Public Infrastructure Districts (PIDs) are a widely used tool throughout Utah to support public infrastructure development. Their purpose is to enable local governments and developers to collaborate on projects that bring essential services—such as roads, water systems, and utilities—into communities. Recent claims have raised concerns about the use of PIDs, particularly in connection with Utah Inland Port Authority (UIPA) projects. Here, we provide accurate information to address these misconceptions.
What Are PIDs and How Do They Work?
PIDs are not a novel or isolated concept. Over 300 project areas across Utah utilize tax increment financing to fund necessary public infrastructure. These financing mechanisms are crucial for community growth and economic development, and they allow for public infrastructure development without relying on existing municipal budgets.
- Public Infrastructure, Not Private Development: PID funds are used to build public infrastructure—roads, sewer systems, utilities, and water systems. These are county or city responsibilities, not private developer responsibilities. For example, the Tooele Valley PID project focuses on building essential public utilities to support development in the area, and none of the funds are used for private building construction.
- Widespread Use Across Utah: The Wasatch Front and other regions have long used tax increment financing and other public financing tools to fund community infrastructure. The use of PIDs in UIPA projects aligns with best practices across the state and is not an anomaly.
Addressing Misconceptions
- Misconception: UIPA Is Using “Junk Bonds” with Excessive Interest Rates
- Fact: While some bonds offer higher yields to attract investment, the interest rates for UIPA-authorized bonds are typically in the 6-7% range, not the 12-13% as claimed. Even in today’s higher interest rate environment, PIDs provide an efficient way to fund infrastructure.
- Misconception: PIDs Will Burden Local Communities with Debt
- Fact: PIDs are structured so that all financial responsibility lies within the district itself. If a PID does not generate enough revenue to repay bonds, the bondholders, not the local community, bear the loss. There is no risk to local government or taxpayers outside the PID.
- Misconception: PIDs Support Polluting Industrial Development
- Fact: UIPA is committed to sustainable development and adheres to strict environmental standards. For instance, the Tooele Valley project includes wetlands mitigation efforts and implements responsible water management systems to protect the Great Salt Lake and surrounding ecosystems. These projects are designed to balance economic development with environmental preservation.
- Misconception: UIPA’s Use of PIDs Is Overwhelming the Municipal Bond Market
- Fact: UIPA bonds are in a separate market from traditional municipal bonds, and there is no indication that the market is becoming oversaturated. Utah’s municipal bonds remain in demand, with state bonds typically issued at rates as low as 3%. The market for PID bonds remains robust, providing a sustainable way to fund public infrastructure without impacting traditional government bonds.
- Misconception: PIDs Are a Subsidy for Developers
- Fact: PIDs do not subsidize private developers. The funds raised through PID bonds are used exclusively for public infrastructure that is turned over to city or county authorities. This ensures that taxpayers are not supporting private development costs, and developers are contributing to public infrastructure through mechanisms like mill levies on their property.
UIPA’s Commitment to Responsible Development
UIPA’s use of Public Infrastructure Districts is part of a broader effort to promote sustainable economic growth in Utah. The infrastructure built through PIDs provides long-term benefits to communities, supporting job creation, industrial development, and improved public services. UIPA follows a rigorous approval process with significant oversight to ensure these projects are implemented responsibly.
- Higher Oversight and Transparency: UIPA follows a two-meeting cycle for PID creation and approval, involving public input and state oversight. Additionally, when a PID is preparing to issue bonds, these are then reviewed by the State Finance Review Commission, providing an extra layer of accountability that surpasses the standard for many local project areas.
Conclusion
Public Infrastructure Districts are a well-established, transparent, and effective method for funding public infrastructure throughout Utah. UIPA’s use of PIDs is consistent with state-wide practices and is critical for delivering the infrastructure necessary to support responsible development. By doing so, UIPA is helping to build the foundation for Utah’s continued growth and success.