Home Rule Charter Cities in MN - Taxation and Assessment Powers

As addressed in the first week of class this semester, and in the League of Minnesota Cities’ Local Government Handbook (www.lmc.org/media/document/1/chapter01/pdf), there two “types” of cities in Minnesota: statutory cities and home rule charter (HRC) cities. Of the 854 incorporated places within the state, 107 are HRC cities. In short, the HRC is an alternative form of governance that allows cities more flexibility in the structure of the mayor/city council/city administrator, as well as other issues, such as the ability to propose amendments to the city charter (statutory cities need a state statute passed for similar changes). This flexibility and localized set of rules (the charter) doesn’t come without extra work and administrative time and cost, though, and many cities seem to have steered clear of this structure because of these reasons.

So, what’s the deal with the non-statutory 13 percent of incorporated local governments, and exactly how do the charters of these cities relate to property taxes? (Before we get to the answers, check out this map to see just which 107 cities I’m talking about. Any familiar faces?)

As it turns out, the impact of home rule charters on local governments, including property taxes, is very minimally researched. In my efforts to dig into this, I found this brief about HRCs in Midwestern states by researchers at Indiana University (go Gophers!). So, at least on fiscal issues, the fiscal independence of Home Rule cities is limited.

Although I’ve always had an interest in local government power, and especially in terms of its role in economic development, land use, and transportation systems, my awareness to HRC cities peaked as I started working on my capstone project this semester. So, with the “limited independence” tag from the IU summary, I kept digging.

Here are a couple of things I found:

The City of Minnetonka’s Economic Development Authority discussion of special service districts (SSD), which can be created through an ordinance in HRC cities (currently extended through June 30, 2013), instead of through a state statute process. SSDs are an additional fee structure on top of property taxes that are frequently used for additional maintenance, streetscaping, and other roadway improvements in a business district.

Here’s a really interesting one, and I have yet to find it applicable to other charter cities: Minnetonka is able to defer the assessment of development fees, such as those related to a parking ramp to be used at a future LRT station, until the time that the development actually occurs. Statutory cities are only allowed to do so on a greenfield (non-developed) site, which can make assessments for redevelopment projects into much more of an upfront barrier.

Interesting…they don’t teach you these things in school!