Sect leader says city done: Followers, jobs flee with almost $21M owed on plant and cash scarce
HILDALE – Given his city’s financial straits, Hildale Mayor David Zitting remains remarkably unruffled.
“We are going on day-to-day like we always have,” Zitting said, then added, “Nobody knows what the future is.”
No, but it does look rocky for Hildale and its twin, Colorado City, Ariz., built by members of the Fundamentalist Church of Jesus Christ of Latter Day Saints.
The polygamous sect is under fire from state authorities and under pressure from the economy, a two-fisted punch that has Hildale, and perhaps Colorado City, struggling to stay upright.
Warren Jeffs, FLDS president, is said to have told his followers that God is finished with Short Creek, as the twin cities were first known. He is in hiding, wanted by the FBI on an Arizona charge of arranging an underage marriage.
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Taking a break?
His followers are fanning out to new developments in Eldorado, Texas; Mancos, Colo.; Pringle, S.D.; and Mesquite and Piute, Nev.; and to established locales in Idaho and British Columbia. Money once dedicated to building up Hildale, which has 1,980 residents, and Colorado City, pop. 4,150, is being diverted elsewhere.
Numerous businesses – more than 30, including Cozy Log Homes, General Rock Products, Ideal Mechanical and Allco Manufacturing – have shut down or moved, taking out jobs and shrinking the community’s tax base.
Soaring prices caused Hildale to shutter its natural-gas-fired Twin City Power Plant, which provided electricity to both cities.
Now it is trying to sell the plant and scrambling to make payments on the $21 million it borrowed to build it and related structures.
The city paid off another general obligation bond last year but discovered that doing so had an unexpected consequence. Tax revenue from fee-assessed property, such as vehicles and equipment, is redistributed to cities in part according to their bond debt. The more debt, the bigger the city’s share.
Hildale’s allocation dropped from $36,000 to about $3,600, Zitting said.
In both Hildale and Colorado City, less than half the property taxes due in 2005 have been paid, which is expected to require tax increases to keep general fund revenue level.
“Their tax rate is going to go up sizably next year to make up for that difference,” said Washington County Clerk Cal Robison.
Colorado City is somewhat insulated from these economic events because it shares in Arizona’s lottery-revenue largess.
But Hildale can’t bond or borrow. When one Utah bank recently backed out of a loan and others refused its business, Hildale had to dip into its water department reserve funds to pay for a new $135,000 ambulance already on order. The city’s budget has been slashed and frozen, staff hours cut, and public projects scaled back or slowed down.
“We made deep, deep cuts in all the budgets,” said Zitting, who is in his 20th year as mayor. “We’re now in the process of looking at anything we can do on the revenue side to improve revenues. We may have to live on a shoestring now and cut the budget way down.”
Those moves have helped reduce Hildale’s current overexpenditure to $80,000. Zitting has warned the Council that, before the fiscal year ends, more cuts may be needed.
“We’ve really hunkered down,” said Jerry Barlow, Hildale city business and utilities manager.
It’s harder to tell what’s going on in Colorado City. Numerous phone calls to Town Clerk Kevin Barlow and interim Mayor Terrill Johnson were not returned to The Salt Lake Tribune.
A copy of the town’s budget shows that at present, its general fund expenditures outpace revenue by $207,520.
Some of the cities’ financial trouble stems from a standoff between FLDS members and Bruce Wisan, the court-appointed fiduciary now in charge of a charitable property trust set up decades ago by the community.
Last November, Wisan told some residents to hold off on paying property taxes until the community was surveyed and lots were assigned individual tax-identification numbers.
That survey is under way, and Wisan now has told residents to pay their taxes either to him or Washington County. Most FLDS members are refusing to deal with Wisan, in keeping with their leaders’ instructions to ignore him.
Wisan also has told officials in both cities that he must personally approve building permits. That edict, and the FLDS church’s focus elsewhere, may be the cause of a precipitous drop in permit applications.
Hildale, for example, has collected just $35 in permit fees so far this fiscal year, only 3 percent of what it had budgeted.
“That’s a product of the publicity, I think,” Barlow said.
In Colorado City, building-permit revenue is off, too. The town has collected just $150 of the $2,500 in permit fees it expected to take in by June.
That city’s budget also shows a steep drop in fines and forfeiture revenue. So far, Colorado City has brought in just $12,579 of the $70,000 it budgeted, probably due to the turnover in deputy marshals.
A year ago, the Utah Police Officer Standards and Training Board decertified Hildale Town Marshal Sam Roundy and Deputy Vance Barlow because they were practicing polygamists. The cities had to hire and train new deputies, creating a lag in ticket writing and property seizures.
Currently, the biggest headache for Hildale is its idled natural-gas-powered generation plant, which the city built in 1996 to decrease its reliance on outsiders. The plant uses retrofitted jet engines to produce electricity, an inefficient and outdated technology for which the city paid premium prices.
“Basically, the gas market shot up and the power market has not followed in the same ratio,” said Barlow, making the plant “out of the market to operate. We are not in that window.”
Not only has the city had to shut down the plant, eliminating a revenue source, it has had to buy power on the open market, adding cost. And that has made making its bond payments difficult.
As of March 1, the city owed $2.7 million in due and past due interest and principal payments to Wells Fargo Bank, trustees for the revenue bonds that funded the plant’s construction. According to a disclosure document, the bank received a partial interest payment of $387,126 and planned to distribute it to bondholders.
That leaves $2.3 million past due – and an outstanding balance of $20.9 million.
The city’s debt service reserve account held just $699.35, short of the $2 million it is required to hold. There is $3.7 million in an escrow account, though the bank notes “it is unknown whether, or to what extent, the escrowed funds will be accessible . . . for distribution.”
Hildale is working with the bank to come up with a restructuring plan, Barlow said.
But unloading the outdated plant could be tough, if not impossible. And the city is unlikely to be able to get more out of residents to help pay off its debt. Twin City Power already charges 11.2 cents per kilowatt hour – nearly a nickel more than Utah Power customers pay.
There are other reasons residents’ pocketbooks are being pinched. In 2000, FLDS members pulled their children from the public school system and created their own private schools, which the community must now fund. The closure of a public school on the Utah side eliminated well-paying jobs. The surviving Arizona school district lost per-pupil funding; when the state took over the district last fall, many FLDS members lost or gave up jobs, most recently Principal Kimball Barlow.
Jeffs also apparently continues to collect hefty tithes and donations from his followers. The best proof of that turned up in October, when Pueblo County sheriff’s deputies found $142,000 in cash in a truck driven by FLDS couriers who were headed for Eldorado, Texas. There also was a jar, bearing a photo of Jeffs and the label “Pennies for the Prophet.”
If money is tight, it is understandable, and it has a trickle-down effect.
Among the companies feeling it: Sew-Rite, a fabric store on Uzona Avenue. It will close at the end of March, reverting to weekend sales through April to clear its inventory because it is not getting enough business.
Still, Hildale City Clerk Ruth Barlow said business licenses are on par. She has issued 64 so far this fiscal year, approaching the 75 licenses of last year.
“There is a lot of industry,” she said. “It’s right on.”