Behind the data: A look at Minnesota counties that profited from tax forfeited properties
This analysis examines the data underpinning this MPR News Story.
In May, the U.S. Supreme Court ruled unanimously that Hennepin County violated a woman’s constitutional rights after the government seized and sold her condominium after she failed to pay her taxes. The court ruled that the government can keep the value of the tax debt and any fees, but the remaining surplus from the sale must be returned to the owner of the property before it was taken by the government.
The court’s decision could affect roughly a dozen states and the District of Columbia that allow local jurisdictions to keep the excess money from the sale of tax forfeited properties. The ruling has resulted in lawsuits across the country.
APM Reports, the APM Research Lab and MPR News examined forfeiture sales data for some of Minnesota’s most populous counties — Anoka, Dakota, Hennepin, Olmsted, Ramsey, Scott and St. Louis. The news analysis examined the sale price of each property and subtracted any unpaid taxes and documented fees to determine additional proceeds collected by the counties.
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The sales vary by location and price since the government manages, markets and sells the properties. Some properties have sold for as much as $900,000. Others for less than $100.
Our analysis also found that some Minnesota counties stand to lose millions of dollars in future revenue.
Between 2017 and 2022, St. Louis County collected nearly $7.2 million from tax-forfeited property sales — an average of more than $1 million a year in proceeds for local governments. St. Louis County is by far the largest county by geographic size in Minnesota.
Hennepin County — which includes the city of Minneapolis — collected $3.7 million between 2017 and 2022. Anoka County reported a surplus of more than $1 million over the same time.
Not every county, however, collected a high amount. Dakota and Ramsey counties each collected about $700,000 over a five-year period.
Scott County earned less than $5,000 over the five-year span, and Olmsted County, which contains the city of Rochester, reported a net loss of $27,000.
Not only does revenue vary county to county, but it can vary substantially by year. Anoka County, for example, collected more than $800,000 in surplus revenues from the sale of tax forfeited properties in 2017 but lost money from those sales in 2018.
As part of our analysis, we matched properties to ZIP codes to determine if any patterns exist regarding race and income. We were able to map 90 percent of all properties to a ZIP code. The only outlier was Anoka County, which provided mappable addresses for two thirds of the properties.
Our analysis shows that tax-forfeited property sales are concentrated in Hennepin and St. Louis counties. Of the sales we analyzed, there are eight ZIP codes where at least 30 tax-forfeited properties were sold between 2017 and 2022.
Six of those areas are in St. Louis County, specifically in Duluth or on Minnesota’s Iron Range. These 244 properties – which include areas in and around Duluth, Hibbing and Chisholm – count for nearly half the total sold in St. Louis County between 2017 and 2022.
North Minneapolis accounts for the other high concentration of properties sold with 101 sold over the same time.
St. Louis County sold 535 forfeited properties between 2017 and 2022
Hennepin County sold the most forfeited properties in the 55411 and 55412 ZIP codes between 2017 and 2022
Olmsted County sold the most forfeited properties east and southeast of Rochester
High volume of tax forfeitures in low-income and racially diverse neighborhoods
The eight areas with the highest concentrations of tax forfeited property sales in the analysis tend to be lower income than surrounding areas.
The two Minneapolis neighborhoods with the largest number of forfeited property sales are among the most racially diverse in the state, with particularly large Black populations. Although we do not know the race of property owners at the time of forfeiture, our analysis suggests disproportionate, if inadvertent, impacts from tax forfeitures.
In the north Minneapolis neighborhoods of Near North and Camden, at least two thirds of the respective neighborhood residents identify as a person of color. Seventy-eight percent of residents in Near North and 61 percent of Camden residents identify as Black, Indigenous or other people of color according to Wilder Research’s Minnesota Compass. (In comparison, 22 percent of Minnesotans identify as Black, Indigenous or other people of color.)
Regarding income, 40 percent of Near North neighborhood residents have annual household incomes below $35,000, which is twice the statewide proportion. The proportion of Camden residents with an income below $35,000 is 28 percent, which is also above the statewide average of 20 percent.
The three notable high-concentration areas on the Iron Range each have higher proportions of lower-income households than Minnesota as a whole. Roughly one in three households in and around Hibbing and Chisholm have an annual household income below $35,000, compared to one in five Minnesotans.
Similarly, one-third of households in the ZIP code that includes western Duluth have an annual income below $35,000. For the two other Duluth ZIP codes in the downtown area, nearly half of all households fall under that category.
The table below shows the 10 ZIP codes with the greatest surplus revenue from the sale of forfeited properties between 2017 and 2022. According to our analysis, seven of those areas are in St. Louis County. The ZIP code that collected the most is in Hennepin County, which alone yielded close to $1 million. Camden, the other high-concentration area in Minneapolis recorded a net loss from the sale of tax forfeiture properties.