CITY OF OREM
CITY COUNCIL MEETING
56 North State Street Orem, Utah
July 12, 2011
5:00 P.M. STUDY SESSION
CONDUCTING
Mayor Pro Tem Carl Hernandez
ELECTED OFFICIALS
Councilmembers Margaret Black, Karen A. McCandless,
Mark E. Seastrand, Mary Street, and Brent Sumner
APPOINTED STAFF
Bruce Chesnut, City Manager; Jamie Davidson, Assistant
City Manager; Paul Johnson, City Attorney; Richard
Manning, Administrative Services Director; Stanford
Sainsbury, Development Services Director; Mike Larsen,
Public Safety Director; Karl Hirst, Recreation Director; Chris
Tschirki, Public Works Director; Donna Weaver, City
Recorder; and Rachelle Conner, Deputy City Recorder
EXCUSED
Mayor Jerry Washburn
BRIEFING – Utah Department of Transportation (UDOT)
Todd Jensen, UDOT, briefed the City Council on the status of the I-15 CORE Project. He stated they
are at forty-five percent completion at this point and are still on schedule for a December
2012 completion.
Mr. Jensen advised that they are currently working on the 1600 North, Center Street, and University
Parkway interchanges. They are also working on the sound wall in the area of 2000 South. The
construction crews will implement a lane split scheme in the American Fork area beginning that
evening. They will have multiple signs in place to help educate the drivers. They will implement this
same option in the Orem area in August. They will have two interchange closures at American Fork
500 East and Provo Center Street southbound.
ANNUAL REVIEW – Gang Loitering Free Areas
Nick Thomas, Public Safety Gang Unit, indicated there has been a steep decline in graffiti reports
since 2007 due to Public Safety’s enforcement efforts. Last year he worked closely with the junior
high schools to get ahead of the gang problems.
Officer Thomas noted they have not had many problems with the gangs loitering in the parks, and
they did not have any problems with gangs at Summerfest this year. The ordinance has been working
very well.
REVIEW OF AGENDA ITEMS
The Council and staff reviewed the agenda items.
City Council Minutes – July 12, 2011 (p.1)
CITY COUNCIL NEW BUSINESS
The Council adjourned at 5:55 p.m. to the City Council Chambers for the regular meeting.
6:00 P.M. REGULAR SESSION
CONDUCTING
Mayor Pro Tem Carl Hernandez
ELECTED OFFICIALS
Councilmembers Margaret Black, Karen A. McCandless,
Mark E. Seastrand, Mary Street, and Brent Sumner
APPOINTED STAFF
Bruce Chesnut, City Manager; Jamie Davidson, Assistant
City Manager; Paul Johnson, City Attorney; Richard
Manning, Administrative Services Director; Stanford
Sainsbury, Development Services Director; Mike Larsen,
Public Safety Director; Karl Hirst, Recreation Director; Chris
Tschirki, Public Works Director; Donna Weaver, City
Recorder; and Rachelle Conner, Deputy City Recorder
EXCUSED
Mayor Jerry C. Washburn
INVOCATION /
INSPIRATIONAL THOUGHT
Roger Scanland
PLEDGE OF ALLEGIANCE
Mason Peterson
APPROVAL OF MINUTES
Joint Orem/Provo City Council Meeting of May 25, 2011, the City Council Meeting of June 28,
2011, and the Joint Orem City Council/Alpine School District Meeting of July 6, 2011
Mr. Seastrand moved to approve the minutes of the Joint Orem/Provo City Council Meeting of
May 25, 2011, the City Council Meeting of June 28, 2011, and the Joint Orem City Council/Alpine
School District Meeting of July 6, 2011. Mr. Sumner seconded the motion. Those voting aye: Mrs.
Black, Mr. Hernandez, Mrs. McCandless, Mr. Seastrand, Mrs. Street, and Mr. Sumner. The motion
passed unanimously.
MAYOR’S REPORT/ITEMS REFERRED BY COUNCIL
Upcoming Events
The Mayor Pro Tem referred the Council to the upcoming events listed in the agenda packet.
Upcoming Agenda Items
The Mayor Pro Tem referred the Council to the upcoming agenda items listed in the agenda packet.
Appointments to Boards and Commissions
There were no new appointments.
City Council Minutes – July 12, 2011 (p.2)
Recognition of New Neighborhoods in Action Officers
No new Neighborhood in Action officers were recognized.
WALTER C. OREM AWARD – Don Norton
Mr. Hernandez read a bio for Don Norton. He thanked him for all of his efforts in writing the
histories of the Veterans.
Don Norton indicated he is attending this evening to try to stimulate an interest in other Veterans to
complete their oral histories.
PERSONAL APPEARANCES
Time was allotted for the public to express their ideas, concerns, and comments on items not on the
agenda.
No one came forward to speak.
CONSENT ITEMS
Mrs. Black moved to approve the following consent item. Mr. Sumner seconded the motion. Those
voting aye: Mrs. Black, Mr. Hernandez, Mrs. McCandless, Mr. Seastrand, Mrs. Street, and Mr.
Sumner. The motion passed unanimously.
MOTION – Cancel the July 26, 2011, City Council Meeting
SCHEDULED ITEMS
6:00 P.M. PUBLIC HEARING
ORDINANCE – Enacting Section 22-8-11(H) of the Orem City Code Pertaining to Caretaker
Facilities in the C2 Zone
Stanford Sainsbury presented an applicant requests that the City Council, by ordinance, enact Section
22-8-11(H) of the Orem City Code to allow caretaker facilities in the C2 zone.
Currently, the applicant owns a carwash facility located at 460 West 1600 North in the C2 zone.
When the car wash was constructed, a second level was included with the construction. The applicant
has been using this space as an office. Recently, an increase in vandalism has taken place to the coin
boxes and other equipment associated with the car wash. The applicant requests a caretaker unit be
allowed for increased site surveillance and security for the carwash. The Planning Commission met
to consider this request on June 1, 2011.
After reviewing the proposed ordinance, staff has listed advantages and disadvantages concerning the
proposed request.
City Council Minutes – July 12, 2011 (p.3)
Advantages:
 A caretaker facility in the C2 zone would potentially decrease crime and vandalism in the
area by having someone living on site
 A caretaker facility would have minimal negative impact to the surrounding businesses
Disadvantages:
 None determined
The proposed amendment to Section 22-8-11(H) is outlined below:
H.
A caretaker facility is a permitted use in the C2 zone. The caretaker facility shall be an accessory use only,
i.e. incidental to and customarily found in conjunction with the principal use, and shall:
1.
Be attached to or located within any structure of the principal use, and not have a total square footage
that exceeds one-thousand (1,000) square feet or ten percent (10%) of the total area of the building square footage
on the site, whichever is less.
2.
Only be a minor part of the principal use.
3.
Have a minimum of two (2) parking spaces dedicated for the caretaker facility.
Mr. Sumner asked whether it would only be one person living there. Mr. Sainsbury stated it allows
for one residential unit, so it could have a family living there.
Mrs. Street questioned what the intent of the incidental use is. Mr. Sainsbury noted there are many
facilities that allow caretaker facilities. The intent of this use is to allow for security of the premises.
Mr. Seastrand wondered if another carwash in this zone would be allowed to build a caretakers unit.
Mr. Sainsbury explained it would have to meet the square footage requirement that is written in the
ordinance.
Mayor Pro Tem Hernandez opened the public hearing.
Sharon Scanland, neighborhood chair, stated there is nothing in the language that indicates what the
facility will look like. It only gives a square footage limitation. She asked if the design requirements
should be a part of the language.
Mr. Sainsbury noted they would have to comply with all of the design requirements in the C2 zone.
Mayor Pro Tem Hernandez closed the public hearing.
Mrs. McCandless asked whether there are other uses in the C2 zone that have auxiliary uses that are
required to have the architecture match the primary use. Mr. Sainsbury said they have many
incidental uses, but they are not required to have separate design requirements. They generally just fit
in with the primary use.
Mr. Sumner expressed a need for the businesses to feel safe. He said they may see more of these
requests, but he does not see a problem with it at 1600 North.
City Council Minutes – July 12, 2011 (p.4)
Mrs. Black questioned whether the proposed language would require the facility to match the
existing structure. Mr. Sainsbury stated they could add more to the language if the Council desires;
however, the owners are running a business, and they would want it to match.
Mrs. Street stated one of the things they are trying to not approve is the creation of more apartments
within businesses. She wants to prohibit a property owner from parking an RV on the site and saying
it is a caretaker’s facility.
Mr. Sainsbury indicated it was their intent to have the caretaker unit be part of the main structure,
and it would have to be approved as part of the site plan, so an RV would not be allowed.
Mr. Johnson suggested they add language to the ordinance to require that the caretaker facility would
have to be a part of the building, and the architecture would have to be consistent with that of the
main building.
Mrs. McCandless questioned if that would be putting a higher standard on this use than others in the
zone.
Mr. Sainsbury said it was his opinion that it would not. He stated ninety-nine percent of people
would match the caretaker facility to the main structure anyway. This change will address the other
one percent.
Mr. Seastrand moved, by ordinance, to enact Section 22-8-11(H) of the Orem City Code to allow
caretaker facilities in the C2 zone with the revised language changes. Mrs. Street seconded the
motion. Those voting aye: Mrs. Black, Mr. Hernandez, Mrs. McCandless, Mr. Seastrand, Mrs. Street,
and Mr. Sumner. The motion passed unanimously.
6:00 P.M. PUBLIC HEARING
RESOLUTION – Approving Agreements which Provide for the Expansion of the US Synthetic
Facility in Orem and the Creation of 100 New Jobs in Orem
Jamie Davidson, Assistant City Manager, presented a staff recommendation that the City Council, by
resolution, approve the proposed Interlocal Agreement between the City and the Redevelopment
Agency of the City of Orem and authorize the Mayor to sign the proposed agreement between the
City, the Redevelopment Agency, and US Synthetic.
The City Council and the Redevelopment Agency of the City of Orem (“Agency”) established
Redevelopment Project Area 85-01 (the “Project Area”) in 1985. Some of the purposes of the Project
Area were to install streets, utilities and other public improvements, and to encourage the expansion
of existing industry in the City.
US Synthetic is an industry-leading developer and producer of polycrystalline diamond cutters and is
a source of high-quality jobs for the Orem community. The existing US Synthetic plant is located in
the Project Area.
City Council Minutes – July 12, 2011 (p.5)
Because of its recent success, US Synthetic needs to expand its facility. US Synthetic considered
moving to some out-of-state sites and also considered expanding its existing facility in Orem. If the
City Council and the Agency approve the proposed agreements, US Synthetic will expand its Orem
facility and create new jobs at its Orem facility.
The parties’ obligations under the proposed agreements are as follows:
US Synthetic
 Construct a new 41,500 square foot building on its Orem property
 Create at least 100 new jobs as part of the expansion of its facility
Agency
 Pay US Synthetic $100,000 in property tax increment over a three year period
 Provide a fiber optic connection to the US Synthetic facility
City

Pay the Agency $66,755.18 as additional assistance to US Synthetic. (The agreement directs
the City to pay this money directly to US Synthetic on behalf of the Agency.)
Mr. Hernandez asked Mr. Davison to explain tax increments to the audience. Mr. Davidson noted
that any property tax money that is generated in a specific project area is encumbered and reinvested
in that defined area.
Mrs. McCandless clarified that this is not creating a new RDA. This RDA was approved in 1985,
and the money has been collected since then.
Mr. Davidson stated that is correct. These dollars have been used in a number of other circumstances
over the course of twenty years, and there is increment remaining within the RDA that can be used
for these specific purposes. It is the Redevelopment Agency’s choice on how to allocate those
monies within the project area.
Mr. Chesnut questioned how much of their own money US Synthetic is investing in this expansion.
Rob Galloway, US Synthetic, indicated they are investing $46 million in this expansion.
Mrs. McCandless noted she is the liaison on the Commission for Economic Development of Orem
(CEDO) Board. The Board reviewed this request and gave its support for this proposal.
Mr. Seastrand asked how many employees US Synthetic currently has. Mr. Davidson replied they
currently provide over 600 jobs.
Mr. Sumner asked whether the $66,000 would be paid in increments. Mr. Davidson explained that it
would be paid within 30 days of the signing of the agreement.
Mrs. Street stated the $66,000 building permit fee is based on the value of the addition that is being
built. That fee is based on the value of the addition they are going to build. The value to the City of
City Council Minutes – July 12, 2011 (p.6)
Orem is the increase in property tax they will receive from the value of the addition being added. She
asked what the value of the building permit was. Mr. Davidson said he believes it was $46.5 million.
Mr. Davidson then indicated there are other tax considerations associated with a project like this.
Granted, there are property taxes generated; however, the employees that work at the facility earn a
paycheck. They pay personal income tax as well as use their money to reinvest in the community by
way of purchases. There is a multiplier effect that takes place with any of these projects. It is difficult
to ascertain a specific number, but the long-term benefit derived from an agreement like this will far
surpass the $166,000 investment the City is making.
Mr. Galloway explained the expansion plans for the facility. He noted their number one reason for
keeping their expansion in Orem is the employees. They are planning to mirror this expansion within
the next 10 years.
Mr. Seastrand said there are not many companies that do what US Synthetics does. He asked if they
are the largest in the world. Mr. Galloway said they are the largest in the polycrystalline diamonds
market. They make forty-five percent on the worldwide market. Orem happens to be the center of the
world for this material as well.
Mrs. Street remarked that she looked on the Utah County website, and US Synthetic currently pays
$120,000 each year in property taxes.
Mayor Pro Tem Hernandez opened the public hearing.
Barbara Petty, resident, said she is typically against RDAs. They were initially setup to help Orem
build a base. Orem has a substantial base, so they do not need to have RDAs to encourage increase.
The City gave Walmart RDA money, which is a tax generating business. This business does not
seem to be a tax generating business. Ms. Petty asserted that just because they hire employees does
not mean those employees will live or shop in Orem. The property tax they are already paying will
continue, so that is not a point. She stated it is an inappropriate intrusion in private enterprise for the
City to be engaging in this RDA.
Mr. Chesnut noted the City entered into negotiations with the Dover Corporation a few months ago
in terms of this expansion. The number Mrs. Street gave earlier is the existing property tax that
company is paying. That does not include the additional property tax that will be paid for the
expansion. The City will benefit from that increase. There were other communities that were offering
very large incentives to get US Synthetics to relocate their whole operation. Orem was able to offer a
very small incentive to show the City’s support of the business, which helped to get Dover’s
approval to stay in Orem.
Mrs. Street explained where she got the information for the property tax, and she explained how this
is an increase to the City. Everyone has an opinion on RDAs, and not everyone has to agree. She
stated she sees it as a benefit to the community by keeping this business in the Orem.
Mr. Seastrand remarked that US Synthetic currently pays $120,000 in property tax on a $10 million
building. This expansion is $46 million, which means their property tax will increase to $400,000 City Council Minutes – July 12, 2011 (p.7)
500,000 each year. That is a significant revenue increase for the City, and it outweighs the
$166,000 in RDA funds that are committed to the project. Mr. Seastrand then indicated that in
reference to the comment about the employees not living or shopping in Orem, it would not be a
valid assumption that none of them would spend any money in Orem. A fair number of them would
each lunch or dinner in Orem and would buy gas at the gas station near the facility. A fair assumption
would be that one-third of the employees live in Orem and spend much of their income in the city.
Ms. Petty said that many residents are still “smarting” over the Shopko RDA. Very few people shop
there, and the RDA is the only thing keeping Shopko in business. That is driving her angst against
RDAs.
Mr. Galloway noted they currently have a 70,000 square foot building right now, and they will be
adding 40,000 square feet with this expansion and have plans for an additional 40,000 square feet in
the future. He stated they do what they can to spend money in the community. They recently
purchased iPads from a store in Orem for all of their employees to celebrate an award they received.
Joyce Mitchell, resident, stated she is excited about US Synthetics staying in Orem. She asked how
the fiber connections would be paid.
Mr. Chesnut explained the fiber optics trunk line already exists in the road. The connection will be
paid with money from the RDA. As staff prepared this agreement, they recognized many of the
benefits the City would receive. The City put a minimum on the number of jobs that would have to
be created; however, US Synthetic anticipates adding even more than 100 jobs. There is also the
added benefit of the additional property taxes.
Mrs. Street stated she is glad that the fiber optics issue was brought up. She noted there was some
legislation in 2005 that stated they could not use an RDA to satisfy a bond obligation. She said it is
her understanding that this is not being done with this agreement. Mr. Chesnut stated that is correct.
Marcus Parker, Boy Scout, wondered where this building will be located. Mr. Chesnut explained the
project expansion is immediately to the south of their existing facility in the Orem Business Park.
The property is currently vacant and has been used as farmland.
Mayor Pro Tem Hernandez closed the public hearing.
Mr. Sumner agreed with some of Ms. Petty’s comments; however, this is such a unique business. He
likes to have a level playing field, and in his opinion RDAs do not always make a level playing field.
In this case, the City of Orem will reap many benefits from this RDA.
Mrs. Black said this is an existing RDA that will expire in a few years, and the only thing this money
can be used for are projects within this area.
Mrs. Street noted she is really glad that people showed up this evening to express their opinions. She
voiced her appreciations for the comments that have been made.
City Council Minutes – July 12, 2011 (p.8)
Mr. Hernandez stated in this environment where unemployment is up and the Federal Government is
struggling to pay their bills, it is refreshing to hear that a business is willing to make a $46 million
commitment to the community. This is a point of optimism. It shows the residents that good things
are happening in Orem. He thanked US Synthetics for its willingness to expand in Orem and
expressed appreciation to the public for their comments.
Mrs. McCandless moved, by resolution, to approve the proposed Interlocal Agreement between the
City and the Redevelopment Agency of the City of Orem and authorize the Mayor to sign the
proposed agreement between the City, the Redevelopment Agency, and US Synthetic. Mrs. Black
seconded the motion. Those voting aye: Mrs. Black, Mr. Hernandez, Mrs. McCandless, Mr.
Seastrand, Mrs. Street, and Mr. Sumner. The motion passed unanimously.
Mr. Davidson indicated that US Synthetic is a significant business leader in the community. They
were founded in 1978 and are the leading supplier of diamond drilling products. Several weeks ago,
they were recognized as a 2011 Enterprise Award recipient of the Shingo Prize. This has been
dubbed the Nobel Prize for manufacturing by Business Week.
COMMUNICATION ITEMS
There were no comments on the communication items.
Mrs. McCandless moved to recess to a Redevelopment Agency of the City of Orem Meeting. Mrs.
Black seconded the motion. Those voting aye: Mrs. Black, Mr. Hernandez, Mrs. McCandless, Mr.
Seastrand, Mrs. Street, and Mr. Sumner. The motion passed unanimously.
**The meeting recessed at 7:18 p.m.
**The meeting resumed at 7:23 p.m.
ADJOURNMENT
Mr. Seastrand moved to adjourn to a closed-door meeting to discuss litigation and personnel issues
pursuant to Sections 52-4-205(1)(c) and (1)(a) of the Utah State Code Annotated. Mrs. Black
seconded the motion. Those voting aye: Mrs. Black, Mr. Hernandez, Mrs. McCandless, Mr.
Seastrand, Mrs. Street, and Mr. Sumner. The motion passed unanimously.
CLOSED-DOOR SESSION – Personnel and Litigation
A closed-door session was held at 7:30 p.m. to discuss litigation and personnel pursuant to Sections
52-4-205(1)(c) and (1)(a) of the Utah Code Annotated. Those in attendance were Councilmembers
Margaret Black, Carl Hernandez III, Karen McCandless, Mark Seastrand, Mary Street, and Brent
Sumner; staff members Bruce Chesnut, Jamie Davidson (left at 8:35 p.m.); Paul Johnson (left at
8:35 p.m.), Steve Earl (left at 8:35 p.m.), Donna Weaver (left at 8:35 p.m.), and Rachelle Conner
(left at 8:35 p.m.).
The meeting adjourned at 11:08 p.m.
City Council Minutes – July 12, 2011 (p.9)
Donna R. Weaver, City Recorder
Approved: August 9, 2011
City Council Minutes – July 12, 2011 (p.10)