The Clearwater City Council is considering changing its Residential Growth Incentive Program. 

 

When the program started in mid-2013, it was designed to promote development by waiving water and sewer access charges (WAC & SAC) for the first three new homes built with a minimum sales price of $160,000 in the city that year.

 

At the time, WAC & SAC were $9,726 combined.

 

The city allocated $30,000 to the EDA, which paid the water and sewer enterprise fund any time an applicant used the money. Under the program, speculation (spec) homes were not eligible because the council felt those homes might remain unoccupied. Plus, it was unlikely developers would want to build spec homes in Clearwater. 

 

In recent years, after WAC & SAC was reduced closer to $7,500, the program was modified to cover four new homes.

 

But even with the incentives, very few new homes have been built in the city.

 

“It’s not being utilized,” said  Councilman Richard Petty at last week’s council meeting. 

 

There have been six new homes built since 2013. Last year, of four new homes built, only two used the incentive program.

 

 “If someone was building because of it, it makes sense because it’s working,” said Petty. “It’s a tool, but if it’s not bringing them here, then can we utilize it some other way.” 

 

 He said there should be a way to market the city and the incentive program to attract development. And he was not against offering it for spec homes.

 

Administrator Kevin Kress said the program language has changed in the past few years and spec homes are no longer mentioned as ineligible.

 

Mayor Pete Edmonson said developers are willing to build from the Twin Cities west to places like Rogers, Elk River, Delano and Buffalo.

 

 “They have a bigger profit margin just because of the demographics,” he said. “Eventually, their lots will get built out and they will come here. But I don’t know how aggressive we could be to get them to come here. What sort of a program would attract developers to build spec homes?”

 

Developer Mike Gohman of Clearwater Development said the money is an incentive, but it’s still a risk to build a spec home.

 

“If you can’t turn the house, your carrying costs are exponential  compared to what your potential savings are,” he said. “I’ve got two spec homes that have been sitting in Clearwater Estates, one since 2008 and  one since 2009.”

 

He said the city should spend “real” money in a way that makes more impact - marketing the program and the city. He said the question that has to be answered is, “Why would somebody move to Clearwater?”

 

 Administrator Kress said using some of the $30,000 for some other program, like marketing, might not be possible because it’s in the EDA budget for a specific purpose. 

 

“If the city wanted to take the money to do something else with it, I’d have to look back at the ordinance and the state statute to see if this fund is eligible for a fund transfer,” he said.

 

Gohman said he encouraged the council to have a workshop session to figure out how to try to have a bigger target than just four new homes a year.

 

“Meet with a bank. Get a group of people together and see how can we create something that’s sustainable,” he said. “You have to get people excited about it.”

 

Councilman Rollie Lange agreed.

 

“I think that’s a great idea,” he said. “I  think we should get the two banks together, some realtors and developers and let’s have a meeting.”

 

The council tabled a decision on extending the growth incentive program. It will be on the agenda again for the February meeting.