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THE FRONTIER LINE
Hosts Wayne Aston and David Murray explore the critical global pillars of infrastructure development and energy production, from traditional methods to future-forward advancements. The Frontier Line covers the latest industry news, energy innovations, and sustainability trends that are shaping the future. Through expert interviews with industry leaders in renewable energy, utility-scale battery storage, and waste-to-energy technologies, the podcast provides insights into the evolving landscape of energy efficiency and sustainable infrastructure. By focusing on the intersection of innovation and the politics of energy, The Frontier Line highlights transformative ideas and technologies poised to deliver cost-efficient, resilient, and sustainable solutions for global industries.
THE FRONTIER LINE
Utah's Legislative Renaissance- Governor Cox's Legacy of Prosperity
And we're back, dave, how you doing today, doing great Wayne.
Speaker 2:I'm so happy. Hello everyone, Welcome to the Frontier Line. Here we are again, yeah yeah.
Speaker 1:So you know you've listened enough already in season one and we're cranking into season two here. You understand that we are all about exploring bold ideas shaping the American West, and Dave and I thought it would be a good idea to dive into Utah's transformation under Governor Cox. Governor Cox was elected back in 2021, and his vision for energy abundance, water security, agricultural modernization, sustainable growth is really driving change here in Utah, and there's so much legislation by way of new bills, new resolutions, new executive orders and and governor the governor Cox is leading it. It feels like our entire legislative body is really, really rallied behind him in a way that I don't think we've ever seen in Utah, and you know we've got a lot to talk about here in Utah about all of this that's gone on in the last five years setting a national standard, and that's really part of the vision for what I'm. How I interpret Governor Cox's vision is setting a standard for the nation, letting Utah be a beacon through its legislative commitments in all of these sectors, would you?
Speaker 2:kicking things off. I totally agree and I would say, even if you don't live in Utah, don't change the podcast station right now, because I think what we're doing here, I think what Governor Cox doing here, along with the legislature, is going is, is being watched and will continue to be watched by governors and legislatures across the country, absolutely um, and I think what we're doing here, given just the unique mix of resources and opportunities I, I think, will be, I mean, I'd like to think, I, you know, you'd like to think will play a large role in the future of the West and the development of the West and energy infrastructure and grid infrastructure in the entire western United States. And so I, you know that's why it's important. Even though this is a very it's going to be a very Utah centric episode, it has implications for everyone. It has implications for everyone.
Speaker 1:That's absolutely right, dave. I appreciate you making that distinction, because Utah matters to us, because our flagship project is here in Utah and it's fun because there's direct corollaries between what we're doing at Valley Forge and what our legislative body and governor have done. You know, setting the stage for something like this to even be contemplated. It's important for you guys out there listening to understand that we wouldn't even be having this conversation about Valley Forge today. A year ago, or especially two years ago, there wasn't enough in place for us to be able to be at this juncture. So I thought maybe we touch on maybe the first three or four things that I'd highlight and then we're going to actually unpack each of these sectors and some of the most relevant five, six, seven house and senate bills, resolutions, orders that have contributed to the enhancements of each of the areas that we just mentioned.
Speaker 1:So, to kick this off right out of the gate, back in 2009, the House set up what's called the Public Utilities and Energy Committee Energy Committee and that has evolved over the years and right around 2019, it formed a different committee, the Public Utilities, energy and Technology Interim Committee, and it's my understanding that both of those committees still exist, so there's actually two different committees here, but that's a lot of not direct legislative processes there, but a lot of brain power, kind of masterminding and kind of approving and considering how could we as a state be ahead of our energy and technology right? So just forming those committees that long ago signals to me a fair amount of foresight in where we were headed In 2019, go ahead.
Speaker 2:Dave, I was going to say no, I was just going to say I mean, I think that has been our experience, you know, and as a lifelong Utahan and somebody who used to be in the news and watching what they've done they have been actively looking at this issue for a long time and engaged and trying to figure a way forward.
Speaker 2:Because, you know, some would say you can't see the writing on the wall things have changed, you know, uh, significantly, especially with ai and the energy demands. And I don't, I don't think a lot in the public sector would have predicted that, even in the private sector unless you're, you know, you're a square in the industry you probably didn't, didn't see it coming, not the demand, that's that, that it's been. But they understood that infrastructure is important, having a foundation is important and they needed to do the right things for the future in order to set us up for success. And I think that that was that kind of that knee jerk of like we've got to, we've got to get some, we got to get some policies and infrastructure in place to start laying the foundation and not to, not not to cut you off, but I think to set the stage. That that was the impetus for a lot of this Agreed.
Speaker 1:Absolutely, and we've had the unique opportunity to work with senator darren owens this past year and he currently chairs the public utilities, energy and technology interim committee and he's a bulldog he is. He's. He's devoted his life to energy in utah. Really, he's actually got two passions, but I think energy drives it he's. He's also really passionate about rural Utah. He presides over District 26, which is where we're at in Miller County, and his district encompasses four or five counties, or six counties, and so preserving the agricultural heritage and excellence here in Utah is also a really important thing for Senator Owens. But it's been so fun to watch him take on these energy issues the way he does and sponsoring bills. He's had his fingerprints on so many of the things we're going to be talking about. As far as bills, in the last five years working under Governor Cox Two of the big highlights, dave, maybe I'll let you touch on RED-TIF. I'm going to touch on the PID Act.
Speaker 1:In 2019, our legislators passed what's called the Public Infrastructure District Act. We refer to that as PID here in Utah and that's under Title 17D, chapter 4. It was approved during the 2019 general session at the Utah legislature through passage of Senate Bill 228. And this bill was actually sponsored by Senator Dan McKay, who's still active. The thing I love about the PID Act you guys, as a land developer, I'm going to go on a limb and I'm going to say this is the most powerful, revolutionary tool in a developer's toolbox. And we're going to talk about a lot of tools, but the PID public infrastructure district, so that the boundaries of that district are essentially the property boundaries of land we own. And then we're able to layer on top of that a tax increment district and within that public infrastructure district we're able to go and put together infrastructure bonds through private banks. We're able to sell those bonds and bring financing to the project. And what makes these really unique? If the listeners out there are familiar with municipal bonds, you've probably heard of those. If you're a city, then you have the powers of raising money for city infrastructure through municipal bonds and that has to do with the city's credit rating and it's just like us individuals borrowers. We have credit scores. Cities have credit scores, credit ratings, so you can only get so much bonding in a municipal bond structure much bonding in a municipal bond structure. In a PID, there's no real cap to. First of all, there's no real cap to how much could be borrowed or how much could be bonded. It's all about new business to be generated. So it's a very forward-thinking piece of legislation here.
Speaker 1:Unlike a municipal bond, where it taxes the taxing authorities like the school district or the police and fire departments of the city, a PID stays aloof of those taxing agencies so a developer can go in and do a new industrial park without raising the taxes of anyone around them, and that's so important. It's so important for growth in any state, and many states have versions of this PID. This is legislation actually, I think, originated in Colorado, but there are varieties of these in Texas and other states in Arizona. We're aware of these in Texas and other states. In Arizona, we're aware of Not going, and raising the taxes for the critical services of a city or school district is so important, and a lot of projects historically were turned down because of opposition from those taxing authorities. School district says, hey, we're barely getting it done with the budget we've got, you know, raise our taxes, it hurts our budget. No, how much do we really need this project? And so that's a serious problem that pid directly addresses.
Speaker 1:The other thing that's so powerful about pid is that the bonds we're able to pull to to provide infrastructure, build infrastructure with, don't encumber the land we own.
Speaker 1:So it's not like a loan.
Speaker 1:The encumbrance is on future tax revenues and we refer to that as a mill levy, so the tax rate of a future business. So let's say we own a thousand acres and we're standing up an industrial park. It's going to have future business revenue and we're going to increase the mill levy by just a couple of a couple of mills. It's not percentage points, mills or fractions of percentage points. It's a very nuanced and and, um, it's a very small adjustment.
Speaker 1:So we increase that mill levy and we're able to pull these bonds together and look at repaying those bonds over the next 20 or 30 or 40 years in some instances, without encumbering the land, and that means that those bonds act like equity for a developer. That's a very powerful thing to have in the toolbox when you're trying to capitalize a project in the front end of a project. Toolbox. When you're trying to capitalize a project in the front end of a project, traditionally speaking, guys like us have had to go raise private money and go into debt and front load a project with debt, and so this whole PID structure helps relieve that pressure so we can get things moving a lot faster with a much lower risk profile. So that's my two cents on the PID Act, dave.
Speaker 2:I think that was more like $1.25.
Speaker 1:Okay, well, I'm so excited about it Now.
Speaker 2:Professor Aston, the class has been schooled, I believe. No, I mean, I know how much you know about this and I hope for the listeners Wayne obviously has become an expert on this because it's so intimate to what we're doing and what we're planning to do and what we've already done, that it's it. It, uh, was absolutely critical to to understand, know and deploy this, and so you can tell by the professor's comments that, uh, that's probably the best explanation I think I've ever heard actually, uh, of, of, uh, of what a PID bond actually is. So you know, hopefully we can put that you know, make a note, uh, if you want to know what a PID bond is you know, clip it right there and this you know, go to Wayne and that's as good as it's ever going to get.
Speaker 1:If we have new emerging developers out there and they happen to listen to this show, they're going to pick up a lot of good material. We're going to be covering that, I think. So that's part of it.
Speaker 2:I think so. So what can?
Speaker 1:you tell us about Red.
Speaker 2:Tiff. I'm almost reticent to go into Red Tiff, no. So what Red Tiff is and what it stands for. The acronym uh was a. It was in 2021. Uh, the rural economic development tax increment financing is what it stands for. Program utah was approved by 2021 general, set in in the 2021 general session. You saw the legislature through a passage of hb 356, sponsored by a representative called carl albrecht. Uh, the bill was passed by the house, senate. Uh, and then finally was signed into law.
Speaker 2:Um, what it does, um, what it is at its heart is it was a modification of the urban focused economic development tax increment financing, ed tiff. That's right. Um, there were, there were, was a lot of I don't know if the word consternation is accurate, but here in Utah, the Wasatch Front so Salt Lake City, provo, ogden, the bigger cities, the bigger counties get a lot of the focus and a lot of the money and a lot of the attention get a lot of the focus and a lot of the money and a lot of the attention. Well, a lot of legislators that aren't from or don't represent the Wasatch Front felt like they needed something for rural Utah that had the equal weight of what EdTiff was. So what it did, is it?
Speaker 2:You know what Red Tiff does is it offers eligible companies a post-performance refundable tax credit rebate of up to 50% of the new state revenue, sales, corporate and withholding taxes generated by their project, significantly higher than the Ed Tiff cap of 30% without industry restrictions. That's huge. Any business locating new operations or expanding Utah counties outside the five urban counties so that would be here in Utah, salt Lake Davis, utah, washington and Weber could apply. So the idea you know, wage, job creation, capital investment benchmarks more attainable than Ed Tiff's and Ed Tiff's reflecting unique needs of rural economics. So this is very tailored towards understanding what the needs were in rural Utah. Uh, you know how it works in a nutshell pre-application review, formal application incentive committee review board meeting. That's public, and then a post-performance credit.
Speaker 2:And guys why does this all go?
Speaker 1:I was just going to say, dave I'll cut you off here For the listeners trying to quantify this we're always focused on the federal tax incentives and the state tax incentives.
Speaker 1:So this is as Dave just stated this is at state level, but for the first five years in standing up a project, you get half of all those state taxes rebated or refunded. It's cash repaid. That's a huge deal when you're doing a pro forma on a project, and I have to give kudos to Senator Owens and Ryan Starks at EDC Utah, who we recently interviewed, and Ryan Starks at EDC Utah, who we recently interviewed. Those two were two of the biggest champions building the Red Tiff program that Rep Carl Albrecht ultimately sponsored and had approved. But a lot of rural influence and rural horsepower behind the Red Tiff program and they still talk about it today. In fact, I think Ryan was mentioning to us a couple of weeks ago that since the inception of the red TIF in 2021, they've brought in $2.3 billion of of investment into rural Utah as a result of this one thing, and that's why we're highlighting this in the front of the episode there with PID and this other thing, it's a really big deal, a really big deal.
Speaker 2:I mean and and you know, at its core it's about rural revitalization, flexibility and scale. I mean it, it's it. The idea was we need to attract capital and create high wage jobs in smaller communities lacking the scale of urban centers. That was really the core of this is saying how do we do that? And they have unique challenges and so what do we do to incentivize them? You know it was. It was very flexible, no target industry limitation and lower wage thresholds. Make, you know, made it easier for a broader range of businesses to qualify, you know, and then lower population counties could qualify for the full 50% rebate. Make it even modest investments compelling right.
Speaker 1:Yeah.
Speaker 2:So what you saw here is and because Red Tiff is strictly post-performance, businesses face no upfront risk If they fail to meet their job creation or capital investment benchmarks. They simply don't get the credit. However, if performance falls short after initial payments, clawback recapture provisions can require repayment of credits are reissued. But for businesses and for initial capital that's a very de-risking kind of activity to say, okay, well, this is going to help you get going, it's going to help, you know, mitigate things. But if it doesn't work out, um, uh, then uh, you know, well, they don't. I mean, if they didn't have any, they didn't have any upfront risk. They didn't have any upfront risk, and that's a big deal in when you're trying to establish a new business, you're trying to bring manufacturing, whatever it might've been, um, you know.
Speaker 2:And then many counties and municipalities were also layering in their own revenue sharing or property tax TIF incentives on top of red TIF to sweeten the deal. So, you see, you see in some of these instances that you had red TIF and so a company requiring, you know, qualifying for red tiff, might negotiate with that particular municipality extra incentives. And so, with those tools in the bag, uh, these rural communities have been able to attract some very qualified businesses and it's, and it's been very successful, um, so that, so that in, in, in a nutshell, that's Red Tiff, uh, and, and it's, and it's working, it's, it's still out there and there's, and it has become one of the best, if you ask anybody, the best tools in the bag for rural Utah.
Speaker 1:Absolutely. Now, guys, we're just setting the table with these highlights. I'm going to make mention of 2025 vintage executive orders in the Trump administration briefly, and then we're going to just dive right into the specific bills and legislation here in Utah. But setting the table, just so everyone's clear, all of this framework that's been set up here in the state of Utah is now finally fully aligned with the federal administration and a lot of these initiatives on AI and nuclear development. We have executive orders in January 2025 enhancing and supporting AI and nuclear development, streamlining NEPA, permitting and expanding oil and gas production. Okay, these are not I guess we had some AI support building in the previous administration but total reversal on oil and gas production in kind of at the expense of the renewable tax credit program, and so it's just a re-engineering the tax incentives and the permitting, okay. So with all of that in mind, let's dive in here, and we've broken up the different legislative House and Senate bills based on the sector. So we're going to break them down in order of the year that it's starting at 2021 up to today, what's happened? So you guys can get a clear picture and hopefully we're covering all the bills.
Speaker 1:But, dave, I'll kick this off here with the energy and infrastructure development bills and maybe we'll just take turns mentioning these. We can clip through these fairly quick without having to give a full explanation, I think. But I'll kick this off with House Bill 263. In 2021, this is one of Governor Cox's first big things and this is known as the Utah Clean Energy Fund, and this bill established a dedicated fund to finance clean energy projects like solar farms and wind and grid modernization. Fast forward several years, Governor Cox rolls out his initiative, operation Gigawatt, and we'll be referring to Operation Gigawatt often in the show. We covered it when it came out, I think in October last year. In depth we did. But Governor Cox is determined to make Utah I shouldn't say make. He's determined to set the stage for Utah to become a leading energy producer. A leading energy producer, and this was like the first legislative cannonball out of the barrel toward that.
Speaker 2:Okay, and then we had SB 243, the infrastructure bank creation. So it created a $75 million infrastructure bank to provide low-interest loans for public projects like highways, rail lines and power systems. A $75 million infrastructure bank to provide low-interest loans for public projects like highways, rail lines and power systems, the point being, the purpose being that it would enable large-scale developments, critical for economic growth, particularly in rural areas, aligning with the initiative of Governor Cox's statewide connectivity and then tying in largely to the Operation Gigawatt.
Speaker 1:That's right. And then the next year, following year, in 2022, we had House Bill 46. These were just amendments to the Utah energy infrastructure bills. We had HB 124 later in 2024. Those were more energy infrastructure amendments. So you can see this pattern of our legislative body like building up and compounding, like you know, measures and enhancements, one on top of another to really get us to where we are today. In 2025, we had some really significant ones. We had house built two, 12.
Speaker 2:I was going to stop you not to, not to, not to cut you off, but that you know we've we've talked a lot about it on the program, about Fervo and Cape station that those energy amendments, I believe included geothermal and I think that was part and parcel of of uh.
Speaker 2:Fervo being able to get going with Cape station, and so, if you've heard us talk about it on the podcast, it's a very big project geothermal project in about 80, 90 miles south of where we are, and they are having great success. They've attracted a lot of investment capital and it just keeps to go. It keeps going and going and going. So sorry to cut you off, wayne.
Speaker 2:No, thank you I want to throw that in there. On that infrastructure, that was one of the. There have been others, but that was one of the first big ones that maybe you heard of. Yeah, Because not only is it a big project in Utah, at some point I read, and I think it still is perhaps the largest geothermal project in the entire world right now.
Speaker 1:That's right.
Speaker 2:And so it has attracted a lot of, uh, national and international attention and that I believe and somebody can correct me, I'm wrong that was facilitated by some of these amendments yeah, it was helped along.
Speaker 1:And and the fervo cave station is a remarkable project. I'm told that, uh, this is like a seven billion dollar build out at full capacity. It's like a two gigawatt capacity enhanced geothermal system. That is really significant guys. So it's fun. It's fun for us to see direct development impact in these categories as a result of some of the legislation that our state is rolling out here is is rolling out here Getting to the 2025 stuff. We there's actually four, four really big ones. We had HB 212, House Bill 212, Advanced Transmission Technologies, and that one promotes grid enhancing technologies like dynamic line ratings, energy storage systems to reduce transmission losses and integrate renewables. It also aligns with Cox's sustainability focus. This one cuts costs for consumers and boosts grid capacity.
Speaker 2:And then, in that same year, hp 249 nuclear power amendments, updates, regulations to facilitate nuclear projects leveraging federal grants, like the DOE's advanced reactor demonstration program. You know nuclear being what we are all looking at is you know, offering clean, high capacity power Looking at is you know, offering clean, high capacity power, also seen as critical for Cox's goal doubling production by 2031. You know, supporting industries and reducing carbon footprints. This is a big one and this is one, wayne, you and I are going to. We've talked about. We're going to talk about a lot. We're going to continue to talk about it's.
Speaker 2:You know each energy modality has what we would say, I'd say the pros and its cons. The one con, and one of them and the big been almost impossible, and so it might cost, say, a utility somewhere between $100 and $300 million just to go down the permitting process and perhaps be told no, and so that, along with all kinds of things, has stopped our nuclear industry for three and four decades Now. Obviously, we've had accidents around the world that have have have cooled people's interest, but that interest has swelled again because it is seen as something really, really important. Out of this has come almost immediately, um, something we talked about a few weeks ago where Governor Cox's administration, along with private company and Utah national guard, announced, uh, that they were doing a joint venture to start up uranium, uranium enrichment. That's right, Uh, making it the, the, the would make it the only, the second plant in operation in the U? S. The only other one that's operating currently is in Illinois. And so they understand, the administration, the legislature is that the entire infrastructure of nuclear right now in the US is not really there, and so you've got to start manufacturing fuel and then training people and all kinds of things have to happen, because right now we're relying on Russia and China and some others to get some of the fuels for the existing infrastructure and so it's not something that is seen, has been seen for a while now in the best interest of the security of the country.
Speaker 2:And so Utah is wading into that in a very big way and saying we're going to lead out as a state and say we'll do uranium enrichment here, why? One, we have history of that, we have mines here, um, and and two, we have a legislature that's, that's willing to work, um, basically, you know, see the bigger picture and work with the, the, the federal, the federal government, and say okay, we can make this happen.
Speaker 1:Absolutely yeah. Nuclear we all see nuclear as a big piece of the energy mix of the future and our legislators and governor really are determined to bring that to Utah and be one of the front runners of nuclear deployment. I'm going to hit the next two 2025 bills simultaneously here. 2025 was a really big year for us this year, guys, this year, and you're going to see a pattern because as we touch on these different things, you're going to see, you know, one or two bills in 21,. It just kind of started to go in each of these categories. 22 got a little momentum. By the time we get to 2025, it's boom, boom, boom. New bills, new bills, new tax incentives, really like. To me, it feels like our identity in the categories where how we want you, who do we want to be as a state, really crystallized in this fifth year with governor well, it underscores what.
Speaker 2:Yeah, it underscores what you and I have both said is that this is new. This, this is incredibly new. This is you know, these evolutions. They've been talking about the broad strokes of found, you know foundational things for a long time, but for you know, four major bills in one year to deal with. This shows how quickly this is happening and also how quickly the the legislature, the Utah legislature is responding. That's right and saying we're seeing these changes, we're reacting to them almost in real time because we've got to take advantage of them. We're not waiting to see how this is going to play out. We're not waiting for two, three, four, five years. We see the opportunity, we're going to do it. We're going to get all the, we're going to bring all the people together and we're going to act on it quickly. And I mean that just to underscore how, how, how much they are paying attention to this space.
Speaker 1:Absolutely so. Next, we have Utah's high cost infrastructure development tax credit in 2025. And this offers a 30% credit on incremental state revenue up to 50% of infrastructure costs, guys, for capital-intensive projects. So that expands eligibility to district energy systems and severance tax offsets. So when you talk about what we're doing at Valley Forge, we're talking about very large, multiple gigawatt power generation that this could apply to. We're talking about very large transmission and distribution expansion, so grid hardening and modernization and that's a very helpful tax credit to have. And right on the heels of that, we had Senate Bill 132. We refer to that as the Sandell Bill.
Speaker 1:Senator Scott Sandell brought this Electric Utility Amendments Bill through and, guys, this is an important one to understand because Utah is a regulated state. We have one investor-owned utility that's Rocky Mountain Power, which is a subsidiary of Pacific Corp, rocky Mountain Power, which is a subsidiary of Pacific Corp, and for 40-something years, rocky Mountain Power it's been the one power utility. Now we have several electrical co-ops around the state. They all buy their power from Rocky Mountain Power essentially. And Rocky Mountain Power basically owns all of the transmission and they manage all of that. Basically owns all of the transmission and they manage all of that.
Speaker 1:But what Senate Bill 132 did, was it? Basically, it did two things. Number one it basically established a new rule that says if you're a hyperload consumer and that's 50 megawatts or more, and you approach Rocky Mountain Power and you request 300 megawatts for a new project and they say no, then you're free to go and find the power wherever you can buy it from in the state of Utah or elsewhere. That's a step toward deregulation. In my mind. It's a soft step toward deregulation, because now you're opening things up to independent power producers like us who can step up and meet that need of 300 megawatts or gigawatt or whatever. And the thing about this is, guys, is that a 50 megawatt load it's a big load. It's rare. It's rare for one business to need 50 megawatts. It's rare. It's rare for one business to need 50 megawatts. But that really supports the data center community and some heavy manufacturing. Okay.
Speaker 1:And the second point about SB 132 is it provides some openness around pricing. So there's some thought toward protecting the residential rate payer, because we have some of the lowest rates in the nation. Here in Utah, I think we're under $0.08 a kilowatt. California is over $0.25 a kilowatt, I think. And so it's important to the legislator to protect our consumers. But it's also important that we're able to accommodate a hyperload and charge a different price. So there's a spectrum now that you can set different pricing within this build. So that's helpful to also bring these hyperload. You know businesses because the legislature and Governor Cox recognize this is critical for the growth, economic growth in Utah right.
Speaker 2:Absolutely Well, you know, and they you know they also layered in some rules around cost allocation and how, very specifically how and, as you mentioned, on rate payers.
Speaker 2:But the reason this is important is they're watching what's going on back east. They're seeing we've got utilities and we've got areas that are saying no to data centers, that are putting their foot down, communities that have seen electrical rates skyrocket. It would help balance that out and that there would be an avenue for people like us to come in and help offset that to where any infrastructure costs that maybe Rocky Mountain might incur by incur by adding new production, uh, would be mitigated or or it wouldn't be necessarily passed along to consumers and they were trying to find other ways. And so they're looking at what's going on around the country and saying what, what, what's working, what's not working. At what's going on around the country and saying what, what, what's working, what's not working. So it was, you know, it was a first, it was a, it was a, it was a good bill and and I think you'll, I think we're going to probably see probably some, you know continued modifications as this, as this space matures absolutely.
Speaker 1:um, we could go on for two hours about the energy and infrastructure enhancements that have happened and how they're applying and maybe, more importantly, where they're going and some of the things that we're hearing. You know between hearing, you know the whisperings in the trees, dave. Let's talk about water optimization. That's the second big category of the legislative legacy of Governor Cox.
Speaker 1:Here, water in Utah is sensitive. It's a sensitive deal and depending on which valley you're in in Utah, it has its own kind of unique nomenclature and its own issues. And you've heard a lot about the Great Salt Lake and it kind of fears of it drying up and not recharging like it used to. But if you really look, you can learn about reservoirs that are bone dry, that were full reservoirs a decade ago or 20 years ago. That's a serious problem, and so didn't see anything in 2021, but in 2022, we cut two new bills. One was a water conservation modification House Bill 121, and it just promoted conservation through incentives. This essentially is for the water consumers in the state, giving rebates for water-saving appliances. I think the bigger one was House Bill 242, which was secondary water metering amendments.
Speaker 1:This one mandated metering for secondary water systems like irrigation, improving accountability, reducing waste by up to 20% in some areas. And, guys, if you understand water in Utah and you understand our agricultural excellence the heritage in Utah has been, you know, agriculture is a big deal and in any rural community which is most of Utah, you've got farms, you've got a lot of alfalfa, you've got a lot of barley, You've got wheat, You've got those types of crop and those are very water intensive. In fact, I think I read a statistic from the state water engineer suggesting that agricultural water uses comprise like 85% of the state's total consumption. It's that big of a deal. So to go and put metering on that consumption dramatic reduction.
Speaker 2:Yeah, I had a unique opportunity to work with a company here in Utah a number of years ago who was trying to solve on the residential on the uh, uh, you know residential side, and then eventually commercial how to reduce water usage uh, for lawns, for watering, you know, and they'd come up and you've probably, you know I don't know how many people have them now, but they were one of the first companies to market and it was just really using algorithms that you know now we hear algorithms all the time but you know was just really using algorithms that you know now we hear algorithms all the time, but you know, 12 years ago, probably not so much and developing sprinkling systems that took into account you know how hot it was, what the transpiration rates were, the types of you know heads. You were using your water flow and what they found is that they could reduce water usage by and this was actually tested in a federal lab. So this is these aren't just claims, they were actually proven. They could reduce water usage 30 to 40% just by watering smartly, by using well, we would. Back then it was machine learning. Now we'd probably refer to it as AI. So this was an early use of AI in watering our lawns.
Speaker 2:In doing that, what I learned, you know there was it was a great education in learning what this bill, what you were talking about, addressed and that is the state of Utah. Didn't you know? You didn't know how much people didn't know how much water they were using in some of these districts. They just didn't know. I mean they just and when they found through studies and studies and studies, if you know how much you're using, you tend to be a little bit more mindful of what you're using. So that was like the first step. The other step, the other thing they said, is that because Utah has a unique geography we have high mountains and we are really close to our water sources Our infrastructure costs have always been really low and so water has always been very inexpensive and we've gotten used to it, including the agriculture side of Utah, we've gotten used to having very low costs and and we've we've benefited from having an infrastructure that you just you don't find in a lot of places. That, combined with all those things, made our. You know, we, we just use water. Now all all you can take all residential and you can say, well, how do you accommodate growth of people? Well, if you could, just if the residents could be smart about what they're doing, we can continue to grow at pace with populations, and usually water agencies can deal with it.
Speaker 2:The the big, the big stickler is agriculture, or high intensive water using. You know, know, uh, water usage kinds of things, and that's what some of these bills for finally going okay, you know what's taught, what's tackle the problem where it's at. I think the statistic you're citing I've seen, I've seen the same thing, I've seen it vacillate between 80 and 85 and 87 percent is that, uh, and I'm going to say things that are probably going to, you know, be unpopular. But you know, you, the average consumer, you can be as cautious as you possibly can be at home, but it's not, in the grand scheme of things, it's probably not going to make a huge difference because most of the water usage is going to agriculture in the state. I think, actually, governor Cox has come out and said well, you know that's not entirely true, I've seen different numbers, but again, a large portion of our water usage goes to there, and we do live in an arid desert, and so water has been an issue since the Central Utah Project 50 or 40 years ago. It's been a debated thing. We've got the Colorado as a water source.
Speaker 2:Glen Canyon you've probably you know you've Glen Canyon Dam, lake Powell has been in the news the last couple of years because it's gotten so low that they basically they were going to have to maybe turn off, it was going to stop producing power at Glen Canyon. So there are some real big water issues in the West, and so the legislature has stepped into this in trying to tackle those things. Oh yeah, and how do we take into account and how do we protect the people who have built Utah, meaning our farming communities, our rural communities are the backbone of a lot of things here in Utah. How do we help them transition or protect them to do some of these things? And so just the very simple thing of saying you know what we're going to cover the costs so you can line your ditches, so that you're not losing half your water to evaporation, yeah, or or to going into the soil, that right, there is a huge savings. But most farmers were like, yeah, I'm not going to spend a million, two million dollars to update my.
Speaker 1:I'm just like I can't do that, and so the margin is not there to just make these big upgrades.
Speaker 2:Right, and so that's what we see is some of these secondary wastewater meeting amendments. And then it came HB 11 was water efficient? Then we're seeing water efficient landscaping requirements to try and make us as efficient as possible.
Speaker 1:Well, and then in 2024 and 2025, we saw two big bills. One's a generational water infrastructure amendment 2025, that was Senate Bill 211. We had House Bill 285 this year on water infrastructure modifications, and these are directing surplus funds to water infrastructure upgrades, long-term water projects like reservoirs and pipelines, and things that really move the needle when you're talking about contemplating new development and where are we going to develop in Utah? So, again, paving the way for development to happen, making things much more efficient by mandate in many regards, the next— and you had—oh, go ahead, go ahead, you want to hit—.
Speaker 2:No, I can hit 274 if you would like.
Speaker 1:Yeah.
Speaker 2:Okay. So HB 274-2025, this year water amendments implements tiered pricing for water retailers, so charging higher rates for excessive use to encourage conservation across residential, agricultural and commercial sectors. Early data already suggesting that we've seen a 15% reduction in per capita usage in pilot programs. Yeah, I mentioned studies. They saw that when people just knew how much they were actually using, that alone made enough of a difference. It's kind of akin to if you have a speedometer in your car reminding you that you're going. Whatever you're going, you might not know how fast you're going until you actually look down and say, oh actually I'm going this fast, I need to slow down, or or whatever. They saw the same thing with water. You know, once people found out how much they were using and maybe how they compared to their neighbors, that's when they saw impact?
Speaker 1:Absolutely so. The next segment guys of the four categories is agricultural modernization and this is I think they out with House Bill 423 in 2022, department of Agriculture and Food Amendments, and this reformed the Department of Agriculture to streamline its operations, promote new technologies like precision farming and vertical agriculture. That's a cool deal. You've heard about the advanced greenhouses and the vertical grow facilities and advanced hydroponics. That was kind of the first bill passed and we've seen several since. 2022 actually saw three agricultural modernization bills. You want to hit on HB33?
Speaker 2:Sure Water conservation funding, so it allocated $20 million for low-interest loans to farmers for water-efficient irrigation systems, such as drip and pivot systems, reducing water use by up to 25% while maintaining crop yields Exactly the same thing I was just talking about. They knew it worked, they did it and really it's just like look, the technology is there, we'll help you pay for it so that you can do these things. You can get what you need, which is your crop yields and use less water. That's right.
Speaker 1:And that was followed up in the same year, 2022, with House Bill 326, state innovation amendments and that actually funds grants for irrigation efficiency, including smart sensors, automated systems, advanced telemetry, and those have been adopted by over 500 farms by 2024. That's a big deal. And in 2025, we saw our most recent and you're seeing a pattern here, guys like the agricultural modernization is largely just expanded policy off of the water optimization sector. Those two are really kind of dovetailed. It's really about the water in Utah, right, dave.
Speaker 2:Right. And if you talk to the farmer and you talk to you know anybody growing, they want to do these things. They're like it's not, like no, we don't care, we're just going to waste water. No, that's you know. I've heard that and I don't think that's that's accurate. I think mostly they're saying look, we get it, we live. You know, we live in, it's the. So we live in these communities. We water is a scarce thing. We understand that, we appreciate it, we want to save it, but we would go bankrupt if we tried to put in even one of these systems without help. That's right, and so something's got to give. We need some help in order to do it. And so that's to your point, to the number you put out 500 farms adopting. That shows you that they're willing to do it as long as there's just a little help there.
Speaker 1:Yep, and that's a good segue to the last bill in this agricultural modernization HB 243, 2025 legislation so hot off the press. It's only a few months old because these were they were busy in 2025, right. Agricultural Water Optimization Amendments expands their funding for research in drought-resistant crops, water-saving technologies, more grants and the pilot programs are showing a 30% reduction in water. So when you look at the compounded sum of all of this legislation, you can see dramatic improvements statewide on efficiencies, right.
Speaker 2:Right and I was going to say and it's a place where you and I occasionally geek out about because we see the possibilities of what we're doing and all the opportunities for improvement but also to optimize systems that really haven't been optimized before, to use waste heat in order to do certain I mean to do all kinds of things and and especially in the water space. So I mean I think you and I really get excited about bringing those, uh, those kinds of improvements and technologies into our, into our development.
Speaker 1:Well, Dave, you've talked about you've mentioned a couple of times how farmers have a tough time justifying on the bottom line, putting a new multi-million dollar system in.
Speaker 1:So one of the exciting things for me about Valley Forge is we've got a revenue model that's centered on power and data with some manufacturing, but it also has that agricultural modernization focus and we can model in some systems, and so it's really exciting to take this to the next level.
Speaker 1:This will be showing up in future legislation and in a water policy, water management plan that we're developing at Valley Forge. That includes things like aquifer reinjection systems. You know where, if you know, we're in a valley where the aquifer has been over pumped by almost 60%, and so how great would it be to create new policies if, if everyone could have a system that would reinject the aquifer and we could build a storage or a surplus up. There's other technologies around water harvesting of stormwater and rain technologies around water harvesting of stormwater and rainwater runoff, and then there's water recycling technologies that we really like. So there's three distinct other additional measures, maybe more costly measures, but we could take the water efficiency conversation a lot further, and I'm really excited to pioneer a lot of that with the Valley Forge water management plan and hopefully impacting policies statewide with it.
Speaker 2:Absolutely, and I think it's one of the reasons for me. I mean, there are many reasons, but it's definitely one of the reasons that I've been so excited to work with a company like Gensler, because they you know, these are the best of the best, biggest architecture firm in the world.
Speaker 2:They've seen everything, they've developed in places where water's far more scarce than even here in Utah, and so they are seeing the best of breed in technologies as far as you know, these spaces are concerned and water conservation, and so I think it just adds and that's been one of the things, because they are coming to the table saying, well, we could do this, we could do this, we could do this. There exists this technology over here because they really do sit in that pole position where they can see what's going on in the entire world.
Speaker 1:That's right. That's right. And this brings us to our fourth category, fourth and final category, which is land use and municipal government. This is also really important to us and what we're doing as developers. We already touched on the 2019 PID Act and so we won't spend time, but that falls into this category.
Speaker 2:Go back and listen to what you said earlier. It was amazing.
Speaker 1:If you want the A to Z on what a PID one, Dave, because this is municipal incorporation amendments and it enables new municipalities to form under the incorporation process as a preliminary municipality, and I'm just going to leave it at that. That's a dynamic new thing. That was a 2024 piece of legislation. There's only been four applicants in the state of Utah and we'll see how that plays out in the coming year.
Speaker 2:We'll see how it evolves and I mean it's exciting and I think it's giving recognition to say, look, we need to help, we need to pass something that helps enable projects that grow well beyond a big project or a project to a more comprehensive thing to maybe take some of the onus on themselves and do this. And so, as you see, there's been four that have applied so far and we will see.
Speaker 1:That's right In 2020.
Speaker 2:Go ahead, well, go ahead. I was going to say, I'll tell you SB 132. Yeah, you got it in 2020. Go ahead, well, go ahead. I was going to say I'll tell you SB 132, 2023. Public infrastructure district amendments. So the PID. It enhanced the flexibility for public infrastructure districts, pids, to issue bonds for energy, transportation and water projects. Over $500 million in PID bonds have been issued since 2023. So two years, half a billion dollars driving infrastructure growth. That's incredible.
Speaker 1:And one thing I didn't talk about with the original PID Act was it was designed to cover publicly used improvements and you'd imagine that could be a road, it could be a sidewalk, a street lamp. It's public appurtenances to a project. This amendment here, being the first big amendment to the act expanding it into energy, transportation and water, is a sonic boom on what PIDs can do, because now it's a much more comprehensive. Use. This paved the way for House Bill 350 this year. Use this paved the way for House Bill 350 this year. This year they expanded the PID authority again to finance district energy systems. So build a power plant. Pid could be used for that, such as microgrids, combined heat power facilities and reducing costs through innovative financing for these energy related projects.
Speaker 2:Uh, which, as we have talked about and we'll continue to talk about, is really important in attracting the right kind of capital. Uh, when you can start reducing costs and de-risking some of these projects in any way possible. Uh, they know that, they understand that and uh, it means that's 10 to 15% that you can put to other. You know, other put other things, and there's a lot of costs when you're, when you're, especially when you're dealing with an energy system or a microgrid or any of these things. These are substantial pieces of infrastructure and so very, very important piece of legislation.
Speaker 1:So a very, very important piece of legislation. Yeah, these can be hundreds and hundreds of millions of dollars. These type of systems Several of the systems that we're working on are multiple billion dollar systems, and so how do you finance that? Well, you really need all the tools you can get your hands on.
Speaker 2:Right, you need everybody at the table because it's and it's going to benefit everyone. And I think you know this year, you know the the. The next one is kind of an add on to that is we're talking about infrastructure and buildings and microgrids and all these things. Well, hb 502, energy Development Amendments that provided tax credits and grants for workforce housing near energy projects. So you do one, you've got to do the other. It's not enough just to say, hey, we're going to build these things. In order to actually build these substantial projects, you just can't import everybody. You're going to need to have some help setting up workforce housing and then also leading into just further development of wherever you are. So it you know, Governor Cox has a goal of you know, hoping that this then played into his goal of 35,000 starter homes, and that's how this is rolling out. Over 100 million in grants have already been allocated this year, enabling 5,000 affordable homes by mid-2025.
Speaker 2:And if you've lived in.
Speaker 1:Utah for a month, know, a month or years.
Speaker 1:You know we have a housing shortage and we uh close because we're past our usual time, but this is so important important that we covered each of these pieces.
Speaker 1:But I want to take the final couple minutes to close this out by just expressing how proud I am to be in Utah, to be a Utahan, to be born in Utah and to be a business owner in Utah, and how proud I am of our legislators, legislators, our senators, our reps, our governor.
Speaker 1:You know, politics has never been my jam and it's so. It's so divisive, you know, getting getting into, you know, the these, these party issues and as, particularly over the last five years, we've just it feels like, you know, the United States has gotten a little crazy, but it's so refreshing to see bipartisan, you know, across both aisles, working together to really improve Utah and really create an environment here in Utah where the biggest best businesses in the world would like to be Utah, where the biggest best businesses in the world would like to be, and I want to give them credit for that and I'm going to be sharing this episode with them to make sure that they hear and understand how grateful we are for all the work that they've done and continue to do, because we're definitely on the right track and we couldn't be doing what we do without them and we couldn't be doing what we do without them Absolutely, and I can't say it any better way Also is a lifelong Utah and a very proud Utah.
Speaker 2:It's it's, you know, despite what, you know all the issues that that politicians face, you know, whether it's national politicians, local politicians the one thing they are really working hard to get right, and to get right as unanimous as politicians can be, they're really trying to do the right things for the future of Utah in energy and infrastructure and water, all these things so that our community for the next hundred years is a community that we can all be proud of and continues to thrive, and it's not without its challenges, and so I applaud them for continuing to work on these things and to be part of that, to play some small role in that.
Speaker 1:Absolutely. These are not knee-jerk reactions. These are laws that are being passed with a serious level of foresight for future generations, and I hear them talk about that all the time. They're thinking about their kids and their grandkids and their grandkids and that level of commitment is so appreciated because we both have kids growing up here in Utah. So, you know, looking out for them, knowing that we've got folks looking out for them and their futures, is really, really important to me. Guys, thank you for listening. This has been a fun episode. Dave, thank you for teaming up and tag teaming this. This was an effort and research to get this all right and and, and you know, provide a comprehensive scope or perspective for you guys listening in, but hopefully you enjoyed it. You got enough out of this, so you'll join us on the next episode.
Speaker 2:Until next time on the Frontier Line.
