Polygamous community's homes in jeopardy because of tax liens

Finger-pointing under way in growing financial problem

The Salt Lake Tribune/October 17, 2009

Unpaid property taxes have put control of more than 150 homes in a polygamous community in jeopardy and more may soon be at risk -- part of a growing financial crisis that has reignited a rift between sect members and a court-appointed overseer.

Investment interests in 35 large, communal properties that are part of the United Effort Plan Trust were auctioned in a Mohave County tax lien certificate sale in February. The sale was triggered after about $124,000 of the $1.2 million total tax bill in Colorado City went unpaid in 2007.

The move means those who picked up the liens will be able to foreclose on the properties in three years if the back-due taxes plus accrued interest charges are not paid. That tab had surpassed $148,910 as of August, according to the Mohave County Treasurer's Office.

The UEP Trust properties now saddled with the tax liens include homes, commercial and school buildings, vacant land and a 54-acre site that features a community park and a zoo.

The trust, created in 1942, holds virtually all property in the border-straddling towns of Colorado City, Ariz., and Hildale, Utah, where most residents are members of the Fundamentalist Church of Jesus Christ of Latter Day Saints.

Who's to blame?

Bruce R. Wisan, the fiduciary who has overseen the trust since 2005, said Thursday that both FLDS and residents who do not belong to the sect failed to pay 2007 taxes.

The situation was exacerbated by the sect's refusal to work with him, causing a "huge communication problem" about who paid what and for which properties, said Wisan, appointed after Utah officials alleged sect leaders were mishandling the trust.

But an attorney for the FLDS says sect members paid taxes on their homes in 2007. Rod Parker lays responsibility for the situation with Wisan.

"The problem was common parcels and farmland occupied by non-FLDS people who were placed there by Bruce Wisan," Parker said. "The property taxes weren't paid on those portions of the properties."

Another problem, he added, "was [Wisan] failed to apply for tax exemptions that had previously been available for many of these properties." That increased the community's tax burden, he noted.

The sect, as a religious organization, got exemptions for properties that included Cottonwood Park, the zoo and private schools.

Wisan said he complained to the Mohave County Assessor about the loss of the exemptions and was able to get a "blanket" 25 percent reduction in the community's overall tax bill.

"I thought that was a real benefit to the trust," he said.

A worsening situation

Because the community is not subdivided, taxes are assessed on large parcels of land that may include numerous homes. One occupant's failure to pay taxes can place the whole parcel at risk.

For example, the 2007 tax bill for one parcel with six homes was $15,077.70; at the time of the tax lien sale, $327.82 was unpaid.

In the past, the FLDS calculated shares for individuals; they sent money to the community's bishop, who paid the taxes. Any shortfall was covered by wealthier individuals or businesses.

Nonmembers were given notices and asked to send payments to a post office box. If they failed to pay, the church covered the gap, Parker said. Taxes were always paid promptly, according to tax collectors in Utah and Arizona.

After the court takeover of the trust, the FLDS initially paid more than their shares to ensure taxes were paid. They also, according to Parker, made sure tax exemptions were in place on some properties.

But by 2007, with the loss of the exemptions and placement of nonmembers in large homes, the overpayments weren't enough to cover the taxes, Parker said.

The situation has worsened since then and more property is at risk of being included in the next tax lien auction in February. As of August, another $428,721 in 2008 property taxes was past due, according to Mohave County.

Utah AG concerned

Many FLDS in Colorado City paid their 2008 property taxes, Parker said, but some, effected by the economic downturn, have made only partial or no payments.

"The FLDS people have always struggled to raise the money to pay property taxes, but have always managed to do it," he said. "However, they do not have an endless source of money, and the fiduciary's demands for money are at cross-purposes with the FLDS desire to preserve their property."

In Hildale, which has fewer homes, some taxes also went unpaid in 2007 and 2008 -- $109,647.84 and $112,408.04, respectively, about half of what was due.

Utah Attorney General Mark Shurtleff, who had pushed for the court takeover to prevent loss of homes, said he is now "very concerned" about the tax problem.

"My feeling at this point is that the responsibility is Bruce Wisan's as the fiduciary and he needs to do whatever he can to ensure that the trust doesn't lose that property," Shurtleff said.

Jeffs Shields, an attorney who represents Wisan, said Thursday the "nonpayment of taxes is fully disclosed" in reports to 3rd District Judge Denise Lindberg, who is in charge of the case.

"No one has attempted to hide the fact that taxes aren't paid," Shields said.

In fact, the last report filed with Lindberg -- in August 2008 -- stated that "all of the Trust's 2006 and 2007 Utah property taxes have been paid."

It noted that $126,148.20 was overdue in Arizona for 2007and said the "fiduciary intends to continue his efforts to accomplish the payment of all the Trust's property taxes."

A May 2008 report said Wisan informed mobile home and apartment residents that their property taxes would be covered by a $100 monthly occupancy fee, charged to community residents for the trust's administration.

But a dozen mobile homes, four town homes and a duplex are now in tax jeopardy.

Like the FLDS, Wisan has been faced with non-FLDS residents who do not pay taxes. In a 2006 report, he said a "number" of non-FLDS had not paid property taxes and he planned to "attempt" to get them to pay and would use those funds for administrative costs.

Gross breach?

The trust has no money to address the tax problem, Wisan said Thursday. It is in debt about $3 million, money owed primary to Wisan and his attorneys.

This summer the FLDS paid nearly $400,000 in past-due occupancy fees to Wisan, and according to spokesman Willie Jessop, asked Shurtleff to ensure it went to taxes.

But Judge Lindberg did not restrict the funds and Wisan didn't use any of that to protect the property, he said.

"It's extremely disappointing after making the AG's office fully aware of the tax problem, we gave hundreds of thousands in hopes they'd mandate that taxes be paid and it not go for fees," Jessop said. "We're still reaching out to the AG's office to put some protections in place."

Wisan also sold heifers from a trust farm this summer, netting an additional $360,000, that could have been used to wipe out the tax debt, Parker said.

"His charge from the court is to protect the property and it would be a gross breach of his duty to fail to pay the taxes," Parker said.

Wisan said in July those funds were needed for "the continued survival of the trust."

Regarding the occupancy fees, Wisan said they have always been earmarked for the trust's administration.

"I had to make some decisions where to pay it," he said. "Frankly, in order to keep the trust going, in order to defend the trust, I had to pay some professional fees."

The tax tab for 2009

Property taxes for 2009 are due in Arizona by Oct. 31. UEP Trust fiduciary Bruce R. Wisan said he has not alerted Colorado City residents what they owe due to "a lack of monetary resources" and because, until a month ago, he thought a settlement over management of the trust might effect his duties.

He said he hopes to notify residents next week of their past-due and current taxes, including shares of communal property, such as parks.

"The community has paid this in the past, the community should pay this now," Wisan said.

"I'm not the bishop, I don't have the ability to communicate to people and businesses like the bishop did previously," he added. "My understanding is that the bishop often allocated property taxes from one residence to another based on the ability to pay. Internally, the FLDS may have to make those kinds of adjustments."

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