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Salt Lake City will be reimbursed for less than half of $7 million it paid to acquire land for a homeless shelter in Sugar House, according to city officials and House Speaker Greg Hughes.
That reflects the portion of land needed for the shelter itself. The fate of 1.5 acres purchased to the south of Simpson Avenue has yet to be determined.
"I've got to be able to explain to my colleagues why we have a $7 million parcel," Hughes told The Salt Lake Tribune's editorial board Wednesday. "The explanation is one I can accept. ... The state's portion of the money would only be for the $3 million or the $3.5 million that will be the resource center itself."
The Legislature is preparing to weigh the second of three funding installments expected to put $27 million toward Salt Lake City's four 150-bed homeless shelters and a revamped service model led by Salt Lake County.
City spokesman Matthew Rojas said the city is "happy to have the opportunity to clear this up."
It's been more than six weeks since the site announcement. Then — and still weeks later — the property at 653 E. Simpson Ave. (2300 South) was presented as the 1.24 acres between Simpson Avenue and the S-Line streetcar that are occupied by four commercial tenants, including a popular day care.
What followed were public meetings that spilled into hallways as affected residents railed against city leaders for a closed site-selection process, a perceived loss in property value and possible threats to their families' safety.
The opposition has overwhelmingly involved 653 E. Simpson Ave., which is the farthest east of the four sites and the only one to abut a neighborhood of single-family homes. About two-thirds of Salt Lake City residents still support the overall shelter model, according to a Salt Lake Tribune-Hinckley Institute poll conducted earlier this month.
The $7 million purchase price had drawn fire in recent weeks from Salt Lake County Mayor Ben McAdams, who said the county had expected costs to be between $1 million and $2 million per site and suggested to Salt Lake City Mayor Jackie Biskupski that the city seek a development at 653 E. Simpson that would include affordable housing. Whatever it did, the city would not be fully reimbursed as it had expected to be, McAdams said.
Told Thursday about the city's explanation that it only intends to be reimbursed for the portion of the land that includes the shelter, City Council member Lisa Adams — whose district includes 653 E. Simpson — said she's frustrated at what she regards as a mixed and shifting message.
"I don't understand why the communication is such an ongoing problem and why when we ask questions we can't get straight answers," Adams said.
A report posted to the city's website Thursday provides more information about the purchase of 653 E. Simpson Ave. — including details clamored for by neighbors and City Council members who've been inundated by their questions.
City officials report that, while the city's broker "confirmed [the] seller's willingness to sell property" and made an anonymous offer, the "seller became aware that the city was the buyer" before the contract was executed.
The deal was already negotiated when the seller asked that the broker reveal the seller's identity, Rojas said, and the city agreed to do so.
The owner of another shelter site, at 275 W. High Ave., has said he deduced that he was dealing with the city because of the suitability of his property for a shelter and the scarcity of sites like his. Representatives from Forest Co., owner of the Simpson Avenue property, have declined multiple interview requests from The Tribune.
The city report says Forest Co. demanded an all-or-nothing offer on the 2.8 acres.
City officials have said that they knew they were purchasing more than they needed for a homeless shelter and that some of the "buffer" space might include a development with affordable housing.
The City Council set aside $21 million for that purpose in October, and the city's affordable housing vision — its first since 2000 — is expected to be released next week.
City Councilman Charlie Luke said Wednesday that he wouldn't support adding both a shelter and affordable housing to the neighborhood because it would have too large an impact.
Adams said she only learned that the city purchased land on the south side of Simpson Avenue when she went to knock on doors to speak to constituents the day after the site announcement, and that the city needs to court public input before it decides what to do with that land.
"I think we've got to think really carefully about what goes there, what complements the neighborhood and what benefits the neighborhood," she said.
The city report said it offered $50 per square foot for the property and settled at $55 after the seller countered with $60. Five "comparable" dealings in Sugar House included sales at $55 per square foot, the city reports.
Those sales involved smaller acreages than the city's purchase, including a quarter-acre site. The most comparable sale in terms of size, 2.24 acres at 2150 S. McClelland, went for $46 per square foot.
An area real estate agent told The Tribune earlier this month that while the property may not have been worth $7 million, it was likely closer to that figure than the county's assessed value of $2.8 million, factoring in the nearly $30,000 in rent it generates per month.
Salt Lake City became aware of a lawsuit between Forest Co. and Utah Transit Authority late in negotiations, the city's report states.
The city ultimately bought Forest Co. out of the lawsuit for the minimum $300,000 it sought from UTA over construction impacts from the S-Line station on the property's northern boundary.
More than a year's worth of zoning and conditional use processes is in store for the sites at Simpson Avenue and 648 W. 100 South.
mpiper@sltrib.com Twitter: @matthew_piper