Planning Commission - Regular Meeting

Thank you. Uh we are back in open meeting. It the time is 1:23. Thank you for everyone's patience. Um we did roll call. We have public comment. I did have a public comment come in. I'll read that for the council. Uh it is from uh Allison McCoy. It says, um, "Thank you for the opportunity to address the council regarding the state's request for a tax a property tax deferral on the former US Magnesium parcel. First, I want to note that I have not had the opportunity to formally review any written deferral requests from the state. I believe it is important that the interest of transparency transparency that any deferral requests be properly submitted, review and consideration through the county's established process, which typically includes review and discussion with the Twilla County Archer's Office. I'm sorry. Um, historically deferrals for county residents have generally involved qualifying residential circumstances. Commercial partials have traditionally been ex excluded from this program. In addition, this partial has already received unique consideration once before. Granting another exception would represent a second departure from the standard procedure applied to other tax uh payers. County Bankruptcy Council has advised caution regarding deferral and has

recommended protecting the county's currently uh secured legal position in the US magnesium bankruptcy case. I believe the guidance should be carefully considered. Additionally, it is my understanding that the state previously allocated funds this obligation during the 2026 uh legislative session proceeding proceeded with closing the purchase of the property then later reduce the allocation. in Twilla County did not cause or create that the funding uh decision and local taxpayers should not be expected to bear the burden of it. When delinquent property taxes remain unpaid, the impact extends beyond a single partial. Those revenues support county services, schools, public safety, and other taxing entities that depend on timely collection. Tilla County cannot comply any cannot comply any taxpayer public or private to pay. What it can do and what I am obligated to do is to administer remedies and timelines provided under Utah state government law when collection responsibilities fall to the county. If the council determines that a deferral is appropriate, I would respectfully ask that it explain how this decision serves the best interests of Twilla County that what protections will be put in place and how similar situation taxpayers will be treated going forward. Thank thank you uh Allison McCoy to county auditor. Okay, that will bring us down to action item on the approval of the tax deferral application for uh the state of Utah, Nathan Harris.

Thank you, chairman. Uh let me use this fun new technology that's everywhere. Maybe I'll be able to put this up on the screen. should be pretty straightforward. Aaron did a good job of explaining it and showing it to me earlier today and Aaron is here. We appreciate it and all their Thank you, Aaron.

Um, so under the Utah State Code, uh, it talks about tax sales of properties that are delinquent on taxes and what remedies are available to people who are haven't paid their taxes. Um we are in a unique situation in this scenario. Uh what has happened is we have had a company US Magnesium uh that failed to pay their taxes for the last five years. Uh after four years we are allowed to sell delinquent properties um at a tax sale. And last year when US Magnesium was still the owner, we chose to enter into agreements with them in hopes that they would get their business back up and running. and pay us taxes. Um, I believe we initially entered into an agreement where they would pay us $100,000. Uh, that happened for a few times and then it stopped. So, we re-entered into negotiations with them and where they would pay us $50,000. I am fully aware of the $50,000 uh payment agreement because I drafted that. The $100,000 one, I don't have recollection of that. I don't believe I was involved, but that is my understanding of what has happened. And after we entered into that $50,000 a month agreement while they were paying these taxes that were due, uh they filed for bankruptcy and uh I believe September or October of last year. What ended up happening was uh the state of Utah came in and was the winning bid in that bankruptcy case and they paid $30 million for that. Uh there was some you can find it in I believe Senate Bill three and Senate Bill Five. If you look at what money is being allocated, there was originally allocated $40 million for the purchase. Uh the state ended up taking back 10 million of that and saying that there

was $30 million available. Uh as for the timing of those, I haven't checked those as to when the purchase occurred and when those happened. Um, it's been presented in public comment that one happened, then the sale, then another happened, and it was clawed back after the fact. Um, I can't confirm that. I I don't know that. But what I do know is that the bankruptcy court ordered US M the state as the purchaser to pay the taxes that are due. Um, in particular in that court order, uh, it is important to know that the the bankruptcy court out of Delaware did not actually put a value on the the amount of taxes to be owed. Um, they understand that taxes can be appealed. There are certain uh, you know, maybe there are different avenues to reduce taxes that the state might want to do. But what it does say in that court order is that the purchaser, meaning the state, expressly reserved the right to challenge the amount, validity or priority of any property tax leans up to Will County and any dispute between us and the state, the purchaser was to be handled locally. Um the state purchases property in February of 2026. Uh so what we have been doing is we have been in discussions with the state the the uh division of forestry fire and state lands fsl to come to an agreement right there are so many moving pieces that are happening right now uh US magnesium actually had filed an appeal on the 2025 taxes and that process is still moving forward and we don't know the final amount for the 2025 tax value of that property. Um the the state also has some other concerns about penalties and interest which we are still trying to figure. So

what we have before us though is we have now an application from the state. Um as you can see on on the screen uh this is the redemption portion and how a deferral or an adjustment of taxes is handled. And so in 1A it says if an interested person applies to a county legislative body for an adjustment or deferral of taxes levied against property located in the county, the county legislative body may accept a sum less than the full amount due or defer the full amount due where in the judgment of the county legislative body, the best human interests and interests of the state and the county are served. It's important to know that the state's interests are also at play here. It's not just Twilla counties. Um what we do look at then is in an application there are certain things that need to happen. So in 2A it says in an application for an adjustment or deferral described in section one the applicant shall include a statement setting forth the following. One the description of the property. Two the value of the property for the current year likely meaning 2025 2026 taxes haven't been assessed yet. three, the amount of delinquent taxes, interest, and penalties. And four, for a deferral, the amount proposed to be deferred. So, we received from the state a letter requesting that they would like to defer any and all tax liability assessed against the US magnesium property that they purchased. Um, in this letter they outlined that 2A is the property that's described on the April 24, 2026 final notice of tax sale. And they also mentioned that it was formerly known as a US magnesium parcel that they purchased in this bankruptcy proceeding. They say that pursuant to to a little two, the disputed value of the property for the current year is approximately

44.6 6 million which is accurate according to the uh the Utah state tax commission appeal that had happened. The state tax commission and US magnesium agreed that that was the right value. That process is still ongoing. So it is a disputed amount but that is currently the value. Um in number little three the disputed amount of delinquent taxes interest and penalties is 8.19 million which is accurate. that as of yesterday that is the total amount of taxes, interest and penalties that are being assessed against that property and they are asking that we defer all of it. So you have a full application in here. It says the applications for deferrals actually come to you as the legislative body in the state code and it is now before you to either grant or not uh or not grant this this deferral that has been requested. Um I think it's um needs to be noted that it did also come to the state or to the county treasurer and he reviewed it. Is that correct, Nathan?

Yes. Uh Mike Jensen, the county treasurer, sent me an email saying that per what he has seen, this meets the statutory requirements as well for a deferral request. And the way I understand, I don't mean to take up anybody else's time, but um when US Magnesium came to the county and said, "Is there a way to defer that because they were trying to consolidate debt, free up uh monies so that they could reopen, we were hoping that that would happen uh to continue to um support with uh employment uh where the state has now purchased it. I think it was fi was it final or they they they went through the whole bankruptcy in February, right?

They became the owner of the property in February. That's when the sale was approved. They're still the bankruptcy proceedings are still ongoing.

Still ongoing. So, you still have that. You still have disputed um costs of the taxes what they're saying that owe. Um, you know, obviously we want to have that tax money come in because that supports our schools, our students. Uh, so we're not going to relinquish on that. Um, give them the time to be able to allocate that funding. That's, uh, where it becomes important. And, and I'm glad that, uh, from the comment this morning from our county auditor that she agrees with the council that, hey, that money should not just be wiped clean. you should go after that because that helps the county and all the entities within that county uh that operates. Um I'll just stop here and is there any comment from the council that would like to make on this before we just a couple of questions Nathan. Uh I know that there was a discussion with the uh our bankruptcy council last week be with you and the auditor. We've just I want to make sure we put on the record. Have there been further discussions with bankruptcy council with the council and the attorney's office in the last week

and that those discussions contemplated everything that we have talked about today. Is that correct? Yes. Second thing is part of the dispute of bankruptcy is who owns the mineral rights and the water rights of the property and do they run with the property and and we've not been able to get an adequate answer from the state as to what that looks like right now. Therefore, there is a potential for litigation if the property were to sell and then or be put up for a sale and then come back to us that there would be several issues of ownership that still would have to be mitigated through that. Is that correct?

Yes. And I I I believe it's been stated um and auditor McCoy also has acknowledged that we don't know who owns the water rights. Um like that that is an unknown or the mineral lease agreement or anything else there. There are lots of unknowns about this property still

and there's been a if I just want to make sure there has been contact with the state attorney general's office not only and I I am going to correct this for the record that auditor McCoy did not say last year in the June 11th meeting that the cleanup was going to cost hundreds of millions of dollars. That was FFSL who had told us that and that we used and relied upon that in that meeting. But there had been other discussions about that. However, um the disputed amount of what could take place if we took ownership of this property if we were asked to clean it up ranges from a hundred million to 500 million. Is that correct?

The last number that the uh attorney general's office gave to me was around half a billion dollars. So 500 million if I know numbers which

and and that is something that we would have to then litigate and hopefully that we can work through all of this in the negotiations this next year to get the taxes paid so our citizens are made whole school districts special service districts all the others that we're not saying we're going to wipe the taxes clean. We're saying we want them paid. There's a way that we can do this through a process. There has to be legislative action from the state and unless that's done in a special legislative session, we would have to wait till the 2027 or 2020. Yeah, 2027 legislative session. Is that correct? That is correct.

Okay. Thank you. Any other comments or questions? Uh so I would just say as you guys are adopting this or not adopting this this make sure you know pursuant to the code that you guys are in your judgment right that this deferral would be in the best human interests and in the interests of the state and the county. I think it's important knowing that it's for the state and the county. It's not just us, right? It's not just in the best interests of us as the county. We want our county made whole, but we're looking more holistically than just

Yeah. And I think, thank you for bringing that up, Nathan. I think we're taking all people that have interest in this property uh where receiving or um purchasing that anyone who has affiliation. So that's even down to our school districts, our students. Um and uh keeping relationship with our school districts and uh state and partners and things of that sort. But um uh to defer that once again, not to wipe it clean, but to defer so that we do receive that funding in behalf of that. Wonderful. If there's nothing else, then the chair entertain a motion.

Mr. Mr. Chairman, I make a motion that we approve the tax deferral application for the state of Utah for the FFSL state forest lands and uh property that has been presented before us with the letter that we have received. Understanding that this is being done in the best community, human, state, and county government interest so that we can collect tax, we can enter into settlement discussions and complete those so that the taxpayers are made whole. Here a motion from Councilman Ward. Is there a second? Second. Hear a second from Councilman Stroberg. All those in favor say I. I. All those may oppose say nay. Sounds unanimous. Uh chair to entertain a motion to adjurnn.

So moved. Hear a motion to adjurnn. Uh all those in favor say I. I. I. We are journed