Inland port’s effort to snatch up LDS Church property throws wrench into plan to improve air, traffic

Rail company files its own eminent domain action to preserve a project years in the making to bring relief to west-siders.

(Rick Egan | The Salt Lake Tribune) A property owned by a real estate arm of The Church of Jesus Christ of Latter-day Saints, seen Friday, May 20, 2022, is caught up in dueling eminent domain claims between a Utah-based rail company and the Utah Inland Port Authority.

Dueling eminent domain claims over church-owned property within the inland port have muddied plans to improve the quality of life for residents of Salt Lake City’s west side.

The Utah Inland Port Authority board voted May 19 to acquire — either through purchase or condemnation — 41 acres owned by Suburban Land Reserve, a real estate arm of The Church of Jesus Christ of Latter-day Saints. The vacant land is nestled between Interstate 80 and a rail line at approximately 6 South and 5600 West.

Port officials insisted quick action was necessary to preserve the land and opportunities for public funding.

Turns out, the Utah Department of Transportation, in partnership with a small Utah-based rail company, already had secured federal funding for the site years ago in an effort to improve traffic, air quality and noise-pollution issues around Salt Lake City’s Poplar Grove neighborhood.

Mere days after the port board approved a resolution to acquire the land, Salt Lake Garfield and Western Railway, or SLGW, filed its own eminent domain action on May 24 in 3rd District Court.

“That land is critical,” said John Fenton, CEO of Patriot Rail, SLGW’s parent company, “to moving forward in doing exactly what we’d like to accomplish.”

SLGW, formed in 1891, provides short-line service in Salt Lake City, moving freight to and from larger rail companies, including Union Pacific and BNSF. Patriot acquired SLGW in January 2021.

How west-siders would benefit

As the company’s rail traffic has grown, especially in the past decade, it has created headaches for people living on the city’s west side. The SLGW’s rail car count grew from 3,775 to 6,000 cars from 2016 to 2017 alone, which causes congestion along intersecting roads as it builds up trains along rail lines.

In grant applications to the U.S. Department of Transportation, SLGW and UDOT made the case for a project they call the “Western Interchange.” That proposal would move the bulk of SLGW’s operations to the Suburban Land Reserve parcels and away from the company’s current rail yard in Poplar Grove.

Significantly, the project would also reduce up to 90% of traffic backups at grade crossings at 800 West, 900 West and 1000 West, along with six other crossings downtown.

“When that railroad was built way back in the 1890s,” Fenton said, “those road crossing didn’t even exist.”

Fewer rail movement at those crossings, now located in residential neighborhoods, also improves safety, helps with late-night noise, and curbs emissions from idling vehicles waiting for the trains to pass, according to submissions to the federal government.

The feds approved UDOT and SLGW’s request in 2018, granting $13.6 million in Infrastructure for Rebuilding America funds for the Western Interchange project. SLGW pledged to match another $9.1 million.

The rail company also began negotiating purchase of the Suburban Land Reserve properties around that time, court filings show.

SLGW offered $5.4 million in cash last July, according to letters sent to representatives with the church’s real estate holdings. The rail company then upped its offer to $6 million in March.

On April 8, SLGW apparently received notice that the church instead intended to solicit bids for the property — at which point SLGW noted it has the right to seek eminent domain.

A month later, the rail company reiterated its $6 million offer. On May 13, it shared an appraisal valuing the site at $3.7 million with “adequate access” and $2.2 million without access (the property is landlocked by the freeway to the north and rail line to the south) in an effort to demonstrate its submission exceeded market rates.

Representatives with Suburban Land Reserve declined to comment for this story, but they previously told The Salt Lake Tribune that after “a competitive marketing process, the Utah Inland Port Authority was the successful bidder among several interested parties who made offers on the land.”

Questions remain about the port authority’s move

It’s unclear why the port authority intervened in SLGW’s acquisition plans, or how much it offered to compensate the church for the acreage.

In an interview last week, port authority Executive Director Jack Hedge said once Suburban Land Reserve opened the property to bid, other buyers were willing to pony up more than SLGW and its parent company, Patriot Rail.

“Because we have a public purpose,” Hedge said, “we could play closer to market than what Patriot was apparently willing or able to pay.”

Several public figures and Utah agencies issued letters in support of UDOT and SLGW’s Western Interchange project in 2017, including then-Gov. Gary Herbert, the Salt Lake Chamber, Utah Transit Authority and Wasatch Front Regional Council.

Hedge, however, said he “was not aware” SLGW had an interest in the Suburban Land Reserve property when the port authority decided to put in a bid.

(Francisco Kjolseth | The Salt Lake Tribune) Shipping containers are moved via railcar at the Union Pacific intermodal terminal, west of Salt Lake City. Directly south is the future site of the transloading facility, which will be the heart of the inland port, as seen on Wednesday, Nov. 10, 2021.

“Our interests and Patriot’s are, quite frankly,” Hedge said, “perfectly aligned.”

Representatives with the port authority declined to comment after SLGW’s submitted its May 24 eminent domain complaint.

The port board secured the ability last year to issue up to $150 million in bonds, which it would repay with a portion of the property taxes it collects. A lawsuit currently under deliberation by the Supreme Court questions whether the port authority is entitled to that revenue at all.

Asked why the port authority did not exercise eminent domain or seek to acquire the land beneath its proposed $53 million transloading facility, at the heart of the inland port, Hedge responded that “we didn’t feel the urgency or need or concern that the property could go to other uses.”

Fenton, Patriot Rail’s CEO, said the port authority’s effort to take the Suburban Land Reserve property “could potentially” put SLGW’s federal grant at risk. A spokesperson for UDOT said the department’s role was merely to “facilitate” the grant and could not say whether loss of SLGW’s participation would have any impact on the fate of those funds.

“We want to proceed. We want to get this done. We want to be good partners,” Fenton said. “There were a lot of different agencies that worked together to pull that grant together and make it a reality. Hopefully, we can move on and do what’s right for everybody involved.”