The right-of-way fees St. Paul applies to more than 81,000 homes, churches, nonprofits, universities and businesses each year for street maintenance are a tax — not a fee — and may have to be reconfigured, the Minnesota Supreme Court ruled Wednesday.

In the ruling, Justice David Lillehaug wrote for the court that the right-of-way charges are taxes aimed at benefiting the public as a whole, and not fees issued in exchange for special benefits awarded to individual property owners.

As a result, Lillehaug said, the charges are subject to a city’s constitutional limits on taxing authority. The opinion did not elaborate on those limits.

The case will be sent back to Ramsey County District Court, which could issue an opinion on the city’s right-of-way system even before 2016 assessments are published in early October.

Opponents of the existing system are calling the decision, however inconclusive, a victory.

“We had a major win, because the city put all of its chips on the fee theory, and that has been disallowed,” said attorney Jack Hoeschler, who represented two downtown St. Paul churches in a suit against the city.

St. Paul City Attorney Samuel Clark, in a statement on the ruling, noted that it doesn’t inhibit the city from collecting assessments.

“With today’s Minnesota Supreme Court decision, the city has maintained its ability to collect assessments through its right-of-way program,” Clark said. “In other words, it’s not a question of if the city can collect assessments but how it goes about doing so.”

Clark noted that the matter was referred back to the lower court.

“While litigation over these issues continues, the city will evaluate its right-of-way program with a focus on continuing to provide exceptional right-of-way services,” he said.

In 2011, the First Baptist Church of St. Paul and the Church of St. Mary took the city to court for assessing them $15,700 and $8,700 in right-of-way charges, respectively.

The charges are intended to cover street sweeping, snow plowing, car towing during snow emergencies, sanding, tree trimming, street-light maintenance, litter pick-up and alley sealing, among other routine street services.

The churches argued that the right-of-way charge was not being applied uniformly because churches outside of downtown St. Paul are treated like residences and assessed far less per linear foot of street frontage.

In response, city officials argued that downtown churches receive more services than neighborhood churches do, including street sweeping twice a week instead of twice a year.

As such, the city called the charges a fee for service.

St. Paul has maintained that because the capital city is home to so many government offices, schools and nonprofits, roughly a third of the city is off the tax rolls. Unable to levy property taxes, the city uses fees to recoup funds for necessary services such as snow plowing and street sweeping.

The case landed before the Minnesota Supreme Court on appeal.

The League of Minnesota Cities filed a legal brief in support of St. Paul before the court.

Tom Grundhofer, an attorney for the league, said that while the immediate impact is unclear, “the Supreme Court’s decision is going to force the city to rethink their practice going forward.”

The impact beyond St. Paul may be more limited.

“Not a lot of other cities have a system similar to St. Paul,” he said. “My impression is it probably won’t have any real widespread impact on most cities’ financing arrangements.”

Still, many cities hoping to find new ways to pay for street maintenance beyond one-time special assessments have been following St. Paul’s legal case closely.

“The issue of how to finance routine street maintenance remains a big issue,” Grundhofer said, “because of the challenges of proving ‘special benefits’ to all properties.”

An excerpt from Wednesday’s Supreme Court ruling read:

“Viewed as a whole, the R.O.W. assessment does not qualify as a ‘special charge’ … but operates as a tax. It funds the bulk of the city’s public right-of-way maintenance program. The substantive features of the city’s unique program — annually recurring assessments, imposed nearly citywide, benefiting largely the general public traveling the rights-of-way, with diverse services largely provided on an ‘as needed’ basis — demonstrate that this program is a ‘revenue measure, benefiting the public in general,’ that draws its authorization from the power to tax. Accordingly, the City’s R.O.W. assessment is a tax subject to constitutional restrictions on the taxing power.”