Some question tax-exempt status of luxurious senior housing
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New residential buildings at Cedar Crest on Janesville's south side.
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Virginia Anderson prepares dinner in the kitchen of her apartment in the new residential buildings at Cedat Crest.
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The spacious living room of Ray and Virginia Anderson's apartment at Cedar Crest.
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Ray Anderson checks his e-mail in the den of his Cedar Crest apartment.
JANESVILLE — Virginia and Ray Anderson have paid more to lease their Cedar Crest apartment than they paid for their house, but they love the quality of life the “senior living” complex offers.
Their apartment is almost as big as the three-bedroom house they used to own, and they enjoy access to weekly movie nights, exercise classes and lectures, Virginia said.
But despite the steep price, neither they nor Cedar Crest pays property taxes on the spacious apartment.
As a benevolent association, Cedar Crest, 1702 S. River Road, Janesville, doesn’t pay property taxes on its buildings, which include a nursing home and assisted living and memory care units.
But some wonder why luxurious not-for-profit apartments and duplexes, such as the ones at Cedar Crest, aren’t on municipal tax rolls.
The issue has been debated statewide for years, officials said. Some argue such exemptions unfairly benefit wealthy seniors, while others say they help not-for-profits subsidize other forms of care.
What is benevolent?
Wisconsin offers property tax exemptions to “educational, religious and benevolent institutions … including benevolent nursing homes and retirement homes for the aged,” according to state statute.
But the state has never fully defined benevolent, said Richard Haviza, Janesville assessment operations manager.
Cedar Crest, a not-for-profit organization, leases its apartments and duplexes to residents through an upfront payment and a monthly service charge.
The Andersons paid $156,000 when they moved in and pay about $1,300 a month, Virginia said. When they move out, they or their family will get back 85 percent of the initial payment.
“I joke with people; I say, ‘We paid all this money, and we don’t own a thing,’” Virginia said.
The organization owns three parcels of land, Haviza said. It pays property taxes on 13.7 acres that exceed the 10-acre parcel limit for exempt property and on a smaller parcel that is not tax exempt, totaling $70,500 in assessed value, he said. It doesn’t pay property taxes on its buildings.
The situation smells fishy to John Eyster, Fulton Township. He was outraged when he toured Cedar Crest’s duplexes in August and found a brochure touting the fact that residents don’t pay property taxes.
The exemption is an example of many loopholes in Wisconsin tax law, he said.
“We need to review and reassess what is property-tax exempt,” he said. “One major argument has been that it’s for the public good … Several of those institutions, I think, would be hard pressed to go to court and prove they are a public good.”
Softening the blow
But the Cedar Crest campus does provide a public good, said Marion Wozniak, president and CEO.
Cedar Crest offers a continuum of care to senior citizens, from independent living to round-the-clock care, she said. Because it is a not-for-profit, it can’t evict residents who become unable to pay.
“When they’re here, they’re essentially aging in place in Cedar Crest, and as their health care needs change and their level of service changes, they move throughout the (Cedar Crest) community,” she said.
The fees from duplex and apartment residents help pay for residents who need more care, she said. Half of the residents are on Medicaid, which doesn’t come close to covering care expenses.
“If all these residents were in the community … taxes would be impacted, and we do soften the blow,” she said.
If Cedar Crest had to use some of its income for property taxes, that would be less money for residents who need care. If it raised rates to pay the taxes, it would force residents to burn through their assets more quickly and put them on public assistance sooner, she said.
The Wisconsin Association of Homes and Services for the Aging supports Wozniak’s position, said Tom Ramsey, director of government relations.
“In many instances, these people are in essence paying for their future care,” he said.
Looking for a solution
But Dan Thompson, executive director of the League of Wisconsin Municipalities, said the property tax exemptions unfairly shift the municipal tax burden onto other property owners.
“When one group of residential property owners is tax exempt, what that means is everybody pays more,” he said. “It’s really a fairness issue.”
Wozniak said she understands the controversy and hopes stakeholders can come to a compromise. For example, in some states institutions pay usage fees instead of property taxes to cover municipal services.
“What we need to do is work at a solution where we can meet the needs of both parties,” she said.
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Cedar Crest is one of many local housing organizations that receive property tax exemptions.
Other tax-exempt properties offer everything from care for disabled residents to drug treatment centers.
Some, like Cedar Crest, offer housing to senior citizens, though many have income limitations.
First Senior Homes, the apartment buildings on property donated by First Lutheran Church at 1720 E. Memorial Drive and 1801 E. Milwaukee St., Janesville, are property-tax exempt even though not all of the housing is low-income, manager Byron Mullaney said.
But Mullaney said the residents don’t benefit from the tax-exempt status because it makes them ineligible to receive the homestead credit. The state offers the credit of up to $1,160 to homeowners or renters with annual household incomes of $24,500 or less.
Some senior care organizations aren’t exempt from property taxes.
Huntington Place, a senior care campus at 3801 N. Wright Road, Janesville, pays property taxes because it is a for-profit corporation, a spokeswoman there said.
Fairhaven Senior Community, 435 W. Starin Road, Whitewater, is not-for-profit and doesn’t pay property taxes on its nursing home or assisted living units, but it does pay taxes on its Prairie Village duplexes.
The organization discussed applying for tax-exempt status for Prairie Village, but the Rev. David Yochum, executive director, said they didn’t for several reasons:
-- State law limits an organization to 10 acres of tax-exempt property in one parcel, and Fairhaven already was at the limit.
-- The organization received tax incremental financing from Whitewater.
-- The organization didn’t believe the duplexes should be tax exempt.
“There was not a compelling reason to seek the tax exemption,” Yochum said.
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There has been action on Wisconsin’s property-tax exemption law in the last few years. In 2005, a special committee recommended limiting the exemption for benevolent associations to:
-- Nursing homes.
-- Community-based residential facilities.
-- Adult family homes.
-- Residential care apartment complexes.
-- Domestic abuse shelters.
-- Homeless/transitional living shelters.
-- Low-income housing.
-- Alcohol and drug abuse treatment housing.
-- Housing for the permanently disabled.
-- Non-residential property.
The proposed bill didn’t make it out of an Assembly committee, and it has not been reintroduced.
Benevolent associations aren’t entirely satisfied with the state law either, said Tom Ramsey, director of government relations for the Wisconsin Association of Homes and Services for the Aging.
The law states any lease income on a benevolent property must be used for maintenance or construction debt of that property. That means senior complexes such as Cedar Crest aren’t supposed to use income from senior living apartments to subsidize nursing home care, even though many of them do.
“The policy itself simply doesn’t make any sense,” Ramsey said. “If you can’t pay for your utilities or—in the case of senior housing—if you can’t pay for transportation to the doctors, what’s the point?”
The state Senate included language removing that restriction in last year’s budget repair bill, but Gov. Jim Doyle vetoed the provision, Ramsey said.
Jan 21, 2009 at 4:27 p.m.
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I agree with you sluggo. How about allowing
our senior citizens some glory and recognition
after all of the hard work they've done through
the years. Since Wisconsin has designated this
a benevolent institution let it be. Let's get
smart and understand the situation.
Jan 20, 2009 at 8:02 p.m.
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wwr1961- You "throw out" ideas? Try "throw up" ideas. You're always taking shots at our city, state and national governments and none of it ever makes any sense. Quit trying to use these blogs to be something you're not. Just remember this, once the village idiot always the village idiot.
Jan 20, 2009 at 8:31 a.m.
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JUST GET OVER IT AND LEAVE THEM BE. They have worked hard through there lives and deserve what they they have there!!!!!!
Jan 19, 2009 at 10:34 p.m.
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MooShoo-Does that number for Janesville include the money that GM paid in?
Jan 19, 2009 at 10:32 p.m.
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These senior citizens have paid taxes all their lives. They should have a break.
Besides, have you seen the cost of medications, especially if it is a newer medication with a patent? (I pay $600 a month for one of my little girl's medications). The majority of our elderly population has multiple medications they have to pay for. Every month. Not all medications are covered by insurance.
Jan 19, 2009 at 8:57 p.m.
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Make that, tongue in cheek there spongebob.
Jan 19, 2009 at 8:22 p.m.
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Ok spongebob, you and patrick come up with a solution to our pathetic loopholes in the tax laws. Give it your best shot. I throw out ideas. Some are tounge in cheek and some are not. I am sure you can figure out which is one and not the other.
Jan 19, 2009 at 6:36 p.m.
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In a 50 billion dollar biennial budget, its nothing.
Jan 19, 2009 at 6:33 p.m.
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O.K. SuperDave my apology, should have said "uniformed". I watch local government budgets because I pay a lot of property tax, and I want it to go to good public purpose. Here is a thumbnail of property tax / total budget for the city, school district and county:
28 million/42 million City of Janesville
35 million/110 million Janesville School District
56 million/169 million Rock County
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Local Goverments (unlike the state) really have to pass a balanced budget. Under state law, they can only levy for real expenditures. Thus, contrary to some opinion, there is not much "fluff" in those budgets.
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Given your scenario of cutting the property taxes in half, that means cutting 14 million in city expenditures, 27 million in county expenditures, and 17 million in school district expenditures. Please tell me what would you cut? If you can't come up with any suggestions that would really work, call George Brunner and ask him how he would cut the City budget by 1/3?
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I have mixed feelings about granting exemptions and changing the uniformity clause on the property tax. I don't like paying property taxes anymore than you, and they are regressive. But I like good public schools, police and fire protection, and my roads plowed. If you offer a suggestion, make it real, and I won't call it "uniformed".
Jan 19, 2009 at 6:26 p.m.
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WI State Internal Revenue Collection
$41,685,900
Rank: 21 (2006)
Nope state don't collect at all do they?
I guess 41.6 million is pocket change now isn't it?
Jan 19, 2009 at 4:08 p.m.
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rep_of_1:
You're right. The numbers DO speak loud and clear. They are not hearsay. They are fact.
Of my 2009 property tax total, just 0.88% is tax levied by the "State of Wisconsin". Contrast that with my school district tax at 54.4% of total tax, the city at 26.1% and the technical college at 12.4%.
So, if you want to have lower taxes, get involved in your local politics and budgeting. Blaming your high property tax on "the state" is ridiculous. What "the state" could do is eliminate exemptions which would expand the tax base. Expanding the tax base will lower the mill rates (all things being equal). The danger with expanding the tax base is local politicians who see tax base growth as an opportunity to expand their budgets equivalently.
Good luck Janesville! your tax base will be shrinking which will lead to higher mill rates next year. Just because your assessments go down, don't expect any 'relief'.
Jan 19, 2009 at 3:53 p.m.
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The CEO's are many and Way overpaid. They are a for profit organization. They treated me nasty when I had a parent out there and told me my dad was going to be evicted when they drained him of all of his money and we were waiting for medicaid to come thru. His nurses were fired for taking his pain meds and the other one for drinking on the job.Not impressed.
Jan 19, 2009 at 1:23 p.m.
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Roger_that:"The state doesn't tax and collect very much." Sorry I fail to see your point, the numbers speak louder that your hearsay. What is a small amount to you is a huge amount to me once it's collected.
Jan 19, 2009 at 12:29 p.m.
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wwr1961- Once again, your comments make zero sense. Next time try something like this:
"Blah, blah, blah, taxes. Blah, blah, blah, government. Blah, blah, blah, I'm not very smart."
Jan 19, 2009 at 10:32 a.m.
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What is wrong with collecting taxes on the building and property but, letting them have exempt status on the income made from these properties. I know the thinking / and practice will be that they will pass on the costs to the user. That is what the government will do. Tax cuts are often paired with fee increases.
Jan 19, 2009 at 10:03 a.m.
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gbahr has it right. No one should be able to escape what should be an inescapable tax. As JohnDoe points out, even renters pay property taxes. Why shouldn't low-income elderly renters who have to eat dog food to survive get a property tax exemption? Because they don't have enough money to pay for it silly. If you have money to shovel to legislators (through lobbyists) and lobbyists that are good at writing the legislation for the legislators (believe me, it happens all the time), then you too can get a property tax exemption. Better hurry though, it's biennial budget time and the pigs are already gathered 'round the trough.
Just wait (and you'll have to) until you see what goes into a budget bill without ever seeing the light of day as proposed legislation with public hearings. Case in point - in the last budget an exemption was snuck in for "high density storage systems", also referred to as an HDSS. What is an HDSS and who benefits? Unlike most businesses that uses racks and forklifts to store products and materials (taxable), one company has built a very large rack system, covered it in sheathing (looks like a 10-story building) and uses computerized rollers and lifts to move the product around (still taxable). This large printing company (which shall remain unnamed) is located in Sussex and Lomira, WI and just laid off 400 workers. Their lobbyist worked directly with the department of revenue to secure a property tax exemption that applies only to them, even writing the law itself. This exemption affects property worth more than $20,000,000. The villages of Sussex and Lomira will be paying for this for years.
Of course, this pales in comparison the the use value assessment of "agricultural" land. It is truly amazing how many farmers Wisconsin has since this law has passed. Land owned by ____________ (fill in the blank with your favorite developer of land baron) that could sell for $50,000/acre or more is being taxes at $100/acre. Why? Because all you have to do is plant a little corn or hay on it and - Presto - you are a 'farmer' and your land is 'agricultural'. It's OK that you are a multi-millionaire real estate developer buying up land and holding it for practically nothing. We, the rest of the poor puds, will pay those property taxes for you.
When will people wise up? Vote out ALL incumbents and get some honest, decent people to run for office - as independents. The two-party system is the cause of this mess.
Lastly, rep_of_1 - check your property tax bill. The state doesn't tax and collect very much. The property taxes you pay go primarily to your local school district. After that, your municipality (town/village/city), technical college and county governments. The state collects a very tiny state forest tax. In most cases, the amount of money you receive back as a lottery tax credit more than offsets this.
Jan 19, 2009 at 9:12 a.m.
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MooShoo: I don't think that lowering oneself to using the word "stupid" is constructive. And I don't believe that "police, fire protection, trash pick-up, jails, and roads" are all paid for by property taxes. If you have anything of substance to say regarding this, please do so.
Jan 19, 2009 at 8:40 a.m.
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No one mentions the hugh income, property and sales tax the legislator gave the farmers since 1995 and passed the burden on to seniors and working class families. Tax unfairness in Wisconsin is known everywhere in the U.S.
Jan 19, 2009 at 6:20 a.m.
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Rep. of 1. Because they have other sources of revenue instead of the property tax, and their local service levels are lower.
Jan 19, 2009 at 12:19 a.m.
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I would prefer removing the income tax in favor of a property tax and a sales tax. People shouldn't be punished for the work they do. However, the more stuff you have the more protection (police and fire) you need so it is actually a better system. For example, the cost of disposal of a product should be place on the product at the point of sale and not after the fact as part of your property taxes.
Jan 18, 2009 at 10:07 p.m.
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MooShoo: Why is it that other states can run off a 1/3 of what Wisconsin collects in yearly property tax?
Perhaps a swift cut would raise some good in bureaucratic B.S.
I look at it as rent to the state for owning my own property.
I am willing to bet beyond a reasonable doubt that the services we are given could be provided on half the tax base we pay in now. We could keep our (jails) institutions run off the labor of criminals. Trash pick up could be a fee based collection service much like your water bill. Roads can implement tolling to maintain them. Fire departments can and are staffed by volunteers.
Stupid comment I think not.
Not being able to fund with out state hand outs is a completely stupid way of thinking.
Jan 18, 2009 at 9:21 p.m.
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SuperDave, your post is one of the most stupid things written to date. Tell me Dave, how are we going to get along in a society without police, fire protection, trash pick-up, jails, and roads just to name a few important public services paid for with property taxes?
Jan 18, 2009 at 9:10 p.m.
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Here's a fresh thought. How about abolishing ALL property taxes? They are EVIL. When you pay for your property, why should you then have to pay what is effectively RENT to the government? Who actually owns the property, after all? Getting rid of property taxes solves the immediate problem, since no one will be fighting over who pays and who is exempt.
Jan 18, 2009 at 8:36 p.m.
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If the Priests/ Ministers/ Rabbis, etc. preach too much about politics, and try to sway peoples votes, they can have their tax exempt status revoked. So churches can be taxed in certain circumstances. In the last election in November, the Mormon church came perilously close to losing their tax exemption because they preached, and raised huge sums of money to pass anti gay laws in many states.
Jan 18, 2009 at 7:13 p.m.
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tax exemption for churches has nothing to do with the Constitution Justice Holmes. Groups get tax exempt status because they often provides services to the needy and destitute. Charging people to have access to government buildings? How about we just charge people who think that people should be charged. That way you can live your moronic idea yourself.
Jan 18, 2009 at 6:18 p.m.
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mooser..."Every one that can afford to own property should have to pay property taxes! If you can't afford to own then rent,"
Who do you think pays the landlords property taxes? DUH. That's right...the renter.
Jan 18, 2009 at 12:58 p.m.
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You can't tax churches because because the government hasn't been granted the power to do so. If you want to tax churches, all you have to do is burn the constitution. Getting back on topic, what is the $156K they have to pay at Cedar Crest for? It sounds like one heck of a security deposit, and you only get 85% back. Shouldn't you get back the present value of your "condo"?
Jan 18, 2009 at 12:10 p.m.
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I don't think churches should be tax-exempt ( Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's.), but if politicians tried to change that at this point in America, they would get smacked down by a special interest group that makes the senior citizen's lobby look like a Junior Achievement program.
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The churches have a lot of money to lobby and wage a political battle, plus most memberships already meet at least once a week, so they are up to speed on organization and communication from the start, should they decide to oppose losing tax-exemption.
Jan 18, 2009 at 11:21 a.m.
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Lets put a charge to walk through the doors of every courthouse , police dept. , and the capital and all munincipal buildings in this state. Think of all the lobbyists, Lawyers and riff raff that would pay just to enter the buildings! Also charge double for phone calls. That way they cant get around the fees!You want to pay half, walk in and you pay half. Those who have the money will call and pay double. Just a thought here.
Jan 18, 2009 at 11:16 a.m.
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If you think about it, why should anyone be exempt from any tax? 50% of income and sales and 40% of property is now exempt from Wisconsin taxes. Are you?
Write your Governor, State Senator and State Representative an demand...
The Fair Tax Plan:
The best approach to Wisconsin revenue needs and spending is to start over.
1. Repeal all state tax exemption devices that unfairly benefit some citizens over others. Everyone should pay a fair share of each tax. No one should be exempt from a tax that makes others pick up the difference. Certainly we should not exempt from tax virtually half the total of income, sales and property taxes. No state should create a law that denies any citizen equal protection under the law. When the State exempts someone from tax it hurts other taxpapyers. By not allowing special interests to buy tax exemptions and benefits with campaign donations, politicians can restore tax fairness and eliminate special-interest influence.
The only tax exemption shall be poverty level income in the income tax. Such an exemption benefits all taxpayers directly and equally – rich or poor.
2. Assign each level of government specific duties and a tax to pay for each – thus saving money now wasted on duplication in services at the federal, state, county and local levels.
The property tax would finance only local government needs for property related expenses – snow plowing, police and fire protection, garbage pickup and weed control. Voters get their property taxes reduced 80% to a level in Western and Southern states.
Schools would be financed by state general revenue on a per student basis with special allowances for special needs kids.
Counties would be financed by Federal and State revenue sharing and deliver social services. They could be given in addition to a 1/2% sales tax, a 1% income tax collected thru the State.
3. Taxes collected this year shall be the budget for next year. Every budget knows exactly how much revenue there is to spend.
By repealing all exemptions, lawmakers would have the money to reduce the property tax to a local tax for local services, keep people in their homes and farms, fund schools and counties, provide health care for all, provide campaign finance reform, balance the budget and exempt poverty level income from tax. The 5% State sales tax would apply to all exempted items repealed. The State income tax rate may be increased this year to cover any debts not bailed out by Feds.
Jan 18, 2009 at 10:01 a.m.
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another idea, send the seniors downtown and put them up with the rats so the fat cat politicians can decide they are where they belong and the nice places can be rented or purchased by those more deserving. lets tax these old fogies (who have given us what we have through their hard work) right out of the system. ha, we'll show them who is in charge
Jan 18, 2009 at 10 a.m.
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The law is vague and has caused real conflicts in other cities. In Madison the senior facilities "compete" for tax-exemptions with non-profit low-income housing developments, for instance, because the city has reached its statutory limit.
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The 2005 committee recommendations should have been taken up. They would have modernized and clarified the state law so that there would be no confusion and fewer judgement calls. It's unfortunate when the legislature knows it has a bad law and doesn't do anything to fix it. In this case it's probably because addressing senior housing in any way would be a "third rail" issue (touch it, and you're dead) for some legislators.
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It really doesn't make much sense that luxury housing is tax-exempt just because it's a senior living campus. Federal housing tax credits, for instance, often require a percentage of the units to be designated for those below the median income.
Jan 18, 2009 at 9:51 a.m.
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put the hammer down. what about the churches? they should pay up to. or just raise the alcohol tax and cigarette tax. don't just stand there, raise somebodys taxes. then go our and plow the streets
Jan 18, 2009 at 9:44 a.m.
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Vogel why dont you do a piece on the churches?? They are tax exempt on everything.
Jan 18, 2009 at 9:42 a.m.
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Hey gazatte how did you arrive at this story? Maybe from Doyle?? Angus has been doing more and more to try and appease the left, bashing O'Reilley, appeaseing the union. homosexuals. If you are trying to save the paper you are doing it all wrong. Like most media you have lost your purpose. (I dont read O'Reilley), but with articles from the likes of Lenoard Pitts, it is pretty obivious.
Jan 18, 2009 at 8:51 a.m.
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Yea, We are not taxing seniors enough. lol. Lets find a way to squeeze more taxes out of a group with fixed incomes and health problems. If you tax the centers they will pass the cost onto Grandma and Grandpa you fools!
Find tax income from some other group. Maybe tax the addicted cigarette smokers some more, or raise the gas taxes again now that we can afford to drive again, or maybe more taxes on booze? oh, yea they are working on ALL of those too. lol. The price of senior living is crazy high already, how can we justify adding more taxes to thier already insaine cost of living? Maybe add more taxes to the medications the have to take? or road and sidewalk taxes on thier electric wheelchairs.
how pathetic.
Jan 18, 2009 at 8:29 a.m.
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Yes, they are following the law and yet somehow they are still wrong? How come no story on how lavish the insides of churches are and how they don't have to pay taxes? Way to go.
Jan 18, 2009 at 7:46 a.m.
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No more GM to attack so the Gazzette has turned on seniors? HOW PATHETIC!!!
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