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Conflict-of-interest 'ambiguity' sinks initial Utah Inland Port Authority meeting

FILE - Land that is being considered for development by Salt Lake City is seen on Monday, Dec. 5, 2016.
FILE - Land that is being considered for development by Salt Lake City is seen on Monday, Dec. 5, 2016.
Scott G Winterton, Deseret News

SALT LAKE CITY — The controversial Utah Inland Port Authority board was supposed to have its first meeting Monday to kick off planning of what is expected to be the state's largest economic development project ever.

But that didn't happen.

Even though the board's publicly noticed agenda included plans to elect a chairman and discuss hiring an executive director, the board didn't officially convene because its members hadn't yet been impaneled amid questions about conflict-of-interest issues.

In fact, four members hadn't yet submitted conflict-of-interest statements, including House Speaker Greg Hughes, who appointed himself to the board. The statements are required under SB234 from each member before they can take their places on the board.

FILE - Utah House Speaker Greg Hughes, R-Draper, speaks during a news conference at the Utah State Capitol Tuesday, June 5, 2018, in Salt Lake City.
FILE - Utah House Speaker Greg Hughes, R-Draper, speaks during a news conference at the Utah State Capitol Tuesday, June 5, 2018, in Salt Lake City.
Rick Bowmer, Associated Press

The other members who hadn't turned in their forms include Salt Lake City Councilman James Rogers (who didn't attend Monday's meeting because of a death in a family, he said); Stuart Clason, Salt Lake County's regional economic development division director; and Salt Lake County Councilman Michael Jensen.

And one member — Senate President Wayne Niederhauser's appointee, Sen. Don Ipson, R-St. George — resigned, Gov. Gary Herbert announced, because he owned land within 5 miles of the port authority's boundaries.

While pumping the brakes on the meeting, Hughes and the Legislature's legal counsel, John Fellows, cited "ambiguity" in SB234's language about what exactly could constitute a conflict of interest while serving as a board member.

"I don't want to start in a place where there are questions or there are challenges to how the process has begun," Hughes said in an interview after the meeting. "So out of an abundance of caution, I think we need to look at this bill and make sure that we're following it right."

Asked why he hasn't submitted his conflict-of-interest form, Hughes told reporters, "because it's ambiguous."

"I think there needs to be more specificity, to be honest with you," Hughes said of SB234, a bill he championed when it passed the 2018 Legislature.

"You want to be careful not to subscribe, under penalty of perjury, with language that I think right now — as you heard — there could be legal interpretations in different ways."

Asked if there were concerns that he could have a conflict, the speaker replied: "I could, sure."

"I mean, look … I think the way it was written when we passed the bill, we wanted to have an abundance of caution on board limitations, for sure," he said. "But the language itself versus what the bill is doing — with boundary, with governing board, with the revenue needed to run it — was where all the attention and where all the eyes were going. The board limitations, I think, could capture many in terms of how it's written, and we don't want that to be the case."

As currently written, SB234 states an individual may not serve as a member of the board or as executive director if:

• The individual owns real property, other than a personal residence, on or within 5 miles of the authority's jurisdictional land.

• A family member owns an interest in real property, other than a personal residence, within a half mile of the authority's jurisdiction.

• The individual or family member owns an interest in, is directly affiliated with, or is an employee or officer of a firm, company, or other entity that the individual is likely to participate in or receive compensation, or other direct financial benefit, from the development of the authority jurisdictional land, or acquire an interest in or locate a facility on the authority jurisdictional land.

The law also states a board member may not at any time "take any action to initiate, negotiate, or otherwise arrange for the acquisition of an interest in real property" located on or within 5 miles of the authority's jurisdiction.

Fellows pointed out, as an example, that it could be argued board member Carlos Braceras, director of the Utah Department of Transportation, participates in buying and selling land within the port's boundaries as part of his duties for UDOT and could therefore have a conflict of interest. John Gleason, spokesman for UDOT, said later Monday that opinion has been reviewed by the Utah Attorney General's office and "determined that would not be the case."

Hughes, a developer and property manager, lists in his personal financial disclosure form filed with the House that he is an owner or officer of Steelers Holding, a real estate holding company. Hughes is also listed as a manager of several other companies listed with the Utah Department of Commerce, some of which have properties in Salt Lake City.

The inland port's boundaries encompass about 22,000 acres of land, mostly located in Salt Lake City's undeveloped northwest quadrant.

So as questions of conflict-of-interest limitations on board members continue to linger, Monday marked a rocky start for the new government entity that has been tangled in a battle with Salt Lake City since its inception from a surprise version of SB234 that sailed through the House and Senate on the second-to-last day of the 2018 session.

Upon its passage, distraught Salt Lake City officials — protesting the board's ability to ultimately usurp city land use authority and capture 100 percent of the project area's tax increment — attempted to negotiate changes, but those negotiations broke down after Salt Lake Mayor Jackie Biskupski didn't accept a compromise bill drafted by the governor's office.

Frustrated with stalled negotiations, Hughes and Sen. Jim Dabakis — without Salt Lake City's involvement — proposed a list of changes to the bill to find a compromise and continue talks, but it's not clear where those negotiations have led.

In light of Monday's meeting, leaders apparently have even more issues to sort though before any discussions about a Utah port can continue.

Even though Herbert, Hughes, Niederhauser, their appointees and several other officials attended, and even though it was apparent Herbert was eager to begin the port authority's business, the governor agreed at Hughes' nudging to make the meeting only "informational" and to delay action items until a future meeting is set.

Board member Derek Miller, who is also president and CEO of World Trade Center Utah, asked to delay the meeting until everyone could file their conflict-of-interest paperwork.

"Why can't we make that in the form of a motion?" Herbert asked.

"Because we're not impaneled," Hughes replied.

An official Utah Inland Port Authority meeting might not be able to take place until after a special session, according to Hughes' chief of staff, Greg Hartley, who said there may be an opportunity to address "conflicting language" in SB234 as it relates to conflict of interest limitations on board members, as well as Salt Lake City's continuing concerns about the power the bill grants to the port authority.

"We have been having productive conversations with the Salt Lake City Council, and we think there are some changes that will likely come in a special session," Hartley said. "And while we've done that, we've identified some clarifying language that likely needs to be inserted related to some of these conflict provisions to provide a little bit more clarity."

Biskupski, who sat in the audience during Monday's meeting, has said her office continues to negotiate with SB234's sponsor, Sen. Jerry Stevenson, R-Layton, on possible changes to the bill.

FILE - Lara Fritts, Salt Lake City Economic Development director, speaks at a roundtable discussion on City Creek’s impact on downtown Salt Lake City at the CBC Advisors office in Salt Lake City on Tuesday, March 14, 2017.
FILE - Lara Fritts, Salt Lake City Economic Development director, speaks at a roundtable discussion on City Creek’s impact on downtown Salt Lake City at the CBC Advisors office in Salt Lake City on Tuesday, March 14, 2017.
Kristin Murphy, Deseret News

Lara Fritts — who was appointed to the inland port board by the chairman of Salt Lake City's airport advisory board, at the request of Biskupski — said in an interview later Monday that "it's important that we start the inland port board off on the right foot."

"And if there are legal questions that need to be clarified or answered, I think it's important we do that," she said, noting that in the meantime, Salt Lake City "continues to operate business as usual."

Among the few things the Utah Inland Port board members unofficially discussed Monday was a cursory review of the board's budget, which includes $1.5 million in one-time money appropriated from the state, as well as $479,000 in one-time funds for "continued study" of the port.

It's not yet clear how the revenue will be spent.

Board members can get paid for their role on the board, but the amount varies. According to SB234, a board member who is not a legislator may not receive compensation or benefits for serving on the board, but may receive per diem and reimbursement for travel expenses incurred. That per diem payment is $60 for each official meeting that lasts up to four hours and $90 per meeting longer than four hours, according to the state's boards and commissions handbook.

If a board member is a legislator, he or she will be compensated at the rate governed by the state's Legislative Management Committee, which was set this year for $273 per day.

However, Hughes will be looking into whether he can forego compensation, Hartley said.