Below is copied from the Staff Report submitted to City Council on September 19, 2014, proposing the revision of the Seniors exemption. It was approved.
Alan Guard, Chief Financial Officer
In 2004, the Rowlett City Council adopted an ordinance setting the tax exemption for seniors and people with disabilities at $67,000. Due to the Senior/Disabled Property Tax Exemption and the Senior Property Tax Freeze, property taxes paid to the City of Rowlett have been reduced by $3.8 million, which is equivalent to 12 cents on the property tax rate. The City is only one of seven out of 31 cities in Dallas County that has adopted the freeze. City Council has had discussions regarding a deduction in the exemption amount at a number of
meetings over the past three years. At the City Council retreat held on June 20-21, 2014, theCouncil reached consensus and provided direction to the City Manager to change the exemption from $67,000 to $50,000 for people with disabilities and $30,000 for persons over the age of 65. The proposed reduction in the exemption will slow down, not eliminate the reduction of property
tax revenue collected. The proposed change in the amount of the exemption ($30,000 for seniors and $50,000 for people with disabilities) will have no impact on those seniors or people with disabilities who currently receive the exemption, due to the property tax freeze. It will only impact people who will turn 65
after tax year 2015, or FY2016.
Please note that the presentation starts with commentary on how the Seniors were avoiding paying $3.8 million in taxes to the city. No evidence was presented that supported that number, but at the $291 per senior household calculated above. Based on $3.8 million per year, that would represent 13,058 senior households that were cheating the city. At an average of 3.2 persons per household, that suggests that 41,786 out of 58,000 people in Rowlett are not paying their fair share.
Of course, we know that's not true. Therefore, I conclude, someone cooked the books.
The conversations about reducing the Senior exemption started when I was on City Council. I was against it then, and I still am. I told others that are still in "officialdom" I was against it. My reasons were simple. I remember as a child that a senior exemption was provided by the town I grew up in and I thought it was honorable to recognize our seniors. They fought wars, worked hard, paid taxes for schools for 30 years after the kids were grown, they wiped the noses and changed the diapers of the ones currently leading the town. I thought it was a nice thing to do and I still feel that way. I'm a Senior and I don't need the deduction. Others do.
The Summary states that the Seniors were costing city government $3.8 million a year, while City Council was giving away $11 million in additional concessions to develop The Villages in downtown, and another 15 years of tax abatement, totaling $2,475,000. That is only one project. How much was given away in the 21 months since passage of the ordinance?
So, I have a problem with the reduction in the Senior exemption from a number of views. However, that is not all. There is a legal issue. Please note the very last sentence of the Staff Report above. Folks, that's a commitment. It is cited for only one reason. That reason is to keep the Seniors from fighting the reduction in exemption. The proposition would exclude any existing Seniors with $67K exemptions to new adjustments to exemptions. When the Seniors of record decided to not fight the change in exemption, a legal requirement in contract law was met. The acceptance of the city's promise to "grandfather" their existing exemption
became their "consideration." Upon passage of the ordinance, a verbal contract was made between City Council and Senior's exemptions of record.
I have been asked by a reader to provide commentary on an opinion of Rowlett's City Attorney. Admittedly, he is a lawyer and I am not. However, there are always two sides to a court case. Opinions differ. The following is my two responses:
Re: Rowlett Property Taxes
In my opinion, when the city passed an ordinance decreasing the exemption, they made a verbal contract with the Seniors at that time. They said at the time that the exemption of $67,000 would still apply to those Seniors that had already claimed that exemption. City officials said the city's tax bill to the current seniors was frozen, and would not increase. It's my belief that this promise was made to ease the passage of the new ordinance reducing the senior exemption. When I took business law in college, this was a "consideration," and necessary for a verbal contract.
When the city decided to reduce the Senior exemption from $67,000 to $30,000, they made a new contract with a new set of Seniors that were younger. This would be a different demographic grouping from the earlier group of seniors.
When they imposed the lower exemption of $30,000 onto the older group of Seniors, after guaranteeing they wouldn't, they breached the verbal contract guaranteeing an exemption to the older Seniors of $67,000.
It's my opinion the city has breached the earlier Senior's verbal contract and is subject to a law suit enforcing the earlier contract. The later Seniors were not harmed in any way. The earlier Seniors were.
In reading David Berman's response again, some other thoughts occurred to me. It is absolutely without debate that the Mayor, City Manager, and probably most of City Council represented that if the ordinance reducing the Senior exemption from $67,000 to $30,000 was passed, the Seniors already claiming the $67,000 exemption would not be effected. They would be exempt from the lowering of the Senior exception. It was clearly proclaimed by all of Rowlett "officialdom" that these Seniors would be protected from a lowered tax exemption. It is also stated in the Staff Report to City Council of 9/16/14.
In David Berman's reply to the Mayor, he states that, "Article VIII, Section 1, Taxation shall be equal and uniform. He further writes that, "However, age discrimination is inherently suspect (my emphasis) and would require a compelling governmental interest much more than a rational basis."
I have a couple more points. First, there is nothing suspect about the "discrimination." There is a clear divide between Seniors that were promised the higher exemption and those that were not. Its called a promise, or agreement, or a contract. The promise was given in return for the existing Seniors not combating the proposed lower exemption ordinance. It worked. The older Seniors quieted down. They had essentially been "grandfathered."
Now, it would appear David is saying the difference between the two Senior groups can not exist because of age "discrimination." Therefore, if the City was to honor its promise to the original Seniors, the ordinance lowering the exemption was illegal. If the ordinance was passed, and the earlier Seniors had the lower exemption imposed on them, a contract with the earlier Seniors was breached.
Furthermore, the opening sentence of David's memo states that taxation should be equal and uniform. I would like for him to explain why The Village received a 15 year tax exemption and other new developments do not. If all our work to attract new development is given a gift of a 15 year tax abatement, why bother? No new residential developments get that deal. That is discrimination against residential property owners.
I know David and I like him. Yet, he is an attorney, not a judge. His interpretation of the statues dovetail nicely with what the City seems to be trying to do. His opinion has not been adjudicated. A deal is a deal.
Many of you have your own stories to tell. I like David Berman and I think all the council members are trying to do the right thing........but I think this was a mistake. The additional revenue generated was hardly worth the ill feelings and the distrust it created. Over the years, death and "move aways" will automatically eliminate the problem by attrition.......probably long before we start getting any tax revenue from The Villages and other developments.
No one expected a tornado, but it did reveal a "boink" in our city's probably well-intentioned, but misguided and ill advised attempt to squeeze a few bucks out of the Seniors.
I think the City Attorney should render an opinion of whether it's okay to breach a contract, or conversely, it's okay to lie to the citizens. It seems to me it's one or the other.