SLC elected leaders call on inland port to be more transparent as it considers taking on millions of public debt
In a letter, the mayor and city council question the true cost of a $ 150 million bond to build rail access.
Salt Lake City Mayor Erin Mendenhall and City Council call on the Utah Inland Port Authority (UIPA) to make rushed efforts to raise $ 150 million in debt, paid off with taxes that would normally have been paid to the city .
The first public notice of the proposed debt came 24 hours before the quarterly port council meeting this month. The meeting agenda included a presentation of a public infrastructure district or PID. Documents and discussions indicate that PID would issue millions of dollars in bonds to develop the port with truck-to-rail transshipment capability, although details remain scarce.
Mendenhall and the board raised a series of concerns about the PID in a September 16 letter to port staff, obtained by the Salt Lake Tribune on Friday night.
“Can you help us understand the urgency of the UIPA to take action so quickly,” the letter said, “when so many questions remain unanswered and the public has not had the opportunity to inquire? on the PID and proposed infrastructure projects, and weigh? “
The board of directors is due to vote on the creation of the PID on Monday afternoon.
The Inland Port Authority would reimburse the PID bond using its tax increment. Through legislation, the port is claiming 75% of future property tax dollars in an area that encompasses one-fifth of the capital.
Salt Lake City has since continued to monitor these revenues, arguing that handing them over to an unelected authority violates the state’s constitution. The case is currently before the Supreme Court.
“If the Utah Supreme Court agrees with the city’s position and returns the tax increase to the city, how will the UIPA make up the difference? The letter from the city asks, questioning the rush to promise money in limbo. “Also, can you help us understand which bank is willing to accept this risk and how they analyze the risk of uncertain income stream? “
A spokesperson for the mayor’s office said the city had not received a response from port officials.
Asked for comment on Saturday, port operations manager Jill Flygare released a brief statement: “We will continue to work with the two appointed representatives from Salt Lake City 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 transshipment facility, rail access and a facility for port workers. Discussions and meeting documents also mentioned the construction of an alternative refueling station for trucks. But details remain scarce, such as construction times, costs and location of the project, and how they will connect to city-owned systems, like water and sewage.
The city questioned whether it would ultimately remain responsible for sustaining the vague infrastructure proposals.
“This rapid process of creating a PID and taking the first steps to issue a massive amount of debt is troubling and ignores the potentially significant consequences for Salt Lake City taxpayers and [existing] infrastructure system, ”the letter from the city reads.
The mayor and council also questioned whether the bond was financially prudent. The $ 150 million would be a self-imposed limit by the harbor authority board. The letter from the city points out, however, that an interest rate of 8.5% means that 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 Salt Lake City properties,” the letter said. “The interest rate is more than three times the interest rate the city receives when it issues municipal bonds. “
The city’s representatives on the Port Authority’s 11-member board of directors include James Rodgers, member of city council, and Rachel Otto, chief of staff to the mayor. However, the majority of the port’s board of directors are appointed by separate city bodies, including the Legislative Assembly, the Governor’s Office, and Salt Lake County.
The PID would have its own board of directors overseeing the bond, made up of a few board members and inland port staff, as well as a few landowners whose taxes will be used to pay off the debt.
Opponents of the port have sounded the alarm on the PID, which allows the management of a significant portion 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 concerns.
“If the City issues a debt, elected officials are required to fully disclose and receive public comment on any project before approving the debt,” the letter said. “This is an essential element of the responsibility of elected officials towards the taxpayers who finance 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 all projects built with bond money would be within city limits.
“We call on the UIPA to delay action on the creation of the PID, the appointment of the PID board and the issuance of the debt until these questions are clearly answered,” the letter said, “and the public had the opportunity to significantly influence the PID and debt issuance.
Read the entire letter below.