Milwaukee pastors raised alarms about 'tax and take.' Months later, here is what an investigation found.

A year and a half ago, Milwaukee pastors crowded into a City Hall meeting room to raise alarms about a city process they said could cost them thousands of dollars or lead to the loss of their churches to city tax foreclosure.

The controversy in late 2021 brought civil rights leader the Rev. Jesse Jackson to a rally inside City Hall, where he joined a coalition of churches, pastors and other religious groups from across Milwaukee and the Midwest.

But on Monday, as a report on the pastors' concerns was finally heard, the meeting room was quite quiet. No one had told the pastors the report would be heard — a lack of communication the Rev. Steven Tipton of El Bethel Church of God In Christ told the Journal Sentinel was more of the same from City Hall.

He came downtown after receiving texts about the meeting Monday morning, including from the Journal Sentinel. However, the committee had moved on to another item by the time he arrived and did not return to the report before he had to leave.

"We keep hearing about people dropping the ball and we're just trying to work with our city," he said.

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Members of the Judiciary and Legislation Committee that heard the report and Milwaukee Inspector General Ronda Kohlheim, who wrote it, acknowledged the lack of notice. Ald. Mark Borkowski, who chairs the committee, said the report would be taken up at the committee's next meeting June 12 so the pastors could weigh in on the findings.

Kohlheim's report looked into whether the city Assessor's Office used processes for exempting property that were inconsistent with state law and "unlawfully taxed and seized Milwaukee area churches, specifically Black churches on the north side."

The report found that all but one of the pastors' claims about the treatment of their churches were unsubstantiated.

However, the report was also critical of the lack of documentation and "organizational deficiencies" in the property tax exemption process at the Assessor's Office, which was under the management of City Assessor Steve Miner when the pastors brought their concerns forward.

"The investigation determined the Assessor's processes for handling property tax exemption request(s) under (state law) are inconsistent with internal, official documented policies and procedures outlining the steps to take and the manner in which they should be performed," the report states.

Kohlheim said City Assessor Nicole Larsen and Chief Assessor Billy Bowers have been proactive in making changes to the office's processes since taking over early last year.

Larsen noted the complexity of the exemption laws and rules and told the committee that communication was the primary area in which the Assessor's Office had been falling short, in her estimation.

Here's what you should know:

What did the pastors argue the city was doing?

In the December 2021 meeting, pastors said the city had improperly foreclosed on their churches and unjustly taxed them despite being religious organizations.

They dubbed the city's processes "tax and take" and urged the council and then-Mayor Tom Barrett to declare a moratorium on city action they say is confusing and bureaucratic.

Council members at the time expressed doubt that a full moratorium on taxing of churches would be feasible under state law.

Tipton after reading the report on Monday said the pastors' concerns were not being understood and expressed disappointment that just a single pastor's claim was found to be substantiated.

"What we have been saying is there is such discombobulation in these areas, we're caught in the middle and none of our concerns are being heard," he said.

Being caught in that system is costly for the churches, he said.

What did the city's inspector general find?

Kohlheim's review did not find any instances in which the city had wrongfully disregarded an organization's nonprofit status or unlawfully assessed taxes or foreclosed on properties of religious organizations.

"However, the investigation revealed that the Assessor's Office failed to consistently document the specific reasons for the denial of a request for an exemption of property taxes on the property record," her report stated.

Additional findings include:

• Since October 2012, the city has acquired 28 properties through foreclosure that had been previously used for religious purposes. Of those, 24 were in the 6th, 7th and 15th aldermanic districts in Milwaukee's central city. The Assessor's Office wasn't able to provide a letter denoting the exemption determination for 26 of the 28 churches, and the letters for the remaining two did not include a reason for the denial of a request for exemption.

• The lone complaint that was found to be substantiated was from Pilgrim Rest Missionary Baptist Church, 3456 N. 38th St., which argued it was wrongfully assessed property taxes on parts of its church building after ownership changed but the use of the property did not.

• The Assessor's Office did not consistently document the specific reasons it denied or only partially approved property tax exemption requests.

• The office did not keep physical copies of property tax exemption request forms, letters denoting approval, denial or partial approval of an exemption, or any other documentation for owners seeking exemption.

• The chief assessor is responsible for overseeing and administering all processes related to property tax exemptions, decreasing the assessor's ability to implement processes to "minimize the occurrence of errors, fraud or to prevent non-compliance with applicable regulations" related to property tax exemptions.

• The Assessor's Office did not have public-facing information about requirements for obtaining an exemption, steps to apply, or other pertinent information.

• The religious organizations' property owners weren't able to efficiently get enough information about property tax exemptions, fees included on property tax bills, foreclosure and more.

What did the city's inspector general recommend?

The inspector general recommended seven changes be made in the Assessor's Office.

The office should:

• Revise its policies and procedures to ensure compliance with the state's property assessment manual and state law on religious organizations. The report found "inconsistencies" in how the Assessor's Office handled each property tax exemption request and related procedures. "It is imperative that management in the Assessor's Office implement such procedures to ensure quality information is maintained and necessary revisions and updates are included in its procedures for making informed decisions," the report states.

• Develop a process for maintaining consistent, up-to-date, chronological notes about each property in the property tax system. That should include interior and exterior inspections, initial property tax exemption requests, justifications for denial or only partial approval of exemption, notes of any interactions between staff and property owners, and more.

• Ensure the office is maintaining electronic and physical property exemption records in compliance with state law.

• Reassign parts of the property tax exemption process to more than one staff member to ensure separation of duties. "Although the property tax exemption process might reasonably be completed by a single individual, a breakdown of the task prevents one person from acquiring sole or excessive control; misuse of that control for nefarious or illegal purposes; and to minimize the occurrence of errors or fraud," the report states.

• Conduct a review to ensure each property owned by a religious organization has met the requirements for exemption based on ownership and use, determine whether electronic property records have up-to-date and consistent notes, ensure data required to establish exemption is maintained as required, and ensure all exemption requests for religious organizations have been handled "without bias, ethically, legally and in accordance with applicable state statutes."

• Share relevant information with property owners who are seeking to get or maintain an exemption from property taxes via print, email, brochures, videos, town halls or other means.

• The Assessor's Office, Treasurer's Office, Department of City Development, Department of Neighborhood Services, Department of Public Works and other city departments or divisions that assess fees that appear on property tax bills should provide guidance to property owners on which department to contact for information related to property tax exemption, assessments, and properties' foreclosure status.

What did the city Assessor's Office say in response to those findings?

In a seven-page response, Larsen wrote that her administration had taken steps to address the problems and had identified deficiencies such as a confusing exemption request process.

The steps taken include plans to train all staff on records retention and working to change positions in the 2024 budget to better handle exemption review instead of having the chief assessor solely responsible. The office has also developed informational tools, updated its website and accepted all requests to participate in town halls, resource fairs and meetings on the issue of church exemptions, she wrote.

The Assessor's Office also found a number of additional reasons for "problems and confusion."

Those included knowledge of required city payments not being passed down as church leadership turned over, foreclosures over delinquent water utility charges, negative interactions with the city's collections agents and a lack of awareness by some that tax-exempt organizations remain responsible for various municipal charges and fees.

Alison Dirr can be reached at adirr@jrn.com.

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This article originally appeared on Milwaukee Journal Sentinel: Report addresses Milwaukee pastors' 'tax and take' concerns