St. Paul aims to ease property tax sticker shock

Raise your city's tax levy by 23.9 percent and there are bound to be consequences.

For St. Paul Mayor Chris Coleman, the proposal means a likelihood of having to face homeowners bristling over eye-popping numbers on property-tax statements arriving in November — but an opportunity, too, to explain that things are not as bad as they seem.

To that end, Coleman's administration is getting ahead of the potential uproar by creating a tool on the city's website by which taxpayers can get a clearer picture of how much they could be paying for city services next year.

First, a review:

Coleman was forced to rethink how people pay for street maintenance after the Minnesota Supreme Court ruled that the assessment program that the city had used to cover some of the costs — a program separate from the property tax — was, in fact, a tax, and not a fee, as the city argued.

The mayor's solution was to shift about $20 million of the costs to property taxes — in turn sending his proposed levy number soaring. So, too, will the property-tax estimates that appear on many truth-in-taxation notices that people will see in their mailboxes in November. A good chunk of the street costs that they had paid for separately through the assessment program now will be included in property tax bills for the first time.

The potential for confusion arose last week during a meeting of a joint panel of city, school district and Ramsey County officials. Typically, people must wait until truth-in-taxation statements are mailed in November to know what the combined tax-levy impacts might be for the next year. Last week's presentation was made possible by the unique nature of St. Paul's joint committee, which was created by state law in the early 1990s.

The panel learned that the owner of St. Paul's median-valued home would see his or her property tax bill rise by $270, or 12.1 percent, if the three jurisdictions approve their respective tax-levy proposals later this year. Of that $270 increase, the city's share is $162, according to the estimate.

But if one took into account what the homeowner paid this year for street maintenance through the separate assessment program, and threw in some new spending proposed by Coleman, the increased cost for city services actually would be $45, according to Todd Hurley, the city's finance director.

To help property owners get a better handle on the before-and-after costs, his office has created a "property tax estimator" that allows property owners to plug in their market values over the past two years, plus the amount of front footage and alley footage they have. Go to www.stpaul.gov/taxestimator.

The estimator has a disclaimer stating that the "calculations are strictly estimates and should not be considered binding or relied upon for planning purposes." The Star Tribune entered the market values for the city's median-valued home for 2017 and 2018 taxes, assuming a 7.7 percent increase in value, and 40 feet for both the front and alley footage, the city's typical residential lot size. According to the estimator, that homeowner would pay $31 more than he or she paid in city taxes and fees this year. (The increase would be $118 if the house were on a corner lot.)

Other factors also come into play when determining what individual property owners pay in taxes, and some areas of St. Paul will be hit harder than others. Property values are rebounding on the North End and in Frogtown, for example, and the projected increases for the median-valued homes in those neighborhoods are 28.8 percent and 18.9 percent, respectively.

Tax hearings could be lively this year.

County Commissioner Janice Rettman, who represents the North End and Frogtown, attended last week's meeting and listened as Chris Samuel, the county's property records and revenue manager, spoke of having to make last-minute changes to two pages in his presentation.

"Are they better or are they worse?" she asked.

"They're worse," he replied.

Staff writer Jessie Van Berkel contributed to this report.

Anthony Lonetree • 612-673-4109