Washington City approves tax incentive for auto mall project

ST. GEORGE — Washington City officials have approved the creation of a tax-incentive zone for the pending Sienna Hills Auto Mall. The tax incentives are seen as a way to help draw dealerships to the auto mall while also paving the way for a potential $75 million in sales taxes for the city over a 10 year span.

A 3D rendering of what the Sienna Hill Auto Mall set for eastern side of Exit 13 in Washington City is slated to look like once built | Rendering courtesy of Washington City, St. George News

During a Wednesday meeting of the city’s redevelopment agency – which is made up of the mayor and City Council – an interlocal agreement was approved, opening the way for creation of a community reinvestment area across more than 42 acres along Interstate 15 by Exit 13 where the Sienna Hills Auto Mall is to be built.

Wednesday’s vote concludes a lengthy process that began earlier in the year as city officials began to explore various tax-incentive options for proposed projects within the city.

When it came to the Sienna Hill’s Auto Mall, a sales tax-based incentive zone option was brought before the city’s redevelopment agency in September. Approval was given to move forward on finalizing the details with the auto mall group.

Auto mall developers plan to use the tax incentive as a way to recruit auto dealers to what is being touted as a high-end, high-tech auto sales facility that is designed to feature multiple “highline” auto brands like Tesla, Bugatti, BMW, Bentley, Volvo and others to the area.

Dealerships that come into the auto mall will be under the umbrella of the project’s agreement with the city and won’t have to work out tax incentive deals of their own, said Rusty Hughes, the city economic development director.

Unlike similar tax-incentive zones in the area that are based on property taxes, the auto mall’s CRA is sales tax-based.

Auto brands invited to set up shop at the Sienna Hills Auto Mall in Washington City, Utah | Composite courtesy of the Sienna Hills Auto Mall, St. George News

Though a large portion of the sales tax the cities make in Utah goes to the state and is redistributed back to the cities accordingly, 0.5% of the collected sales tax goes directly to the cities.

Washington City will be using half of what is produced by the auto mall as a tax incentive. The revenue will come from new city point-of-sale sales taxes generated from sales generated by the auto mall.

The incentives are also 100% proportional to the project’s performance, and will be given post-performance in the form of a refundable tax credit.

The agreement between the city and auto mall group is set to last 10 years.

A breakdown of the numbers provided by Hughes places the capital investment of the auto mall – or the value of the overall infrastructure to be built for the auto mall – to be estimated at around $80 million.

“That’ll have property tax implications for all of the taxing entities, including Washington City,” she said.

Around 750 jobs are also projected to be created with an annual wage of up to $75,000, which is 204% above the county average, according the data Hughes shared.

As for tax revenue, over a 10-year span, property tax revenue earned from the Sienna Hills Auto Mall is estimated to be around $680,000, while sales tax revenue is projected to hit over $75 million.

Hughes previously stated the auto mall could become the fourth-largest sales tax generator for the city.

Wednesday’s vote to approve the agreement between the city and auto mall group was unanimous and is set to go into effect in Jan. 2023. The reasoning for this is that the developers want to have some time to put infrastructure in place prior to bringing in potential auto dealers.

“This well be the final step and the incentive will be in place and the next move will be building the dealerships,” Washington City Manager Jeremy Redd said.

Copyright St. George News, SaintGeorgeUtah.com LLC, 2021, all rights reserved.

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