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HEBER CITY — The Utah School and Institutional Trust Lands Administration, which controls over 3.3 million acres of land across the state as of 2023, is facing fierce local opposition to a potential housing project in unincorporated Wasatch County.
"We have a target on our backs," SITLA representative Gregg McArthur told a joint meeting of the Heber City and Wasatch County councils earlier this month, "because right now, Utah has an affordable housing problem, and us as one of the largest landowners — everybody's coming to us saying, 'Help us solve that.'"
The two councils met to discuss a potential change to Heber City's annexation plan, a first step toward considering a large housing development around 4 miles east of downtown, which includes SITLA land.
A company, Mountain Venture Studios, approached SITLA in February 2022, offering to enter into a development lease agreement on 720 acres of land that had seen little interest from local builders since a project was shot down by Wasatch County's planning commission in the early 2000s, according to SITLA project documents.
The administration issued a public request for proposal on the property, and receiving no other official offers, entered into negotiations with Mountain Venture Studios in October 2022 on a final contract.
In February 2023, the two parties ratified a mutual option agreement, which held that the development company would secure a zoning change on the project area to allow increased density, which includes STILA property and neighboring parcels for an estimated 4,000 acres of building area, and final plat approvals showing they have sufficient water rights for the development.
McArthur said the developers have successfully proven to the board of trustees they have enough water to support housing in the development. The details are somewhat obscured by a nondisclosure agreement, according to developer Greg Whitehead, until a deal with a "large water owner" is solidified.
Wasatch County Councilman Steve Farrell said, "We know where those shares are. They've got to be transported across the valley to that location."
This project is still in its infancy, according to Whitehead, who brought the annexation request to Heber City as a first step in changing zoning in the project area. Annexation takes a minimum of six months, up to a couple years, according to Heber City Councilman Scott Phillips.
For some on the Wasatch County Council, even considering updating the annexation policy plan is a step too far in allowing consideration of the housing project, but both bodies found common ground agreeing that the proposal was riddled with logistical challenges, namely water rights, traffic impacts and existing sewer capacity.
The Heber City Council agreed to entertain discussion on the annexation, much to the chagrin of Wasatch County officials, because of SITLA's power over local planning authorities. Councilman Mike Johnston argued at the meeting that if the project is forced through, the city should have a seat at the table during development talks.
Despite protests from officials — the roads are congested, the sewer system would have to be rebuilt to support the growth, the density threatens the rural character of the valley — SITLA has the power to flex its state exemptions and force development, something it has been hesitant to do in the past.
What is SITLA?
Congress granted lands to Utah at statehood, in 1896, provided that revenue earned from the sale or lease of the land is placed into a permanent endowment for public schools.
The government divided Utah into townships of 36 square miles each, 6 miles by 6 miles. Four of those square mile parcels in each township were dedicated to Utah's trust lands.
According to McArthur, SITLA is "institutionally greedy" — they are charged with getting the most from the land under its stewardship.
The administration has almost 4.5 million acres of mineral rights, which it leverages using oil, gas, mineral leases and recently solar, to generate $89 million in 2023. Money flows in from leases and sales of its 3.3 million acres of surface holdings, and interest from its permanent fund. The fund, reported as $3.2 billion at the end of 2023, has grown 89% in the last 10 years, according to the administration's website.
Beneficiaries then receive payments from SITLA — $107 million in 2023. These include the University of Utah, Utah State University, Utah Schools for the Deaf, Utah Schools for the Blind, Utah State Hospital, Juvenile Justice Services, Miners Hospital Community Center, state reservoirs, and public buildings.
SITLA's changing approach to real estate
The Wasatch project is just one of a number of future developments backed by SITLA across the state, which are spurred by Utah Gov. Spencer Cox's goal of increasing the stock of single detached homes under $400,000, according to McArthur.
"Traditionally, SITLA likes to work with local municipalities, county commissions, and we like to go through the front door," McArthur told local officials. The administration has only used its exemption to override local authority once before, in Grand County near Moab.
But the state has the power to develop on its parcels, even forcing nearby infrastructure like sewer to connect. "We can go in and put what we want on it. We don't need to follow the local zoning ordinances," McArthur said. "We're a state entity, and we can put what we want on those lands now."
Because the administration doesn't pay state tax, it has traditionally sat and waited for land values to go up. "It's a great strategy," according to McArthur, but "now things are changing a little bit."
"All the easy pieces are done," he said, "so us waiting is something that probably is a thing of the past."
SITLA's "best four pieces" left in Washington County were released for development recently, according to McArthur, partially spurred by "a large affordable housing problem."
These include a 3,000-acre property in Warner Valley just east of St. George and the St. George airport, that is "probably the last large, pristine valley in Washington County," McArthur said. " I'm an outdoor enthusiast. ... I actually hate to see it go to development, but that's our job." It also includes a 40-acre parcel in Ivans, 315 acres in La Verkin driving toward Zion, and over 1,200 acres on the west side of St. George near the Bloomington area.
"We're asking state, local, county and other entities to say what tools will you give us to help put affordable housing on this, and then we're releasing it to developers to say, come in and show us an affordable housing plan," McArthur said. "We'll move forward with it if the municipality is not for it. We'll exercise our exemption, and we'll get affordable housing on this property.
"Not as a threat or anything, I just want to let you know that our intent will probably be to move forward and release this parcel because Wasatch has need for affordable housing as well," he said. If the current version of the project is successful, it could increase SITLA's potential revenue on the parcel from $3,604,900 to over $15 million, according to agreement documents.
If the developer can't deliver on any of the terms of their agreement with SITLA, a process would be triggered to separate the two parties, taking the thousands of acres not on SITLA land out of the equation. The state administration would then move forward with affordable housing on its 740-acre parcel, McArthur said.
Approval of zoning changes, which is required for the thousands of acres outside of the SITLA property, may prove to be the biggest hurdle of the Wasatch County project, given the outspoken opposition voiced from both councils. But including the thousands of acres outside the SITLA parcel provides the ability to spread housing across a bigger area to reduce density, creating a real riddle for officials.
SITLA did not respond to requests for additional comment.
The two local councils plan to readdress the project at another joint meeting Jan. 21.
