Facing a persistent shortage of affordable and workforce housing, the St. Cloud City Council unanimously approved a measure last week giving the city’s Economic Development Authority (EDA) greater flexibility to use Tax Increment Financing (TIF) to help spur residential development. City leaders said the action fills a long-standing gap in state law and provides another tool to encourage projects that might otherwise be financially out of reach.

St. Cloud Economic Development Authority (EDA) Director Cathy Mehelich told Council members the change restores an important financing option that neither the EDA nor the St. Cloud Housing and Redevelopment Authority (HRA) had effectively been able to use for housing projects.

“There was this gap for the last 15 years that neither entity was able to utilize housing tax increment financing to support the development of affordable housing and workforce housing in the community,” Mehelich said. She added that the proposal does not diminish the HRA’s role, noting that language requested by the HRA’s attorney ensures it retains responsibility for its existing and future housing initiatives.

Tax Increment Financing, or "TIF", allows a portion of the future increase in property tax revenue generated by a development to help pay eligible project costs. Supporters say the financing tool can bridge funding gaps that often prevent housing developments from moving forward, particularly as construction costs and financing expenses remain elevated. The council’s action gives the EDA another option to partner with developers on projects that provide a public benefit while expanding the city’s housing supply.

Councilmember Dave Masters, who also serves on the city's EDA board, said the additional authority comes at a critical time. “It brings forth another option for TIF funding for affordable housing, which is definitely needed in the city,” Masters said before voting in favor of the measure. His comments echoed concerns that the lack of available housing has become both an economic development issue and a quality-of-life challenge for the region.

Councilmember Karen Larson praised the cooperation between the EDA and HRA that led to the proposal. “It is once again evidence of how this city and how this community collaborates," Larson said. "It’s the collaboration that will bring us the kind of housing that we need,” she said. Her remarks underscored the council’s view that expanding housing opportunities will require cooperation among multiple public agencies and private developers.

CMBA has been meeting with city leaders and development stake holders, urging more of this kind of outside-the-box thinking.  "It's that old definition of insanity: Expecting different results from doing trhe same things over and over again," said CMBA Government Affairs Consultant, Steve Gottwalt. "City leaders who recognize the growing need for housing development and home building need to take real action to change course," he said. "It's encouraging to see this new willingness to try new approaches."

The council’s vote does not automatically grant incentives to new developments. Instead, each housing development proposal seeking TIF assistance will continue to be reviewed individually to determine whether public participation is justified. However, by expanding the EDA’s financing authority, city officials hope more affordable and workforce housing projects will move from the drawing board to construction, helping meet the needs of a growing St. Cloud area economy while increasing housing options for current and future residents. 

The City of St. Cloud estimates it needs more than 1,000 new units of housing each year for at least the next 15 years. The city is currently far behind that pace, and is running out of platted, developable lots.

The St. Cloud City Council is also preparing to reconsider a raft of major building fee increases, along with a report on strategies to spur more housing development, at their meeting August 17.  CMBA has been closely involved in those discussions, and remains opposed to the fee increases, arguing they will have a chilling effect on already subdued home building in the community.

"The city has promised a more efficient, effective and more pro-development system for years," said Gottwalt. "It is time for the city to fulfill that promise without raising building fees and further hampering efforts to build the housing we need and in which people can afford to live."  CMBA is encouraging its members to show-up at the August 17 St. Cloud City Council meeting.

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