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Blugold Real Estate Foundation is suing the city of Eau Claire over taxes on Aspenson Mogensen Hall, 222 Water St. The nonprofit Blugold Real Estate claims the off-campus student housing should be tax exempt.

A tiff over taxes between the Blugold Real Estate Foundation and city of Eau Claire has ended up in court.

The nonprofit Blugold Real Estate claims off-campus student housing — Aspenson Mogensen Hall — is tax exempt. However, the city claims the property at 222 Water St. is taxable.

In January, Blugold Real Estate filed a claim with the city, seeking tax exemption and a refund for real estate taxes imposed on the property for 2018 — $223,044.05 — plus statutory interest.

The Eau Claire City Council, on Feb. 26, disallowed the claim, opening the door for the lawsuit, which was filed this week in Eau Claire County Court.

“We’ve been in active discussions with Blugold Real Estate to see if we can resolve the dispute outside of litigation,” said Douglas Hoffer, deputy city attorney, “and discussions are ongoing.”

According to the complaint:

Blugold Real Estate is a nonprofit formed to support and further the purposes of the UW-Eau Claire Foundation and UW-Eau Claire.

Blugold Real Estate acquired the property for use as campus housing for UW-Eau Claire students.

Aspenson Mogensen Hall welcomed its first students for the 2017-18 academic year.

Located directly across Water Street from the university’s Human Sciences and Services building, the co-ed apartment style facility is home to more than 200 students in single or multiple bedroom suites.

Various amenities and services, along with other facilities typically found in a modern university residence hall, are provided there.

The city assessor set the property’s 2018 assessment at $11.15 million, resulting in a tax bill of $223,044.05.

“By taxing the property, the city improperly assessed property that was exempt by law from property taxes,” the complaint reads.

That said, Blugold Real Estate paid the taxes for 2018, or at least the requested installment, and will pay any remaining installments of the 2018 property taxes as required by law.

Earlier this year, city attorney Stephen Nick said because the building was a private construction project — built outside the usual UW System appropriations process to construct a dormitory — and is located off-campus, state law requires it pay taxes.

In addition to the legal argument against the tax-exempt status, Nick said in February that city policy would oppose it too. As part of a tax increment financing district, taxes on the dorm currently go toward public improvements in the Water Street area and a housing improvement initiative in the Randall Park area.

Contact: 715-830-5838, christena.obrien@ecpc.com, @CTOBrien on Twitter