Minneapolis Property Taxes are High. Why?

Among urbanists, it’s basically an accepted Truth that more compact development patterns reduce public expenditures per resident. Fewer lane miles and feet of pipe per resident means lower tax bills, while also making it possible for services to cover more residents with the same physical infrastructure (police or fire stations, etc). There’s a whole organization around the idea based in Brainerd, MN; perhaps you’ve heard of them. If not, some other urban advocacy groups shared this image to highlight the savings of a compact city over a more suburban one:

Suburban vs Urban public costs per household

Here’s the problem. In the real world, it’s harder to prove this out. Minneapolis and St Paul–the most urban, walkable, dense cities in the metro–spend a good deal more per resident than basically any of our suburbs, with higher property tax rates to boot. Don’t believe me? Ask a typical Star Tribune commenter (for a more nuanced take, check out a previous streets.mn comment thread). Or, wait a few paragraphs while I lay some groundwork.

What’s Included, Property Taxes vs Revenue vs Spend

First, let me be clear that this post isn’t complaining about Minneapolis (or St. Paul) taxes. Maybe there are some inefficiencies to be found in City Hall or reforms to be made, but that’s a topic for another day. Second, I should also clarify that Minneapolis is not a high property tax city when compared to large cities across the country. This Lincoln Institute report [pdf] shows that for various homestead market values, Minneapolis tax rates are below average, while apartment, commercial, and industrial properties pay a higher rate than average (draw your own conclusions as to who this shift benefits to). But in general, tax rates in the city are neither outrageously high nor low relative to our peers.

My analysis doesn’t include the budgets of any school districts or transit services. This may not seem fair given 1) urbanists claim savings for school budgets and 2) public transit is a major mobility component for many urban residents (though perhaps not as many as possible) who would likely make those same trips by car in a suburb. However, given the K–12 school funding model in our state and my inability to accurately parse out shared transit costs to individual cities in our region, I left them out.

Finally, we need to acknowledge the difference between the city’s property tax levy, the city’s total revenue streams, and what a city spends per capita.

Minneapolis Revenue Sources Pie Chart

For Minneapolis, property taxes represent less than a quarter of total revenues brought in. Charges for services (waste hauling, water, etc.) make up a huge component outside your annual tax bill, and the city receives payments from the state (e.g., Local Government Aid), Uncle Sam, from permits, fees, assessments, and a host of sources. These funds may be required to cover costs of running particular business units (“Enterprise Funds”), or they may be dropped into the General Fund, over which the city council has a bit more discretion in how to allocate on an annual basis. Minneapolis’ revenue stream makeup will look different than Eden Prairie’s, but that’s how it generally works.

Local Comparisons

With that out of the way, how do the core cities stack up from a property tax perspective? I used the League of Minnesota Cities’ Property Tax Calculator to estimate a bunch of city taxes (not including school or county levies) within Hennepin County plus St Paul for good measure:

City Taxes Comparison by Home Value

This analysis only looks at homesteaded properties (excluding commercial, apartments, and industrial) at various market values. It’s clear that Minneapolis is above average relative to its suburban peers. Someone with a keen eye for our region’s land use patterns would point out that more urban suburbs like Richfield, Robbinsdale, Golden Valley, and Hopkins also tend to be higher than their sprawly counterparts.

On the other side of the coin, we see that Minneapolis and St. Paul spend more per capita (in total) than their less dense suburbs:

City Spend per Capita Total

I shortened the list of peers because digging through budget documents can be a chore. Minneapolis spends over 50% more than its Hennepin County peers at just over $3,000 per capita. I wanted to know more, so I separated out spending into buckets:


As an aside, this was very challenging. No two cities report spending by department the same way, so I had to make up categories that define general roles of government. I also went through each city’s capital spending and dumped them into appropriate categories (in retrospect, this may have been a bad idea as capital programs vary year to year, but I wanted to capture the type of ongoing capital spending that maintains streets, parks, and emergency equipment).

I was surprised to see that Minneapolis’ public works department spends a good deal more than many suburbs (this is an area where I thought the city’s inherent density would lower costs), and also surprised to see the parks budget very much in line with other municipalities given how many non-resident park users there are and the effort it takes to maintain such a well-regarded system.

So Why is Spending Higher?

At this point, we could just pack it up and conclude dense environments are inherently costly to serve. But I want to offer up a list of reasons why the core cities spent more per capita in 2014 than their suburbs. Some are more conjecture than others, and I hope it encourages some solid discussion in the comment section. I also roughly ordered them by (my perception of) their budget impact magnitude.

1) Infrastructure Age – Almost the entirety of Minneapolis was built-out before 1950 (with at least half before 1924-ish). This means we’re on the second or third lifecycle for every street, and we’re routinely doing major repairs or replacements to 80+ year old water mains, sanitary and storm sewers. Our parks are in a similar cycle of maintenance and major renovation. This simply isn’t the case for many suburbs in our region, even first ring ones like St. Louis Park and Edina. Major chunks of Eden Prairie and Bloomington haven’t had to replace their streets yet. This affects the annual Public Works budget in a major way, but how much exactly, I can’t say.

2) Mismatch in Provided Services, or Programs – There’s a long list of things Minneapolis and/or St. Paul provide that many suburbs do not (or, spend less per-capita). Additionally, core cities are home to more regional-serving infrastructure. Examples include:

  • Garbage, recycling, and composting pickup
  • Affordable housing
  • The Minneapolis Convention Center (4% of Minneapolis expenditure)
  • A park system that disproportionally serves non-residents
  • Municipal ramps downtown serving regional employees
  • Streets & bridges sized to handle vehicle traffic with a higher share of non-residents than suburban streets

We could debate how much of an impact each of these alone have on per-capita spending, and to what extent less dense suburbs do the same, but I’m willing to bet it tilts in favor of central cities.

3) Core Population Decline – Minneapolis once held 521,000 people, and it just crossed over 400,000 in the last couple years. I’m of the opinion that our city could handle over 650,000 with the infrastructure we have, but even dividing our current budget by 520k people brings the Minneapolis to average suburb spend ratio down to 20% rather than 50% higher.

4) Infrastructure/Service Quality – These are things cities typically provide but suburbs choose not to. Sidewalks on both sides of the street vs one or (more commonly) none and public street tree planting/maintenance (vs none) come to mind. These things are essential to creating a healthy walking environment, and suburbs mostly avoid the costs by simply not building this infrastructure. One could go a step further and point out that some suburbs choose to offer a lower quality emergency response service. My hometown, Lakeville, has a volunteer fire department which saves residents money, but has much higher average response times than Minneapolis. Minneapolis has publicly maintained alleys. In these cases, there is no right or wrong, just a set of expected outcomes.

5) Concentration of Non-Taxpaying Properties – Minneapolis and St Paul are host to quite a few universities, non-profit campuses, state and federal government buildings- places that don’t pay property taxes yet require streets and water and other services all the same. Those costs are passed on to residents and businesses, and I suspect this is more prevalent in the core than suburbs.

Depending on your ideology (or zip code), these may sound like “excuses” rather than “reasons.” I thin it’s fair to say that geometry is inescapable. A square mile served by the same area of pavement and feet of pipes will cost less per person at Minneapolis density than Eden Prairie’s. But we should also acknowledge that “public works” activities only account for about 30% of a city’s budget to begin with, and big cities choose to spend more on more, or higher quality, services for residents that suburbs just don’t feel are necessary.

54 thoughts on “Minneapolis Property Taxes are High. Why?

  1. Eric AnondsonEric Anondson

    Than you for getting this math out there in public for discussion.

    Puts a nice clarity on somethings I’ve seen discussed on the Nextdoor groups I’m next to.

  2. ae_umn

    Two big questions jumped out at me:

    1. St. Paul’s estimated property taxes appear more comparable to suburbs than Minneapolis. Why is that? I would guess Minneapolis provides more amenities and services, but by that much?

    2. What’s with Bloomington’s crazy spend on planning/community development? Do they just handle an insane amount of permits? Does it have to do with MOA?

    1. Alex CecchiniAlex Cecchini Post author

      I’m not really sure what’s going on with St Paul. They plow less, don’t plow alleys, and don’t have municipal garbage collection beefing up their budgets. Maybe commenters with more knowledge on the histories between the two can comment.

      As to Bloomington, you nailed it. I included the Port Authority budget, which has handled some of the redevelopment around the city along with the massive MOA budget. I should have noted that in the post and perhaps made MOA-related costs a different color on the Bloomington bar. I personally think it’s fair to put MOA spend in here in the general sense – Bloomington claims to be a fiscal disparities net contributor despite the original TIF deal but is more than happy to divert funds directly from that pot to help finance the current expansion. Anyway, the spend is clearly a few year blip for Bloomington.

      1. Julie Kosbab

        St. Paul also carved out a whole bunch of property tax stuff into “use fees” during the Coleman era. Not sure if Minneapolis has any of the same impact.

        Used to pay several hundred a year for streetlights and alleyway/curb frontage on separate invoices. If you looked at the totals, it raised effective property tax by quite a bit – roughly 15 to 20%, although I am too lazy to do the real math.

        There is also a bunch of stuff wrapped into the water billing, but that may also exist in Minneapolis.

  3. Linea Palmisano

    Thanks, Alex, for digging through and assembling these things for comparison. I think your insight on reasons why is pretty spot-on. Good way to further and continue the discussion.

  4. Steve

    One difference between Minneapolis and St. Paul is garbage pick-up and alley plowing (provided in Minneapolis not in St. Paul). Not sure what the practice is in the suburbs.

    Water and Sewer pipes in new subdivisions are funded with metro-wide taxes (not municipal funds), repair and replacement by municipalities. In suburbs newer than 40 years old (pretty much all of the Cities except first ring) the pipes were paid for with funds collected from Minneapolis and St. Paul homeowners. So many MN suburbs have yet to pay for municipal water and sewer, while mature communities are paying for that infrastructure in both their own cities and the new suburban subdivisions.

    1. Alex CecchiniAlex Cecchini Post author

      I discussed the metro-wide taxes for Met Council sewer in this post, there’s more info here. It’s not just general taxes, it’s a flat fee assessed per unit on new development. This means that every apartment in Uptown leveraging existing pipe in the ground (while requiring far less per unit if it needs to be upgraded) cross-subsidizes every unit on 1/3 acre out in new subdivisions.

      Monte is right that new subdivisions typically pay for the rest of the infrastructure on their own and roll it into land (or land+home) sale prices. I don’t really see a problem with this, but it does mean that cities with large chunks of development less than ~30-40 years old are not in a regular cycle of replacement or major maintenance.

  5. Joe ScottJoe

    I think excuses 1-5 are pretty accurate and make up a big portion of the explanation. But the other thing is that Minneapolis isn’t particularly dense, even just compared to other cities in the U.S. The density difference between Minneapolis and the suburbs is small enough that it can be overcome by the noise of other factors like the ones you describe. Fortunately I think that will be less true over time, and we also have the advantage of a clear demarcation of pre and post-war development occurring in separate municipalities.

    An anecdotal example of #5: I live right next to Abbott Northwestern hospital, an entity that despite not paying property taxes, A-takes up a huge amount of valuable land in a prime location, B-generates a huge amount of auto traffic on Minneapolis owned streets, and C-likely reduces the tax base by blighting surrounding property. Suburban commuters on their way to and from the hospital were a major factor in preventing 26th and 28th streets from being converted back to two-way, extending the hospital’s malignant influence beyond the facades of parking ramps and blank walls well into the surrounding neighborhood.

      1. Alex CecchiniAlex Cecchini Post author

        I don’t think people are necessarily complaining about the hospital (or the U, or whatever) or saying they’re bad for the city. A dense cluster of jobs in a walkable area served by transit is great, as is having a major hospital centrally-located (also, located very close to a giant research university, like Fairview or even HCMC). I personally think we should re-think property tax exemptions for non-profits such as these because they do end up burdening the cities they end up in from an infrastructure/service perspective. Either have them pay market rates, then have the state or federal government reimburse them, or have the state/federal gov’t pay taxes in lieu of the organization directly to the city. That’s a totally different post.

        1. Wayne

          Payment in lieu of taxes was a big thing when I was schooling back in MA. A lot of land in Boston and Worcester is tied up in institutional uses and without getting something back from them the cities’ budget situations would be untenable. It’s really something that should be explored here, but because it basically only benefits Minneapolis, St Paul and probably Rochester I’m sure the state legislature wouldn’t be too keen on approving anything that really only benefits larger cities. Yay for state paternalism punishing urban centers that provide them with most of their revenue!

    1. Rosa

      I’m not sure the big institutions (though we have a lot of them) are a net loss of density- the U certainly has big open spaces but also lots of dense student housing. Likewise, the “blighted” areas around Abbott have a lot of Abbott staff living in multi-units and divided up formerly single-family houses.

      There are huge areas of both North and South that are single-family dominated, though, and as you get out to the edges of the city the development pattern is not different than the inner-ring suburbs.

      Personally, I chose more services and higher taxes (and lower commuting costs, though that’s partly the transit system that’s not accounted for here.) so I’m not really looking for “excuses”. But not everyone who wants the higher service levels can afford the higher taxes, so I welcome density and permanent infrastructure improvement even if it’s a case of pay now to avoid paying later.

      Someone here might know better, but isn’t Minneapolis still occasionally finding places where sewage is getting into the storm sewers? I know separating out the really old parts of the system was one of the infrastructure costs when we first looked at what our taxes would be like. As a person who grew up downstream of here on the Mississippi, I’m fine paying for that.

      1. Wayne

        It’s not so much about the density of institutional uses as it is about the cost. They contribute no property taxes and the benefits of having a large employment center generally come in the form of income taxes that go to the state. The state certainly doesn’t hand that money back over to the city to make up for the lost property taxes (in some places they do, they’re usually called PILOT programs). There is some bleed over to other local tax revenues, but nowhere near enough to make up for the lost property tax revenue, especially when balanced against the cost of supporting infrastructure for these institutional land uses (that are generally more intense than other development).

        I’m by no means saying kick hospitals and government buildings and universities out of the city, but some kind of PILOT-like program should really be put in place just out of basic fairness. Then again, the state legislature here has a pretty poor track record when it comes to treating the center-cities fairly, so I won’t hold out any hope there.

    2. Ted Hathaway

      “Minneapolis isn’t particularly dense, even just compared to other cities in the U.S”

      This is incorrect. Minneapolis ranks 46th in population among US cities, but 33 of those cities with more population have lower population density. It is often cited that Minneapolis’ population has declined from 521,000 in 1950, but what is left out is that this peak occurred before the freeways arrived. I-94, I-35 and I-394 eliminated about 10% of the city’s housing stock. There was also a major housing shortage crisis after WWII that, no surprise, helped spur the flight to the suburbs. Minneapolis may not be overcrowded, but talk of 650,000 is silly. That would give us a population density of 12,000/sq mile, putting us behind only Boston, San Francisco and New York. Somehow, I don’t think that’s going to happen.

      Minneapolis is one of the smallest major cities in the US in area. Only five other cities in the top 50 by population have less square milage. Why that is, I don’t know. The last annexation was in 1927. I guess the city should have scooped up Edina, St. Louis Park and Golden Valley when they had the chance.

      1. Wayne

        I always take direct statistical comparisons of cities with a grain of salt because of how different metropolitan areas are organized in different parts of the country. Back east every piece of land is part of some incorporated town in a lot of states, whereas there’s tons of unincorporated ‘county’ land when you get out west. So as western cities grow they just gobble up unincorporated land, while the further east you go the more constrained by pre-existing boundaries they are. It makes direct comparisons, especially when you look at the metropolitan level where they are most functionally similar, pretty difficult to do. Minneapolis and its suburbs combined is a more apt comparison to a sprawly southwestern city with no preexisting neighbors to bump up against for a dozen miles.

        That said, I do agree they should have annexed a few of the first ring burbs when annexation was still a big thing. At this point though I’m looking forward to the schadenfreude of watching Golden Valley implode when their little pyramid scheme of tax breaks to lure business out of the city implodes and they can’t afford to fix their aging infrastructure anymore. The kind of metro-area balkanization they pioneered and profited from has done more harm to cities and metropolitan areas than almost anything else (except probably highways and redlining).

        1. GlowBoy

          Agreed, Minneapolis’ boundary is drawn unusually tight compared to other cities. Compared with Portland (or Seattle, my other used-to-live-there reference point), a lot of pre-1950s areas are outside the city limit instead of within it. Those other cities also include large areas that were developed much later. If Minneapolis’ boundaries were drawn similarly to Portland’s, they’d include major chunks of Richfield, Edina, SLP, Golden Valley, Robbinsdale and the Brooklyns.

          As for what would fit within the actual boundaries we have today: In the 18 years I lived there, Portland city absorbed an additional 100,000 residents without difficulty, and without building on large tracts of undeveloped land. Most of the change came from increasing density in already-developed areas. A little of that was because of young families rediscovering the city and increasing the density of existing SFHs, but less so than in Minneapolis because families mostly hadn’t left in the first place. And of course, with so many young people streaming in, much of the increase also came from owner-occupied homes converting to rentals and creating Additional Dwelling Units (called “granny flats” here and “Mother In Law” apartments there).

          But a large share of it was simply due to increasing density along arterial routes. Across the city, this has turned numerous small, half-forgotten commercial districts into thriving neighborhood centers (which Minneapolis could use more of), with lots of new restaurants, shops, coffeehouses, etc. I believe Minneapolis could easily accommodate an additional 100,000 (and possibly much more) without knocking down large numbers of SFHs on quiet residential streets. And it would work wonders for the vitality of our neighborhoods and transit.

          Here in SE Minneapolis there’s really no more density than Richfield or Bloomington (with, correspondingly, no more commercial vitality). We’ve got good transit and could absorb a lot more humanity along the main streets without disrupting the existing neighborhoods.

          1. GlowBoy

            Also, an outsider’s property tax perspective: Minneapolis has higher tax rates than Portland, but from what I can see you end up paying about the same for a comparable house, because comparable houses are much cheaper in Minneapolis.

          2. Alex

            The annual reports of the Mpls Planning Commission going back to the 1910s I think are in the Central Library stacks. I remember reading one from the 20s that reported on their research on annexing Columbia Heights, and the primary reason they didn’t is that it would have been too expensive to upgrade the existing development there to Mpls’ street design standards (I don’t recall what these were besides sidewalks on both sides).

            I think that if you look at cities that continued to annex in that era, the areas annexed then often have rural street sections. Some examples I can think of are in Portland, OR, Chicago, and Charlotte.

            Speaking of Portland, I’m not sure when exactly you lived there, but I believe there were some pretty large sections of greenfield development in the 2000s.

            1. GlowBoy

              re: pretty large sections of greenfield development in the 2000s.

              Actually, you’re right. I was thinking of conversion of undeveloped areas to housing, and there hasn’t been a lot of that … but there was quite a bit of conversion of industrial areas to residential (brownfield development). Both the Pearl District and South Waterfront were former railyard and industrial sites that were converted to residential areas, bringing in thousands of new housing units.

            2. sheldon mains

              One of the main reasons for the small size of Minneapolis is a law passed in 1912 that made it almost impossible for Minneapolis to continue to annex additional land. The only annexation after that was the area between 54th street and 62nd street on the south side. That happened around 1928.

    3. mplsjaromir

      Richfield, St. Louis Park and North St. Paul are the only suburbs I could find that are even half as dense as Minneapolis. None would be considered insignificantly different mathematically.

  6. Karlie

    Would you happen to know or know where to find out how they calculate property taxes for individual houses? Mine is on the very low end of property values but the taxes have gone up 15%+ each year for the past 2 years and I’d like to understand how that makes any sense to raise taxes so drastically on lower value homes. Thanks for any resources!

    1. Rosa

      Was there a new levy for your area? If a school, parks, or citywide levy passed two years ago, that might be it. The other thing that can change is the assessed property value – ours has gone up the max allowable amount since I think 2011 because the market has gotten so much better in our neighborhood. If it’s assessed property value you can appeal it. You should get a statement every year saying what it is for the upcoming year that has a deadline for appealing.

      The legislature has a document that shows what all goes into residential property taxes: http://www.house.leg.state.mn.us/hrd/pubs/ss/ssptterm.pdf but you have to look up specific levies for your city/county/school district/whatever.

  7. Kris

    Minneapolis does provide garbage pickup but they charge homeowners for that. And the price I pay and Minneapolis for garbage pickup is about the same as what I would pay in other cities throughout the Metro where they have independent for profit companies picking up the trash. So why would that be an additional cost from the that has to be passed on to homeowners in taxes? Since Minneapolis picks up the trash for the whole city and they charge just as much as for profit companies that serve much smaller areas, shouldn’t they have some economies of scale and actually have this be a profit center?

    1. Kris

      After just checking my Minneapolis trash bill, included with your water bill. I see the charge is $30.52 a month for garbage pickup. That is actually more then what most companies charge in suburbia. For example current charges are $68.50/ every 3 months in a suburb for trash pickup including organic recycling and yard waste and can go to as much is $80-85 bucks every 3 months with a more expensive company like waste management but at $90 bucks every three months, Minneapolis should be able to actually make money out of this business not have it be a burden for property tax payers in the city.

        1. sheldon mains

          My solid waste bill for Mpls is lower than Kris quotes:

          Slid waste base fee (1 dwelling unit) $17.60
          large cart fee $5.00
          Management tax $ 1.70
          Henn Cty fee $1.57

          TOTAL $25.87

          1. Kris

            My current fees from the last bill – But the city of Minneapolis website said fees will go up to $22.89 per month starting 1/1/2016
            Solid Waste Base fee 21.60
            large cart disposal fee 5.00
            9.75% solid waste mgmt Tx 2.04
            Hennepin COunty Fee 1.88
            Total 30.54/month
            Will be $31.83 or slightly more after the 1/1/16 increase

            This is for a small home in the SW of the city. The cart I have is pretty standard in size, similar to what other trash company’s use.

            My point was that trash pick-up fees should cover the cost of trash pick-up since they are clearly in-line with fees for other for profit companies. They are not a valid reason to explain why property taxes are so high in Minneapolis.

            1. Alex CecchiniAlex Cecchini Post author

              Just a point of clarification: The point of the article was to address both 1) why taxes are higher and 2) why total city spending is higher. Garbage fees aren’t part of a Minneapolis tax bill (as you note), but garbage collection costs *are* part of the total city spending. This is a complicated discussion and trying to separate out which services are funded by our property taxes is very difficult.

              1. Kris

                Good point, orchestrating trash pick-up for an entire city would certainly increase overall costs. Hopefully our fees we pay more then cover the expense and it is helping keep overall costs down, but hard to say.

                It is not uncommon in other states to pay for your trash pick-up through property taxes. This is common in FL, but the counties always outsource the job to a refuse company rather then keeping it in house. The charge for this is about $230-$250/year on your tax bill (looking at two separate homes in Fl that I property manage) but I am sure things are a a lot cheaper in FL.

        2. Kris

          No, that is not introductory. The $68.90/every three months with Organic disposal is the rate I have paid for about 2 years. Waste Management and other guys often give a few month or so for introductory pricing, but the basic rates come to around $80 – $85 every three months but you can usually get them down a bit lower with a phone call.

        3. kris

          Joe –
          Reading through the MN Post article, I think some body just miss-stated some numbers. Garbage should really not cost more then $35/month no mater who you use in the twin cities. And that is assuming you have a large mixed trash can for recycling and a big can for regular trash. Also, many cities and town have a tax payer funded clean-up day where they pick-up large items such as furniture and/or they have a recycling center for these items and hazardous waste.

          I sell real estate and often research companies and prices for my buyers and most companies charge around $75-$85 every 3 months as far as a total bills with taxes and all, with maybe a free month of service for new customers. Many cities have a list of 2-4 approved companies for trash pick-up and they usually all pick-up on the same day.

          I think someone was thinking maybe $35/year savings?? Maybe $35/QTR if they can get trash hauling & recycling fees down to $230-300/year, which is not uncommon in other states. Not sure how $35/month savings really makes any sense…

          If the city was able to award the contract or license a company for trash pick-up within a certain area so this one company had a monopoly in that area in order to both to keep wear and tear on roads down and to negotiate a better deal for the consumers, I would think they could get the trash hauler to agree to slightly lower rates since they wouldn’t have to market and they should have some serious economies of scale.

  8. Novacek

    Subsidizing commuters.

    You mention non-residents using streets, but there’s a whole lot of other subsidizing going on. Public safety budgets need to accommodate commuters, medical emergencies of commuters, etc.

    1. Al

      My commute into the city involves a driving on a federal highway, a state highway and then on a county road and finally parking in city owned ramp that I pay a fee to use. I’m fairly certain the construction of Ramp A was subsidized by Federal Highway funding, too.

      I’m not entirely sure what subsidy I’m receiving from resident tax payers. I’ve always felt the property taxes paid for my office space and highest in the nation sales taxes on my lunch more than made up the burden I placed on city residents by doing business there.

      1. Alex CecchiniAlex Cecchini

        Those federal and state highways sit on land that used to be taxpaying parcels. Removing them from the total taxable market value upped the burden for city services (which didn’t drop much – the city still has the same number of streets and pipes and parks) for everyone else. If we want to go a step further (beyond municipal budgets), we could talk about the barrier effect costs a highway imposes on residents (not being able to walk, bike, even drive around the city as easily thanks to breaks in the street grid), health costs urban residents pay due to pollution from motorists on highways serving *mostly* people coming into the city or passing through, etc.

        Ramp A *may* have been built with federal funds. Most municipal ramps weren’t. While city ramps often cover their operating expenses, this ignores debt service and any capital improvements over time. And this ignores the opportunity cost of a block of prime downtown real estate off the tax rolls. Maybe you could make the case that cheap municipal parking ramps improve nearby land values more than the opportunity cost of the land itself. I haven’t seen that claim made or studied formally, and all the development going up on former surface lots (and even ramps) with very little parking tells me this isn’t the case.

        1. Al

          I agree that the freeways are awful for city life and am wholly in favor of capping programs in high value areas. I owned a home in Minneapolis for years and the worst part about my neighborhood was the freeway in the middle of it.

          That said, we have a chicken and egg problem with land values. Would the commercial heart of Minneapolis have the same taxable value without freeways? The large commuting population in Downtown Minneapolis contributes to the economy and tax base, too.

          I also agree that the City ramp program is ridiculous and grossly underpriced if they aren’t generating return. I propose the city divest the asset and let the market decide how much parking exists and at what price.

          1. Adam MillerAdam Miller

            “Would the commercial heart of Minneapolis have the same taxable value without freeways?”

            Almost certainly, yes. See every major city in Europe.

            We might have needed to invest more in transit, and we likely would have avoided at least some (maybe lots) of mid-century flight, but I don’t think there is any question that cutting freeways hurt the city substantially.

            It was great for those who moved to the suburbs, though.

            Market-based pricing would definitely help.

            1. Al

              Most European business centers are near expressways. Cuatro Torres in Madrid, La Defense in Paris, Zuidas in Amsterdam (and certainly many more) all have great access to large, limited access roads. London is the only large city in Europe I can think of without expressways abutting their skyscraper district(s).

              The interstate system was largely built to relieve congestion from the post-WW2 urban flight that was already occurring, much of this driven by a substantial lack of housing in central cities. As I said before, it’s a chicken and egg problem. Residents and businesses were already heading out of central cities before the Interstates were built. However, I will submit that the Interstates and freeways likely sped up this process in the late 50s and 60s.

              1. Alex CecchiniAlex Cecchini Post author

                It’s been linked to in our comment sections before, but: http://www.jstor.org/stable/25098858

                ”one new highway passing through a central city reduces its population by about 18 percent. Estimates imply that aggregate central city population would have grown by about 8 percent had the interstate highway system not been built … highways account for about one-third of the decline in aggregate central city population relative to that in entire metropolitan areas between 1950 and 1990.”

              2. Adam MillerAdam Miller

                Great attempt to move the goalpost, but “skyscraper district” and commercial center are not the same. Central Paris, Madrid and Amsterdam have plenty of commercial office space too.

      2. Novacek

        City residents are also paying for that federal highway, state highway and county road, but use them much less.

        Someone who lives in a city could never drive on interstates, but still pay for them, subsidizing suburban commuters who use them daily.

        And again, if you have an accident while driving on those roads, what medical service responds and who pays for it.

        That’s not even getting into the environmental costs of long commutes (paid for by everyone, including those with shorter commutes).

        1. Al

          Is there some sort of Minneapolis Free Medical Service I haven’t heard of here or something?

          State and Federal roads are paid for with gas taxes and shortfalls are covered with income taxes. I highly doubt many high income tax payers are riding buses and riding bikes all the time. That leaves county roads, which consist of streets like Park Avenue, Lake Street and Broadway Avenue – all of which are certainly used almost exclusively by residents and people patronizing local businesses.

          1. Alex CecchiniAlex Cecchini Post author

            To your first question: yes. Fire and police first responders that provide medical and other services at crash sites. I think this is overblown when talking “subsidies” from city taxpayers to outsiders, but the costs are there and the ratios of taxpayers to outsiders is probably higher than in most suburbs.

            State funding for roads is split fairly evenly between gas taxes, registration/tabs fees, and the motor vehicle sales tax. Two of those 3 depend almost entirely on the value of the car, rather than the amount driven (and on what roads, at what time). A family in Minneapolis who drives short trips on local streets some of the time, walks or bikes or buses other times (or even not at all), and rarely uses freeways or state highways yet still owns a car or two is paying a large fixed cost into the state pot yet getting very little in return due to low mileage driving habits.

            To be sure, the cross-subsidies between a core city car owner and a suburban one is s small piece of the statewide cross-subsidies, where metro area drivers as a whole are funding the vast network of state roads with very little use.

            1. Sheldon Mains

              Alex–To expand on your 2nd paragraph: Funding for highways and roads in Minnesota is only about 1/2 from user fees. The larges source is actually local property taxes and assessments.
              * State gas tax–17%,
              * Vehicle registration fees about 14%,
              * Other fees and tolls about 1 %,
              * Property taxes and property assessments–35%,
              * Federal highway funds (federal gas tax) — 18%,
              * State sales tax from motor vehicles $ 4%,
              *State bonding a little more than 9 % (repaid from general fund (mainly individual income and corporate income taxes)

              Source: http://fresh-energy.org/wp/wp-content/uploads/2012/07/MN-Road-Revenues-and-Expenditures-Summary1.pdf (note the footnotes at the end of that document for the original sources)

  9. Sheldon Mains

    Another possible explanation. You missed one big variable; Concentration of poverty in Minneapolis is higher than any of the suburbs except Brooklyn Park and Brooklyn Center (the two suburbs that are very close to Mpls property tax for similar properties).

  10. Al

    Minneapolis produces tax revenue per capita that is well above the per capita tax revenue of the average metro city. It has scale advantages due to it’s size and additional cost advantages due to the dense nature of much of it’s built environment, as mentioned in the article.

    Minneapolis also pays for ridiculous social engineering programs like Healthy Corner Stores and Fair Scheduling ordinances. It has rampant nepotism and elected officials with goals of closing achievement gaps (despite having no jurisdiction over schools) and giving away additional free benefits to city workers, rather than repairing roads and enhancing community safety.

    I propose that almost all advantages Minneapolis gains due to size and density is squandered away by gross mismanagement.

    1. Eric AnondsonEric Anondson

      You may have some nuggets of good points in there but the “StarTribune commenter level hyperbole” makes it hard to tell. Streets.mn could benefit from a spectrum of comments but not ones that come at it to swatting the hornet’s nest. 😉

      1. Al

        It’s not hyperbole. Minneapolis routinely engages and pays for programs that are completely outside the scope of municipal governance. There is almost nothing like this in any suburb.

        The earlier discussion in the comment thread about Minneapolis trash collection specifically exhibits squandering scale advantages. The non-profit, community servant managed, scale advantaged trash service should be cheaper than private, for-profit dispersed trash services, but instead Minneapolis trash collection is 50% more expensive than suburban private service. This scenario certainly extends to many areas of governance in Minneapolis.

        1. Alex CecchiniAlex Cecchini

          Couple thoughts:

          – Trash collection is done half by city crews, and half by a consortium of private (for-profit) haulers known as Minneapolis Refuse Inc. The Mac-Groveland organized collection study shows self-reported monthly rates in St Paul average ~$24/month. This is exclusive of county fees on top of the service provider rate. So $30/mo (including organics, yard waste, recycling, appliances, and all county fees) is basically right in the middle of private haulers. In any case, per-capita cost savings isn’t the only goal of organized collection (reducing noise, alley wear/tear, pollution, etc).

          – Your definition of “outside the scope” of municipal government is different than someone else’s. Are sidewalks in scope? Street trees? Yes, Minneapolis *does* routinely pay for services that suburbs don’t. Suburbs have routinely turned their back on funding affordable housing. The city does have programs to encourage healthy eating, enforcing civil rights in employment, and helping prevent teen pregnancy. Maybe those don’t seem necessary to someone who lives in the suburbs where the demographics don’t reflect a need for these things (or maybe they still do but suburbs ignore them anyway). I think the typical suburban mindset in how to increase community safety is different than the programs required (or methods Minneapolis uses) to do the same.

          – Perhaps you are right that Minneapolis is guilty of “gross mismanagement.” Maybe the city pays its employees more than necessary, or has too many people on staff for the work being done. Or benefits are too high. I guess, I haven’t seen an audit or report that shows this is true, which makes the language on your part fall into the hyperbole in my opinion. I tend to think the reasons I listed in the article out-shadow the potential mismanagement costs. Especially since, as I noted, “public works” type activities only make up 1/3 of a city’s typical spend anyway – the rest of the budget doesn’t really get much savings due to built form. We shouldn’t expect a dense city to have massively lower budgets owing only to its built form, but rather which services it chooses to provide its residents.

  11. Nathanael

    It’s worth noting that standard methods of buried underground utility construction create ridiculously high maintenance costs.

    If you build tunnels you can walk through and put the utilities in them, it lowers the utility replacement costs *massively*. But it costs more upfront so it isn’t done. (Sigh.)

  12. Charlie

    Great article, Alex!

    You mention the Minneapolis park system “disproportionally serves non-residents”

    Could you please expand on that? I was under the impression that places like Loring Park and the Chain of Lakes get some regional funding in addition to Minneapolis’s to balance things out.

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