St. Cloud Council Unanimously Approves First-in-State Fee Deferral Program for Home Builders

(KNSI) – The St. Cloud City Council has approved a first-in-Minnesota plan letting developers put off paying tens of thousands of dollars in utility fees, an effort to head off a projected shortage of buildable housing lots.

Monday night’s vote to create the Single-Family Housing Supply Initiative was 7-0. Speakers at the public hearing were largely supportive, with builders and developers making up most of that group, and some told the council the program does not go far enough. Others objected to the city offering what they characterized as a subsidy.

Mayor Jake Anderson took that criticism head-on Tuesday morning on KNSI. “We don’t necessarily view this as a subsidy because we’re simply deferring a payment and charging an interest rate on that payment for sewer access charges, water access charges, trunk access charges. So, it’s a tool in a toolbox.”

Developers can 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 lot level, builders can defer water and sewer availability charges of $3,100 per unit each, a combined $6,200 per home, due when a Certificate of Occupancy is issued or 12 months after the building permit, whichever comes first. Deferred money carries 3.5% annual interest, is secured through liens or other collateral the city accepts, and runs with the land if the property changes hands.

Anderson said the council acted on the one cost driver it controls, at a time when builders are telling city hall the pressure is coming from every direction. “The biggest concern and challenges that we’re hearing from developers is obviously financial costs to build really housing of all types. So this isn’t just necessarily affordable or workforce housing, but even at market rate housing, they’re feeling pressures from the labor market, materials market, the cost of money, the cost of land, and the cost of government.”

The mayor said the city is trying to do its part with what it can afford without pushing costs onto ratepayers.

The numbers behind the proposal are stark. City staff say roughly 237 platted single-family lots are available for development, and St. Cloud has issued about 100 single-family building permits annually over the last five years. At that pace, the supply could be gone by 2028 unless new subdivisions come online. Only lots platted after September 3rd qualify, and the program sunsets December 31st, 2027.

City staff say the program is the only one of its kind in Minnesota. Staff 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.

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