In March, I wrote an article titled “Tanking commercial property values in downtown Minneapolis push up residential property taxes.” Across the Mississippi, Ramsey County Auditor Tracy West told the County Board of Commissioners recently that “Declining commercial and apartment values are shifting the property tax burden to residential taxpayers.”
Tanking commercial property values
In the Pioneer Press, Frederick Melo notes that, over the last year, the market values of “apartments and commercial buildings are down about 2-3% and agricultural land is down nearly 17%”:
The U.S. Bank Center on 5th Street has seen its estimated market value slide from $21.7 million in 2024 to $20 million this year, and down to an estimated $14 million for the purpose of calculating taxes in 2026.
This decline in property value means a decline in property tax payments:
Corresponding property taxes for U.S. Bank Center will have fallen precipitously from $729,000 last year to an estimated $495,000 next year.
Downtown St. Paul commercial properties have lost about 11% of their value from one year to the next, compared to almost 2% in Ramsey County’s commercial properties as a whole.
The 3M headquarters on McKnight Road in Maplewood carried an estimated market value of $98 million in 2024, which fell to $93.6 million over the past year, according to the county. That value will fall to $89.8 million next year.
Acorn Mini-Storage on Cleveland Avenue in Roseville — formerly a HOM Furniture store — has seen its estimated market value drop from $7.43 million to $6.7 million in two years.
Rising residential property taxes
That, in turn, means an increase in the property tax payments of residents. Melo notes that “the city’s poorest neighborhoods will be hit especially hard”:
According to a Tuesday presentation to the Board of Commissioners, St. Paul home values are rising fastest in the most affordable neighborhoods, which means they’ll see the largest tax increases, at least as a percentage of what they’re paying.
This is where the property tax functions like a wealth tax. There is no evidence that the incomes of the residents of these poorer neighborhoods have grown more quickly than anywhere, nor that their use of the services provided by the county have increased at a greater rate. As I’ve written before, “any link between increases in assessed property values and increases in property tax payments needs to be broken.”
The county levy alone will cost the median Frogtown homeowner another $228, or 7.3%, with similar impacts in Payne/Phalen, the North End and West Side.
Como, Hamline-Midway, Dayton’s Bluff and Summit/University homeowners won’t pay quite that much.
And Sunray/Battle Creek/Highwood and St. Anthony Park will see some of the lowest tax hikes in the city, while downtown owners may even see a decrease.
The county levy accounts for just 35% of what property owners pay in property taxes. As I noted yesterday, “Last week, Mayor Melvin Carter proposed a 5.3% property tax levy increase,” and “this hike is on top of the 9.75% hike proposed by Ramsey County. It is also on top of a 10-year, $37.2 million-per-year levy referendum for St. Paul Public Schools that residents will vote on in November.” All told, these hikes would cost the median St. Paul resident an additional $620 next year.
Given its consequences for St. Paul’s residential property owners, it is worth asking why it is that commercial property values have tanked so badly. Quite simply, many of the office buildings are practically or actually empty. Of course, that just begs the question of why downtown St. Paul has become so toxic.
Fiscal watchdog In$ight St. Paul has offered some fixes for the city’s budget crisis, but one of the most important is for the governments imposing these hikes to restrain the growth in their spending.
