Tax Exemption For Church Gets Pushback

A church wants to take over an art gallery in the city’s Haymarket neighborhood north of Fiserv Forum. And with it, the building would become tax exempt.

It’s the latter fact that is drawing concern from members of the Common Council.

“The city is comfortable with that arrangement for an area that has seen significant development?” asked Alderman Robert Bauman at Tuesday’s meeting of the Zoning, Neighborhoods & Development Committee. “I have a problem with this file as a result of that.”

The church needs a zoning change to accommodate its purchase of the property.

“This is a huge hit to the city’s ability to fund basic services,” said Bauman after learning the property is assessed for $1.05 million. The city is capped based on the value of its taxable properties on the amount of revenue it can raise. The church property is scheduled to be billed for $29,274, including $10,556.12 for the City of Milwaukee, for property taxes and special assessments in 2021.

Built in 1916, the two-story, 22,500-square-foot building at 1422 N. Vel R. Phillips Ave. was most recently home to RedLine, an art gallery and studio space.

It opened in the building in 2009 and closed in 2019. Created by Steve Vande Zande and Lori Bauman, the nonprofit became an incubator for Milwaukee’s arts community.

City records list it as property tax exempt in 2015, 2016 and 2017. State and federal law allows exemptions for nonprofits provided they are not generating revenue by leasing the space.

Christ Church Milwaukee plans to purchase the building and establish it as a permanent home.

The church is requesting the property’s zoning be changed from “industrial – light” to “industrial – mixed.” The church would still need to receive a special use permit from the Board of Zoning Appeals for a religious assembly space, but without the zoning change it would not even be eligible for the permit.

Department of City Development planning manager Sam Leichtling said DCD is supporting the zoning change based on its regular approval of such a change for properties in that area and other neighborhoods where industry is giving way to commercial and residential uses.

“In general I don’t disagree with the city plan for the Haymarket area,” said area Alderwoman Milele A. Coggs. “Solely on the issue of zoning I don’t have objections to the zoning being changed, whether or not a church is the best usage for it is a whole other issue for me.”

She said it wasn’t about the specific church, but the tax exemption.

Committee chair Ald. Jose G. Perez asked Leichtling if the city has a standard process for how a request is made and said the council’s vote would likely sway the Board of Zoning Appeals.

There is a pathway to a compromise with the church.

“I just wanted to ask if there were any conversation about a payment in lieu of taxes?” asked Ald. Ashanti Hamilton. Payments in lieu of taxes or PILOTs are annual payments made by exempt organizations on a voluntary basis.

The city has used PILOTs to address the fact that more than 9,000 properties are property tax exempt. A 2019 treasurer’s office report says $4.6 billion of property is exempt, more than 17% of the city’s total assessed value. The percentage of property that is exempt far outpaces the suburbs, further exacerbating the city’s financial woes given its state-imposed reliance on property tax revenue.

“We have not been in touch with the assessor’s office at all in regards to a tax exemption or a PILOT payment,” said church representative Leia Wyatt.

But Wyatt and pastor Jon Talley said they were aware of another church, City Reformed Church at 1661 N. Farwell Ave., that they said made PILOT payments.

“It’s not been unprecedented,” said Tally. The payment would not need to cover the full property tax bill, but only the city share of the bill or another agreed upon figure.

The committee unanimously voted to hold the item to allow that discussion to take place.

“I think you have a little homework and communication to do,” said Perez.

The potential church property is listed for sale for $1.5 million through Paul Monigal at Corley Real Estate. A purchase price for the church has not been disclosed.

The property was purchased in an Internal Revenue Service auction by Milwaukee bar and restaurant owner R.C. Schmidt in 1987 for $87,000 and sold to a limited liability company connected to Lori Bauman in 2008 for $480,000. RedLine engaged in a substantial redevelopment of the property prior to opening.

The church is an affiliate of the Presbyterian Church in America. For more on its plans, see our coverage of the June hearing before the City Plan Commission.

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