Property Tax Exemption: Where’s the "Out"?

Posted April 29th, 2009 @ 12:51 PM by

So, Attorney Tim Radelet has suggested how the City can get out of this situation. The Property Tax Exemption Subcommittee of the Housing Committee have also suggested several things (skip past the first part about the resolution – go to the part where Bill Clingan talks to the committee.) Bill Clingan, our Community Development Director recently appointed by the Mayor (i.e. expect the party line), was tasked with coming up with a report on our options, but the city attorney seems to have over-ruled that motion declaring it invalid and not allowing it to come back to the council. Meanwhile, here’s what the council is going to consider at the next meeting. (HINT: If you’re unhappy about this situation, plan on attending the May 5th Common Council meeting. Recommendation: If the entire council motion is over-ruled by the city attorney, the Council could ask for the reports they requested in this resolution.)

Here’s the resolution, as the Property Tax Exemption Committee recommended. (The recommendation was to have the Council President have this under business by the President and not send it back to the Housing Committee, we’ll see if that happens.)

WHEREAS, over the past many years, hundreds of housing units have been developed in the City of Madison by non-profit organizations specifically for providing affordable housing to low and moderate income residents; and

WHEREAS, the many non-profit organizations which have developed this housing did so with budgets and plans which included exemption from property tax; and

WHEREAS, the City of Madison has been involved in various ways with many of these housing developers, helping them develop this housing, with the understanding and expectation that they would be exempt from property tax; and

WHEREAS, these many non-profit housing developers, and including the Community
Development Authority (CDA), have been in operation for years with exemption from property tax; and

WHEREAS, recent circuit court rulings have been made in the fall of 2008 which interpret the state law, which provides for property tax exemption, in such a way that may result in all or most of these housing developers, and possibly the CDA, losing their exemption; and

WHEREAS, many of these housing providers are unable to adjust their budgets to
accommodate this property tax expense and may be forced either to shut down and thus
displace their low income residents, or if they are able to raise their rents sufficiently then they will no longer be affordable to low-income renters; and

WHEREAS, the City of Madison does support efforts to amend the State Statute to protect the tax-exempt status of these housing providers; and

WHEREAS, it is the understanding that the state legislature is considering a number of different options for amendment to the statutes related to property tax exemption;

NOW, THEREFORE, BE IT RESOLVED that the Common Council hereby adopts the following

1. The Council directs the City’s lobbyists to strongly urge Madison’s State legislators, and also all other State legislators and the Governor, to promptly adopt the changes supported below.

2. The Council directs the City’s lobbyists to strongly urge State legislators and the Governor to do so as soon as possible, but no later than the end of the summer, with the amendments being retroactive to January 1, 2009, so that the housing providers will not lose their exemption from property tax for 2009.

3. The Council directs the City’s lobbyists to urge State legislators and the Governor to adopt a bill which has the terms formerly stated in Conference Substitute Amendment 1, to Assembly Bill 1 from 2008 (this is often called the Vetoed Language) attached, along with the following adjustments to Section 51 of the Bill:
A 70.11(4)(a) shall be changed as follows: Low Income Housing. (a) For purposes of sub (4) “low-income housing” means any single-family house or residential condominium unit described in sub (4a)(b)1., (ADD:any low-income housing project, or any) housing project described in sub. (4b) (DELETE: or any residential unit within a low-income housing project that is occupied by a low-income or very low-income person or is vacant and is only available to such persons.)
B Insert the following paragraph between 70.11(4a)(c) and (4a)(d):
(cc) For purposes of this subsection and sub. (4), “project” includes property located on more than one tax parcel if the parcels are owned or operated by the same person and are adjacent, separated only by a street or other public right-of-way, or within the same condominium development.

4. That the City’s lobbyists provide monthly reports, whether in person or in writing, about the progress of their efforts on this issue, starting with one month after this resolution is adopted.

5. That the City take action, in the event the Legislature does not resolve this issue in 2009, to mitigate the impact of losing tax-exempt status on non-profit housing providers and the people they house.

I hope that passing this resolution is not the “out” that council members use to say that they have done something and wash their hands of the situation.

I’d recommend that they also:
get more information about what the city attorney’s office is doing when it comes to lawsuits, so that in the future they don’t get caught like this again. In the least, they should get a report on the claims filed over a certain amount of money.
find a local solution, in case the state legislature doesn’t fix this situation. They need the reports that they asked for at both council meetings where this was discussed.
get an affordable housing plan in place, ASAP. I think the Housing Committee should do it, and be given resources to get it done! In the alternative, the Housing Diversity committee that was formed when IZ went away in January should MEET!! They only have 2 months or so to come up with a report.
instruct the city attorney to work with Attorney Tim Radelet and respond to his recommendations. I’d like to see them come back with alternative solutions if the city attorney’s office shoots down all of Attorney Radelet’s suggestions.

Categories: | Affordable Housing | Progressive Dane | Property Tax Exemption

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