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U NIVERSITY A VENUE P ROPERTY T AX S TUDY: Part 5: P ROPERTIES E XEMPT F ROM P ROPERTY T AX Bob Spaulding November 14th, 2006.

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Presentation on theme: "U NIVERSITY A VENUE P ROPERTY T AX S TUDY: Part 5: P ROPERTIES E XEMPT F ROM P ROPERTY T AX Bob Spaulding November 14th, 2006."— Presentation transcript:

1 U NIVERSITY A VENUE P ROPERTY T AX S TUDY: Part 5: P ROPERTIES E XEMPT F ROM P ROPERTY T AX Bob Spaulding November 14th, 2006

2 TAX STUDY | PROPERTIES EXEMPT FROM PROPERTY TAX E XEMPT FROM P ROPERTY T AX IN M INNESOTA Source: Minnesota Statutes Chapter ; Dakota County Asessors Office Summary 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)

3 TAX STUDY | PROPERTIES EXEMPT FROM PROPERTY TAX E XEMPT FROM P ROPERTY T AX IN M INNESOTA Source: Northstar Research Institute v. Hennepin County; Dakota County Asessors Office Summary Institutions of Purely Public Charity: Defined The “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 by donations 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.

4 TAX STUDY | PROPERTIES EXEMPT FROM PROPERTY TAX P ERCENTAGE OF E XEMPT P ROPERTY L OCALLY Taxable Market Values, 2006 Source: Ramsey County Assessor’s Office Ramsey CountySaint Paul

5 TAX STUDY | PROPERTIES EXEMPT FROM PROPERTY TAX P ERCENTAGE OF E XEMPT P ROPERTY L OCALLY Taxable Market Values, 2006 Source: Ramsey County Assessor’s Office University Avenue, Excluding Capitol Grounds

6 TAX STUDY | PROPERTIES EXEMPT FROM PROPERTY TAX E XEMPT P ROPERTY Source: Ramsey County Assessor’s Office REVENUE LOSSES Macalester College: $222 million St. Joseph’s 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?

7 TAX STUDY | PROPERTIES EXEMPT FROM PROPERTY TAX P AYMENT IN L IEU OF T AXES (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.

8 TAX STUDY | PROPERTIES EXEMPT FROM PROPERTY TAX P AYMENT IN L IEU OF T AXES (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 don’t pay taxes.

9 TAX STUDY | PROPERTIES EXEMPT FROM PROPERTY TAX P AYMENT IN L IEU OF T AXES (PILOT) Summary Source: Cost Estimates of Payment in lieu of Taxes on Charitable Institutions and Hospitals, MN Council of Non-Profits Budget Project 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.

10 TAX STUDY | PROPERTIES EXEMPT FROM PROPERTY TAX P AYMENT IN L IEU OF T AXES (PILOT) Summary Source: Cost Estimates of Payment in lieu of Taxes on Charitable Institutions and Hospitals, MN Council of Non-Profits Budget Project 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.

11 TAX STUDY | PROPERTIES EXEMPT FROM PROPERTY TAX P AYMENT IN L IEU OF T AXES (PILOT) Summary Source: Cost Estimates of Payment in lieu of Taxes on Charitable Institutions and Hospitals, MN Council of Non-Profits Budget Project 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.


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