Q & A: Do Development Fees cover Costs?

Paid consultant Glenn Dorfman made the claim that developer fees cover the cost of development.  As it turns out he didn’t actually check the facts.  But I did…

Despite making this claim to the city council and chamber, the claim was never actually checked.  This is really too bad since the data was easily available.  I called him on his lack of research and did the research myself.  The State of Minnesota requires cities to fill out a document called, “Municipal Construction and Development Fee Revenue and Expenses Annual Report.”  This is required by M.S. 16B.685 / 326B.145.  This document shows how much we spent on development and how much we collected in fees and assessments.

Here is the data from 2002 – 2009: Development Fees and Revenues

The data shows that over the course of this 8 year period taxpayers paid an average of $26.95 million for development and got back $7.4 million.  So we were giving an average subsidy of $18.55 million per year.  By comparison, Rochester’s total tax levy is only $46 million.

After seeing the amount of subsidies we are giving I feel like I need a shower.  I didn’t even get a thank you note.  Easily accessible public data shows Glenn’s statement and the claims of many in the development community are false.

Our 4% of jobs in the construction industry are important, but so are our other 96% of jobs that don’t see this kind of subsidy.  Further, if we continue these subsidies we have a right to demand much higher standards that the kind of development we see in places like 22nd Ave. NW.

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