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Property tax mitigation for low- and median- income residents

Page history last edited by David Seitz 14 years, 4 months ago
This strategy profile relates to the Central Corridor Light Rail in Minneapolis-St. Paul, MN local case and the Transportation, Equity, and Community Development issue overview.

 

Summary

With the goal of preventing the displacement of historic, diverse, close-knit neighborhoods, residents of St. Paul's Aurora-St. Anthony and Frogtown neighborhoods have proposed to the City of St. Paul a partial deferral of property taxes for residents within a certain distance of the light rail.[1] Under the proposal, eligible property owners would pay a predictable portion of annual property tax bills, 102 percent of the past year's tax bill. The rest of the bill would be covered from a neighborhood preservation fund. In the proposal, eligible homeowners would be limited to homestead properties (homes occupied by the owner as her/his home) and rental properties for which the owner(s) has agreed to voluntary rent controls. The proposal would cover homes within one half-mile north or south of University Avenue between Prior and Rice Avenues in St. Paul. The city accounts for approximately one-quarter of residential property tax bills in St. Paul.

 

Goal

To ensure that current residents of the Aurora-St. Anthony and Frogtown neighborhoods in St. Paul, Minnesota, including low- and median-income residents, are able to remain in their homes in the event of dramatically increased property taxes following the Central Corridor light rail.[2]

 

 

Cost

  • Organizers do not yet have an estimate for the cost of the proposed policy. However, over time those property owners who do sell will contribute into the fund, eventually leading to a kind of revolving door.[3]
  • Assuming that initial support for fund would come from city government, it is worth noting that recent cuts to local government aid (LGA) have constrained the ability of the city to fund new programs. However, many see the 2010 Minnesota gubernatorial election as an opportunity to talk about the importance of the LGA program and secure its restoration.[4]

 

Implementation

  • The city of St. Paul creates a fund for the partial deferral of property taxes for residents within one half-mile of University Avenue, the site of the Central Corridor light rail, between Prior and Rice Avenues.
  • Owners of homestead properties, or residents who agree to rent controls (for at least 15 year), within the geographic zone continue to pay their property taxes at a predictable rate -- 102 percent of the past year's tax bill. The difference (what the tax would normally have been minus 102 percent of the past year's tax bill) is paid by the neighborhood preservation fund.[5]
  • When a property owner sells the property, she or he pays the amount covered by the neighborhood preservation fund for the past three years. This money goes back to the neighborhood preservation fund -- helping the fund to sustain itself without as much additional city funding.
  • Under this plan, sellers whose families inherit their homes do not have to pay back taxes. Rental property owners who sell to an owner who agrees to maintain rent control are likewise exempt from paying back taxes.

 

Evaluation

  • The crucial test of the efficacy of a neighborhood preservation fund comes in whether the neighborhoods are able to maintain their racial and economic demographics and character, as light rail effects property values.
  • Data on program participation would also help to establish the effectiveness of the program over time. If property owners continue to participate in the program in large numbers, the neighborhood is more likely to retain its character.

 

Status

  • On June 4, 2009, a group of Aurora-St. Anthony residents and allies, the Preserve and Benefit Historic Rondo Committee, filed a Title VI Civil Rights Act Complaint with the Federal Transportation Administration against the Metropolitan Council of the Twin Cities. The complaint charged that the light rail as planned failed to account for how historic racial and economic disparities would  condition light rail related harms, including harms related to the gentrification and displacement of the neighborhood.[6]
  • In March and July, 2009, Central Corridor residents, business owners, and other stakeholders held community summits to develop an independent vision for light rail and related development. At these summits, stakeholders adopted a vision that includes an insistence on equitable development.[7]
  • At a community forum on November 21, 2009, Frogtown and Aurora-St. Anthony residents and  allies held a forum with St. Paul City Councilmembers Melvin Carter III (Ward One) and Russ Stark (Ward Four) to propose a property tax deferral policy and ask elected officials how they planned to ensure the negative impacts of gentrification on the neighborhood. While Carter and Stark were supportive, they noted that increased support from the State of Minnesota would likely be crucial in creating any such fund. Carter also noted that a similar program already exists to protect seniors from the loss of of their homes, and that the program is currently underutilized.[8]

 

 

Points of View

  • St. Paul City Councilmember Russ Stark: "We want to make sure that the negative impacts are lessened and the positive impacts happen. We don't want to raise property taxes in one area to pay for reduced property taxes in another area."[9]
  • St. Paul City Councilmember Melvin Carter III: "We need to make sure seniors know about the senior property tax defferal program. We need a governor who's going to support cities. We want our community to be the first in line for the opportunities that the light rail brings."[10]
  • Victori Vu, St. Paul Central High School alum and son of Frogtown residents: "The concerns of many people in the Hmong community are not being addressed by the Met Council or elected officials. Many people in the Hmong community feel like they have no voice, but they have so many neighbors - Hmong, Black, white - who share their values. Together, just by speaking out, we can be powerful, and we can be heard."[11]

  • Rena Moran, Aurora-St. Anthony resident leader: "The light rail will foster racial disparities if nothing is in place to defend the community. We're concerned with the outcome that the light rail will have on the communities that are here, which are predominantly communities of color. People in this neighborhood have families," Moran says. "Racial justice is about sustaining a neighborhood for families, for a generation of elders. If it could happen here, it could happen somewhere else."[12]

 

Contact

 

Bibliography

 

 

 

Footnotes

  1. Neighbors Standing Together to Save Our Homes and Preserve Our Community. St. Paul, MN. ▲
  2. Neighbors Standing Together to Save Our Homes and Preserve Our Community ▲
  3. Neighbors Standing Together to Save Our Homes and Preserve Our Community ▲
  4. "Mayors Launch Effort to Hold Gov Candidates Feet to the Fire on City Funding." Thank LGA. September 30, 2009. ▲
  5. Neighbors Standing Together to Save Our Homes and Preserve Our Community ▲
  6. Yuen, Laura, and Dan Olson. "Opponents File Civil Rights Complaint Against Central Corridor." Minnesota Public Radio News. June 4, 2009; Harris, M. Duchess. "Rondo and the Rail: Standing Fast Against Gentrification." Sister Scholar. June 25, 2009. ▲
  7. Seitz, David. "Going Green on Central Corridor." Twin Cities Daily Planet. July 11, 2009. ▲
  8. Regan, Sheila. "St. Paul Forum Targets Gentrification with Creative Tax Ideas." Twin Cities Daily Planet. November 24, 2009; Seitz, David. "St. Paul Forum to Focus on Gentrification." Twin Cities Daily Planet. November 18, 2009; Minnesota Department of Revenue. Senior Citizen Property Tax Deferral. ▲
  9. Regan, Sheila. "St. Paul Forum Targets Gentrification with Creative Tax Ideas." Twin Cities Daily Planet. November 24, 2009. ▲
  10. Regan, Sheila. "St. Paul Forum Targets Gentrification with Creative Tax Ideas." Twin Cities Daily Planet. November 24, 2009. ▲
  11. Seitz, David. "St. Paul Forum to Focus on Gentrification." Twin Cities Daily Planet. November 18, 2009. ▲
  12. Seitz, David. "St. Paul Forum to Focus on Gentrification." Twin Cities Daily Planet. November 18, 2009. ▲

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