HomeMy WebLinkAbout[06c] Housing Incentive Program� ' CITY OF ST. JOSEPH
VVV. cityof stjoscph.com
Date: February 5, 2014
Memo To: Members of the EDA
City Administrator Weyrens
EDA Discussion on the item in January was postponed to the February 12"' EDA meeting.
Doug Danielson As you may recall, at the December meeting Osberg requested a break out of fees
Steve Frank charged for new residential units in 2013 be provided for the January EDA meeting as a
Gary Osberg means of discussing potential fee reduction. Attached please find a summary of fees
Larry Hoscb applicable to each of the six new home permits issued in 2013. As evident they range from
Dale Wick $9,200 to about $9,800 per home.
In addition I have attached an article from the St. Cloud Times indicating a "Build it in St.
Cloud" program was allowed to expire in 2013 with the efficacy of the program
undetermined. It's noted Sartell and Sauk Rapids did not offer such a program.
In addition, I have followed up with several of the aforementioned communities with regard
to efficacy of their housing incentive programs. At this time I have the following to report:
1. The City of Clearwater initiated a "Growth Incentive Plan" in January of this year.
The offer is valued at $10,000 and includes waived WAC /SAC and a 'free' second
water meter to the first three persons pulling new single family home permits. The
incentive is available to spec builders, contractors, or end users. Staff reports there
has not been a new home permit filed and there has only been one inquiry on the
program thus far.
The City of LeRoy is located 30 miles south of Austin on the Iowa border. Since
2008 the City has offered the following incentives for new home construction:
waiving of WAC /SAC, donation of two trees to be planted on the lot, and $1,500 in
"LeRoy Dollars ". Staff reports there have been no new housing permits issued.
Only one entity qualified for assistance since 2008 and that was a modular home
constructed by students at Austin Technical College which was moved onto an
existing foundation in the City limits. The program is available to anyone
purchasing a lot in town — developer, spec home builder, or end user.
3. The City of Eyota is located 11 miles from Rochester. They have had new home
construction incentives in effect since 2008. The incentive is valued at
IWIR
Memo From: Cynthia Smith - Strack, MDG, Inc.
Administrator
Judy Weyrens
RE: Housing Incentives
Mayor
Rick Schultz
Background:
At the December 2013 meeting Mayor Schultz inquired as to what follow up the EDA
Councilors
planned as a result of the real estate roundtable discussion at the close of October. He
Steve Frank
noted interest in offering incentives for new home construction remained on the part of
Bob Loso
local real estate agents. Schultz specifically mentioned fee reduction and /or development
Renee Symanietz
partnering.
Dale Wick
EDA Discussion on the item in January was postponed to the February 12"' EDA meeting.
Doug Danielson As you may recall, at the December meeting Osberg requested a break out of fees
Steve Frank charged for new residential units in 2013 be provided for the January EDA meeting as a
Gary Osberg means of discussing potential fee reduction. Attached please find a summary of fees
Larry Hoscb applicable to each of the six new home permits issued in 2013. As evident they range from
Dale Wick $9,200 to about $9,800 per home.
In addition I have attached an article from the St. Cloud Times indicating a "Build it in St.
Cloud" program was allowed to expire in 2013 with the efficacy of the program
undetermined. It's noted Sartell and Sauk Rapids did not offer such a program.
In addition, I have followed up with several of the aforementioned communities with regard
to efficacy of their housing incentive programs. At this time I have the following to report:
1. The City of Clearwater initiated a "Growth Incentive Plan" in January of this year.
The offer is valued at $10,000 and includes waived WAC /SAC and a 'free' second
water meter to the first three persons pulling new single family home permits. The
incentive is available to spec builders, contractors, or end users. Staff reports there
has not been a new home permit filed and there has only been one inquiry on the
program thus far.
The City of LeRoy is located 30 miles south of Austin on the Iowa border. Since
2008 the City has offered the following incentives for new home construction:
waiving of WAC /SAC, donation of two trees to be planted on the lot, and $1,500 in
"LeRoy Dollars ". Staff reports there have been no new housing permits issued.
Only one entity qualified for assistance since 2008 and that was a modular home
constructed by students at Austin Technical College which was moved onto an
existing foundation in the City limits. The program is available to anyone
purchasing a lot in town — developer, spec home builder, or end user.
3. The City of Eyota is located 11 miles from Rochester. They have had new home
construction incentives in effect since 2008. The incentive is valued at
IWIR
$2,250 /permit and represents waiving of WAC /SAC and zoning review fee in
conjunction with the new home permit. The program can only benefit end users
(i.e. homeowners). Staff reports efficacy of the program is difficult to quantify. In
2008 four new home permits were issued, in 2009 two new permits were issued,
2010 & 2011 six new home permits were issued, in 2012 one new home permit
was issued, and in 2013 no new home permits were issued. Staff did note a
shortage of vacant residential lots currently exists within the community, however,
developers are not interested in platting of additional lots at this time.
4. The City of Crookston is located in a relatively isolated area in northwestern
Minnesota. In 2013 the City instituted new construction incentives for new
dwellings. Under the program owners of homestead property have property taxes
rebated for a period of two years (pay as you go). In addition, WAC /SAC are
waived and a handful of other small token items are provided. As such the
incentive only benefits end users of residential property. Staff reports two building
permits were issued in 2013 which is typical of years past. The program has been
extended into 2014, no additional new housing permits have been pulled.
5. Dilworth is a small community that abuts the City of Moorhead. The City offers tax
abatement (pay as you go) for two years, free municipal utilities for two years or
$2,000 whichever comes first, and a free pool pass. The incentives go directly to
homeowners (i.e. end users) and are non - transferable. Tax abatement payable for
the two years after issuance of a certificate of occupancy. If a spec builder retains
possession of the property that individual receives abatement benefit. The County
and school participate in abatement incentive. The program was started in 2013
and applies only to new home construction. Staff reports prior to recession 30 to
40 new home permits were issued annually. The numbers dropped from 2008-
2012 to approximately 15 permits per year. Following institution of incentives the
number again rose to 35 permits in 2013. Staff reports the incentives have been
highly effective. Staff also reports construction costs much higher in Fargo,
therefore, they pull demand from N.D. as families can get more for their money in
Dilworth. Several tax forfeited lots exist but most have been purchased.
Assessments still apply regardless of incentive available. Staff reports there is no
limit on the amount of new homes eligible (last year 34 homes benefited) and there
is no limit on the value of the abatement.
Preston is in southeast Minnesota. The City provides three types of incentives:
new construction, purchase of existing home, and housing improvement.
Incentives consist of utility bill credits for five months, 'Preston dollars', a free
family public golf course membership for one year, and two free trees. IN addition,
new homes are eligible for waiving of WAC /SAC. Housing improvements must be
valued at greater than $5,000 and must result in the addition of habitable space.
The program was started in 2011. 1 have left a message with the EDA Director.
Request:
In order to focus in on potential incentives and promote productive discussion the following
discussion outline is offered for consideration. Please note this doesn't mean an incentive
program is being recommended. Also, please note if such a program would be offered it
would be not be funded by the EDA. If such a program is suggested presumably the cost
could be $50,000 to $100,000. Those funds would not be available for other uses (i.e.
extension of water and sewer to 94) in the future.
Public use of funds. Public expenditures can't be used to benefit private entities.
Typical public purposes include: removal of slum /blight, benefit to low /moderate
income persons, removal of urgent public threat, provide for the public's health,
Li&
safety, and welfare. The use of public funds for a public purpose must be kept in
mind when discussing incentive programs.
Benefitting entity. An important component of any discussion about fee reduction is
what entity will be the beneficiary. For example will home buyers receive the direct
benefit for fee reduction? Could home builders constructing a spec home benefit, if
so should there be a mechanism to require savings be passed on to the end user?
Should real estate agents receive a benefit? Lot owners /developers? Apartment
owners? Is a clawback provision warranted?
III. Limits of the program. Should the incentive be targeted to only new construction?
What about demolition /reconstruction or major remodeling /additions?
IV. Program structure. Define the actual incentive. Will it be waiving of WAC /SAC?
Deferring WAC /SAC? Waiving of building permit fee (still have to pay inspector)?
Waiving of utility fees for a specified period of months? Tax rebates /abatement?
V. What are we trying to encourage? What is the program goal — new housing
construction anywhere, new houses being built on tax forfeit lots, construction of
move up housing, construction of starter houses, and /or construction of work force
housing?
VI. How will the program be rolled out? If to builders, how are they notified. How do
you make the program fair and free (first come first served, lottery). How do you
target the benefit to achieve policy goal?
On a related note, I verified with the City of Sartell the action taken in November of last
year to 'simplify' the development process was to provide for administrative review of
multiple family, commercial, and industrial building site plans. This is an action the City of
St. Joseph took a few years ago.
Action:
This item is for discussion purposes only.
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http:// www .sctimes.com /article/20131216/N EWS01 /312160072/St- Cloud- ends - home - construction - incentive - program
St. Cloud ends home construction incentive program
Written by Kari Petrie
Jan. 07 sctimes.com
Taking a wait and see approach, the St. Cloud City Council decided Monday to allow a housing incentive
program to sunset.
The Build It in St. Cloud program was created to encourage home construction by reducing single - family
housing permits by $1,500. The program is set to expire at the end of the year, and the council has been
discussing whether to continue it.
Council member George Hontos, who came up with the program, said he was comfortable letting it end.
He said they should let developers come to the city if they see a need to spur more building and
brainstorm ideas.
The program started in July 2012 by reducing single- housing permits by $1,500 for the first 35 permits. By
the end of that year, 35 permits were issued.
In January, the council voted to extend the program from March until September with a new focus on half
of the 30 permits being used for foreclosed lots. Of the 22 issued during that time frame, seven were for
foreclosed lots.
In a report to the council, city staff say they have no reasonable method to see if the program was
effective.
Council members have said that they want to focus more on encouraging people to buy foreclosed lots.
Foreclosed lots become a burden to the city because special assessments remain unpaid for those lots.
From 2007 to 2012, the city had more than $6.8 million in uncollected special assessments.
When foreclosed lots are sold, the city reassesses unpaid special assessments. In 2011, 301 lots were
put on sale at auction and 87 were sold. Another 115 lots will be put up for sale in 2014.
Follow Karl Petrie on Twitter @karipetrie.
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