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SALT LAKE CITY — Leaders of the Utah Inland Port Authority say their proposed $150 million bonds may go toward about a half-dozen transportation projects aimed at increasing production of the growing inland port.
The agency on Friday hosted a virtual information session to explain their call for a public infrastructure district, a little more than a week after they postponed a vote on the plan amid concerns raised by Salt Lake City leaders and residents.
What's a PID?
The $150 million bonds would go toward a public infrastructure district, which is something relatively new in Utah. The creation of these districts, referred to as PIDs, was first allowed through a 2019 bill passed by the Utah Legislature, said Benji Becker, vice president of the investment bank Piper Sandler.
The point of public infrastructure districts, Becker said, is that it allows cities, counties and developmental authorities the ability to finance new infrastructure that's used for public use. These can be upgrades to roads, water and wastewater systems, utilities, public transportation or parks. The same concept exists in other states under terms such as "metropolitan districts" in Colorado and "general improvement districts" in Nevada.
"This infrastructure may be financed by issuing bonds that are repayable from property taxes or assessments on the property within the public infrastructure district or by using tax increment financing proceeds, which applies in the case of the Utah Inland Port Authority," he explained.
What the inland port wants to add
The bonds the Utah Inland Port Authority is proposing would go toward funding improvements to Utah's importing and exporting logistics system in the area of a major railroad hub and the Salt Lake City International Airport, according to Jill Flygare, the chief operations officer for the Utah Inland Port Authority.
One of the proposed projects is a transloading facility that would be located just south of the Union Pacific Intermodal facility near Salt Lake City's Glendale neighborhood. The 43-acre facility would be located in the area of 5600 West and 1100 South and used as a "cost-effective and more efficient" transportation between the railroad hub and trucks importing and exporting items to and from the hub.
"The transloading facility will reduce the number of truck trips and overall costs within the system by consolidating cargo and optimizing crate flows," Flygare said. "Ninety percent of all cargo that comes into this market today comes by truck. By building this facility, we'll be able to reduce the number of trucks that currently come into this market."
The authority is also looking into an alternative energy refueling station that would include compressed natural gas, liquefied natural gas and electric vehicle refueling, as well as hydrogen refueling sometime after that. It's still not clear where that facility would be located, but Flygare said the project is also being supported in coordination with Dominion Energy, Lancer Energy and BayoTech, Inc.
Another project centers around a new Stadler Rail manufacturing plant in the area of 5600 West and 150 South. The facility would also offer services open for all residents, such as day care and access to "restaurant grade facilities" during off-hours, Flygare said. The building is close to where a proposed rail spur test track is being considered with the bonds.
There's also a proposal to repurpose a building in the area of 5100 West and I-80 for a U.S. Customs bonded warehouse, which is a secured area where federal agents can protect certain stored goods. Another plan calls for an easement to build a rail line through the North Temple Landfill, which can open rail access north of I-80, while another calls for an expansion of 7200 West, where heavy-duty trucks account for a little more than one-fourth of the estimated 22,000 average daily trips on the road.
All of the projects described Friday are still being contemplated and may not be funded through the proposed bonds, Flygare said. Some of the projects could be funded by other sources in the future.
"We are still in the process of prioritizing those for this first round of funding," she said.
How the bonds would be financed
The Utah Inland Port Authority first announced plans for the bond on Sept. 8. Leaders had planned to vote on it on Sept. 20 but the meeting was postponed after the agency received a letter from Salt Lake City leaders asking for a pause on the vote to allow them more time to research the proposal and as Stop the Polluting Port Coalition, a group against the inland port, protested outside of the authority's office building.
Salt Lake leaders and the environmental coalition questioned the bond proposal and the speed that port authority leaders tried to push it through, especially because it wasn't clear as to what would be funded by the issuances of $150 million in bonds. They were also concerned because property tax would go into repaying the bonds, which could end up at an 8.5% interest rate — meaning it would cost taxpayers $255 million in total over a 35-year term of the loan.
Becker explained Friday that the plan doesn't call for a tax rate increase for homeowners inside the Inland Port Authority areas of Salt Lake City and West Valley City — or the residents of those cities outside of the inland port. In addition, all of the affected property owners within the selected public infrastructure district area would also have to consent to the taxation.
The property taxes of homeowners who agree to the bonds would essentially be frozen, and any additional increases to property tax assessment over the time frame of the bonds, created by the projects improving the value of the land, would go toward repaying those bonds.
"That growth is shared between the taxing entities based on the agreements they make amongst each other and with the (Utah Inland Port Authority)," he said.
Randy Larsen, a municipal bond attorney for Gilmore Bell, added that the interest rate has yet to be set and an 8.5% rate Salt Lake City leaders questioned is the maximum the project could receive. With interests considered low at the moment, it's more likely for the rate to be lower than that. Becker explained that means more money ends up going toward the project and not toward interest.
Flygare added that more details — like locations and total costs — of the selected projects will be provided if they are funded through a public infrastructure district.
What's next in the process
The Utah Inland Port Authority has yet to vote on the bonds, which would be its largest funding since it was formed in 2018.
Deeda Seed, an organizer for Stop the Polluting Port Coalition, said the coalition still isn't convinced about the project after attending Friday's meeting. She said everyone involved still "failed to answer essential questions" about the projects that would still be paid back through property tax revenue. She added that it ultimately "raised more questions than it answered."
"The fact that UIPA is intending to use public money to fund projects that haven't been fully vetted is outrageous and should be of concern to every Utah taxpayer," she said in a statement. "It is analogous to creating an enormous 'slush fund,' which in this instance has the potential to further degrade air quality, westside communities, wildlife habitat, the Great Salt Lake and more."
It's not clear when the Utah Inland Port Authority will vote on the proposal but the vote will be held in a future public meeting.