Wow! I’ve never seen this! Common council makes a motion. Motion passes. City Attorney declares their action null and void. And doesn’t think it can come back before the council.
The topic? What else – the continued struggle between staff, the Mayor’s office and the Common Council – the property tax exemption.
I used to have alot of respect for City Attorney Micheal May. That has waned over the last six months and at this point, I’m just completely disappointed.
So, the history here is long and sordid – and I’m not sure I understand it all, but here’s what I think happened. Asst. City Attorney Larry O’Brien took two cases to court to “clarify” the law. Originally, the cases were about the “10 acre rule” which says that groups aren’t exempt if they own more than 10 acres of land. In the process, the Asst. City Attorney also raised the “rent use restriction” issue. This issue was about how the agencies could spend the rent that they collected. More specifically “maintenance”. Are property management services, mortgage payments for buying the property and other expenses “maintenance” costs of the property? Turns out, in the process of “clarifying” this issue, that the local circuit court and the Department of Revenue sided with the narrow interpretation of Asst. City Attorney Larry O’Brien and as a result, 40 non-profits with over 200 properties and 1700 affordable housing units could risk losing their property tax exemption. The result is that the non-profits will have to raise the rent on their units $100 – $250 per unit (if they don’t have rent caps because it is, after all, supposed to be affordable housing), or defer maintenance (i.e. not do repairs), or cut back on services (the very services that make the programs successful), sell the units to the private market making them no longer affordable (and the people who live there homeless), or, in some (many?) cases, they will give the keys back to the lenders – which in many cases, could end up being the city. (For more info, here’s the council briefing, the last council meeting part I and part II, and the subcommittee (notes) that is working on this issue.)
At the last council meeting (part I and part II) the council passed a resolution that referred this matter for 60 days, directed the city attorney to work with the parties involved in the cases and asked for a report to tell the council what the local ramifications would be to the removal of the tax exemption and how much it could cost locally if we attempted to keep the units affordable. The 60 day delay was requested by the attorneys representing the non-profits in these cases. Placing the risk on the non-profits, not the City of Madison. As you can see from the council meeting notes, the alders asked many, many questions regarding the motion and its legality and the city attorney “hadn’t researched” the full implications of the issue, despite the offer by the attorneys. But he didn’t have any problem insisting that the Council had to follow his un-researched legal advice.
Yesterday, the council members got a memo in their mailboxes (I think on Sunday they were emailed it?) dated April 27th. His memo states in part . . . .
To: Mayor Dave Cieslewicz, All Alders
From: Michael P. May, City Attorney
Re: Tax Exempt Claims of Greentree Glen, Madison Turners and WHPC; Effect of Council’s Referral on April 21, 2009.
At the Common Council meeting of April 21, 2009, the Council referred these items for up to 60 days, with a request that our office seek an agreement to extend the time for the Council to consider the requests for tax exemption. I advised at the meeting that the Council should act at the time, and that while I was certainly agreeable to seek the agreed upon extension, I had concerns about the City’s authority to do so.
Since the meeting, I have taken time to review the State Statutes governing tax appeals. The statues are clear that the effect of the Council’s actions – non-action in fact – operates as a denial of the claims by operation of law.
[omitted cites to statutes 74.35, 74.35(5), 74.35(3) and legislative notes in section (3) the bolded/emphasized parts of the memo are here:
75.35(3) Action on claim. (a) In this subsection, to "disallow" a claim means either to deny the claim in whole or in part or to fail to take final action on the claim within 90 days after the claim is filed.
Legislative notes: Subsection (3) establishes the procedure for handling the claim. Pargraph (a) clearly states that failure to act constitutes disallowance. Under par. (b), the taxation district must act within 90 days after the claim is filed or the claim is considered disallowed. This will ensure timely action by the taxation district and provide certainty to the proceedings.]
Because the State Legislature has stated clearly that the passage of 90 days with no action constitutes a disallowance, there is no way for the parties to stipulate to extend that time. The City cannot by agreement or otherwise keep the days from advancing, and the City has no authority to amend the legal effect established by the Legislature. The legislative history noted above highlights that the law is intended to bring certainty to the status of a claim after 90 days. The language in the statute is effectively a finding by the Legislature that no taxing district may extend the time to allow or disallow a claim.
The rationale for this limitation in State law on deciding tax exemption claims is also made clear in the legislative notes, which refer to the need to “provide certainty” to the proceedings. Not only for the taxing district itself, but for all the other districts for which taxes are assessed, there is a need to know with certainty by a date certain as to which property is included in the assessment. [memo continued below . . . ]
- Why didn’t the city attorney look at the statutes before the meeting and come prepared to the meeting? If Assistant City Attorney Larry O’Brien is spending 60% of his time on these types of cases, why couldn’t they answer this questions much, much sooner.
- If this is so clearly the law, why would attorneys from top law firms in Madison have made the initial offer, at their own peril?
- The attorney talks about “no action”, but the council took an action. It told the city attorney to work out a deal. Why isn’t that “action”?
- Why not allow a court to decide this issue? If the city attorney is right, the council has given up its right to act, if not, they still have a chance to act. Why make this declaration, thereby ensuring the council cannot act? i.e. Why not let this play out since there will be no harm to the city? The risk is on the other parties.
THIS CAN’T EVEN COME BACK TO THE COUNCIL?
So, the memo continues . . .
The 90th day for each of the above claims is:
Turners: April 20 (Claim filed January 20, 2009. Note the 90 days expired even before the Council’s meeting last week, a fact nobody noticed.)
Greentree Glen: April 29 (Claim filed January 29, 2009)
WHPC: April 30 (Claim filed January 30, 2009)
The next Council meeting is May 5, 2009.
Although the Council does not have authority to change the effect of its failure to act upon these claims, the City can, and I will, make an offer to the parties to delay sending the Notice letter required under section 75.35(3)(b) which will delay the time that any lawsuit must be brought to challenge the denial of the claims. Unlike sub. (a), neither sub (b) or (c) directly state what the result of delay will be; I read this as not restricting the City’s ability to extend these time limits. Therefore, I will offer to each claimant the opportunity for the City to delay sending the Notice letters that start the clock ticking on their 90 days to file suit. A delay of 60 days is likely at the bound of a reasonable delay. Nor do I know if such a delay is of interest to the claimants.
Late Friday, April 24, I recieved a proposal from the attorney for Greentree Glen asking for the sort of extension that is not allowed under state law. I will be advising him that the City is without authority to do so.
Finally, I will be looking more closely at whether there is any basis for these claims to come back before the Council after the 90 days expire and they are denied by operation of law. My initial reaction is that, since there is no longer any action for the Council to take, there is nothing to be referred to a future Council meeting.
- Why didn’t the City Attorney’s office notice the Turner’s claim had expired? That’s pretty sloppy work for an attorney’s office! (In fact, I asked that question when the motion was made to refer – the copy of the stamp made it unclear if that was a “0” or “8” or “6” in the date.)
- (3)(b) says: The taxation district shall notify the claimant by certified or registered mail whether the claim is allowed or disallowed within 90 days after the claim is filed. What part of “shall” is ambiguous? Why can he find ambiguities in shall? But not in “action”? Seriously, he’s hanging his hat on not knowing what the result might be if he doesn’t notify them? Isn’t that a big risk for the CITY that the court will be able to decide?
- Why offer a delay to the claimants now? Wasn’t the delay so that the COUNCIL could figure out the ramifications of the actions of the city attorney and what their options were at this point?
- What are the consequences to the city attorney for directly ignoring the wishes of his client?
- Is there a process for disciplining a city attorney that directly ignores the Council’s action?
- Can he be serious that he won’t even allow the item to come back to the council – when the motion clearly asked for a report from the Community Development Director? Can’t the council at least get the information that they requested and the public be allowed the chance to comment on that information?
- Why is he guessing again?!
Wow, just wow. They are seriously putting the screws to the council.
This is a bit of a sidetrack, but wow, the Wisconsin State Journal coverage of this issue was atrociously lop-sided. Why didn’t they contact any council members who had a different opinion from the mayor, council president and city attorney? And, the facts are wrong, we are up to 1700 affordable housing units that are affected. I’m surprised by how sloppy this was!
WHAT I WOULD DO?
1. Get on the phone to Dean Mosiman and ask him to print the other side of the story instead of the folks that all agree with each other.
2. Get on the phone with Tim Bruer and get him to call an emergency meeting of the Common Council so that they can make a decision before the deadline. Only 24 hours notice is requried and they have a special briefing tomorrow night anyways. They could act tomorrow on the two claims.
3. Read the City Attorney’s contract and research ethics laws and the duty of the City Attorney to his clients.
4. Investigate what it would take to hire an attorney for the Council that would do what they said.
5. Find a way to get this issue back before the council to get those reports.
I’m not sure I’d find the answers I want or be convincing with the powers that be, but I certainly wouldn’t give up! This whole thing has been a disaster since day one. The wishes of the Council have been ignored/they weren’t consulted by the City Attorney, the Mayor or Council leadership. That’s how we got into this mess and it just continues to get messier. It makes me wonder, why have they dug their heels in this way? I’ve truly never seen anything like this before.
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