4-Attachment B Scope of Work.pdf

Attachment B Scope of Work

Independent Consultant for Regionally Significant Development Zone Evaluation

1. Objective and Overview.

The primary objective of this contract is to assist the office in evaluating proposals for the creation of Regionally Significant Development Zones (RSDZ) under Utah Code Title 63N Chapter 3a. The independent consultant will provide expertise in analyzing economic development opportunities and managing increment financing to support the office's duties in coordinating regional economic development activity.

Research will include a description of the planned development, an objective market analysis, an evaluation of the application, and an opinion on the amount of public financing reasonably determined to be necessary. To be successful, the studies should be as thorough as possible while not exceeding $20,000 per application. The study should also be nonpartisan, with opinions supported by quantitative data.

Applications will be given to the contracted vendor as they are received by the Governor’s Office of Economic Development (GOED). Each study should be complete 45 days after the application is received by the research organization, with at least one verbal or written update midway through the project.

This research will be critical in determining whether, and to what extent, a RSDZ zone should be established.

2. Background information.

The State Coordination of Regional and Local Economic Development Projects Amendments (H.B. 507), adopted during the 2026 General Legislative Session, allows a municipality or county to propose a Regionally Significant Development Zone (RSDZ).

RSDZs are development tools available to the creating entity and allow for incremental tax revenue growth to be captured over a designated period of time in order to support enhanced development costs associated with mixed-use, high- or mid-density, multi-family housing developments, with affordable housing options and opportunities for home ownership or other economic development opportunities.

A creating entity (applicant) may propose one of the following:

● Transit-Oriented RSDZ - Section 301

● First Home Village RSDZ - Section 302

● Economic Development Opportunity RSDZ - Section 303

If the Economic Development Opportunity RSDZ involves a large load of customers or a qualifying data center, the proposal must also comply with Part 4 Regionally Significant Zones with Energy Implications.

3. Vendor Qualifications.

The vendor must possess demonstrated expertise in analyzing economic and community development opportunities and managing increment financing. The study should also be nonpartisan, with opinions supported by quantitative data.

A. Mandatory Technical Expertise

● Real Estate Finance & Development Audit: Proven track record in auditing complex commercial, residential, and mixed-use pro formas, debt/equity structures, and capital stacks.

● Municipal Economics & Tax Increment Financing: Direct experience in evaluating tax increment captures mechanisms, public subsidy necessity (but-for" testing), and municipal debt capacity.

● Urban Planning & Policy Alignment: Demonstrated capacity to evaluate spatial layout, transit integration, and statutory compliance with state and local economic development frameworks.

B. Conflict of Interest:

The independent consultant is strictly prohibited from advising the creating entity (the municipality or county proposing the zone) or any party with a financial stake in the proposed regionally significant development zone.

4. Scope of Services.

It is critical that Utah uses the RSDZ tools armed with the best information available. The state needs independent analyses that consider the details of development proposals and, within the framework of the goals of RSDZ, including the specified requirements for each zone type (Transit-Oriented, First Home Village, and Economic Development Opportunity), and the market factors, produce professional opinions on the adequacy of the development.

The contracted vendor will be on retainer so that it can work with as needed for future RSDZ zoning analyses. GOED expects to have 1-5 RSDZ applications per year that will each need an individual study completed.

Vendors must perform an exhaustive forensic audit of the applicant’s financial projections to verify that public assistance is necessary, appropriate, and sized correctly.

A. Financial and Tax Evaluation

● Pro Forma Analysis: Evaluate the pro forma analysis submitted with the proposal to verify the data showing the cost difference between feasible development without the zone and the proposed development utilizing RSDZ revenue. Verify "but-for" cost gaps, ensuring public subsidy requests directly offset documented, verified extraordinary costs rather than standard developer overhead or inflated profit margins.

● Cost Prohibitive Assessment: Analyze the development impediments and market conditions described in the proposal to confirm whether the development would be cost-prohibitive, absent the financial incentives.

● Validation of Market Conditions: Audit all baseline underwriting assumptions against local market benchmarks. Assess market feasibility to confirm that proposed rent/price points are realistic given submarket demographics and absorption rates.

● Tax Increment Capture Analysis: Conduct stress-testing and sensitivity analysis on tax increment revenue projections under conservative, base, and aggressive growth scenarios. Review proposed increment capture percentages, duration, and debt service coverage ratios to minimize exposure and risk to taxing entities.

B. Regional Impact Assessment

● Broad Regional Benefits: Assist the executive director in determining whether the proposal demonstrates broad regional benefits to the state and its residents, such as the provision of affordable housing, enhancement of statewide infrastructure, or contribution to economic resilience. See criteria considerations listed below.

● Resident and Existing Increment Impact: Evaluate the potential impact of the proposed increment financing on local residents and identify the impact on existing uses of increment financing in the proposed area.

● Jobs-Housing Balance: Assess how the residential density supports local employment nodes and whether unit sizing accommodates local workforce demographic. Assess whether the local community has the housing capacity for jobs being brought in through the proposed development.

C. Objective Verification by Zone Type.

The vendor will verify that proposals adequately address the statutory objectives and minimum requirements based on their specific classification:

● Transit-Oriented Development: Verify provisions outlined in 63N-3a-301 are met, including but not limited to higher utilization of public transit, improved air quality, water conservation, and mixed-use development. Confirm compliance with strict housing requirements, including the housing density and affordable housing.

● First Home Village: Verify provision outlined in 63N-3a-302 and that the proposal is anchored by mid-density residential and mixed residential-commercial uses promoting walkability. Confirm compliance with strict housing requirements, including the housing density, affordable housing, and home ownership.

● Economic Development Opportunity (ED Opportunity): Evaluate the likelihood that the project constitutes a significant capital investment. While no metric requirements are required, the office has a list of criteria that applicants will consider and include in the proposal. The criteria encompass the following areas of consideration: provision of Affordable Housing, enhancing statewide infrastructure, and contribution to economic resilience. See criteria considerations listed below.

○ ED Opportunity Zones with Energy Implications (Large Load Data Centers): If the zone proposes a large load data center, assess the existing electrical energy infrastructure and development plan (including anticipated improvements and projected economic benefits).

Confirm the proposed land is suitable based on access to electrical energy resources and adequate water supply.

D. Criteria Considerations for RSDZs:

Based on the statute for RSDZs, the following criteria are proposed to show if a project meets a broad regional benefit to the state of Utah and its residents. Consideration may include:

● Provision of Affordable Housing: A project demonstrates broad regional benefit through affordable housing by meeting defined metrics for housing accessibility and sustained commitment:

○ Quantity and Restriction: Does the project dedicate a percentage of all new residential units as long-term affordable housing?

○ Affordability Target: What is the threshold for the affordable units?

(e.g., 80% AMI or less, adjusted by household size).

○ Duration of Affordability: Do the affordable units include a guarantee for a period of time. (e.g., deed restriction or other legally enforceable agreements)

○ Regional Need: Is the project located in a region or county identified by a relevant state agency as having a critical shortage of affordable housing units?

● Enhancing Statewide Infrastructure: A project demonstrates broad regional benefit through infrastructure enhancements by extending or improving public assets that serve beyond immediate development:

○ External Service Area: Does infrastructure improvement enhance capacity or reliability for users outside the RSDZ project boundary, such as a major highway interchange, water treatment facility, or utility trunk line?

○ Transportation Impact: Does the project demonstrably reduce regional travel times (commute times), decrease congestion on key state or regional transportation corridors, or significantly expand public transit access.

○ Critical Utilities: Does the project provide substantial upgrades to critical utilities? (e.g., water, power, or high-speed fiber-optic broadband) that increase redundancy or capacity for multiple municipalities or a defined economic region of the state)

○ Investment Threshold: Does the project include investment in the region beyond the RSDZ project boundary? (e.g., percentage of the total development cost toward publicly owned or publicly accessible infrastructure improvements)

● Contributing to Economic Resilience: A project demonstrates broad regional benefit by strengthening the long-term, diverse economic health of the state:

○ New, High-Quality Jobs: Does the project create new, permanent, full-time jobs within a specified timeframe?

○ Above-Average Wages: Does the projected average wage of the new jobs created exceed the most recently published state or regional average wage by a set percentage?

○ Industry Diversification: Does the project primarily support industries identified by the state as strategic growth sectors or as necessary for diversifying the regional economy away from existing concentrations?

○ Community Revitalization & Amenities: Does the project foster economic and cultural growth, such as revitalizing the community's Main Street, enhancing cultural venues, or addressing local service gaps like grocery stores or childcare facilities to expand spending and quality of life?

○ Supply Chain Support: Does the project create a new supply chain that may attract additional businesses?

○ Net Fiscal Impact: Does the project show a positive projected net fiscal impact on state and local revenues in the long-term, accounting for increased public service costs?

○ Workforce Training: Does the project include a formal partnership with a regional higher education or technical college institution to develop a curriculum and provide training programs that specifically supply a workforce pipeline for the new jobs created?

5. Deliverables.

The vendors must synthesize their technical findings into a concise, professional written report. Deliverables must follow standard administrative structures to facilitate public review and authorization committee action.

Deliverables Framework

Deliverable Name Primary Focus Mandatory Content & Analysis

1. Factual Project Description

Baseline Summary Executive summary of project scope, square footage, unit mix, total capital investment, requested public assistance, and development timeline.

2. Financial Audit & Market Analysis

Pro Forma Evaluation Detailed audit of baseline developer assumptions, verification of cost differentials, market absorption rates, sensitivity testing, and incremental revenue capture schedules.

3. Statutory & Policy Impact Assessment

Compliance & Benefit Review

Scorecard assessing alignment with TOD/First Home Village/ED Opportunity standards, housing affordability duration, regional impact goals, and statutory economic policy mandates.

4. Executive Recommendation & Synthesis

Final Determination Formal technical recommendation (Approval, Modification, or Rejection) including proposed conditions of approval, developer callback provisions, and public benefit metrics.

Upon completion, the contracted vendor should send the study to the GOED. Within three business days of receipt, GOED will provide the completed study to the creating entity proposing the RSDZ zone. If the creating entity chooses to move forward with the proposal, or an amended version of the proposal, the study will also be given to the increment approval committee. The study will inform the committee’s decision on whether to approve or deny the RSDZ proposal.

The vendor will be invited to present the findings to the committee at the committee meeting, as they may be available.

6. Project Timeline.

After GOED receives an application to create an RSDZ zone, they will send details of the project to the contracted vendor.

After receiving the application, the vendor will have up to 10 days to disclose conflicts of interest.

GOED will then have up to 10 days to review the conflicts of interests. If it is determined that there is a conflict of interest that cannot be mitigated, GOED will pursue a different vendor for that application. If there is no conflict of interest, or if the vendor has a sufficient plan to mitigate any conflict of interest, then the GOED will send the full proposal to the contracted vendor.

The contracted entity will provide GOED with an update 3 weeks after the proposal is received.

The analysis should be completed within 45 calendar days after the proposal is sent to the independent contracted entity. If additional time is needed, an extension of 30 days may be granted by GOED.

The vendor will be invited to present the findings to the increment authorization committee at the committee meeting, as they may be available.

7. Project Budget.

The analysis by offeror is a fixed sum not to exceed $20,000 per engagement basis.

This is a per engagement cost maximum that cannot be exceeded. Nonetheless, should statute be revised to adjust this engagement maximum, GOED may subsequently revise this cap in the resulting contract accordingly.

GOED anticipates roughly 5 engagements to be completed per year under the resulting contract. This estimate of 5 engagements is not guaranteed.

During the resulting contract term GOED may award more than 5 engagements per year, depending on actual needs. The estimate of 5 engagements per year is not to be construed as a limit on GOED’s ability to pursue less or more than 5 engagements per year.

Additional funding may be added to the resulting contract award based on newly appropriated legislative funding related to the scope of this contract.