University Place and the Woodbury Corporation are seeking an amendment to a Community Development Agency agreement due to issues surrounding COVID-19.
On Tuesday, the Orem City Council will be asked to extend the tax increment payments on the University Place Community Development Agency (CDA) for two years due to rising prices and lack of deliveries on construction materials for the mall.
The Redevelopment Agency has determined the mall’s construction sites to be an “impacted project area” as defined by Utah State code.
According to the resolution, to be presented to the council by City Manager Jamie Davidson, the conditions resulting from the COVID-19 emergency will either delay the CDA’s implementation of the project area plan (construction sites), or cause the CDA to receive an amount of tax increment from the project area (sales and property taxes) that is less than the amount of tax increment the agency expected it would receive from the project area.
Due to the pandemic, the legislature has allowed such extensions, according to Ryan Clark, director of Community Development.
The formal resolution states that, “COVID-19 has had a significant impact on construction costs related to the Project Area Plan increasing the cost of construction and delaying construction/increasing lead time.”
The Woodbury Corporation provided the city with a perspective on just how much costs have increased and what kind of delays they are looking at due to the pandemic.
Woodbury indicated the following as far as construction costs and delays: PVC pipe prices have increased 98.7% with an increased lead time of six to eight weeks; lumber prices increased 25%-30% with lead time increase of two to three weeks for certain lumber; bus duct prices increased 20% with a lead time increase of two months; HVAC mechanical equipment lead time increased by six weeks.
In addition to that, electrical panels and breakers lead time increased by four weeks. Glass lead time increased by four weeks. Copper prices increased 20% and steel prices increased 4%.
“These price increases and delays in construction lead time have delayed the construction and implementation of the project area plan and it is expected delays will continue for the foreseeable future,” according to Woodbury.
The resolution notes that the demand for mixed-use product types has decreased. For example, demand for office space leases has decreased sharply as some businesses have transitioned to work-at-home options.
Retail and hospitality leases also have faced negative economic impacts from prolonged periods of consumers staying at home.
At the University Place campus that would include the Cinemark Theatres.
The extension for an additional two years will allow these markets time to rebound and the CDA time to recapture any reduction in tax increment experienced as a result of the COVID-19 emergency.
If the city council passes the resolution and amends the CDA agreements for two years, the resolution will be effective immediately.