A planned expansion and redesign of University Mall hinges on diverting future property taxes away from the city of Orem and the Alpine School District for two decades.
Though the tactic is standard practice with redevelopment projects, a city councilman has twice tried to put the brakes on the project. But plans to transform the 40-year-old mall into a mixed-use civic center with retail, residential and office space are going forward.
The project will bring an aging shopping center into the 21st century, Orem spokesman Steven Downs said.
"The mall, albeit great now, is really a mall of the '90s and '80s," Downs said. "It's not what a mall is today."
The project also comes with a $57 million price tag — property tax rebates that will be taken from Orem City and Alpine School District coffers over 20 years.
Supporters say the tax breaks, which apply only to new property values, provide a no-cost investment in the economic future of Orem.
Opponents like Orem City Councilman Hans Andersen, on the other hand, say the deal puts the interests of a private developer over those of students and taxpayers.
"To me, it's a fairness issue," Andersen said. "I'm for the development if they want to pay for it, but I don't want the taxpayers to pay for it."
Andersen launched two petition drives aimed at putting the tax incentive package up for a public vote, but both ultimately were unsuccessful.
The first petition fell short on signatures. A second attempt was targeted at a City Council action that Downs said is not subject to referendum votes.
"He wasn't able to get enough signatures," Downs said. "The large majority of citizens wanted this project to go forward, even with the incentives."
Downs said Orem City has lost between 2,500 and 3,000 jobs to neighboring cities in recent years as businesses have relocated for better real estate. He said companies have already expressed interest in University Place and the development would create a downtown atmosphere that Orem currently lacks.
"The city of Orem is significantly lacking class A office space, which is the office space those companies that are growing and doing well are seeking," he said.
Woodbury Corporation, the mall's owner, will pay 35 percent of its school district property taxes and 25 percent of its municipal property taxes for the next 20 years as part of the incentive package. Those discounts apply only to new property value, Downs said, so neither the city nor Alpine School District will have to manage a loss of funds.
And after the 20-year term has expired, Downs said, the various taxing agencies will receive full payment on the value of the development.
"The school district will see a huge increase in revenue," Downs said. "Even during the period of the incentive."
But if the project is as successful as it is projected to be, it likely would happen with or without the tax breaks, according to Utah Taxpayers Association Vice President Billy Hesterman.
He said the city and school district are giving a leg up to one of the biggest businesses in town and losing out on property tax revenue that would otherwise go toward education and city programs.
"You are giving away something as the project moves forward," he said.
The Alpine School District has already approved the tax incentive, which is estimated to total more than $38 million in rebates over the 20-year term that would otherwise fund schools throughout northern Utah County.
Alpine School District is the largest in the state and one of the fastest-growing. From 2013 to 2014, the district added about 1,700 students.
Both the president and vice president of the Alpine School Board declined to comment on the project, instead deferring to a statement released by a district spokesman.
But in an email to The Salt Lake Tribune, school board Vice President JoDee Sundberg said board members consider the University Place development as a way to benefit the school district with little or no risk.
"It is a good thing when we can participate in partnerships that ultimately are in the best interest of our students, and also a great thing for increasing funds long term without affecting our taxpayers adversely," Sundberg said.
Some construction related to the University Place development is underway, Woodbury Corporation spokesman Arthur Woodbury said, and work on the full civic center is expected to continue for eight years. He said Woodbury expects to invest more than $500 million in the project, and the tax incentives were crucial to moving it forward.
"We worked long and hard with the city, the county and then the school district and I think all, in the end, were in favor," he said.