After an hour-long discussion Monday, the Clearwater City Council decided to adjust the city’s fee schedule as a way to provide economic growth incentives.

 

It wasn’t what they intended at the start of the meeting when they began talking about an economic assistance agreement with Progressive Builders.

 

Last November, Progressive Builders owner Denny Nelson approached the council about getting some incentives to lower the cost to build new homes in Clearwater. He said he could build five to six new homes a year, or 30 in five years, if the price was competitive. But with Clearwater’s high fees, the sales price was higher than surrounding communities.

 

After a long discussion that evening about lowering WAC & SAC, possibly by $5,000, the council voted to entertain developing an incentive agreement with Progressive using a WAC & SAC discount. 

 

Since then, the council has debated the idea a number of times about whether to sign an agreement or give the $5,000 discount.

 

In February, the council met with Nelson again to review language in a draft agreement. They discussed the number of homes, price, duration of an agreement, and added language to require a second water meter in any new home built.

 

Monday, that revised agreement was up for further discussion and possibly a vote.

 

But the council was split on whether it was the best option.

 

Council Member Andrea Lawrence, who wasn’t convinced a WAC & SAC subsidy was the best idea, said they still had time to look into other options.

 

“We agreed to have Administrator Kress talk to a lawyer about this to see if we wanted to pursue it,” she said. “We were discussing the possibility of it, but never saying we were going through with it.”

 

She said she was in favor of growth, but felt Tax Increment Financing (TIF) was a better option.

 

Councilman Rollie Lange said in his opinion, the council made a verbal commitment, and the discussion was about the terms and legality, not whether to make an agreement. He said Progressive went forward and purchased 30 lots with the understanding there would be an agreement.

 

Nelson said he was getting frustrated because everyone thought it was about him making bigger profits.

 

“This isn’t an incentive that comes into my pocket. This is an incentive that just makes the price of the house cheaper based on the WAC & SAC fees,” he said. “This gets passed down to the customer. It’s just straight incentive for people to move here.”

 

One point of debate was how long it would take for the city to recoup the money lost up front as an incentive.

 

Mayor Pete Edmonson said based on the new taxes coming in from occupied homes instead of empty lots, it would take about three years.

 

Councilman Kris Crandall said he was concerned about setting a precedent for other developers in the future.

 

“The way it’s set up  today, if we say yes to him, when a  builder comes along for Eagle Trace for the new lots, we just said we’d give away $5,000,” he said. “What’s to say he can’t have the same deal?”

 

Nelson said it shouldn’t be about him. It should be about anyone who wants to build because it brings in growth and increases the tax base for the city.

 

He said there was zero WAC & SAC coming in, and the empty lots were paying $250 a year in taxes. 

 

“That tax rate is going to $2,300 for full homestead,” he said. “And the people are spending money in the community.”

 

Nelson said after the initial meeting in November when the council was in favor of an agreement, he purchased the 30 lots and began construction.

 

“I stood up to my end of the bargain,” he said. “I said I’d go out there and buy lots and start building, and we did that. There’s more houses going up in the last three months than you guys have seen in the last five years.”

 

But the council was deadlocked at 2-2.  Councilman Richard Petty, who was not in attendance, would have abstained from the vote anyway, since he could potentially be involved in development. 

 

After the deadlocked vote, Edmonson had another suggestion. He asked whether the council would entertain adjusting the WAC & SAC fees on the city’s fee schedule as an alternative to an agreement or policy.

 

Crandall said it was an option to consider. 

 

“Sauk Rapids reduced their fees by 50% and have had success,” he said.

 

He said the city would still be getting money, and everyone who wanted to build would get a break, not just one developer.

 

Edmonson suggested lowering the fees a combined $5,000 so it would not affect the current situation with Progressive. And since the fee schedule could be revised at any time, the council had the ability to change it based on how the water and sewer funds were doing.

 

Crandall agreed.

 

“We can review it annually. If it’s working we keep it going,” he said. “If it’s not, we get to evaluate it every year.”

 

The council directed Kress to bring back a fee schedule ordinance revision for review for the meeting in May.