DL acts to lessen home glut
After being amended just over a year ago, Detroit Lakes is amending its assessment policy for undeveloped property again.
The Detroit Lakes City Council approved the amendment Tuesday.
Previously, the policy stated plans "shall be limited to 20 lots per development area." That is now stricken from the policy.
The major change in the policy, however, comes with the percentage amount of assessments to be paid at what point in the development.
For the last year, the developer had to pay 10 percent down, with a third of the assessable costs after three years, another third after five years, and the final third after seven years.
Now, collection on the property will begin the year after improvements have been 90 percent completed. 100 percent of the assessments will be assessed over a 20-year period after the lot is sold or developed.
Instead of 10 percent down, the developer will be required to pay 25 percent down.
The move was made to eliminate building incentives and thereby limit the number of lots in the city. There are about 400 available lots with infrastructure to them.
Alderman Leonard Heltemes expressed his concern during the finance committee meeting held earlier in the afternoon. He said taking the limit off the number of lots a developer can plat might give the city an extremely large number of lots, requiring more city money in infrastructure.
Alderman Jim Anderson said he felt the 25 percent down would deter some developers from platting too many lots, and the developer would basically govern his or herself in that sense.
"If it were 25 percent, it would give the developer incentive (to limit the number of lots)," he said.
The city has about $3.6 million in infrastructure waiting to be assessed. If the lots never sell and the bonds on the lots mature, the city will have to levy taxes to pay for the infrastructure.
Alderman Bruce Imholte said he felt it was a bad idea to limit lot numbers because it would be cheaper to bring the infrastructure to a whole development at once.
City Finance Officer Lou Guzek reminded the committee the city council always has the power to tell developers "no, there's too many lots, you have to cut back."
Mayor Larry Buboltz said the council needs to revisit the issue each year to ensure the right number of lots are for sale.
Developer Paul Renner spoke at the council meeting, and said with the new percentage hike, the city is basically going to "penalize the good developers, the ones who do this for a living."
He suggested requiring "wanna-be developers" to cut their own roads, like he does, and then have the city come in to put in the infrastructure. He said with the money invested in cutting a road, the developer would be sure to continue with the development and make sure the lots get sold.
By cutting his own roads, Renner said he keeps the price of his lots and assessments down, which is why the lots are selling quickly. He added that if he is forced to pay the 25 percent on top of that, he may look outside the city to develop.
Dixie Johnson suggested the city use the cost of cutting roads as part of the 25 percent down, an idea the city council and Renner seemed to agree was fair.
It was agreed the city engineer would still have to sign off on the work that was done.
The council unanimously approved upping the down payment to 25 percent, which would include the cost of any infrastructure the developer had already put into the land.