The inland port of Utah is unable to cancel multimillion-dollar leases it cannot use

The Utah Inland Port Authority (UIPA) continues to spend millions each year to lease two largely vacant lots, and its leadership doesn’t know what to do with it.

Previous UIPA executives signed leases in 2021 for a proposed truck-train freight transfer facility and semi-trailer parking lot, pledging to pay tens of thousands of dollars every month for a decade or more. Although the port authority has now withdrawn the plans for the two properties, they cannot get out of their expensive contracts.

“It’s a heavy financial burden that I honestly wish we didn’t have to pay for,” said UIPA Managing Director Ben Hart.

Hart took over the controversial, quasi-state-owned company in August 2022 after lawmakers reshuffled its leadership, frustrated by UIPA’s lack of progress and questionable deals.

Jack Hedge, the Port Authority’s former chief executive, first entered into a lease commitment with real estate developers Gardner Batt and The Boyer Co. in January 2021. Under the terms of the agreement, UIPA agreed to pay up to $120,000 per month for a period of 40 years for two properties totaling 41.6 acres at 1100 South and 5600 West in the Northwest quadrant of Salt Lake City .

The developers hoped to earn millions more in public funds by building UIPA’s terminal, which would form the heart of the port’s operations, and leasing it back to the Port Authority. However, logistics experts have determined that Utah is unlikely to receive enough rail freight to justify investments in handling, including the proposed $50 million facility on the Boyer-Gardner property.

Those plans are no longer on the table, Hart said. However, he confirmed that UIPA continues to pay Gardner and Boyer $120,000 a month.

“We are looking for occupiers for this property,” Hart said. “We don’t want just any users, we want users that fit well with the philosophy of the new port and the needs of the community.”

The second lease was signed in November 2021 by former UIPA chief executive Jill Flygare. This contract requires the Port Authority to pay up to $155,000 per month for an old cattle feed storage facility and its associated 23-acre parking lot for a term of 10 years. Chicago-based developer Industrial Outdoor Ventures (IOV) announced in February 2021 that it had purchased the property at 5 S. 5100 West.

UIPA currently pays “SNL IOV SLC Owner LLC” $150,000 a month in rent. Those payments have been supplemented since last fall by a “flexible” sublease agreement with BioFire, Hart said, which pays $55,000 a month to use the building.

Previous Port Authority officials intended to use the site as a parking and rest area for long-distance truck drivers. But increased semi-trailer traffic on the site would hamper efforts to get trains to stop blocking crossroads in Salt Lake City’s Poplar Grove neighborhood, Hart said.

He called the resolution of rail and road conflicts in the port’s jurisdiction “one of our top priorities” as it causes significant delays, pollution and frustration for residents on the west side of the city.

Victoria Petro, a member of the Salt Lake City Council who represents communities on the West Side and is also a non-voting member of the UIPA Board, said she would still like parking for articulated lorry drivers in the Northwest Quadrant.

(Francisco Kjolseth | The Salt Lake Tribune) Trucks carrying shipping containers enter and exit the Union Pacific Intermodal Terminal under the jurisdiction of the Utah Inland Port Authority in Salt Lake City, November 10, 2021.

“Right now we have truckers at the Love’s rest area and on the streets throughout my county and they’re idling all night,” Petro said.

While drivers in Utah’s hot summers and bitterly cold winters understandably need air conditioning when resting, Petro says the large trucks and diesel fumes clogging the city’s streets pose an environmental and safety concern for residents.

The councilor said she would like UIPA to prioritize a parking facility that allows truck drivers to connect their taxis to a renewable energy source, rather than creating fossil fuel emissions.

“Anything,” Petro said, “that allows us to increase our reliance on solar and other clean energy.”

Hart said UIPA leadership wants to “do the right thing” for the West Side community, even as it explores options on its two cash-strapped leases.

“It’s a significant amount every month,” Hart said. “We are working hard to find good financial solutions for them.”

Developers benefit from other port projects throughout Utah

Gardner and Boyer not only make a lot of money from the abandoned transshipment center. As the Port Authority shifts its focus to funding smaller “port” projects across the state, developers keep popping up.

According to a plan and budget approved by City Council and the UIPA Board last month, Boyer owns two properties totaling 135.3 acres in the Spanish Fork Harbor project area. Gardner also owns several parcels totaling 109.9 acres in the Spanish Fork Harbor.

Boyer also appears to own at least a 150-acre property in a port development planned for Box Elder County.

“It wasn’t purposeful,” Hart said.

As part of its revamped strategy, UIPA is helping these project areas use tax differentials to build infrastructure such as railroads and sewers, allowing local governments to support new industrial developments. The funds also provide incentives to attract businesses. Lawmakers also made $60 million in state infrastructure bank funds available for UIPA to borrow, though Hart said none of his taxpayer money goes directly to developers.

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“We respect the wishes of the local community,” Hart said. “[Like] if there are already landowners and developers in the local community, and [just] brings in the port authority as an overlay.”

But longtime Port Authority critics say the projects are just another mechanism to funnel more public money into the deep pockets of property speculators.

“Clearly, well-connected Utah developers are taking advantage of the opportunity offered by the Utah Inland Port Authority to receive industrial development subsidies,” said Deeda Seed, a member of the Stop the Polluting Port Coalition.

She called the two Salt Lake City leases in which UIPA remains involved “outrageous.”

“This entire concept of a Utah Inland Port Authority is based on quicksand,” Seed said. “They just make things up over time, and the idea of ​​putting up this terminal and everything else that they’ve leased out has been looked at so poorly.”

Petro said she remains “cautiously optimistic” about the port’s changing strategies and investments in Salt Lake City, even after the city has been at odds with former UIPA leadership for years. But she urged current Port Authority policymakers to ensure it’s not just big developers nationwide to benefit.

(Chris Samuels | The Salt Lake Tribune) Salt Lake City Councilwoman Victoria Petro speaks during a meeting of the Utah Inland Port Authority Board of Directors at the state Capitol, Thursday, May 11, 2023.

“I love engines of economic development,” Petro said at the May UIPA Board meeting, “but I see the same landowners in every project area.”

She added that UIPA investments could empower small, minority and women-owned businesses to advance projects and drive change in their communities.

“I actually got a thank you letter from a smaller developer,” Petro said in an interview after the meeting. “That’s why you want diverse representation… I’m able to represent the voice of those who aren’t often heard.”

Justin Scaccy

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