At one time developers paid local fees, built their subdivisions, pocketed their profits and walked away — but that wasn’t enough. They got greedy and wanted more. One of them sued the city of Woodbury over its road fees, and, in 2018, the Minnesota State Supreme Court ruled that local communities, like Prior Lake, lacked state statutory authority to levy fees on developers for road improvements and costs attributable to their development projects.
More homes mean more cars, more traffic and more wear on existing infrastructure. Who picks up the tab for all this? More broadly, who pays for the municipal services, schools, fire and police protection, etc., that accompany the population growth — not to mention the environmental degradation: noise, air pollution, increased runoff and the rest?
It’s not a rhetorical question. Developers tell us that “growth pays for itself,” blaming high home prices on local fees and regulations, while perversely ignoring their appetite for 6,000 square foot, triple garage McMansions — which is where their profits come from.
Whatever happened to the postwar, 1,500 square foot, single garage, bungalows and ramblers that were popular in the 1950s? I grew up in one. It’s still there, as are thousands more in Richfield, Bloomington and other Twin Cities suburbs. Where are the Orin Thompsons, Marv Andersons and Vern Donnays of yesteryear?
Their successors are at the Minnesota Legislature along with a trade group, the Builders Association of the Twin Cities (BATC), also known as Housing First Minnesota. In February 2019, under the guise of something called the Housing Affordability Institute, they released a supposed study titled “Priced Out, The True Cost of Minnesota’s Broken Housing Market.” The document focused on new single-family homes built in nine cities in the Minneapolis-St. Paul market by four home builders.
“Priced Out” claims that almost a third of the cost of a new home’s price in the Twin Cities comes from local regulations and fees. It cites builders reporting that city regulations make it impossible for them to meet market demand for affordable housing. Months later, it released a second piece, “Building Permit Fees: Boosting the Bottom Line for Minnesota Cities,” which claims that cities are overcharging for building permit fees and driving up the costs of new homes. BATC claims that from 2014 to 2018 city fees outweighed city expenses by $78 million.
The League of Minnesota Cities pushed back. In the January-February edition of Minnesota Cities Magazine, its Executive Director, David Unmacht, commented:
“BATC’s premise is that city fees are the primary factor for the lack of affordable housing, and that is simply false. This premise is not based on fact, and we believe BATC’s motive is to raise the profits of builders at the expense of property taxpayers. This issue is greater than just affordability, and the League will do everything we can to defeat legislation that limits the ability of our cities to ensure that development pays for itself.”
What’s at stake is local control of cities, and citizens, overseeing the growth and development of their communities. Builders want to take away the autonomy that lets cities set fees and regulate development — like charging developers for road improvements made necessary by developer’s projects.
Right now, there are four bills, (SF915/SF914 and SF801/HF1085), before the legislature that will do just that. Nine Scott County cities and their mayors: Belle Plaine, Lonsdale, Prior Lake, Elko New Market, Montgomery, Savage, Jordan, New Prague and Shakopee took a stand and sent an open letter to legislators last week, writing:
“Growth brings with it increased costs to a city. The proposed legislation seeks to limit the ability for a city to recoup these costs from whence they came (the development itself). Not having the local control to equitably collect a fee from developers is not an elimination of a cost — It is a transfer of a cost to our existing taxpayers.”
More specifically, it means cities, like Prior Lake, will lose local sovereignty over development plans and the fees that cover development costs. These costs will get passed along to existing businesses and homeowners. Simply put, subsidizing developer profits will make your taxes go up.
Growth doesn’t pay for itself. Developers should. Let’s make sure the legislature listens.