CMBA testified May 18 against a raft of valuation and building fee increases pushed by city administration, arguing it will further deepen St. Cloud's already steep building slump. City staff argue they need another $500,000 per year in fee revenues to cover staff and systems costs of delivering building permits and inspections. Without those increases, they warned St. Cloud would have to continue subsidizing their $1.3 million permit and inspections budget with property taxes and utility charges.

According to city projections, a typical $250,000 single-family, two-family or townhome project would see a combined permit cost increase of about $2,000 once both the valuation and rate changes are fully in effect. A $500,000 home would see an increase of $4,363, and a $1.1 million commercial or industrial building permit would rise by about $3,536.

Based in-part on CMBA input and concerns, the St. Cloud City Council on Monday night (May 18) voted to postpone taking action on the proposed project valuation and building fee increases until August 17, by which time city staff are to present a "comprehensive package" of actions to help boost building in the city.

CMBA and its members showed-up to let City Council members know building fee increases will hurt, not help, residential building at a time when the city says it needs more than 1,000 units of new housing each year for the next 15 years.

"St. Cloud is nowhere near the numbers it says it needs," said CMBA government affairs consultant Steve Gottwalt. "Neighboring communities have higher fees [than St. Cloud], and are still building more units of housing," he said.  CMBA tracks residential building permits across several area communities, and those statistics show a sharp decline in St. Cloud building in recent years, compared to increases in neighboring cities.

"I'm challenging [City Council and staff] to honestly ask the question 'Why are builders choosing not to build in St. Cloud?'", Gottwalt testified before the Council. "Then work with [CMBA] to seek honest answers and real solutions." CMBA regularly meets with area mayors and community development directors to discuss what can be done to spur more housing in which people can afford to live.

"Community leaders consistently tell us housing is an urgent need," said Gottwalt.  "So, is their priority covering costs of staff, or getting more housing built?" He added, "The City Council needs to look at the big picture, and they need to be very concerned that as they raise fees of all kinds, it's going to have a chilling effect on the housing they need."

Gottwalt also cautioned the St. Cloud City Council and city officials against fee increases that could violate state law.  Minnesota Rules Part 1300.0160, specifies "Fees established by the municipality must be by legal means and must be fair, reasonable and proportionate to the actual cost of the service for which the fee is imposed."  At Monday night's hearing, St. Cloud Mayor Jake Anderson reported 25% of fees are diverted to the city's non-specific Development Fund, which could be a violation of the law.  A handful of Minnesota cities, including St. Paul, Duluth, Dayton and Corcoran have faced lawsuits over excessive fees.

CMBA will reach-out to the City of St. Cloud to offer assistance in developing a package of actions the city can take to help spur more housing development ahead of the August 17 reconsideration of the fee increases.

For more information:  Steve Gottwalt, CMBA Government Affairs, steve@cmbaonline.org, 952-923-5265.