Developers top tax delinquencies list

Nine of the 10 biggest property tax delinquents in Utah County have something in common this year: They are developers.

In fact, Deseret News analysis shows that developers, as a group, owe more than $2 of every $5 in late 2009 property taxes in that county. That is more than what all homeowners combined owe there. It is also more than what all other types of business combined owe there.

Why? Developers appear to be using nonpayment of taxes as a "cheap loan." It requires no application fee or waiting period, and does not require good credit. The cost is a 2 percent penalty, plus a comparatively low 6.25 percent interest rate this year. The amount must be paid off in five years, or the property is seized and auctioned.

"I know it's a cheap loan for developers," said Utah County Treasurer Robert C. Kirk, who adds that he doesn't see any way to stop the growing practice without hurting others.

He said even raising penalties or interest rates for developers "is not going to be a deterrent. They're not going to pay it until they sell their homes. They're going to pass on that cost when times get better. ... So ultimately, it (trying to raise taxes on developers) just ends up hurting the consumer anyway."

That comes as county treasurers along the Wasatch Front say they are surprised at how many homeowners and businesses paid tax on time last year despite the recession, except for growing numbers of developers who are not. Some other well-known businesses from hospitals to hotels, restaurants and grocery stores also appeared on the delinquency list.

Despite the recession, Salt Lake County Treasurer Larry Richardson said about 95 percent of 2009 property taxes there were paid on time, about the same as the previous year. Davis County Treasurer Mark Altom said about 94 percent were paid on time, down about 1.5 percent from the previous year.

Utah County had a much lower on-time tax payment rate: about 87 percent, which Kirk said is down roughly 1.7 percentage points from the previous year. He said much of that is because of developers.

"We've probably been hurt a little bit more because we've had more development than other counties. That's the industry that's gotten hit the most," he said.

"Utah County was the fastest growing county in the state in 2008" as the recession hit, Kirk said. "Unfortunately, developers got caught up like everybody else in the economy," and he said many choose not to pay taxes on property until it is sold.