Despite uncertainty with inland port, Salt Lake City approves tax increment for Swiss rail firm project

SALT LAKE CITY — Despite uncertainty with the bill establishing the Utah Inland Port Authority in Salt Lake City, city leaders have approved an agreement with a Swiss-based rail car maker to bring nearly 1,000 jobs to the city’s northwest quadrant over 10 years.

The agreement with Stadler Rail, finalized by Salt Lake City’s Redevelopment Agency board Tuesday, includes the commitment of up to about $9.6 million in future city tax increment over 20 years to help with infrastructure costs needed to build the rail car manufacturing facility.

The new facility, planned for a site just west of 5600 West on the south side of I-80, is projected to be 250,000 square feet by the end of 2019 and more than 900,000 square feet by the end of 2029, according to city documents.

Stadler currently employs about 150 in Salt Lake City, but that’s projected to grow to 976 over the next 10 years as the new facility is built. The average employee’s salary is estimated to be about $55,000, including jobs for welders, electricians, assemblers and engineers.

Stadler projects the entire project, including land and buildings, will cost about $174 million, with an estimated $19 million for infrastructure costs.

City Councilman Derek Kitchen, who also serves as chairman of the city’s RDA board, called the agreement with Stadler an "enormous opportunity" for Salt Lake City.

"It really sets the stage for what can be in the northwest quadrant," Kitchen said. "Time will tell what the reality will be for the inland port, but having such an enormous investment by an international company like Stadler out in our northwest quadrant shows we are on the trajectory of making Salt Lake City not only the crossroads of the west but the crossroads of the world."

Though Kitchen added, "We just hope it ends well."

Kitchen acknowledged SB234 — the bill passed by the Utah Legislature this year and signed by Gov. Gary Herbert despite outcry from Salt Lake City leaders — creates uncertainty for Stadler since the Utah Inland Port Authority, as the law is currently written, will have the power to capture 100 percent of tax increment of projects in the area.

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Herbert signed the bill with the intention to call a special session this spring to address Salt Lake City’s concerns with the bill, but it remains to be seen how the bill might change in a special session that has yet to be called.

The agreement with Stadler includes a caveat that the city’s Redevelopment Agency can’t guarantee that the Utah Inland Port Authority will not take the city’s portion of the tax increment on the property.

Stadler CEO Martin Ritter acknowledged SB234 "complicated" matters, but he said talks with Salt Lake City have gone on for years, even before inland port discussions began, and so he’s "optimistic" about the deal.

"I think it doesn’t help anybody if we’re … stuck in the moment," Ritter said, adding that Stadler wanted to move forward and "commit" to the project.

"And then we’ll go from there," Ritter said. "We’ll figure it out.

Ritter added that he doesn’t know what direction the Salt Lake City inland port will take, "so it’s hard to say" if it will be an advantage or disadvantage for Stadler, but time will tell. Most of all, Ritter said Stadler chose the location because the company hopes to expand to fill rail demands in the west.

"It’s a green field for us," he said.

If all goes according to plan, Kitchen said the deal with Stadler will "for sure" be worth the city’s future tax increment investment.

"Our hope is the legislature will see Salt Lake City is not only working well but working quick and working in good faith," Kitchen said.

Stadler, based in Switzerland, currently has 20 locations with 7,000 employees. Its current Salt Lake City facility, at 500 W. 900 North, is the company’s only location in the United States.

Correction: An earlier version stated the projected size of the facility by 2029 would be 300,000 square feet. The projected size is more than 900,000 square feet.

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