Let’s Shift St. Paul, Minnesota’s, Property Taxes Onto Land!

At last, I’ve found time to write! This will be the first in a while for a while. A few months back I threatened readers with posts on real-estate mapping and assessment, and I make good on my threats.

Background: When I moved to the Twin Cities, I joined Minnesota’s Common Ground chapter, and this year its intern introduced some of us to the black arts of geographic information system/science (GIS) software. GIS is a discipline full of jargon, like “vectors” and “table joins,” that I find silly, but they’re certainly more sensible than “JD Advantage.”

The purpose of our inculcation is to help Common Ground advocate for land-value tax districts in Minnesota cities as a pilot program toward enabling municipalities to adopt split-rate taxation like Pennsylvania’s. The goal is to observe the effects of removing taxes on improvements and replacing them on locations to encourage development. Connecticut enabled a pilot program like this in 2014 (and it’s being extended), so LVT of a kind is in the policy air. So far, Common Ground’s efforts have successfully resulted in the introduction of a bill in the Minnesota House of Representatives.

Oh, and I claim zero credit for any of this.

But I do have newfound technical skills to unleash on readers (actually, a lot of the work is done in MS Excel, which is old hat around here), so with the open source QGIS and the state’s wonderful MetroGIS’s database in hand, here’s how a property tax shift would affect St. Paul, Minn.—because I was born there, and it’s the city we started our training with.


St Paul Shift Small

Click to enlarge.

What you’re seeing is the distribution of the percent changes in property taxes for each parcel, divided into negative changes (blue, decreased charges) and positive changes (red, increased charges), and excluding tax-exempt properties. Because more parcels’ property taxes would be cut by the shift (yay!) than raised, the number of blue/red parcels isn’t equal.

Here’s a histogram of the percent changes of property taxes by percentile for single-unit residential lots claimed as homesteads, which dominate the city’s land use by nearly two-thirds of all properties and are probably the most salient politically.

Distribution of Property Tax ChangesThe results for these properties is inauspicious. A bare majority, 52 percent, would get breaks, and the remaining homeowners would pay more by comparison.

I’ve included a macro table for reference below, but generally, the tax shift would move the property tax to residential parcels and off commercial lots. Vacant lots would pay more—as they should—but there aren’t many of them in St. Paul.

One of the biggest conceptual problems with estimating the effects of a land-tax shift is that the current property-tax system discriminates among property classes. Residential lots on average pay less than commercial lots—by design. Single-unit homesteaders pay on average 1.52 percent of their assessed values in property taxes, and commercial owners pay 4.24 percent. Meanwhile, vacant residential lots pay 8.08 percent, illustrating existing progressivity in the property-tax system.

Consequently, much of the effect of a property-tax shift is really just equalizing the tax rate on all parcels, eliminating discrimination among property classes. In fact, a land-value tax shift starting from a hypothetical flat property-tax rate that includes buildings is better for single-unit residential landowners. Unsurprisingly, Common Ground Minnesota explores what happens when residential parcels are treated differently than other types in its advocacy.

Let’s return to the map above. Comparing the top 10 percent of property-tax reductions to the top 10 percent of increases, the property-tax burden is lifted most from the northeast part of St. Paul and downtown, and moved to the southwest part of the city, which is mostly residential.

These results don’t fill me with warm fuzzies, but the underlying issue is not who would pay but who isn’t currently paying, i.e. it’s the land-value assessments. Minnesota requires properties to be assessed at their fair-market values. These estimates are fed into multiple formulae to arrive at properties’ tax capacities, and then tax authorities apportion levies against all properties based on these tax capacities. When properties are under-assessed, they receive a hidden tax break; when they’re over-assessed, they opposite is true. Between commercial landowners and homeowners, guess who gets the hidden breaks?

To illustrate why I think St. Paul’s real estate isn’t properly assessed, here’s a map of St. Paul’s land values per square foot, including only the bottom 10 percent of parcels and top five percent.


Click to enlarge.

I’ve zoomed the map to the southwest part of St. Paul, and while you can see that the downtown cluster includes much real estate in the top 1 percent by value, some of it streaks west along Grand Ave. There are a few other peculiar concentrations of 1 percent real estate: a few blocks south of St. Catherine University (St. Kate’s to the locals), and a few blocks south of the University of St. Thomas’ divinity school (the law school’s campus occupies a surprisingly large chunk of land in nearby downtown Minneapolis). Slightly less valuable real estate lies along University Ave. (where the light rail connects the Twin Cities) and the L-shape along Cretin Ave. and Ford Parkway.

Most of the top .01 percent is downtown (~$56 per square foot), but some of it is still in these areas. Naturally, you may be wondering why property owners with the most valuable land aren’t demanding their properties be rezoned so they can build office towers in western St. Paul. The answer is that much commercial real estate is under-assessed, and many parcels’ values are malapportioned between buildings and land. (I have an acquaintance who recently bought a decades-old house on a plot of land valued at a mere $5,000.)

Although Minnesota’s tax authorities go to great lengths to ensure assessments are fair, notably sales-ratio equalization estimates of numerous parcels, these methods only include properties that were sold in arms-length transactions. One ongoing problem I’ve identified is that commercial real estate transactions differ substantially from those of owner-occupiers. The wealthy simply buy land differently from the rest of the populace.

For example, on November 10, 2015, the First National Bank building sold for $37.25 million but its assessed value as of January was only $25.5 million. Why? Because according to the Ramsey County Assessor’s Office, it was a “Not Typical Market” transaction, so it was disqualified from the sales-ratio equalization analysis.

Here’s another fun one: A Walgreens on Larpenteur Ave. (which might actually be in Roseville) sold for $11.2 million in April 2013, but was excluded from the sales-ratio equalization study because of “unusual financing.” The same goes for the Walgreens on Ford Parkway, which sold for $13.9 million but was assessed at $3.2 million.

Other times sales that qualify for the sales-ratio equalization analysis still result in assessments that are below their sales prices, e.g. the lot on 240 4th St. East, which sold for $800,000 in March 2015 but was assessed at only $286,300 in 2016. The biggest offender I’ve found in my casual search is ten vacant lots along Dunlap St. that sold for $7.5 million and have been assessed at about $3,200 per parcel. You’d think qualified sales of vacant real estate would be assessed at something close to their sale prices, but they’re simply not. This results in large property-tax breaks for wealthy landowners and an increased burden on everyone else.

If I were a St. Paul homeowner (and I know a bunch), I would grab my pitchfork and march on the Ramsey County Assessor’s Office and demand the city’s land values, especially its commercial land, be properly assessed according to law. I’m confident that would shift some of the property-tax burden away from homeowners and onto downtown landowners without affecting their property values. Municipalities should also rely more on mass building-residual assessments to arrive at more accurate land (and building) values, echoing the negative corporate land values in 2009 that I wrote about a few months back. I believe better assessments would make land-value-only property taxes more attractive to single-unit homesteaders than the current system illustrates.


Here’s the macro table of what the LVT change would do to the majority of the city’s parcels.

Macro Tax Shift Table

Click to enlarge, if you dare.


Change in Graduate Outcomes Driven by Small Jobs

My second cut at the class of 2015 employment data:

Comparing the law-school classes of 2015 to 2014 (and excluding our three Puerto Rico law schools), there were 3,772 fewer graduates, a decline of 8.7 percent. Four employment categories constituted nearly 90 percent to this change: bar-passage-required jobs (52%), JD-advantage jobs (13.1%), law-school-funded jobs (14.3%), and unemployed grads seeking jobs (9.5%).

Changes among the employment types accounted for 85 percent of the 3,772 fewer graduates. The four largest drivers were 2-10-lawyer practices (25.9%), business-and-industry jobs (23.6%), government jobs (11.6%), and public interest jobs (7.5%).

Finally, I looked at the distribution of graduates among the employment categories and statuses by their Gini coefficients. Some of these are more informative than others given the small number of grads that fit into some of them, e.g. the two dozen employed – undeterminable grads. There’s nothing unexpected here. Aside from solos and unknowns, outcome inequality at law firms increases with firms’ sizes. Federal clerkships are still doled out like income in a landlocked, kleptocratic, military dictatorship. Public interest jobs aren’t so easy to come by either, which casts some doubt on the willingness of grads to take them given their student loan burdens.

In all, I’m surprised so little of the decline is attributable to fewer unemployed grads. Instead, it appears that small-law and non-law jobs took much more of the hit. The change in how law-school-funded jobs are tallied distorts these results somewhat, and I look forward to years in which the employment criteria remain constant. At least the categories and statuses (mostly) added up correctly.

Here’s an analytic table I base these opinions on.

2014 2015 2014 2015 2015 2015 2014 2015
Employed – Bar Passage Required 26,794 24,832 62.0% 63.0% -7.3% 52.0% 0.30 0.32
Employed – JD Advantage 5,913 5,420 13.7% 13.7% -8.3% 13.1% 0.36 0.37
Employed – Professional Position 1,787 1,634 4.1% 4.1% -8.6% 4.1% 0.49 0.53
Employed – Non-Professional Position 600 537 1.4% 1.4% -10.5% 1.7% 0.57 0.54
Employed – Law School 1,577 1,037 3.7% 2.6% -34.2% 14.3% 0.73 0.79
Employed – Undeterminable 21 25 0.0% 0.1% 19.0% -0.1% 0.93 0.94
Employed – Pursuing Graduate Degree 693 649 1.6% 1.6% -6.3% 1.2% 0.44 0.50
Unemployed – Start Date Deferred 313 285 0.7% 0.7% -8.9% 0.7% 0.64 0.63
Unemployed – Not Seeking 553 494 1.3% 1.3% -10.7% 1.6% 0.54 0.57
Unemployed – Seeking 4,103 3,744 9.5% 9.5% -8.7% 9.5% 0.43 0.47
Employment Status Unknown 841 766 1.9% 1.9% -8.9% 2.0% 0.67 0.68
Total Graduates 43,195 39,423 100.0% 100.0% -8.7% 100.0% 0.27 0.29
Solo 902 653 2.1% 1.7% -27.6% 6.6% 0.51 0.53
2-10 7,657 6,680 17.7% 16.9% -12.8% 25.9% 0.34 0.33
11-25 1,875 1,737 4.3% 4.4% -7.4% 3.7% 0.37 0.39
26-50 1,036 942 2.4% 2.4% -9.1% 2.5% 0.42 0.44
51-100 799 807 1.8% 2.0% 1.0% -0.2% 0.46 0.46
101-250 1,090 952 2.5% 2.4% -12.7% 3.7% 0.50 0.52
251-500 1,082 1,059 2.5% 2.7% -2.1% 0.6% 0.66 0.66
501-PLUS 3,968 4,008 9.2% 10.2% 1.0% -1.1% 0.78 0.77
Unknown 247 254 0.6% 0.6% 2.8% -0.2% 0.80 0.83
Business Industry 6,608 5,718 15.3% 14.5% -13.5% 23.6% 0.35 0.36
Government 5,038 4,602 11.7% 11.7% -8.7% 11.6% 0.32 0.33
Public Interest 2,160 1,878 5.0% 4.8% -13.1% 7.5% 0.50 0.51
Federal Clerkship 1,275 1,222 3.0% 3.1% -4.2% 1.4% 0.67 0.70
State/Local Clerkship 2,056 2,007 4.8% 5.1% -2.4% 1.3% 0.57 0.58
Other Clerkship 37 125 0.1% 0.3% 237.8% -2.3% 0.93 0.86
Education 772 635 1.8% 1.6% -17.7% 3.6% 0.46 0.49
Unknown Employer Type 90 206 0.2% 0.5% 128.9% -3.1% 0.84 0.94
Total Employed by Type 36,692 33,485 84.9% 84.9% -8.7% 85.0% 0.29 0.30

That’s all.


[UPDATE: As with last year, it appears the ABA took down the employment spreadsheet by late Friday afternoon, making this post … an exclusive. There may be substantial revisions to come.]

At last, something to write about! (And time to do it too!)

On Friday, the ABA updated its Employment Summary Report Web site, which provides employment data for each law school class going back to 2010. Many if not all law schools have uploaded their individual reports, and some intrepid researchers have already dug into them, but I prefer to wait until the easy-to-use spreadsheet comes out. Note: There may be revisions to these data, but this first, preliminary cut gives a good sense of the class of 2015’s employment outcomes. Also, I diligently account for all accredited law schools, so researchers should recognize that Concordia Law School must be inserted manually. Indiana Tech has no data.

39,423 people graduated from 204 ABA-accredited law schools outside of Puerto Rico roughly between September 1, 2014, and August 31, 2015. The employment information is good as of about March 15, 2016.

Here’s the employment status distribution.

Class of 2015 Employment Status Distribution

Surprisingly, many of the employment status categories’ percentages are identical to last year, even though the absolute numbers have fallen. I almost thought I was looking at the 2014 data by mistake. Notably, the employment status tables added a section for “Employed – Law School/University Funded” jobs. It’s probable that a good chunk of these jobs were classified as “JD Advantage” until now, further clouding the validity of that category.

The display tables appear below the fold to conserve blog space.




Mellow is the Bubble

I’ve been putting in more overtime at the office, but that gives me a chance to listen to music!

Here’s Peach Kelli Pop, our space explorers:

And Skylar Gudasz covering Big Star:

At the end, if you look carefully you just might see the last gen x American as the camera pans right. I even contributed a whistle.

Gudasz’s original stuff is quite good too.

2016-04-09 Site Update

I’ve updated the site’s most popular attraction, the Lawyers Per Capita by State page, thanks to updated population and lawyer counts. Kudos to the state bars for all reporting attorney numbers on time. Back in 2014, the Census Bureau’s press department honored the page by using its contents in a “Profile America” feature on the ABA’s foundation.

And for fun, here’s a time series chart depicting the saturation of lawyers by Bureau of Economic Analysis region.

No. Attorneys Per 10,000 Residents by BEA Region

That’s all.