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SLC elected leaders call on inland port to provide more transparency as it plans to take on millions in public debt

In a letter, the mayor and City Council question the true cost of a $150 million bond meant to build up rail access.

(Trent Nelson | The Salt Lake Tribune) Salt Lake City Mayor Erin Mendenhall speaks at a recent news conference. The mayor joined with the City Council in issuing a letter raising a series of concerns about millions in debt the Inland Port Authority intends to issue in order to some large but vague infrastructure projects within the capital city's boundaries.

Salt Lake City Mayor Erin Mendenhall and the City Council are calling out the Utah Inland Port Authority (UIPA) for a rushed effort to raise $150 million in debt, paid back with tax dollars that would have normally gone to the city.

The first public notice of the proposed debt came 24 hours before the port board’s quarterly meeting this month. The meeting’s agenda listed a presentation of a public infrastructure district, or PID. Documents and discussions indicate that the PID would issue millions in bond money to build up the port with truck-to-rail transloading capacity, although details remain sparse.

Mendenhall and the council raised a series of concerns about the PID in a Sept. 16 letter to the port staff, obtained by The Salt Lake Tribune on Friday night.

“Can you help us understand UIPA’s urgency to take action so quickly,” the letter says, “when so many questions remain unanswered and the public has not had a meaningful opportunity to learn about the PID, and proposed infrastructure projects, and weigh in?”

The board is set to vote Monday afternoon on creation of the PID.

The Inland Port Authority would pay back the PID’s bond using its tax increment. Through legislation, the port claims 75% of future property tax dollars in an area that encompasses a fifth of the capital city.

Salt Lake City has since sued over control of that revenue, arguing that handing it over to an unelected authority violates the state constitution. The case currently sits before the Utah Supreme Court.

“If the Utah Supreme Court agrees with the City’s position and returns the tax increment to the City, how will UIPA make up the difference?” the city’s letter asks, going on to question the rush to pledge money in limbo. “Further, can you help us understand which bank is willing to accept this risk and how they are analyzing the risk of the uncertain revenue stream?”

A spokesperson for the mayor’s office said the city has not received a response from port representatives.

Asked for comment Saturday, the port’s chief operating officer, Jill Flygare, issued a brief statement: “We have and will continue to work with Salt Lake City’s two appointed representatives on the board.”

In a previous interview, the port’s executive director, Jack Hedge, said the $150 million bond would be used to build a train-to-truck transloading facility, rail access and a facility for port employees. Discussions and meeting materials also mentioned building an alternative fueling station for trucks. Specifics remain scant, such as construction timelines, project costs and location, and how they would connect with city-owned systems, like water and sewer.

The city questioned whether it would ultimately be left responsible for maintaining the vague infrastructure proposals.

“This quick process to create a PID and take the first steps to issue an enormous amount of debt is troubling and ignores the potential significant consequences to Salt Lake City’s taxpayers and [existing] infrastructure system,” the city’s letter states.

The mayor and council also questioned whether the bond was financially prudent. The $150 million would be a self-imposed limit set by the port authority board. The city’s letter points out, however, that an 8.5% interest rate means the public debt would climb to $255 million over the 35-year term.

“This high-interest loan will be repaid with public money generated by properties in Salt Lake City,” the letter says. “The interest rate is over three times the interest rate that the city receives when it issues municipal bonds.”

The city’s representatives on the 11-member port authority board include City Council member James Rodgers and Rachel Otto, the mayor’s chief of staff. The majority of the port’s board members, however, are appointed by bodies separate from the city, including the Legislature, governor’s office and Salt Lake County.

The PID would have its own board overseeing the bond, comprised of a few members of the inland port’s board and staff, as well as some landowners whose taxes would be used to pay back the debt.

Opponents of the port have raised alarm over the PID, which allows management of a significant chunk of public funds by an unelected governing body, appointed by another unelected body.

In their letter to port staff, the mayor and City Council echoed similar worries.

“If the City issues debt, the elected officials are required to disclose in detail, and receive public comment, on any project before approving the debt,” the letter says. “This is a critical part of the elected officials’ accountability to the taxpayers who are funding the project.”

The letter also points out that the proposed PID board does not include any members representing Salt Lake City, despite the fact that any projects built with bond money would be within city boundaries.

“We request that UIPA delay action on the creation of the PID, appointment of the PID board, and issuance of debt until these questions are clearly answered,” the letter says, “and the public has had the opportunity to meaningfully weigh in on the PID and issuance of debt.”

Read the entire letter below.

Correction 10:01 p.m., Sept. 20, 2021: This story has been updated to correct a quote from Jill Flygare, which was not complete.

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