In today’s Strib, normally capable columnist Eric Wieffering opines that Minneapolis’ proposed development impact fee, which would pay for parks, will make the cost of development in the city too high. He repeats a threat by Arnie Gregory of Greco to drop “four projects he’s involved in” if the fee goes through.
Inconveniently for Wieffering’s argument, the 2010 census showed that Minneapolis had a greater net gain in housing units than any other city – a much greater gain, half again more than even boomburbs like Woodbury and Blaine. If Weiffering is right that “building housing or office space in Minneapolis is never easy or cheap,” there are lot of people willing to pay.
There are some scary numbers in the article though:
In St. Paul, a developer who wants to build a 56-unit apartment building on the city’s East Side would have to pay about $11,000 in park dedication fees. The fee for a similar project in Minneapolis would be $84,000 — payable before construction begins — if the city’s new fee system is approved.
However, the proposed fee in Minneapolis is much less than other cities mentioned in the column: Minneapolis (which added 9,681 units in the last decade) would charge $1500 per new unit, while Woodbury (added 6,027 in the same decade) currently “charges about $3600 per unit,” and Blaine (added 5,752 units) charges $2,435.
I actually agree with a lot of right-wingers about regulation being too much of a burden on businesses – it’s a problem in any representative government that a rule is added in response to one crisis and forgotten by the next crisis, repeating over and over until the red tape resembles Darwin’s twine ball.
But fees and taxes, while they may hurt to pay, have a valid purpose. In the case of development impact fees, it actually has a direct benefit to the payer, whose property values increase in response to better parks.
In the title I say that Wieffering whiffs his polemic, but he is persuasive when he suggests the fee be based on property value instead of number of units. I don’t think it would make a difference in his example above comparing the dirt-cheap East Side to most of Minneapolis, but it may be relevant to the North Side (although I believe affordable housing and city-assisted development would be exempt).
With the center cities racing ahead of the suburbs in building again after the recession, it seems unlikely that a fee is going to derail the process. It may be prudent to adopt the less impactful impact fee for now, with the option of upping it later – but this fee will be a good thing for the city.