Tooele County crashed and burned when handling the sale of Miller Motorsport Park, costing its taxpayers millions of dollars, according to a scathing performance audit released Tuesday.
State auditors said the county “mishandled” the sale of what is now called Utah Motorsports Campus by not following commonly used best practices for selling public property and made “several missteps" throughout the process, the audit found. That, combined with “other events that were out of its control,” caused the final sale to be delayed for more than 13 years and netted only a $7.36 million gain.
The county had originally agreed upon $20 million for the sale to Mitime Utah Investment LLC, a subsidiary of Chinese car manufacturer Geely, in 2015.
County leaders passed over an offer of $22.5 million for the property developed by the late Utah Jazz owner Larry H. Miller from Wyoming-based Center Point Management in 2015 by accepting Mitime’s offer, a decision that resulted in Center Point Management successfully suing the county for accepting a lower bid.
The county agreed to a $1.5 million settlement to Center Point in November of 2017, ending a 15-month legal battle. Last November, after putting the UMC up for sale for a third time, the Tooele County Commission agreed to sell the property to Mitime for about $18.5 million, according to county documents.
Tooele County Attorney Scott Broadhead said Tuesday that the county accepts the recommendations that auditors made regarding needed changes in the county’s procedures for selling public property and the need for more transparency. But he respectfully disagreed with the “narrative part of the report” that said the county received millions less than it could have from the sale of the raceway.
The audit, produced by the Utah Office of the Legislative Auditor General, also found that the county used misleading financial reporting and did not have proper oversight of the raceway when it managed the facility after the Miller Group chose not to renew its lease on the property in 2015 and turned it over to Tooele County.
“We disagree with the theory they espouse that, if we had followed some ideal process, that everything would have been different,” Broadhead said. “We think that is, frankly, not true, and it is just a bunch of speculation. It doesn’t compute with the decision the court has made. It is not consistent with what the 12 attorneys and two judges that have worked on the case would say.”
Broadhead was pleased that the auditor’s review of records from the facility and the county did not support allegations made when it was originally sold for the lower price that county commissioners’ decisions were influenced by a conflict of interest. There was no collusion, and no county officials profited from the sale, according to the audit.
“The initial sale failed, but not because of process,” Broadhead argued. “It failed because the judge thought that the county had to accept the highest purchase price. The county accepted the lower purchase price and looked at future economic benefits. That’s why we lost [the initial court case]. We didn’t pick the highest price. Then it got caught up in [more] litigation.”
That litigation cost the county $1.8 million, the audit said.
The audit said the county “had difficulty defending itself due to the lack of a documented process” but couldn’t say with certainly exactly how much the mishandling cost. The resulting delays ended up costing the county $9.36 million in operating losses.
“I think that idea that we could have [mitigated] all these economic damages is completely unfair,” Broadhead said.
He said the State Legislature clarified the law last year regarding the disposal of county property through a bill sponsored by Sen. Wayne A. Harper that said local governments do not have to accept the highest purchase price offered by bidders.
“So in that sense, I think we were vindicated,” Broadhead said.
The audit report mostly agrees that Tooele County chose the right buyer, but took exception to the way it handled the process.
“Reality is it is money we never actually had,” Broadhead said. “We were handed a piece of property that we really didn’t have [before]. You don’t know what the value is until you sell it. In their minds, it is money that you could have had, instead of money that you actually had.”
The audit also found that the county did not provide adequate budgetary oversight for the raceway before the final sale went through last year and did not provide adequate oversight for capital asset purchases. It did not protect its “investment” by conducting regular inventories of equipment it owned at the raceway.
It found that the county did not use an appraiser to establish fair market value.
Broadhead countered that the sale had to be made quickly because UMC’s top revenue-producing tenant, Ford Performance Racing School, told the county it needed a buyer by July 31, 2015, in order to keep the school from moving elsewhere.
When the property was put up for sale a third time, after years and years of court battles, Mitime was the only bidder and is the current owner.
“What is clear is that a well-executed sale could have allowed Tooele County to complete the agreed upon $20 million sale to Mitime in 2015,” the audit concluded.
Tom Tripp, chairman of the Tooele County Commission, wrote in a letter to the auditor general that the county “agrees with the recommendations and will use its best efforts to implement those recommendations in the coming months.”
Added House Speaker Brad Wilson, in a statement: “I think that everyone agrees that what was discovered, related to how Tooele County handled the sale of the Utah Motorsports Campus, should never happen again. However, our auditors have also provided some good recommendations on how Tooele County can improve in the future, and I trust they will take the proper steps to implement them.”