Inland port wins, Salt Lake City loses in Supreme Court ruling

Judges dismiss Salt Lake City’s arguments that establishing the facility and collecting revenue are unconstitutional.

(Francisco Kjolseth | The Salt Lake Tribune) Trucks carrying shipping containers move in and out of Union Pacific’s intermodal terminal west of Salt Lake City at a steady pace. The future location of the handling facility, which will be the heart of the inland port, is directly to the south, as can be seen on Wednesday, November 10, 2021.

After more than a year of deliberation, the Utah Supreme Court issued a ruling on Wednesday over whether the river port is unconstitutional and illegally siphoning off a portion of Salt Lake City’s revenues.

In short, the answer is no.

The judges found that the port’s formation did not violate Utah law and dismissed the city’s financial claims, though they left the tax revenue issue open for additional debate.

The Utah legislature established the inland port in 2018, taking advantage of a growing international airport, a Union Pacific rail hub, and the relocation of the Utah State Penitentiary — and its supporting infrastructure — in close proximity. The port area covers around 16,000 hectares. It includes parts of West Valley City and Magna, but the vast majority lies in the northwest quadrant of Salt Lake City and occupies about one-fifth of the capital’s landmass.

The legislator demanded that the three municipalities concerned allow zoning for the operation of the port within their borders. They ordered cities to allow the transportation and storage of “natural resources” — which some have interpreted as coal mined in Utah — on port land. They also allowed the Utah Port Authority, formed to manage the development of the facility, a portion of the property, sales, and use taxes that the port area cities would have levied.

Salt Lake City sued the Utah Inland Port Authority and the state in 2019. The lawsuit alleged the port’s creation violated the Utah Constitution on two counts:

• First, Salt Lake City argued that it treated the three affected municipalities differently than other state cities, violating the Consistent Application of Laws Clause.

• Second, the city claimed the inland port violated the constitution’s “Ripper Clause,” which prevents lawmakers from channeling a city’s funds, tax authorities, or property to a “special commission, private corporation, or association.”

A 3rd Circuit judge dismissed the lawsuit in January 2020, and Salt Lake City appealed to the state Supreme Court, which heard hearings in the case in April 2021.

In their 13-page report published on Wednesday, all five judges sided with the district court on the question of the constitutionality of the inland port.

While the port’s formation “clearly” resulted in unequal treatment of three cities, Salt Lake City attorneys failed to make arguments that the zoning requirements for the port “are not rationally related to a legitimate legislative objective,” the deputy said Chief Justice Thomas Rex Lee wrote. Thus, there is no violation of the uniformity rule.

“Economic studies underlying it [port’s creation] predicts that a river port could create thousands of jobs, develop natural resource extraction industries and make Utah a bigger player in the global economy,” wrote Lee, who will retire from the court Thursday. “Those are legitimate targets.”

As for the Ripper Clause, the judges found that the legislature had not delegated land-use or zoning powers to the Port Authority and dismissed the city’s claims.

“The legislature does not ‘trust’ here [the port authority] with a duty or responsibility to enact specific zoning ordinances,” Lee wrote. “[It] requires that Salt Lake City, West Valley City, and Magna ‘allow’ an inland port.”

Earlier this year, the Utah legislature negotiated river port reforms with Salt Lake City that included a reorganized board of directors and greater city control over property tax revenues generated by the company.

Under HB443, the city agreed to remit 65% of its port-derived property tax revenue, a figure that is declining over time. In return, the Port Authority must invest significant portions of these revenues in environmental controls, traffic reduction and job creation.

Therefore, the Supreme Court questioned whether the city’s complaints about its tax agency were moot. It directed the parties to submit supplementary briefings explaining whether they believed this to be the case.

Read the entire statement below:

This story will be updated. Inland port wins, Salt Lake City loses in Supreme Court ruling

Joel McCord

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