City leaders continue to tussle over whether to waive payments in lieu of taxes for the Wausau Museum of Contemporary Art, which brings internationally-known artists for exhibitions that generate tens of thousands of dollars annually in tourism dollars, drawing attendees from around the world.
For not-for-profit entities, payments in lieu of taxes (PILOT) are amounts paid to a state or local government in place of taxes, most commonly property taxes. The tax-exempt status granted to these entities by the IRS means that property taxes that would have been paid to municipalities had this land been owned by private individuals or companies are not collected. Many nonprofits reduce local government spending through the services they offer, according to the Lincoln Institute for Land Policy, but at the same time impose a cost on municipalities by consuming public services, such as police and fire protection. PILOTs are payments made voluntarily by tax-exempt nonprofits as a substitute for property taxes.
Tuesday at Wausau’s Economic Development Committee, officials deferred a decision on the issue pending a review of past records.
The committee asked City Attorney Anne Jacobson to bring several records dating back as far as 2017, when the city approved a Commercial Rehab loan for the former Wausau Club, 309 McClellan St., with David and Rebecca Hummer, representing Jim N.E. Cricket LLC.
The committee also wishes to speak with Hummer before making a decision. He attended past meetings on the topic but was not present on Tuesday.
The Hummers run the museum through MOCA, Inc., a nonprofit. They signed an agreement saying they would continue to pay the PILOT amount after the property is transferred from a for-profit LLC to the nonprofit but will apply for tax-exempt status for the new LLC. Committee members also seek information about that process.
The sale occurred on Dec. 30. David Hummer is listed as a principal of MOCA, Inc.
The museum operators have said they were assured by former Economic Development Director Chris Schock that the museum would never be taxed, only to learn later that Schock did not have the authority to make such a promise.
On Tuesday, the Economic Development Committee members requested documents related voting records of the past committee meetings and the City Council, the total amount of the PILOT at issue, the property’s real estate taxes and similar agreements with other entities, among others.
Alder Lisa Rasmussen said there was an understanding when the city handed over the property to current owners that once they get the tax-exempt status for the museum wing of the property, the PILOT would be waived. She said it made sense to waive off the payment since the Hummers had not asked for room tax revenue – which the Leigh Yawkey Woodson Art Museum receives – despite bringing outside visitors to the city through their events.
Rasmussen says it is unfair for the Hummers, who have turned a once dilapidated property into a well-known museum, and said the city is not waiving off taxes but helping an entity that is operating an art appreciation facility. If the Hummers do not receive tax-exempt status, the question of the waiver will be moot, Rasmussen said.
One portion of the property will be reserved for commercial use and will not be tax exempt. The second level of the building, which is undergoing extensive renovation, will be used for future events.
The McClellan St. property had fallen into disrepair after The Wausau Club’s closure and needed extensive work when the Hummers bought the building. They renovated the building and opened the museum, which has acquired an international reputation.
Alder Tom Kilian once again objected to the waiver, saying the owners had agreed to it and the city should be consistent in enforcing their agreements. He asked if the Woodson Art Museum had entered into such an agreement and whether they asked for a waiver after agreeing to pay the PILOT.
Attorney Jacobson suggested that any amended document related to the waiver must make it clear that it would be only for the current owners for a specific period of time, reasoning if the property changed hands or if the current owners turned it into a for-profit entity, the city should be able to collect taxes.
The Wausau City Council approved the sale of the property from Jim N.E. Cricket LLC to MOCA, Inc. on Nov. 15 by waiving the right of first refusal to repurchase the property. But the stopped short of waiving payment of taxes on the property through August 2037, which is required by the restrictive covenants of the Memorandum of the Right of First Refusal. The provision of the right of first refusal is part of the agreement because the Hummers took a property rehab loan of $89,000 from the city when the museum first launched.
In early November, Wausau’s Community Development Manager Tammy Stratz told Wausau Pilot & Review that the staff proposed that the Hummers continue to pay the amount of the tax bill that the city would receive – just over $6,000 for last year – out of a total tax bill of $15,067.
The Department of Community Development had recommended a PILOT payment of $6,000, which is equal to the city’s portion of the approximate $15,000 a year owed to four tax-collecting entities.