Minnesota homeowners get an early peek at property tax bills

It's the season when estimated property tax bills for 2020 show up in the mail, and the numbers could be eye-opening for some Minnesota homeowners.

In St. Paul, the preliminary bills are calculated using the 22% maximum tax levy hike that the City Council approved in September as a way to pay for organized trash collection if voters threw out the current quarterly billing system. Since St. Paul overwhelmingly voted to stick with the system, the actual levy increase will probably be under 6% when the council approves it in December, said Council President Amy Brendmoen.

"I can all but guarantee that everybody's preliminary property tax statement is higher than what they will see when their actual property tax statement comes next year," she said.

In Minneapolis, the nearly 7% levy hike is unlikely to change much when City Council members approve the budget next month. And in suburban communities, rapid growth means big levy increases won't necessarily show up on residents' tax statements.

The levy is the amount of money that governments collect in property taxes, not the amount that individual property owners pay. That can vary widely depending on the property's assessed value.

In Minneapolis and St. Paul, city tax increases are expected to hit hardest in low-income neighborhoods, where property values are rising the most. City Council members in Minneapolis and St. Paul say they want to keep the levy increase low, but they also feel pressure to spend more.

"You're living in your home and you're making your modest improvements and you're going about your life, and your property values go up and up and up," said St. Paul Council Member Jane Prince, who represents East Side neighborhoods where tax increases are expected to be among the highest in the city. "It's not sustainable for people."

Erik Solis bought a house in St. Paul's North End neighborhood four years ago, and his property value has approximately doubled since then — along with his tax bill. Solis said he recently put his house on the market and plans to move to the suburbs.

"I'm actually trying to leave St. Paul and go somewhere where I can feel like I'm getting a better value for what I'm paying for my property taxes," he said.

The 2020 budget that Mayor Melvin Carter proposed in August included a levy increase under 5%; in the months since, the city has had 30 homicides, prompting the mayor to propose a supplemental public safety budget that could require more tax dollars. Council members haven't gotten details yet but have generally expressed support.

"My constituents have been crying out for action from every part of the ward, and I feel deeply concerned on one hand and responsible on the other to take action and not let another budget cycle go by before we do that," said Council Member Rebecca Noecker.

In Minneapolis, Mayor Jacob Frey earlier this year proposed a 6.95% increase in the property tax levy — money that would help support affordable housing programs, investments in cultural districts and a controversial plan to hire 14 additional police officers. Frey's spokesman, Mychal Vlatkovich, said Friday that the mayor continues to back that plan and has not made any substantial changes to it.

Earlier this fall, the city's Board of Estimate and Taxation approved a tax levy increase of up to 6.95%. City officials could ultimately decide to impose an increase of that amount or a smaller one.

The City Council has a public hearing on the budget, including the tax levy, scheduled for Dec. 4, with final approval expected later in the month.

Minneapolis real estate agent Nate Pentz received his tax estimates this week. At one of his properties, he expects to see a roughly 15% increase in property taxes. At the other, he expects to see a roughly 3% decrease.

"It is what it is," said Pentz, who lives in the Webber-Camden neighborhood in north Minneapolis.

Pentz said he doesn't sweat the tax increase because he can afford it — he estimates that he'll spend about an extra $20 a month — and because he supports some city proposals, such as efforts to bolster protected bike lanes.

He said he hears more about property taxes in St. Paul.

"That said, even in St. Paul, I have never had someone not want to look to buy a home because of the property taxes in St. Paul being higher than a comparable property in Minneapolis," said Pentz, who has worked as a licensed real estate agent for four years.

Data from the Minnesota Department of Revenue show suburbs have also proposed significant increases to their city levies.

The state data show jumps of 18.4% in Lake Elmo, 18% in Crystal and 17.8% in Hugo.

Kristina Handt, Lake Elmo city administrator, said the increase is driven by factors like new debt for road projects, a new fire engine, a new building inspector, adding a sheriff's deputy and other expenses. But since the city has been experiencing rapid growth, Handt said, homes will only see a 2% jump in their tax rates.

"We have a long-range plan to try and keep it at a 2% increase on the tax rate," Handt said, adding that it may be higher with the construction of a new City Hall and fire station in several years.

Hugo City Administrator Bryan Bear said the City Council proposed a higher levy in part to fund improvements at local parks — like pavilion buildings and space for community events.

But the council wants to hear from residents.

Bear said the city's goal is to grow the levy in line with new construction and rising property values, ideally keeping the tax rate flat on individual homes.

Crystal Mayor Jim Adams said their levy increase is driven in part by road reconstruction projects and a new police building. But he expects the number to fall before the budget is finalized.

"What we have is an appetite to not have that high of an increase," Adams said. "We expect it to come back quite a bit."