In 90 percent of cases, city officials say, the RDA has a secured interest in the properties it helps fund - and often is listed on the deed filed with the county - which provides a safeguard against loan defaults or fraud.

"We work very hard so that the true intentions of the developer are well-documented," says D.J. Baxter, who took the city's RDA director post in April. "The agreements are very thorough and are done in close coordination with our attorneys' office."

Valda Tarbet, deputy director for the RDA, notes 70 loans are spread across the city for a total of $31 million. Each account is current, she says.

The difference with Hansen's Wasatch Property Management loan - it led to a chest-to-chest confrontation with Mayor Rocky Anderson that grabbed headlines - is that the RDA got creative. And, some would say, it backfired.

In 2003, the RDA approved two loans worth $2.8 million to relocate KUTV from its West Valley City television studio to the downtown Wells Fargo tower, which Wasatch acquired from American Stores.

To offset the 3 percent interest rate, the RDA - for the first time - offered an interest credit for every employee Wasatch lured downtown from outside the capital. Last winter, staffers got suspicious when Wasatch claimed credits for hundreds of employees who had worked within Salt Lake City limits.

Documents reviewed by The Tribune verify the discrepancy, which fueled the mayor's attempt to strip Wasatch of $1 million in additional RDA cash for a planned high-rise at 222 S. Main St.

At the same time, the RDA discovered another problem: Hansen had refinanced the $1.3 million portion of the Wells Fargo loan two years ago, and failed to repay half as the 2003 agreement required.

The city, which could not afford to put up collateral as a secured lender on a building worth tens of millions, agreed to accept a letter of credit to protect the loan. It therefore was not listed on any deed, and the RDA was never informed of the refinancing.

"With a letter of credit, we're a little more reliant on the borrower to be honest with us," Tarbet says. "With the letter-of-credit format, lenders may not even know the city exists (as another lending partner)."

Tarbet checked county records at the end of last year. But since Hansen had the original promissory note rewritten, a refinance was not detected.

Such arrangements are rare.

For downtown's Metro Condominiums - the RDA's biggest current project - the agency has a tri-party agreement and a trust deed for the $6.7 million loan. The project is under construction on 200 East between 300 South and 400 South. And on the $50 million deal that helped create the Gateway shopping center west of downtown, the Boyer Co. must supply the city with annual property tax notices until 2022 to receive its reimbursements.

Tarbet says legal snags are infrequent for the RDA. The most recent involved the Redman building on 2100 South below 1300 East. Last year, the city went to court to recoup $775,000 after the owner went bankrupt.

Hansen, who handed RDA officials a check for $586,000 just last week for half of his refinanced loan, denies taking shortcuts. Besides bolting from the 222 S. Main project, Hansen defends the refinance as a "bridge loan," and has suggested the city may actually owe him money.

Then on Tuesday, he infamously cornered Anderson against a wall after discussing the issue in a City Hall meeting. The confrontation drew the mayor's retort: "I'll kick your ass."

Baxter insists Wasatch still owes $120,000 in interest. And he estimates the developer deprived the RDA of $1.2 million it could have used had Hansen honored the agreement. But instead of going to court, Baxter says RDA officials will continue to negotiate with Wasatch over the discrepancy.

Still, he defends the RDA's incentives to bring more workers downtown.

"If it were organized differently, we probably could make it work," Baxter says. "We certainly learned a lot from this process."

djensen@sltrib.com