PROPOSED IN THE THIRD JUDICIAL DISTRICT COURT IN AND FOR TOOELE COUNTY, STATE OF UTAH ITRODUCTIO

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1 Adam S. Affleck (#5434) Thomas R. Barton (#6827) Tara W. Pincock (#14754) PRINCE, YEATES & GELDZAHLER 15 W. South Temple, Ste Salt Lake City, Utah Telephone: (801) Facsimile: (801) Attorneys for Plaintiff IN THE THIRD JUDICIAL DISTRICT COURT IN AND FOR TOOELE COUNTY, STATE OF UTAH CETER POIT MAAGEMET, LLC, a Wyoming limited liability company; Plaintiff, vs. TOOELE COUTY, a Utah unit of local government; andmitime UTAH IVESTMET, LLC, a Utah limited liability company; Defendants. CETER POIT S FIDIGS OF FACT AD COCLUSIOS OF LAW Case No Judge Robert Atkins ITRODUCTIO In this action, Center Point, LLC ( Center Point ) seeks to enjoin or, alternatively, set aside Tooele County s (the County ) sale of County-owned race track property (the Property ) to Mitime Utah Investment, LLC ( Mitime ). By

2 consent of the parties, the hearing on Center Point s motion for temporary restraining order and preliminary injunction was consolidated with trial on the merits, and trial was held on November 6 and December 17, Having considered the evidence and arguments presented by the parties, the Court now issues its findings of fact and conclusions of law in accordance with Utah Rule of Civil Procedure 52. The Property FIDIGS OF FACT 1. The County owns acres of improved real property located at 2901 Sheep Lane, Grantsville, Utah (the Property ) which is more particularly described as follows: Lot 1, Deseret Peak PUD Phase 5, a Planned Unit Development of Tooele County (Tooele County Assessor s Parcel Number # ). Complaint 6, County Answer 6; Mitime Answer 6. Termination of the Miller Lease 2. Miller Performance, LLC, formerly known as Miller Motorsports Part, Utah, L.L.C. County ( Miller ), has leased the Property from the County since approximately Exhibit Initially raw ground, Miller invested more than $95,000,000 into leasehold improvements establishing the Property as a world-class, award-winning racing venue consisting of tracks, garages, media buildings, and other improvements. Tr. 294/21-295/7 (Alan Wilson); 12/17/15 expected testimony of

3 Phil Cook. 4. On May 8, 2015, Miller gave notice to the County of its decision to terminate its leasehold interest and vacate the Property as of February 29, Exhibit 1. The County s efforts to market and sell the Property 5. Shortly after receipt of this notice, the County determined that it should sell the Property and commenced efforts to find a purchaser. Tr.104/19-23 (Commissioner Milne). 6. Sometime in late June or early July 2015, Mitime became aware of the County s desire to sell the Property and began discussions with the County relating to a prospective purchase. Tr. 252/18-24 (Alan Wilson). 7. About the same time, Center Point also became aware of the County s desire and engaged in similar discussions with the County. Tr. 16/22-17/14 (Andrew Cartwright). 8. On July 21, 2015, the County published formal notice of its desire to sell the Property and invited interested parties to submit sealed bids by July 23, Exhibit 3; Exhibit EE (newspaper). 9. The County received timely bids from Mitime, Center Point, and others. Complaint 9; Mitime Answer 9; County Answer After receiving these bids, the County selected Mitime and Center Point to engage in post-bid negotiations. Complaint 10; Mitime Answer 10; County Answer 10; Tr. 21/17-23 (Andrew Cartwright); Tr. 109/13-15

4 (Commissioner Milne). Center Point s offer 11. The County s negotiations with Center Point concluded on July 30, 2015, at which time Center Point delivered a Memorandum of Understanding to the County containing an amended bid to purchase the Property (the Center Point MOU ). Exhibit The cash consideration proposed under the Center Point MOU consisted of the following: a. $22,500,000 cash payable at closing (Center Point MOU Section 1.1); b. Up to $5,000,000 cash or bond to pay for the construction of culinary water and sewer services to be provided by the County to the Property within two years of closing (Center Point MOU Sections 2.4 and 1.10). Mitime s offer 13. The initial bid by Mitime contained no cash purchase price component. See Exhibit 10 (proposal dated July 13, 201[5]). 14. In the County s further negotiations with Mitime (which also concluded on July 30, 2015), Mitime made an oral commitment to pay in the ballpark of the high teens, 20 [million]. Tr. 116/9-14 (Commissioner Milne). Continuing operations and development 15. The proposals of both prospective purchasers were accompanied by

5 written and oral expressions of intent to continue operation of the Property as a race track and to invest significant funds for capital improvements. See, e.g., Exhibit 10 (Mitime proposal); Exhibit 8 (letter from Center Point to County); Exhibit 9 (Center Point MOU); Exhibit 6 (Center Point Expansion Proposal). Center Point s ability to pay 16. During the negotiation process, the County considered Mitime and Center Point to be legitimate perspective [sic] Buyers of the Property with the ability to perform and pay the cash purchase price obligations in their respective offers. Tr. 119/23-120/9 (Commissioner Milne); see Exhibit 11 (Mitime MOU (defined hereafter) Section 12). 17. At trial, the ability of Center Point to perform and pay the cash purchase price of its offer was questioned (primarily by Mitime); but, based upon the evidence presented and received concerning Center Point and its designated assignee, the Court finds that Center Point was, and remains, a legitimate perspective [sic] Buyer[] of the Property. See Exhibit 11 (Mitime MOU Section 12). The County s selection of Mitime as the successful bidder 18. On July 31, 2015, the County selected Mitime as the successful bidder and informed Center Point that its offer was rejected. Tr.111/25-112/3 (Commissioner Milne). 19. The County s selection of Mitime s offer over Center Point s was not based upon which party had offered the highest cash purchase price, but upon

6 the County s favorable impression of Mitime s future development plans. Tr. 132/15-133/6 (Commissioner Milne). 20. On August 6, 2015, the County gave notice of a public hearing to take place on August 18, 2015, on the proposed disposition of the Property. See Exhibit 14; Exhibit FF (newspaper). 21. On August 17, 2015, one day before the scheduled hearing, Mitime presented the County with a written purchase offer in the form of a Memorandum of Understanding (the Mitime MOU ), which, for the first time, included a written commitment as to the cash purchase price as follows: a. $20,000,000 in cash payable at closing (Mitime MOU Section 2); and b. Up to $2,500,000 cash to pay its proportionate share of infrastructure cost if Mitime should desire to obtain an alternate or secondary source of water and sewer to the Property (Mitime MOU Section 13). Exhibit 11 (Mitime MOU). 22. The County executed the Mitime MOU, and, at the scheduled public hearing, the County announced its agreement to sell the Property to Mitime. Exhibit 15 (Minutes). 23. Among other reasons given for selecting Mitime as the winning bidder, the County represented that Mitime s proposal includes economic factors

7 well in excess of the upfront $20,000,000 purchase price. Id. Center Point s request for information 24. On August 25, 2015, Center Point served a GRAMA request on the County for production of, among other things, (2) all information that Tooele County relied upon in evaluating whether [Mitime s] offer represented a net fair value exchange for the [Property]; [and] (3) any documentation concerning an independent determination (other than by Tooele County) of the value of the exchange. Exhibit B. 25. The County responded to the GRAMA request on September 2, 2015, indicating (1) that it had a report similar to an appraisal report that was prepared for tax litigation but which was protected from disclosure; (2) that no reports were prepared by the County or its consultants in regards to the proposed transaction; and (3) that it was unaware of any independent determination (other than by the County) of the value of the exchange. Exhibit C. Center Point s lawsuit 26. On September 8, 2015, Center Point filed its complaint seeking to enjoin or set aside the proposed sale of the Property to Mitime because the County had improperly considered future and uncertain benefits in selecting Mitime s offer over Center Point s offer and that, by so doing, the County had violated state laws and local ordinances that prohibit the sale of County-owned property for less than full and adequate consideration. See Complaint. 27. Center Point further complained that, through its unlawful conduct,

8 the County had also deprived Center Point of fair and lawful consideration of its competing bid. Id. 28. The only relief sought by Center Point is injunctive: the restraint or setting aside of the sale to Mitime. Id. 29. On September 11, 2015, Center Point filed a motion for temporary restraining order and preliminary injunction seeking to preliminarily enjoin the proposed sale pending trial on the merits. 30. On September 24, 2015, all parties executed a stipulation regarding Center Point s pending motion setting forth the following agreements: 1. The County and Mitime agree that they will not close the proposed purchase and sale of the Property prior to November 6, 2015, when the hearing on Center Point s Motion, which seeks, in part, a preliminary injunction, has been scheduled. 2. The County and Mitime agree they will not assert as a defense to Center Point s arguments in favor of a preliminary injunction the lapse of time between the date of this stipulation and the preliminary injunction hearing or that the status quo has been changed (including the occurrence of public hearings or execution of a binding purchase contract for that purpose). 3. To the extent any such purchase contract between the County and Mitime is finalized, a complete copy of the final form of the purchase contract shall be promptly provided to Center Point before any hearing is held on its approval by the County. 31. Even though the stipulation prevented closing of a sale, it was understood and agreed by the parties (in paragraph 2) that the County and Mitime were permitted to draft final sale documents consistent with the Mitime MOU, give notice of another public hearing, and execute the final purchase documents.

9 The PSA and the second public hearing 32. On September 29, 2015, the County published notice of another public hearing to take place on October 13, 2015, to announce the proposed disposition of the [Property]. Exhibit 18; Exhibit GG (newspaper). 33. On October 7, 2015, the County gave additional notice of its agenda for the hearing to include the Purchase and Sale Agreement with [Mitime for the Property]. Exhibit The County and Mitime had not finalized the Purchase and Sale Agreement (the PSA ) before publishing the afore-mentioned notices and did not finalize the PSA until a few hours before the October 13, 2015, hearing. See Exhibit 26; 12/17/15 expected testimony of Andrew Cartwright. 35. On September 17, 2015, between when Center Point filed its complaint and the second public hearing, the County retained J. Phillip Cook to perform an appraisal of the Property for the purpose of shoring up its decision to sell the Property to Mitime. Tr. 143/18-24 (Commissioner Milne); Exhibit HH (Engagement Letter). 36. In his report (the Cook Appraisal ), Mr. Cook opined that the fair market value of the Property is $9,000,000. See Exhibit At the hearing, the County represented to the public that it had relied on the Cook Appraisal in selecting Mitime s offer over Center Point s, and explained its view that the $20,000,000 sale of the Property to Mitime exceeded fair market value (as opined in the Cook Appraisal) by $11,000,000. Tr.

10 188/3-189/1 (Commissioner Milne); Exhibit 27 (transcript of public hearing). 38. The County also retained Benj Becker to prepare a report (the Becker Report ) regarding the value of non-cash consideration in Mitime s offer. But the parties have stipulated the County did not rely on the Becker Report and, further, that there is no evidence in the record in this case establishing the net present value of any non-cash consideration contained in the Mitime PSA. 8/24/15 Stipulation. 39. At the conclusion of the October 13, 2015, hearing, the County commissioners announced their decision on behalf of the County to execute the PSA, and did so on October 20, Exhibit 26 (PSA). Differences between the PSA and the Mitime MOU 40. The PSA is consistent with the Mitime MOU except for two significant differences. Cf. Exhibit 11 and Exhibit The first difference is a Right of First Offer which was not contained in the Mitime MOU but is included in the PSA. Exhibit 26 (Exhibit E to PSA). 42. This Right of First Offer requires Mitime to give notice to the County of any proposed future sale of the Property to a third party and provides a right for the County to purchase the Property at the same price. Id. 43. The second difference is lease and sale options granted by the County to Mitime in the event that this Court enjoins or sets aside the $20,000,000 sale as initially set forth in the Mitime MOU. Exhibit 26 (PSA Section 10).

11 44. Under these option provisions, if the $20,000,000 sale is enjoined or set aside, then Mitime is automatically, and without additional consideration, granted the option to lease the Property for approximately one year on terms identical to the terms of the County s lease to Miller although the County was unable, at trial, to explain what these terms are. Id.; Tr. 156/10-157/7 (Commissioner Milne). 45. Furthermore, if Mitime exercises its option to lease the Property, it is also automatically, and without additional consideration, granted the option to purchase the Property at the end of the lease term for $20,000,000 or the appraised value (not including the value of any improvements made during the lease term), whichever is greater. Exhibit 26 (PSA 10). 46. If the purchase option is exercised, then the amounts paid by Mitime under its lease of the Property are applied to the purchase price. Id. The County s and Mitime s reliance on the Cook Appraisal 47. At trial, the County and Mitime relied on the Cook Appraisal as evidence that the current fair market value of the Property is $9,000, Mr. Cook is unquestionably a qualified appraiser; but the Court gives little weight to his opinion as to the fair market value of the Property. 49. His opinion is based solely upon the sales comparison approach (ignoring the income and cost approaches), and considers sales of tenuous comparability. 50. Moreover, Mr. Cook failed to adequately consider the actual facts

12 establishing that a willing seller (the County) agreed to sell the Property to a willing buyer (Mitime) for $20,000,000, and that a higher cash offer of $22,500,000 (including a binding commitment for another $5,000,000) from another willing buyer (Center Point) was rejected by the County. 51. Also discrediting the Cook Appraisal are the undisputed facts that, since 2010, the County s tax valuation of the Property (which is based upon the fair market value of the improvements and excludes the value of the land itself) has been $27,000,000 or more, and is currently $28,101,306. Exhibit 29 (Stipulation on Fair Market Value and Joint Motion for Entry of Order); Tr (Wendy Shubert); Exhibit 30; Exhibit C (CP000070). 52. Finally, notwithstanding that the County has advocated for this Court s acceptance of the Cook Appraisal as conclusive proof of fair market value, the evidence indicates that the County was not, and would not have been, a willing seller of the Property (to Mitime or any other purchaser) at $9,000,000. Tr.116/9-25 (Commissioner Milne). Center Point s new offer 53. On the second day of trial, Center Point presented a new written offer to the County for purchase of the Property for $28,101,306 which is identical in all material respects to the PSA except for deletion of the lease and purchase options. Exhibit KK. 54. The County has taken the position that it may disregard any higher cash offer by Center Point because its sale of the Property to Mitime is for fair

13 market value. COCLUSIOS OF LAW I. Jurisdiction and Venue 1. This action is a civil matter, and, under Utah Code Ann. Section 78B-5-102, this Court has original jurisdiction over it. 2. Because the transactions at issue involve the (1) proposed sale by the County of the Property, which is located in Tooele County, Utah, and (2) Mitime s and Center Point s respective rights relating to that proposed sale, the Court has jurisdiction over all the parties under Utah Code Ann. Section 78B and venue is properly laid in this Court under Utah Code Ann. Section 78B and 303. II. Center Point s Standing A. Center Point has traditional standing. 3. To enjoy traditional standing, a party must satisfy three criteria: (1) the party must allege it has been or will be adversely affected by the [challenged] actions; (2) the party must allege a causal relationship between the injury to the party, the [challenged] actions and the relief requested; and (3) the relief requested must be substantially likely to redress the injury claimed. Utah Chapter of Sierra Club v. Utah Air Quality Bd., 2006 UT 74, 19, 148 P.3d In its complaint, Center Point has met the first requirement that it has been adversely affected by the County s sale of the Property to Mitime. Specifically, Center Point has alleged that it was denied a fair and lawful

14 evaluation of its purchase offer due to the County s failure to comply with the requirements of state and local laws concerning the disposition of publicallyowned property. These requirements, as alleged by Center Point, include that the County may only sell publically-owned property in good faith and for not less than fair market value. The primary purpose of such alleged requirements are to protect the interest of citizens of the County lest public and political pressures persuade local government to transfer [property] into private hands without receiving a fair net benefit in exchange. Price Development Co., L.P. v. Orem City, 2000 UT 26, 27 & 36, 995 P.2d But prospective purchasers also benefit from these requirements because the County may not discriminate against them on bases other than the consideration offered. Moreover, having opened up bidding for the Property to the public, the County cannot, in good faith, argue that bidders have no protectable right to fair consideration of offers made in accordance with procedures the County established. 5. Center Point has also met the second requirement for traditional standing as outlined in Sierra Club by alleging a causal relationship between the injury to the party, the [challenged] actions and the relief requested. The injury alleged is as direct result of the actions challenged by Center Point namely, the selection of Mitime s offer over Center Point s offer on the basis of future and uncertain benefits which the County was alleged to be legally prohibited from considering.

15 6. Finally, the third Sierra Club requirement is met because the relief requested by Center Point is substantially likely to redress the injury claimed. Enjoining or setting aside the sale for reason that the County made its decision based upon unlawful considerations will not necessarily force the County to accept Center Point s offer. But it will require the County to consider Center Point s offer on equal standing with Mitime s offer, which is the relief Center Point has requested. B. Center Point has alternative standing. 7. A party has alternative standing when it is able to show that it is an appropriate party raising issues of significant public importance. Cedar Mountain Envtl., Inc. v. Tooele Cnty. ex rel. Tooele Cnty. Comm n, 2009 UT 48, 15, 214 P.3d 95 (quoting Sierra Club v. Utah Air Quality Bd., 2006 UT 74, 35). 8. Alternative standing asks two questions: (1) is the plaintiff an appropriate party and; (2) does the dispute raise an issue of significant public importance. Id. 9. Whether Center Point is an appropriate party depends on whether it has the interest necessary to effectively assist the court in developing and reviewing all relevant legal and factual questions. Gregory v. Shurtleff, 2013 UT 18, 28, 299 P.3d The plaintiff must also show that the issues are unlikely to be raised if the party is denied standing. Sierra Club, 2006 UT 74, Here, Center Point clearly has an interest in developing all relevant legal and factual questions (and, indeed, has competently done so). Center Point

16 has the necessary knowledge and expertise to assist this Court. It is familiar with the relevant statutes and codes, the County s bidding process, and the facts pertaining to the sale of the Property. Further, Center Point s self-interest has not inappropriately colored its allegations, strategy, or presentation of evidence and arguments to the Court. 11. It is further unlikely that any other party will challenge the County s proposed sale of the Property to Mitime (and, none has). It is the County s citizens that are most directly harmed by the County s alleged disregard of applicable law in this case. But bringing a lawsuit is expensive, and few, if any, citizens would be willing to put their personal funds on the line to challenge the County s sale of the Property to Mitime. The inquiry is not whether some hypothetical plaintiff can be imagined; it is whether the issues are unlikely to be raised if the party is denied [public-interest] standing. Id. at 30 (emphasis in original). Here, the issues in this action are unlikely to be vetted in a court of law except for Center Point having raised them. 12. Center Point s allegations also raise an issue of significant public importance namely, whether the County complied with generally applicable law and its own ordinances that require that the disposition of any real property owned by the County shall not be for less than full and adequate consideration unless otherwise permitted by law. Tooele County Code Section Finally, a plaintiff relying on alternative standing must not only show

17 that the issues are of a sufficient weight but also that they are not more appropriately addressed by another branch of government pursuant to the political process. Cedar Mountain Envtl., Inc., 2009 UT 48, 18, 214 P.3d 95 (quoting Sierra Club, 2006 UT 74, 39, 148 P.3d 960). The more generalized the issues, the more likely they ought to be resolved in the legislative or executive branches. Sierra Club, 2006 UT 74, 39, 148 P.3d Here, the issues raised by Center Point are sufficiently specific that resolution by the judicial branch is most appropriate. Moreover, as the court noted in Cedar Mountain, whether [Tooele] County in fact complied with its own procedures is a proper issue for judicial resolution. Cedar Mountain Envtl., Inc., 2009 UT 48, 19. III. Standards Governing the Sale of Public Property 15. When reviewing a local government action, [courts] give local government great latitude in creating solutions to the many challenges it faces, unless the action is arbitrary, or is directly prohibited by, or is inconsistent with the policy of, the state or federal laws or the constitution of [Utah] or the United States. Price Development Co., L.P. v. Orem City, 2000 UT 26, 10, 995 P.2d 1237 (quoting State v. Hutchinson, 624 P.2d 1116, 1126 (Utah 1980)). 16. When the matter reviewed is the disposition of publically-owned property, however, the great latitude normally enjoyed by local government is limited. Specifically, courts are not free to ignore the technical requirements of the law lest public and political pressures persuade local government to transfer

18 [property] into private hands without receiving a fair net benefit in exchange. Price Development, 2000 UT 26, 27 & At issue here is the propriety of County s proposed disposition of the Property (which is publically-owned) to Mitime. As further developed below, there are at least three requirements that neither the County nor this Court may ignore namely, (1) receipt of fair market value; (2) adequate public notice, and (3) good faith. A. The government must receive fair market value in exchange. 18. Under Utah Code Ann. Section , a county may sell, lease, convey, or otherwise... dispose of any real or personal property or any interest in such property if the action is in the public interest and complies with other law. 19. This provision is silent on the subject of necessary consideration for a disposition of government-owned property. But, interpreting a similar provision applicable to municipalities, the Utah Supreme Court has unequivocally declared that local governments are prohibited from selling publically-owned property for less than fair market value. See Price Development, 2000 UT 26, 26 ( [P]ublic property is held in trust for the public and may not be disposed of other than in good faith and for adequate consideration. (quoting Sears v. Ogden City, 533 P.2d 118, 119 (Utah 1975), aff d on rehearing, 537 P.2d 1029 (Utah 1975)) (emphasis added); id. at 33 ( Adequate consideration means that the exchange brings the government entity net fair market value. ); id. at 26 ( A future benefit will not suffice, nor will a benefit that is of uncertain value. ).

19 20. The provisions of the Tooele County Code governing property disposal are consistent with Utah Code Ann. Section and the abovereferenced case law. But, significantly, they add that the County shall not sell public property unless the consideration received is not only adequate but full. B. The government must provide reasonable notice and opportunity for public comment. 21. In addition to the fair market value requirement, the County s right to dispose of publically-owned property is conditioned upon notice and hearing requirements. 22. Under Utah Code Ann. Section (4)(a), [b]efore a county may dispose of a significant parcel of real property, the county shall: (i) provide reasonable notice of the proposed disposition at least 14 days before the opportunity for public comment under Subsection 4(a)(ii); and (ii) allow an opportunity for public comment on the proposed disposition. 23. The Tooele County Code, again, is consistent with state law and provides additional substance including defining a significant parcel as a parcel having a value in excess of $50,000 and directing that notice of the proposed disposition be published in a newspaper of general circulation in the county at least 14 days before a public hearing. 24. The content of the reasonable notice required under these provisions of state and local law is not specified. Traditional notions of fairness and due process, however, require that reasonable notice, at the very least,

20 include a description of the material terms of the proposed disposition such as what interest in property is being sold and the consideration to be received by the County. Since the purported purpose of the reasonable notice is to allow for public comment on the proposed disposition, notice that does not describe the material terms (or provide a way for such terms to be reasonably accessed) would fail to provide any opportunity for an interested party to participate in, or contribute to, the legislative process making the public comment requirement of the law nugatory and pointless. C. The government must act in good faith. 25. A final limitation on the latitude given to local governments in their disposition of public property is that they act in good faith. See Price Development, 2000 UT 26, 26 ( [P]ublic property is held in trust for the public and may not be disposed of other than in good faith and for adequate consideration. (quoting Sears, 533 P.2d at 119) (emphasis added). 26. Good faith is a term oft-used in the law. It is generally characterized by actions that are done honestly, objectively, with no deliberate intent to defraud the other party. BLACK'S LAW DICTIONARY FREE ONLINE LEGAL DICTIONARY 2d ed. 27. Where good faith relates to an effort, the term additionally means [f]ocused efforts to produce desired or required results by deliberate action. Id. 28. With respect to the disposition of public property (which, as

21 mentioned above, may not be sold for less than fair market value), good faith requires the governmental entity to market and sell such property in manner that is honestly and objectively designed to garner fair market value. IV. Burdens and Presumptions 29. In the event of a judicial challenge to a sale of public property, local government has the burden to show compliance with the general standards applicable to such sales as set forth above. See Price Development, 2000 UT 26, 27 ( For any disposition of public money or property to pass legal muster, it must be shown that the public entity has received fair market value in exchange.... ). 30. The local government is, however, entitled to a presumption of validity with respect to its fair market value determination if the good faith legislative judgment that the net exchange is for fair market value flowing to the entity is supported by documentation within the legislative record of an independent determination of the value of the exchange. Price Development, 2000 UT 26, The strength of a presumption so supported is in direct proportion to the thoroughness of the evaluation of transaction entered into and to the independence and skill of the evaluators. Price Development, 2000 UT 26, If local government comes forward with sufficient investigatory facts to support a presumption, the challenger may, however, still overcome such presumption by showing the applicable legal standards have not been met and is not limited to the evidence in the legislative record in mounting the challenge to

22 the fairness of the exchange. Price Development, 2000 UT 26, Here, the County and Mitime argue that the County is entitled to the presumption described above because the County relied on the independent determination of its real estate appraiser, Mr. Cook, in making its decision to sell the Property to Mitime for a $20 million purchase price. 34. But the County did not rely on the Cook Appraisal to exercise its legislative discretion. The County did not retain Mr. Cook until mid-september, after Center Point commenced this action. The County decided to sell to Mitime on July 31, 2015 at which time it rejected Center Point s offer to purchase the Property at a price of $22,500,000. The County publicly announced its decision to sell Mitime six weeks before it received Mr. Cook s opinion of the market value of the Property. Commissioner Milne further testified that the Cook Appraisal was for the purpose of shoring up a decision that was already made. 35. This evidence demonstrates that Mr. Cook s Appraisal was not for the purpose of assisting the County in reaching its decisions. Rather, its sole purpose was for support of its legal arguments in this litigation. 36. The County has, thus, failed to demonstrate that its decision is entitled to any presumption of validity. Moreover, even if the County were entitled to a presumption that the fair market value of the Property is what Mr. Cook says it is (i.e., $9,000,000), the evidence presented by Center Point overcomes the presumption as explained below. V. The Fair Market Value of the Property

23 37. The parties agree with the general standards discussed above with respect to the requirement that the County receive fair market value in exchange for the Property. But they disagree as to what fair market value means in the context of the proposed sale of the Property. 38. Even though the County has agreed to sell the Property to Mitime for $20,000,000, the County and Mitime ask this Court to rely solely on the Cook Appraisal which values the Property at less than half of the bargained-for purchase price. Because Mr. Cook s opinion of the fair market value is less than the cash consideration proposed by Mitime, the County and Mitime argue that the County s obligation to sell the Property for fair market value is satisfied by the County s proposed sale to Mitime and would be satisfied by any sale providing for consideration above the value opined by Mr. Cook. 39. Center Point asks the Court not to rely on Mr. Cook s opinion, but instead determine fair market value based upon the actual workings of the market for the Property specifically the unaccepted but the bona fide offer it made to the County in the Center Point MOU, and as later augmented at trial. Since these offers well-exceed the $20,000,000 purchase price under the PSA, Center Point asks this Court to set aside the proposed sale because it is for less than fair market value. 40. The legal definition of fair market value is well-established. It is the amount at which property would change hands between a willing buyer and willing

24 seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. Utah Code Ann. Section (12). 41. As noted, the Court is loathe to accept the Cook Appraisal as evidence of fair market value because the report is not well-supported by comparable sales and it is highly inconsistent with the County s own internal tax valuations. 42. In addition, appraisals are only estimates of the price at which a willing seller and willing buyer will strike a deal. See, e.g., Beaver County v. Utah State Tax Comm n, 916 P.2d 344, 355 (Utah 1996). Where there is an actual agreement between two such parties, an estimate of the strike price by appraisal is unnecessary. 43. In this case, the price at which a willing seller will sell and a willing buyer will buy is known and is a matter of undisputed fact. Because the County and Mitime have agreed to a sale of the Property for $20,000,000, the fair market value is at least this amount. 44. However, Center Point has offered substantially more than $20,000,000. There is a general rule that offers to purchase property are not admissible as evidence of value, and the Utah Court of Appeals has cited this rule. See Utah Dep't of Transp. v S. Associates, 872 P.2d 462, 466 n.3 (Utah Ct. App. 1994). But in the same case, the court also referenced exceptions where the

25 offer is bona fide and for cash (citing State Toll Highway Auth. v. Heritage Standard Bank & Trust, 619 N.E.2d 1321, 1334 (Ill. 1993)), or in exceptional cases where the evidence establishes a foundation for a bona fide offer (citing Hardaway v. City of Des Moines, 166 N.W.2d 578, 581 (Iowa 1969)). Id. Moreover, for generations, courts have considered bona fide offers, with adequate evidence of foundation and reliability, as evidence of fair market value. See City of Chicago v. Lehmann, 104 N.E. 829, 831 (Ill. 1914) (bona fide offers admitted as evidence of value in a condemnation case); Bouchard v. Orange, 2 Cal. Rptr. 388, 392 (Ct. App. 1960) (bona fide offer admitted to corroborate value of real property in breach of contract case); Lower Makefield Twp. v. Lands of Chester Dalgewicz, 67 A.3d 772, (Pa. 2013) (trial court properly considered offer, where it indicated the offeror s intention and ability to carry out the transaction and was a firm offer that could have been accepted upon receipt ). 45. This is the exceptional case. Center Point s offers are bona fide, supported by adequate foundation, and evidence Center Point s willingness and ability to purchase the Property for cash now. They are, accordingly, not just admissible evidence of the Property s value; they are determinative. They establish a fair market value of no less than $28, Importantly, Center Point s offer is corroborated by the County s own assessment of fair market value for tax purposes. The Utah Constitution, Art. XIII, Section 2, cl.1, and Utah Code Annotated, Sections (2004), require

26 that all tangible taxable property shall be assessed and taxed at a uniform and equal rate on the basis of its fair market value. County assessors are tasked with assessing property located within the county, and annually updating values based on a systematic review of current market data. Utah Code Ann. Sections , 303. Here, the County has admitted and relied upon the fact that the fair market value of the Property has been $27,000,000 or more since 2010 and that it is currently worth no less than $28,101,306. Since 2010, Miller has paid taxes to Tooele County based upon these assessments. 47. Thus, the County s proposed sale of the Property to Mitime is for less than fair market value, and it violates Utah law and the Tooele County Code, which requires full and adequate consideration, for the disposal of public property. 48. Because the County s proposed sale to Mitime violates Utah law, it must be enjoined, and to the extent it has been partially consummated, set aside. VI. The Lease and Purchase Options 49. Anticipating the possibility that the Court would invalidate their sale, the County and Mitime included grants of a lease option and a purchase option in the PSA. But these provisions are unlawful and must also be enjoined and set aside. 50. An option consists of the following two elements: (1) an offer to sell, which does not become a contract until accepted; and (2) a contract to leave the offer open for a specified time. Property Assistance Corp. v. Roberts, 768

27 P.2d 976, 978 (Utah Ct. App.1989) (citing 1A Corbin on Contracts Section 259, at 464 (1963)). The contract to leave the option open for a specified time must be supported by consideration; without it the promisor is not bound. Jensen v. Anderson, 468 P.2d 366, 367 (Utah 1970). 51. An option involving an interest in property is in itself an interest in property. Coulter v. Smith, 966 P.2d 852, 856 (Utah 1998) ( Coulter s option to purchase the Russell property is an interest in real estate.... ). So, before the County may dispose of such an interest, it must comply with the requirements of the law previously discussed, including (1) receipt of fair market value, (2) adequate public notice, and (3) good faith. A. The County did not provide reasonable notice that it was granting option rights to Mitime. 52. Both the Utah Code and the Tooele County Code require at least 14 days notice of a sale of significant property. Assuming the option rights granted in the PSA have a value of $50,000 or more (and are, thus, significant), the County did not comply with this requirement. Prior to its execution of the PSA, the County gave no notice of its intent to grant the option rights contained therein. Indeed, the terms of the PSA were not made public until just hours before the hearing at which they were approved. B. The County received no consideration for the option rights it granted. 53. Nor did the County comply with the requirement that it only part with publically-owned property for fair market value. The lease option in the PSA

28 allows Mitime to lease the Property on the same terms applicable to Miller under a lease entered into in 200, before Miller made any substantial improvements on the Property. Similarly, the purchase option provides Mitime with the right to purchase the Property for $20,000,000 (which, as noted above, is less than current fair market value) or at an appraised value (which, as shown in this proceeding, can vary significantly from actual market value). These option rights are not without value. The County has, nevertheless, given both option rights away for no consideration at all. C. The lease rate and purchase price are for less than fair market value. 54. If exercised, the lease option would give Mitime a leasehold interest in the Property under the same terms as the County s 2005 lease with Miller. There is no evidence that rental rate under this historical lease represents the current fair market lease value of the Property. And it is further evident from Commissioner Milne s testimony (wherein he was unable to even generally describe the terms of the Miller lease) that the County made no attempt to investigate, evaluate, or obtain fair value in exchange for the lease. 55. The exercise price for purchase of the Property is similarly without support as constituting an exchange for fair market value. The fair market value today is $28,101,306. Yet the exercise price under the option is not the greater of this value and the appraised value, but the greater of $20,000,000 and the appraised value. As previously noted, appraisals do not always accurately reflect

29 what a willing buyer will pay for a property and can even be less than half of the actual fair market value. Also, it is noteworthy that the purchase price is reduced by whatever Mitime paid under the preceding leasehold. It necessarily follows that the exercise price under the option is less than fair market value by the amount of the offset provided, thus rendering the option to purchase unlawful. D. The options were not granted in good faith. 56. It is evident to the Court that the County failed to engage in any marketing, analysis or evaluation to determine whether the option rights granted to Mitime were for adequate consideration or that the exercise prices represented fair market value. Rather, it appears that such rights were granted in an inappropriate attempt to circumvent the law and avoid the prospect of having to address a higher purchase offer from another willing purchaser. These were not actions taken to ensure that the County received fair market value for the Property. Therefore, they were not taken in good faith. VII. Postscript 57. The County is entitled to flexibility on how surplus property must be disposed (i.e., an auction sale is not required). Nevertheless, the goal of such flexibility remains to get fair market value for publically-owned property. Accordingly, the County may employ a broker to find potential buyers. It may (as the County did here) ask for sealed bids. It may even negotiate privately with interested parties. But no matter what method is employed, it may not ignore bona fide offers that are received during the process, which includes the public hearing

30 to approve the sale. Fair market value is what a willing buyer will pay. And where there are multiple willing and legitimate buyers, it is the highest price offered. 58. The Court is cognizant of the County s legitimate desire to control the use of property within its jurisdiction and also encourage development. There are legitimate ways to accomplish these objectives (e.g., zoning, use restrictions, tax incentives, etc.). But sacrificing the price of publically-owned property is not one of them. Such public and political pressures are subordinate to the requirements of the law regarding sales of publically-owned property, the primary purpose of which are to protect the interest of citizens lest public and political pressures persuade local government to transfer [property] into private hands without receiving a fair net benefit in exchange. Price, 2000 UT 26, 36. COCLUSIO For the reasons explained herein, the Court shall issue judgment enjoining and, to the extent consummated, setting aside the County s sale of any interest in the Property to Mitime pursuant to any provision of the PSA. DATED this day of December, BY THE COURT: Honorable Robert Atkins Third District Judge