St. Paul Considering 'Voluntary' Payment Plan for Non-Profits

September 07, 2017 11:02 AM

The City of St. Paul is considering a unique way to boost revenue by asking non-profits that own tax-exempt property to voluntarily make payments to the city.

It's the latest effort by the city to recover from a Minnesota Supreme Court ruling last fall that determined it was illegal to keep charging non-profits "right-of-way" assessments.

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"These tax-exempt organizations by the state constitution and primarily by statutes are tax exempt," says Sean Kershaw of the Citizens League, who co-chaired a committee looking at the idea. "And yet the city is obligated to provide police, fire, snow removal services to everybody in town."

Kershaw says the idea is to approach non-profits with big property footprints in St. Paul, like private colleges and hospitals, and ask them to voluntarily make payments to the city to help ease the overall property tax burden.  His committee included representatives from non-profits like the University of St. Thomas and United Hospital.

"The city and these tax-exempt organizations each benefit from a strong community and the idea of talking about a voluntary initiative where they sit down and work out what's most beneficial to both of them...that got a lot of support," Kershaw told 5 EYEWITNESS NEWS before a St. Paul City Council meeting Wednesday.

After the city council heard a report on the proposal, St. Paul Mayor Chris Coleman said he was eager to begin negotiations.

“As a result of the task force’s recommendations, the City of Saint Paul will engage in a process with our tax-exempt partners to better understand the public services they value and how a voluntary payment initiative may serve as a vehicle of mutual benefit," Coleman said in a written statement.

Coleman also acknowledged the value the non-profits bring to St. Paul.

Steven Schier, a Carleton College professor, says voluntary payments could be a good public relations move for non-profits.

"These non-profit institutions can illustrate that they are good citizens and create a more positive public image by doing this," Schier said.

No other Minnesota cities have a similar program, although Schier noted that Carleton College and St. Olaf College make voluntary contributions to the City of Northfield.

In Massachusetts, the City of Boston has a voluntary payment program that raised $31 million last year.

Kershaw says St. Paul would likely start by trying to raise a modest amount of $500,000 to a million dollars in the first year and try to build on that in the future.

Credits

Tom Hauser

Copyright 2018 - KSTP-TV, LLC A Hubbard Broadcasting Company

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