UW-Eau Claire Foundation Sues City To Avoid Property Taxes

A fundraising organization tied to the University of Wisconsin-Eau Claire has filed a lawsuit against the city of Eau Claire alleging student housing owned by the nonprofit foundation shouldn’t have to pay property taxes.

Blugold Real Estate Foundation, an offshoot of the UW-Eau Claire Foundation, is pushing to get a property tax exemption for student housing built in 2017 designed to hold 201 students. Blugold Real Estate Executive Director Kimera Way told WPR the intent was to file a property tax exemption with the city from the outset of the plan but the exemption was rejected by the city assessor and city council.

In lieu of the exemption, the city is demanding the foundation pay $223,000 for taxes assessed in 2018. According to Eau Claire County tax records Blugold Real Estate has paid half of that total. Way said they shouldn’t have to pay property taxes at all because they’re a nonprofit created to support UW-Eau Claire.

“Blugold Real Estate Foundation is a supporting organization of the UW-Eau Claire Foundation and collectively our mission and our reason for existence is to support and benefit the University of Wisconsin-Eau Claire,” said Way.

Way said the $1.6 million student housing complex was vital for UW-Eau Claire because of a housing shortage which has caused some incoming freshman, who are required to live in university housing, to live in city hotels.

“As I think the community knows we’ve had a chronic shortage of housing for decades,” Way said. “So the Blugold Real Estate Foundation has had a commitment to identify, either purchase or construct housing that would be made available to house students.”

Way pointed to an agreement between UW-Milwaukee’s UWM Foundation and the city of Milwaukee as proof that foundation-owned student housing can be property tax exempt. In that agreement, two student apartment complexes owned by the foundation are property tax exempt but the foundation has agreed to pay for city services such as water and sewer.

Assistant Eau Claire City Attorney Doug Hoffer argues Wisconsin law presumes property is taxable and exemptions are only allowed under specific circumstances.

“In order to qualify for a tax exemption the property needs to be owned by the state and this is owned by a private entity, which does not qualify for that exemption,” Hoffer said.

Hoffer said that while Blugold Real Estate was created to support the university, a 2017 policy issued by the University of Wisconsin Board of Regents asserts foundations must exist as separate organizations. Also, Hoffer pointed to a 2009 state budget amendment that provided a narrow exemption for a specific 300-bed student housing project owned by the University of Wisconsin Foundation that supports UW-Madison.

“A logical inference that can be drawn is that if you need to get a statutory exemption added for that particular property it’s because there isn’t an existing exemption that applies,” Hoffer said.

As of Tuesday afternoon, Hoffer said the city had not been served with the lawsuit brought by Blugold Real Estate. He and Way said there have been ongoing discussions on the matter and there are hopes of a settlement out of court. But Hoffer said the city is prepared to settle the matter through the litigation.

The use of foundations to purchase property and support university campuses is not new. But foundations have become more visible in the wake of a 2018 bankruptcy filing and string of lawsuits involving the UW Oshkosh Foundation.