State audit finds prominent developer made money from UTA land deal

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SALT LAKE CITY -- A state audit found a controversial member of the Utah Transit Authority board did have a conflict of interest and made an "undisclosed amount" of money involving a land deal on a controversial rail stop.

However, legislative leaders chose to disregard the auditor's recommendations for further review by the attorney general.

The report stated UTA trustee Terry Diehl properly disclosed he had a financial interest in the deal as the law requires and that despite the conflict, it did not influence the selection of a FrontRunner rail stop in Draper.

Still, the Legislative Auditor General asked lawmakers to consider referring the matter, which could be class B misdemeanor, to the attorney general for further review.

Diehl, who was appointed to the board by former House Speaker Greg Curtis, did not respond to a call and e-mail seeking a comment.

The audit found that in December of 2009, Diehl sold the development rights for the property to a company called Draper Holdings for "an undisclosed amount."
The audit found that in December of 2009, Diehl sold the development rights for the property to a company called Draper Holdings for "an undisclosed amount."

Legislative leaders disregard recommendationsUTA referred questions to UTA Board Chairman Greg Hughes, a Draper lawmaker, who discussed the matter at a Legislative Audit Committee meeting Tuesday afternoon.

One lawmaker on the four-member Legislative Audit Subcommittee, Sen. Pat Jones, zeroed in on the potentially lucrative financial reward, but Hughes said he didn't know how much money Diehl made off the exchange.

"As the chair of the board I'm not privy to any of that. It's not a board matter," Hughes said.

When Jones questioned whether or not Hughes tried to find out the sum, he said he hadn't.

"For other reasons, I haven't asked what your salary is, what you make on contracts," he said.

Rep. Janice Fisher, D-West Valley City, who requested the audit, questioned the decision not to follow the audit's recommendations.

"I'm extremely unhappy that this wasn't sent to the attorney general's office because the audit indicated it should have been," she said.

Despite those concerns, legislative leaders sent it to a pair of legislative committees.

The controversy

Controversy has been swirling for more than two years now over the selection of a FrontRunner rail stop in Draper at 12800 South, near where archaeologists have found the site of 3,000-year-old Native American village.

Top lawmakers called for the audit nearly seven months ago. It substantiated a number of news reports by KSL-TV, among others, that Diehl, a prominent developer, consulted for and later became an owner in a company called Whitewater Seven, which wanted to develop land next to the proposed FrontRunner stop.

The audit found that in December of last year, Diehl sold the development rights for the property to a company called Draper Holdings for "an undisclosed amount."

Both UTA and Diehl told auditors they acknowledged that the conflict existed, but say it was properly disclosed to the board.

The audit found Utah Code bans trustees from "acquiring property that could be potentially affected by UTA actions."

UTA's attorney, Bruce Jones, interprets the statute differently, maintaining the law is vague, "subject to multiple interpretations" and wasn't broken in any case.

The audit recommended both UTA and the Legislature consider beefing up conflict of interest rules. It asked legislative leaders to consider whether to refer the potential violation of the law, which is a class B misdemeanor, to the attorney general.

It also asked those leaders to decide whether to OK "additional audit work" into another major controversy involving Diehl — his Tavaci real estate development near Big Cottonwood Canyon in Cottonwood Heights.

This is not the first time the issue of conflicts of interest at UTA has come up. A 1996 audit found UTA's general manager and attorney at the time privately bought land next to property UTA had recently purchased. The report found nothing illegal, but expressed concern about the appearance of impropriety.

In 1997 lawmakers added the "misuse of information restriction" to the Public District Act. That's the same provision the audit found Diehl may have violated.


Story compiled with contributions from John Daley and Marc Giauque.

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