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  • Nephi City holds public hearing for the issuance of bonds for new hotel construction

By Myrna Trauntvein
Times-News Correspondent

There were only four interested citizens at the public hearing for the issuance of a bond for the Nephi Community Reinvestment Agency proposal.

The project in question is the construction of a hotel in south Nephi. The council, acting as the board of the community reinvestment agency, considered area parameters resolution at city council meeting two weeks ago.

The public hearing for issuance of the bond was held at 6 p.m. prior to council meeting on December 5, the first meeting of the council in December.

“We want everyone to understand that the city will not be making payments,” said Mark Jones, mayor. “This has been very closely considered.”

“This is the second to the last step in a lengthy process,” said Seth Atkinson, city administrator.

A parameters resolution had been passed, a 30-day comment period had been provided for, legal notices had been given, and public meetings had been held with the major taxing entities to gain their approval.

Juab School District Board of Education members and Juab County Commissioners had both given their approval for the project.

There are still some smaller taxing agencies that need to give approval but the major taxing entities which could have affected the proposal adversely if they had refused support have agreed.

“The more common name for the reinvestment area is TIF,” said Atkinson.

Tax increment financing (TIF) is a public financing method that is used as a subsidy for redevelopment, infrastructure, and other community-improvement projects in the United States.

The value of all the properties inside the district is assessed or calculated and the total amount of property tax generated by all those properties is noted. Call that number the Base Amount of Property Tax Revenues.

The life span of a TIF district is 20 years. For the next 20 years all property revenue above this base amount is captured by the TIF district. The amount over the base is called the Incremental Revenue.

“The $740 now collected as property tax from the property in question is frozen and will continue to be disbursed among the taxing agencies that have been collecting that tax,” he said. “It is frozen.”

Don Ball asked how the Chamber of Commerce felt about this proposal and how it would affect those motels already in business in the area.

Jones said that the Chamber had not responded specifically on the question but had, in the past, indicated a willingness to support new business.

Motels have a tier system, he said. That goes from economy to upscale or luxury.

Economy motels offer a good room with a bathroom and offer a nice place to stay overnight. A mid-scale would offer more amenities that would appeal to a client staying longer than overnight.

A hotel, by common definition, is different. Hotels have interior corridors and motels usually do not. Motels appeal to the through traveler.

Hotels appeal to those there for a longer stay. There would be things such as a breakfast, a swimming pool, a work-out room and laundry. An upper-midscale hotel is the type that appeals to conference attenders.

“The proposed hotel will also have a conference room,” said Jones.

Blaine Howell said he thought that the city might be getting the cart before the horse in bringing such a hotel to the city.

“Without the cart, we will not get the horse,” said Greg Rowley, city council member.

The city, in the past, had a hotel and a bed and breakfast, both on Main Street, and neither were still in operation, Howell said. The hotel had been razed.

“I don’t think this was well thought out,” said Howell.

He had read that the city was basing their proposal on the success of Richfield but that was faulty thinking.

“First of all,” said Rowley, “the city is not putting the hotel in.”

He said that the hotel developer was building the hotel and was carrying the burden of the expense. All the city was doing was offering a tax incentive.

“This is a $7 million project,” said Kent Park, council member. “The company, not the city, picked the location.”

Rowley was originally from Richfield and said that none of the new businesses had been there before the hotel was built. Now that hotel was surrounded by new businesses.

“It seems to be a seed,” he said.

“We just used Richfield as an example,” said Jones.

Richfield was not used as a pattern for Nephi but was used as an example of possibility. Spanish Fork could also be used. There was nothing around Costco and now it was the flagship of many businesses. They are called anchor stores.

Howell said he thought there needed to be something to draw people to the area in order for a hotel to succeed. Nephi had the Ute Stampede and some other such events but most people either did not stay or brought recreation trailers.

“This is a central area,” said Park. “This is a project that we have considered for about four years.”

“Nephi City depends on sales tax to operate,” said Rowley. “We see growth occurring but just because there is growth doesn’t mean there is economic benefit coming from sales tax.”

More businesses bring in sales tax, more homes bring in property tax.

The incentive being given the hotel through a property tax break could stimulate further growth and the city could make more in sales tax which would benefit residents.

“This developer has done the research and they are putting six times more into the project than we are offering in tax incentive,” said Jones.

“If you build it, they will come,” said Ball.