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Updated: As Prior Lake mulls development halt, builder group calls approach unfair

The Prior Lake City Council is considering slowing or even halting development after more than a year since the state Supreme Court affirmed cities couldn’t charge street impact fees.

Councilmembers on Tuesday discussed stopping the rezoning of agricultural land to residential land and a possible moratorium on new building. They didn’t make any firm decisions but said they’d scrutinize agricultural rezoning proposals more closely.

Members also left in place the new practice of accepting deposits from some developers to cover street updates that come in the next 10 years for their developments. The city began the deposit system in September to recover some of the lost street fees.

Councilmen Warren Erickson and Zach Braid said they’d prefer to continue allowing development plans for lots that would be rezoned to come before the council.

Mayor Kirt Briggs and Councilwoman Annette Thompson, on the other hand, said they’d rather stop all rezoning of agricultural land to halt major residential developments.

Councilman Kevin Burkart said that if the city were to stop rezoning agriculture land, he’d prefer a moratorium outright. After the council rejected that idea, he sided with Braid and Erickson.

“The real message is we’re not open for business,” Burkart said of the proposal to stop rezoning agricultural land. “If that’s the case, let’s just go that route.”

The council’s growing skepticism to rezoning puts the owners of several agricultural lots on the north side of the city in the middle of a dispute between cities and Housing First Minnesota, a builder advocacy group, which opposes street impact fees.

“I have major anxiety for the sellers of that land, I feel for them,” Braid said.

Some Minnesota cities for years charged developers a street impact fee as a way to cover the additional street projects needed to support the development’s residents — putting things like nearby stoplights, turn lanes and street signs on the builder’s dime instead of taxpayers’.

That changed in August 2018 when the Minnesota Supreme Court affirmed cities didn’t have statutory authority to charge the fees.

Prior Lake Community Development Director Casey McCabe said the entire calculus of developments has become more complicated and less fair for cities, builders and residents since the ruling.

Since September, developers have had three options in Prior Lake: Build the infrastructure projects needed immediately as a result of their development, have the city build the projects and assess them for the cost, or pay the city a deposit to cover any street updates that the city has to make in the next 10-years as a result of the development.

The city must return the deposit to the developer if the money isn’t used for street projects during the 10 years — something McCabe said would become a problem if a street update became necessary only after 10 years, for instance.

“We’re going to hurt a lot of developments along the way. We’re going to add a lot of costs to the existing homes for collecting these deposits that we’re just not going to use,” McCabe said.

A returned deposit could double a developer’s profit if they increase their sales price to make up for the deposit and then get it back, in other words.

“A legislative solution would be easiest for all of us,” McCabe said.

City Attorney Sarah Schwarzhoff said in an email Wednesday that the deposits are legal when the old fees weren’t because they can be returned and because of other details.

The fees were based on a per acre amount and were never returned once collected, even if the money ended up going to street projects across town. The deposits are based on a predetermined cost-share between the city and developer, must be used on specific projects and can be returned.

David Siegel, Executive Director of Housing First Minnesota, said the deposit is a street impact fee by another name.

“You can call it whatever you want, you craft it however you want, it’s not a legal fee,” Siegel said.

Siegel said the Harstad ruling the court made clear that even in the form of a negotiation, like the one that would be required for a deposit, asking developers to take on street impact costs outside of the development would essentially be “extortion.”

“It isn’t a fair negotiation, because if you don’t agree to what the city wants, you won’t get approval on your project and you have no where else to go,” Siegel said.

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City considers changing ordinances to reduce number of boat slips on lakes

Ordinance changes headed to the City Council next week would cut down on the ballooning number of boat slips and illegal slip rentals on city lakes, city staff members said.

Among other things, the proposal would allow homeowner associations one slip per 50 feet of shoreline, up from one slip per about 19 feet, and would limit private residences to five slips instead of six.

The city’s 13 lakeshore homeowners associations have a combined right to 424 slips that would be grandfathered into the ordinance, meaning the new slip-to-shore ratio wouldn’t affect them.

Renting personal boat slips is illegal, but the proposal would let the city require proof of tenancy and ownership to make sure residents are keeping with the ordinance.

Several residents at the commission meeting said they favored the changes, though some questioned who the changes really served.

Dana Wheeler, a longtime resident on Lower Prior Lake, said the changes represented “favoritism” to homeowners associations and scapegoated inland city residents trying to appreciate the lakes.

“I don’t know that who owns the boat impacts the number of boats on the lake,” Wheeler said, adding he had allowed his friends and neighbors to use multiple slips on his property over the years.

“Twelve or 13 complaints is much less significant than the number of people that will be impacted by the change to the law that says it has to be the owner of the property that owns the boat,” Wheeler said, referring to the number of slip rental complaints the city had last year.

Liz Weninger, a former member of the Lakes Advisory Community, voiced similar concerns.

“We must take everybody and hope and pray that they know how to treat a lake and how to act on the lakes,” Weninger said. “We can’t say we don’t want you here. We want to welcome everybody here.”

Community Development Director Casey McCabe in an interview said the changes don’t give preference to one kind of resident or another.

“What this ordinance does is it makes it easier for staff to enforce existing regulations,” McCabe said. “The ordinances related to (associations) are to provide more realistic expectations for future developers and residents of the community.”

According to city documents, two properties on Lower Prior Lake that are expected to be developed have about 1,325 feet of shoreline and could install 70 boat slips. If the new language is approved, each would only be able to install 25 slips.