2017 ANNUAL REPORT OF THE UNITED EFFORT PLAN TRUST INTRODUCTION

Transcription

1 2017 ANNUAL REPORT OF THE UNITED EFFORT PLAN TRUST INTRODUCTION This is the 2017 Annual Report of the United Effort Plan Trust ( Trust ), prepared by the Board of Trustees ( Board ) in accordance with Section of the Reformed Declaration of Trust of the United Effort Plan Trust, dated October 25, As the Court will recall, its Order: (1) Transferring Additional Duties and Authority to the Board; and (2) Reducing Court Oversight ( Order ), dated February 26, 2016, effectively transferred responsibility and authority for Trust administration from the Special Fiduciary to the Trust s Board of Trustees ( Board ). The Fiduciary s only remaining responsibilities are preparation and filing of the Trust s annual reports with the Court, the negotiation and litigation of Canadian case no. S , Bruce R. Wisan v. Bountiful Elementary School et al., the exercise of subpoena powers, and the winding up of professional fees and costs incurred by the Special Fiduciary prior to the Order. Accordingly, while filed by the Special Fiduciary pursuant to the Order, this report reflects administration of the Trust by its Board in The current Board, as appointed by the Court, consists of the following individuals: 1. Don Timpson 2. Arnold Richter 3. Deloy Bateman 4. Greg Barlow 5. Shirlee Draper 6. Jean Allred 7. Ramona Barlow The Board established the position of Executive Director of the Trust to manage day to day operations of the Trust and to implement and carry out Board policies and decisions. Jeff Barlow currently serves at the discretion of the Board as Executive Director. The Board holds public meetings monthly to keep participants informed of issues that affect them directly and to answer participants questions about the Trust. Additionally, the Board meets twice each month to review Petitions for Benefits, to interview participants, and to make decisions with respect to those petitions. The Board has also established an Advisory Board, consisting of persons who reside or have resided on Trust property in Canada, to advise the Trust with respect to issues relating to the Trust s Canadian property. 1

2 I. Real Property and Related Issues. A. Residential Property. TRUST MANAGEMENT AND ACTIVITIES As the primary purpose of the Trust is to provide for participant s just wants and needs with respect to housing, the Trust continues to distribute deeds to residential properties in Hildale, Utah. Most of the Hildale homes have been approved and distributed by the Board in accordance with the Court approved process for distribution to Trust participants. The Trust is waiting for many of these participants to close on their transactions. Residential property in Colorado City continues to be owned by the Trust and managed using Occupancy Agreements with Trust participants who reside in the property. A lack of subdivided Trust property and Town of Colorado City s refusal to cooperate with the Trust on this matter has previously been the legal and practical impediment to distributing these properties to participants. However, on April 18, 2017 the United States District Court for the District of Arizona in the case of United States of America vs. Town of Colorado City, Arizona, et al., ordered Colorado City to work with the Trust to develop a recordable subdivision plat as a remedy for the City s violation of the Fair Housing Act. Through this process, the Trust was eventually able to receive City approval for its subdivision plat, which the Trust recorded as the Short Creek Subdivision on September 26, 2017 in the Mohave County Recorder s Office. The Trust is establishing an irrigation district in Mohave County so that subdivided lots may receive non-culinary irrigation water. Creation of the irrigation district must be completed before lots can be distributed. The Trust has also worked closely with the Mohave County Assessor, Treasurer, and Recorder to allow them time to prepare for and ensure the orderly conveyance of deeds given that more than 650 lots were created by the subdivision. It is anticipated that the Trust will begin distributing subdivided Arizona residential property to participants in In June 2017, under a Court approved process, the Trust sold a large parcel of land in Colorado City that encompassed a mobile home park with approximately 84 mobile homes. Most, if not all of the mobile homes were in serious disrepair and legal title for most trailers was unclear, requiring substantial legal and other expenses to establish. These costs were paid by the buyer, who is now remodeling the mobile homes and offering them for sale or lease. Sale of the mobile home park and trailers and their subsequent renovation has fulfilled a continuing need for housing in the community. The Board has determined that some residential properties, due to their extreme size, are not well suited to meet the housing needs of single families. Accordingly, the Board developed a plan to sell certain residences at significant discounts for conversion into 2

3 apartments and temporary housing. Under the terms of this plan, participants receive an option to purchase the properties at a discount on the condition that the property is converted into apartments and a predetermined minimum amount is spent on renovation. This program allows once unusable homes to be converted into additional housing units available to trust participants with no out of pocket cost to the Trust. B. Tax Delinquencies. Many Trust properties are sufficiently tax delinquent that they are within a year of being sold by the county or the tax lien holder, depending on whether they are located in Utah or Arizona, respectively. On the Utah side, Trust participants occupying property were given a 10, 30, or 60 day notice to pay taxes or vacate the property. The amount of time given an occupant for compliance was determined by the Board based upon the occupant s previous efforts, if any, to comply with the terms of their occupancy agreement. In almost all cases, occupants complied by paying the past due taxes and any unpaid occupancy fees. On the Arizona side, where tax delinquencies are greatest, the Trust is focusing on properties with three or more years of delinquent taxes. Those properties have been issued notices to pay taxes and occupancy fees within 10 days or vacate the property. The occupants are also encouraged to contact the Trust if meeting this obligation would cause a hardship. The Trust s uniform policy for occupancy of a property is to require three things: 1) a signed occupancy agreement from a responsible adult who lives in the property; 2) the payment of county assessed property taxes; and 3) payment of the $100 occupancy fee approved by the Court. Previously, the general refusal of occupants to communicate in any way with the Trust or enter into an occupancy agreement was an obstacle that forced the Trust to evict noncompliant occupants. However, during the fourth quarter, the Trust has had a great deal of success communicating with occupants and entering into occupancy agreements using a third-party. Occupants are contacted by the third-party before any notice to pay or vacate is posted and are encouraged to present their own simplified occupancy agreement (that must meet specified minimum legal requirements) to the Trust, which many occupants have found acceptable. This is accompanied by the payment of taxes and occupancy fees. Where the occupant objects to the payment of an occupancy fee on religious grounds, the Board has adopted a Fee Deferral Plan where the fee is charged but not collected. If a signed request for a Fee Deferral is in place, the Trust will not evict the occupant for nonpayment of those fees. However, the fees are tracked and would have to be paid if the occupant successfully petitioned the Trust for a distribution of housing or other property in the future. This improved communication with occupants and their willingness to comply with standard Trust policies has resulted in the dismissal of more than half of all Arizona evictions filed in the fourth quarter. While there are still a great number of tax delinquent properties in Arizona, word of what these occupants have done has spread and many previously non- 3

4 compliant occupants are taking a proactive approach by complying with Trust requirements before receiving any notice to pay or vacate, including paying delinquent taxes. C. Economic Development. The 2017 municipal elections in Hildale resulted in a new mayor and three new council members. The new mayor and city council have been very cooperative and the Board has met with them on several occasions to discuss issues of water management, zoning, flood control easements, development and improvement of parks, and the approval of lot line adjustments. The relationship between the Trust and Hildale City has improved significantly. The Trust anticipates that the improved relationship and cooperation with the City will help attract businesses to the area and improve the quality of life for existing residents and businesses. The Trust is hopeful that similar progress can be made in Colorado City in the future. II. Litigation. As the Court will recall, it approved settlement of the lawsuit referred to as the MJ lawsuit in As of 2017, all cash payments agreed to in the settlement have been completed. All real property transfers agreed to have been made, with the exception of a parcel in Arizona. It was agreed between the parties that this parcel would be transferred upon recording of a platted subdivision in Colorado City and the creation of an irrigation district, both of which would add value to the property. A large building known as the LSJ Meeting House holds great historical and cultural significance to the Trust and the community. As noted in the Trust s 2016 report, the Trust filed a quiet title action because of some confusion regarding its ownership. The Trust was successful in that action and has quieted title to the property in the Trust. At the time, the building was being used by members of the Fundamentalist Church of Jesus Christ of Latter-Day Saints. After inspecting the building and confirming that it was in good condition, the Trust leased it by written agreement to a representative of the FLDS church for a nominal amount, to be used for religious purposes. As previously reported, the Trust lawsuit against Twin City Water Works ( TCWW ) was previously submitted to the court for a decision, but the parties asked the court to delay a decision pending the outcome of settlement discussions. The Trust has worked with the Utah Attorney General s Office on the matter because their office also has a pending action against TCWW. At the conclusion of 2017, the parties were on the verge of finalizing a memorandum of understanding to settle this case by transferring the wells and accompanying water rights to Town of Colorado City and Hildale City. As of the date of this report, TCWW has not yet signed the memorandum, but the Trust is informed that TCWW s Board has approved the signing of the memorandum and that TCWW s signature on the document is imminent. Once the memorandum is signed, the parties intend to seek the approval of the Cities and the State of Arizona which is necessary for implementation of the settlement. 4

5 The Trust s lawsuit against the Bountiful Elementary Secondary School Society ( BESS ) in British Columbia, Canada, remained pending in 2017 (and was concluded in early 2018). While authority for this litigation rested with the Special Fiduciary, the Board was involved in monitoring the progress of the litigation and working with the Canadian attorneys representing the Trust. In early 2018, the court entered a ruling denying the relief requested by the Trust in this lawsuit. After consultation between the Board and Fiduciary, the Trust elected to not pursue an appeal of the court s ruling. On December 29, 2017, a lawsuit was filed against the Trust by an unknown plaintiff under the pseudonym R.H. The lawsuit claims liability on the part of the Trust for alleged prior bad acts of Warren Jeffs and other former trustees who were removed from their positions by this Court. The Trust denies liability and is vigorously defending the lawsuit. Ongoing litigation in Arizona courts over Town of Colorado City s refusal to cooperate with the Trust s efforts to subdivide its property there has been rendered moot after a federal court ordered subdivision as part of a remedy to help end discrimination by the City. As discussed above, the decision was rendered in United States of America vs. Town of Colorado City, Arizona, et al. on April 18, 2017 and effectively ends all Arizona subdivision related litigation. III. Financial Activity. Cash received by the Trust is primarily through distributions and sales of real property. Distributions and sales are made only upon Board approval, providing the required notice to the Court and the public, and after following the approval requirements of the Court. The Trust started a seller finance program in 2017 to assist Trust participants who qualify for a property distribution but have difficulty securing traditional financing because of credit or property appraisal issues. The program is not intended to serve as a long term financing option, but as a bridge to private financing. Accordingly, the interest rate is set above prevailing market rates to make financing possible, but also encourage participant borrowers to refinance with a private lender at the earliest opportunity. A. Debt Reduction. Careful management of Trust income and expenses allowed it reduce outstanding debt obligations by almost $1.3 million. The Trust s largest expenditures in 2017 were settlement payments in the MJ case and payments for previously incurred legal expenses. As noted above, MJ payment obligations have been satisfied. The Trust has met its other cash flow requirements thus far and has pending transactions which it anticipates will be sufficient to meet future payments and retire all presently outstanding debt obligations. 5

6 Going forward, the Board has made it a priority to pay financial obligations as they are incurred. In keeping with this goal and to reduce its costs, the Board has hired in-house counsel, thereby reducing current legal expenses significantly. Attached to this report are the following financial Exhibits: Exhibit 1, Summary of Revenues and Expenses Exhibit 2, List of Properties Distributed VISION FOR THE FUTURE The Board anticipates that in 2018 it will manage residential and commercial Trust property consistent with the terms of the Reformed of Trust and in much the same way as it has done in The commencement of Arizona property distributions will be one of the focus areas for the Board. In addition, the Board has continued a non-discrimination policy regarding access to parks, open spaces, cemeteries, and other Trust owned lands open to the public. No use restrictions will be applied on account of religion, race, sex, gender, etc. During the creation of the Arizona subdivision plat, the Trust retained the historical boundaries of Short Creek as an open access corridor to serve the community and public at large. It is anticipated that in the future and as funds permit, pedestrian and biking trails will be established along this corridor. It is also anticipated that substantial improvements will be made to the Cottonwood Park, which will serve the community. The Trust will continue to meet the housing needs of Trust participants by distributing property or entering into occupancy agreements. Secondarily, the Trust will continue to work with city and local leaders to encourage economic development and provide greater employment opportunities for Trust participants. 6

7 Exhibit 1 Summary of Revenues and Expenses 7

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9 Exhibit 2 List of Properties Distributed 8

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