So, the meeting planned for noon yesterday in the Mayor’s office had to be moved from the Mayor’s office to room 260 to accommodate nearly 50 people who showed up to hear what was going on.
The short story. Nothing, despite the Council asking for solutions. We are waiting for the state to solve the problem, with “helpful” suggestions from the Mayor’s staff about how non-profits should lobby the legislators at the capital . . . you know, in their spare time. And a city attorney’s office that is not interested in looking at any alternatives and insisting that they have to just follow the circuit court decisions – not just for the parties in the case – but for the entire city.
The good news is many alders showed up: Kerr, Rhodes-Conway, Clear, Palm, Schumacher, Bruer, Compton plus three of the five alder-elects Bidar-Sielaff, Schmidt, Eagon. So, half the council.
The concrete solutions suggested for this dilemna were:
1. Change the state law.
Solutions by attendees were:
2. Direct subsidies to providers, likely through the Affordable Housing Trust Fund – but it has to be carefully legally crafted. Here’s one version that will be placed on file for lack of a sponsor.
3. Subsidies to tenants whose rent will go up $100 – $250 per month. i.e. our own local quasi-section 8 program
Of course, that all costs money, but since we’ll be collecting more in taxes, we’ll have more money to solve the problem.
The Property Tax Exemption Sub-committee of the Housing Committee (meeting this Thursday at noon) has a resolution that they have drafted, but they are looking for a sponsor. Schumacher is considering it, but hesitating.
Other things that we learned during the brown bag lunch/questions:
– The only other cities in Wisconsin that are pursuing this that we are aware of are Milwaukee (tho some say their properties haven’t been affected yet) and Marshfield.
– Julia Kerr was asking what we can do NOW to deal with this before we lose 1,000 low-income rental units in the City.
– The City Attorney hadn’t even thought of the contracts that these low-income housing projects have with the CDBG office and what implications those agreements might have on this issue – especially if groups end up in default on their taxes and in violation of those contracts. Julia Kerr is interested in passing a resolution asking CDBG to pursue this avenue.
– While there was no changes in other areas of the law beyond the rent use issue, the Assessors office is more proactively reviewing tax exemption status for other groups – i.e. the Turners.
– While assessors could lose their license if they don’t follow the ruling by the Department of Revenue – the council would have no consequences if they directed otherwise. Except the vague threat of potential law suits, but it is unclear from whom – especially since the two groups that have filed claims are willing to waive their right to sue.
– The assessors office will spend hours and hours and hours assessing nearly 250 properties and won’t be done til the fall – which is in addition to the 60% time the Larry O’Brien says he spends on these cases. What is that total cost to the city?
– Non-profits won’t know til December how much they have to pay in taxes for this year. And it is unclear how they are going to value the property.
– Clear is just looking for some more predictability.
– Bidar-Sielaff was concerned that we are being asked to make a decision with no other options on the table and wanted to know if we could delay.
– Mario Mendoza reiterated that the City supports the “vetoed” language as a fix at the state level and that the bill currently drafted is not getting support and it likely won’t even get introduced, much less passed.
– There was concern that the state will not resolve this and that the non-profits have little options since they can’t raise the rent in the middle of their leases, some have caps on how much rent they can charge and since they don’t know what the assessments are going to be, they can’t plan.
– There was a suggestion that the city help figure out how non-profits might be exempt in 2010.
– Rhodes-Conway expressed frustration that as a council they were “powerless” because they cannot change the state law, they can’t ignore the city attorney and they can’t change the actions that the city attorney and assessors office took that got us into this mess.
– They will consider rent to include the payments from the housing authorities for section 8 renters.
– For small properties they will likely use a gross rent multiplier to determine the value of the property, for larger properties, they will use income capitalization. Tho, Judy Karofsky pointed out that non-profits don’t capitalize and so that method makes no sense.
– Mike May (City Attorney) suggested that perhaps the value of the property is limited by the rent use restriction and that the property would be worth less – but Larry O’Brien (Assistant City Attorney) quickly shushed him.
– Marianne Morton reminded us that this isn’t about the non-profits, but about the people who will not be able to afford their rent. She also reminded us that the City was a partner in many of these projects and she hoped that the partnership would continue as we look for solutions. When non-profits submitted their pro formas for approval of funding, tax exemption was a major assumption.
That’s about it. Still no solutions – with the city mostly pointing to the state capital for solutions.
