CMBA builders, developers and real estate professionals gathered Dec. 17 at a special CMBA Government Affairs Committee "Builders Roundtable" to discuss what local regulatory and fee changes could help spur more and less costly housing construction. Local officials have estimated we are thousands of units short of the housing we need. In St. Cloud, the supply of buildable residential lots is less than a year's worth. 

The roundtable featured Kathy Parsons, retired CentraCare executive, who has been tasked with shepherding a community-wide, multi-stakeholder, long-term initiative to address area housing shortages and unaffordability. Joining her was Matt Glaesman, Director of Community Development for the City of St. Cloud. Parsons and Glaesman, along with Steve Gottwalt, CMBA Government Affairs Consultant, comprise the initiative's Regulatory cohort, looking at how regulations and fees impact local housing.

The cohort requested the opportunity to meet with CMBA builders to get input and listen to ideas about what changes could best address local housing needs. Prior to the roundtable, they shared a spreadsheet summarizing and comparing development regulations and fees across several area communities. (CMBA members can obtain a copy of the spreadsheet by contacting the CMBA office.)

"Housing for different income levels . . . There is good work being done in silos," said Parsons "but not always all together." She noted there are six different cohorts looking at how to solve various aspects of local housing challenges. She added state legislators have been asking her what policy changes could help address the housing crisis.

Glaesman originally came to St. Cloud from working in Fargo/Moorhead, where differences in state regulations and taxes had major impacts. He said he takes the approach, "How can we do things quicker and better for developers -- How can we get out of their way?" Glaesman said he seeks incremental progress. "What is one thing we can do [to improve conditions]? Let's do that, and then do the next thing, and the next thing."

St. Cloud recently approved a new Accessory Dwelling Unit (ADU) ordinance for residential zones, and is about to act on reducing off-street parking space requirements for new housing. Glaesman asked, "What is that next thing we need to address?"

Roundtable participants' comments and suggestions:

• Costs and complications of undue regulations, including requirements to survey neighboring properties, mandatory silt fencing for small lot developments, and delays in obtaining necessary permits.  As one builder put it, "It all adds-up," making housing less affordable.
• SAC and WAC fees seem reasonable.
• Referring to the City of Rochester's goal of more than 500 units of new housing in two years. "Do we have a target goal in mind for our area?" Glaesman noted St. Cloud has identified specific goals by housing type, and said, "The numbers are massive."
• Could CentraCare and local cities replicate what Mayo and Rochester have done to address more affordable housing?
• Could local cities return to the practice of covering the up-front costs of installing infrastructure supporting new housing developments, instead of requiring developers to finance those costs before a spade of dirt is turned? Cities recoup the costs through special assessment as homes are built and sold. A revolving loan fund could also help cover those costs. This would reduce a significant barrier to starting new housing developments.
• Developers noted they are paying up-front development costs of $70,000 - $100,000 per lot before even beginning to build. Holding ponds and utilities can run more than $500,000 for a 200 lot development.
• "The cost of land and developing land, building costs, and mortgage interest rates -- In recent years, all three have gone high," crippling affordability.
• "Can we find ways to buy-down interest rates on financing? Because the home buyers main concern is 'What is my payment going to be?'"
• Could we replicate what was accomplished in the 90's with the Westwood Park mixed-use PUD on St. Cloud's west side, which included large numbers of small lot, decent, affordable single-family homes?
• Several participants highlighted the need for financing supports to help make both building and purchasing housing more affordable (housing trusts like the one Stearns County recently established, gap financing, revolving loan funds, employer-built/subsidized housing for workers, buying-down interest rates for first-time home buyers, tax increment financing and other public financing tools, state and federal housing grants, etc.). The local affordable housing initiative has a Finance cohort, including bankers and business people, looking into creative solutions.
• "It takes just as much effort to build a new $400,000 home as it does to build a new $300,000 home, and we're not seeing enough demand to mass-produce those."
• "We need more solutions on the financing end of things," especially for first-time home buyers who do not have enough to cover a down payment. "Market demand has changed significantly" because of financing challenges.
• There are programs to help first-time home buyers with down-payments. Mortgage interest rates are not terrible. Mortgage lending guidelines are fairly tight.
• "We cannot do anything about state or federal [factors]," but we can work on local solutions.
• The skyrocketing cost of homeowners insurance is adding to affordability challenges.
• Younger home buyers seem less interested in the commitment and upkeep of an owned home, and many prefer upscale rentals. $2,000 per month will get you a $280,000 - $300,000 home, which are in extremely short supply, and will likely be an older, existing home requiring significant maintenance and upkeep.

Roundtable participants agreed to keep in-touch on these issues, and agreed the meeting was valuable. CMBA remains engaged in the local Affordable Housing initiative and discussion, and will continue representing members' interests as we help identify workable solutions.  CMBA is also working with Housing First Minnesota on 2025 Minnesota legislation to help ease regulatory burdens and costs, and make housing less expensive to build.

MARK YOUR CALENDARS:  CMBA is helping plan an Affordable Housing Summit to be held at SCSU's Atwood Memorial Center Tuesday, March 18th.  The summit is a follow-up to the summit held two years ago, and will focus more broadly on workable solutions to our housing crisis, including ideas from other Minnesota and Midwestern communities, and nationally. Stay tuned for more details.

For more information about the Builders Roundtable or the local Affordable Housing initiative, contact:  Steve Gottwalt, CMBA Government Affairs, 952.923.5265, steve@cmbaonline.org.

#     #     #