Soon, property taxes rather than annual fees will fund the majority of St. Paul’s routine street maintenance program. St. Paul Mayor Chris Coleman plans to lead three public forums before his budget address next month to explain how property owners will be affected, which is no easy feat. Results, as they say, will vary.

St. Paul is fundamentally altering the way it pays for $31 million in street services.

Unlike most cities, St. Paul previously used special annual bills assessed to all property owners — even churches and nonprofits — separate from and in addition to normal property taxes.

This year city officials are ripping up the old way of assessing property owners for “right of way” street and sidewalk maintenance and shifting two-thirds of the cost burden onto St. Paul’s general fund. Related Articles Minneapolis and St. Paul to add 70 electric car charging stations with $6.7M grant

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The city will continue to collect roughly $31 million annually to fund about two dozen types of right-of-way services — such as tree trimming, snow plowing, salting, sanding, pothole patching, traffic signage and signals — but it will mostly come from property taxes rather than annual fees.

Four key services will remain fee-based. Street lighting and street sweeping will incur annual charges. Seal coating and mill and overlay work will be charged as needed.

THE BOTTOM LINE

Most homeowners will see property taxes go up a year from now — in some cases considerably — while fees go down.

Owners of high-end homes and businesses likely will see a significant net increase in costs, as much as 15 percent for a home with an estimated market value of $800,000.

For owners of lesser-valued properties, the end result could be a wash, or even a substantial net savings. At the lowest market value, the city expects owners of homes with a market value of $55,000 to save a net 30 percent.

Under the old system, the typical St. Paul homeowner with 40 feet of linear street frontage paid about $200 per year.

“On a median value home, fees will go from $200 down to $80,” said City Finance Director Todd Hurley.

A year from now, the same home will see a 2.7 percent increase in taxes to cover ROW services.

“We’re saying that home breaks even,” Hurley said.

Generally speaking, the impact in Highland Park will be far different than in the North End, but not just yet.

The current fiscal year is a transition year. While fees will drop this year, the property tax levy cannot be increased beyond what was approved by the city council in December.

“In 2017, everyone is getting a break,” Hurley said. “In 2018 is when the shift is going to happen.”

City officials emphasize that they plan no service reductions.

“The city will be collecting the same amount of money, just doing so in a different way,” said Ben Petok, a spokesman for the mayor’s office. “This point is critical. Same amount of money collected. Same level of service.”

PUBLIC OUTREACH PLANNED

Coleman will deliver his annual budget address in early-to-mid August, and the mayor has acknowledged that explaining the particulars of the new street maintenance service program won’t be easy.

To prepare residents and business owners, Coleman and Hurley will host three community meetings ahead of the budget address. Residents are asked to bring questions.

The discussions will be:

6 to 7:15 p.m. July 10 at the Highland Community Center Auditorium, 1978 Ford Parkway

6 to 7:15 p.m. July 17 at the Dayton’s Bluff Recreation Center Theater, 800 Conway St.

6 to 7:15 p.m. July 24 at the Oxford Community Center Multipurpose Room, 270 N. Lexington Parkway.

More information is on the city’s Street Maintenance Service website.

CHANGES STILL POSSIBLE

Changes are possible when the budget is voted on by the St. Paul City Council in December.

Over the past several months, council members have asked city staff to analyze a series of possible approaches toward reorganizing the street maintenance service program.

“At this point I support the mayor’s approach of keeping a street maintenance program that ensures some contribution from tax exempt properties and doesn’t create quite as big a shift toward higher value properties,” said St. Paul City Council President Russ Stark.

City Council Member Rebecca Noecker said the approach the council adopts this budget season may not be permanent. It’s possible more or even all street maintenance services will be shifted to the general fund in the future.

“The property tax system is the most equitable system we have,” Noecker said.

The council’s budget analyst will study the pros and cons of moving the entire system to the general fund and report back to council on Sept. 6.

Depending on how that discussion goes, the council could choose to ditch the mayor’s plan entirely, but Noecker said it’s too soon to tell.

“I think it’s really healthy in our city for the two independent branches of government to do our jobs … and not necessarily just adopt whatever is being proposed by the administration,” Noecker said.

TASK FORCE STUDIES OPTIONS

In May, at the city’s request, the Citizens League formed a task force to study a potential “payment in lieu of taxes” program.

Boston and some other taxing jurisdictions use a similar honor system to get their largest non-taxable properties, such as colleges, government buildings and hospitals, to contribute toward the tax base.

Sean Kershaw, executive director of the Citizens League, said the task force is likely to come out with a series of recommendations around Aug. 1.

He’s inviting interested property owners to share thoughts during a community speak-out at 8 a.m. July 12 at the Amherst H. Wilder Foundation, 451 Lexington Parkway. The task force will meet at 7:30 a.m. July 13 at the same location. The meetings are open to the public.

The proposed changes follow legal pressure from two downtown churches, Minnesota Public Radio and other nonprofit property owners who objected to paying thousands of dollars per year in assessments that vary heavily by neighborhood and property type.

In August 2016, the Minnesota Supreme Court found that the approximately $30 million in street-maintenance charges that St. Paul applies to more than 81,000 homes, churches, nonprofits, universities and businesses each year are a tax — not a fee for service — and would probably have to be reconfigured. The decision stopped short of explaining how.