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Court: Regarding street fees, St. Paul can treat churches like businesses

ST. PAUL - The city of St. Paul is claiming victory in a long-standing legal dispute with two downtown churches over routine street assessments.

ST. PAUL – The city of St. Paul is claiming victory in a long-standing legal dispute with two downtown churches over routine street assessments.

The decision issued Monday by the Minnesota Court of Appeals upholds St. Paul's right to treat downtown churches like businesses when it charges annual right-of-way street maintenance fees.

"I would say this is a win for the city, and hopefully, this does bring an end to what has been years of litigation over this issue," St. Paul City Attorney Samuel Clark said.

An attorney for the churches has promised to continue to press their case in court.

The city of St. Paul bills all property owners-even schools, churches, government buildings and nonprofits-for every foot of street and alley frontage. The assessments, which raise some $26 million annually, are intended to pay for street cleaning, sidewalk patching, tree-trimming, traffic sign repair, snowplowing and other repeat maintenance that happens year after year.


Pastor Bill Englund of the block-length First Baptist Church of St. Paul said the fees are costing his congregation about $18,000 per year, "and that's basically shoveling snow onto our sidewalk," he said. "And the ironic thing is, we get warnings from the city that we have to shovel our sidewalk."

Downtown churches and nonprofits pay the same rate for routine street maintenance as commercial properties such as the Wells Fargo Tower or the Travelers building. While downtown condos are charged $3.62 per foot of street frontage, businesses, churches, nonprofits and all other properties pay $18.81 per foot on paved streets.

Englund noted that outside of downtown, however, churches are charged the much cheaper residential rate, as if they were houses.

"The church has always offered to pay its fair share," Englund said.

In three legal filings since 2011, the First Baptist Church and the Church of St. Mary have contended they are being assessed unfairly. Minnesota Public Radio has signed on as co-plaintiff in the 2012 and 2013 cases, which are pending in Ramsey County District Court.

Englund said the 2011 case has been through the district courts twice and through the Court of Appeals twice, and through a mediator.

Legal opponents have said that St. Paul, which is home to hundreds of nonprofits, is unique in Minnesota for using street assessments on top of property taxes and levying them against all properties annually. They've expressed concern that if St. Paul defeats its challenges in court, other cities will impose the same type of annual charges on all property owners.

Jack Hoeschler, who represented the two churches in court, promised to appeal the decision to the Minnesota Supreme Court.


"This ruling is absolute gold for a city attorney. This ruling is a carte blanche," Hoeschler said. "If this is not overturned, the city attorneys throughout Minnesota will be adopting similar approaches to that being used by St. Paul alone."

In the decision issued Monday, the Court of Appeals' three-judge panel noted that St. Paul has its own home rule charter, which allows the city to levy assessments for certain improvements, provided that the charges do not outweigh the benefit.

Over the years, legal cases before the state's highest court have turned on whether an assessment is a tax or a fee. General measures intended to raise revenue are considered taxes by the courts, while fees are intended to recoup the cost of providing a specific service. In other words, a fee cannot outweigh the benefit it provides.

"The churches will argue that this assessment is really a tax," Hoeschler said. "In addition, they will argue that even if it were a fee, it is unreasonable for the city to charge more than its costs for such fees."

In their written opinion, however, the judges found that St. Paul is operating within the appropriate legal definitions. "The services improve the city's health and safety by removing debris and snow from city streets, repairing streetlights and signs, and patching potholes in the streets, alleys, and sidewalks," they said. "Therefore, we conclude that the district court correctly concluded that the ROW assessment is a regulatory service fee."

The panel found that although the fees do not exactly reflect the costs of the services the churches receive, they're still proportional.

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