Data shows that, in the last decade, taxpayers paid $244 million statewide to cover development-related expenses, contrary to builder claims.
(Published Sep 16, 2019)
The Senate Select Committee on Home Ownership and Availability met on Sept. 10 to discuss an industry report on building permit fees. This was the committee’s second meeting, but the first time that cities were allowed to testify and present their perspective.
The select committee, established by the 2019 Senate, is charged with making findings and recommendations to the Senate regarding issues affecting the availability of affordable owner-occupied housing. The select committee has no authority to consider bills, and bills cannot be referred to the select committee.
League staff explained to the committee that data from the Minnesota Department of Labor and Industry shows that cities are in the red over $244 million in development-related expenses. This deficit is from the last decade (accounting for the highs and lows of the economy) and includes all development-related fees (building permits, city administrative, engineering, planning, and zoning, etc.).
This data is in direct contradiction with the claim of builders and developers that cities are overcharging developers by $78 million, as stated in a report released Aug. 20 by the Housing Affordability Institute. However, the report only looks at a five-year timespan when the economy was booming, and it only looks at building permit fees. This is an incomplete picture, leaving out information that is known to builders. (Read previous related Cities Bulletin article.)
In addition to the League, Metro Cities, Lakeville City Administrator Justin Miller, and Cambridge City Administrator Lynda Woulfe testified at the hearing.
Miller and Woulfe provided helpful city-specific information about cities’ relationships with builders and developers. They also shared data that countered claims of cities being responsible for up to a third of housing costs. When Lakeville and Cambridge looked at one year of data, it showed that city fees made up only 4% to 6% of the selling price of homes.
The Senate Select Committee will continue to meet, but dates have not yet been set. The League will continue to work with this committee.
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