Did Utah’s Inner Harbor Stocks Raise the Price of LDS Church Property?

The Utah Inland Port Authority’s pursuit of 41 acres for a rail yard may have raised the price of church-owned property by millions of dollars, newly obtained documents show, and jeopardized a federal grant.

Salt Lake Garfield and Western Rail, a branch line company, has long aimed to move operations out of Salt Lake City’s Poplar Grove neighborhood to improve the quality of life for western residents. As the company has grown over the years, its cars frequently slow traffic at crossings, leading to more pollution, delays and safety issues.

SLGW, recently acquired by Patriot Rail, received a $13.6 million federal grant in 2018 to move its operations through a project called “Western Interchange” – in partnership with the Utah Department of Transportation. SLGW also agreed to participate in a game over $9 million, so the western exchange would cost the state nothing. The project has received support from the Governor’s office, Salt Lake City officials, the Salt Lake Chamber and many others.

In securing the grant, SLGW identified a strip of vacant land at 6 South and 5600 West as an ideal site for its plans, as it already adjoins railway company-owned easements. The 41-acre parcel is owned by Suburban Land Reserve, a real estate branch of The Church of Jesus Christ of Latter-day Saints. SLGW entered into negotiations with the church shortly after obtaining its federal funds.

Last July, SLGW offered the church $5.4 million in cash for the property. In March, the rail company agreed to increase its offer to $6 million.

Church brokers then decided to solicit offers instead. The Utah Inner Ports Authority rushed in with the highest bid, evidently to the frustration of SLGW operators.

“Although port management has asserted that the port and SLGW are ‘partners’, the port’s attempt to acquire SLR ownership directly jeopardizes the [federal] Grant,” wrote Patriot Rail CEO John Fenton in a May 25 letter to Salt Lake City Council and Mayor Erin Mendenhall.

The harbor board approved the “amicable sentencing” of the church property on May 19, but did not provide any public information about the purchase in advance, including plot numbers, l site location or port benefits.

Fenton noted the port authority’s lack of public disclosure in his letter, which the Salt Lake Tribune obtained through a public records request.

“The lack of transparency that surrounds meetings of the Port’s Board of Directors makes it difficult to engage substantively in the Port’s public process,” he wrote, “since the SLR ownership in question was not not listed on the port board’s agenda, nor were public copies of the sentencing resolution made available until several hours after the meeting ended.

How much did the port offer for the land?

The Tribune previously requested information on how much the Port Authority planned to pay for the church land. A person hired to handle public relations for the port replied on June 7 that “they are still negotiating” the transaction. But Fenton’s letter notes that the Port Authority submitted an offer of “over $10 million.”

That’s “nearly twice SLGW’s $6 million bid,” he wrote, “and nearly five times SLGW’s estimated market value.”

It’s unclear why the property would be of much value to anyone but SLGW, since it’s essentially landlocked by the company railroad to the south and Interstate 80 to the north. Last month, Patriot Rail commissioned an appraisal that valued the property at $3.7 million with “adequate access” and $2.2 million without access.

“We cannot understand why a public body is increasing the cost of a critical parcel needed to fulfill the grant,” Fenton wrote, “especially since SLGW is not aware of any other bidder for the SLR property”.

Outgoing Inner Port chief executive Jack Hedge previously told The Tribune that other bidders beyond SLGW and the port were interested in buying the property. A church spokesperson also previously said that “Utah’s Inner Ports Authority was the winning bidder among several interested parties who made bids on the ground.”

A church spokesperson did not respond Thursday to a request for comment on the story.

Fenton noted in his letter that inflation has already “severely” eroded the scope of the Western Interchange project, and the Port Authority’s decision has put the proposal in jeopardy.

“If SLGW cannot acquire the SLR property at fair value,” Fenton wrote, “without restrictions or conditions, the entire $13.65 million federal grant awarded four years ago will sadly be forfeited, and SLGW will not be able to move its operations. [its] East Yard in Poplar Grove.

SLGW apparently attempted to negotiate when it learned of the Port Authority’s plans. In April, SLGW officials suggested buying an easement for $5.4 million, the letter said, with the port authority retaining ownership of the land in case the company ceases operations.

“Despite multiple appeals and communications to port personnel, SLGW has received no substantive response to SLGW’s proposal,” Fenton wrote, “or any further notification from the port of its intention to proceed with condemnation.”

The city wants to move the rail yard

SLGW and Patriot Rail launched their own eminent domain process for the property on May 24, which remains pending.

“The City is aware of discussions between the Port, Patriot Rail and the Church,” Mendenhall said in a statement to The Tribune. “The city’s priority for any future owner of the property is to ensure they are committed to relocating the rail yard and significantly reducing rail traffic through Salt Lake City.”

Asked about the property’s purchase price and inconsistencies over the number of bidders involved, a Port Authority public relations officer said he would not comment on matters relating to ongoing litigation.

“But [the port authority] is working with its board of directors, its legal team and representatives of Patriot Rail,” he added, “to achieve a positive solution that works for private business and the state.”

Discussions at a recent board meeting provided clues to the Port Authority’s motives for grabbing church property.

“We have two objectives here that we are trying to accomplish that we believe are in the public interest,” Board Chairman Miles Hansen said Thursday in response to public complaints about the transaction. “One prevents one entity from having a monopoly on rail access north of I-80, and the other ensures that we get at-grade railroad crossings out of neighborhoods.”

Fenton addressed the Port Authority’s concern over “competitive access” in its letter, calling it “unfounded” since SLGW offers options to shippers through interchange agreements with Union Pacific and BNSF.

Board members also addressed complaints about the Port Authority’s transparency on Thursday, saying they will provide greater access to documents and processes, as well as potentially more time for public comment and less closed sessions.