Council approves $4 million renewal district


The Idaho Falls City Council voted during a Thursday meeting to create an urban renewal district for the Jackson Hole Junction site off Sunnyside Road near Interstate 15.
Council President Tom Hally and council members Ed Marohn, David Smith and Michelle Ziel-Dingman voted for the measure; council members Barbara Ehardt and John Radford voted against it.
The 42-acre shopping center, being developed by Morgan Construction, is slated to be bordered by Teton Toyota, Sunnyside Road, I-15 and Pioneer Drive.
The creation of an urban renewal district allows the Idaho Falls Redevelopment Agency, a city entity tasked with promoting development and tax base growth, to implement tax increment financing. The financing method allows the city to divert future property tax revenue increases from a defined district toward the reimbursement of money already spent improving public infrastructure.
Renewal districts are intended to speed up economic growth by incentivizing the developer to invest in streets, sewers and other improvements, thereby making the site more attractive to potential tenants.
The Jackson Hole Junction renewal district has a $4 million improvement cap over a 13-year span.
No public debt will be issued. Morgan Construction will pay for the improvements up front; the company won’t be reimbursed unless new tenants sufficiently bolster the tax base within the Jackson Hole Junction district.
“We’ve given (Morgan Construction) the setting to get out there and hustle,” Hally said.
No tenants have signed on to Jackson Hole Junction yet, though Morgan President Matt Morgan previously said there has been national retailer interest.
The renewal district’s creation offsets a handful of factors that threatened the center’s economic viability, Jackson Hole Junction attorney Deborah Nelson said Thursday.
Especially problematic is an unexpected basalt lava rock deposit that wasn’t discovered underneath the site until a seismic engineering test in the spring.
The rock increases utility installation costs. Eating the costs would’ve ruined Morgan’s bottom line, and forcing those costs onto tenants would’ve made the center unfeasible, Nelson said.
“They’re competing on a national level to get national tenants in this site, and what they’re finding in those discussions is they have to be competitive with shovel-ready sites,” she said.
With the district’s creation, Morgan Construction is eligible for $1 million in reimbursement for basalt removal. About $1.4 million is reserved for street improvements, including to roadways, curbs and gutters, while the remaining balance will be spent on sewer, water and power system improvements, as well as engineering, consulting and management fees.
Development along nearby Snake River Landing, Taylor’s Crossing and elsewhere was aided by tax increment financing. Another district near Yellowstone Avenue and Pancheri Drive sparked by construction of a Ball Ventures motel hasn’t been as successful, though Marohn pointed out there was less tenant interest in the site ahead of the district’s creation.
Before council approval, the Jackson Hole Junction district was approved by the Redevelopment Agency, which also had considered a $10 million, then $5 million cap for the district.
A Morgan-funded eligibility study concluded that the site meets 12 of the state’s 14 criteria for zone creation, including improvement to pedestrian, bike and vehicle safety, promotion of private enterprise and no displacement of families.
The city’s long-term comprehensive plan also prioritizes the site, which is near an I-15 exit, Ziel-Dingman said.
“This entryway can be a foundation for economic development, growth and the presentation of a thriving city,” she said.
Ehardt voted against the district; she thought it was unfair to other developers.
“I’m just not sure were doing the right thing by other businesses,” she said.
Radford voted against the district because he didn’t feel it passed the “but-for test:” without city assistance, would this area be developed?
“If this is going to be built out anyway, we’re costing taxpayers $4 million in my mind,” he said.
Radford asserted his support for the project in general, but thought other developers and businesses would exploit the system.
“I have an amazing amount of worry people will come to us asking for these same things. The test becomes too easy to fulfill,” he said.
Smith said the increased interest wouldn’t be a problem.
“I hope we have more developers do the same thing and come knocking on our door,” he said.
Hally, meanwhile, asserted the usefulness of the renewal district as an efficient use of what would otherwise be city revenue.
“I don’t know of a better way to leverage taxpayer money than through the Redevelopment Agency. I think the percentage of gain on that money is tremendous,” he said. “Certain areas would have been developed still, but not with that increment increase. It’s practically the only tool the city has to create growth.”