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In 2011, the old mesa-top airport in St. George is slated to shut down after its bigger, better replacement opens on 1,200 acres five miles southeast of the city's downtown.
The new jet-friendly facility is expected to fling open the region's doors to robust development.
"This is the largest public works project we have ever undertaken," said Marc Mortensen, assistant to St. George City Manager Gary Esplin.
Combined with expanded offerings at Dixie State College, reliable fiber-optics and a world-class health care facility, the airport upgrade puts the city in position for decades of solid growth, Mortensen added.
Just two years ago, real estate values were peaking in Washington County and costs
But the economic downturn has trimmed that price tag to $160 million, Mortensen said.
Of that total, $123 million comes from federal dollars -- collected from fuel and user fees tacked on to the cost of airline tickets. The remainder is being cobbled together from city capital improvement dollars and county hotel taxes.
Grading and other site-preparation has been going on for months and construction on the terminal is set to begin Monday.
"We view the new airport as a great gift to our community," Mortensen said. "It won't cost local taxpayers anything -- the project is being built and paid for through fees and the sale of existing property."
By 2012, the old facility will empty out and be readied for Sandy-based Anderson Development to purchase from the city for the agreed-upon $44 million.
Anderson won that competitive bid in February 2008 -- launching a flurry of legislative activity aimed at making sure the deal got done and authorizing an unprecedented $42.5 million bridge loan from the state.
Going South
In the waning hours of the 2008 Legislature, Senate budget chairman Lyle Hillyard warned colleagues against using the state's spotless credit rating to secure the loan for the St. George airport project.
"I have some deep concerns about this bill [SB298]," Hillyard, a Logan Republican and the state's longest-serving lawmaker, said on the Senate floor. "We haven't really had time to understand all the implications."
In retrospect, Hillyard's misgivings foreshadowed the loan's undoing.
Despite months of negotiations, reams of correspondence and the backing of powerful politicians, the state loan never materialized.
By late November, St. George city officials, frustrated over apparent foot-dragging, told the state they would find their own funding.
"While we believe the state will benefit from the new economic development resulting from this airport ... we recognize that not everyone at the State level is as committed as we are," St. George Mayor Dan McArthur wrote in a Nov. 25 letter to the state treasurer.
Even though the loan deal fell through, taxpayers ended up forking out about $150,000 in consulting and legal fees. But those dollars are dwarfed by even larger questions about the deal's demise.
Did it snag over a political feud tied to last year's bitter treasurer's race, as some alleged? Or was the loan just too risky an investment of taxpayer dollars?
The Salt Lake Tribune sifted through hundreds of documents obtained through a series of open-records requests and conducted more than a dozen interviews in search of answers.
The conclusion? More than anything else, it appears that the deal -- conceived behind closed doors with minimal public input or debate -- also was killed by secrecy.
Private matters
Michael Hutchings, a former judge who emerged in recent years as one of the state's most ambitious developers, makes no bones about it: He doesn't like hanging details of his company's finances out in the public for rivals -- and the media -- to feast on.
"It was information we really didn't want to get out to competitors," Hutchings said of documents the state Treasurer's Office and its consultant required in order to sign off on the airport bridge loan.
Hutchings, a principal with Anderson Development, was also a partner with then-House Speaker Greg Curtis in a law firm that represented the company.
That tie with the state's most powerful lawmaker, and the rush to pass legislation authorizing the loan -- SB298 popped up the same day St. George awarded the contract to Anderson Development, leaving no time for the usual committee hearings -- raised questions for Hillyard and other critics.
Nevertheless, the bill passed just hours before the final gavel fell, thanks to a last-minute amendment that required the state treasurer to scrutinize and sign off on the deal.
Utah House Speaker Dave Clark, then the majority leader and House sponsor of the bill, assured his colleagues that the amendment provided the necessary safeguards to "make sure that these funds will be repaid."
Due diligence
Then State Treasurer Ed Alter and his successor, Richard Ellis, said they took that charge seriously.
"We organized ourselves, started doing this extensive financial review, asked for documents -- and never got any," Alter said.
As required in SB298, the treasurer hired a consulting firm to determine Anderson Development's ability to pay back the $42.5 million loan and whether the old airport property was worth enough to secure the loan.
These experts identified two major obstacles.
First, an independent appraisal indicated an alarming discrepancy in the land's value and the cost of the bonds. State officials also learned that 40 of the 274 acres, by law, would revert to federal ownership once the airport ceased operations.
The second hurdle was the privacy issue. Anderson Development simply refused to turn over financial records without an ironclad guarantee that they would never end up in the public domain.
"The short story is we never received any information to reveal from Anderson Development," state consultant Karen Wikstrom, president of Wikstrom Economic & Planning Consultants, told The Tribune.
Wrangling
Anderson Development's Hutchings wanted to cut a deal.
He would give the treasurer's consultant whatever information she needed in exchange for a promise that it would remain confidential.
"We felt the law would have allowed for the information to be protected, and there were people in state government that had a different opinion," he said in an interview.
Hutchings, a 3rd District judge from 1983-1996, even suggested using a data room, similar to what he had seen in civil litigation cases. The state's designee could view records in a secure area with no cell phones, cameras or recording devices, and jot down notes, but not retain copies.
The treasurer's in-house attorney, Betsy Ross, said there was no way to guarantee in advance that Anderson's records wouldn't be subject to the state's open-records laws. Ross is the longest-sitting member of the State Records Committee, which has jurisdiction over open-records cases.
A 2008 Utah Supreme Court ruling "would prohibit an up-front guarantee" of the kind demanded by Anderson Development, Ross said in a late October e-mail to several state officials.
'Sad to say!'
About three weeks later, on Nov. 24, 2008, Clark vented his frustration over apparent foot-dragging in an e-mail to then treasurer-elect Ellis.
"This has gone on too long. I understand St. George may have given up on you and the State and moved on to alternative funding. Sad to say!"
The Santa Clara lawmaker, whose district includes the old airport, called it right -- the deal was dead.
Clark, in a recent interview, continued to blame the treasurer for the debacle.
"When it comes to the budget, the Legislature has the deposit slips and the executive branch writes the check," Clark said. "In this case, I don't think they got the checkbook out of their pocket."
Clash of cultures
In response to claims that their office deliberately stalled the process, current treasurer Ellis and his predecessor, Ed Alter, who retired at the end of 2008, said they acted as responsible guardians of public monies -- not obstructionists.
"People asked how they could know the deal actually pencils [out]," Alter recalled. "At the last minute the current language [in SB298] was inserted, to have the treasurer get in there and scrub it down, to make sure it makes sense and the state's position is protected."
But the problem -- which in the end proved insurmountable -- was the treasurer couldn't approve the deal without proper documentation and the developer wouldn't provide it without a guarantee of confidentiality.
"If you do a deal with the state, most of the information is public," Alter said. "It was a clash of cultures in terms of disclosure -- developers live in a secret world where nobody tells."
In the spring of 2008, Richard Ellis, then chief deputy state treasurer, battled former Rep. Mark Walker in a scandal-scarred Republican primary for the treasurer's job. Walker had the backing of key GOP leaders, including then-House Speaker Greg Curtis, a partner in the old airport developer's law firm, and Rep. Dave Clark, R-Santa Clara, a regional president of Zions Bank who sponsored SB298 and later became Speaker of the House.
Ellis survived the primary and won in November, while Walker resigned his House seat to halt a House ethics probe into whether he offered Ellis a job and salary hike to drop out of the race. Walker later pleaded guilty to a misdemeanor in the case.
The land evaluation report commissioned by St. George officials -- tailored specifically for Anderson Development's plan -- set the old airport value at $46 million after the city pays for demolition and improvements.
The plan:
» 140 hillside homes
» 110 acres of low to high-density residential
» 11 acres commercial
The appraisal conducted for the state treasurer's consultant valued the 274 acres after demolition at $29.3 million, dropping to $26.4 million after subtracting 40 federal acres.
Earlier this year, the federal-land issue was resolved in legislation introduced by Utah Sen. Bob Bennett.
