Tom Holtzleiter says:
So my question still stands, If everyone's property increased in value (a
lot
over the last 5 years) and therefore so did their taxes, how is it that
Minneapolis collected less in 2002, and why did they need to borrow to pay
for
their pension plan? That money is going somewhere....
Nick Replies:
My understanding is that the property tax reform in 2001 had three impacts:
1. Commercial property taxes were lowered significantly - this would
have the impact of lowering overall tax receipts
coming in to the city
2. The City of Minneapolis got a smaller share of the property taxes
collected. When you pay your property taxes to
the county part of it goes to the city, a portion goes to the
county and the remaining amount goes to the state.
The portion that was going to the city was reduced under the reform
3. Some limitations on residential property were eliminated.
Therefore, property taxes were assessed at higher
values than previously allowed.
We are definitely in a financial mess. However, had these rules not been
changed, the problems would not be so large.
Dyna Sluyter Says:
We can only grow our way out of this problem. Taking a page from
Ford's playbook, we need to quit harassing citizens out of the city and
start giving them a good deal. How about a discount on building permit
fees until property tax revenues rise again? How about giving citizens
help instead of harrassment? We need to make Minneapolis competitive in
the housing and commercial space markets or the death spiral will
continue.
Nick Replies:
I agree we need to grow out of this problem. There really is no other way
to financially cover future debts without growth in property taxes. The
formula for property taxes is essentially
Amount of revenue needed = Value of Taxable Property x Property tax Rate
(The rate is a plug figure to get to the budgeted revenue)
There appear to be two ways that the city can actually increase property tax
revenues:
1. Increase the property tax rate on the existing real estate owners
- This seems to be a losing strategy since our property taxes are already
higher than neighboring communities.
2. Have an increase in the taxable value of the property. This may
be due to actual market increases but the city can do almost nothing to
influence this directly on existing properties. However the city can
promote the redevelopment of underutilized properties.
In my mind, the easiest way promote growth is to upzone most of the city to
allow denser development to occur. Basically, most single-family areas
would have to be upzoned to allow 2 or 3 units and so on. We only have a
limited amount of geographical space so growth must occur in density. I
think this is reasonable solution since it costs nothing in actual dollars
and no one is forced to change their own property but it gives property
owners more freedom to determine what they want to do with their
land/buildings. We should also reduce the minimum Buildable lot sizes and
setbacks to allow growth to occur where it has previously been prohibited.
(The carriage home concept in Ventura Village is a good example of this)
I also think we should expand commercial uses in the city. Commercial
property still pays a higher tax rate than residential. Additionally, more
density will lead to more opportunities for commercial activity since the
market is essentially expanded by the density.
Perhaps parking requirements could be reduced at some point when density is
sufficient to allow for fewer car owners.
I am not advocating that we do away with zoning but that we allow more
growth where clearly there is demand for it (as illustrated by the
incredible increases in property values in the past few years)
Essentially I think we need to start looking more like the bigger cities
such as Chicago, Boston, and New York since we have such a small
geographical area.
Nick Frank
North Loop
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