Utah bond deal set to fund initial phase of development on state land
5 min read
Piper Sandler
Bond financing for a massive development of state-owned land in Utah will kick off with $247.74 million of unrated tax-exempt revenue bonds scheduled to price on Thursday.
Proceeds from the Point Phase 1 Public Infrastructure District No. 1 deal will finance public infrastructure and projects on an initial 35 acres of the 600-acre site. State money and private debt and equity are also in the project’s funding mix.
“This is the state’s real big effort at a public-private partnership,” said Benjamin Becker, a managing director at Piper Sandler, the bond deal’s sole underwriter.
About $105 million of the bond proceeds will finance a 5,000-person capacity event center with construction expected to begin in the first quarter of 2026 and completion expected two years later, according to an investor presentation. Parking facilities and a promenade will also be funded by the bonds.
The initial development for The Point project includes 908 multi-family housing units, 391,900 square feet of retail space, 371,200 square feet of office space, and 140 hotel rooms.
Utah appropriated $150 million to build Convergence Hall, a multi-use state building that will serve as an innovation hub for investors, students, professors, and government agencies.
That money is part of the state’s $615 million commitment, which also includes $45 million Utah spent to demolish a state correctional facility on the site and remediate the property, $170 million for infrastructure improvements through an interest-bearing loan to be paid back with revenue generated by future ground leases as development progresses, and $250 million for a commuter rail station.
The state granted a 99-year ground lease covering nearly 100 acres to the private developer, CLW Point Partners, LLC, a joint venture between Lincoln Property Company, Wadsworth Development Group, and Colmena Group that was selected in 2022 for the phase 1 project.
The deal is structured with a $186.58 million Series A-1 tax assessment and general revenue current interest term bond, $18.86 million of Series A-2 convertible capital appreciation bonds with a preliminary conversion date of March 1, 2030, and a $42.3 million Series B subordinate cash flow term bond, according to the preliminary official statement. All three series carry a 2055 final maturity, a September 2030 call date, and March 2065 discharge dates.
The Series A bonds have a senior lien on pledged revenue collected within the district. That includes a share of property tax equivalent revenue.
While the state will continue to own the land, taxable property within the district will be assessed for a required payment, according to Becker.
Other revenue to pay off bonds will come from a share of state sales taxes, as well as a 2% public infrastructure fee on taxable transactions. Net revenue from the event center and from parking facilities is also pledged.
No debt service payments will be made on the Series B bonds until the surplus fund for the Series A bonds reaches $37.39 million, which is forecast under a base case scenario to occur in 2033, according to the POS.
The bonds are unrated due to the property’s lack of debt history and revenue generation, according to Becker.
“What will happen is, in several years, once the development has been constructed and we hit a certain assessed value, then we would go and look to get the bonds rated,” he said.
The POS cautions that investment in the bonds “is speculative in nature and involves a high degree of risk,” noting the absence of any mortgage or guarantee.
Becker nevertheless anticipates strong investor appetite for the deal.
“With the state support and the location, we think it’ll be well received,” he said.
At a December groundbreaking, Utah Gov. Spencer Cox called the development’s site “the epicenter of the fastest-growing part of the fastest-growing state in the country.”
“The Point reflects our administration’s priorities to invest in people, places and prosperity,” he said. “It will create solutions to some of Utah’s most pressing challenges. We’re going to create tens of thousands of high-quality jobs right here that provide economic opportunity for all Utahns. (It’s) going to facilitate cutting-edge technology that advances innovation across the state and will literally change the world in powerful ways.”
He also hailed the development’s plan to build housing units “to help address our housing shortage, including much needed affordable housing.”
Other speakers at the groundbreaking noted the development was starting at “the heart” of the site, which is located between Salt Lake and Utah counties.
“This is unlike usual developments, where it starts on the edge, next to existing utilities and ease of access, but instead we are starting at the center, accelerating the success of this project due to the investment of this infrastructure,” said Mike Ambre, who was tapped by the state-created The Point of the Mountain State Land Authority in October to serve as executive director for The Point.
The Utah Legislature created the authority in 2018 to oversee the development of the 600 acres of state land where the prison was located. The authority board, which is appointed in part by the governor, House speaker and Senate president, also includes the mayors of Salt Lake County and the city of Draper.
The planning process was launched in 2020 for the land that officials said is “at the
The 70-year-old state prison was demolished and replaced with a facility that opened in July 2022, located five miles west of the Salt Lake City International Airport.
Additional debt will follow the inaugural bond issuance.
“We’re focusing really just on the 35 acres that are within that 100 acres, but there will be more issuances for those remaining essentially 65 acres that’ll be smaller,” Becker said.
Utah is expected to contribute an additional $1 billion for future phases of the development, according to the investor presentation, which cites state estimates that the full 600-acre mixed-use master development will generate 46,000 jobs, $4.5 billion in annual earnings, and $7 billion in annual gross domestic product once completed in 2055.
It would be the largest overall public infrastructure district-funded area in Utah, according to Becker.
Bond and disclosure counsel for the deal is Gilmore & Bell. Underwriter’s counsel is Thompson Coburn.
