Ruling against county is set aside
June 2, 2007
A Third District Court judge set aside a decision against Summit County in a long-running tax dispute against the private Summit Water Distribution Company that could have far-reaching effects on who pays taxes for utilities infrastructure when it crosses property that belongs to various private landowners.
The sides will reargue the case in 3rd District Court to Judge L.A. Dever, according to a May 9 ruling.
"[The decision against the county] has thrown (County Assessor) Barbara Kresser into a tailspin," Summit County Commissioner Sally Elliott said.
But "on his own" Dever set aside his ruling from Jan. 26, said David Thomas, the county’s chief deputy civil attorney.
Siding with the private Summit Water Distribution Company, the judge originally ruled against Summit County.
The decision, however, "left more questions than it answered," Thomas said.
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At issue is whether Summit Water should be taxed for personal property for infrastructure the private water company develops in the Snyderville Basin.
Attorneys for the company argue that items like water rights, pipes, storage tanks and water shares constitute improvements to "real property" under state law, Judge L.A. Dever’s decision states, and should not be taxed as "personal property."
But county officials counter that personal property includes "gas and water mains and pipes laid in roads, streets and alleys."
"Clearly, [Summit Water’s] facilities are included in the meaning of the terms ‘improvement’ and therefore, cannot lie within the definition of personal property," the judge stated in his ruling against the county.
But that decision made homeowners responsible for paying property taxes on utility infrastructure that crosses their land, Thomas claimed.
"If the question is, if it’s personal property of the person who put it in, [Summit Water should] pay taxes on it," Thomas said.
The case could affect how utilities are assessed throughout the state and "Summit Water is just another utility," Thomas said about the county’s long-time competitor in the water market in the Snyderville Basin.
Meanwhile, the original decision has tax assessors across the state "up in arms," Kresser said.
"I knew all along it was a bad decision and I’m glad that it was set aside," Kresser said in a telephone interview this week about the judge setting aside his ruling.
The Utah Attorney General’s Office, state lawmakers and members of the Utah State Tax Commission helped convince Dever his decision was flawed, she added.
"I had some pretty powerful help with that," Kresser said, "Somebody has given [Dever] a little lesson in tax 101."
Dever’s original ruling called into question the validity of rules tax assessors have used for years, she said.
If individual property owners pay taxes on the water infrastructure that crosses their land, do they own it? Thomas asked, adding that prior to the ruling the utility provider was taxed for such improvements.