A natural gas company with the single largest tax bill of any account holder in La Plata County is behind on its taxes to the tune of over $9 million.
Simcoe LLC has thousands of property accounts and owed $11.9 million in 2023 property taxes.
And although the final deadline by which property taxes are due passed 11 weeks ago, Simcoe still owes $9.2 million – about 8.8% of all property taxes billed by the county treasurer for last year.
“I cannot say this with certainty, but I don’t know that the county has ever faced this situation before,” said County Treasurer Moni Grushkin.
Grushkin’s office bills and collects property taxes – $104.5 million for 2023 – and distributes those revenues to taxing entities such as schools, fire departments, libraries and other service providers. Simcoe’s tax burden makes up about 11.4% of all property tax bills.
Like all taxpayers in the county, Simcoe had the option to pay its bill either in one lump sum by April 30 of this year, or in two installments, due Feb. 29 and June 17, respectively.
The company submitted a payment of $500,000 on March 29.
“There was no reason to believe that we wouldn’t get the remainder by April 30,” Grushkin said.
On May 2, her office received another payment, but only for $600,500.
“That’s when we started reaching out to them, trying to get clarification, and then I got involved,” the treasurer said. “When I finally was speaking with them directly, that was when I was told that … we would be doing installment payments and not the full amount.”
Grushkin has not receive an explanation for the lack of payment, and the company did not respond to a request for comment.
The challenge is not just that one company is responsible for such a large volume of back taxes, but that those taxes are derived mostly from the profits of natural gas sales, not real property.
Simcoe, which operates 1,364 wells in La Plata County and has almost 3,000 individual tax accounts, is the largest natural gas extractor in the county by volume.
Of the outstanding balance, Simcoe owes $2.3 million on 28 business and personal property accounts for infrastructure such as pipelines. The remaining $6.9 million balance is owed on 729 “O accounts.”
The taxable value of those accounts is derived not from real property, but from the profits of natural gas extracted in the county, explained Renae Durand, the county assessor’s oil and gas analyst.
When a homeowner doesn’t pay their taxes, the county can place a lien on the property and auction the debt off to cover the tax bill. The homeowner is then responsible for compensating investors for the back taxes in addition to 15% annual interest.
But Grushkin can’t place a lien on a natural gas product, much less one that has already been sold.
Instead, she is empowered by statute to impose a 1% monthly interest fee on the principal amount owed. As Simcoe pays off the balance, Grushkin disperses revenues proportionately to taxing districts on the 10th of every month.
The treasurer has fielded questions from school districts in Ignacio and Bayfield, as well as the Upper Pine Fire Protection District, all of whom noticed smaller-than-expected cash inflows. There is no simple way to determine the scale of Simcoe’s impact upon each district because any one tax account – of which Simcoe has thousands – may fall within the confines of a different set of taxing districts than another Simcoe account.
“(Districts are) getting their share of the monies that are paid, and … they will get their money, it’s just a delay from a cash flow perspective on when they’re receiving that money,” Grushkin said.
Upper Pine Fire Chief Bruce Evans said in a news release the department’s expected tax revenues were short by $800,000.
“The district got enough warning from the County Treasurer to shift priorities and adjust the budget mid-year the delay and potential loss of this revenue effects capital projects and the ability to pay a thriving wage or match inflation for firefighters and paramedics,” the statement said.
Simcoe assured Grushkin that the balance will be paid off by the end of the calendar year.
The annual tax lien sale, when debts on delinquent real property taxes are auctioned off, will occur Nov. 7.
rschafir@durangoherald.com
