New City Center Moves Forward, Part One of Three

Reduce City Services, Raise Taxes 64 Percent, or Create Commercial Tax Base

by Robin M Johnson

Citizens turned out in large numbers Wednesday, April 19, filling Midway City Council Chambers and spilling out into the foyer. Steve Nichols, planning commission chairman, made an opening statement regarding the proposed C-4 code to create a new zone for mixed use commercial and residential development south of Memorial Hill. Nichols then gave time to Michael Henke, city planner, to discuss the newest version of the code. Nichols next opened a public hearing limited to 30 minutes of public comment. After closing the public hearing the commissioners and staff discussed the code as currently written and decided to forward the C-4 zone code to the city council for further consideration and refinement.

This article will focus on Steve Nichols comments and Michael Henke's presentation. Part Two will address the public comments. Part Three will outline the commission's response to public concerns and their decision to move the C-4 legislation on to the city council.

Nichols said the purpose of adding regulations to the new C-4 code is to create a community gathering area focused on tourism and retail having a walkable central plaza with surrounding commercial and arts related businesses, along with residential. The general area is from 400 East to 700 East along the north side of Main Street.

Nichols asked citizens to pay close attention to how the current proposal is introduced. "We have been looking at this issue for a couple of months now," he said. "Social media may not have been accurate or is no longer accurate."

In 2010 Midway qualified for imposing a state resort tax on commercial sales. Utah's
Transient Room Tax (TRT) is based on the ratio of total nightly rentals compared to the  total residential homes within the city limits. The Homestead, Zermatt, and all other rooms or camping spots that are rented for a minimum of two weeks out of the year met or exceeded the 64% requirement. Nichols said in 2017 Midway will add an estimated $425,000 to the city budget collected from this tax.  

"Since the 2010 Federal Census Midway had grown rapidly," Nichols said. At the 2020 Federal Census Midway will not have the ratio of rental rooms to residential homes that are required to qualify for the TRT. In addition to residential homes being built at a rapid rate, there are currently no applications before the city for more nightly rentals. Also, at least two of the cities nightly rental facilities, Inn on the Creek and Johnson Mill Bed & Breakfast, closed doors as nightly rentals and reopened as Recovery centers. 

Nichols said without the resort tax funds the city has two immediate options: 1) reduce city services or 2) raise property taxes ... by an estimated 64 percent. 

"Another alternative is to create more commercial tax base that can help fill the shortfall," Nichols said. "The need to control property taxes through more commercial development cannot be simply ignored. As a result the city is looking at ways to encourage commercial development, particularly development that will conform to the nature of the community while best addressing our need for a commercial tax base. Clearly we would prefer some types of development over others as better suited to Midway. This effort has led our city council and staff to propose the new C-4 zone," said Nichols. 

Next Nichols outlined the city process for new legislation. "Procedurally it goes before the planning commission first. Our task is to apply our experience with land use in Midway generally to consider and possibly refine the proposal," 

Other points Nichols made include: 1) a key function of the planning commission is to solicit and receive public input, 2) when the planning commission has finished its work it will most likely make recommendation to city council, 3) the City Council makes the final decision on whether to enact new zone, and decides what the provisions of it will be, 4) the planning commission's recommendation is not binding on the city council, they can follow or disregard it as they see fit. 

Cutting to the heart of the issue lies the question: why create a new commercial zone in Midway? Nichols said, "The intent is to attract commercial development that for a variety of reasons was not attracted in the past." Hopefully the new code will make this area of Midway's commercial zone "more attractive to development by relaxing some restriction such as height and density, while also limiting types of business that can be located in the zone to those that are thought to best fit the community. This is the only undeveloped parcel remaining on Main Street of significant size where this approach could effectively be attempted.

"Another key component for some … is a community arts center with an outdoor amphitheater." Nichols said.  He described two attitudes toward the art center, on one hand some want the arts center in this location to foster the commercial tax base needed for the city, while others feel the arts center would be better located outside the city limits as an answer to address noise and traffic concerns. 

"I have … some sympathy with both of those views," Nichols said. "We all value the rights we bear over property we own, for that to be we also have to respect others property." He said the need to respect property rights "limits what we as a community can do to control the use other citizens’ make to privately owned property."

Nichols said in this meeting we are considering ... one area where "we as a community can relax restrictions to foster development." In "past meetings we heard extensive public comment that original C-4 proposal did not strike the right balance."

Revision requests to the proposed C-4 zone were given by Nichols to the city staff at the conclusion of the planning commission's last regular meeting in March in direct response to public concerns. Nichols reviewed his list of issues to revisit including building height allowance, residential density, parking lot requirements and other parking issues, buffer zone requirements, phasing of residential vs. commercial facilities, and an analysis of tax revenues to be expected in C-4 zone vs. current C-2 zone.

At this point Michael Henke began his presentation.

History:  The area is in the proposed C-4 zone is approximately 20 acres in size and almost all has been for sale over the past several years, Henke said. "Unless someone purchases (the area) to keep as open space, it’s going to develop."

Four applications went before the city in recent years including two large commercial developments for storage units one east of Midway Automotive was pulled by the applicant before it passed the city council, the other west of Midway Automotive was pulled by its applicant after it passed city council. Also two different residential development proposals on the north side of the property were made, one a PUD, the other a subdivision.  

Regarding residential proposals Henke said most of the property tax collected in Midway goes to the school district. A very small percentage, less than one percent, goes to Midway City and residential is not a net gain. "The city gains revenue from the sales tax that comes along. There are a lot of options outside Midway for shopping so Midway doesn’t gather very much revenue," Henke said. residential proposals aren’t seen as very favorable, especially in area close to Main Street and not developed. “Most of our Main Street is developed with either housing or commercial; there are not a lot of large parcels left.”

General Plan: “When we look at revision to code, we need to look to our general plan," Henke said. "It’s the guiding light to our city and creates the vision of what we would like to become in the future. The general plan has a number of chapters, we reviewed the plan all last year.” 

Economic Development:  This chapter in the general plan “talks specifically about this area and trying to use this area as a way to create a tax base for the city,” Henke said. The comments in general plan support looking at this property to build a commercial tax base. Since residential property tax is not a net gain to the city the general plan states, "for a community to be fiscally responsible and viable, there must be a source of increased revenues not associated with development." Further code states economically successful cities recognize property tax increases have many obvious drawbacks while sales tax revenues expand service and retail opportunities and promote job growth. 

Zoning Map:  Henke said the zoning map shows the limited commercial area within the city limits. "We have a commercial area in the center relatively small compared to the rest of the map … probably three percent of Midway is zoned commercial, 97 percent is zoned for residential growth.” In the proposed C-4 area about 2/3 is currently zoned C-2. The top third is currently zoned R-1-11.

The C-2 zone was designated Mixed Use, allowing 20 residential units per ace, for at least a decade, Henke said. So far its use has been very limited, most commercial on Main Street is only one or two units associated with a business. Currently two larger mixed use developments are being built on Main Street. Since developers are not attracted to the current zoning and the commercial tax base hoped for is not being realized Henke said, "the city needs to take a closer look at the overall density of what could happen in the C-2 and C-3 zones."        

Main Street:  Henke began outlining the newest proposed C-4 code with Main Street. He said the intent of the C-4 zone is to create a vibrant, active community gathering area with retail, restaurants, arts related industry, and with residential. Much like the River Woods gathering area on a smaller scale. City code defines Main Street as "the economic, architectural, and historical heart of Midway ... this main corridor has great potential to provide a public gathering place for residents and tourists to interact and coexist with one another ... the area will cater to the pedestrian experience (with) access to open space such plazas, street furniture, pocket parks, and trails"

Henke defined the challenge Midway has faced creating a pedestrian friendly environment and pointed out the new C-4 zone as ideal to create this vision. “Main Street is wide," he said, "the blocks are wide, about 600 feet in width per block, it doesn’t lend itself to a very walkable community especially with the spacing of historic structures. It’s difficult to create a walkable environment with the hand we’ve got right now. But we can do that just off of Main Street.” 

Planned Performance Code:  The proposed C-4 zone includes a Planned Performance Code designed to change the ratio of residential and commercial units on a project. This is a method for the city and the developer to create a partnership where the city gives the developer attractive incentives in exchange for providing features and amenities the city desires to include in the development. Developers are given percentage increases for agreeing to items on the list which increases the residential density and decreases the commercial density of their project. 

 “If a developer does certain items in the code, then the city will give them certain benefits.” Henke said. The standard for commercial zones is 20% residential/80% commercial, in other words one home for every four businesses.  The goal is to flip the ratio around in the mixed use development as proposed in the new C-4 code, to 20% commercial/80% residential, or one business for every four dwellings. Henke said this helps developers because the 20/80 ratio is what a lender will lend to with this type of a project.

"In order for that to happen certain amenities need to be built within the development to make it a very nice development," Henke said. The city is offering 1-10% residential increase for a nice water feature, 1-5% for a fire feature, 5% for a stage for musical performances, 30% for an outdoor ice rink, 35% for a three screen movie theater, and 20% for land donated for an arts center/amphitheatre. Some of the amenities have very high numbers, according to Henke, in order to create the ambiance the city is looking for in the development.

Open Space: Three options were added to the Planned Performance Code since the last meeting that would increase open space within the city, Henke said.

Option One: Fee in Lieu of Open Space.  “For every $100,000 donated to the city to purchase open space rights it would be worth 1.5 points on the scale. That would increase by a 5% rate each year based off of increased land values as time goes on," Henke said. Developers could pay an open space fee which would create a fund the city can use to purchase open space

Option Two: Open Space Outside the C-4 Zone.  "Land that is developable, we wouldn’t want to receive wetlands or steep slopes that couldn’t be developed, but land that could potentially be developed," Henke said. This could result in developers buying developable open space within residential city limits and donating the property to the city to keep as open space and not develop. "So really, to reach the maximum on this scale somebody would be donating $1.3 million, or roughly 13 acres of property that’s worth $100,000 per acre," Henke said.

Option Three: Purchase Development Rights.  "When you purchase development rights from a property, the land owner continues to own (and maintain) the property but they are not able to develop the property any further ," Henke said. "Since the land owner continues to own the property, usually that’s a very rough estimate; it’s about half as much as buying the property directly. That’s given .75 (points on the scale). Basically your money goes twice as far going that route." With this option the developer purchases the development rights off a property  to use within the C-4 zone so the land remains open space and can continue to be farmed.

The Open Space options are "fairly exciting," according to Henke, "having the potential of transferring development rights within the city from fields that we want to preserve to the new C-4 zone ... We actually reduce density in areas of the city … it effectively creates open space.”

Permitted and Conditional Uses: In the proposed C-4 Zone uses are reduced to about half the number allowed in the C-2 Zone in an effort to create the ambience the city wants, Henke said.  "A land owner in C-4  district is essentially losing buyers for their property because if somebody wanted to do a gas station or car wash it wouldn’t be allowed." There are both permitted and conditional uses.  Permitted uses must be accepted by the city if the application meets code, while conditional are reviewed through a public hearing process and allow the city to add conditions to the use to mitigate nuisances.

Nuisance Restrictions and Buffering for neighbors: The city plans to mitigate noise, lights, and other nuisances the best it can to protect those living in area. Nuisance restrictions in the existing code for noise will be enforced. The Dark Sky ordinance will need to be adhered to for lighting within the city.The proposed C-4 code lists requirements for a physical buffer; four foot berm barriers, landscaping with trees every 25 feet and two rows of bushes staggered every five feet, and a minimum 15 foot setback for structures or parking.

Density:  "The C-4 initial proposal allowed 40 units per acre, tonight its reduced down to 30 units per acre," Henke said. He added this number not set in stone, it could change when it goes before the city council, 'but that's the reason we go through this process, to make sure it's a benefit and not a negative to the community."

Density Big Picture:  Henke said the city could reduce the overall density of the city and described how that could be done.

"If we do increased density, we take a look at the rest of Main Street and pursue reducing density in those areas so we can preserve Midway’s Main Street the way it is now," Henke said. "What a lot of people really love about Midway is the Main Street, so we could reduce that potentially from 20 (units per acre) to one commercial unit with one associated residence.

"That’s a separate code text amendment that would need to go through the planning commission and city council. But overall, the density in Midway could reduce ... It would help preserve historic Main Street because there wouldn’t be large mixed use projects proposed on the rest of Main Street. If somebody did do a mixed use it would just be one residential unit with a store or a restaurant ... Most of this (C-2/C-3 zones) is developed with either homes or businesses, but this would help reduce redevelopment or even the demolition of some of the structures on Main Street." Henke said.

Traffic Impacts:  "Traffic will increase locally around the C-4 zone, but it would also increase as the C-2 zone developed, "Henke said. He added traffic might increase more as the C-4 zone especially on Main Street (400 to 700 East), possibly up River Road, and over to Heber on Highway 113. Looking at the big picture if  the density is reduced on the rest of Main Street (200 West to 400 East) traffic will potentially be reduced in that section from what it would be if Main Street were developed to the current C-2 density.

Height:  "The first proposal height allowance was 55 feet (in the center of the zone), that basically allows four stories, and allowed for architectural elements to go above that limit," Henke said. "There was a number in the code of  87 feet based off of a 50 percent increase for non livable space for architectural elements (no livable space above 55 feet). Henke said the city wants to be respectful of those living on the outer edges of the zone so the height allowed on the perimeter next to neighbors is 35 feet, the same as what is allowed in the rest of the city.

"The proposal now is 55 feet," Henke said. "Any architectural feature built above 55’ would need to be reviewed by the visual and architectural committee and go to the planning commission and then be approved by the city council. There would be a lot of eyes looking on anything above the 55’ level."

There are three height allowances proposed in the zone. Around the perimeter on the east and west sides for the first 100 feet the height allowance is 35 feet, also the first 200 feet from Main Street is allowed 35 feet height. Next on the sides from 100 to 200 feet the height allowance 45 feet. The center of the zone is allowed 55 feet. Henke said the buildings on the perimeter would be two stories, then increase to three stories, and in the center increase to four stories.

"The idea is to mitigate visual impact on anyone outside this district," Henke said."The farther away you are from a structure, the lower it seems from your perspective." Height is another element of the code the city council could adjust when the proposal goes before them. 

Purpose: Echoing Nichols previous comments Henke addressed the intent of the proposed C-4 code to create a vibrant active environment, synergy between different uses, a pedestrian friendly environment, a greater tax base, a place to promote the arts, and a community gathering area.

Project Phasing:  Henke said the development would most likely not happen overnight. A project of this magnitude will take several years to build. As a safe guard the city needs to make sure each phase has the "correct percentage of commercial square footage as compared to residential so somebody couldn’t come in and just build residential initially and try to hold off on the commercial. There would have to be the correct proportion based on the incentives they received."

Parking Requirements: "We have not proposed an adjustment from what’s already required in the code," Henke said. Commercial parking allowance is one stall every 250 square feet of commercial space. Residential is one stall for every dwelling unit.

"A developer goes through quite a bit of analysis, Henke said. "Parking is kind of a death nail to the business … we can increase numbers if feel it's not sufficient, we have not gone through an exercise to find out what would work on the property."

Henke said, "That covers most items Chairman Nichols mentioned."

Financial analysis:  A Proforma projecting economic impact is not done, Henke said. "That requires hiring someone to come in, look at current zoning and potential zoning and do a best guess analysis on what the difference would be between the two. That would require a contract for somebody to go through that process and we may do that in the future, we have talked about that on a staff level. We haven’t budgeted the money to go through that process yet, but we could if we are directed to go that route."

The city council authorizes how city funds are spent. When the proposed C-4 code goes before they council they will decide if a Proforma is needed. 

Conclusion:  "Basically that's the presentation," Henke said. "Hopefully that clears up some of the misinformation that’s been out there. That doesn’t mean everybody will agree with whats been proposed, but I wanted to make sure the facts are out for everybody to see."

Link to city website for Proposed C-4 Zone code text:http://www.midwaycityut.org/media/uploads/files/Agenda%20Item%20%233%20-%20Code%20Text%20Amendment.pdf

Note: Watch for Part Two: Public Hearing Pros and Cons midweek.