The Real Reason Why The City Of Minneapolis Wants Big Multi-Family Developments
The city of Minneapolis makes more money in tax revenue per acre on multi-family properties compared to single-family properties. For example, if there are two average size parcels of land in Minneapolis with single-family homes on each parcel and the value of the two parcels is $300,000 each, then the total value for both is $600,000. The city taxes each parcel at 1.5% of its value so the total city property tax revenue from those two parcels is $9,000.
Compare that example to a new 30-unit apartment building on two of the same size parcels of land in the same area of town. Each one of those units is valued at $130,000. So each one gets taxed about $1950 a year. If there are 30 units then the total property tax would be $58,500. So with single-family homes the city makes $9,000, but with multi-family developments the city makes $58,500. The city makes 650% more in tax revenue. The city costs go up a little bit with infrastructure, but not much. Most of the costs of the building are paid by the owner. To be fair the economy is hot and there are a lot of people moving to Minneapolis; demand for rental housing is high. But nevertheless, the city has a major financial interest in getting more multi-family properties to the market.