Utah House Speaker Greg Hughes lands in another conflict-of-interest controversy

(Leah Hogsten | Tribune file photo) House Speaker Greg Hughes, R-Draper, participated in unveiling several recommendations from the Utah Safe Schools Commission, June 20, 2018, during a press conference at the Utah Capitol.

For the third time in little more than a year, Utah House Speaker Greg Hughes is in another conflict-of-interest controversy — and this time it is apparently part of an ongoing federal probe into the Utah Transit Authority, where he was once chairman of the board.

Documents newly released by UTA show the agency raised red flags in 2016 when it found that a company co-owned by Hughes, Urban Chase Property Management, was listed among partners aiming to build low-income housing as part of a “transit-oriented development” that would use surplus UTA land in West Jordan.

“UTA believes that Greg Hughes’ proposed participation in this project, even if it is just as an investor, appears to be a conflict of interest,” said a 2016 letter to project developers from then-UTA President and CEO Jerry Benson and then-General Counsel Jayme Blakesley.

They noted that UTA board decisions to allow the project near the Jordan Valley TRAX station all occurred when “Hughes was a member of the UTA Board of Trustees. For most of that time, Mr. Hughes was chairman.”

The letter and other records were first obtained by the Deseret News.

Documents indicate that Hughes and his company then withdrew from participation, and say he did not know the project was related to UTA. Also, the proposed Oquirrh Flats apartment complex as part of the project was never built, contracts expired and UTA pulled out of the partnership.

What may be more interesting is that UTA and Hughes won’t directly comment on it now, saying that’s because the matter is part of an ongoing federal investigation.

The U.S. Attorney for Utah’s office announced last year that it made a deal to avoid prosecuting the agency in exchange for its cooperation with a criminal probe into former UTA board members and others concerning possible misuse of taxpayer funds and development around train stations.

Trent Nelson | The Salt Lake Tribune U.S. Attorney John W. Huber announces an investigation into the Utah Transit Authority at a news conference in Salt Lake City, Tuesday April 4, 2017.

The only charges from that probe so far have been against former UTA board member Terry Diehl, a developer. But that case fell apart and the charges were dismissed.

Melodie Rydalch, spokeswoman for the U.S. Attorney for Utah’s office, said she could not comment on whether the investigation is still ongoing or whether it involves Hughes' situation.

But UTA spokesman Carl Arky emailed on Thursday, “We’re not allowed to comment due to the ongoing federal investigation.” Also Greg Hartley, Hughes’ chief of staff, said Hughes is declining to comment personally on the advice of a lawyer because of such UTA statements.

Hartley said Hughes has not talked to federal investigators about the latest controversy, and had only talked to them briefly early after the UTA immunity agreement was announced. He said that was a general discussion about the agency, and not about any projects related to him.

Hughes “doesn’t do any business with UTA. He’s never done any business related to a [transit-oriented development]," Hartley said. "He’s never made money from his service as an elected official. And he’s probably scrutinized a little harder for it.”

Chris Detrick | The Salt Lake Tribune UTA Board Chair Greg Hughes UTA, right, and General Manager Mike Allegra speak during a Audit Subcommittee of the Legislative Management Committee Tuesday August 26, 2014.

In the latest situation, Hartley said, Hughes “didn’t know [about] UTA’s involvement. Had he known, he never would have been involved with it. He and his business partner have talked. They are never going to do business with anything UTA owns, or a UTA project. That’s not just for the politics that come with it. He really doesn’t want to work with them.”

He said Hughes’ company was brought into the proposed project by GBR Capital because of Urban Chase’s experience working with low-income housing tax credits. At that time, Hartley said, it was still in the early “proposal and due diligence phase.”

Hughes’ company at that point had been told that the project was to be in West Jordan, but did not know it involved UTA. When he was advised of that after the initial UTA letter, Hughes and the company withdrew, Hartley said.

Documents released by UTA this week include a follow-up Dec. 19, 2016, UTA letter putting in writing that it understood that Hughes took “steps to remedy the issue.”

The agency also said it was told that Hughes’ company did not know that “the proposed investment was part of a UTA-initiated TOD,” and “is no longer involved in any of the transactions to be located at or on the property.”

But six months later, UTA attorney Blakesley sent another letter again raising red flags.

Despite Hughes' commitment not to be involved, Blakesley wrote, “I received information indicating (1) Mr. Hughes remains involved in the proposed transaction, (2) he has met with the West Jordan City manager to advocate for Oquirrh Flats, LLD, and (3) ‘Speaker Hughes’ is listed as part” of the partnership in a presentation that was planned the next week for the city council.

Hartley said even though Hughes withdrew from the project, he was inadvertently listed as a participant in an early draft of the presentation, which was later changed.

“It was news to the speaker that his name was used on anything,” Hartley said. “It was never actually used in a public setting of any kind.”

Hughes did not advocate for Oquirrh Flats in the meeting with the city manager, Hartley said, but met to answer general questions he had about low-income housing tax credits.

This is the third time in about a year that Hughes has landed in controversy over possible conflicts of interests.

In May 2017, The Salt Lake Tribune reported how Hughes and former House Majority Leader Kevin Garn formed a company in 2011 seeking to construct an apartment building on land that Hughes owned in downtown Salt Lake City.

Al Hartmann | Salt Lake Tribune Kevin Garn, Majority leader of the House of Representatives on February 10, 2009.

Not long afterward, UTA selected a separate Garn company to be its partner in several transit-oriented developments. Hughes was UTA board chairman at the time, and he didn’t include his business relationship with Garn on his UTA disclosure forms.

Hughes said that wasn’t required because formation of the company with Garn was a preliminary step in a project that never got off the ground. Hughes also said he didn’t know that Garn was a partner in the company that won the contracts.

More recently, Hughes, appointed himself to the board of the Utah Inland Port, then resigned from it last month because he owned property within a five-mile conflict zone that disqualified him from membership.

Hughes, a vocal proponent of the planned massive trade hub, owns several properties within five miles of the sprawling project’s boundaries. He said he was unaware his holdings were within that area, until it was first reported by The Tribune.

Hughes’ initial reaction was to push for changes to the law based on his argument that the five-mile buffer wasn’t a good way to screen out conflicts of interest. He later dropped that effort, withdrew his self-appointment and named House Majority Whip Francis Gibson, R-Mapleton, to the board.

Hughes is retiring from the Legislature this year, and is not seeking re-election. But he is seen as a likely candidate for governor in 2020.