As mayors in communities throughout the Twin Cities region and the state, we appreciate the focus on housing affordability among state policymakers, citizens, businesses and the media. It is a top priority for all our communities. Housing affordability is a complex issue that deserves our best innovative thinking.
A recent commentary, "High housing costs are not the problem, but a symptom" (March 19), is not helpful in solving the challenge but continues a misleading narrative that has little to do with actual housing affordability. Incendiary attacks on cities are not new, asserting their development fees and regulations are the source of the problems of housing affordability. But they have become increasingly negative, and they lack a nexus to what is required to address the housing problem.
Market forces, including the cost of land, labor and building materials, are the overwhelming determinants for the sale price of homes. It is a fallacy to suggest that simply limiting local fees and regulations will make an unaffordable house suddenly affordable. It will simply shift who pays for the infrastructure for a new housing development, which is what fees pay for, and it will benefit developers and builders, not the purchasing public.
The vast majority of new, single-family housing is built by the private market in response to market demand and is not what could meet an "affordable" definition. Most new housing is built by private builders, who are focused on building a product to meet demand and make a profit, and that is their prerogative. They build large houses with attractive amenities that make profitable sense.
But it is not the responsibility of cities and local property taxpayers to buy down the public costs associated with building those new houses and creating those new subdivisions or developments simply so builders can increase their profits.
The local fees the March 18 piece labels as "tucked into housing prices" are transparent fees that pay for the requisite utilities, streets, sidewalks, curbs, drainage, sewer pipes and inspections of the construction itself to ensure a safe, code-compliant home. It should go without saying that public infrastructure is not free. Its provision is not profitable for cities and, by law, is not allowed to be a source of profit.
Costs of fees and regulation must, by law, reflect the cost of governmental oversight for the benefit of public health, safety and welfare. These fees are part of a new home's price because those buying the new housing are asked to pay for the infrastructure provided for their benefit.
If the Legislature limits cities from setting such fees, as has been proposed, those costs will shift to others who have already paid these costs for their own homes or businesses. Contrary to the disproved assertion in the March 18 commentary that fees represent one-third of the cost of a house, such city fees typically represent between 3 and 7% of the sale price of a new home.
Cities play a limited but valuable role with respect to facilitating housing production. One is to ensure that local public infrastructure is sufficient. Cities also do what they can, within local fiscal capacities and without compromising public health and safety, to make housing more affordable.
Cities have been proactive by reducing lot sizes, providing density bonuses, abating local taxes, eliminating building size requirements, reducing set back and parking minimums, streamlining review processes, and providing down payment assistance. More often than not, builders build the same larger, more expensive home, just on a smaller lot.
Pending legislation that would impede local fees, regulations and tools would preempt local efforts to address the varied housing needs across the state and would come with no guarantee that an affordable home will be built. One legislative proposal would, in effect, allow private developers to take over local and regional planning authorities, removing any public accountability. This would not be an outcome consistent with orderly planning of communities or the public health, safety and welfare.
To truly assist Minnesotans by making homes more accessible and affordable, we would emphasize the need for state resources to reduce financial barriers to homeownership and preserve existing homes that can be more easily made affordable, the need to allow local innovation, and the need for more productive partnerships among the public, private and nonprofit sectors.
Cities do not deserve the continued attacks on regulations and fees that exist to serve the interests of safety, infrastructure adequacy, fiscal prudence and, ultimately, more housing. They need allies and partners to continue to address these needs, house by house, across Minnesota.
James Hovland is mayor of Edina. Brian Holmer is mayor of Thief River Falls. Elise Ryan is mayor of Chanhassen. This article was also submitted on behalf of the following Minnesota mayors: Jeff Wosje, Plymouth; Shelly Carlson, Moorhead; Kurt Briggs, Prior Lake; Mike Kuhle, Worthington; Brad Wiersum, Minnetonka; Doug Anderson, Lakeville; Tom McKee, Corcoran; Tom Weidt, Hugo; Marvin Calvin, Willmar.