By the BF Staff
From the January/February 2019 Issue
Utah continues to outperform the U.S. economy as a whole, just as it has for the past decade. For much of the last year, Utah—which has one of the most diverse economies in the country—has added jobs at a rate faster than any other state.
Not only is growth strong, but the state’s fiscal condition remains near the top. U.S. News ranked Utah the #1 state for best fiscal stability and #3 for most stable economy. As an example, state leaders announced in October that the state closed out the prior fiscal year (FY 2018) with a budget surplus. Under current calculations, it will deposit $107 million into state reserve accounts and the Industrial Assistance Fund. After accounting for these transfers, the division estimates there will be nearly $158 million in additional, one-time revenue available from FY 2018.
Pretty boring, right? Sure, but this translates to a business environment that is predictable, and a government that lives within its means. If you’re looking for a place to expand your business, a safe-haven like Utah makes a lot of sense.
What’s new in the Beehive state? Several generational opportunities are catching the attention of site selection experts around the country.
Point of the Mountain. When the Utah State Prison was built in Draper in the 1950s, it was surrounded by miles of alfalfa fields in an area known as Point of the Mountain. Today, it’s in the heart of Utah’s booming tech industry, also known as Silicon Slopes. In 2015, the state Legislature approved funding to move the prison to Salt Lake City’s northwest quadrant, west of the Salt Lake City International Airport.
This decision initiated a multi-year study to determine the best use of the Draper prison site, and other developable land in the surrounding communities. Spearheaded by the Point of the Mountain Commission, the state is gathering stakeholder feedback and weighing options. In any scenario, the continued growth of Utah’s tech industry is a significant factor in the area’s long-term development.
Inland Port. Utah has had a love affair with rail ever since the Union Pacific and Central Pacific railroads met at Promontory Point in 1869, connecting the country in Utah with railway from coast to coast. Today, we’re pretty sweet on highways and air freight too.
As the crossroads of the West, Utah is a highly cost-effective business hub. Two major U.S. interstates converge at the heart of the state. We have a robust, statewide rail network, with every major western seaport within a one-day trip by rail from Utah.
Lastly our international airport—a Delta Air Lines hub—is undergoing a $3.4 billion upgrade. First phase construction of the project has hit the halfway mark.
These factors have led the state to embark on the creation of an Inland Port. With the infrastructure accompanying the move of the state prison, some 16,000 acres west of the airport will become available for significant manufacturing and distribution projects.
As Gov. Gary R. Herbert said in 2016 when he announced the study of an Inland Port: “Maybe the best thing those who went before gave us is their example. We have the responsibility to follow their examples by investing in the future, not just for ourselves, but for our children and grandchildren. We have to lay the groundwork for Utah to be number one not just for today, but for 20 and 50 years into the future. One way we can make that investment and ensure our economic future is through the creation of an inland port.”
Eagle Mountain. A few miles west of Point of the Mountain is the community of Eagle Mountain. In May 2018, Facebook announced it’s building a 970,000-square-foot facility on 500 acres, roughly 15 miles south of the National Security Agency data center in Bluffdale.
Facebook is investing more than $100 million in infrastructure improvements in the community. These investments—and Eagle Mountain’s business-friendly approach—will open the door to other companies looking for a prime location for data center operations.
In the face of growth in virtually all sectors of the Utah economy, workforce availability is top of mind. At the end of 2014, Utah’s aerospace industry challenged the state to develop a viable internship program aimed at juniors in high school. In less than a year, the state launched the Utah Aerospace Pathways program, which has been expanded to school districts across the state. Utah high school students get early exposure to the aerospace industry and graduate straight into well-paying technical jobs in composites manufacturing.
In 2016, the state replicated the pathway model in two other industries: diesel technology and medical device manufacturing. Early in 2018, Utah further expanded into the tech industry, with the Tech Pathways program. The Utah model has received national attention and accolades.
In parallel with these efforts, the state is bringing economic growth to rural parts of Utah. Increasingly, companies in Utah’s urban Wasatch Front region are looking to rural communities for a skilled and dedicated workforce. HealthEquity’s expansion of more than 100 jobs in the city of Price is a prime example.
All in all, it’s been a banner year for Utah’s economy and key industries. The Governor’s Office of Economic Development will stay focused on its core mission and continue to meet head-on the challenges and opportunities stemming from Utah’s exemplary economic success. For more information, visit business.utah.gov.
OATLY EXPANDING ITS UTAH OPERATIONS IN WEBER COUNTY
The Utah Governor’s Office of Economic Development (GOED) recently announced Oatly, Inc. will expand its operations in Utah, planning to add up to 50 jobs, $2.9 million in new state revenue, and up to $40 million in capital investment in Weber County over the next seven years.
“Oatly is a great addition to Utah’s manufacturing community and will add to our food and beverage industry in the state,” said Val Hale, executive director of GOED, in a GOED press release. “As their first operation in the west, Ogden is a great fit and we’re excited to have them in Utah.”
Oatly is a food manufacturing company that develops and produces oat-based drinks and foods. The company is dedicated to helping people eat and drink healthier without taxing the planet’s resources in the process. Oatly’s flagship product is their oatmilk, an original oat-based drink produced using patented enzyme technology that turns oats into nutritional and delicious liquid food. The company worked with Brian Corde from Atlas Insight LLC, a site selection firm based in Freehold, New Jersey to help it arrive at this strategic location decision.
“As a 25-year-old company, we’ve been blown away by the enthusiasm and incredible demand for Oatly that we’ve seen here in the states over the past few years. We’re equally excited that we’ve been able to make our products for the US here in North America” said Oatly US General Manager Mike Messersmith. “Through this partnership with the state of Utah, our upcoming factory in Ogden will help us keep oatmilk in all the many coffee shops, grocery stores and refrigerators that want it.”
Oatly plans to create up to 50 jobs over the next seven years. The total wages in aggregate are required to exceed 110 percent of the average county wage. Projected new state wages over the life of the agreement may be up to $17,327,500, which includes wages, salaries, bonuses and other taxable compensation. Projected new state revenues, as a result of corporate, payroll and sales tax are estimated to be $2,954,627 over seven years.
“EDCUtah is excited for Oatly to establish a significant presence in Utah,” said Theresa Foxley, president and CEO of the Economic Development Corporation of Utah. “This will be the company’s first operation in the western U.S., and their corporate values of sustainability and environmental friendliness align nicely with our vision for economic development in Utah. Oatly will help raise the bar for employee compensation in the food and beverage manufacturing industry, and we appreciate the support of GOED, Ogden City, the Business Depot Ogden, and other partners to bring this project to fruition.”
Oatly may earn up to 10 percent of the new state taxes they will pay over the life of the seven-year life of the agreement in the form of a post-performance Economic Development Tax Increment Finance (EDTIF) tax credit rebate. As part of the contract with Oatly, the GOED Board of Directors has approved a post-performance tax credit rebate not to exceed $295,463. Each year that Oatly meets the criteria in its contract with the state, it will earn a portion of the total tax credit rebate.
The Utah Legislature has authorized economic development incentives in the form of post-performance tax rebates. Eligible companies work with the Utah Governor’s Office of Economic Development to outline specific performance criteria. Once GOED confirms those criteria have been met, companies can receive a refund up to 30 percent of the state taxes they paid for up to 20 years.