total amount of increment to the Agency, at varying percentages, is shown in the table below, assuming that only Salt Lake City participates in contributing tax increment to the Agency. Other taxing entities may choose to contribute in other ways, such as with public infrastructure. TABLE 5: PROJECTED TAX REVENUES TO AGENCY — VARYING PERCENTAGES 70% Increment $8,794,125 20-Year Anticipated Tax Revenues to Agency 80% Increment 90% Increment $10,050,428 $11,306,732 Anticipated Public Benefit from the Proposed Project Area Development Beneficial Influences on the Community's Tax Base Fiscal impacts to the City have been evaluated through a review of projected revenues and expenses to the General Fund from the proposed development. Property Tax Revenues Property tax revenues are based both on taxable value and current tax rates for all taxing entities. The proposed development is located in Tax District 13E, which has the following current tax rates: TABLE 6. fAx D;sTAICT 13E TAX RATES Tax District 13E Tax Rate Salt Lake County 0.002238 Multi -County Assessing & Collecting Levy 0.000010 County Assessment & Collecting Levy 0.000244 Salt Lake City School District 0.005748 Salt Lake City 0.004286 Salt Lake City Library 0.000834 Metropolitan Water District - Salt Lake 0.000325 Magna Mosquito Abatement District 0.000050 Central Utah Water Conservancy District 0.000400 TOTAL 0.014135 Market values of the proposed real and personal property investment were obtained through consultation with Stadler. The study further assumes a construction cost inflation factor of two percent per year over the absorption time period. Detailed absorption projections, by year, are included in Appendix A. 7 Zions Public Finance, Inc. I March 2018 Salt Lake City Redevelopment Agency 1 DRAFT Public Benefit Analysis of Stadler Development Property tax revenues are estimated to reach nearly $12.6 million over the 20-year period of this analysis. TABLE 7: SALT LAKE CITY PROJECTED PROPERTY TAX REVENUES, 20 YEARS Salt Lake City Real Property Tax Revenues Personal Property Tax Revenues TOTAL 20-Year Projected Revenues $12,063,090 $499,945 $12,563,035 Base year tax revenues forthe two parcels2 in the Stadler development are minimal. The base year taxable value is $3,710 and property tax revenues to Salt Lake City are estimated at $15.90 per year, for a total of $318 over the 20-year time period of this study. Projected 20-year revenues to all taxing entities in Tax District 13E are also minimal. TABLE 8: ALL TAXING ENTITIES PROJECTED PROPERTY TAX REVENUES, 20 YEARS, BASELINE CONDITIONS Taxing Entities Salt Lake County Multi -County Assessing & Collecting Levy County Assessment & Collecting Levy Salt Lake City School District Salt Lake City Salt Lake City Library Metropolitan Water District - Salt Lake Magna Mosquito Abatement District Central Utah Water Conservancy District TOTAL 9: ALL TAXING ENTITIES PROJECTED PROPERTY TAX REVENUES, 20 YEARS Taxing Entities Salt Lake City Salt Lake County Salt Lake City School District Salt Lake City Library Metropolitan Water District - Salt Lake Magna Mosquito Abatement District Central Utah Water Conservancy District TOTAL 20-Year Projected Revenues $166 $1 $18 $427 $318 $62 $24 $4 $30 $1,049 ITH STADLER DEVELOPMENT 20-Year Projected Revenues $12,563,035 $6,559,980 $16,848,420 $2,444,604 $952,633 $146,559 $1,172,472 $40,687,703 The projected property tax revenues from the Stadler Development are significantly more than what the taxing entities could expect if the parcels were to develop in a similar fashion to nearby industrial development. As shown previously, the average real property taxable value per acre of the Stadler Development is nearly $2.8 million. In comparison, the real property value per acre of comparison parcels averages only $973,048 per acre. TABLE 10: COMPARISON SITES, TAXABLE VALUE PER ACRE FID Taxable Value _ Stadler Property $174,000,000 2 Includes parcels 14021000150000 and 14022000020000. Acres 62.74 Taxable Value per Acre $2,773,350 8 Zions Public Finance, Inc. I March 2018 Salt Lake City Redevelopment Agency I DRAFT Public Benefit Analysis of Stadler Development © ©© 0 FID Taxable Value 230101 $35,335,700 230104 $29,276,100 230102 $31,489,700 230122 $43,365,500 230086 $21,914,600 230099 $30,691,400 230100 $32,988,000 230088 $27,982,500 229973 $23,697,100 230103 $30,126,300 229967 $20,124,600 229968 $22,849,900 229916 $44,312,200 229972 $10,020,800 229974 $22,555,400 Source: Salt Lake County Assessor's Office Zions Public Finance, Inc. March 2018 Acres Taxable Value per Acre 24.09 $1,467,086 22.99 $1,273,512 25.87 $1,217,077 35.75 $1,213,123 18.50 $1,184,686 28.28 $1,085,401 31.33 $1,052,975 28.46 $983,215 23.98 $988,310 30.10 $1, 000, 981 20.71 $971,653 24.59 $929,404 49.00 $904,313 12.98 $772,273 61.94 $364,126 9 Salt Lake City Redevelopment Agency 1 DRAFT Public Benefit Analysis of Stadler Development FIGURE 2: COMPARISON SITES, TAXABLE VALUE PER ACRE Legend OStadler Improvement Value per Acre so - $250,000 J S250,000 - $500,000 II $500,003 - $750,000 111 $750,000 - S1,000,000 $1,000,000 - 31,311,025 Sales Tax Revenues Stadler will not generate any direct point -of -sale tax revenues because there may not be direct sales in the immediate area. However, Stadler will likely purchase many of its operating supplies in the local area, thereby paying local sales tax revenues. Stadler has not been able to provide an estimate of the magnitude of these purchases. In addition, there will be one-time purchases of construction supplies. Assuming that roughly 40 percent of the construction investment is for supplies results in purchases of approximately $77 million. The following table shows the potential one-time sales tax revenue impacts to Salt Lake City and Salt Lake County, assuming that different percentages of total supplies are bought within Salt Lake City boundaries.' — ONE-TIME POINT -OF-; Percent Purchased in Local Area Point of Sale Distribution 10% 25% 50% Salt Lake City Salt Lake County 0.005 0.00125 $38,603 $9,651 $96,507 $24,127 $193,014 $48,253 3 Salt Lake County could receive additional purchases more than Salt Lake City as it covers a larger geographic area and thereby has a broader range of suppliers available for construction. 10 Zions Public Finance, Inc. I March 2018 Salt Lake City Redevelopment Agency I DRAFT Public Benefit Analysis of Stadler Development is Percent Purchased in Local Area 75% i\ilulnci al Energy Tax ;ev"enu es Salt Lake City Salt Lake County $289,521 $72,380 Salt Lake City has enacted the municipal energy ("franchise") tax to the full six percent allowed by law. This means that the City can charge a tax on all taxable portion of electric and natural gas sales. Estimates of energy usage and annual costs have been provided by Dominion Energy and Rocky Mountain Power. TABLE 12: ESTIMATED NATURAL GAS USAGE AND ANNUAL PAYMENTS Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Source: Dominion Energy DTH 49,320 49,320 49,320 98,640 98,640 98,640 135,360 135,360 135,360 135,360 135,360 172,080 172,080 172,080 172,080 172,080 172,080 172,080 172,080 172,080 Commodity @ $3.00 $147,960.00 $147,960.00 $147,960.00 $295,920.00 $295,920.00 $295,920.00 $406,080.00 $406,080.00 $406,080.00 $406,080.00 $406,080.00 $516,240.00 $516,240.00 $516,240.00 $516,240.00 $516,240.00 $516,240.00 $516,240.00 $516,240.00 $516,240.00 Municipal Energy Tax Revenue - 6% $ 8,877.60 $ 8,877.60 $ 8,877.60 $17,755.20 $17,755.20 $17,755.20 $24,364.80 $24,364.80 $24,364.80 $24,364.80 $24,364.80 $30,974.40 $30,974.40 $30,974.40 $30,974.40 $30,974.40 $30,974.40 $30,974.40 $30,974.40 $30,974.40 Total municipal energy tax revenues to Salt Lake City from natural gas purchases are anticipated to reach over $480,000 over the 20-year time period of this study. Estimates of energy usage and costs have been provided by Rocky Mountain Power, but are based on limited information that could be provided to RMP by Stadler. They are, therefore, considered to be a conservative estimate of future energy costs. Year Energy Costs Year 1 $1,498,005.23 Year2 $1,685,146.45 11 Zions Public Finance, Inc. I March 2018 Salt Lake City Redevelopment Agency I DRAFT Public Benefit Analysis of Stadler Development IN Year Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Source: Rocky Mountain Power; Stadler Class B/C Road Fund Revenues Energy Costs $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 $1,674,408.97 Utah Department of Transportation (UDOT) distributes road funds to cities based on both a population distribution and a weighted road miles distribution. There will be no added population from the Stadler development and only limited road miles — approximately 5,000 linear feet of roadway. Because the road will be paved, it will be weighted by a factor of five, with the average distribution per weighted road mile of $582.10.4 Therefore, anticipated road fund revenues are nearly $67,000, over the 20-year timeframe of this study. Summary of Major General Fund Revenue Sources Total general fund revenues are anticipated to reach more than $15.1 million over the 20-year period. 4: SUMMAR ( OF 1'4i,v GENERAL FUND REVENUES TO SALT LAKE CITY— 20-YEAR TIMEFRA Salt Lake City Amount Real Property Tax Revenues $12,063,090 Personal Property Tax Revenues $499,945 Sales Tax Revenues $0 Municipal Energy - Natural Gas $480,492 Municipal Energy —Electric $1,999,351 Class B/C Road Funds $66,967 TOTAL $15,109,846 4 UDOT 12 Zions Public Finance, Inc. I March 2018 Salt Lake City Redevelopment Agency I DRAFT Public Benefit Analysis of Stadler Development In addition, property tax revenues to other taxing entities are expected to reach over $28 million over the 20-year period. SUMMARY OF MAJOR REVENUES TO OTHER TAXi•NG _ti-YE.-1 R. Tl,1ErRAi�9 Taxing Entity 20-Year Revenues Salt Lake County $6,559,980 Salt Lake City School District $16,848,420 Salt Lake City Library $2,444,604 Metropolitan Water District - Salt Lake $952,633 Magna Mosquito Abatement District $146,559 Central Utah Water Conservancy District $1,172,472 TOTAL $28,124,668 ti?rierai Fund Expenses Salt Lake City's General Fund Budget for 2018 shows total budgeted expenses of $272,848,337. With a total of 71,110.4 acres in the City, this represents average expenditures of $3,837 per acre. Clearly, there is a wide range of expenses in a City, from residential to downtown commercial to industrial areas. And, research shows that nonresidential development is, on average, substantially less costly to service than residential development.' Revenue calculations for Stadler indicate that revenues will average $12,042 per acre, suggesting a more than 3:1 ratio of revenues per acre when compared to average expenses per acre. Further, the cost of services per acre is likely significantly less for industrial development. Research conducted by ZPFI for various cities for business license fees shows that calls for service (police, fire and EMS) are generally low for industrial -type properties when compared to residential and other business categories. Revenues Net revenues per acre are estimated to be at least $8,205 per acre.' With a total of 62.74 acres, this results in net revenues to Salt Lake City of roughly $514,782 annually. The Associated Business and Economic Activity the Proposed Project Area Development Will Likely Stimulate Full -Time Job Creation Based on information provided by Stadler, the proposed development will require 976 full-time employees by 2027. The average wage, without benefits, for these jobs is $55,370. Wages will range from a low of $14 per hour, to $146,163 in annual wages (not including benefits). In comparison, the average wage in Salt Lake County is $50,596,7 suggesting that the average wage at Stadler will be 109 percent of the County average. Phase 1 will include 300jobs, of which 150 will be retained from previous operations. The other 150 will be new jobs created by the development. 5 American Farmland Trust, Cost of Community Services Studies 6 Calculated by subtracting $3,837 in expenses per acre from anticipated revenues of $12,042 per acre. ' Bureau of Labor Statistics 13 Zions Public Finance, Inc. I March 2018 Salt Lake City Redevelopment Agency I DRAFT Public Benefit Analysis of Stadler Development N Construction Job Creation In addition to full-time jobs created in the study area, there will be a significant number of construction jobs created as the four phases of buildings are constructed. The average construction wage is roughly $50,000 per year.' With benefits and other costs, this analysis uses an average construction job cost of $60,000. Labor costs represent approximately 40 percent of construction expenses, with the remaining 60 percent mainly allocated for construction supplies, and with some room for overhead and profit. This analysis assumes that 40 percent of the projected construction investment per year will be spent on construction labor and that the number of construction jobs created per year will vary depending on the level of development taking place in that year. Given the absorption projections shown earlier in this report, it is assumed that a total of 1,286 full-time one-year equivalent construction jobs will be created. Whether Adoption of the Proposed Community Reinvestment Project Area Plan is Necessary and Appropriate to Undertake the Proposed Project Area Development. The creation of the proposed Community Reinvestment Project Area Plan is necessary and appropriate for the following reasons: • The Stadler development will provide a ratio of at least 3:1 of revenues to expenses for Salt Lake City's General Fund; • The development will provide significantly higher -than -average property values; • The industrial development that will take place in the area will include 976 jobs (150 of which are jobs retained from current operations) with average wages above the area median wage; • There are significant infrastructure costs associated with the development at the Salt Lake City site; and • Upfront costs open up additional acres for development and accelerate development in the surrounding area. 8 Utah Department of Workforce Services 14 Zions Public Finance, Inc. I March 2018 Salt Lake City Redevelopment Agency I DRAFT Public Benefit Analysis of Stadler Development APPENDIX A — Stadler Development Fiscal Impacts 15 Zions Public Finance, Inc. I March 2018 TOTAL 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 PROJECTED REVENUES 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Salt Lake City Real Property Tax Revenues $12,063,090 $188,584 $188,584 $188,584 $416,001 $416,001 $416,001 $560,803 $560,803 $560,803 $560,803 $560,803 $827,258 $827,258 $827,258 $827,258 $827,258 $827,258 $827,258 $827,258 $827,258 Personal Property Tax Revenues $499,945 $12,249 $19,698 $31,068 $29,131 $27,270 $29,916 $27,778 $38,968 $35,732 $32,323 $29,037 $26,453 $24,053 $21,568 $19,275 $20,307 $18,728 $19,623 $18,870 $17,900 Sales Tax Revenues $0 Municipal Energy - Natural Gas $480,492 $8,878 $8,878 $8,878 $17,755 $17,755 $17,755 $24,365 $24,365 $24,365 $24,365 $24,365 $30,974 $30,974 $30,974 $30,974 $30,974 $30,974 $30,974 $30,974 $30,974 Municipal Energy - Electric $1,999,351 $89,880 $101,109 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 $100,465 Class 8/C Road Funds $66,967 $2,756 $2,811 $2,868 $2,925 $2,983 $3,043 $3,104 $3,166 $3,229 $3,294 $3,360 $3,427 $3,495 $3,565 $3,637 $3,709 $3,784 $3,859 $3,936 $4,015 TOTAL $15,109,846 $302,347 $321,080 $331,861 $566,276 $564,474 $567,180 $716,514 $727,766 $724,593 $721,249 $718,029 $988,577 $986,245 $983,830 $981,609 $982,713 $981,208 $982,179 $981,503 $980,612 Salt Lake County Real Property Tax Revenues (not incl. A&C) $6,298,926 $98,472 $98,472 $98,472 $217,221 $217,221 $217,221 $292,832 $292,832 $292,832 $292,832 $292,832 $431,965 $431,965 $431,965 $431,965 $431,965 $431,965 $431,965 $431,965 $431,965 Personal Property Tax Revenues $261,054 $6,396 $10,286 $16,222 $15,211 $14,240 $15,621 $14,505 $20,348 $18,658 $16,878 $15,162 $13,813 $12,559 $11,262 $10,065 $10,603 $9,779 $10,246 $9,853 $9,347 Sales Tax Revenues $0 TOTAL $6,559,980 $104,868 $108,758 $114,694 $232,432 $231,461 $232,842 $307,337 $313,180 $311,490 $309,710 $307,994 $445,778 $444,525 $443,227 $442,030 $442,569 $441,744 $442,212 $441,818 $441,312 Other Taxing Entities Salt Lake City School District $16,848,420 $269,340 $279,329 $294,577 $596,970 $594,475 $598,024 $789,353 $804,359 $800,019 $795,447 $791,040 $1,144,920 $1,141,702 $1,138,369 $1,135,295 $1,136,678 $1,134,561 $1,135,761 $1,134,751 $1,133,450 Salt Lake City Library $2,444,604 $39,080 $40,529 $42,741 $86,617 $86,255 $86,770 $114,530 $116,708 $116,078 $115,415 $114,775 $166,121 $165,654 $165,171 $164,724 $164,925 $164,618 $164,792 $164,645 $164,457 Metropolitan Water District - Salt Lake $952,633 $15,229 $15,794 $16,656 $33,754 $33,612 $33,813 $44,631 $45,480 $45,234 $44,976 $44,727 $64,735 $64,553 $64,365 $64,191 $64,269 $64,150 $64,217 $64,160 $64,087 Magna Mosquito Abatement District $146,559 $2,343 $2,430 $2,562 $5,193 $5,171 $5,202 $6,866 $6,997 $6,959 $6,919 $6,881 $9,959 $9,931 $9,902 $9,876 $9,888 $9,869 $9,880 $9,871 $9,860 Central Utah Water Conservancy District $1,172,472 $18,743 $19,438 $20,499 $41,543 $41,369 $41,616 $54,931 $55,975 $55,673 $55,355 $55,048 $79,674 $79,450 $79,218 $79,005 $79,101 $78,953 $79,037 $78,967 $78,876 TOTAL $21,564,688 $344,734 $357,520 $377,036 $764,077 $760,883 $765,425 $1,010,311 $1,029,518 $1,023,963 $1,018,112 $1,012,471 $1,465,411 $1,461,291 $1,457,026 $1,453,090 $1,454,861 $1,452,151 $1,453,687 $1,452,394 $1,450,730 EXHIBIT B: PROJECT AREA BUDGET SLCRDA Page 10—Stadler Rail CRA Plan **DRAFT** STADLER RAIL COMMUNITY REINVESTMENT AREA BUDGET Community Reinvestment Project Area Budget Requirements: 17C-5-303 (1) if the agency received tax increment: (a) the base taxable value: $ 3,710 (b) the projected tax increment expected to be generated within the project area: $ 40,687,703 (c) each project area funds collection period: 2019-2038 (d) if applicable, the projected amount of tax increment to be paid to other taxing entities in accordance with Section 17C-1-410: $ 12,206,311 (e) if the area from which tax increment is collected is less than the entire community reinvestment project area: (i) a boundary description of the portion or portions of the community reinvestment project area from which the agency receives tax increment; and (ii) for each portion described in Subsection (1)(e)(i), the period of time during which tax increment is collected: Estimated Amount N/A (1) the percentage of tax increment the agency is authorized to receive from the community reinvestment project area; and 70% (g) the maximum cumulative dollar amount of tax increment the agency is authorized to receive from the community reinvestment project area; (2) if the agency receives sales and use tax revenue: (a) the percentage and total amount of sales and use tax revenue to be paid to the agency; and (b) each project area funds collection period; (3) the amount of project area funds the agency will use to implement the community reinvestment project area plan, including the estimated amount of project area funds that will be used for land acquisition, public improvements, infrastructure improvements, or any loans, grants, or other incentives to private or public entities; $ 28,481,392 N/A Redevelopment Activities (85%) $ 24,209,183 Housing Funds (10%) $ 2,848,139 Other Statutory andAdministrative Expenses (5%) $ 1,424,070 (4) the agency's combined incremental value; $ 3,630,841,450 (5) the amount of project area funds that will be used to cover the cost of administering the community reinvestment project area plan; and $ 1,424,070 (6) for property that the agency owns and expects to sell, the expected total cost of the property to the agency and the N/A expected sales price.