Concerns Raised Over Property Tax for Minneapolis' Nicollet Mall Renovation

A plan to renovate the Nicollet Mall in Minneapolis relies on a special property tax assessment district to fund the $50 million in design and construction work dedicated to the project. As Peter Callaghan reports, opposition to the property tax has relied on predictable rhetoric—until now. According to Callaghan, the "a batch of nonprofit organizations" are arguing that the property tax could violate the Minnesota Constitution when applied to nonprofits.

How’s that? Under Minnesota's 1858 constitution, most nonprofits are exempt from paying regular property taxes because they are presumed to deliver services that benefit the community. But under long-established case law, they do pay special assessments for things such as new streets, sidewalks or sewers adjacent to their property.

What’s happening with Nicollet Mall, however, goes beyond sidewalk and lighting, argued Kurt Glaser, an attorney representing the Basilica of St. Mary.

Callaghan reports that the basilica is pitching a new structure for the property tax, whereby nonprofits would be charged at 50 percent the rate applied to "institutions."

The article goes on to define the idea of "value capture" as enacted by the property tax assessment as well as the legal ramifications of this "creative and novel" dissenting approach to the tax. Moreover, this particular example provides a "creative and novel" pressure on the traditional tension between governments and tax-exempt entities.