By now the basic features of the Cranky Pat's situation in Oshkosh are familiar to all who follow such matters. Absent some action last night by the Common Council, Cranky Pat's (along with Kodiak Jacks and a few others) would have lost their license to operate and liquor license on July 1st if the taxes on the buildings in which they rent space remained unpaid. In order to keep Cranky Pat's open, the Council had essentially two options:
1. Act as a judicial body and listen to an appeal by the Cranky Pat's owners as to why they should continue to be licensed even though the taxes on the premises remain unpaid.
2. Pass an ordinance that would amend the city code so that tenants could have a license issued even if their landlord has not paid taxes by the deadline.
The Council last night passed option #2 by a vote of 7-0[June 14th Correction: Councilor King voted "Present" because the law firm at which she is employed represents clients that are tenants and landlords] , but the way we got there was interesting, to say the least. Here's what happened:
*In order to pass resolution 07-163 (which would amend the city codes and which was sponsored by Esslinger and McHugh) and have it go into effect by July 1st, the Council had to waive the rules because ordinance changes normally get two readings. The vote to waive the rules lost on a 4-3 vote (Bain, King, Burk Tower and Frank Tower voting not to waive the rules) [June 14 Correction: Mayor Frank Tower actually voted to waive the rules, but the motion still failed because a motion to waive requires 5 votes], meaning that the resolution would have to come back at the June 26th meeting. Even if the resolution were to pass on June 26th, however, it would not go into effect until July 2nd and thus would be of limited value to Cranky Pat's and others in their situation.
*Those who voted against waiving the rules had a preference for the appeal process laid out in the city codes and supported most visibly by Mayor Tower. Under that scenario, Cranky Pat's would appeal to the Council to overturn the decision of Director of Finance Ed Nokes to deny the request for issuance of a license.
*During Council Member statements, a discussion of how the appeal process would work was held. I inquired as to how the Council could vote in favor of Cranky Pat's appeal since to do so would be, in essence, a vote to break our own clearly stated law. As much as I like Cranky Pat's and Kodiak Jack's, to knowingly vote to break the law in a case like this would seem to be a violation of our oath of office. Mr. Bain asked an excellent question, which was whether or not such a vote would be similar to voting to waive a bid and thus acceptable. City attorney Kraft said that waiving a bid is a legislative action, whereas in hearing an appeal the Council is acting as a judicial body.
*After a healthy discussion of our options, Councilor King moved to reconsider her vote not to waive the rules on the Esslinger/McHugh resolution. The reconsideration passed by a 7-0 vote, and then the resolution passed (also 7-0) [June 14th Correction: Councilor King voted "Present"]. This means that Cranky Pat's, Kodiak Jack's and others in a similar situation will not go out of business due to the failure of their landlord to pay his or her taxes.
I voted for the resolution even though I appreciate the arguments against it. Cheryl Hentz lays out those arguments very clearly here. In the long run, I could not see how closing Cranky Pat's and Kodiak Jack's would make it more likely for their deadbeat landlords to pay their taxes. Moreover, the loss of jobs and economic activity represented by the closing of these establishments would be substantial and difficult to justify.
Ultimately, I simply felt that that law which in essence blaims the tenant for the actions of the landlord is bad law that should be changed. Not all cities make the issue of the tax status of the landlord a factor in determining whether or not to issue licenses; Marshfield, for example, is concerned only with whether or not the applicant for the license has met his or her obligations. The Esslinger/McHugh resolution, I believe, moves us closer to making the status of the applicant the key factor in making the decision and I think that's healthy.
Cheryl makes one statement in her post that I agree with completely: "And the city should once and for all stop doing business with business owners who don't pay their taxes when owed."
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4 comments:
Tony,
I agreed with Cheryl on this case - I felt that bending the rules on the licenses removes one of the significant motivations for deadbeat landlords to cough up the tax money.
I was 95% sure Ganther would kick up the cash on the last day, if he didn't no business would ever rent from him again. Now, though, what will be the penalty for him to wait even longer?
However, I wouldn't want to see either business shut down because of the taxes. It is really a game of chicken and I think the city chickened out.
Ron,
I'm somewhat surprised by your position on this. It's really an issue of tenants' rights and workers' rights, and the Council (I'm pleasantly surprised to say) chose to reform a bad law and make it more friendly to tenants and workers.
Even if you are correct that the law as it was written was a "significant motivation" for tax deadbeats to pay up (I don't think that the law provided any such motivation, but that's something we can debate at another time), that still to me does not make up for the misery that the workers have to go through as they wonder whether their job will still be around on July 1st. In the case of Kodiak Jack's, I believe we are talking about over 100 employees.
Cranky Pat's is much smaller but still significant.
If we were talking about a situation in which the Council's vote would mean that the city would not receive taxes from the deadbeat landlords, then I might agree with you. But the way state law is written, if the 100 block owners do not pay their taxes on time the matter simply goes to the County (which will reimburse the city) which will then begin the process of retrieving the money.
And the county will be charging interest on that money until the deadbeats pay their taxes.
I agree with Tony, Paul and Dennis on this. Tennants and their employees should NOT have to pay the price for the deep pockets that don't want to part with their money. The tennant is still REQUIRED to pay the rent whether or not they are in business. That means that the landlord who owes the taxes gets to collect money but not be any more forced to pay the bills.
I agree with you regarding tenants rights, and I wouldn't want either the businesses or the employees to be penalized for the landlord's actions.
My only issue is that we are now providing Ganther and other deadbeat landlords with more loopholes and less deadlines.
"Well, since my tenants won't have to shut down on July 1, I may as well invest that tax money somewhere else for a few more months..."
I would add an additional ordinance or something that says that property owners who fail to pay their property taxes after a certain point can no longer bid for public projects, receive TIF money, receive city loans or other assistance, for a period of X number of months or years.
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