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Commentary: State should let city charge fees, or city should halt housing development

By John Diers Feb 10, 2020

Hold on to your wallet. According to Prior Lake Mayor Kirt Briggs, Prior Lake homeowners could get stuck with upwards of $25 million if a recent state Supreme Court decision stands and this upcoming legislative session takes no action on bills authored by Rep. Brad Tabke, DFL-Shakopee, and Sen. Eric Pratt, R-Prior Lake.

At issue is who should pay for roadway improvements made necessary by developers’ residential housing projects. Two years ago, Woodbury developer Dennis Harstad sued when Woodbury wanted $1.3 million in development fees to pay for city road improvements made necessary by Harstad’s project.

Woodbury’s demands seemed reasonable — more people, more cars, more pressure on local roadways. Logically, shouldn’t the developer pay upfront when it’s their development project that facilitates the need, and the demand, for more roads and city services? Why should the costs fall on current homeowners and businesses?

A lot of money is at stake. In a typical year, according to Mayor Briggs, the city of Prior Lake takes in roughly $225,000 in fees from residential developers for street improvements. The problem is that Prior Lake, like Lakeville and Dayton and Woodbury and other growing cities, lacks clear state statutory authority to levy the fees — which is why the Supreme Court ruled for Harstad.

Giving cities that statutory authority is what the Tabke and Pratt legislation is about. Without it, developers can pick up $225,000 for themselves, and Prior Lake residents get stuck with the difference on their property tax bills.

It also explains why, despite strong support from the league of Minnesota Cities, special interests have the legislation in their sights. Enter the Builder’s Association of the Twin Cities, AKA Housing First Minnesota, a developer trade association and lobbying group.

BATC markets itself as a friend of the homebuyer and affordable housing. It argues that municipal fees and regulations drive up housing costs and make it impossible to build a single-family home in the Twin Cities for less than $375,000.


I can remember when a simple, new home with three bedrooms and two baths went for $85,000. Of course, it wasn’t 4,000 square feet, nor did it have a three-car garage or sit on a half-acre lot on a cul-de-sac in a project with an upscale name. Housing costs are grossly inflated, but how much of it is driven by developers and landowner speculation? Expensive homes on big lots mean more profits for developers and landowners. That’s why they build them.

Comes the question: Is the BATC a friend of the homebuyer and affordable housing, or is it about fattening developer profits and sticking the costs to current residents? I suspect the latter, and so does the League of Minnesota Cities. The League was blunt in the January-February edition of its journal, Minnesota Cities Magazine:

The League believes that BATC’s work is financially motivated, and that BATC is using cities as scapegoats for increases in costs that affect housing affordability.

“BATC’s premise that city fees are the primary factor for the lack of affordable housing is simply false,” says David Unmacht, League executive director.

“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 local control, or the ability of our cities to ensure that development pays for itself.”

Bravo for the League of Minnesota Cities, State Rep. Tabke, State Sen. Pratt, Mayor Briggs and the entire Prior Lake City Council and others who’ve taken up this cause for current homeowners and businesses. They need our support. This same legislation failed in last year’s session. Let’s make sure it doesn’t happen again.

Development doesn’t pay for itself, nor should businesses or retired homeowners or young families struggling with student loans get stuck with the costs of development. It’s said we live in a new Gilded Age. A better term might be the Age of Inequity — an absence of simple fairness that puts greed above the common good.

Development costs belong with the developers. If this legislation fails again and developers are unwilling to pay their fair share and shirk their responsibility to the community, then our City Council should put a moratorium on new housing development until such time as developers are prepared to accept their responsibilities and acknowledge the common good.

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