SALT LAKE CITY — A legislative audit has identified problems with how the inland port authority selects contracts and spends taxpayer dollars.
The Legislative Auditor General's report, released late Tuesday, found that 81% of the Utah Inland Port Authority's contracts were done without approval of its board and without any competitive bid process.
"UIPA staff and management have acted within their policy and delegated authority. However, with such a slant towards sole source contracting, the port leans heavily on the exception to a normal procurement process," the audit said. "This reduces transparency and can foster an environment where public resources are not adequately safeguarded."
Auditors identified two questionable contracts between inland port authority staff and companies with ties to them: one for $3.7 million that auditors claimed had a prior business association between the port's former director and the CEO of the company that got the contract and a spin-off nonprofit that involves the CEO, and the inland port authority's CEO and chief technology officer.
"While port officials explained that the nonprofit was created as a vehicle to spin off any innovation created through the contract, enough questions exist that we believe it is essential that the UIPA board monitor this contract," the auditors wrote.
Auditors also identified questionable spending for a road project on 700 North. The contract was signed for $10 million in taxpayer money.
"One question raised regarded road construction typically being funded by developers in the course of their work. We reviewed available documents to understand why UIPA is paying the entire bill for the road construction. We were not able to get sufficient evidence to make a determination," the audit said. "It is also unclear if other financing options were available for this road. The new board asked about this and raised other questions during board meetings we attended."
Overall, auditors called for greater involvement by the Utah Inland Port Authority's board and asking one of them to serve as a treasurer to oversee the projects. The audit also offered some criticism for the inland port project being allocated $150 million in a bond that has not yet been spent.
House Speaker Brad Wilson, R-Kaysville, said what the audit found was "troubling." He noted changes have been made including a new board and new executive director.
In a formal response to the audit, the Utah Inland Port Authority said it had appointed board member and former state lawmaker Dan Hemmert to the role.
The UIPA Board also insisted it was reviewing the questions about the procurement but had found no evidence of any wrongdoing.
"It is important to emphasize that each fiscal year UIPA has had independent financial auditors review the UIPA financial statements. These internal controls and annual financial audits concluded that all expenditures have been made in accordance with the board approved budgets and policies and legislative statute. UIPA has made significant progress, and will continue that progress, toward restructuring the organization to ensure stronger internal controls with separation of duties and authorities," the board wrote.
However, in a hearing before legislative leadership, newly hired port executive director Ben Hart said they would cancel their sole-sourced contracts.
"I don’t take this as a rebuke," he said of the audit. "I take it as an invitation to create what the public needs it to be."
The inland port has been a controversial project since its inception. Located on Salt Lake City's northwest side, it sweeps up nearly a third of the city's land mass. It has been billed as the state's largest economic development project — a massive import and export center designed to get goods quickly through customs by road, rail and air and distributed across the region. The project has faced major protests over its environmental impacts around the Great Salt Lake and impacts to neighborhoods on Salt Lake City's west side.
Salt Lake City sued over the project with then-Mayor Jackie Biskupski calling it a "land grab." The Utah Supreme Court recently sided with the state on the project.
Read the audit here:
