The League-supported bill that would allow municipalities to charge fees for future street improvements had a contentious hearing.
The House State Government Finance and Elections Committee heard HF 527 (Rep. Sandra Masin, DFL-Eagan) on Feb. 18. This League-supported bill would give local governments necessary statutory authority to equitably collect fees for future infrastructure improvements.
The bill was laid over for possible inclusion in the state government omnibus bill.
Proposed amendments not adopted
Two amendments were posted, but were not adopted. These amendments would have required:
- That fees could only be collected for improvements within a one-mile radius of a proposed development, and that fees must be refunded if unused within five years. The trigger for the timing of street improvements (such as a turn lane or widening of a street) depend on when private developers move forward with their projects. Cities do not control when this occurs. Developers would get a windfall, leaving the existing tax base to pick up the cost of the still unaddressed need. (Note: this amendment was different than the one offered in the previous committee.)
- Notice to residents and publication of the notice for this fee. Notice is typically required to make those impacted aware of a proposed change. Given that this fee would be paid by the applicant (developer), who would already be aware of the fee per the proposed requirements in HF 527, there is no need to have these additional requirements on local government. (Note: this amendment was voted down in the previous committee.)
City and township testifiers
In addition to the League’s testimony, Prior Lake City Manager Jason Wedel shared that without this bill, the existing tax base would be left to pay for street improvements that are needed only because of incoming development.
While cities should have the local flexibility to do this now, they should not be forced to make existing taxpayers pay for these streets that would not otherwise be needed if it weren’t for development. Instead, streets should be treated similarly to other infrastructure, like sewer, water, and stormwater.
Spring Lake Township Supervisor Ted Kowalski also testified in favor of the bill, as it would equally distribute the fee for infrastructure improvements, instead of unfairly forcing the existing taxpayers to pay for development-related improvements, which is largely residential in townships.
The League of Minnesota Cities, Municipal Legislative Commission, Metro Cities, Coalition of Greater Minnesota Cities, and the Minnesota Association of Small Cities expressed support for the bill with a joint letter of support. The North Metro Mayors Association also submitted its own letter of support.
In addition, 39 local governments statewide adopted resolutions in support of this bill.
Opposition to infrastructure accountability
Peter Coyle and Nick Erickson, of Housing First Minnesota, opposed the bill, saying that this fee would be a new “tax.”
However, it is not a tax because the proposed fees cover the costs of infrastructure improvements necessitated by the development, and the infrastructure improvements benefit the development more than the public or other residents.
Others who testified in opposition were Minnesota Realtors Association Director of Governmental Affairs Matt Spellman and David Werschay, of Werschay Homes. Opponents claimed that allowing this authority would make building affordable housing more difficult.
For more background information about this bill, read a previous article.