Minnesota Supreme Court Rules on Development Fees

A new ruling from the Minnesota Supreme Court sided with a local developer arguing that he should not be financially responsible for future road improvements for a planned housing development.

David Siegel, executive director of trade group Housing First Minnesota, says, “This is a landmark decision ... This is an example of how difficult it is to fight city hall.” The Star Tribune reports that the decision may relieve concerns about affordability for both homebuyers and builders, as fees to pay for infrastructure are typically levied by municipalities before development can begin.

Housing First Minnesota represents more than 1,200 housing professionals and suppliers, and views municipal fees as an issue of paramount importance. Siegel explains that some fees are necessary, but account for 25 to 30 percent of the cost of a new home, impeding affordability efforts, “The challenge is balancing the cost of development with the cost of homeownership.”

Martin Harstad submitted plans in 2015 to build about 180 homes in a Woodbury development called Bailey Park. He filed the suit in January 2016 and put the plans on hold after city officials said they wanted an additional $1.3 million in fees — about $7,000 per house — to help fund future improvements in other parts of the city. Jason Egerstrom, a spokesman for Woodbury, said the city is evaluating the impact of last week’s decision. “We look forward to working with the building and development community to provide high-quality neighborhoods, while ensuring development costs will not be borne solely by the city’s taxpayers,” he said.

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