Monday, September 26th, 2016

Citizen Klauck

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At Monday night’s Waukesha mayoral candidate forum, Jeff Scrima attacked the integrity of the city assessor’s office, claiming they had overvalued the Clarke Hotel, something he learned in a “one-on-one” meeting with Paul Klauck, the City Assessor.

Mayor Larry Nelson was outraged, as the Waukesha Freeman reports,

“I can’t sit here and let my opponent attack our city assessor who has honestly served our city for 24 years with distinction,” Nelson said. “Our assessments are done by state law, the mayor has absolutely nothing to do with the assessments. … It is really unfair for my opponent to attack his integrity and honesty.”

I caught up to Scrima after the forum to ask him about his conversation with Klauck.  Scrima said that Klauck told him that he never toured the Clarke Hotel when he was determining its value, that Klauck had determined the value of the building on “word of mouth” from the owners regarding cost overruns.  Scrima also said Klauck told him the city was over-assessed by two percent.

At Tuesday night’s candidate forum, Scrima again mentioned that he met with Klauk, and he again stated that the assessment for the Clarke Hotel was deliberately inflated.

Despite meeting with Klauck, Scrima seemed to have a problem pronouncing Klauck’s name.  Fortunately for Scrima, the mayor was happy to correct him.

Klauck said Tuesday afternoon that he remembered meeting Scrima, but that Scrima either, “…didn’t listen to a lot of what I said or he misinterpreted a lot of what I said.”

Klauck explained how the assessment for the Clarke Hotel worked.  He said there are three ways typically to assess a property’s value: sales, income, and cost.  In the case of the Clarke Hotel, Klauck had to use cost.  He could not use sales, as there was not a comparable property in Waukesha to use, and he could not use income as the Clarke Hotel is still a relatively new enterprise.

On this point, Klauck and Scrima agree.  But Klauck explained that the Clarke Hotel was treated no differently than any other business in the city.

The vast majority of businesses are assessed on cost, too, in Waukesha.  The property tax assessment forms from Waukesha’s 2500 businesses are due on March 1st.  The information is run through the computer and the result is an assessment based on standard tables.

In the case of the Clarke Hotel, it was basically a completely rebuilt structure.  Instead of “word of mouth” or even information in the newspaper, Klauck used the assessment software and generated a value based upon what would be needed for such a renovation.

There has been some question about the value of personal property in the building and whether the assessment of that value was inflated.  Again, Klauck pointed out, personal property is a self-reporting process in Waukesha, as it is in every other community, and the Clarke Hotel was treated like any other business.

As for not walking through the structure, Klauck had walked through the structure along with other city officials on the official tour, but it wasn’t necessary.

The city has a developer’s agreement with the Clarke Hotel.  Even if the value of the hotel is not the expected $5 million after the TIF district expires, the owners of the hotel still will have to pay property taxes as if were valued at $5 million.

As for the supposed over assessment of Waukesha property, Klauck said he talked to Scrima for half an hour, but Scrima is only using the parts that help him.

The city is checked on its assessments through reporting the assessed value of each home that is sold, and the assessed value is compared to the sale value.  This is averaged over a four-year period, and the ratio must be within 10%.  The city based their assessment on using the previous year’s numbers and the values are 2% less of the current assessment across the board.

Now, this is all neat, but it doesn’t change much.  As Chris Lufter, the former president of the Waukesha Taxpayer League once explained to me, don’t look at the tax rate, look at the tax levy.  Even if everyone’s assessment magically dropped 2%, the amount of taxes you pay would remain the same.  The rate would go up (roughly 2%) to compensate for the levy required.

Scrima knows this, and has been attacking Mayor Nelson on the amount the levy has risen in four years.  It’s a fair criticism.

But to give in to paranoid fantasies about conspiracies to jigger the assessments does not explain the issue, nor does it help the city.

I asked Klauck if he ever remembers becoming an issue in a political campaign before, or if the office had ever become an issue before.  He said he wasn’t sure, but he thinks his last opponent in a city assessor election was in the early 1990s.  “If it was going to be an issue, you would have seen it in an assessor’s office race,” he said.

Klauck has been Waukesha’s city assessor for 24 years.  He started working in Waukesha’s assessor office in 1981.  Scrima was too young to play with Legos then (although he was probably building a condo block house in a blighted nursery).

As for the Clarke Hotel, it looks as though they may be turning the corner.  They have new, professional management.  They have paid the room taxes.  They have committed to catching up on the other taxes as well.

Waukesha has turned a $50,000 rat’s nest into a viable commercial property that will be worth $5,000,000 when the TIF expires, and Scrima still can’t even get the details right on the financing as he insists on claiming the city gave the Clarke Hotel $1.5 million.

It was a bold and risky venture, one that I was not sure of when the decision was made.  But it’s paid off.  If the criticism is going to be leveled at Mayor Nelson for the Clarke Hotel, then it’s time he gets the credit, too.

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