EBay — the multibillion-dollar auction and sales company — sent a $1.16 million check just before the deadline for property taxes on its massive data center in South Jordan, the heart of its online operations.
The trouble is, when Salt Lake County deposited the check, “the bank rejected it,” said county Treasurer Wayne Cushing.
“That could be for a number of reasons,” he added, such as insufficient funds in its account or perhaps because eBay didn’t warn the bank that the big check was coming and anti-fraud measures stopped it.
But the glitch meant eBay’s taxes were not paid on time, so it became the largest 2017 property tax delinquent on the Wasatch Front in annual public lists released by counties and analyzed by The Salt Lake Tribune.
BIGGEST 2017 PROPERTY TAX DELINQUENTS<br>eBay Inc • Salt Lake County • $1,166,182<br>Watson Laboratories • Salt Lake County • $512,480<br>Central Utah Investment Company LLC • Utah County • $439,398<br>Expressway Business Park LLC • Utah County • $363,292<br>Harmony Development LLC • Utah County • $301,489<br>Greenfield Investments LC • Utah County • $289,989<br>Wilson, Mark A. • Utah County • $278,605<br>Tem SPC LLC • Utah County • $270,134<br>ParkProvo LLC • Utah County • $243,331
For its part, eBay declined to give many details about what happened. “An administrative error with our payment occurred just before the holidays, and we worked closely with the county and our bank to resolve the matter,” eBay spokeswoman Penny Bruce wrote in an email.
“We can confirm that our 2017 taxes have been paid” now, she added last week.
After all, one auction that the online auctioneer wants to avoid is the tax sale of property. But the 38-acre eBay data center property, assessed at $91.9 million, wouldn’t have faced such consequences until racking up five years of nonpayment.
Some years, many well-known companies and individuals land on delinquency lists. Relatively few big names are there this year — and even eBay attempted to pay on time — which Cushing says may be a sign of how well the economy is booming.
“Our delinquencies are significantly less than they were a few years ago, even though we are asked to collect a lot more” because of tax hikes and new development, Cushing says.
“Our total delinquencies now are $22 million less than 2012,” he said. “Our delinquencies are even $2 million less than last year, even though we were asked to collect an extra $55 million based on taxes going up.”
Davis County Treasurer Mark Altom says he has seen the same. “This year, we had 3,660 delinquencies. Back in the recession, our delinquencies were in the mid-5,500 range. They are down significantly, I believe, because of the better economy.” He said he believes the value of those delinquencies is also down.
‘Cheap loans’ for developers?
But one type of business still has plenty of late and nonpayers: real estate developers. In fact, 16 of the top 25 property tax delinquents this year appear to be developers.
Treasurers say developers tend to use nonpayment of property tax either to solve cash-flow problems until they can sell or rent land and buildings, or as a sort of cheap loan that requires no approval.
Cushing explains that interest rates set by law on unpaid property tax is 7.25 percent, up slightly this year from the long-charged 7 percent. If the tax is not paid by Nov. 30, owners are assessed a 1 percent penalty. If they fail to pay by Jan. 31, the 1 percent penalty increases to 2.5 percent.
If the taxes are not paid within five years, the properties go to a tax sale in which they may be auctioned off for the back taxes and penalties owed.
Developers that finished among the top 10 delinquents — which all were in Utah County — include: Central Utah Investments, $439,398; Expressway Business Park, $363,292; Harmony Developments; $301,489; Greenfield Investments, $289,989; TEM SPC, $270,134; and ParkProvo, $243,653.
Others property owners on the top 10 delinquent list were: Watson Laboratories in the University of Utah Research Park, $512,480; Mark A. Wilson for Utah County properties, $278,605; and Chief Consolidated Mining Co. for property in Utah County, $238,653
OTHER NOTABLE PROPERTY OWNERS ON DELINQUENCY LISTS<br>• Mondi Bags USA in South Salt Lake, $203,306<br>• Syracuse Arts Academy in Davis County, $104,128<br>• Cabela’s Wholesale in Lehi, $97,847<br>• Soccer City Utah in Draper, $96,119<br>• Murdock Hyundai in Lindon, $94,451<br>• Sterling Furniture (for several Salt Lake County properties), $90,654<br>• Syracuse Family Fun Center in Davis County, $88,472<br>• Redwood Latino Plaza in West Valley City, $56,379<br>• IHC Health Services (for vacant land in West Valley City), $52,970<br>• Cowabunga Bay Land LLC in Draper, $42,525<br>• Cinepoint 6 in Ogden, $25,070
Cushing said counties receive a small silver lining from interest charged to tax delinquents. The 7.25 percent interest they eventually must pay is more than counties receive through investments in required state pools, which he said is around 1.6 percent.
But he said counties push hard for on-time payments for one main reason: It helps to hold down taxes that everyone pays.
He said the final calculation on tax rates is based in part on how many people paid tax on time the previous year. “So if the collection rate is high — meaning we get a 97 or 98 collection rate — they don’t have to bill as much as if you had a 94 or 95 percent rate. So it actually helps the individual homeowner.”
Few big names on lists
Most years at least a few politicians turn up on the delinquency list. This year, The Tribune found only one — and he offered a good explanation.
Salt Lake County Councilman Arlyn Bradshaw was listed as owing $1,010. He explained that he closed on a new home in September, “and at that time paid my property taxes with the closing costs. Apparently unbeknownst to me, there was an entry error by the title company. They underpaid the tax.”
He added that when he found out, he paid the remainder — and told his title company and mortgage broker “it was embarrassing to me because inevitably I was going to get a call for being a deadbeat,” and sure enough The Tribune called.
Another prominent person who appeared on the list was Steve Creamer, a former owner and executive of Energy Solutions and now executive chairman of sPower. He was shown owing $51,232 to Salt Lake County, mostly for a large 20-room home in Emigration Canyon. He did not respond to messages left at sPower seeking comment.