Richfield City is exploring the concept of creating a reinvestment agency.
The concept is a way to incentivize development and stimulate the local economy through providing an incentive for businesses to locate in a certain area.
Many people don’t understand how incentives like this work. It’s not a way for a business to simply get tax money to help its operation. Instead, the reinvestment agency is a way for a local government to capture in whole or in part the increase in property taxes resulting in development. These new funds are then used to help differ the cost of development.
In this case, the proposed site of a composites manufacturing facility is located to the north of Richfield’s north interchange with Interstate 70. The freeway was installed in the 1980s, but no development has occurred north of the interchange in all of that time.
The city has even installed access to its sewer and water systems in the area, but still no development.
This is because there are other utilities that need to be installed, roads that need building and many other development costs that have made developing the area a very expensive proposition.
The goal of the redevelopment agency is to capture new sales tax and use it to help pay for the development costs — roads, drainage, utilities and so on.
This lessens the financial burden for the company that’s trying to get started, and fosters an environment where other companies can begin to consider the area since the major costs will already be paid.
The downside is that the taxing entities, such as Richfield City, Sevier County and the largest of all, Sevier School District, will not have all of the increase in property tax revenue resulting from the new facilities. However, while they won’t get the direct benefit, the business will provide employment, which means more jobs, more opportunities and likely more people owning homes, which will result in more property tax base.
However, if incentives like this are not used, there is a good chance new employers won’t move into the area and there will be no gains in property tax.
Diversification of Sevier County’s tax base has been a pressing issue on people’s minds for decades. The two largest property tax payers in the county are the Sufco Mine and the Covenant Field oil development. The county and cities within it need to do what they can to help encourage businesses to locate here to provide more opportunities for employment and to spread the property tax burden among a broader spectrum of payers.
Salina City has done an excellent job in attracting new businesses to its industrial park during the past decade or so — solidifying it as a trucking industry hub in the state.
Creating a reinvestment agency is a good way to encourage growth. These agencies should be used judiciously, as they are complex and require an investment. However, Richfield City is moving in the right direction in considering the establishment of one.