In recent years, Saint Paul has seen steady growth in single-family home values, reflecting the strong demand for residential properties. However, not all property types are experiencing the same trend. Commercial properties, industrial buildings, and apartment complexes have slightly dipped in their estimated market values over the past year. This shift in property value dynamics has significant implications for homeowners, as the value of various property types in the area heavily influences property taxes. As a result, Saint Paul homeowners are likely to face higher property tax bills in the coming year.

Property Tax Increases Expected for Homeowners

For most homeowners, property taxes are a major expense, and Saint Paul residents should brace themselves for a noticeable increase. A typical single-family home with a median value could see a property tax hike of about $200 next year. This increase is the result of combined tax levies from the city, county, and school districts. But that’s not all – fees for essential services like trash collection, water, recycling, and sewer are expected to rise as well, adding at least $100 more to household expenses. Altogether, homeowners may face approximately $300 in additional taxes and fees next year, depending on their neighborhood and the final approved tax rates.

Budget Challenges and Shifting Tax Burdens

The city’s leaders are navigating a challenging financial landscape, with a growing reliance on residential property taxes to balance the budget. Saint Paul’s mayor has proposed a 7.9% increase to the city’s property tax levy, which would raise $16.5 million in additional revenue. While this is a significant increase, it is not unprecedented, as larger tax hikes have occurred in the past decade. The tax burden appears to be shifting more toward residential properties, as the value of commercial and industrial properties has declined. This means that Saint Paul homeowners will likely shoulder a larger share of the city’s tax needs compared to previous years.

Neighborhoods Experience Different Impacts

The impact of these tax increases will not be evenly felt across Saint Paul. In neighborhoods like Highland Park, where home values are climbing by over 5%, property tax bills are expected to rise substantially. For example, a home in Highland Park worth $413,000 may see its taxes increase by $527 next year. On the other hand, downtown condo owners could see some relief, as property values in that area have slightly declined. Other neighborhoods will fall somewhere in the middle. For instance, a home in the Payne-Phalen neighborhood, with a smaller increase in market value, might see a more modest tax hike of around $89.

Decline in Commercial and Apartment Values

While residential property values are on the rise, commercial and industrial properties, as well as apartment buildings, are experiencing a downturn. Commercial property values have dropped by 1.5%, industrial values by 2.4%, and apartment values by 4.5%. This decline means these property types will likely see lower property tax bills, providing some financial relief for businesses and landlords. However, this shift places a heavier burden on residential properties to make up for the revenue shortfall. The commercial and office real estate markets are also adjusting to new trends, such as hybrid work models and fewer retail developments, which could further affect property values and tax revenues.

Development and Programs to Offset Tax Impacts

Despite the challenges, there are bright spots in Saint Paul’s real estate and financial landscape. Major residential development projects, such as Highland Bridge and The Heights, are moving forward, along with other large-scale developments throughout Ramsey County. These projects are expected to boost the housing market and provide long-term benefits to the local economy. Additionally, Saint Paul benefits from a regional fiscal disparities program, which redistributes property tax revenue from commercial-industrial properties across counties. Ramsey County is set to receive $56.8 million from this program in 2025, an increase of nearly 12% compared to last year. This shared revenue helps offset some of the tax burdens on homeowners.

Preparing for a Challenging Year Ahead

Saint Paul residents should prepare for a challenging year as property taxes and fees rise to address the city’s budget needs. While development and fiscal programs may provide some relief, the increase in residential property taxes is inevitable for many homeowners. Those looking to minimize their tax burden should consider exploring options such as challenging their property’s market value assessment, a method some homeowners have already used successfully. As city, county, and school district budgets are finalized in the coming months, there may still be adjustments to tax rates, but the general trend points toward higher costs for Saint Paul households in 2025.