Ryan Ritchie and Rob Heywood from the Ritchie Group asked Heber City’s Community Reinvestment Agency for the mixed-use development, Station Seven, to be exempt from a total of $20.1 million in property, sales and transient room taxes to the city, county and school district between 2027 and 2056.
The Community Reinvestment Agency board, which is made up of the same members as the Heber City Council, wasn’t convinced when The Ritchie Group first made their proposal on Oct. 21, in part due to confusion about what the space would look like and how Heber City would benefit from the agreement.
But after a second presentation on Nov. 18, three of the five board members changed their tune.
The Community Reinvestment Agency, which allows a municipality to redevelop a blighted area through tax increment financing, was established in 2021 to reinvest in downtown.
The Ritchie Group’s tax exemptions would allow them to spend an additional $8.7 million on development. The funds would be used to build a 730-stall parking garage on the lot, which the developer said it cannot afford without the tax-sharing agreement.
A parking garage, rather than surface parking, would allow for the expansion of retail space and residential units, as well as the addition of a Marriott hotel and a 30,400 square foot public event plaza.
The bigger scope of Station Seven would result in higher revenues, The Ritchie Group argued. That’s in no small part thanks to the addition of the hotel.
According to the developer’s projections, Station Seven would generate a combined $1.3 million in tax revenues to the city, county and school district annually during the 30-year agreement. After the conclusion of the agreement, that number doubles to $2.6 million annually.
If the agreement were not approved, annual revenues to those entities would shrink to just under $2 million indefinitely, with a lower-quality project to boot.
Community Reinvestment Agency board member Scott Phillips was persuaded, citing the desire for more restaurants and increasing demand for hotels in Wasatch County with the upcoming opening of Deer Valley East Village.
But the location of Station Seven was a sticking point for others.
Station Seven will be built on a lot near the Smith’s grocery store on the northern corridor of Heber City. Notably, the lot is the path of destruction of the Utah Department of Transportation’s Alternative A for the Heber Valley bypass, which is one of two remaining options.
If UDOT chooses Alternative A in January, Station Seven will be forced to downsize, any tax-sharing agreement would be scrapped and The Ritchie Group would go back to the drawing board.
The Ritchie Group’s stance is that going ahead with the tax-sharing agreement could make Alternative A less attractive to UDOT because of the potential tax revenues to the state, city, county and school district that would be on the chopping block.
In the case that UDOT chooses Alternative A for the bypass in early January, Ritchie said, “Our development plans will inevitably change, but our mentality is to press forward until then.”
Furthermore, board members Yvonne Barney and Heidi Franco felt that the development’s distance from central Heber misses the point of why the Community Reinvestment Agency was founded: to reinvest in the older downtown area.
Barney was particularly concerned about gentrification, the process whereby an area becomes more affluent due to an influx of wealthy residents and businesses. Gentrification is criticized for displacing an area’s current residents when the cost of living increases.
“This is going to create a problem where all of the wealth is up there, and we have higher taxes and more stress on individuals in (downtown),” Barney added.
But Ritchie didn’t seem as concerned.
“If we do the ‘without’ project, the revenue stream (during the 30-year agreement) is $200,000 (annually) that you can use for ‘re-gentrification’ projects in downtown,” he said. “Or you let us have some incremental participation, and we increase your cash flow to $541,000 (annually during the 30-year agreement).”
The Park Record followed up with Ritchie about his use of the term “re-gentrification” in reference to Heber City’s efforts to revitalize downtown.
“Gentrification is what I meant to say. Revitalization is a synonym that would have been interchangeable,” Ritchie responded via email. “We share the vision of the city staff and City Council to make downtown a revitalized hub for our beautiful and bustling city. We are happy to contribute to that vision by maximizing the city’s tax revenues.”
Franco, who is a non-voting member of the board, clarified that the city would have to hire an independent consultant to verify The Ritchie Group’s numbers.
“Your numbers look great on paper,” she said. “That’s all it’s worth to me right now. Just paper.”
Franco added that she was concerned about an agreement creating a precedent.
“We have a lot of hotels that have already been approved in annexations, and they are not asking to be subsidized or have an incentive. So, if we give you a subsidy, incentive, then every other hotel that’s already been approved all the way up through North Village or other places is going to come and want the very same thing,” she said.
Barney voiced further concerns that the project would put pressure on public services and funnel more traffic onto Heritage Parkway.
“I don’t think we benefit from this as citizens. You’re asking us to dig in, reach deep into these shallow pockets and hand you more money. And that is unfair,” she said. “When I was campaigning, I kept hearing over and over again, ‘You keep using our hard-earned money for projects that we are not willing to get behind.’ So, as a voice for the citizens…”
Heywood interjected, “Some citizens.” Barney replied, “But those citizens, that majority, voted for me. No. The answer is no.”
But for Community Reinvestment Agency board member Mike Johnston, the answer was yes.
“What you’re asking for is exactly what we’re wanting to do in our downtown, with a parking garage that we would fund and build and take the risk on,” Johnston said. “You’re asking for the same thing, except you’re going to be doing it, and you’re going to be creating the extra, significant property tax, sales tax, TRT tax.”
Johnston made a motion that the Community Reinvestment Agency board support the project. The motion passed 3-2, with Johnston, Phillips and Sid Ostergaard voting yes and Barney and Aaron Cheatwood voting no.
The Ritchie Group’s next steps will be to verify its data with the city and prepare future negotiations with Heber City, Wasatch County and Wasatch County School District to create an interlocal agreement. The developer expects the process to take several months.
Time will tell what discussions with the county and school district bring. The tax-sharing agreement cannot go ahead without all three parties entering into an interlocal agreement.
Ritchie explained that in most tax-sharing agreements he’s been a part of, the developer finds a sponsor in the city or county before presenting to the other party.
But The Ritchie Group has also presented its idea to the school district, which happened in April.
“We came away from there feeling like there’s a shot,” Ritchie said.
That confidence comes from the fact that The Ritchie Group has fine-tuned its tax participation percentages to ensure the school district receives an equal amount of annual tax revenue, whether or not tax increment financing is approved.
Mere hours before the Community Reinvestment Agency board voted to sponsor the agreement, the school board was meeting less than a half-mile away. At the end of the study session, President Kim Dickerson asked whether the board wanted to make The Ritchie Group’s tax-sharing proposal a priority.
All board members agreed it was not a current priority.