Mill Creek council and CRA set bond parameters, move Phase 2 financing to CRA and accept $1 million state grant

The Mill Creek City Council voted on May 27 to amend the city budget and set parameters that allow the Mill Creek Community Reinvestment Agency to pursue up to $25 million in sales-tax- and tax-increment-backed bonds for Mill Creek Common Phase 2.

The action also authorized public notice and a June public hearing on the sales-tax pledge and related bond documents, and the council approved a separate $1,000,000 grant award from the Utah Division of Outdoor Recreation for Phase 2.

Why it matters: City leaders say the package is intended to finance public infrastructure — principally a parking structure that the city would rent to a private hotel and condominium development — and to capture near-term economic development that will support recreation and events at Mill Creek Common.

Mayor (speaking at the meeting) said the parking structure will be rented to the hotel and condos and that “these bonds are gonna be paid by renting the parking structure.” He added that the project should generate additional transient-room tax revenue and other economic benefits for the city. Jason Birmingham, the city’s financial advisor, told council members the bonds can likely be issued tax-exempt and that current market yields for long maturities are roughly “4.6 to 4.8 in current market on the 30 years.”

What the council approved: The council adopted a resolution (parameters resolution) that sets maximum issuance limits for a future bond sale: not to exceed $25,000,000 aggregate principal, a maximum maturity term of 32 years and a maximum interest cap of 7 percent. The resolution also authorized public notice and a public hearing (set for June 23) on the city’s sales-tax pledge related to the transaction.

Why the CRA will issue the bonds: Bond counsel advised the city that because Phase 2’s program includes public-facing hotel, retail and parking elements located within the Mill Creek Center CRA, issuing the bonds through the CRA enables more of the project to qualify for tax-exempt financing. City staff said that structure could lower borrowing costs.

Budget and accounting steps: Council members also approved a budget amendment that recategorizes planned bond proceeds so they flow from the CRA into the capital projects fund (instead of being shown as a transfer from the general fund). Finance director Lisa Dudley explained staff made the change to align how the city will receive and spend proceeds if the CRA issues the debt.

Interfund loans and cleanup: Staff described an accounting cleanup to record interfund loans that previously were not fully formalized between CRA project areas. Lisa Dudley said some project areas borrowed cash from the West Mill Creek CRA while waiting for tax increment to materialize; those balances will be documented with repayment schedules and interest calculated at the city’s investment rate (PTIF) so the audit correctly shows the loans and repayments.

Grant award: Separately, the council adopted Resolution 25-20 to accept a $1,000,000 Utah Outdoor Recreation Grant toward Mill Creek Common Phase 2. Mayor commented that Christopher Land, the city’s grants manager, “did a fantastic job” preparing the application and securing the award.

Next steps: The council’s resolution authorizes staff and designated officers to proceed with required notices, to present to rating agencies in early July and to return later with final sale documents if the market and ratings are acceptable. Council members emphasized they can halt issuance if market conditions or final terms are unfavorable.

Context and limits: The parameters merely authorize pursuit of financing within set limits; the city will not issue bonds until the council and CRA approve final terms after rating agency feedback. The public hearing on the sales-tax pledge and other notices required by state law were ordered to run in advance of any final sale.