The prospect of nonprofits being forced to pay annual fees drew an indignant crowd to the Onalaska OmniCenter on June 16.
The city of Onalaska, regardless of a property’s tax-exempt status, provides services like police and fire protection, snow removal, lighting and the like. Payments in Lieu Of Taxes, or PILOTs, would serve as a monetary recognition of these services from nonprofits, whether they be voluntary or not.
PILOTs were brought to a head in April when Onalaska’s city staff became aware that certain churches added daycare services to their properties, effectively altering the structure in such a way that competed with for-profit businesses and required a conditional-use permit – which they hadn’t applied for. That month, a draft of the PILOT ordinance was forwarded to the common council for final approval, but instead, was sent back to the plan commission to work out some details in May. But it didn’t quite take off there, either, so the next logical step for the city was to gather public feedback, which it got plenty of last Thursday.
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Nearly 20 people marched to a podium and spoke, without a time limit, to Onalaska Plan Commission members, members of the planning department, attorney Sean O’Flaherty, finance director Fred Buehler, and Mayor Joe Chilsen – all of whom took notes until the listening session opened into questioning.
Most of those in opposition had some degree of religious affiliation, whether they were pastors, clergy, family members of pastors or members of the congregation.
Jason Stanton, senior pastor at First Lutheran Church, said the PILOT payment could cost his ministry $30,000 annually, a “very significant” amount that’s already forced him to ponder who in his staff he’d have to lay off, which is “not a question I’d like to think about,” he said.
“Onalaska is such a relatively wealthy community. I have a hard time understanding where the need is,” Stanton said.
According to the ordinance, PILOT payments would be pursued when an organization buys taxable land and converts it to tax-exempt, or when a nonprofit builds on or alters its structure in a way that requires a conditional-use permit or a variance from the city.
To calculate PILOTs, the city would take its annually adjusted mill rate – the amount of taxes per dollar ($0.0065 for 2016) – and multiply that by the city’s assessed value of the non-profit property in question. The city hasn’t yet determined the property values for all of its nonprofits, and therefore, it’s unclear how much money the passing of this ordinance would generate.
It’s also important to note that this ordinance wasn’t drafted to initiate PILOT payments in the city. They’ve occurred spottily in Onalaska for more than 30 years and they’ve just been largely ungoverned and informal, according to O’Flaherty.
Katie Aspenson, planning and zoning inspector, reiterated: “This doesn’t create the city’s ability to do PILOTs. We have that ability. This creates a framework for the city to operate in.”
A framework, nonetheless, that was heavily contested. Those at the forum who weren’t speaking on behalf of the 17 churches in the city, still spoke on behalf of the majority-held opinion: that PILOTs are a tax, regardless of the acronym, and should be done away with.
Heather Hankins, who’s been the executive director at the Coulee Region Humane Society for eight years, said an added payment like this would make it harder to gather donations.
“We’re not going to be able to call somebody and say. ‘We need $10,000 to pay our taxes,’” she said after the forum. “Nobody wants to pay operating costs; they want to support the mission.”
Larry Hagar, the only speaker without non-profit affiliation, said that as a citizen, he would be OK with paying additional taxes for non-profits rather than have the city pursue PILOT agreements.
“I would much rather pay it that way than break a long-standing tradition of not taxing non-profits,” Hagar said.
However, it may turn out to be quite the opposite. Onalaska’s tax base could actually see a drop in its taxes as a result of adding PILOTS. Money generated from the proposed PILOT ordinance would go toward the city’s revenue in its general fund, which made up over half of Onalaska’s total property tax contribution in 2016. More revenue in the general fund, then, would require less of a tax levy to balance out the general fund’s expenses.
“Revenue offsets the expenses – it’s a direct impact,” Buehler said.
Right now, Onalaska has 15 PILOT agreements, but notices of the public forum were sent out to 32 additional non-profits which could be subjected to PILOTs in the future.
That depends, though, on what action the city decides to take. The plan commission still needs to make some sort of move on the topic, and it’s looking like that’s going to take longer than expected.
At the public forum, attendees were encouraged to go to the plan commission meeting on June 28 where the topic was to be addressed in greater detail. But this took for granted that the plan commission sub-committee, which met Tuesday, still needed to pass the item forward. As it turns out, the item was tabled for another 30 days rather than forwarded to the plan commission.
Regardless, a line of disconnect was drawn: to policy makers, this move increases transparency and consistency to a policy already in place; to the 50 or so in the audience, the ordinance is a “misguided, money-seeking adventure,” as written by Jeffrey Morehouse, who couldn’t attend the meeting but wanted his words read into the minutes by the mayor.