The torches and pitchforks came out at the July 15 Prior Lake City Council meeting. Unfortunately, I wasn’t there, but I read about it in the July 20 American. It seems a developer wants to build 100 homes with lake access on 65 acres of land on the west side of Spring Lake. The developer made a presentation, but residents were there in force with plenty of questions and objections — and a petition with 1,200 signatures opposing the proposal.
This wasn’t a public hearing, and the developer has yet to make a formal proposal for council approval. That’s several months away. Let’s hope the council listens to residents and asks plenty of questions. Spring Lake is in trouble and has been for a long time. Efforts to clean up the water and suppress algae blooms are having some success, but 100 more homes, docks and their associated lawn fertilizer runoff and drainage disruptions will make it worse. Without a full environmental study and necessary mitigation, this proposal needs to go away.
Here’s a question: Who pays for all this? Specifically, who picks up the tab for the road and infrastructure improvements made necessary by the project — not to mention the additional municipal services, schools etc. that come with the growth in population?
Until last year, developers paid local fees, built their subdivisions, pocketed their profits and walked away, but that wasn’t enough. They wanted more. One of them filed suit, and last August the Minnesota State Supreme Court ruled in a developer lawsuit that local communities like Prior Lake lacked 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.
Prior Lake was then charging developers $6,549 per buildable acre for road improvements linked to their projects. With the court’s decision, that’s gone. The city has 3,755 acres of developable land. At $6,549 per acre, that’s a $25 million revenue loss to the city — which now has to be made up by local taxpayers. The city had been collecting an average of $225,000 per year from developers for road improvements. With the 2020 budget season approaching, where does that money come from?
I recently spoke with Mayor Kirt Briggs to get an update. Prior Lake isn’t alone. Other communities are similarly affected — and our officials have been collaborating with them to find a solution. Sen. Eric Pratt and Reps. Tony Albright and Bard Tabke have legislation now under discussion that would give cities the statutory authority to charge developers road improvement fees.
Dayton, a northeast suburb, just passed an ordinance requiring developers to fund a study to assess the full costs of their project prior to approval by the City Council — that, or pay a predetermined fee and sign a waiver. Prior Lake engaged a consultant to assess its exposure and make recommendations. That study will be completed shortly. Our council will then review the study and staff recommendations and, presumably, take action.
There are risks. Legislative initiatives are sure to bring opposition from developers and their lobbyists and trade organizations. There is no assurance the Legislature can be persuaded to give cities statutory authority to levy road improvement fees. Developers may also challenge local ordinances, like Dayton’s, in court
Last February, Housing First Minnesota, a developer and trade association, published a report, “Priced Out: The True Cost of Minnesota’s Broken Housing Market,” arguing local fees and regulations are responsible for a large share of the high cost of new housing. Local ordinances add to the cost, but, for the most part, they are there for safety and environmental reasons or to regulate the size and scope of development.
Circumstances and situations change, and all ordinances should be subject to periodic review. Regardless, the costs belong to the developer, not local taxpayers. That’s non-negotiable.
Incentives are needed. Perhaps this a good time for draconian measures such as a moratorium on new development projects until the issues get resolved. If developers want to play hardball, a moratorium might get their attention.