From building damage to police payouts, the costs of Floyd’s killing are piling up

By: - November 30, 2020 6:00 am

Soren Stevenson lost an eye after getting hit by a rubber bullet while protesting the police killing of George Floyd. Photo by Will Jacott/Minnesota Reformer.

Soren Stevenson was standing on a ramp to I-35W on May 31, arms linked with other protesters, when police started firing rubber bullets. Stevenson was hit in the eye.

His eye had to be removed, and he’s had several surgeries to reset his facial bones, he said. The eye didn’t heal correctly, despite multiple sets of stitches and a skin graft, and continued to bleed for months. 

Now Stevenson, 26, is suing the city of Minneapolis for conduct by its police officers during the unrest following the killing of George Floyd. 

Stevenson says he and his family have suffered both emotional and financial costs. His mother left her job for a month to be with him; his father two weeks; his brother three weeks, Stevenson said. He continues to join protests.

“The first time I went out, I could hardly breathe,” he said. “But there’s really no other choice for me … I don’t regret at all protesting for the life of George Floyd.” 

In all likelihood, Stevenson will be one of many people compensated for damage inflicted upon them by the Minneapolis Police Department and other government agencies, beginning with the family of George Floyd. It’s not known how much will be paid out, but the costs could be steep.

And that’s just the beginning of the financial burden — resulting from the actions of the four former police officers at the scene of Floyd’s death — that is now the responsibility of state and local taxpayers. Taxpayers are on the hook for millions in police costs and mobilization of the National Guard. And it’s coming at a time when city and state governments’ budgets are already stretched thin due to the COVID-19 pandemic.

Other costs are being borne by private entities — the looting and arson that broke out in the Twin Cities, for instance, caused significant property damage, totaling more than $100 million in Minneapolis alone. 

On top of all that, Minneapolis is sure to face harder-to-quantify effects that could plague the city for decades. Cities affected by riots — like Los Angeles in 1992 — are slow to recover and experience economic consequences for years, studies show, and there are no quick fixes for the issues at the root of Minneapolis’ current predicament.

Physical damage, insurance costs pile up

In the nights after Floyd’s death, peaceful protests gave way to arson and looting that damaged more than 1,300 buildings in Minneapolis and St. Paul.

Gov. Tim Walz’s administration estimated that the damage in the Twin Cities and surrounding suburbs would total more than $500 million, making it the second-costliest civil disturbance in U.S. history. The costliest on record are the 1992 riots that erupted in Los Angeles after four police officers were acquitted in the beating of Rodney King, which caused more than $1.4 billion in damage in today’s dollars.

In Minneapolis, a 5-mile swath of Lake Street was hit hardest. In all, 1,025 buildings were damaged, including 140 rendered uninhabitable by fires and smashed windows, according to the city. Of those, 53 were destroyed. 

This amounted to more than $107 million in property damage, which doesn’t account for business inventory losses, according to the Minneapolis Assessor’s Office.

In St. Paul, the Midway neighborhood sustained the worst of the damage. Destruction across the city added up to roughly $73 million, and $8.8 million in inventory loss, according to the city of St. Paul. Nearly 300 buildings were affected, including 20 that sustained major damage and another 20 that were destroyed.

Those totals don’t encompass the full scope of the financial impact. Insurers expect damage to cars, personal property and other insured property will add up to at least $17.5 million, according to data from the Minnesota Department of Commerce.

And help might be hard to come by. Although most business insurance policies cover losses from riots and vandalism, many business owners are uninsured or underinsured. Even those with coverage never expected they would lose their entire inventory, meaning their policy will only cover a portion of the financial hit.

Insurance companies had paid out more than $105.8 million in commercial property claims as of September — less than 40% of the expected losses, which insurers project will top $270 million. That doesn’t account for losses from uninsured businesses, or people who didn’t file claims.

Minnesota Democratic-Farmer-Labor legislators this summer proposed setting aside as much as $300 million to help damaged businesses, but Senate Republicans blocked the efforts, saying the packages were too large and local governments should contribute more.

Minnesota can’t expect any immediate federal aid for rebuilding, either. Walz’s request for $15.6 million to repair buildings damaged by fires during the unrest was twice denied by the Federal Emergency Management Agency this summer. Early this month, Walz authorized $11.7 million in state disaster funds for repairs in Hennepin County.

And the damage wasn’t just limited to the Twin Cities. For the first time ever, a “multi-state catastrophe” was declared by Property Claim Services, a company that analyzes insurance claims. The company tracked destruction in more than 20 states, with insured losses projected to reach nearly $2 billion.

State and local governments take on law enforcement costs

State and local governments racked up significant law enforcement costs during the unrest, and the added expenses come at a time when cities can ill afford any more budget surprises.

Minneapolis, like cities across the world, is facing a grim budget year as revenues fall and costs rise due to the COVID-19 pandemic. The city already had to close a $156 million budget shortfall this year and expects next year to be at least as difficult. Mayor Jacob Frey’s proposed budget for 2021 trims $213 million — a 13% reduction — from 2019, although the final budget numbers won’t be set until the City Council votes on Dec. 9.

In hopes of quelling the unrest in the Twin Cities, Walz mobilized thousands of Minnesota National Guard members — the largest Guard deployment in response to civil unrest in Minnesota’s history — at a cost of roughly $13 million, paid for by the state. 

That total surpasses the National Guard’s spending on emergency services for all of 2016 through 2019, when the Guard put roughly $2.6 million into security for the Super Bowl and other missions assisting law enforcement in Minnesota and neighboring states.

Cities saw their law enforcement spending rise as well. Minneapolis paid out more than $4.3 million for police overtime in June as officers worked extra hours responding to the unrest. That’s more than 18 times what the city spent on police overtime in May, and roughly two-thirds what it spent on overtime in all of 2019, when police overtime costs neared $6 million.

As a result, the city had exceeded its 2020 police overtime budget by more than $3 million by the end of October. This loss was offset, however, by police leaving the department in droves. Minneapolis expects more than 100 officers to leave this year — compared to 40 in a normal year — saving the city $14.2 million by next spring

Police costs are adding up in other agencies, too. After Floyd’s death, a local attorney made headlines when he said an “astronomical” number of Minneapolis police officers were seeking disability benefits, the majority of them officers who say they developed post-traumatic stress disorder during the unrest.

Minnesota police officers and firefighters — as well as other public employees, like teachers — receive disability benefits through the Public Employees Retirement Association. The organization had already received 123 disability applications from police and firefighters as of Sept. 30 this year — up from 119 in all of 2019 — and expects to receive nearly 150 through the end of the year, said Doug Anderson, executive director of PERA.

The application process can take months, so there’s no final numbers yet on how many officers will qualify, or how much PERA will pay out. Anderson is optimistic and said he doesn’t anticipate the plan’s costs or benefits will be affected by the increase in disability applications. Even if 250 officers were approved for disability benefits this year — which would be more than double the total from last year — that would represent about 1% of PERA’s police and fire plan members, he said.

“It’s not to say there is no cost implication. It’s just when you put it all into context, any kind of cost implication that does exist gets spread out among a lot of members over many years,” Anderson said. “It’s not terribly concerning to us.”

Other costs like workers’ compensations and health insurance associated with the disability claims will be covered by the cities these officers and firefighters work for, which could be a significant burden. Those costs are unpredictable for cities, while PERA plans for some fluctuation in benefits, Anderson said.

Minneapolis is already seeing a spike in sick and injury leave for police officers. The city’s spending on sick leave for police more than doubled between June and July, from $291,000 to $644,000. So far this year, the city has spent $4.2 million on sick leave for police officers, nearly 50% more than it spent in all of 2019, while spending on sick leave in other city departments has not increased as significantly.

The city is also paying more for officers to take leave due to on-duty injuries. Through October, Minneapolis paid $401,000 for police injury leave, more than double what it spent in all of 2019.

Minneapolis faces a wave of lawsuits

After Floyd’s death and the unrest, the city of Minneapolis is facing a flurry of lawsuits. 

Floyd’s family is suing the four former Minneapolis police officers involved in his death — and the city. The lawsuit alleges the city failed to properly train officers or address a pattern of unconstitutional policing practices, resulting in Floyd’s death.

The city is facing at least another six lawsuits related to protests, including a class action suit on behalf of journalists, alleging Minneapolis police and state officials targeted reporters during the protests; another class action suit on behalf of injured protesters, alleging Minneapolis police and state officers used unnecessary and excessive force; and at least four lawsuits from protesters like Stevenson who sustained eye injuries.

It’s too soon to tell just how costly these lawsuits could be in Minneapolis, but damages could be in the millions. Joanna Schwartz, a law professor at the University of California-Los Angeles who studies police litigation, told NPR that payouts in police violence cases range from thousands to millions of dollars and depend on where in the country the suit is filed.

“I don’t think the difference has to do with the severity of the harm,” she said. “It has a lot to do with other issues including the judges, the juries, the kinds of claims that can be brought and the number of attorneys who are experienced and willing to bring civil rights cases.”

In Minneapolis, legal settlements and payouts have racked up significant costs in recent years.

Minneapolis has paid out more than $34 million across 181 lawsuits against the Minneapolis Police Department since 2010, most of them for police misconduct, according to records from the city of Minneapolis. Minneapolis is self-insured, so settlements are paid from the city’s funds.

One settlement accounts for more than half that total: a $20 million payout — the largest police misconduct settlement in state history — to the family of Justine Ruszczyk Damond, who was shot by former officer Mohamed Noor in 2017 after calling 911 to report a possible crime. The second-largest payout this decade was in 2013, when Minneapolis paid more than $3 million to the family of David Smith, who died in 2010 after an officer kneeled on his back for more than 4 minutes.

The Twin Cities could endure long-term economic consequences

Minneapolis could suffer consequences from the riots for years to come. Research shows that neighborhoods and cities affected by riots see declines in economic activity and property values for decades after the unrest.

Fred Smith, an economics professor at Davidson College, studied long-term trends in neighborhoods damaged during the Cleveland riots in 1964 and 1968. Even when controlling for crime rates, housing stock and demographics, property values increased up to 30% more in areas unaffected by the riots than in riot-affected neighborhoods, the study found. Neighborhoods closest to the riots also saw the biggest population declines by 1980.

Risk aversion is at the root of these long-term changes, Smith said. If residents and business owners in riot-affected areas don’t feel safe, those who can afford to may move to another part of the city or out of the city entirely, as they did in Cleveland. That sets off a spiral that can affect quality of life and property values for years, he said.

Victor Matheson, an economics professor at College of the Holy Cross, said risk aversion was likely the cause for the economic effects he identified in Los Angeles after the Rodney King riots. The city experienced about $1 billion in immediate damage, then lost another $3.85 billion in taxable sales over the next decade, his study found. Ten years later, the city’s economy still hadn’t recovered.

In another study, Matheson was among a group of researchers who found that Miami’s taxable sales bounced back within months after Hurricane Andrew — the nation’s most expensive natural disaster before Hurricane Katrina, causing $26 billion in property damage — while Los Angeles’ struggles persisted for years.

They’re not exactly sure why the natural disaster recovery was so much faster than riot recovery, Matheson said, but residents’ confidence in solutions to the issues that caused the damage could be a factor. People may feel comfortable returning to hurricane-affected areas because technology and infrastructure improvements can keep people and buildings safe, but we don’t have concrete solutions to racism and police brutality, he said.

“I would point out that the riots in L.A. were sparked by exactly the same (thing) that happened in Minneapolis,” he said. “So there’s not been an obvious social solution to problems with respect to policing.”

There’s no quick and easy way to help neighborhoods recover, Smith said. Ensuring that lines of credit are available for business owners as they rebuild — especially new, first-time business owners and people of color —  is one step that could help. 

Fixing the root issues, however, will be much more complicated, he said.  

“The fact that this unrest is stemming from what is, obviously, legitimate concern about societal issues that have plagued communities for decades — I think that’s what makes it so very, very difficult,” he said. “I wish I knew what the recipe was for trying to make this experience different than what happened in the 60s and 70s.”

The Twin Cities may not suffer the same fates as Cleveland and Los Angeles, however.

Cleveland was already experiencing an economic decline due to deindustrialization when the riots happened, Smith said, which may have exacerbated the effects of the unrest. The Los Angeles riots covered a wider geographic area than those in Minnesota, Matheson said, and were much deadlier, with 63 people killed.

“You can always rebuild your business, but you can’t replace a life,” Matheson said. “If it was the death toll that really scared away people from rebuilding, then you might expect that not to happen in Minneapolis.”

Nicolas Papadopoulos, a professor at Ottawa’s Carleton University who studies marketing and international business, said Minneapolis’ reputation as a generally stable, peaceful place could save its image from taking a significant hit and help preserve its economic well-being.

Floyd’s death and the ensuing unrest may have damaged the city’s reputation for some people, but that would depend on the person and how they relate to those events, he said, and it’s unlikely that they’ll push major businesses out or deter new ones from setting up shop in the Twin Cities.

A small business owner whose shop was destroyed might decide to move if they have a better opportunity elsewhere, he said, but it would take extreme circumstances or ongoing unrest for a significant number of firms to up and move.

Still, we may never know for sure whether the city’s image has taken a dive — or what that would mean for Minneapolis’ future. Even seemingly concrete evidence, like declining tourism, is hard to pin to a specific event without surveys and studies, Papadopoulos said.

“In my business, that is the $64 million question,” he said. “No one has figured out how to directly quantify the effects of image, and the effects of worsening your condition.”

Take the example of DreamHaven Books and Comics. Greg Ketter and his wife arrived on May 29, four days after Minneapolis police killed Floyd, and found their store in disarray.

The front door had been boarded with old doors and plywood — Ketter wasn’t sure by who — and inside, shelves were knocked over, books were strewn across the store and showcases full of vintage toys were smashed.

Greg Ketter’s Minneapolis bookstore was looted and vandalized during the George Floyd unrest, and then recently robbed as he tries to push through the pandemic. Photo by Will Jacott/Minnesota Reformer.

With the help of nearly 100 residents who responded to a plea for help on Facebook, Ketter got the store at 2301 E. 38th St. cleaned up and ready to ship mail orders again.

“Within that first day, we were in pretty good shape,” Ketter said. “I saw the worst of humanity and the best of humanity that day, and the best wins out.”

Then on a recent Monday evening, he and an employee were closing the store when two men robbed them. The men said they were looking for a book, then started beating his employee. Ketter grabbed a baseball bat and chased the men off, but not before they hit him, leaving him with cuts and bruises. 

Robberies like the one at DreamHaven and other violent crimes have surged in Minneapolis since Floyd’s death. Violent crimes like robberies are up more than 15% compared to the five-year average, and roughly 500 people have been hurt by gunfire, a 15-year high.

The exact causes of the spike are unknown, but officials and residents have floated a number of possible explanations, including less proactive policing, limited support for young people during the pandemic, and lower community confidence in law enforcement.

This is just one of the myriad examples of how Derek Chauvin’s actions when he kneeled on Floyd’s neck for more than seven minutes, killing him, set off a chain of events whose effects would ripple out — and carry a high price.   

Derrick Miedaner and Deena Winter contributed.

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Rilyn Eischens
Rilyn Eischens

Rilyn Eischens is a former data reporter for the Minnesota Reformer. Rilyn was born and raised in Minnesota and has worked in newsrooms in the Twin Cities, Iowa, Texas and most recently Virginia, where she covered education for The Staunton News Leader. She's an alumna of the Dow Jones News Fund data journalism program and the Minnesota Daily. When Rilyn isn't in the newsroom, she likes to read, add to her plant collection and try new recipes.