After a 40-minute discussion last week, the Clearwater City Council voted to table a decision on a proposal to cut WAC & SAC fees for Progressive Builders.

 

In November,  Progressive Builders owner Denny Nelson asked the council to consider offering an incentive if he would agree to build multiple homes in the Cedar South Development south of I-94.

 

Nelson said he was in the process of purchasing 30 lots, and it would make it more marketable if he could cut costs and offer the homes at a lower price.

 

He explained how a typical 1,200 to 1,400 sq. ft. three-bedroom, two-bath model with three car garage would cost $218,529 in Clearwater, compared to $204,000 in Foley, $215,900 in Sauk Rapids, $219,000 in Becker and $222,000 in Zimmerman.

 

If he could reduce some of the fees, he could be competitive and make Clearwater a more desirable site. He felt he could build a minimum of five or six new homes a year. But the city’s water and sewer connection fees (WAC & SAC) totalled almost $7,500.

 

After a long discussion about possibly reducing WAC & SAC by $5,000 per home, the council voted to entertain developing an incentive agreement with Progressive using a WAC & SAC discount. But they didn’t set an amount or parameters at the time.

 

Last Monday, Administrator Kevin Kress said after speaking with  some bond advisors and the city attorney, he wasn’t comfortable recommending the proposal because the city would be committing $150,000 in fees it would never collect.

 

“He did caution that it seems dangerous up front because there is not another city where they’ve waived the WAC & SAC by the amount we’re predicting here,” he said.  “He said it’s pretty loose because it could open us up for litigation if somebody else came in after the fact and said they want the same thing - 30 lots at a $5,000 reduction.”

 

Kress said it was up to the council, but the attorney felt there should be a developers agreement, not just a resolution approving a $5,000 reduction.

 

Councilman Kris Crandall was concerned about the future economy.

 

“Let’s say next year they build five homes and  then the market goes flat. What happens to that agreement for 30 houses?” he asked.

 

 “You’d have to have that in the developer’s agreement,” said Kress.

 

Mayor Pete Edmonson said it wouldn’t matter because the WAC & SAC is only reduced for the homes that are built.

 

“Regardless of the market, why would that affect the agreement? Clearly, the city is not going to force Progressive to build a minimum of five homes for the next five years. The agreement is good for a maximum of 30. If they build four it’s not like the agreement is terminated.”

 

Council Member Andrea Lawrence said she felt there were other options, like Tax Increment Financing (TIF) or a tax abatement, where the developer pays taxes first and then is reimbursed. 

 

“We could still do a TIF that would equate to $5,000 per lot,” she said. But it wouldn’t be WAC & SAC.”

 

“It depends on what they’re getting the TIF for,” he said. “It’s a little bit more uncommon for residential. And there are lots of standards involved.”

 

Edmonson asked why passing a resolution alone wouldn’t be enough to resolve the issue.

 

“All it does is say the council is in favor of doing this,” said Kress. “It doesn’t have a signature from Progressive Builders that they’re tied to building five homes a year - or whatever criteria we have.”

 

Councilman Rollie Lange said Progressive has already purchased the lots and in the process of building three new homes based on the assumption that the city will cut WAC & SAC.

 

“They understand they have an agreement with us,” he said.

 

Lawrence said Nelson came to the November meeting looking for a commitment so he could move forward quickly. But the council never agreed to cut WAC & SAC. They only agreed to entertain the idea of developing some type of an incentive agreement.

 

“He needed a quick decision,” she said. “How is everybody supposed to know all the details at the meeting? I think we were clear saying we were going to research it. Now some of the answers are coming back that we have concerns with. It’s due diligence.”

 

Kress suggested having a developer’s agreement with Progressive that establishes specific parameters, like the number of homes, time frame and the cost of the homes. 

 

Lange suggested tabling the agreement until Kress could sit down with Nelson and discuss the terms and cost of a developer’s agreement. The council voted in favor.