Shannon Orgill lives up Chalk Creek Road behind the Citation Oil & Gas Corporation buildings. Her proximity to oil drilling means her taxes are, as her son estimates it, nearly triple that of a comparable home.
“We just — we can't maintain this,” she told the Summit County Council Oct. 2. “We don't want to lose everything or have to sell and find somewhere else to live, because we can't maintain these costs into retirement.”
The rising costs are property taxes, especially from what’s called “service area 8,” an entity that maintains about Chalk Creek Road from Coalville to to the Wyoming border.
What is service area 8?
The county commission voted to create the service area, which now operates independently, in 1982 to keep Chalk Creek Road open for commercial use.
“When the road was first built, it was built for the oil companies and others — and certainly everybody benefits from the road up to the county line — but originally, the valuation of those companies was fairly high, and they paid the vast majority for the maintenance of the road,” Summit County Deputy Civil Attorney Dave Thomas said at the council meeting.
Now, the balance of property taxes service area 8 is collecting is changing.
According to resident Tyler Orgill, there are 269 individual properties within the area, the majority of which are greenbelt, meaning they pay hardly any property tax. The rest are oil fields, and there are nine year-round residents.
Orgill describes its shape as similar to a no. 1: wider at the bottom, travelling up the road, then cutting back down near the Wyoming border.
Property values determine how much landowners pay in taxes: Summit County assesses the value of the residential and other local properties.
The oil fields are "centrally assessed," meaning the Utah State Tax Commission says how much they're worth. Central assessment is used to make sure underground property, such as mines or drilling fields, or property that crosses county lines, such as railroads, don't have disparate values from different county assessors.
Centrally assessed properties haven't been increasing in value like residences have.
“What that results in is a ‘tax shift,’” Thomas told the council.
Utah's tax shift
Weber County Assessor John Ulibarri agrees the situation up Chalk Creek is a “textbook” example of tax shift. He researched the phenomenon with Tooele County Assessor Jake Parkinson and presented findings to the Utah Legislature last year.
Click here to read Ulibarri and Parkinson's report.
“Think of the taxes as a pie, right? It’s just a single pie which generates a set dollar amount,” Ulibarri told KPCW. “So as the values change for the individual properties in there, or the slices of the pie, as one gets bigger, another gets smaller.”
Summit County property values are meteoric. But since state tax assessors haven’t raised the value of the Chalk Creek oil fields in equal measure, residential properties’ share of the pie has increased.
Ulibarri said that's happening everywhere in Utah, both because of market changes and tax policy not changing with the market.
In 2013, residential properties accounted for 55% of the taxable value in Utah, and centrally assessed properties accounted for 12%. Ten years later, 67% of property taxes came from residences, and 6% from centrally assessed.
Service area 8's tax shift
Tyler Orgill said during October's council meeting that service area 8’s total budget is $773,000. This year, oil companies and other landowners paid almost 95% of that.
The problem is, there are only nine year-round households to make up the rest. Together, they pay $47,000, or about $5,000 each, for one road.
“That is 57% of the total tax bill for those nine landowners,” Orgill said.
His piece of the pie only keeps growing; he said residents’ total tax bill will be 27% higher next year. That's not because service area 8 is collecting more money; it's because the relative values of their homes and the oil fields continue to shift.
Residents will probably not be able to opt out of service area 8 because, Thomas said, they’d have to prove they don’t benefit from the road maintenance it provides.
Council to discuss solutions
During the council’s initial conversation about the problem in October, Councilmember Chris Robinson asked Thomas about expanding the service area or dissolving it.
Expanding it would require the new group of people opting into a new tax, which doesn’t seem likely.
“You could dissolve it if you had a petition signed by 33% of the private landowners, with at least 25% of assessed value,” the civil attorney responded. “The question is whether you get the oil companies. Maybe they want out of the district too.”
Dissolving the service area would be a $773,000 problem for Summit County, if it wants Chalk Creek Road to receive the same level of service.
And doing nothing might force out fifth-generation families, including the Orgills, Jacobsens and Clarks, all of whom spoke to the council in October.
“This is where we live. This is where we love,” Shannon Orgill told the council. “This is where we want our grandkids to keep, keep living and loving.”
Ulibarri and Parkinson recommend statewide solutions in their paper for the Utah Legislature.
Those include modifying or increasing the discounts primary residents get on property taxes to account for tax shift, or applying different tax rates to different kinds of properties. They also suggest increasing the amount of data available about commercial properties so they're fairly valued.
Ulibarri told KPCW he still believes Utah has the best property tax system in the country.
"We have only recently experienced the unusual pressure on residential property owners," he wrote. He believes, rather than a one-size-fits-all approach, Utah will need to apply several solutions to "round out the rough edges."
As for the residents experiencing it firsthand in northern Summit County, the county council is discussing the dilemma at its Nov. 20 meeting at 3:40 p.m.
