By Ana Alexander
HOWARD LAKE, MN To continue its progression of revitalization, the City of Howard Lake recently created a citywide Housing Development Incentive Program.
To promote development and construction of single-family homes in Howard Lake, the city will be offering reduced development, assessment, and land fees for individuals, families, and developers.
“I think what we’re proposing will actually help any private owner that has land to build upon, or any developer. Lake Ridge, Dutch Lake, Mallard Pass, Terning Trails would also benefit from this,” City Administrator Nick Haggenmiller said.
Any vacant single-family parcels within Howard Lake city limits are eligible for a $5,000 development fee reduction, which will be applied upon issuance of a building permit. Development fees can be defined as building permits, water and sewer availability charges, and site plan review.
“We are not waiving these, we will not write it off our books, but what we will do is handle it in a very similar manner to a TIF,” Haggenmiller said.
The city would document the sale of each property in its financial books, and set aside a special levy this way, the city will be able to restore the funds used for the assessment fees.
“In order to make that happen, we would actually have an inter-fund loan from the general fund to those relative funds, and every year when we get our tax disbursements, a portion of that would go back into those funds to make them whole,” Haggenmiller said.
This would not affect the taxes residents pay.
“They just pay their taxes there’s not additional fees on the tax statement itself,” Haggenmiller said. “We just know that they owe us for this development internally, so that we pay our own funds back. Instead of [the money] going back to the general fund, we’ll take a portion and put it in our water fund, our sewer fund, just to make sure those funds are whole at the end of it.”
Not including the price of the lot, the home must be valued at a minimum of $150,000. Properties purchased but not developed will not qualify, and incentives are capped at one single-family parcel per single-family home.
The homes in the Terning Trails subdivision were intended to be single-family homes, geared toward first-time home buyers or seniors. The campus plan in Terning Trails includes townhomes and a childcare center, in addition to the assisted living apartments at The Lodge of Howard Lake.
The city currently owns all but 17 parcels in the Terning Trails subdivision the other 17 are owned by several contractors who accepted the parcels in lieu of payment for their work when the original developer of the subdivision, Lakeland Construction, went bankrupt.
Now, the city is looking to begin developing Terning Trails. The contractors in possession of the 17 parcels have expressed concern that competing with the city in marketing their parcels would make sales difficult.
“They took the property with the understanding that the property has value, and one day they’ll be able to sell it, to pay them back for the work they did on the job site,” Haggenmiller said.
The council discussed forming a three-phase development plan for Terning Trails.
The first phase would give the contractors the opportunity to market their property before the city-owned parcels.
“They’re taking a bigger risk, being the first property to develop, than the person that’s the 10th. It’s actually easier to sell the 10th than the first,” Haggenmiller said. “Not only do they have costs that have been tied up in this development for six or seven years, but now they’re taking a bigger risk by opening the development and hoping that those homes sell.”
The city hopes that beginning development on these initial parcels will spur further development through Terning Trails.
“I’ve made it very clear that we don’t want the [contractors] to say, ‘OK, we’ve built our house, we’re good to go,’” Haggenmiller said. “This needs to open up this development.”
The first phase would include creating a letter of understanding or a development agreement between the city and the contractors, which would include a timeline for construction and a minimum number of homes to be built. Mid Minnesota Hot Mix, one owner of property in Terning Trails, has verbally agreed to building four homes on its parcels in 2017 once the program moves forward.
The properties would also qualify for waiving their outstanding assessments, which are roughly $1,900 per property. Additionally, the Howard Lake Housing Development Incentive Program will also be applicable to the Terning Trails subdivision.
“What I will likely bring back is a revised letter of understanding or development agreement with Mid Minnesota Hot Mix specifically, and that would put a timeline on the program for one year. It would also dictate a minimum of four houses to be built in 2017,” Haggenmiller said.
The second phase would take on the city-owned parcels. These parcels would not be available for sale until phase one is completed. The third phase would put the available parcels in Terning Trails on the open market.
“Even in terms of city planning, it makes sense for us to phase-in the growth,” Haggenmiller said.
The city is hopeful that the Housing Development Incentive Program will help promote growth in Howard Lake.
“It’s a step in the right direction, for sure,” Mayor Pete Zimmerman said.