Many homeowners in Saint Paul’s poorer neighborhoods will be seeing steep property tax increases next year due to large increases in the market value of their homes. To ease the tax burden, Mayor Melvin Carter wants to include $600,000 in the 2022 city budget for a new program that would provide relief to low-income households that spend 30 percent of more of their income on housing.
 
The Low Income Homeowner Support Program would provide a $500 stipend to roughly 1,000 qualifying homeowners with the remaining $100,000 going toward administration. The neighborhoods identified for relief include Frogtown, the North End, Payne-Phalen and Dayton’s Bluff.
 
“Since we cannot tax people at different rates, we see this program as a way to capture market value and maintain city services while providing flexible assistance to cost-burdened properties specifically in areas of concentrated poverty,” said Madeline Mitchell, senior budget analyst for the city.
 
melvin carter
Mayor Melvin Carter

The program would be overseen by the city’s Office of Financial Service and Office of Financial Empowerment. Kasey Wiedrich, financial capability manager in the Office of Financial Empowerment, said a key focus would be to help homeowners sign up for other governmental assistance programs, including energy assistance and other property tax relief programs.

City Council members Rebecca Noecker and Amy Brendmoen questioned the cost-effectiveness of setting up yet another city program when the need is to make homeowners aware of existing programs. “I’m just wondering if this is the best use of staff time and resources,” Noecker said. “The irony of raising taxes to lower taxes is something to think about.”

Senior citizens in Minnesota who have lived in their home for 15 years or longer can apply to have their property taxes deferred if their annual household income is below $60,000. The state’s homestead credit refund provided an average of $1,140 in property tax relief in 2018 to Ramsey County households with incomes below $116,180. Homeowners whose property taxes increase 12 percent or more in a year are eligible for additional relief from the state. Ramsey County officials have said that Saint Paul homeowners who fail to file for a property tax refund leave millions of dollars on the table each year.

The City Council could vote on the 2022 city budget as early as December 8. The mayor has proposed a 6.9 percent or $11.4 million increase in the city’s property tax levy for 2022—from $165.2 million to $176.6 million—in support of a $713 million city budget.

   

The Low Income Homeowner Support Program appears to have the support of council members Mitra Jalali and Nelsie Yang. Jalali said she likes the focus on getting people to an array of governmental resources.

Other City Council members were not sold on the program. City Council president Amy Brendmoen said the program was not ready for prime time. Ward 2 council member Jane Prince called the benefit “marginal,” especially considering that the $500 stipend would be taxed as income.

According to city officials, there are about 4,000 households whose housing costs are high enough to be eligible for the program. “We can only serve about a quarter of the people who qualify for it, so right away we’re going to have winners and losers,” Prince said.

 

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Brendmoen said she grew up in public housing as the child of a single mother, and providing housing assistance is important to her. The state property tax relief programs need more publicity, she said, but the state needs to provide that.

Noecker and Brendmoen questioned the cost-effectiveness of setting up yet another city program when the need is to make homeowners aware of existing programs. “I’m just wondering if this is the best use of staff time and resources,” Noecker said. “The irony of raising taxes to lower taxes is something to think about.”

To be eligible for the city stipend, homeowners could earn no more than 30 percent of the Twin Cities’ area median income of 130 percent of the federal poverty line, whichever is greater. That puts the income limit at $31,450 for a family of four. The property must be owner-occupied and be a primary residence. Households in areas of concentrated poverty would have top priority.

Twenty percent of Saint Paul households are believed to spend 30 percent or more of their income on housing. Six percent are believed to spend 50 percent or more of their income on housing. Of Saint Paul households making 30 percent or less of the area median income, 80 percent spend more than 30 percent of their income on housing and 64 percent spend more than 50 percent of their income on housing.

Homeowners would have to reapply for the stipend each year. The mayor’s plan is to make the Low Income Homeowner Support Program ongoing. It would be paid for through the city’s general fund, which is largely supported by property taxes and Local Government Aid from the state.

— Jane McClure

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