Montereau v. Ken Yazel: Leashing elected officials through deprivation of legal counsel

NOTE: Tulsa County Assessor Ken Yazel was on 1170 KFAQ with Pat Campbell and Eddie Huff at 7:35 a.m. Tuesday.

UPDATE 2014/06/25: In an 8-1 decision today (Winchester dissenting), the Oklahoma Supreme Court overturned the Court of Civil Appealsand remanded the property tax appeals to be considered on their merits. The Supreme Court affirmed that the Legislature has given County Assessors the authority to use their general counsel for appeals, rather than being shackled to counsel supplied by the District Attorney's office or the Oklahoma Tax Commission. For Yazel, who won re-election with 65% of the vote, this is icing on the cake.

Tulsa County Assessor Ken Yazel's challenger has made an issue of Yazel's 2012 decision against Montereau's application for a total exemption from ad valorem taxes. The fair market value of the upscale senior residential complex was estimated at $178,990,029. Yazel validated that 40% of the facility was legally qualified for tax exemption as a state-licensed continuum of care facility, based on the proportion of the facility devoted to those 154 licensed beds, but the remainder -- independent living apartments and cottage homes that require an entrance fee ranging from $198,000 to $1.2 million just to get in the door, plus a monthly fee in the thousands -- was taxable under state law, with a tax bill of over $1.5 million.

Montereau protested Yazel's decision, won in district court, and Yazel, as authorized by state law, appealed to the Court of Civil Appeals (COCA).

Yazel's opponent has described Yazel's pursuit of the appeal a "waste of resources." The simple version of his argument as I understand it, is that, because state law specifically grants an exemption for state-licensed continuum of care facilities, the entire property should be exempted from ad valorem taxes. The counterargument is that taxable property shouldn't be exempt because it sits on the same parcel as property that is exempt.

While Montereau and the William K. Warren Medical Research Center (WKWMRC, which owns the land and leases it to Montereau) are both 501(c)(3) non-profits, not every activity of a non-profit is exempt from all taxes under Oklahoma law. Article X, Section 6 of the Oklahoma Constitution exempts "property used exclusively for religious and religious purposes" as well as government-owned property, free museums, and several other specifically enumerated exemptions. State statutes grant other exemptions. As far as I can tell, none of the constitutional or statutory exemptions cover market-rate housing. However much he might want to, the County Assessor can't grant an exemption that isn't authorized by law.

(Yazel's opponent, John Feary, has received a significant amount of his reported campaign funds -- $10,150 out of $36,311 by my count -- from Warren family members, Warren Foundation and Montereau board members, a Montereau executive, and (judging by the addresses) a couple of Montereau residents. Montereau and WKWMRC were created by the William K. Warren Foundation.)

Tulsa County taxpayers have a great deal at stake. If Montereau is right, property owners will have a strong incentive to take otherwise taxable uses off the tax rolls by lumping them in with a relatively minuscule tax-exempt use. That means the burden of paying for property-tax-funded government (schools, libraries, county operations, city and school bond issues, etc.) will fall more heavily on the rest of us.

This is particularly true for the sinking funds that pay back the general obligation bond issues that fund projects like streets and school improvements. The millage rate for sinking funds is calculated by dividing the debt service requirements for the year by the assessed value of property in the jurisdiction. It's basic fractions: If the denominator goes down (by removing property from the tax rolls) while the numerator stays the same, the millage rate goes up on the property still on the tax rolls. This means a tax increase even for seniors who have a valuation freeze. If Montereau gets its exemption, seniors who can afford expensive Montereau accommodations will benefit at the expense of seniors living in their own modest homes and younger property owners decades from retirement.

By fighting this battle, Ken Yazel is fighting to keep our tax rates from going up. With all due appreciation for the Warren Foundation and the institutions spawned by it and affirming their right to pursue their legal remedies vigorously, Oklahoma property taxpayers had better hope that Yazel prevails in this case.

At this point, however, Yazel is blocked from pursuing this fight by COCA's bizarre theory that he can't appeal without using an attorney from the District Attorney's office. Yazel filed his appeal using the general counsel that he is authorized to hire under 19 O.S. 527. The law was passed in 2005, recognizing that certain county offices needed legal expertise in technical areas to carry out their duties, and that such expertise may not reside in the DA's office.

COCA has taken a statute that requires the DA's office to assist the assessor in pursuing an appeal and turned it into an effective veto over the assessor's judgment. Yazel has appealed COCA's ruling to the Oklahoma Supreme Court, which has granted certiorari. (Yazel's petition has a copy of COCA's ruling attached.) In an amicus curiae brief in support of Yazel's position, attorneys for the County Assessors Association of Oklahoma and County Officers and Deputies Association of Oklahoma write:

In effect the COCA's decision would allow the district attorney or the Oklahoma Tax Commission to determine the issues of ad valorem tax law to the exclusion of the judicial branch of government. COCA's decision would eviscerate the power invested in the judicial branch to say what the law is, while closing the courthouse doors and leaving no effective remedy for an assessor to fulfill his or responsibilities absent district attorney approval.

The brief goes on to show that COCA's ruling contradicts numerous precedents.

In its published decision, the COCA effectively held that the failure, unwillingness or inability of a district attorney to fulfill its duty to represent an assessor under § 2880.1(D) somehow extinguishes an assessor's right to appeal under § 2880.1(A), thereby preventing the assessor from fulfilling his or her duties in connection with the assessment and collection of ad valorem tax. There simply is not, nor has there ever been, any language in what is now § 2880.1 suggesting that an assessor's right to appeal is conditioned upon the district attorney's review of a tax case and that district attorney's willingness to appear in such appeals on the assessor's behalf. The COCA's decision is plainly contrary to the decisions of this Court holding that courts are "not free to rewrite the statute" and must "vigorously resist reading words or elements into a statute that do not appear on its face.

In footnotes to the above paragraph, the brief lists "four occasions [in which] this Court has decided appeals under § 2880.1 or its predecessor statutes where no district attorney had entered an appearance." The amicus brief also quotes the court's ruling in a "situation strikingly similar to that in this case" (1980 OK 96, 614 P.2d 45, 06/17/1980, State ex rel. Howard v. Oklahoma Corp. Commission):

The foregoing language of Article IX s 20 does not bar Commission's attorneys from appearing for it. It clearly is implicit from the language of 74 O.S.1971 s 18c that the ... Commission may appoint its own in-house counsel.

Likewise, the right to be represented by counsel ordinarily should include the right to make a choice, if timely exercised, of attorneys whose views are consonant with one's own or who at least will present the client's interests....

If then, the Commission may be brought into court . . . , Sections 6 and 7 of Article 2 of our State Constitution, . . . under any concept of affording it any semblance of even-handed justice, must require that it be represented if it so desires, by counsel who can and will ably and conscientiously express its views to the tribunal. . .. Commission may properly be represented in this case by its own in-house counsel (employee-attorneys).

The right to counsel undergirds all our other rights. If someone can force an attorney on me who may work to thwart my aims, I really don't have legal counsel at all. If an elected official is forced to rely on counsel at odds with him, it ultimately thwarts the will of the voters who elected that official.

To me, COCA's ruling looks like the latest example of an attempt to control an elected official's performance of his duties by denying him legal counsel to support the actions he believes he needs to take. This entry is long enough already without delving into the efforts by the Cockroach Caucus to prevent the Tulsa City Council from hiring its own attorney, forcing the Council to rely on the Mayor-appointed City Attorney, even when the Mayor's aims and the Council's aims are at odds.

A candidate runs on a platform and once elected, if he has integrity, he implements that platform. Sometimes he will need legal advice to know how to proceed or to deal with legal challenges from opponents to his policies. This is especially important when the official is a reformer, sent by the voters to change the way government operates; he will encounter resistance from those whose interests are aligned with the status quo.

Just as a besieged army uses trenches, mines, and razor wire as multiple lines of defense against an attacking force, so the defenders of the political status quo have multiple ways to block reform. The first layer is to use campaign money to persuade voters to keep the reformer out of office. If a reformer manages to win an election, they can attempt to co-opt him. If that fails, they can launch a PR campaign attacking the reformer as a petty bickerer or worse. They can attempt to entice and entrap him in wrongdoing. They can exert pressure via friends and family. They can sue him and then deny him access to counsel.

Voters need to realize that the forces denying legal counsel to the elected official are not merely thwarting the elected official but the voters who put him in office.

The precedent set by the Oklahoma Supreme Court, quoted above, is crystal clear. If the Supreme Court is consistent, Yazel will be allowed to pursue his appeal and the original issue -- does a tax exemption rub off on the taxable uses attached to the exempt use? -- will be considered and resolved. If voters are wise today, we'll still have Ken Yazel as Tulsa County Assessor to pursue this fight on behalf of taxpayers and his fellow county officials all across Oklahoma.

MORE: A few more notes regarding the discussion on Monday's Pat Campbell show:

I've looked at all the Budget Board minutes available online, going back to July 2011. Most Budget Board meetings appear to be routine and brief, with votes to approve retroactively a long list of appropriations that have already been made. Ken Yazel has personally attended all Budget Board meetings at which the budget for the upcoming fiscal year's budget was discussed or significant adjustments to the budget were discussed. Like every other Budget Board member has done, Yazel sends his chief deputy to attend when he is unable to be present. Only twice in the last three years, at routine meetings, has no one been present to represent the assessor's office.

According to Yazel, the Tulsa County Assessor's Office headcount is ten below the number recommended for a jurisdiction the size of Tulsa County. While Oklahoma County has more parcels, it has, as the capital city, a much larger number of tax-exempt government-owned parcels, which are not assessed at all. Large swaths of northern and eastern Oklahoma County consist of undeveloped property; bare land requires less effort to assess than real estate with improvements.

Regarding the Vision 2025 surplus funds: The projected grand total revenues, as of September 2013, totaled $730.5 million. That's about $195 million more than the $535 million in projects approved in 2003. This accounting of remaining Vision 2025 obligations, cash on hand, and projected revenue from December 31, 2013, shows a projected surplus of $35.7 million. If you add back in the $45.5 million that was "promised" to the suburbs in exchange for the extra $45.5 million for the BOK Center (a promise whose existence was denied during the 2007 River Tax debate), that's $81.2 million, plenty to have handled our criminal justice needs without a tax hike.

A couple of weeks ago, I discussed Tulsa County's lack of budget transparency -- not illegal, but not in the taxpayers' best interest, and not as good as Oklahoma County. In my endorsement of Yazel, I discussed the different colors of money and how millages and budgets could be adjusted to meet county needs without raising taxes, if the County Commissioners had the political will to do so.