Union Pacific says it has a good reason for not meeting the deadline to pay $2.8 million in property taxes that it owed to Wasatch Front counties this year — making it the urban area’s largest property tax delinquent.
The company contends that tax collectors are railroading it, and the Utah Tax Commission placed values on its property that are 75 percent too high.
So instead of paying, Union Pacific filed a federal lawsuit challenging those valuations. A judge is allowing it to hold disputed taxes in escrow until the lawsuit is resolved. “Union Pacific paid the undisputed portion of the property taxes,” said company spokeswoman Kristen South.
That is just one story coming out of the $224.4 million in 2018 property taxes not paid on time in Salt Lake, Utah, Davis and Weber counties — many involving well-known companies, some struggling ones and even a few politicians.
Taxes are due Nov. 30. A few weeks later, counties start posting online a sort of a shame list of businesses and homeowners who missed the deadline. The Salt Lake Tribune downloaded and analyzed them as soon as they were available (some names disappear after their overdue taxes are paid.)
Every year, a few politicians show up on the list — and may illustrate reasons why other individuals land there. This year that included three legislators: Reps. Jim Dunnigan, R-Taylorsville; Norm Thurston, R-Provo; and Brad Daw, R-Orem.
Daw was late on $1,788. Instead of taking the blame himself, he asked his wife, Laura, to return a Tribune phone call inquiring about it. “I’m the one in charge of the finances, and I missed the date," she said. “It had nothing to do with him.”
Thurston was late on $3,581 for his home and took full responsibility for it. “I just messed up,” he said. “It was an oversight, and I took care of it as quickly as possible” when he received his delinquency notice.
Dunnigan was late on $2,030. He said he tried to pay online for three properties at the same time, but apparently the payment for only the first one properly registered. “I don’t know what happened,” he said, adding he has now paid it.
Don’t wait too long
No one wants to pay taxes early and miss out on any interest on the sometimes large amounts of money due, but waiting until literally the last second to pay inadvertently landed a few companies on the delinquent list initially.
That included AT&T for its $3.8 million tax bill to Salt Lake County. The county received a check from the company the first week of December, but it “arrived with no postmark,” said county Treasurer Wayne Cushing. So it was deemed late, and the required 1 percent penalty for missing the deadline was imposed.
But AT&T asserted the check was in the mail on time. The company eventually sent the county a post office receipt showing it was mailed before the Nov. 30 deadline, so it was removed from the delinquent list.
Similar last-second mailings also landed Swire Coca-Cola on the list for owing $840,717 and the Howard Hughes Co. (for the old Cottonwood Mall site that it owns) for $402,673. Late payments eventually arrived in the mail and had postmarks before Dec. 1, Cushing said. So they also were removed from lists.
Hospitals don’t see the emergency
No. 2 on the list of tax delinquents — late on $2.6 million owed — was Medical Properties Trust, which in 2017 acquired the real estate titles of several area hospitals. While it missed the initial Nov. 30 deadline, its taxes were paid in December.
The delinquent amounts included: $697,300 for the Jordan Valley Medical Center in West Jordan; $385,900 for that hospital’s West Valley City campus (formerly called Pioneer Valley Hospital); $599,700 for the Salt Lake Valley Regional Medical Center; $457,800 for the Mountain Point Medical Center in Lehi; $453,400 for Davis Hospital and Medical Center; and $44,700 for a medical office building in Ogden.
The Alabama-based MPT did not return phone calls about why its payments were late.
Developers using unpaid tax as loans?
Dozens of property developers were high on the list — as they are every year.
“Some of them will use unpaid taxes essentially like an easy loan” and a perhaps relatively inexpensive one, Cushing said. Treasurers have said that for years.
The interest rate on late 2018 taxes is 8.45 percent, up from 7.25 percent in 2017. 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.
Paying those amounts sometimes is easier than obtaining business loans or may cost about the same for some developers — or it may help solve cash-flow issues until they can sell or rent their land and buildings. But if taxes are not paid within five years, the properties are auctioned at a tax sale for back taxes and penalties.
This year, 15 of the top 25 tax delinquents were developers.
Those in the Top 10 included: Harmony Development, $430,449; HD Development of Maryland, $421,920; Evergreen Utah (owner of a large office building in West Valley City), $379,600; Patterson Construction (a homebuilder), $320,460; SCP Fox Hollow, $315,400; and SMHG (the parent company of Powder Mountain ski resort, developing areas nearby), $275,684.
Late payments by developers do create a small silver lining for taxpayers. Cushing notes that the 8.45 percent interest they pay is much higher than the 2.7 percent or so interest most counties get on allowed investments through a state pool.
But he says treasurers push for on-time payments because it helps to hold down taxes that everyone pays. Final calculations are based in part on how many people paid tax on time the previous year — so late payments can raise taxes for others.
Showing up on the tax-delinquency list can be a sign that a company is struggling. That is apparently the case for Parkprovo, No. 6 on the list, owing $343,107 to Utah County.
The company owns the former Seven Peaks Water Park, but filed for bankruptcy this year. News stories said it switched to a new operating company, which changed the name of the attraction to Blue Island Resort.
Blue Island said it would open in June, which was pushed back to July, and then it never opened last summer. It posted on its Facebook page in August, “So sorry, not opening this year. But next year will be an entirely upgraded experience.”
Then it ended up near the top of the tax-delinquents list.
Relatively few big names landed on the delinquency list this year — which treasurers say is a sign of a booming economy.
“Our collection rate is a little bit better than last year,” said Davis County Treasurer Mark Alton, “and it’s significantly better than during the Great Recession.”
Cushing added about Salt Lake County, “Our delinquencies are down … the economy is doing real well.”
The only hitch he found was where some people opted to receive their tax bill this year by email instead of by regular mail. “A certain number of them opened them, and forgot them. They never printed them out,” he said. “They’ve decided not to go that route next year.”
Others of interest
Smatterings of other names of interest are sprinkled through the delinquency lists. Following are some:
• Towne Center Apartments in Herriman, $193,687.
• Zions First National Bank (for scattered land holdings), $191,040.
• Fort Union Shopping Center, for a Walmart store, $180,830.
• Hillside Plaza Shopping Center in Cottonwood Heights, $174,527.
• Ken Garff West Valley City auto dealerships, $151,262.
• Ken Garff dealerships in downtown Salt Lake City including Ferrari of Salt Lake City, Maserati Alfa Romeo and its Italian Service Center, $99,306.
• Maverik, for several sites in Utah County, $119,765.
• Soccer City Utah in Draper, $106,492.
• Cabela’s in Lehi, $105,967.
• Syracuse Family Fun Center, $85,657.
• Kohl’s Department Stores, for a Layton store, $75,290.