Property tax hike to lead to increased rent in Prospect Park next year

Many homeowners in the neighborhood will likely be hit by a property tax hike in 2012.

by Anissa Stocks

Many residents in the Prospect Park neighborhood will see slight increases in rent next year.

Some landlords said they will increase monthly rent between $25 and $100 per home, depending on how hard their homes are hit by property taxes next year.

The neighborhood is one of about 10 in Minneapolis likely to feel the effects of higher property taxes in 2012. About 75 percent of homes in the area will see a tax hike âÄî the highest percentage among Minneapolis neighborhoods, according to city estimates.

About 72 percent of Prospect Park houses are renter-occupied, according to 2000 U.S. Census Data.

Ward 2 City Councilman Cam Gordon, who represents the Prospect Park area, said that more residents and landlords will see tax increases because houses in the neighborhood have better held their property values.

Prospect Park has a significantly higher median home market value âÄî about $265,000 âÄî than other areas near the University of Minnesota like Marcy Holmes and Southeast Como, according to the cityâÄôs assessor Patrick Todd.

According to city estimates, 7 percent of houses in Marcy Holmes will see a tax increase next year. No property taxes will be increased on homes in Southeast Como.

In those two neighborhoods, tax rates have generally remained level and home values have fallen since 2007 âÄî a peak year for University-area property market values.

Despite Mayor R.T. RybakâÄôs proposed frozen tax levy in his 2012 budget, many homes and businesses with higher market values will still have a tax hike. ThatâÄôs because the state Legislature earlier this year eliminated the market value homestead credit to benefit lower-value homes.

RybakâÄôs budget will wind its way through the Minneapolis City Council until it comes up for a final vote Dec. 14.

Although some residents are concerned about the tax hike, many said tax increases have become common in Prospect Park.

âÄúThere has been a gradual tax increase for several years. WeâÄôre used to it,âÄù long-time resident and landlord Mary Alice Kopf said.

Residents say the increase in Prospect Park might be a result of the neighborhoodâÄôs historical character and location.

âÄúWe sit on a hill near the river. That beauty makes us extremely appealing,âÄù Kopf said.

Some renters who live in the neighborhood said many students wonâÄôt notice the tax increase.

âÄúA lot of [them] just donâÄôt care [because] theyâÄôre not paying for their rent. Their parents are,âÄù University senior Abby Schraufnagel said.

Prospect Park has felt steady tax increases over the past few years.

Kopf has rented to graduate and professional students in the neighborhood for 47 years, and has increased rent to keep up with neighborhood trends and housing demands.

 She said she will likely increase rent at her two properties $20 per month, which she has done about every two years. This year, her century-old properties rent for about $900 a month.

The large apartment complex, University Commons wonâÄôt be affected by the increase.

Manager Constance Campbell said the building has fixed rent rates that have stayed relatively flat in the past few years.

The cityâÄôs assessorâÄôs office will begin notifying residents of their 2012 property values in January after the city finalizes the budget later this year.

The average Minneapolis home will be hit with a tax increase of roughly 1 percent, Todd said.

Prospect Park neighborhood association members said that the deal between Gov. Mark Dayton and the Legislature to replace certain tax credits hasnâÄôt been well received by some homeowners and developers.

 Gordon said taxpayers might have expected RybakâÄôs zero tax increase to mean flat rates, but thatâÄôs not always the case.

 âÄúItâÄôs unfortunate that [lawmakers] decided to do this … In some ways, itâÄôs kind of an undercover way to actually raise taxes.âÄù