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CITIES SEEK TO BOND AGAINST RESTAURANT TAX

SHARE CITIES SEEK TO BOND AGAINST RESTAURANT TAX

Orem and Provo officials might go over Utah County's head to get some restaurant tax money to help build a convention center and performing arts center.

Provo Mayor George Stewart wants to bond for about $3 million against receipts from the 1 percent tax on prepared foods to help finance a proposed $13 million downtown performing arts center. The remaining funds would come from federal loans, private donations and a state grant.Orem also wants a piece of the restaurant tax pie to help pay for a proposed $9 million convention center that would be part of John Q. Hammons' hotel development near the mouth of Provo Canyon.

The way the law is written now, however, cities can't bond against the tax because county commissioners can't make any long-term commitments with the funds. Commissioners are required to reimpose the tax each year if they want to keep it, and at least one candidate for an open seat on the commission says he wants to eliminate the tax.

"It's a very good tax because it can provide some quality cultural facilities without causing much pain to the pocketbooks of local residents," Stewart said. "But to take full advantage of the tax we need to be able to bond against it."

To make the funds more accessible to cities, Stewart is seeking support from local lawmakers on proposed legislation that would eliminate the need for commissioners to adopt the tax each year. In fact, a draft copy of the proposed legislation has already been written.

"This legislation would make better use of the tax," Stewart said.

Stewart recently gave a copy of the proposed bill to Orem Mayor Stella Welsh, seeking support for the bill from the county's second-largest city. Welsh said city administrators are reviewing the bill but have made no commitments on whether to support it.

"It's something that we're looking at, and considering, but that's as far as we've got with it," Welsh said.

But even if the law is changed so cities can bond against the tax, commissioners are still not likely to allow it because of pressure from other mayors. The tax generates more than $1.2 million annually in Utah County - with 44 percent coming from Provo and 28 percent from Orem - and commissioners use about half of that to pay off the voter-approved bonds for the Utah Valley Special Events Center. Commissioners plan to use some of the remaining proceeds to help buy seats for the events center.

For the past two years, however, commissioners have divvied up about $400,000 of the remaining receipts to the county's 21 cities.

The cities use the money for city celebrations and other cultural and tourism events.

When Provo and Orem approached the county about getting a larger percentage of the tax revenues, the smaller cities protested - saying the tax is one of the few funding sources the smaller cities have for cultural events.

But the two larger cities say most of the tax revenue is generated in their cities, so a greater portion should be returned to their cities.

"We're not asking for the county to take that money away from the smaller cities," Stewart said. "We think there's enough money for them and to help Provo and Orem build these facilities."

Stewart said the best way to ensure that Provo and Orem get their fair share of the tax is to take control of the money out of commissioners' hands. That's why he also is proposing legislation that would require a percentage of the money to be distributed back to cities where it is generated.

"It's money that's generated in the cities and it's only fair that the money is distributed proportionately to the amount collected from each city," he said.

Welsh says Stewart's argument is legitimate, but Orem is hesitant to support legislation that would wage a war with other cities. She said Orem might have to find the money it needs elsewhere.

"It'll be difficult to do (the convention center) without the restaurant money, but we'll find some way to do it. But the restaurant money would sure make it a lot more palatable," she said.

To build the performing arts center, Stewart not only has to persuade the Legislature to support his restaurant tax bills, but he also needs a $1 million state grant. The state recently gave Ogden money to help build a similar facility, and Stewart said it would be unfair not to give Provo the same amount of money.