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Kristin Murphy, KSL

Inland port opponents confront SLC Council over $28 million tax for warehouse

By Katie McKellar, KSL | Posted - Aug 20th, 2019 @ 9:42pm


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SALT LAKE CITY — An agreement Salt Lake City leaders made last year, before the state created the controversial Utah Inland Port Authority, has come back to haunt them — along with the rage of residents digging in their heels against anything related to a Utah port.

For more than two hours, the Salt Lake City Council felt the brunt of that rage Tuesday, when roughly 100 residents came to the council’s work session meeting to voice opposition to a proposed resolution to authorize a property tax increment reimbursement of up to $28 million over 20 years to a developer in the city’s northwest quadrant. The reimbursement would pay for infrastructure improvements on a development of about eight to 10 industrial warehouses on 378 acres north of I-80.

The development agreement with a coalition of northwest quadrant landowners called NWQ, LLC was initially approved by Salt Lake City Mayor Jackie Biskupski and the City Council last year, months before the Utah Legislature created the Utah Inland Port Authority — grandfathering the project area as the only piece of land in the port authority’s roughly 16,000 acre jurisdiction that remains under the city’s city land use and taxing authority.

When the mayor and City Council approved the agreement in January 2018, they were moving forward on the first phases of a city-led inland port or global trade hub that included environmental protections amid rumblings that state leaders would swoop in to take control.

At the time, throughout a public process that began in July 2016, Salt Lake City never saw the same public opposition to their agreement with NWQ, LLC as they did Tuesday — after controversy over the now state-created Utah Inland Port Authority has bubbled to a full boil.

After the state created an 11-member board to guide the creation of a Utah Inland Port — legislation that city leaders decried as usurping the city’s land use and taxing authority — public unrest over the inland port as grown exponentially as environmentalists and others worry a port will have catastrophic effects on air quality, traffic and wildlife in the city’s last swath of undeveloped land.

Over the past few months, the issue has become so vitriolic it’s led to numerous protests, some of which have shut down board meetings and led to arrests.

“I don’t understand why you would even consider approving this port,” said Kathleen Cahill, who was among about 60 residents voicing concerns about how a network of trucks, trains, and warehouses would impact air quality, sensitive wetlands and migratory bird habitat in the city’s west side.

“It’s like building a tumor on the neck of the city,” Cahill said.

But the situation before the council now is more complicated.

A man shows his “I Heart Clean Air” shirt while speaking in opposition to a proposed property tax increment reimbursement of up to $28 million for development of an inland port during a Salt Lake City Council Redevelopment Agency meeting at the City-County Building in Salt Lake City on Tuesday, Aug. 20, 2019. (Photo: Kristin Murphy, KSL)

It isn’t necessarily over whether the council would approve an inland port — but rather whether it would follow through with an agreement that had already been struck with the developer last year.

The decision before the council is whether it, acting as the Redevelopment Agency, would authorize future property tax revenue generated from the developer’s project of up to $28 million to be reimbursed to the developer to help pay for infrastructure improvements such as streets, stormwater systems and utilities.

The project already approved by the council to build eight to 10 warehouses adjacent to the already developed International Center — an area west of the airport that includes warehouses for Amazon and dozens of other companies with distribution centers — would include about 6 million square feet of development and is estimated to attract about 2,900 jobs. Those opposed question whether any of the jobs the warehouses bring will be well-paying.

The up to $28 million property tax reimbursement would come from tax increment — or future property tax revenue generated by growth. That money is only reimbursed if the property tax revenue growth occurs.

Under the city’s agreement, the developer would receive 54 percent of the tax increment — estimated at between $19 million and nearly $28 million, depending on growth — while the city would take 25 percent. The rest would go to affordable housing, Redevelopment Agency administrative costs, and shared costs for systemwide infrastructure improvements, according to city documents.

Currently, the property only generates about $724 in annual property taxes, but the first phase of the development, if realized, could bring in about $4.2 million a year, and the land could have an assessed value of over $1 billion, according to an independent analysis of the project.

The City Council, acting as the Redevelopment Agency, did not take action on whether to approve the up-to $28 million tax reimbursement Tuesday, but a vote could come as soon as next week.

But public speakers including Deeda Seed, a former Salt Lake City councilwoman and campaigner for the Center for Biological Diversity and leader of the group Stop the Polluting Port, urged the City Council to reject the tax reimbursement or take more time.

“Very few people were paying attention” when the city first approved the agreement, Seed said. She questioned how a “mega warehouse” development would impact the city’s future.

Additionally, the city and state remain locked in a legal battle over the constitutionality of the Utah Inland Port Authority — an issue that puts the port’s future in limbo.

“The Salt Lake City community deserves to have answers to these questions before we go any further,” Seed said.

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But whether the city could even back out of the agreement is in question. Council members asked city attorney Katie Lewis that if the Redevelopment Agency didn’t approve the tax reimbursement, would the city be violating its contract? Additionally, if the agreement is voided, would the city risk losing control of the area to the Utah Inland Port Authority?

Lewis didn’t provide any clear answers, hesitant to provide legal advice to the city in a public meeting. Later Tuesday, the City Council held a closed session for legal counsel.

Wade Budge, attorney at Snell and Wilmer who represents NWQ, LLC, told the council his clients are “committed” to working with the city.

However, City Councilwoman Erin Mendenhall — who is also running for mayor — questioned if the development agreement is not upheld, whether the developers would have other options, perhaps by going to the Utah Inland Port Authority instead.

“I don’t anticipate we’re going anywhere,” Budget said. “We intend to work with the city to try and obtain the agreement entered into. ... We can always look at opportunities to partner with others, but I don’t think that’s what we’re about. We haven’t even thought about that.”

City Councilman Charlie Luke said questions about the city upholding its contract put city leaders in an “uncomfortable position” when it comes to authorizing the tax reimbursement, but he pledged to give serious consideration to the public’s concern.

“We are trying to do what is in the best interest of Salt Lake City,” he said. “We’ll be looking for those answers very closely.”

City Councilwoman Ana Valdemoros read a statement expressing frustration that she was being asked to approve a tax deal already approved by a previous City Council and Biskupski — whom Valdemoros pointed out did not attend Tuesday’s meeting.

“As usual the mayor is not sitting with us today,” she said, issuing a call to Biskupski to attend the next meeting so she could discuss the issue with the council and the public.

The mayor’s spokesman, Matthew Rojas, said the mayor didn’t attend Tuesday because she had committed to other meetings and a press event to unveil artwork recently installed around the city.

Rojas told KSL the mayor was supportive of the agreement with NWQ, LLC based off of lengthy public process “long before” the legislation that created the Utah Inland Port Authority.

“The city does these types of agreements not only because we want to see development, but because we want to be investors in the development so that we have a say in how those areas are developed,” Rojas said. “This demonstrates the city is willing and able to negotiate to bring development to this area, but most importantly bring responsible development to this area.”

Rojas noted the agreement with NWQ, LLC was negotiated to include environmental buffers and other protections to guide a development that would represent Salt Lake City “values,” all while the city was operating with “the inland port legislation over our heads.”

“We were trying to demonstrate we could do this and we could do it in a manner that could reflect our values, get environmental protections, and we could come to an agreement,” he said. “So we are at a final stage of just kind of fulfilling our contracts with somebody who is willing to actually operate with the city as a fair partner.”

Seed, in an interview with KSL after Tuesday’s meeting, said questions about the city’s position as it relates to potentially violating its contract or if it could lose control of the area to the Utah Inland Port Authority are all “speculative questions that shouldn’t stop them from doing the right thing” and rejecting the tax reimbursement.

Danny Walz, chief operating officer of the city’s redevelopment agency, aimed to clarify that city leaders aren’t considering the port itself, but rather a set of warehouses.

“We are not building the inland port,” he said. “I recognize this is property within the inland port authority’s boundaries, however, this is a private development and does not include the port itself or whatever that will ultimately be decided to be.”

However, Seed challenged that characterization, noting that the city has master planned the area specifically for an inland port — and while the warehouses would be an early piece, they would lay the groundwork for infrastructure and future development.

“It’s the camel’s nose under the tent,” she said, “on the way to the inland port.”

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