2017-09-20

Sixteen Ways of Fixing Saint Paul's Tax Base (That Aren't Raising Taxes)


[As a "religion", Scientologists pay no taxes on their downtown buildings!]
You all know the problem… Saint Paul has a $32M budget hole that make even its potholes look small! The way the story is told: there is a big percentage of non-taxable land – like parks! – and, more importantly, non-taxed organizations in the city. These include the non-profits, schools, churches, and state governments that do not contribute to the property tax rolls. It places an extra burden on the tax-paying properties.

That’s why, about 15 years ago, the city developed a system where these institutions would pay for road maintenance. But the city screwed it up, got sued and lost, and now has to do without $32m in revenue. Thus the “taxes going up by 25%” headlines that you might have seen…

Meanwhile, important things are being left by the wayside, like street paving, streetscape improvements, street safety, basic maintenance, and rec centers, etc.

I am nothing like an expert in city budgeting and revenue policy. I’m barely knowledgeable, but I recently read an entire book about how cities can rethink how they raise money. (I didn’t learn much from it, and instead spent $10 to “purchase” the book as a .pdf.) But I might have some good ideas anyway, having been around a while and listening to people talk about taxes and economic development and being sorta intelligint.

That said, take these with grains of salt. I don't even endorse these, necessarily. It's just what I could brainstorm. The point is that if Saint Paul wants to fix its revenue problems without raising taxes, these are some ways to do that.

[Flashback: East Side, 1975.]
1.    Property Tax Assessment Reform

[Dig around in here and see for yourself.]
fiscal impact: large
time horizon: short


I was recently digging around a bit in the Ramsey County tax database, looking at property tax bills. I was struck repeatedly by how disparate assessments can be for houses that are in every other way similar. (I have also heard this from others, who shall remain nameless.)

In other words, if you have two relatively identical houses, one might pay many times the property taxes of the other depending on when it had most recently been sold. Partly this is because assessors are very conservative, and don’t look at home interiors or even speculate on potential values until they are sold.

It would be possible to assess properties at least partly based on their potential value (see also: a land tax) instead of their last-having-been-sold value. The downside is that the proverbial little old lady would have to pay more in taxes. The upside would be a far more accurate and fair valuation of property, especially between generations and between newer and older housing stock. This would thus de-incentivize things like vacant lots and/or surface parking lots.

2.    Reduction of Parking Minimums

fiscal impact: medium
time horizon: medium

I wrote a whole post on this kind of thing a while ago at streets.mn, the effect of parking and especially parking requirements on the tax base. There is no less valuable land than the land used for car storage. Requiring businesses, homes, schools, etc. to build un-valuable parking lots is a bad move, fiscally speaking. This goes double when many of these lots could be developed into actual space for people, rather than empty cars or (worse) just sitting there without even empty cars!

3.   Boosting and Expanding Downtown Density

[Potentially valuable land next to downtown on the West Side flats.]
fiscal impact: large
time horizon: medium

Downtowns are the cash cows for any city, as a whole bunch of value-per-acre analysis from smart people shows. I’m sure that policy people are trying to do this – see the recent marketing of the former West Publishing site, for example – but growing Downtown Saint Paul needs to be a top priority for the city’s bottom line. Downtown could and should be a lot more valuable, and could and should generate many more tax dollars for the city. Growing downtown should be a huge priority, and this means up and out.

One interesting angle is “growing out.” Stay tuned for a future article on this topic, but downtown needs to be geographically larger. That means that we need downtown-like development on the West Side Flats, the former Lafayette Park area and Railroad Island, by the Rice Street Sears, and along West 7th. All of these parts of the city should be huge boons to the city’s bottom line, part of a “downtown Saint Paul” full of people, jobs, and diverse activity.

4.    Teardowns (yikes tho! …)


[New home in Mac-Groveland.]
fiscal impact: medium 
time horizon: short

Teardowns are are hugely unpopular, but from a tax-base perspective, they are a big boost for the city for reasons that are similar to Point #1 above. I mean, if you want a larger tax-base, building fancy homes in fancy neighborhoods is a way to do it! The alternative -- not building larger more expensive homes in fancy neighborhoods -- is a recipe for tax base stagnation.

I’m not saying Saint Paul should encourage teardowns, but I am saying that people concerned about revenue growth and fiscal sustainability should think carefully about things like moratoriums or strict regulations on teardowns. These kinds of policies absolutely impact the city’s bottom line.

5.    Public Works fee structure

fiscal impact: small
time horizon: short

Correct me if I’m wrong, but the legal opinion about now-defunct street maintenance fee was that it lacked specific ties between the fee structure and city services. There was a debate about whether to shift all or part of the fee-based system over to the regular property tax, only paid by non-non-profit properties.

Well, I’d be curious to see just how much of the Public Works budget could be set up as a strictly fee-for-service model, which would presumably be legal and would allow the city to have non-profits pay for street maintenance. I am quite skeptical that the pilot PILOT program will amount to much, and there might be a kind of transparency in having a simple street fee model in place that would allow the city to charge governments, schools, Scientologists, etc. for snowplowing, curbs, street sweeping, or basically anything that it does in a transparent manner.  PS. I am not a lawyer.

6.    Charging for parking at Como Park (and maybe other places)

[Fixing this sign at Como Park comes out of the general fund.]
fiscal impact: small
time horizon: short

I was at Como Park the other weekend, and what a mess! What percentage of people are driving around looking for free parking while simultaneously blocking the road for others? How much money is the city leaving on the table by refusing to charge a basic small fee for parking at a basically-free regional museum, where many thousands of non-Saint Paul residents visit all the time? How much money is the city spending doing things like building new parking lots and subsidizing a little-used shuttle when it could have a larger impact by simply creating incentives?

Minneapolis charges for parking at its parks (especially Wirth and Minnehaha, its two massive regional parks) and it works fine.

Charging a basic fee for parking is a fair and also environmentally and fiscally sustainable practice. This is true downtown, and also when setting up a fee structure for a popular parks, especially the regional ones.  The way it would work seems fair to me: the parks are free, but you have to pay if you want to drive yourself there and store your car on valuable land… that’s eminently reasonable, and what a city that actually cared about climate change would do.

7.    General Infill and Density

[New buildings, finally, along East 7th Street.]
fiscal impact: medium
time horizon: medium


Swapping out a vacant lot, surface parking, or a half-empty strip mall for mixed-use density is a huge improvement for the tax base. The city should be supportive of these kinds of infill developments as much as possible, if it wants to build a strong tax base. TN-type rezoning, as with the recent changes to Snelling Avenue, are a great kind of policy. I’d love to see Saint Paul get more aggressive about working with neighborhoods to get more of the city re-zoned with its TN zoning. Huge parts of town -- like the West Side or Payne Avenue, just to name two – are still zoned using the antiquated and fiscally unsound R- and B- districts.

8.    Promoting walking to help small businesses

[Payne Avenue: great sidewalks.]
fiscal impact: medium
time horizon: long

The more that people walk, the easier it is to do the kinds of things listed above, especially the points listed above: growing downtown, charging for parking, reducing minimums, and promoting denser infill. Also, the nicer the sidewalks, the more valuable the businesses are, generally speaking.

There are probably other tax-base benefits to great sidewalks, like fewer crashes, better public safety, etc. This is one that has a lot of secondary effects, but is hard to make a direct case.

9.    Riverfront Development

fiscal impact: large
time horizon: long

I wrote about this before, but Saint Paul is not taking advantage of its riverfront. Think about great the Upper Landing homes are, or the new City House café. If we had more riverfront development on the West Side or elsewhere along the Mississippi corridor, it would certainly be an easy way to help the tax base. Saint Paul is way behind on this. I am thinking about things like building the "riverfront balcony," reducing Shepard/Warner road to a boulevard-type footprint through downtown, etc.

10.    Getting rid of / developing part of Ayd Mill Road 

[Fixing this street will cost a fortune AND devalue St. Paul land.]
fiscal impact: medium
time horizon: long


I wrote about this before, but Ayd Mill Road is a big drain on city resources already, and spending any city dollars to rebuild it would be a mammoth mistake. It would be possible to turn this from a space that devalues the surrounding neighborhoods into one that could be partially developed

11.    Organizing Garbage (and maybe other things)


fiscal impact: medium
time horizon: long

I’m glad the city is doing this, and saving money by reducing road maintenance is the big reason why.

(Q: Are there other opportunities like this sitting out there?)

12.    TIF Reform
[Pretty sure the Schmidt is still in a TIF district.]

fiscal impact: medium

time horizon: medium

I think cities should absolutely use TIFs, but with a thriving tax base, a city like Saint Paul might not have to rely so heavily on this funding model. It’d be awfully nice to phase out a TIF ahead of schedule sometime. Instead, they tend to stay around a long time after their initial purpose has been achieved.

13.    Downtown parking lot sales

fiscal impact: medium

time horizon: short

The city of Saint Paul owns a bunch of downtown parking lots. If subsidizing parking was a great economic development strategy, downtown Saint Paul would be thriving today. Instead, it’s way behind its peers.

Why not get these lots into the hands of the private sector? Subsidizing parking is not the way to create a thriving downtown. Let the market handle that.

14.    Expand parking meters / direct fund for “property tax relief”

[Pasadena parking revenue is tied to local business improvements.]
fiscal impact: mediumtime horizon: short

Just sayin’.

What if we created a neighborhood parking fund and said all the revenue would go directly toward property tax relief? Or, perhaps a mix of property tax relief and some sort of NRP-type fund that could be spent in whatever way a neighborhood group / district council might like?

In a place like Grand Avenue,  essentially you’d have people from all over the metro area coming, paying a small fee to more conveniently park, and then helping local folk pay less in taxes and/or have nice things. If done well, this could be a great fund for neighborhoods that also promote sustainable transportation.

15.    Sell / develop golf courses

fiscal impact: medium
time horizon: short

I wrote about this before, but golf is not as popular as it used to be and uses a tremendous amount of valuable land. I have written about this before, but it seems like the writing is on the wall for Saint Paul’s lesser-used golf courses. Someday, they will be losing so much money each year, someone will have to do something.

Why not rip the band-aid right off? Golf courses occupy valuable land that could be a mix of parks and tax-base-boosting mixed-use.


16. Great bike lanes downtown

fiscal impact: medium
time horizon: medium

It turns out, attractive employers love this kind of thing. Saint Paul started but hasn't finished the job.


In Conclusion, this is why the Ford Site is Great

I am not saying any or all of these things are good or that Saint Paul leaders should do them. Just that these are the kinds of things that a city like Saint Paul can do if it wants to solve some of its recurring problems. Along with straight-up raising taxes, these are the choices it has.

And a lot is at stake, because the list of great projects that the city could fund it it had more money is a long one. Each year or so, the CIB committee ranks everything and has all the great ideas in the city (and some bad ones) compete for a small amount of funding. Lots of great stuff does not make the cut.

That's why the Ford Site is such a basic litmus test of one's understanding of urban fiscal policy. People that are against higher property taxes but also against the Ford Site plans confuse me. People that claim to be concerned about the tax base but are against the Ford Site plans also confuse me. It’s not often that you get the chance to solve so many problems in one fell swoop, at so little perceived cost. The Ford site checks a lot of these boxes and is a great opportunity to fill another big hole in the city’s tax base

The Ford Site is a one example of a big project that will, in one fell swoop, boost the city’s tax base without stepping on anybody's toes. The Snelling/University site (if we can move past the horrid “surface parking lot” phase), the Hillcrest golf course, and the long-vacant West Side Flats are three other large opportunities for tax-base-boosting development.

Supporting dense mixed-use development - hopefully with jobs! - at these sites is critical to Saint Paul’s fiscal sustainability and its ability to act in accordance with other shared principles. These are some of the alternatives, and not many of them are easy to accomplish, because they often come at the expense of easy driving or perceptions about “neighborhood character.”

And yet, some of them are very worthwhile policy changes that would move Saint Paul toward a fiscally sustainable future.

[Penfield generates about $1M a year in property taxes.]

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