Before the Stratos data center, there was Deer Valley and Sundance

Long before the Stratos data center came into public consciousness, the Military Installation Development Authority, known as MIDA, had already drifted far from its original purpose. Created by the Utah Legislature in 2007 to facilitate development on military land, few Utahns would have imagined it would later include projects at luxury ski resorts. Yet today, MIDA is involved in an extensive development at Deer Valley and another at Sundance.

The military benefits for Deer Valley’s MIDA-backed East Village resemble the fine print in a warranty, complete with qualifications and exceptions.

For example, an article about the Deer Valley Grand Hyatt states that veterans may receive discounts of up to 50%, but only if they book at least 120 days in advance. Otherwise, discounts range from 20% to 30%, depending on military status, and may not apply during peak periods. Veterans with fewer than 20 years of service are not eligible for the preferred-rate rooms at all.

Many major hotel chains, including Hyatt, already offer military discounts and appreciation programs. If the military component is what justifies MIDA’s involvement, Utahns deserve to know what is unique, substantial, and enforceable about these benefits beyond what the Hyatt already offers.

The recreational amenities are similarly difficult to pin down. A MIDA spokesperson explained that they “will be announced as the area builds out.” In other words, part of the military benefit used to justify the project has yet to be fully defined.

At Sundance, the military benefit takes a different form. Its Mountain Veteran Program is designed for wounded and disabled veterans, but scale matters. Participation appears limited to small groups of four to six veterans with approximately 15 experiences currently offered. Given those numbers, it is reasonable to ask whether a program at a luxury mountain resort is the most effective way to support veterans.

The Deer Valley and Sundance developments involve tax increment financing, special districts, and MIDA-authorized bonds — approximately $650 million for Deer Valley East Village and up to $45 million for Sundance. While the details are complex, the basic idea can be illustrated with a simple analogy:

Imagine two developers want to build luxury hotels.

Developer A gets conventional financing. When the project is complete, he makes loan payments and pays increased property taxes resulting from the development. Those taxes help fund local public services.

Developer B gets a special financing arrangement through MIDA. When the project is complete, approximately 75% of the increase in property taxes is directed back into the project for up to forty years, helping repay project financing and infrastructure costs.

As a result, local public services do not immediately receive much of the new tax revenue generated by the development, even as the project may increase demand for those services.

The obvious question is why Developer B received access to a financing arrangement unavailable to most businesses and taxpayers. A related question is whether the public receives enough in return for that arrangement.

Forty years is a long time. A child entering kindergarten today could be well into a career. Governors, legislators, county commissioners, and MIDA board members will come and go before the arrangement expires.

It may be a reasonable tradeoff if tax increment financing was truly necessary.

Tax increment financing can be a tool to spur development in struggling or underinvested areas. But do luxury resort developments such as Deer Valley and Sundance require this level of public assistance? Given the interest these projects have attracted, why should decades of new tax revenue be directed back into them rather than immediately supporting public services?

Another question follows. Are military benefits and veterans programs the primary purpose of these projects, or have they become the vehicle for MIDA’s involvement in developments whose principal beneficiaries are developers, investors, and property owners?

A military family facing housing costs, childcare expenses, and the challenges of military life is unlikely to view discounted lodging and skiing in Deer Valley as a pressing need. Likewise, a disabled veteran may not view ADA-accessible lodging and mountain recreation programs as a top priority.

That does not mean recreation has no value. Healing can happen in beautiful places. The question is whether those benefits are substantial enough to justify MIDA’s involvement.

Through roughly a dozen legislative changes, MIDA’s role has steadily expanded. At what point does a military-development authority effectively become a general development authority with extraordinary power?

That evolution raises a reasonable question about oversight. Is it appropriate for lawmakers to both shape an agency’s powers and serve on the board responsible for exercising them?

Utah’s political and development ecosystem is relatively small, and the lines between legislators, developers, construction firms, landowners, lobbyists, and development-authority board members can become remarkably thin. In that environment, Utahns should demand increased transparency, disclosure, independent review, and public oversight to protect the public interest.