Spenser Heaps, Deseret News
Charlie Luke, vice chairman of the Salt Lake City Council, left, council staffer Cindy Gust-Jenson, Chairwoman Erin Mendenhall, Vice Chairman Chris Wharton and Councilman Andrew Johnston attend a special council work session at the City-County Building in Salt Lake City on Friday, March 9, 2018. Councilman Derek Kitchen attended the meeting via telephone.

SALT LAKE CITY — City leaders have pushed pause on new development agreements in the northwest quadrant, citing uncertainty with the bill signed by Gov. Gary Herbert last week establishing an inland port authority in the city's northwest quadrant.

City officials said SB234 — which may see changes in a special legislative session later this spring — has put any new development agreements in limbo since it's not clear whether the city or the Utah Inland Port Authority will have the power to capture future tax increment.

The Salt Lake City Council, acting as the city's Redevelopment Agency board, voted Tuesday to table any changes to an already established 3,000-acre project area. They also discussed pausing the creation of any new project areas in the roughly 20,000-acre northwest quadrant until issues with SB234 could be sorted out in the upcoming special session.

SB234 "puts all of our agreements in limbo because we don't know if we'll be able to uphold the language in those agreements," said Councilman Derek Kitchen, chairman of the city's Redevelopment Agency.

"This bill has created an enormous amount of uncertainty for us," Kitchen said.

On the board's Tuesday agenda was a potential adjustment to a 3,000-acre project area the city established in January to include another 280 acres to the east, between 5600 West and 700 North, an area that includes a FedEx freight center and undeveloped land owned by other private property owners and Salt Lake City.

Council Chairwoman Erin Mendenhall said property owners in the area approached Salt Lake City with the desire to be part of the project area late in the city's process, but city leaders hoped to include them by changing the boundaries later.

Danny Walz, chief operating officer of the city's Redevelopment Agency, told city leaders that because the city established its 3,000-acre project area in January, its tax increment could still be captured by the city since SB234's current language states any project areas established before March 1 would be exempt from the inland port authority's jurisdiction.

But, if the city adjusted that project area's boundaries, the area could be legally interpreted as established after March 1, and the project area's tax increment could be "at risk" of being re-allocated to the Utah Inland Port Authority, Walz said.

"So whatever project area you create, whatever interlocal agreement you enter in to with a taxing entity, and whatever reimbursement you pledge with a developer from this point forward is subject to that port authority collecting that increment instead," Walz said.

Down the road, city leaders will likely also have to pause the creation of a separate project area in the northwest quadrant — a 63-acre community investment area south of I-80, near 150 South and 5600 West, that would help facilitate an expansion of Stadler Rail over the next 10 years, according to an October city memo.

"While I'm disappointed that we can't move forward the way that I think would make sense, I'm not willing to spin wheels either," Councilman Charlie Luke said, urging city staff to continue work with property owners in the city's current project area.

"But until (changes to SB234 are made), talking about anything outside of the existing boundaries is pointless," Luke said.

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Luke added that city leaders want to act in "good faith" with business partners, but "if we cannot guarantee we will be able to hold up our end of a bargain, it's probably not good business for us to move forward with any new contracts or (project areas) that fall within the inland port boundary or jurisdiction."

Mendenhall also urged city staff to keep track of development agreements being delayed because of SB234 and write letters to state leaders and other stakeholders to explain the city's position and "articulate that these opportunities are being delayed by the ambiguity and the conflicts of this bill."