Utah Inland Port board votes to issue up to $150M in bonds, despite questions about how to pay the debt

Over the objections of Salt Lake City’s two representatives, the Utah Inland Port Authority moved Monday toward taking on millions in debt to build a center for transferring shipments between trucks and trains in the city’s northwest quadrant.

Two resolutions approved by the board created a public infrastructure district, or PID, and authorized it to issue up to $150 million in bonds. It will repay that debt with a portion of the port authority’s property taxes that are collected within the district. Members of the separate PID board only have the authority to issue the bond — while the port authority board retains the power to approve the projects it will fund.

Salt Lake City’s representatives opposed forming the district, noting the port authority is tied up in a lawsuit that calls into question its property tax funding — the very money that would be used to repay the bond. The Utah Supreme Court is currently deliberating over the case.

“What’s the urgency here to issue this now, when things are at risk, when we’ve already been waiting for months for a response on the legal case?” asked board member Dennis Faris, who is also a Salt Lake City Council member. “Can we at least see that settled first?”

Port authority staff and board advisers explained that the district is needed now to take advantage of historically low market rates.

While the current port authority board already has the ability to issue bonds, using a separate district to issue the debt is meant to shield the port authority from risk in case of default, since the port authority is a statewide entity that will eventually mange satellite ports throughout Utah. But Faris also called the necessity of that shield into question.

“If the PID is created solely to be the fall guy that can default, that seems scary from a fiscally conservative point of view,” Faris said.

The port authority’s executive director, Jack Hedge, however, called the district “prudent and appropriate.” He compared it to a city’s redevelopment agency, or RDA, which is a legal entity separate from the city that pays for revitalization projects partly through increments of property taxes.

Faris, however, pointed out that RDAs are governed by elected city councils. The port’s PID board will include the unelected port authority board’s chair, vice chair, Hedge and two other members appointed by those three people.

“We’re talking about a PID whose sole purpose is to ... borrow a lot of money, based on a promise of repayment from taxes, all while one or two layers removed from any elected representation,” Faris said.

The vote was rescheduled last month after the PID proposal stoked ire over a lack of public information and notice. The plan also generated a lengthy list of questions from the Salt Lake City Council and Mayor Erin Mendenhall, including how the bonds would be repaid, why the public had not been allowed to weigh in, and why the port authority was rushing to approve the PID.

Hours before the board met Monday, about 30 members of the Stop the Polluting Port coalition held a news conference and protest at the inland port’s office headquarters at 111 S. Main Street in Salt Lake City. Some of the protesters attempted to deliver a petition against the PID, with more than 2,000 signatures, to port authority staff, but they were stopped at the building’s elevators and told to leave by security and police officers.

“This is another example of how the public has been cut out of engagement in this process,” said coalition member Deeda Seed. “... I think it shows that they really don’t care what the public thinks.”

Opponents of the inland port have long decried its potential impacts to air quality and the environment due to increased traffic. Developing hundreds of square miles of open land near the south shore of the Great Salt Lake could also have a detrimental impact on millions of migratory birds, they warn.

At the Monday protest, Seed also complained about a lack of transparency over how the PID’s bond money would be spent. Port authority staff held an informational session on Oct. 1 to provide more information about the PID.

The PID area encompasses a 43-acre property near 5600 West and 1100 South. Port authority staff confirmed the land has a single owner. They did not say who the owner is, but Salt Lake County parcel information lists “BOYER 1100 SOUTH INDUSTRIAL, LC, et al.”

The port authority does not plan to raise property taxes for the PID, but increased property value from projects built on the land is expected to pay back the bonds.

A large truck-to-train transloading facility is planned for the PID property, according to the port authority’s COO Jill Flygare, but the bonds issued by the PID could also fund other projects on other properties.

Some of those projects might include a refueling station tentatively planned south of the State Road 201 Freeway and west of the Mountain View Corridor, a rail line north of Interstate 80 at the site of an old landfill, and a manufacturing plant with worker resources as well as a U.S. Department of Homeland Security customs warehouse, both south of I-80.

Flygare noted at the informational session that these are only “contemplated projects” and may be financed by other means than the PID. At Monday’s protest, Seed called the lack of firmer details and plans for the PID funds “reckless.”

“Have you have you ever heard of a municipal government issuing $150 million in bonds and telling the taxpayers that they’re not quite sure what they’re going to do with the money?” Seed said. “It’s outrageous.”

Opponents of the inland port have further raised alarm at the 8.5% interest rate cap included in the PID resolutions the board approved. But staff and the board’s advisers have noted that the actual interest rate will likely be much lower, even with the uncertainty hanging over the port’s revenue due to Salt Lake City’s lawsuit.