By Mimi Darley Dutton | [email protected]

A tax rate hike is proposed for residents of the Traverse Ridge Special Service District (TRSSD) after current members of the TRSSD Administrative Control Board, which is tasked with managing TRSSD funds, realized the district is financially insolvent. Established in December 1999, the district has “special” or extra services in comparison to the rest of Draper City. The city provides those extra services and the TRSSD is obligated to pay for them according to the resolution establishing the district.

“The TRSSD was created to provide for additional services which are the result of its geographic location. These services are considered ‘in addition to’ the basic services provided by Draper City to other areas of the community. These services include snow removal, street light fixture upgrades, repair and maintenance of roads, street sweeping and disposal services. The revenue for the District comes from a property tax mill levy,” reads the resolution establishing the TRSSD.

In 2012, through an unusual string of circumstances, Draper City became landowner to approximately 2,400 acres of SunCrest property within the TRSSD. That portion of SunCrest property had changed ownership among developers and the last owner declared bankruptcy in 2007. Zions Bank was an original lender to the project, and in an effort to protect their multi-million-dollar investment, they bought the property out of bankruptcy.

Former City Attorney Doug Ahlstrom explained in a 2014 interview, “Zions made it clear that they’re a bank, not developers, and they were looking to sell it to the next developer who came along. The city met with at least four developers who were trying to decide if they could buy it and each one found out how expensive it was going to be to go forward with the project. Zions Bank sued Draper City for $25 million claiming we’d interrupted development and interfered with their ability to sell it.”

Litigation between Zions Bank and Draper City took place between 2010-13. “Each party refined what they understood about the problems in SunCrest…they wanted to be out of litigation, we wanted to be out of litigation,” Ahlstrom said.

In an unusual twist, Zions Bank approached Draper City and suggested the city bid to purchase the property. The city council at the time chose to purchase the property for $5.6 million. “Draper was able to acquire the property at an extremely reduced price,” Ahlstrom said.

According to Mayor Troy Walker, the city sold a portion of the land near the city of Highland and used that profit to pay off the bond, traded a portion as a settlement in another lawsuit with a developer in the area, and kept the parcel at the top of Deer Ridge Drive for open space. “We’re out of debt, we own new land and we have new trailheads,” Walker said.

By buying the property, Walker said the city eliminated about 5,000 more homes that previous developers had planned to build. “One of the TRSSD residents’ arguments is that their taxes would have been lower if there were more homes up there…but there would have been more homes, it would have been way more crowded and a lot more traffic.”

In 2014, the city established a TRSSD Administrative Control Board made up of district residents to work with the city on managing the budget for the required special services. According to Walker, the board started building up a fund balance to do maintenance on Deer Ridge Drive, but some TRSSD residents filed a lawsuit against the city because they didn’t want to pay for reconstruction of that road.

“We set a tax rate that would pay all the bills plus the road maintenance. They thought it was too much. Some residents set a referendum not to increase taxes and they were successful voting the tax increase down. They lived off the fund balance and had no tax for a number of years. Now they’re out of money…they have to raise taxes,” Walker said.

Daryl Acumen is the current chairman of the TRSSD Administrative Control Board which consists of five members plus a treasurer. All six are district residents who serve voluntarily. Acumen said the TRSSD is broader than SunCrest and encompasses areas of Traverse Mountain that are not in the SunCrest HOA.

Acumen explained the history of the board before he was a member. “In 2014, a group of activists came to the conclusion the assessment was too high. They decided to do a referendum on the assessment and the referendum passed. The city council appointed a citizens’ board to manage the TRSSD to figure out what the assessment should be. We had about $2 million in the bank. That board made the decision to slash the assessment by 75%. The problem is, the assessment revenues were not sufficient to cover the costs of snow removal, lights and road maintenance.”

Both Walker and Acumen said the previous board spent a great deal of TRSSD funds on litigation with the city. “We ultimately settled litigation that the city would reconstruct Deer Ridge Drive and it wouldn’t come out of their funds,” Walker said.

Through Profit and Loss analysis done by members of the TRSSD Administrative Control Board, they have a clearer picture of the district’s finances. “The TRSSD is insolvent. The $2 million we had in the bank is gone…the TRSSD spends more in snow removal alone than we take in from the tax assessment. We’ve got to double the assessment to a sensible level in order to operate. Today our liabilities are $48,000 more than our assets, so we caught this just in time,” Acumen said.

Walker feels the current board is going in the right direction and he hopes TRSSD residents will be willing to pay the higher tax rate. “We’re just trying to get enough money to cover the services. I want it to be fair for everybody in the city, that’s why I don’t think the rest of Draper should pay when the deal is what it is. The board members are people who live up there. They’re the ones setting it (the tax rate) with the assistance of the city’s financial people. It’s transparent and fair on what they’re trying to accomplish.”