The St. Cloud City Council is set to reconsider an increased raft of major building fee increases at its August 17 meeting, and CMBA is urging members to attend the meeting.  CMBA remains opposed to the proposed building fee increases.

The City Council was set to approve the increases in May, but chose to delay action after CMBA and others testified against the fee increases.  In choosing to delay, the Council also directed city staff to explore and provide a "comprehensive list" of new strategies for spurring more building.  CMBA has participated in stakeholder meetings over the last several weeks discussing that list of new strategies.

The city's latest version, released late August 13, calls for $800,000 in annual fee increases, and drops the proposed increase in valuation.  The raft of building fee increases has been pushed by city staff who argue they need another $800,000 per year in fee revenues to cover staff and systems costs of delivering building permits and inspections. Without those increases, they continue warning St. Cloud will have to continue subsidizing their $1.3 million permit and inspections budget with property taxes and utility charges.  In fact, their new proposal suggests the major property tax hikes they are proposing for 2027 would be mitigated if the City Council approves the building fee increases.

"That's a false choice," said CMBA Government Affairs consultant Steve Gottwalt. "The city could also choose to hold-the-line on building permit and inspections costs, or reduce those costs to match the current level of development."

The city's new proposal would add an estimated $1,000-$4,000 to the cost of each new home at the very time the city says it needs more housing in which people can afford to live.  St. Cloud estimates it needs more than 1,000 new units of housing each year for the next 15 years.

"This proposal is focused on expanding city staff and systems at the expense of both current and future property owners in St. Cloud," said Gottwalt.  "It will have a chilling effect on residential and commercial development in St. Cloud, and the city is nowhere near the numbers it says it needs."  CMBA tracks residential building permits across several area communities, and those statistics show a decline in St. Cloud building in recent years, compared to increases in neighboring cities.

"We are challenging city leaders to honestly ask the question 'Why are builders choosing not to build in St. Cloud?'", Gottwalt testified before the Council in May. "Then work with [CMBA members] to seek honest answers and real solutions." In addition to the special meetings over the last several weeks, 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."

CMBA has 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 the May 18 City Council meeting, 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 state law.  A handful of Minnesota cities, including St. Paul, Duluth, Dayton and Corcoran have faced lawsuits over similar building fee structures.

CMBA urges members to attend the Monday, August 17 St. Cloud City Council meeting, which begins at 6:00 p.m.  While CMBA supports the city's newest measures toward boosting development, it remains opposed to the $800,000 in proposed building fee increases that will hamper new development, increase housing costs and potentially violate state law.

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

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