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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
Benj Becker- Piper Sandler Managing Director, Head of Utah Special District Group
Welcome back to the show. Friends. Dave, how are you doing today?
Speaker 2:Doing fantastic. Looking forward to this episode of the Frontier Line, I think you're always fantastic. I am. Anytime we get to come on here and just talk and talk about all the things we're interested in, it's a good day.
Speaker 1:Yeah, no, I agree, I agree, guys we're so excited about today. We've got a really special guest joining us for a fun interview. We've got Benj Becker joining us here from Salt Lake City, utah. He is with Piper Sandler and he's specifically the managing director and the head of their special district group at Piper Sandler, with over 20 years experience in real estate advisory, investment banking and public finance. So, benj, welcome to the show. I appreciate it. It's good to be here with you both. Yeah, absolutely.
Speaker 1:So we've gotten a chance to know Benj over the past few years, actually, because I think he and I first met maybe back in 2022. Around the time we started buying land in Millard County, utah. We knew pretty soon into that process that we wanted to create a PID because you know it was for me, it was my first kind of learning experience of the 2019 legislation the Public Infrastructure District Act here in Utah and I was really eager as a developer, you know, buying up that land to be able to leverage that amazing tool, and I know that's just one tool of the things that we're going to get into all that. But, benj, do you mind just giving the listeners a perspective, a little bit of history about yourself, education career and what has led you, through your finance career, to be running Piper Sandler right now with Special Districts.
Speaker 3:Yeah, absolutely. I appreciate again the opportunity to talk with you guys today. For sure, I'm originally a Utah native, born and raised for at least my first 20 years in Utah. I went to school at Brigham Young University, studied both math and English, moved to the San Francisco Bay Area and worked for about 11, 12 years there for a real estate advisory group, helping portfolios and banks and real estate investment trusts understand what to do next with their real estate assets, which was a great fun time to be in San Francisco going through multiple different market cycles. Um took a little entrepreneurial foray into Eastern Europe for a few years with my young family and we opened up commercial laundromats in uh Ukraine and uh Poland, which was kind of a unique um time to be in Ukraine and um, obviously it's a unique country right now.
Speaker 3:Yeah and uh moved back to Utah while still operating that and on the side continued doing some of the real estate advisory consulting work I was doing in the Bay Area but did it here in Utah, started doing a fair amount of it with Zions Bank and then ultimately went full-time at Zions Bank and their municipal consulting public finance group. Really enjoyed making relationships in that job throughout the state. That was a lot more municipal focused and meeting some great developers, city, county people and around the same time, piper Sandler was writing the legislation for public infrastructure districts and began to meet the public or, excuse me, the Piper Sandler was writing the legislation for public infrastructure districts and began to meet the public or, excuse me, the Piper Sandler team and ultimately felt like this was a great opportunity to help grow a team in Utah using this new tool. Since then, additional tools have been added on to the public infrastructure district tool. But yeah, I've been with Piper Sandler now for several years right here in downtown Salt Lake and absolutely loving it.
Speaker 1:Thanks for that, benj. I didn't know about the laundromats in Ukraine, yeah, Do you speak Russian.
Speaker 3:Well done, excellent.
Speaker 1:You always have to try. If run into a fellow fellow Russian speaker, you know we got to. We got to practice a little yeah.
Speaker 3:My. I spoke Ukrainian, which is a little different than Russian, but very, very similar. You know same Cyrillic alphabet, but I'm impressed with your Russian there.
Speaker 1:Well, we're so excited about this, benj, because public infrastructure districts are something we've talked about often on the show. We're now in season two, we're headlong into season two, but I think we've been talking about the tools and the benefits for developers from almost day one for the frontier line, from almost day one for, you know, the frontier line, and I've given some pretty detailed explanations as I understand public infrastructure districts. But it's going to be exciting to dive into this with you. You know, knowing that Piper Sandler really wrote that legislation and really influenced that, you know, becoming law, what an incredible, incredible impact that's made on Utah's economic development landscape.
Speaker 3:So yeah, absolutely. I mean it has been a pretty transformative tool, slowly gaining traction. So I'm glad that you keep talking about it because it's now really picking up and appreciate you know, developers like you who saw the vision early on, that's for sure.
Speaker 1:Absolutely so. There's a, Dave, I'm going to let you get to a question here. Let me, let me you're all good.
Speaker 2:You're all good, keep going.
Speaker 1:There's a couple of big PIDs. There's a couple of big public infrastructure districts that that I just wanted to let Ben talk to our listeners about. One of those was the Inland Port Authority's PID I think it was a $150 million bond package, and then, more recently than that, was the Extel Mida Mayflower, I think a $260 million bond package. Can you just tell us a little bit about those being? I think those are the biggest in Utah that I'm aware of.
Speaker 3:Yeah, you know, we just had another $250 million one a couple weeks ago, so I'll talk about that as well. That's the point of the mountain. Oh, okay, awesome, that's hot off the press. Yeah, the Utah Inland Port was really a critical initial one, in that it was taking tax increment money that was already flowing from people paying property taxes and saying, instead of having receiving this money over the next 30 years, let's monetize it, let's use it today to put in the infrastructure that we need to continue to drive the growth of this area. And so it was really the jumpstart for the inland port in saying we could use some significant infrastructure upgrades, some capital, in order to do the projects we want to do. So that bond was issued at the end of 2021.
Speaker 3:I think really a great look for Utah and that it was very well received by bond buyers. This was national money that a lot of it had not yet invested anything in. Utah was now saying, wait a minute, you've got 15,000 acres of this dedicated industrial area that's intended to be for manufacturing, logistics, distribution growth. You know, a stone's throw away from a newly completed airport, not far from a downtown district. You're telling me that there is tax increment for the next 40 years off of these 15,000 acres that can be used to support growth in this area and bond buyers really loved it Great. You know it was a great market at the time 2021. This is when there was, you know, very low rates. You know money had been printed for quite some time there because of the pandemic and so that was a pretty transformative initial public infrastructure district for Maida, which was down up in Deer Valley, the east side of Deer Valley. We now call that Deer Valley East. This is a remarkably transformative development and that is a new ski resort, which is rare, for new ski resorts have the military component focused, which allows for military members to have discounts at the hotel there and other programs, which is absolutely fantastic. I think our team felt like if we wanted to get behind a great cause there's not a better cause to get behind than, you know supporting men and women who are either current or active or past military.
Speaker 3:Absolutely, that bond was a combination of a variety of revenue sources, including hotel revenues. These are all future revenues because none of these developments had actually gone vertical yet, but hotel revenues, sales tax, property tax, from a pretty ambitious development plan for MITA. That was done in August of 2021. Right before we went to market with that, we brought about 50 bond buyers. These are buyers who represent significant mutual funds, institutional buyers. We brought them to utah to see the project. They were pretty blown away with how close it is to uh, salt lake city, how easy it is to access that mountain uh right from the airport. Essentially, I mean, you're, you're, you get on almost one freeway and, yeah, uh, you're right there at the base of the resort. That was a very well-received bond. Since that bond so that was a $265 million initial senior bond We've since issued an additional $300 million in subordinate funds. Wow, because the project has done so well and the assessed values have come in higher than originally anticipated and the project continues to grow. There was additional revenues that were available to monetize, so that bond was done at the $300 million. Bond was done at the end of 2024. So a lot of capital being put into that MITRE project.
Speaker 3:The one I mentioned this more recently was the Point of the Mountain project, which I think any of your Utah listeners will be very familiar with. The location that is right at the nexus of Utah County and Salt Lake County. It's where our former prison was Not a great site for a prison. I'm sure it was 80 plus years ago when they put it there, as was Sugar House Park, you know for that. I'm sure it was 80 plus years ago when they put it there, as was Sugar House Park.
Speaker 2:You know for that. I mean, that's where the old prison was. It was Sugar House Park. So there you go, I don't know, if you do that.
Speaker 3:I did not know that.
Speaker 2:Yeah, sugar House Park was the location of the old prison, and then they moved it out at the point of the mountain, which was way in the middle of nowhere back then, sure.
Speaker 3:And now it's right in the middle of all the growth you have the silicon slopes kind of pushing northward up through Utah County and into Draper and Sandy, so really hitting that area. The prison, as you know, has now been moved to up by the airport. It probably makes for easier escape routes I guess I don't know why it's by theford but obviously has really all the infrastructure that was necessary to put in the prison really helped the Utah Inland Port with a lot of infrastructure they needed for that northwest quadrant. The Point of the Mountain project is pretty substantial, roughly 600 plus acres. This first bond issuance that we did really focuses on 36 acres and it's the key 36 sort of downtown acres of it, the higher density. It will include a vent venue, a 5,000 seat theater that will have all sorts of programming associated with it. It has a great promenade, river to range, trails and open space, some planned office headquarter uses as well as residential.
Speaker 3:It was a very unique deal in that we took a lot of different revenue sources and pledged to these bonds. So we took the property tax increment that the state was providing for the proposed off of the proposed growth. We also took this. The state was sharing a portion of their sales tax the state gets, then we put on this is the new feature in Utah we put on a new sales tax just specific to that area. If you go to that area there's an additional 2% sales tax or a fee. It's something similar that you would see if you went to a downtown district in another state, or almost like a Disneyland. You go to a destination location. Sometimes you're paying an additional amount for a special type district, so that was a fee that's associated there as well.
Speaker 3:As we took the proposed parking revenues off of about a thirty three hundred space parking garage system and then some of the net revenues off of the event venue. So you can see there's multiple different revenue sources that you know. The developers here said we have, we've got this program. We've gone through all the planning and zoning. We know what this is going to look like. We've got significant infrastructure needs here. Let's use some of these proposed revenues into a bond and definitely a lengthy process working that through with the Point of the Mountain Authority and through the state, but very well received by bondholders. This just closed in July. Wow, and it's really a pretty substantial one for Utah in that it is right there middle of the Wasatch Front. Oh yeah, pretty significant revenues, so good ones.
Speaker 2:Are we just at the beginning, meaning like I mean, these are significant right now. Can you seeing into the future? Is you know more infrastructures built, massive infrastructure projects and energy and things? Do you see that you know these $200 and $300 million numbers being actually small in comparison to what you think could come in the future?
Speaker 3:I don't know that they'll be small. I think that you'll just see more transactions overall. That they'll be small. I think that you'll just see more transactions overall. We, you know, 2021 was really kind of the first year for some of these major transactions, and then 2022, 2023, the market really was in a tricky spot with, you know, increasing rates and there weren't the significant size of transactions but just the overall volume now of transactions is notably more.
Speaker 3:Cities are becoming more comfortable with them. The state has approved more authorities. You've got now. You know, 10 years ago you didn't have any of these. Now you have. Well, I guess you had MITA, but MITA has expanded. Inland Port has expanded Point of the Mountain, the Power District. You have more of these authorities that have capacity to create and issue their own kids.
Speaker 3:I think that as cities are starting to understand wow, other cities are getting infrastructure because they're using this tool, or cities are getting some great parks and amenities they're starting to become more open to it. You know, initially a lot of cities were very against it. They felt like, wait a minute, this sounds like an incentive to development. Why are we trying to encourage development when it's already occurring in Utah at a pretty rapid pace. But that's a really myopic viewpoint, right? Yeah, absolutely. You know you should encourage better development or encourage development in the right way. No-transcript individual deal size. At some point there becomes almost a breaking point of how much you can really squeeze into a district before it gets. You know, the bond gets a little bit clunky and you need to do it in separate issuances. I mean, you've got some rules by IRS that you can really only issue what you can spend in a three year period. So some of those things you know cop some limitations.
Speaker 1:There's so many questions and so many distinctions. I mean this is one of my favorite subjects. The first distinction for the listeners. We've attempted to articulate it is the difference between a traditional municipal bond and the types of infrastructure bonds you're talking about in the public infrastructure district, and you could see how a city council might have take pause, you know, when they consider the city taking on debt and impacting the city's credit rating or profile with a traditional municipal structure. Can you give our listeners just a little distinction there?
Speaker 3:Absolutely. Yeah, typically, I mean bond buyers love tax exempt bonds because they're tax exempt from federal and state income taxes. But in order to qualify as tax exempt bonds, you need a tax exempt issuer and you usually need those the uses of the bonds to be for some tax exempt purposes, like public infrastructure. So, historically, in order to achieve that, you had to have a tax exempt issuer. Like public infrastructure. So, historically, in order to achieve that, you had to have a tax exempt issuer. Like a city, go ahead and issue bonds.
Speaker 3:But the city only has so much lending capacity or issuing capacity and it impacts their credit rating. And cities are, you know, certainly want the highest possible credit rating, like we all want a higher credit score because it cheapens credit for us right, cities want the lowest possible interest rate, which requires a higher credit rating or better credit rating. So they are limited or sometimes lack the desires to go ahead and issue bonds, particularly if they think it's for a private development. Well, the PIDs allow for the creation. The PID is essentially a creation of a separate jurisdictional governmental entity that allows, in the place of a city, to issue tax exempt bonds. That allows for these bonds to be issued without any impact to the city, no fallback to the city, no impact on their balance sheet. So you know, whatever you call it, you want to call it your Valley Forge Public Infrastructure District. You issue bonds that has no impact on the county, on the city, which is great for these cities because, at the end of the day, they're still getting public infrastructure Right, but it's not on their book.
Speaker 2:Yeah it's incredible and to your point. It's one thing in, I guess, major metropolitan areas, where some infrastructure development is always going on. It's an entirely different thing when you're talking about funding something that is a very substantial cost, usually to an area where you might only have a couple 3,000 residents, correct?
Speaker 3:Absolutely Yep Correct.
Speaker 1:Yeah, that's a great point too, dave. You know, ben, you mentioned this notion of developing better and I really like that because I understand how the PID works and I understand that if I've got access to really low interest debt and it's non-recourse and it acts like equity, as a developer I can equate that into enhancing the quality of my project. I can look at that and say, man, if this is for public use, I could put in a park, I could put in some amenities that are higher quality amenities than I would do if I had to privately fund this on my own or get bank financing. Can you tell a little bit about your experience and seeing that aspect of it in play, getting a better project out of it as a result of this tool?
Speaker 3:Yeah, boy, I really wish that people understood it in that same way. That's the story that we try to tell is that if a developer goes out and raises money to put in horizontal infrastructure, that's expensive money that might cost them 18, 20% or whatever it might be. It costs them 18, 20% or whatever it might be. And a developer only has so many ways in which they can control cost on a development. They can either create an inferior product, which nobody wants. No city wants that, no developer wants that. They can cut out the amenities, which, again, they don't want. To do that. There's only so much you can do about construction costs and labor costs, material costs or even land costs. The one element that we can control to some degree here in Utah is some of the financing, particularly on the public infrastructure, because of this tool. So if we're able to now say, hey, this money now, instead of costing me 18%, is going to cost me 6%, that's a significant savings. And you're seeing this happen, where now developers are saying, okay, this pencil is a whole lot better. Now I can put all the amenities up in the initial phase, as opposed to waiting to sell out phase three before I can begin phase four or it might be. We can upsize now our utilities so that future developments uh, you know are are easier for us to build. You're not going in and replacing the eight inch line with a 12 inch line, cause you can. You can put the 12 inch line in initially.
Speaker 3:Um, we saw this in Heber with the Jordan L Ridge project where it's planned for about 5,500 homes in the first phase of the PID. The first PID was for about 1,100 homes. The city really wanted a regional park but it didn't have the funding for that in its capital kind of facilities planning for about 10 years. Well, they said to the developer great, we'd love to give you a PID. We recognize you have some significant infrastructure costs here. We'd also like to see a regional park and that made sense to the developer because it'd be an amenity that they thought would attract homebuyers and increase the value of their property.
Speaker 1:Absolutely. Yeah, I'd love to see that in motion.
Speaker 3:Yeah, they put in the park the residents of the rest of the town. It's a win-win for them. There's no increased taxes to them, they get access to a park. It's allowing growth to pay for growth. That's so when you're frustrated with all of the people moving in from California into your town or wherever they're moving in from, they're the ones who are paying for that new infrastructure, that new park, that new amenity. So that's where developers are starting to say great, I think we can expedite our construction, we can do a little better planning here and that, truthfully, a little bit of the purpose of the tool from the beginning. As the legislature said, we have too much piecemeal development in utah. Yeah, we're getting 50 acres that's taken from a farmer or bought from a farmer, and then that's built, and then another 50 acres comes in and the only difference between the two is the color of the stucco.
Speaker 3:Yeah, right yeah, no, connect parks or trails or even even systematic like transportation or or anything like that. And they said, well, why can't we get more master plan developments? And really the answer was that's expensive, that's difficult for up front to right side the utilities and infrastructure.
Speaker 1:We need some sort of tool for that and that's partially the reason of the pit infrastructure and we need some sort of tool for that, and that's partially the reason of the PID. Thank you for that thought and that's the way we see it. And it's exciting because we you know I got really excited of the 2019 vintage of of you know the capabilities of the PID, but it's been fun to see 2024 and even 2025, some really exciting expanded uses, expanded tools in the toolbox now extending into energy and infrastructure. Also being considered, as you know, qualified appurtenances that could be paid for with these bonds. Can you talk to us about some of these most recent enhancements?
Speaker 3:Yeah, certainly you talk to us about some of these most recent enhancements. Yeah, certainly. Initially the legislation was a little less broad than it is now. I think each year the bill keeps getting changed to allow for additional types of infrastructure and growth. That way Now we've added in private utilities such as gas and electricity when you're from a private provider, which is great because that's a significant development cost for most developers and previously that had not been allowed because they're private utility providers.
Speaker 3:But now the definition of public use has been expanded a little bit to say these have a public purpose, they're serving multiple homes and businesses and things like that. We've also seen it expand into more parking garages, parks and amenities. Now we're seeing PIDs be the owner of some of those improvements. So, like a parking garage, now you have the PID become the ownership of it. So you have a local essentially government that you've created become the owner of the parking garage. That kind of allows you to make all of the tax exempt qualifications that are necessary. So certainly there's an expansion there of what's being used and developers are getting very creative on where they use the SAC exam dollars and that's certainly expanding over the last couple of years. Boy, that's exciting.
Speaker 2:You know, I know other stations of this and I think they were ahead of us. They were called something else, but they were ahead of us in doing essentially creating these areas. In your experience, what have you looked at? We can graph this a better way to make these effective for everybody and to mitigate any of the concerns that have come up.
Speaker 3:Yeah. So you know, in all, really all this, a lot of states have a variety of different public finance tools. You have these Melrose districts in California, you've got community infrastructure districts in Idaho and metropolitan or metro districts in Colorado. Utah was smarter than saying let's take what's worked well in each of those states and let's just make the best possible tool well in each of those states and let's just make the best possible tool. We still have some revisions that I think will help it. But you know, you have some things in, like California, where the Belarus districts allow for early infrastructure funding, but it's also very city driven and that becomes bureaucratic, right, you start getting a new government entity that is run by the government as opposed to by private developers and you run into a few more restrictions there. The same thing Idaho there are a few more restrictions there.
Speaker 3:Utah has done a great job of saying we want the cities to be able to have a say in what's happening in their city, but once they've approved, really like the, the sandbox or the, the, the parameters here, the, the, the guidelines and the guardrails of the district then we want the private market to be able to use it, uh, how they see best fit.
Speaker 3:Obviously everything, everything is very regulated. But allow developers to do what they do within the confines of what the city has set up. But don't continue to let the city run and operate these districts. It's a burden to the city and it's also a burden to the development. That way that has been great in Utah's there is more essentially freedom. That way the creation of authorities also in Utah is pretty unique. These districts that the state says we really want to incentivize the right type of growth and economic development in these areas and we think we have unique properties in Inland Port and the Power District and the Point of the Mountain and Mida that we want to be able to put the right type of incentive. That because we we think there's a significant economic benefit to the state that's been transformational for Utah and I think we may see maybe not as many authorities formed in the future but I think um, you'll still see some continued growth there and that's a real benefit to use.
Speaker 2:Uh well, and they often get layered. I mean so the pids often get layered in with some of these other. I mean, you've got the authorities but like, for example, like, uh, an energy district or opportunity zone, or you know, uh, I guess right, or even redevelopment areas, absolutely. Pids get used as an additional tool in this major sandbox. So it's not just one or the other, it's, it's, it's a, it's its own tool. It gets to get used alongside these other tools that have been so beneficial, correct.
Speaker 3:Exactly, yep and the and the great, really transformative projects are managed to layer on multiple of these different economic tools, whether it's an RDA, or we call them a CRA, or tax income and financing, whether they have sharing in some type of sales tax or hotel tax and then a PID if you're putting assessments on or a mill levy. Lots of different options there and yes, you can certainly layer on multiple approaches. The opportunity zone, another great one, just another benefit for developers.
Speaker 1:So great, here's an interesting.
Speaker 2:Well, go ahead, I was gonna say, wayne, you you talk about mill levies a lot. Yeah, we've talked about it, actually, in previous episodes. You just kind of can you for for the listeners, benj, give an idea of like what a mill levy is and what it does? I mean, I know Wayne's explained it really well, but I'd love to hear from somebody who's kind of like in the middle of it all the time.
Speaker 3:Yeah, it simply gets a tax rate. When you pay your property taxes along the Wasatch Front on your home, you're paying anywhere between $. You come on the watch that you're in between eight and 13 mils and so, like, 10 mils is 1%. 1% of your assessed value is what you would pay in property taxes if you live in certain areas. So when we talk about adding on a mill levy, we're saying all right, currently this area has nine mils. We're going to add two mils, or 0.002 is a separate line item on your tax bill. So you're paying for your county, your city, your school district, maybe there's a water and sewer district and now a public infrastructure district. The combination of all that is what you pay for your property taxes. So a mill levy is purely just a tax rate, that is, you know, put under the assessed value of the property.
Speaker 1:Thank you for that.
Speaker 1:That was a much better explanation than the one I gave, much more concise. So, ben, to shift gears here and have some real life application. If I could just quiz you a little bit on, you know Valley Forge, like I started the show off with. You know, when we started buying land at Valley Forge it was just a few hundred acres and we had this you know industrial park idea and it was really kind of isolated to that limited plan. Now, you know, fast forward, you know, four, almost five years later it's expanded into several thousand acres and it's got multiple kind of zones and areas of, you know, power generation and data and residential and commercial and all of these different varieties of development. No-transcript, is that a fair?
Speaker 3:assessment. Yeah, that's a great assessment. I mean, I think you're taking all the I don't know if synergies is the right word, but all these different uses to create this larger vision that's ultimately going to be. This sounds like its own essential ecosystem, and you're using a tool that is very flexible, very dynamic, to help support that. I think you're exactly spot on there.
Speaker 1:Here's an interesting curveball. So if you had a municipality, well, maybe I won't even go down that rabbit hole. From a perspective of energy, you touched on how the expanded uses of the PID can cover a private power generator. So let's talk about that for a second. If we were building a natural gas plant and the cost of that plant was $2 billion let's say it's a large plant $2 billion cost just how much of the total development cost of a plant like that could be bonded through this structure.
Speaker 3:Yeah, it's really going to just be limited by the revenue that you have associated to repay back those bonds. Okay, so you could? You know, if the cost of the power plant structure is $2 billion, technically, you could raise and use $2 billion in net proceeds to pay for that. So that's the first question Could you fund that all through a tax-exempt bond? The most likely answer is yes. The second question is is there sufficient revenue to support the debt service that would be required for a $2 billion bond? Wow, okay, my guess is that yes.
Speaker 3:If you're putting in a $2 billion power plant, you've obviously done some research to say it's going to generate this amount in revenue. And I think you know, without getting too far over my skis, that you're going to see a power generation plant on a much smaller scale that we're going to fund here shortly, just outside of Salt Lake County. Awesome, it's going to help service some data centers and it'll be funded by a portion of the revenues that are associated with selling the electricity. Yeah, and it's be funded by a portion of the revenues that are associated with selling the electricity.
Speaker 3:Yeah and um it's. You know it's pretty exciting and that it's a tax exempt use because that electricity will be used by multiple different users. Right, uh, multiple different people will be paying those electric, electrical rates. So it becomes kind of this generally applicable tax that's associated with the power plant and that helps keep it within the tax exempt realm. And you're going to see, actually several of these come here in the near term as people are trying to take advantage of how we fund data centers and their electrical needs.
Speaker 1:Data centers and their electrical needs and there's a lot of, as you know, probably best there's a lot of change in Utah in terms of energy production and how the state's looking at that. That's really exciting for us. I mean, that's one of the major elements of the evolution of Valley Forge is, you know, buying land and kind of initially leaning into municipal authorities suggesting that they could provide power and water, and then getting a few years down the road and recognizing they couldn't provide the power and water and I was kind of saying, okay, I guess we're gonna have to do it on our own. We're gonna have to build our own power generation, we're gonna have to find our own water resources and that comes at a significantly. I mean that that made the the whole cost of the project. You know, the 10x 100 I mean I won't even throw numbers out but a an extremely, a high increase of the overall project cost. And even talking water distribution, you know, just having to put in all the pipe and sewer to support something on our own really, really changed the dynamic here.
Speaker 1:So this is very exciting and I would imagine that with the new 2025 enhancements, then this could also probably apply to transmission and distribution lines. On the power, exactly, yep, correct, Wow. Can you give any insight on how, from a federal and state level collaborative and finance. Let's let's say that we were putting in a big transmission line and obviously we've seen you know the current administration and the new executive orders supporting you know the the streamlining orders supporting you know streamlining, permitting providing federal level financial supports, grants, loans, things like that. How do you see the pairing of federal and state incentives or financing to be leveraged with these bonds, incentives or financing to be leveraged with these bonds.
Speaker 3:Yeah, I think it's pretty critical, particularly on the energy creation and distribution.
Speaker 3:We saw a really critical part of the point of the mountain even though that's not necessarily energy was that the state has already committed about $615 million in various forms for infrastructure for the Point of the Mountain project.
Speaker 3:That was really a key part for bondholders to get behind the project, knowing that there's a billion plus dollars in needs and infrastructure costs and that the state is becoming an active participant in that. I think, as you see, from the federal level or the state level, participate more in either funding measures or grants, whatever it might be, for some of these projects. All that really does is just enhance the credit and the likelihood of success of these projects and that is going to drive down your interest rate. Drive up interest excuse me, drive up, you know, interest, not in a rate perspective but in a you know people being interested in the bonds. Yeah, and that's a great thing. That's the way of the state and the Fed not necessarily backing the bonds by putting their full faith and credit behind it, but by showing a level of support by saying we agree with this project, we believe in it, that's why we're approving a grant or putting some other money behind this, so that's pretty important.
Speaker 2:We see it that way too. Absolutely, yeah, if you could wave a wand. I mean, what do you see needs to happen? Still, I know you said that there are some changes and things. Do we still need to move things forward and there still needs to be some additional adjustments made to what the infrastructure we have? Let's just say, in Utah, what's a wish list for Bench and for Piper Sandler and kind of how you guys address this?
Speaker 3:Right now we don't have the option to let PIDs pay for operations and maintenance of the improvements that they put in. And so you're still putting a little bit of a burden on some cities and you say, great, we're going to install a new water tank and we're going to put in this park, but, by the way, statutorily the PID cannot pay for annual operations and maintenance of that. That's tough on some cities who feel that they're already financially strapped to say, well, we're not sure we can handle a whole new park. And it's also tough from a developer because you say, well, we're going to build this beautiful park and then we're going to turn it over to the city for their operations and maintenance. And that's a level of operations and maintenance that we think is less than what we want. And so there are some workarounds. But statutorily it would be great to be able to say a portion of the proceeds or a separate mill levy essentially and it could be capped at a pretty low level would just be for operations and maintenance, very similar to like how an HOA would work. That would certainly be beneficial.
Speaker 3:I don't think in Utah we've cracked the code yet on understanding how valuable these PIDs whether it's through assessments or the limited tax bonds can be for more attainable housing. And how is it that we are where we still get a lot of pushback from cities to say I don't think this is doing anything to decrease the cost of housing. Tuesday I don't think this is doing anything to decrease the cost of housing, and I think there's some work that we can do on what is allowed to be if it's affordable housing and if it's federally designated affordable housing. I think there should be an opportunity there for some of the vertical construction to be financed through tax exempt bonds. I think there's probably some creativity there with some of our bill language that that would then help incentivize developers to say great, we can get behind more affordable housing beyond the typical low income housing tax credits, things like that, because we can now fund some of the vertical construction for affordable housing. So I think that's probably a little bit of a wish list. Yeah, those are probably two.
Speaker 2:Well it's a really awesome answer, I agree. Do you wish the other side or the people in opposition to these or that don't understand these? What do you wish that they understood? Maybe you know what's the largest misunderstanding of these that you run across. Here's a simple explanation of why maybe you have your understanding this the wrong way, and here's a different way to look at it.
Speaker 3:Yeah, I, there are a lot of cities who say, you know I think I brought this up a little bit earlier like, hey, we already have growth, we don't need more growth and we don't need growth to happen. And that's such a short-sighted viewpoint, right? I mean, people are going to always want to come to Utah because, my goodness, the mountains are beautiful, recreation's remarkable, my goodness, the mountains are beautiful, recreation's remarkable. It is a state that you know, families love to, for the most part, continue to come back to, and so we've got to adopt, at some point, this idea of all right, we're going to grow Utah, we're not getting rid of the mountains, we're not getting rid of all the natural features that bring people to Utah. So we've got to figure out how we grow in a smart sort of responsible way. And that doesn't mean cutting off development.
Speaker 3:And we're at a 35,000 home shortage right now because we've taken this mantra of I've already done my part on housing, let them move elsewhere. Well, all that does is perpetuate transportation problems and infrastructure problems, all that perpetuate transportation problems and infrastructure problems. So I'd love for the opposition, which is primarily cities, right now to realize that there is a smart way to use this tool to not put an additional burden on cities, to create smart growth, to incentivize better amenities Like why don't we increase quality of living and do it at a low cost of capital, so that we're not exponentially increasing housing prices for the next several years? So I guess that's probably my approach to the side that opposes these bids. I think that's phenomenal, love it.
Speaker 1:Thank you for sharing.
Speaker 3:That's a phenomenal, love it.
Speaker 2:Thank you for sharing.
Speaker 1:That's a phenomenal final thought, benj. We're coming up on the top of the hour and you've been amazing. That final thought and I think you hit the nail on the head. And how can we make Utah communities better, how can we improve the quality of living in Utah? And this is a tool as a developer. In my humble opinion, I feel like it's one of the best tools we have in Utah to ensure that everything we're building is not just repeating kind of rinse and repeat old ways of doing things. It's new, it's fresh, it affords us the opportunity to do things better, literally better than we've done them in the past. And so with that, let's go ahead and wrap this up. Thank you so much for joining us today, benj. This has been so insightful.
Speaker 2:Yeah, absolutely.
Speaker 1:Okay, well, we'll look forward to continue collaborating with you, benj, on Valley Forge and, for our listeners, we hope you join us next time on the Frontier Line.
