The new owners of the DeJoria Center are working with the Kamas City Council to potentially create a new property tax to fund projects and improvements on the High Star Ranch property.
The proposal centers on establishing a public infrastructure district that would act similarly to a municipal government. Developers can borrow money by selling bonds to investors, while property owners in the district pay an extra property tax. The funds generated by the tax are used to pay off the bond over a period of up to 30 years. The money can only be used to build and improve infrastructure within the district.
The creation of a public infrastructure district would only apply to taxpayers living within the district. The new owners said they plan for the tax to only apply to new residents, not anyone who has already purchased a home and is already living on the property.
The money is also held in a trust, meaning developers cannot personally profit from the tax and must fill out an application with their bank to withdraw funds.
George Wright, one of the four developers, said the public infrastructure district would let his development team build quickly while maintaining a quality product. He added that their goal isn’t to change the development agreement already established with the Kamas City Council and the previous High Star Ranch owner, but to ensure the vision outlined in the document can become a reality.
The DeJoria Center closed late last year, and the four developers purchased 16 acres of the High Star Ranch property, including the event center, over the summer.
The development agreement includes a 150-room hotel associated with the DeJoria Center, an underground parking garage, 17 single-family residential homes and a water tank. The public infrastructure district does not give the owners the ability to change zoning, approve developments without oversight from the City Council or modify the development agreement.
“On the financing side, the city’s benefit is infrastructure without city debt,” explained owner Shane Starr. “We have to put in public infrastructure. The challenge on the financing side, of course, is there is an oversight responsibility, so the city must still review, approve and monitor the development that is taking place.”
The maximum amount of funding the developers plan to pursue through the tax is around $56 million, but the number may ultimately decrease as blueprints, amenities and timelines are solidified.
Starr said the community would benefit economically as the hotel and other amenities create jobs, as well as strengthening property values and creating retail spaces in the Kamas Valley. There is an additional opportunity to provide benefits to Kamas residents by offering them discounted hotel rooms and giving them access to amenities on the property, he said.
“The biggest cost of this will be appropriated to the hotel and its tenants and the commercial side of it and all of the retail that goes with it, so in reality, that’s where most of the levy will be placed,” added Mitch Burton, another one of the owners.
If the tax revenues fail to meet expectations and cannot fully pay off the debt, the burden and risk fall back on the bondholders, not the city or residents. The bondholders participating in public infrastructure districts tend to be larger investment firms, such as Goldman Sachs, according to Starr.
Moreover, the city’s involvement in the public infrastructure district ends once it is operational. The district is then considered an independent entity and is governed by a board charged with making district-related decisions.
Currently, the four owners hold 16 acres of the overall High Star Ranch property, but a deal to close on 400 more acres is in progress and should be completed by early December. The developers requested the City Council approve an annexation clause as part of the proposal, which would then let them implement the tax on surrounding properties they acquire in the future without needing to return to the City Council.
The annexation is not traditional, as in land becoming incorporated into a municipality, and the High Star Ranch property is already within city limits. Instead, annexation in this case refers to expanding the borders of the public infrastructure district and encompassing more properties willing to pay the tax.
The City Council was initially worried about the annexation clause, expressing a hesitation to give developers the freedom to impose the tax at will as properties are acquired. However, Wright, Starr and Burton clarified that property owners outside of the district boundaries would need to consent to annexation, meaning the tax is, essentially, voluntary.
There’s also a full disclosure requirement, so any potential home buyers looking to purchase property within the district boundaries would be given information about the additional tax up front.
Kamas City Mayor Matt McCormick said his biggest concern with the development is water usage, pointing out the developers’ plans to build 180 units total between the hotel rooms, single-family residences and workforce housing. The property is currently only equipped to handle around 150 units.
McCormick suggested the developers provide a written document detailing the plans for installing the water tank outlined in the development agreement before trying to obtain permits for further construction.
The City Council deferred the decision about the district for a second time, opting to hold a work session with the developers instead. The four men said they hope to have the public infrastructure district established by the end of December to give them time to solidify their plans, obtain permits and start construction in the spring.
Further discussion on the proposed district is slated for mid-November.