Hildale utilities department cuts ties with water company accused of illegally funneling money to FLDS

ST. GEORGE — Hildale city officials say the dissolution of the nonprofit water company that “exceeded or abused its authority” likely began after the Hildale City Utilities Department board voted to use alternative water sources.

Twin City Water Works transferred all water rights to the city of Hildale and dissolved its company on June 25 after years of conflict with the United Effort Plan Trust and almost five years of legal proceedings from UEP and the state of Utah. The company was also the subject of a tax lien by the state of Arizona resulting from the company’s mismanagement. 

In the midst of the company’s financial and legal disputes, it proposed a 54% wholesale water rate increase for Hildale in 2018. Harrison Johnson, managing director of the Hildale Utilities Department, said in order to accommodate the company’s request, the city would have had to “raise the customer’s rate dramatically.”

“I think it’s important to note that the department must make sure the citizens come first, not private suppliers laden down with litigation and tax liabilities,” he said. 

For decades, Twin City Water Works was the principle water supplier for Hildale and Colorado City, Arizona, and – until recently – delivered over 90% of the water for Short Creek. The utility board reviewed the agreement between Hildale and the company every five years, with the latest one happening in 2015. The city purchased water from the entity at a rate of $0.69 per 1,000 gallons, but Twin City requested an increase to $1.07 per 1,000 gallons in July 2018.

The Hildale City Hall and Utilities Department building in Hildale, Utah, on July 3, 2019 | Photo by Ryann Richardson, St. George News

Twin City delivered 374,584,000 gallons of water during the city’s 2018 fiscal year, which totaled to approximately $259,587. The rate increase would cost the city over $140,000 more for the same amount of water.

Johnson said that as a nonprofit, Twin City did not have any investors to pay. Therefore the revenue it received should be enough to cover its operations, but he said his calculations showed under 35% of the company’s revenue from Hildale was going toward maintenance of the wells. The company’s board chairman, Sylmar Barlow, said the majority of operation costs were being eaten up by the multiple lawsuits. 

Johnson said the cost of keeping Twin City Water Works as a supplier was “significant.”

Barlow promised the utilities department further documentation to illustrate the necessity of the rate increase, but Johnson said the only documents provided show usage patterns and assessed cost of power bills. He reached out to Barlow for additional information, but no further documentation was provided.

Johnson asserted that as an operating subsidiary for the city’s utilities department, Twin City should be transparent with its financial and operating information as well as allow the utilities board to assess the company’s finances in order to “negotiate in good faith.”

Hildale, Utah, date not specified | Photo by Cody Blowers, St. George News

Although the utilities department stated it did not receive the proper documentation to make a sound assessment, Johnson said from the limited information available, the company’s financial position was “dire.” 

Johnson said Twin City had sold all of its equipment to Spring Ranch – the company’s single contractor – in what the utilities department believed was either a way to obtain money for legal fees or an effort to ensure the plaintiff in its cases received less. The utilities board also feared the company was raising its rates because it was trapped in a “debt spiral.”

In the end – and “in the interest of the community” – Johnson recommended the utilities board reject the rate increase, endorse the transfer of water rights from Twin City and UEP, and encourage further research for alternative water sources that include higher quality and lower costs.

“They never diversified or considered other business options, so when we went a different direction, they had no sources of revenue.”

The city’s decision to switch to using city water, which has cheaper wholesale rates than those previously charged by Twin Cities, has saved Hildale customers about $170,000 during the current fiscal year, Johnson said, adding that the money saved can be used to better the community though investment in infrastructure and reducing other customer costs.

The Utah Attorney General’s Office pursued legal action after it received information that Twin City was illegally funneling money to members of the Fundamentalist Church of Jesus Christ of Latter Day Saints. The company diverted $1.7 million to outside interests not connected to the nonprofit’s business, according to a report prepared for a civil rights lawsuit against Hildale and Colorado City.

Lawyers for the Utah Attorney General’s Office and Twin City reported to a 5th District judge that Twin City had been dissolved on June 24, and Joni Jones, litigation director for the Attorney General’s Office, said the transfer of the rights to the wells and – if applicable – the land around the wells was completed June 25.

Email: rrichardson@stgnews.com 

Twitter: @STGnews | @AvereeRyann 

Copyright St. George News, SaintGeorgeUtah.com LLC, 2019, all rights reserved.

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