Hooper City reviews fiscal analysis of proposed Smith’s Marketplace; consultant projects net fiscal benefit

At a Hooper City Council meeting, a consultant presented a fiscal‑impact analysis of the proposed Smith’s Marketplace mixed‑use project, concluding the development would generate a net fiscal benefit of about $21.5 million over the model period (future dollars) and roughly $11.8 million in net present value, with Hooper City’s share estimated at a $7.7 million net benefit over the period (about $4.3 million in present dollars).

The consultant, identified in the meeting as “Mister Birmingham,” told council members the study includes assumptions about 17 residential units, 65,000 square feet of retail anchored by a Smith’s grocery, and a possible community reinvestment area (CRA) using tax‑increment financing (TIF). Birmingham said the analysis assumes 75% of incremental property tax revenue from a defined project boundary would be captured by a CRA for 25 years, producing an estimated nominal $6.0 million or about $3.9 million in net present value for infrastructure funding.

Why it matters: the city must weigh near‑term infrastructure costs and the timing of revenues against a multi‑decade fiscal benefit. Birmingham warned that the sewer lift station needed to serve the project is an off‑site cost likely to be paid by utility customers or capital financing; the study used a conservative $3.0 million allowance (the city provided a bid tabulation for about $2.2 million) to reflect construction inflation and contingencies.

Key findings and assumptions

- Project components analyzed: 17 residential units, 65,000 square feet of retail (including a grocery anchor), and related employment and sales activity. - Revenue estimates (future dollars, 25‑year span): total gross revenues to taxing entities roughly $84 million; discounted at 4% the equivalent is about $47.4 million. - Cost estimates (future dollars): Hooper City costs about $6.8 million; Weber County about $3.3 million; State of Utah about $53.1 million (the state cost estimate reflects additional demand for state services from new residents). After discounting, the consultant reported a total net present‑value fiscal benefit of about $11.8 million across entities. - Hooper City fiscal outcome: nominal net benefit $7.7 million over the period (discounted to roughly $4.3 million). The consultant illustrated that dividing $7.7 million by 25 years equals roughly $308,000 per year on average, though he said early years could be negative because costs are front‑loaded while property tax and some sales tax growth are realized later. - Sewer lift station: the packet included a city bid tabulation showing an estimated $2.2 million cost; the consultant increased that to $3.0 million in the model to capture inflation and contingencies and said the agency/C R A could be used to fund part or all of the lift station. - TIF/CRA assumptions: the analysis modeled 75% of incremental property tax returned to the agency for 25 years. Birmingham emphasized that this presumes consent by other taxing entities (school district, county, fire districts) and that approval is not automatic: “That’s assuming that each of those entities will approve that,” a councilor said; Birmingham replied, “Absolutely a critical point.”

Council questions and caveats

Council members focused on timing, responsibility for utility operations and fees, and the school district’s likely role. A councilor asked whether operational and maintenance costs for the lift station were built into the analysis; Birmingham said they treated the lift station as a utility asset and assumed operational costs would be borne through user rates: “we do anticipate that there would be operational costs associated with that, and ratepayers would be the primary source to repay that.”

Members also asked about the distribution of tax increments. Birmingham explained that while the development pays taxes, the largest portion of property tax revenue typically flows to the school district, followed by the county; therefore, the school district would be the largest participant whose approval could affect how much increment is available for the CRA. He cautioned that the CRA’s revenue mix could also include incremental sales tax or other negotiated arrangements.

State policy risk: a councilor asked whether a state move to exempt food from sales tax would affect local revenues from a grocery anchor. Birmingham said such a change would primarily affect state revenues and noted issues around non‑impairment clauses and bondholders. He said a state elimination of its portion of food tax would “just impact the state revenues” but acknowledged discussion of that policy could create revenue uncertainty for projects that rely on grocery‑driven sales tax.

Net present value and timing

Councilors pressed the difference between total (future) cash flow and net present value. Birmingham explained that while the study reports larger nominal totals over 25 years, discounting at 4% reduces those future receipts to present‑day equivalents: the city’s nominal $7.7 million is about $4.3 million in present value, and the total nominal $21.5 million net benefit becomes about $11.8 million present value.

What the study does not decide

No final council action or CRA creation occurred at the meeting. Birmingham said the analysis shows the project is “economically viable” from the fiscal lens used in the study, but he repeatedly noted that a CRA or TIF would require negotiation and approval by other taxing entities and that some infrastructure costs might be the developer’s responsibility or funded through other tools such as impact fees. He recommended narrowing the capital needs and then structuring any CRA around identified revenue needs.

Next steps and packet availability

Council members discussed presenting the study to the planning commission and holding additional community engagement; Birmingham offered to return to other venues. The city clerk noted the packet and report are on the city agenda packet online. Birmingham then returned to the mayor and the meeting moved to other agenda items.

Ending: The council did not vote on zoning, CRA formation or on any fiscal commitment at the meeting. The consultant’s presentation and the full fiscal‑impact report remain part of the meeting packet for further review and for any follow‑up staff recommendations.