Business property owners sue St. Paul over right of way assessments

Another group of St. Paul property owners, including Cherokee State Bank and the Green Mill, has appealed the right of way fees the city charges for snowplowing and street maintenance to the courts, essentially suing the city over fees they say are unfair and unconstitutional.

The city's reliance on charging the fees disproportionately to businesses for services that benefit everyone in St. Paul hits commercial properties especially hard while providing no additional benefit, said Ferdinand Peters, an attorney representing several commercial property owners, including himself.

"The city got addicted to this thing and it can't get off of it," he said of St. Paul's reliance on more than $30 million in right of way assessment charges that it uses to fund street maintenance.

Downtown churches sued in 2011 over the assessment process. A trial scheduled to start next month recently was canceled because the city is expected to consent to an order for judgment and repay the churches' assessments. Other property owners have said they plan to bring a class-action suit against the city.

St. Paul City Attorney Sammy Clark said the city has created a work group to re-evaluate the right of way assessment system in light of recent court actions.

Under state law, cities may only charge a fee for properties that benefit from an improvement. St. Paul assesses almost all property owners every year and uses that money for street maintenance, including tree trimming, snowplowing and litter pickup.

But owners of corner commercial properties pay significantly more in fees than owners of similarly sized properties next to theirs, Peters said. Corner property owners pay more because they pay according to the number of feet of street frontage for their property.

In August, the state Supreme Court ruled that St. Paul's assessments are actually taxes, and not fees that benefit individual property owners. That sent the churches' lawsuit back to the courts.

The result of all this means the city will likely have to reconfigure how it collects the money it needs to pay for such services.

Peters has a suggestion: Levy the amount needed on all property owners as part of the city's overall operating budget process. "Put it on the tax rolls," he said.

Clark, the city attorney, said the resolution of the church case will set in motion other cases involving opposition to the right of way assessments. The city is searching for a solution that everyone finds equitable, he said.

"Everyone at the city understands the legal landscape following the Supreme Court decision. And we are attempting to think very carefully and thoughtfully about possible changes to our program," Clark said. "But, keep in mind, any change has legal implications and fiscal implications for our city."

Staff writer Jessie Van Berkel contributed to this report.