St. Paul pays $640K to settle with property owners on street maintenance assessments

St. Paul is paying $640,000 to settle with property owners who successfully challenged the city's street maintenance program in court.

The St. Paul City Council on Wednesday approved seven settlement agreements authorizing the refunds, which cover assessments for work done between 2018 and 2020. A Ramsey County district court ruling in May ordered the city to stop assessing individual property owners for routine upkeep — such as lighting, sweeping and sealcoating — of the streets abutting their land.

Many of those receiving payments are churches, which argued that the city was using assessments to strategically collect revenue from tax-exempt properties. About 20% of St. Paul properties — including universities, nonprofit organizations and government buildings — are exempt from paying property taxes, according to the city.

Others getting refunds are homeowners living on busy arterial streets, who argued it was unfair for St. Paul to make them pay thousands of dollars for mill and overlay work on streets worn down by citywide traffic.

Kamal Baker, Mayor Melvin Carter's press secretary, said in an email Wednesday that some of the city's payments will also cover attorney's fees. The city does not have plans to issue other refunds for work that was performed and paid for prior to the court ruling, he added.

"I'm pleased that the city decided to settle this," said attorney Ferdinand Peters, who estimated his firm represented property owners who appealed assessments on about 400 parcels of land.

In an interview, Peters said he hopes the city is pivoting its focus to find other funding solutions for street upkeep, adding that he's lived in St. Paul for more than three decades and "never seen the streets this bad."

Many St. Paulites emphatically agree. Even city officials acknowledge that this year's potholes are frustratingly bad — which is why they say they're asking the Legislature, and hopefully voters, to approve a 1% local sales tax that would collect $738 million for street maintenance over 20 years.

The court ruling left St. Paul with a $15 million budget hole, which the city patched last year by tapping into other funding sources and forgoing about $4 million of planned sealcoating work. About half of the city's nearly 15% property tax levy increase in 2023, totaling $13.3 million, is being used to cover the costs of services that assessments used to cover.

The city also launched a new mill-and-overlay program for residential streets in 2023, which is expected to cost $4 million annually.

The city did not collect charges for services like sweeping, lighting and sealcoating completed in 2021, though it can still charge assessments for street work that provides a special benefit to adjacent properties.