UNIVERSITY AVENUE PROPERTY TAX STUDY: Part 5: PROPERTIES EXEMPT FROM PROPERTY TAX

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UNIVERSITY AVENUE PROPERTY TAX STUDYPart
5PROPERTIES EXEMPT FROM PROPERTY TAX

Bob Spaulding November 14th, 2006
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TAX STUDY PROPERTIES EXEMPT FROM PROPERTY TAX

EXEMPT FROM PROPERTY TAX IN MINNESOTA
Public schools Public hospitals Public burying
grounds Academies, colleges, universities, and
seminaries of learning Churches, church property,
and houses of worship Public property used
exclusively for public purposes Property used for
the control of air, water, and land
pollution Manure pits certified by the
State Electric power distribution
lines Transitional housing Wind energy conversion
systems Waste water treatment systems operated by
a municipality Institutions of purely public
charity (see next slide for clarification)
Source Minnesota Statutes Chapter 272.02 Dakota
County Asessors Office Summary
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TAX STUDY PROPERTIES EXEMPT FROM PROPERTY TAX

EXEMPT FROM PROPERTY TAX IN MINNESOTA

• Institutions of Purely Public Charity
  DefinedThe Northstar Factors - From Northstar
  v. Hennepin County (1976)1. Whether the stated
  purpose of the undertaking is to be helpful to
  others without immediate expectation of material
  reward.
• 2. Whether the entity involved is supported
  bydonations and gifts in whole or in part.
• 3. Whether the recipients of the charity are
  required to pay for the assistance received in
  whole or in part.
• 4. Whether the income received from gifts and
  donations and charges to users produces a profit
  to the charitable institution.
• 5. Whether the beneficiaries of the charity are
  restricted or

unrestricted and, if restricted, whether the
class of persons to whom the charity is made
available is one having a reasonable relationship
to the charitable objectives. 6. Whether the
dividends, in form or substance, or assets upon
dissolution are available to private interest.
Source Northstar Research Institute v. Hennepin
County Dakota County Asessors Office Summary
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TAX STUDY PROPERTIES EXEMPT FROM PROPERTY TAX

PERCENTAGE OF EXEMPT PROPERTY LOCALLYTaxable
Market Values, 2006
Ramsey County
Saint Paul
Source Ramsey County Assessors Office
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TAX STUDY PROPERTIES EXEMPT FROM PROPERTY TAX

PERCENTAGE OF EXEMPT PROPERTY LOCALLYTaxable
Market Values, 2006
University Avenue, Excluding Capitol Grounds
Source Ramsey County Assessors Office
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TAX STUDY PROPERTIES EXEMPT FROM PROPERTY TAX

EXEMPT PROPERTY
REVENUE LOSSES Macalester College 222
million St. Josephs Hospital 114 million St.
Paul College 73 million EXPENDITURES How do
you quantify the expenditures a city makes on
average for a hospital? A college? A government
building?
Source Ramsey County Assessors Office
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TAX STUDY PROPERTIES EXEMPT FROM PROPERTY TAX

PAYMENT IN LIEU OF TAXES (PILOT)Summary
PILOT Programs allow municipalities to get
property tax revenue from properties that would
not otherwise pay property tax, such as
government buildings, colleges, hospitals and
charitable institutions. Depending on the
structure and intent of the program, the Payments
can come directly from the affected properties,
or a higher level of government can compensate a
lower level of government for the existence of
non tax-generating properties in the area.
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TAX STUDY PROPERTIES EXEMPT FROM PROPERTY TAX

PAYMENT IN LIEU OF TAXES (PILOT)Summary
The most extensive PILOT Program is in
Connecticut, where the state government
compensates municipalities for taxes lost by
non-profits, colleges, and hospitals, at a rate
of 77 of the revenue the property would generate
if it were not exempt. However, even in
Connecticut, the funding level for the program is
subject to the whims of the state legislature.
Other programs operate in Michigan, and through
the Canadian National Government. The United
States Federal Government also compensates states
for certain types of federal lands that dont pay
taxes.
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TAX STUDY PROPERTIES EXEMPT FROM PROPERTY TAX

PAYMENT IN LIEU OF TAXES (PILOT)Summary
Before any Minnesota city could initiate a PILOT
program, the state Legislature would have to
approve its use in Minnesota. As part of the
Property Tax Reforms enacted in 2001, some state
leaders investigated the possibility of allowing
Minnesota Cities to establish PILOT Programs. A
2000 Study from the Minnesota Budget Project
looked at how much Cities could raise statewide
by instituting a PILOT Program on specifically
hospitals and charitable properties at a rate of
38 that of peer properties. The study
suggested St. Paul would have gotten an
estimated 612,614, or about 1 of its total tax
levy.
Source Cost Estimates of Payment in lieu of
Taxes on Charitable Institutions and Hospitals,
MN Council of Non-Profits Budget Project
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TAX STUDY PROPERTIES EXEMPT FROM PROPERTY TAX

PAYMENT IN LIEU OF TAXES (PILOT)Summary
Before any Minnesota city could initiate a PILOT
program, the state Legislature would have to
approve its use in Minnesota. As part of the
Property Tax Reforms enacted in 2001, some state
leaders investigated the possibility of allowing
Minnesota Cities to establish PILOT Programs. A
2000 Study from the Minnesota Budget Project
looked at how much Cities could raise statewide
by instituting a PILOT Program on specifically
hospitals and charitable properties at a rate of
38 that of peer properties. The study
suggested St. Paul would have gotten an
estimated 612,614, or about 1 of its total tax
levy.
Source Cost Estimates of Payment in lieu of
Taxes on Charitable Institutions and Hospitals,
MN Council of Non-Profits Budget Project
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TAX STUDY PROPERTIES EXEMPT FROM PROPERTY TAX

PAYMENT IN LIEU OF TAXES (PILOT)Summary
Before any Minnesota city could initiate a PILOT
program, the state Legislature would have to
approve its use in Minnesota. As part of the
Property Tax Reforms enacted in 2001, some state
leaders investigated the possibility of allowing
Minnesota Cities to establish PILOT Programs. A
2000 Study from the Minnesota Budget Project
looked at how much Cities could raise statewide
by instituting a PILOT Program on specifically
hospitals and charitable properties at a rate of
38 that of peer properties. The study
suggested St. Paul would have gotten an
estimated 612,614, or about 1 of its total tax
levy.
Source Cost Estimates of Payment in lieu of
Taxes on Charitable Institutions and Hospitals,
MN Council of Non-Profits Budget Project