St. Cloud Council Holds Public Hearing Monday On Plan To Delay Fees For Housing Developer Fees

(KNSI) – The St. Cloud City Council will take public comment Monday night on a first-in-Minnesota plan to let developers put off paying tens of thousands of dollars in utility fees, an effort to head off a projected shortage of buildable lots.

The ordinance would create the Single-Family Housing Supply Initiative. The council is expected to vote following the hearing. The timing is baked into the proposal itself. Only lots platted after September 3rd, which falls 30 days after the hearing, would qualify.

The numbers behind the proposal are stark. City staff say roughly 237 platted single-family lots are currently available for development. Over the last five years, St. Cloud has issued about 100 single-family building permits annually. At that pace, the city’s supply of buildable lots could be gone by 2028 unless new subdivisions come online.

City Administrator Tracy Hodel submitted the proposal, which staff from City Administration, Legal, Finance, Building Safety, Planning and Zoning, Economic Development and Engineering helped develop.

Under the program, developers could defer water trunk area charges of $3,000 per acre, sewer trunk area charges of $2,500 per acre and stormwater trunk area charges of $0.10 per square foot for up to 24 months from final plat approval. At the individual lot level, builders could defer water availability charges of $3,100 per unit and sewer availability charges of another $3,100 per unit, a combined $6,200 per home. Those charges would come due when a Certificate of Occupancy is issued or 12 months after the building permit is issued, whichever comes first.

Deferred money would carry interest at 3.5% per year and would be secured through recorded liens, letters of credit, deferral agreements or other security the city finds acceptable. The obligations would run with the land, meaning they follow the property if it changes hands.

City staff are careful to draw a line between a deferral and a giveaway. The proposal is described as a financing tool rather than an incentive or a public subsidy, with the city recovering every dollar plus interest to offset lost investment earnings during the deferral period. Developers would also pick up collection costs, including recording fees, administrative costs and attorney fees.

The goal, according to the staff report, is to improve project cash flow, reduce capital carrying costs and make it easier for developers and builders to obtain financing while the city preserves its ability to recover deferred revenue.

Staff say the idea has been requested by developers and builders in the past, and the proposal was circulated to several developers and builders who have shown recent interest in building new subdivisions in St. Cloud. City staff also report the program appears to be the only one of its kind in Minnesota. Researchers found a small number of similar programs in Washington and California, though most deferral programs nationally attach affordable housing requirements. St. Cloud’s version does not.

The program would sunset on December 31st, 2027. No new deferral applications would be accepted after that date, though deferrals already approved would stay valid under their original terms. For availability charges to qualify, a building permit must be issued before December 31st, 2027.

The council voted July 20th to set Monday’s hearing. Staff recommends approval.

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