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Commentary: Constraints, fees on development prevent other problems

By John Diers Apr 11, 2019

A couple of years ago I asked a Metropolitan Council planner if the council had ever taken a critical look at the costs and benefits of suburban growth. I was underwhelmed with the response in the negative. Nor, to the best of my knowledge, has the state, or a county, or local government in the metro area studied the issue. Yet we blithely go along with long-range plans assuming suburban development, as currently practiced, is inevitable and economically and environmentally sustainable.

But what if it’s not? A lot is at stake. The answer to this, and other questions, is more important than ever.

Consider: Does growth pay for the infrastructure improvements and essential public services that come with it? Does it help local governments pay for essential public services without undermining the environment or the quality of life? Do these costs get passed along to current property owners and taxpayers?

We assume local governments have little choice in the matter— that they must expand their population and the number of businesses to maintain prosperity. But this near-term gain comes with enormous long-term liabilities— infrastructure that must be maintained and renewed, along with public services like police, fire and schools. Does the current model for suburban growth create real wealth, or, like a Ponzi scheme, does it exchange short-term gain for long-term liabilities that require still more growth to sustain them?

Readers may think I’m beating the proverbial dead horse because I keep asking the same questions, but two things make it more timely and urgent. One is the issue of affordable housing now before the Legislature. The other is the state Supreme Court’s Hastert decision, which took away an important source of local highway infrastructure funding from Prior Lake and other communities — funding that will have to be made up by local property taxpayers.

The court ruled that cities don’t have the statutory authority to levy impact fees for road improvements made necessary by developer projects. Before Hastert, Prior Lake was charging developers $6,549 per buildable acre for road infrastructure. With 3,775 acres of developable land, that’s a $25 million revenue loss to the city that will fall on current taxpayers unless the Legislature acts and amends state statute.

Reps. Tony Albright and Brad Tabke and Sen. Eric Pratt have introduced the necessary legislation, and our mayor and council are giving strong support to it. Minnesota law already allows cities to charge impact fees for sewer, water, storm water, and park improvements; why not roads?

Developers are the problem. They’ve pulled out all the stops, arguing that local fees and regulations are the reason home prices are out of reach for so many Minnesotans. Housing First Minnesota, a developer trade association, makes the case in a 65-page study, “Priced Out: The True Cost of Minnesota’s Broken Housing Market.”

The study is available online. Read it with an open mind, but bring along a critical attitude, because it places much of the blame for high new home prices on “local regulations,” “local and regional water management,” “land supply challenges,” and “state regulations,” implying that if these went away home prices would come down. Would they? For sure it would improve a developer’s bottom line, especially if infrastructure costs are unloaded on current residents and taxpayers.

Some developers may prefer to build large, expensive homes on huge lots because there’s more profit in it for them. Take away the Met Council’s growth boundary line and suburban sprawl will go everywhere and anywhere along with demands for more roads and infrastructure. That’s not a problem for developers if the costs go to local taxpayers. Developers can bank the difference.

And what about local environmental regulations? Do away with them and there’s still more money to be made, ignoring, of course, the lawn fertilizer and chemical run-off in streams and lakes, aggravating an already serious problem with algae blooms.

In the March 30 Prior Lake American, the executive director of Housing First Minnesota calls for “collaboration” and cites “existing revenue sources” as a starting point for discussing housing affordability. These “existing resources” are public tax money. Should tax money subsidize developers and development in what’s been called corporate welfare? Is that how growth pays for itself?

Perhaps we should toss out the Met Council line and environmental guidelines and let developers sprawl and pollute. Would that bring housing costs down, or would it create other issues that would have to be solved at public expense?

It’s an issue of fairness. If history rhymes, as Mark Twain suggests, and we’ve arrived at a new Gilded Age, perhaps we need a dose of 19th-century Midwest populism and the likes of William Jennings Bryan and the good words of Mary Elizabeth Lease. Did Teddy Roosevelt “collaborate” with J. P. Morgan and James J. Hill? I think not.

If this legislation fails and the burden is tossed back on taxpayers, the council should place a moratorium on development and conduct the cost-benefit study that’s long overdue.

Please read more from The Prior Lake American:

John Diers is a Prior Lake resident who spent 40 years working in the transit industry and is the author of “Twin Cities by Trolley: The Streetcar Era in Minneapolis and St. Paul” and “St. Paul Union Depot.” To submit questions or topics for community columnists, email editor@plamerican.com.