The city of St. Paul will pay out more than $634,000 to settle a series of lawsuits filed by roughly 200 plaintiffs seeking reimbursement of their street maintenance fees.
The lawsuits, grouped into six major claims, were filed by two attorneys, the late Jack Hoeschler and Ferdinand Peters, who assumed Hoeschler’s clients following his illness. The city council approved the six settlements last week.
“Several clients were in multiple cases,” said Peters on Friday. “Some of these cases went before five different judges.”
Property owners — especially churches, nonprofits and other non-taxable entities — have long sought to upend the annual fee St. Paul assesses for routine street maintenance such as snow plowing, tree trimming, sidewalk crack sealing, street lights, traffic signs and alley maintenance.
MN Supreme Court, Ramsey County Court decisions
Following a Minnesota Supreme Court decision in 2016 and a Ramsey County District Court decision last year, the city agreed to do just that. “It’s pretty much resolved,” Peters said. “I’m pleased that we settled.”
The city has long maintained that the annual fees were the only way to recoup expenses from colleges, government buildings and other properties that don’t pay property taxes.
In 2011, the downtown First Baptist Church of St. Paul noted that the fees, based on linear street frontage, were far higher for block-length houses of worship than for taller but narrower office buildings. The fees also varied greatly depending upon the type of street (residential versus arterial) and whether the structure was downtown or not.
Compared to churches based outside of downtown, First Baptist discovered in 2011 it was being assessed $16.29 per linear foot, instead of $3.14 to $3.34, a supposed “overpayment” of $33,544 from 2004 to 2009. City officials argued at the time that downtown streets were swept twice weekly instead of twice annually, among other benefits for downtown denizens.
“It wasn’t for a new sidewalk or a major improvement, which is a different category,” Peters said. “This was just street maintenance. We’ve got to do something different in this town.”
A series of lawsuits first initiated by First Baptist in 2011 and joined by other plaintiffs, including Minnesota Public Radio on appeal, rose to the Minnesota Supreme Court in 2016. Following a negative court decision against St. Paul, Duluth chose to abandon its street maintenance fee structure entirely.
St. Paul restructures street maintenance program
St. Paul, instead, settled its legal cases and then renamed and restructured its Right-of-Way (ROW) street maintenance program, folding much but not all of the $32 million in costs into the taxpayer-supported general fund. Fees were then limited to a handful of street services, such as mill-and-overlay work.
That drew a fresh wave of legal pushback from St. Paul nonprofits, churches and other entities. Victoria Street resident Simon Taghioff appealed his 2018-2019 mill-and-overlay assessment, which he noted was $5,000 largely because he lives on a busy arterial street as opposed to a residential street.
Other lead plaintiffs on separate legal actions included Midway Fuel, 178 RP LLC led by developer Rich Pakonen, Arvold Properties, 475 Cleveland Assoc. LLC and again, First Baptist Church.
In May 2022, a judicial decision from Ramsey County District Court Judge Robert Awsumb convinced the city to back down entirely. The judge found that the properties received no special benefit from routine street maintenance and should not be assessed special fees as if they were receiving an extra service.
“Case law has held that non-uniform taxes, unlike fees charged under a municipality’s police powers, require a showing of special benefit to the properties charged,” wrote Awsumb in his 22 page order, adding later, “The court finds that the (street assessment) is an exercise of the city’s tax powers.”
The city has since shifted routine street maintenance funding into the taxpayer-supported general fund. St. Paul Mayor Melvin Carter’s administration has said the shift accounts for roughly half the 14.65% increase in this year’s property tax levy.
