Some St. Paul residents, grieved by the affordable housing shortage, have expressed concern over plans by site developer Ford to allocate sites along the cliffs of the Mississippi River for upscale single-family residences (“planners of St. Paul Reject Single Family Homes in Project Ford, ”March 9,“ Ryan’s Plan for Ford Site Moves 6 to 1 by St. Paul Council, ”April 11).
But 10 percent of the 3,800 housing units offered for the Ford site must be reserved for households at 80 percent or less of the region’s median income, with 10 percent for households at 30 percent or less of the median income in the area. the region. The city had approved a tax increase financial grant to include low-cost housing in the overall plan.
But there is another aspect of the bluff site plans that aligns with both the developer’s financial outlook as well as the city’s tax agenda. In any given year, Saint Paul’s property tax collections represent approximately 35 percent of the city’s general revenue. Much of the city’s real estate is owned by the state or by non-profit organizations (colleges, churches, etc.). These properties do not pay property taxes but still require services. The city’s other income comes from royalties, fines, sales, etc., but the share of property tax in the city’s budget is under constant pressure.
Minneapolis receives about 41 percent of the property taxes paid by residential and commercial-industrial property in the city. The rest goes to the county, school district, and special districts (e.g., metropolitan council, mosquito control district, etc.).
Because Minnesota law limits how cities can generate income, they must plan for and protect certain land uses that generate more tax revenue than costs to provide municipal services to affected properties. The difference is used to subsidize neighborhoods that require more services than they can afford.
Minneapolis and St. Paul are unusual among industrial cities in 19th-century Northeastern America for their relative abundance of desirable residential neighborhoods within city limits. These neighborhoods have attracted and retained middle and upper-middle class households who have sufficient financial means to settle in the suburbs if they so wish. This has happened regularly in most cities in the North East, which face serious fiscal headaches.
In addition, cities like St. Paul and Minneapolis that have supported and preserved prosperous neighborhoods have simultaneously retained commercial and office activities that serve those neighborhoods. When purchasing power goes away, neighboring businesses fall back or move.
In Minneapolis, there are hundreds of upscale homes in the city’s Chain of Lakes neighborhood, along Minnehaha Parkway, near Lake Nokomis and Lake Hiawatha, and along West River Road, homes that have been well maintained and reinvested over the years to make them even more attractive today than they were a century ago, with market values to match. The same is true in St. Paul, along East River Road, Summit Avenue, Crocus Hill and Linwood, Merriam Park, some of Ramsey Hill, Mac-Groveland and Highland Park.
Between 2010 and 2017, the population of Minneapolis increased by 10% and that of Saint-Paul by almost 8%. These cities must be doing something right.
I live in southwest Minneapolis, south of Lake Harriet. Near my house is a block bounded on the west by Thomas Avenue, on the north by W. Lake Harriet Parkway, on the east by Sheridan Avenue, and on the south by W. 49th St. This block contains 27 single family homes with a combined current assessed value (market) of $ 26,763,500 and total taxes due in 2019 of $ 442,463, or an average of $ 16,875 per home.
In contrast, a somewhat typical block in a low-income residential neighborhood in northern Minneapolis, bounded by Logan Avenue, 16th Avenue N., Morgan Avenue N., and 15th Avenue N. contains 15 homes. A house, owned by the Minneapolis Housing Authority, is exempt from property tax. The 14 homes for which the appraiser’s market value and tax liability data are available have a combined value of $ 1,875,600 and property taxes due in 2019 of $ 28,265, or $ 2,019 per home.
Most of my neighbors can afford to move elsewhere if they wish. But they stay where they are and continue to pay high taxes. The rest of the city benefits.
Bottom Line: A few high end homes along the river cliff at the west end of the Ford site would likely yield a positive bottom line for the town of St. Paul.
John S. Adams is Professor Emeritus of Geography, Planning and Public Affairs at the University of Minnesota.