Minneapolis removes tax demand that was blocking rebuilding of riot-torn areas

Minneapolis officials will no longer require property owners to prepay the second half of their property taxes in order to start removing rubble from sites damaged in the May riots.

Mayor Jacob Frey announced the change Thursday after the Star Tribune reported on the controversy.

Minneapolis property owners have complained that the policy was slowing the recovery and turning piles of debris into safety hazards. The situation is different in St. Paul, which has been issuing demolition permits without requiring the prepayment of the second half of 2020 property taxes, which are due in October.

Frey said the city will begin issuing permits and waiving demolition fees for any properties damaged in the riots "irrespective of whether taxes have been paid." The new policy went into effect Thursday.

"I recently learned about the predicament and took quick action to fix it," Frey said in an interview. "For the sake of our businesses, we need to be removing every last possible barrier to recovery and reopening."

Minneapolis property owners applauded the move, but they also complained about a continued lack of support from city and county officials. They hope that officials will expedite approvals going forward and help them by lowering the assessments on their heavily damaged properties.

"It is refreshing to see them doing the right thing," said Steve Krause, owner of Minnehaha Lake Wine & Spirits, which was destroyed in the rioting. "But the taxes are outrageous. They are based on improved real estate, and obviously the real estate is no longer improved. It is devastated."

Krause had to pay $17,116 in taxes on his property to get a demolition permit because his building is still valued at $363,400, according to county property records.

"This will remove one small roadblock, but I am not sure how much it will actually speed up the entire rebuilding process," said Don Blyly, owner of Uncle Hugo's and Uncle Edgar's bookstores in Minneapolis, which were destroyed in the riots. "You are still going to have the problem of a whole lot of demolition permits being handled by people who are working at home because of COVID-19."

Blyly, who hired a contractor to remove the rubble from his lot a month ago, still doesn't have his demolition permit, even though he paid his taxes last week.

Minneapolis City Council Member Andrew Johnson said he will introduce legislation at Friday's council meeting that would require city officials to expedite the approval process for riot-damaged properties and waive all administrative fees.

"We should be processing their applications first, in front of everyone else's, and they shouldn't be subject to any unnecessary steps that are slowing stuff down," Johnson said. "We need to bend over backward and do everything possible to help them with rebuilding."

In a statement, Frey said he consulted with Johnson before deciding to waive the collection of property taxes as part of the debris removal process. Johnson has been lobbying city and county officials on the issue since June.

Though Hennepin County officials said they told city officials to leave them out of the permitting process weeks ago, the county was still pressuring property owners to pay their property taxes as recently as last month.

In a July 28 e-mail to property owner Marc Snover, the county's property tax department warned him that "the full year's taxes need to be paid in order for us to sign off on a wrecking permit." Snover subsequently paid more than $42,000 in taxes so he could clear his lot of debris left from the destruction of a Family Dollar store and an O'Reilly Auto Parts shop.

"They were sending me demand letters saying I had to get the debris off my lot," Snover said. "I didn't want to get in trouble. But my building is worth zero right now, so it feels like they are kind of taking advantage of the situation."

Snover said the county should refund his property tax payment.

Carolyn Marinan, a spokeswoman for Hennepin County, said property owners who paid the taxes to get a permit can apply for a refund. "We would make a decision on a case-by-case basis," she said.

"Finger-pointing is not helpful," Marinan said in an e-mail. "Everyone wants to make this right."

Though Minneapolis officials will no longer force property owners to pay their taxes for a demolition permit, a spokeswoman for the city said that individuals who clear their lots without first paying their taxes will be "guilty of a gross misdemeanor."

However, city and county officials told the Star Tribune that they would not enforce that law and will not be citing any property owners or contractors who go ahead with demolition work without first paying the taxes.

"Due to the unrest and the mass destruction, properties that have been determined to be an unsafe and health risk are being encouraged to remove the debris," Minneapolis spokeswoman Sarah McKenzie said in a written response to questions. "We are going to be handling this appropriately in the best interest for the citizens of Minneapolis effective today."

City officials said they will continue to seek additional property tax relief from the Legislature, which has not moved forward with any bills related to rebuilding efforts in the Twin Cities. Democrats have proposed legislation that would require the reassessment of all riot-damaged property and provide abatements worth up to 100% of a property's 2020 tax bill. The size of the abatement would depend on the amount of damage.

Jeffrey Meitrodt • 612-673-4132