Special Assessment Policy and Practice: A Case Study of the City of St. Paul

Abstract

Since the early 1900’s the City of Saint Paul, Minnesota has charged special assessments to properties within its borders to help pay for street maintenance and street improvements. Over the years, the City’s process has evolved to meet demands of the times, and along the way has faced significant legal challenges that prompted a reexamination of its policies and approach to the application of “special benefit” in its assessment methodology. These influences led to the development and adoption of new special assessment policies that place special benefit – the increase in a property’s value due to a public street improvement project – at the heart of the assessment calculation method. This case study delves into the City’s assessment policies and practices by first recognizing the place special assessments occupies within the broader public finance category of “value capture.” It then provides a select historical review of the City’s special assessment policies, practices and legal challenges, and details the City’s appraisal-based approach to determining special benefit in its assessment calculations. Finally, the study analyzes the practical effects of this approach on city finances and city property owners, and considers how the policies and process might be improved through increased transparency, efficiency, equity, and other lenses.