Utah Inland Port Authority retools to fulfill its mission

The bond-issuing Utah Inland Port Authority, which has been the target of two state audit reviews, a lawsuit brought by Salt Lake City, and opposition from environmentalists, is retooling its image and approach to economic development.  

With a strategic business plan covering 2023 to 2027 and a new executive director who took over in September, the agency is trying to put its controversial past behind, while forging ahead with projects.

"There were some feelings that not everything was getting accomplished the way it could or should," UIPA Executive Director Ben Hart said, pointing to a now stronger focus on governance by "making sure this organization could not only fulfill its charter, but did so in a way that was appropriate with public standards, public perceptions, and just everything that comes along with being steward over taxpayer dollars nowadays." 

BZI Steel

He also acknowledged that "the clock is ticking" to start tapping proceeds from an inaugural bond issue by UIPA, which was created by the Utah Legislature in 2018 as an independent development authority focused on supply chain logistics.  

The UIPA Crossroads Public Infrastructure District sold $150 million of unrated tax differential revenue bonds in December 2021 to finance an intermodal transportation center in Salt Lake City despite environmental protests and an ongoing lawsuit by the city that raised constitutional concerns related to the authority's use of tax increment financing.

The incremental increase in property tax revenue generated in a statutorily created 16,000-acre authority jurisdictional land project area that includes the 42-acre Crossroads district is pledged to pay off the debt.

The issue, which was structured with tax-exempt term bonds due in 2041 and 2052, had an extraordinary mandatory redemption provision that could have been triggered by an adverse outcome in the litigation. The Utah Supreme Court in June 2022 affirmed the dismissal of Salt Lake City's challenges to certain zoning provisions in the Utah Inland Port Authority Act, but ordered a supplemental briefing on challenges to the act's tax provisions.

The remainder of the lawsuit was dismissed by the high court in January after the authority and the city reached an agreement over TIF revenue.

Hart, who previously served as deputy director of the Governor's Office of Economic Opportunity and as a member of the UIPA board, said bond proceeds will be used by the agency for the purchase and remediation of a landfill, as well as for some rail-related work.

"The original notion used for some of the infrastructure related to a transloading facility and a few other things," he said. "We still want to do the rail infrastructure, but we would rather do it on the landfill property so a lot of those bond proceeds will probably end up helping to fulfill that vision and purpose on the landfill property."

Deeda Seed, senior campaigner at Center for Biological Diversity, which is part of a Stop the Polluting Port coalition, called the authority a "boondoggle."

"They're still struggling to figure out how they're going to justify their existence," she said. "The way they seem to be headed at the moment is to use money from the bond sale to remediate an old landfill and build warehouses."

A report last September by a University of California at Berkeley logistics expert that was commissioned by the anti-port coalition concluded UIPA's proposal for a trans-loading facility adjacent to a Union Pacific Railroad's intermodal terminal in Salt Lake City would fall short of attracting enough business and achieving significant reductions in supply-chain emissions.

Seed also raised concerns about the authority's use of taxpayer money, its ability to undertake remediation of a brownfield site, and the land project area's proximity to the Great Salt Lake and wetlands. 

Hart said the authority wants to be sensitive to the wetlands issues, but dismissed the coalition's other concerns as "basically garbage." 

"We feel what we're doing feeds into sustainability," he said. "It helps with air quality, it's helping with making wear and tear on our roads less expensive."

As for the landfill, Hart said additional bond issuance may be required given ultimate remediation costs are unknown. He noted TIF revenue has surpassed expectations. In fiscal 2022, which ended June 30, property tax differential revenue was up 21.7% at $6 million compared to fiscal 2021. 

Bond sales could happen in the future for projects outside of Salt Lake City to develop mini ports, he added. This year, inland port project areas were created in Iron and Box Elder counties and most recently in Spanish Fork.

"We anticipate we'll be helping with public finance mechanisms as well in some of these project areas," Hart said. 

UIPA could also get involved in a big railway project to ship crude oil from the Uinta Basin if asked by local officials, according to Hart.

Utah's Seven County Infrastructure Coalition plans to seek up to $2 billion in private activity bond authorization from the U.S. Department of Transportation for the project, which faces opposition from environmental groups and Colorado officials.

The port authority has been the target of state scrutiny.

A limited review audit by the Legislative Auditor General's office last September said while UIPA released a multi-year strategic business plan in 2020, it needs to prioritize the creation of a master development plan with stated goals and purposes prior to any major expenditure of bond proceeds unless its board approves an exception. 

Utah Inland Port Authority

A complaint the authority improperly procured a $2 million contract prompted a review last year by the state auditor's office, which recommended the agency update its procurement policy to require public notice and written justification for sole source procurements.

Hart said the board adopted a new business plan in December and is implementing other recommendations by the auditors.

Senate Bill 241, which was signed into law in March, made several changes to  UIPA, including requiring the adoption of a procurement policy and allowing it to create a project area for contaminated land and use TIF revenue to repay remediation costs.

A State Finance Review Commission, which was created under Utah law last year, will oversee bond issues by the UIPA and other newer development agencies in the state. 

UIPA has posted sometimes tardy quarterly financial reports on the Municipal Securities Rulemaking Board's EMMA disclosure website, as well as bare-bones budget information.

The agency's fiscal 2022 basic financial statements appears on the Utah auditor's website, but no annual audited financial report has been posted on EMMA.