Jeffrey D. Allred, Deseret Morning News
Park City Mayor Dana Williams, left, and city manager Tom Bakaly look over BLM-owned land within the city.

PARK CITY — To city fathers, the few remaining slivers of undeveloped land left in Park City are priceless as open space.

Actually, the price they would like to pay for some open space is about $10,000 an acre. That's the amount the city is offering the Bureau of Land Management for roughly 116 acres of prime, undeveloped property the federal agency owns within the city limits. The total amount the city wants to pay would be about $1.16 million.

And Park City wants to keep its offer intact, although some others are saying the land is worth many times that amount and that the city's proposed deal would be a colossal rip-off of U.S. taxpayers.

A plan to preserve open space — a plan being pushed by city officials and U.S. Rep. Rob Bishop, R-Utah, along with support from the Sierra Club — is causing a lot of heartburn in the U.S. Department of Interior, BLM's parent agency. Some argue that at the city's proposed price, the deal could be a $100 million loss to taxpayers.

"While we have not undertaken an appraisal of these lands, comparables in the immediate area suggest a valuation of at least $1 million an acre is not unreasonable, meaning the total fair market value of the land being transferred could well exceed $100 million," said Chad Calvert, a deputy assistant secretary for the Department of Interior, during congressional testimony earlier this year.

Beyond the disparity in perceived values, the proposed transaction gets even more complicated and convoluted. And some believe it could run afoul of current federal law.

Open space valued

Park City has long valued its open space. According to Mayor Dana Williams' testimony before a congressional committee earlier this year, the city has permanently protected 4,000 acres of open space, spending more than $35 million since 1990 to acquire those lands.

"In 1998 and again in 2002, by a margin of 75 percent and 80 percent respectively, voters approved raising their taxes to fund a total of $20 million in bonds for the acquisition and preservation of recreational open space," Williams said.

And now the city has its eyes on the 116 acres under BLM management. The city has leased the land from the BLM since 1985 as recreational property under provisions of the Recreation and Public Purposes Act. That lease expires in five years.

The lease, Calvert said, is a source of contention between the BLM and Park City because the city never completed its development plan for the property "and there is no legal public access to the parcel."

Now the city wants to maintain the property as open space instead of recreation. "Open space that does not provide any additional public value, such as recreational facilities, is not an allowed use under the R&PP Act," Calvert testified.

Perceived intransigence by the BLM's parent agency, the Department of Interior, over protocol and procedures prompted city fathers to approach Bishop about sponsoring legislation to overcome the bureaucratic hurdles. And they found a sympathetic ear.

"Congressman Bishop has a real problem with the BLM owning land in city limits, like Park City," said Justin Harding, legislative director for Bishop's office, who added that Bishop has a "great relationship" with the BLM in Utah and nationally, and that there are "no negative feelings between our office and BLM on this matter."

The result is HR3462, which directs the Department of Interior to convey to Park City title to the 116 acres in four separate BLM-owned parcels near Deer Valley. It also mandates that the city pay fair market value "based on the continued and primary use of the property as open space." Bishop sees the legislation as a way to get the BLM out of the business of managing land in Park City, Harding said.

Park City recently acquired open space lands from a neighboring landowner for $10,000 an acre — the amount officials believe is the fair market value of open space in the city.

But some in the Department of Interior say fair market value means the maximum value dictated by the marketplace, not a price set artificially low to accommodate a city purpose, no matter how well intended. And by mandating an "open space value," the legislation shortchanges U.S. taxpayers.

The issue of fair market value has been a sore spot for the department for years after audits and investigations revealed widespread abuse in the federal appraisal process surrounding land sales and trades. Several prominent Utah land trades cost U.S. taxpayers tens of millions of dollars, whistle-blowers said.

To correct the abuses, the department established strict criteria governing how appraisals would be conducted. Department officials say the Bishop legislation, while maybe not violating the letter of the law, appears to be sidestepping the spirit of the reforms designed to restore public confidence that sales are fair and beneficial to American taxpayers.

Mining claims

If the value of the property causes heartburn for federal land managers, there is another provision of the bill that is causing a full-blown ulcer.

The bill would allow Park City, once it obtained title to the land, to give away part of the acreage as compensation to two companies that currently own long-standing, unpatented mining claims — claims that do not convey with title to the surface land.

"It is inappropriate to make payment for claims without a demonstration of validity under the mining laws," Calvert said, adding that "validity exams should be completed on the claims prior to any payment of land to these claimants because the economic value of the claims has not been established."

There is also concern the claimants are being compensated for something that has no real value, since it is unrealistic to expect that silver mining will ever resume in Park City.

Even city officials say there is a "very low" likelihood that mining would ever restart anywhere in Park City, and that the surface value of lands far, far exceeds any minerals that might be harvested.

So why compensate the companies — Leo-Rhea based in Tremonton and the United Park City Mine Co. based in Park City — for mining claims that will never be developed?

"If they passed a validity test (proving that minerals could be economically recovered), then they would have title to the surface. In other words, they would own the land," Park City manager Tom Bakaly said. "And the real value is the land."

Advocates for the legislation say the acquisition of the mineral claims is critical, that someday far in the future the lease holders could exercise their legal rights to develop a mine on the property, thereby acquiring the surface lands for potential development. And there would be little the city could do to block it from happening.

All it would take is a change in market conditions for mined products.

"You never know what the future will be. There will still be a need for natural resources domestically," Harding said.

According to a 1983 study of mineral potential on two Leo-Rhea parcels, BLM chief geologist Burrett W. Clay reported a high probability of minerals at depths where they could be mined. "In fact, this probability is high enough to make the parcel mineral in character," Clay wrote.

And both parcels have potential phosphate and oil and gas deposits, he added.

But Clay also added the caveat, "While the claimants in this case have a high probability of discovering a major ore deposit, they have not as yet uncovered ore and made a legal discovery."

Two years later, the BLM entered into a lease with Park City, which wanted to use the surface lands for recreation. The BLM signed a memorandum with Leo-Rhea assuring the company it had not forfeited its rights to pursue the mining claims in the future if desired.

Leo-Rhea, which owns the vast majority of the mining claims at stake, is the company created by the descendants of Andrew Hurley, an Irish immigrant who became one of the great names in Park City mining in the 1800s. The Hurley family has, over the years, owned hundreds of mining claims in Park City, and it has maintained its claim on the BLM parcels, called the Fir Claim, since 1929.

The family did not want to comment on Bishop's legislation because of the sensitivity of ongoing negotiations, said David Nilsson, son of Patrick Hurley, who worked in the Park City mines before becoming a pharmacist in California.

There are two factors working against claimants ever exercising their rights. With silver trading at much less than $10 an ounce, it simply isn't economical to mine at this time.

And the BLM has a moratorium on "patents" — the legal mechanism under the Mining Act that transfers surface title to mining claim holders to harvest the below-ground minerals.

Bishop's legislation would make an exception in this particular case. "It makes it possible to compensate those with historic claims," Harding said.

And while the Bishop legislation might not follow the exact protocol for appraisals and sales, the situation, all agree, is truly unique.

"Name another place owned by the BLM in the middle of a city that has unpatented mining claims," Harding said. "I don't know of any."