City wants more money for connecting to roads, sewers

City Hall says it needs more money from developers to pay for extending roads, sewers and water systems on the outskirts of Sioux Falls.

The proposal follows a consultant's conclusion that Sioux Falls' platting fees underestimate the demand, wear and tear on city infrastructure from larger apartment buildings. Some warned, though, that a fee hike will be passed along to buyers and renters and add to the cost of housing.

The city's public works department will share a proposal Tuesday to more than double the cost of connecting to city infrastructure for multi-family housing developments. Other residential, industrial, office and commercial developments would see more modest increases.

“It makes it harder and harder to put up a unit that rents for under $800 a month," said developer Garry Harr, an owner with Harr and Lemme Development.

The fee for a multi-family housing development is currently $3,600 per acre, regardless of the number of units. That cost would ramp up to $8,309 over the next three years, with 2.5 percent annual increases after that under a plan to be presented Tuesday at City Council Land Use Committee meeting.

Public Works officials were unavailable for comment Monday, a government holiday.

The city last year hired Duncan Associates, a Texas planning consultancy that helped develop Sioux Falls' existing platting fees in 2008, to come back and review the formula. Vice President Clancy Mullen said the original fees were based on national data trends. This time around, calculations were based on population density, traffic counts and other data specific to Sioux Falls.

One difference. In the first study, multi-family housing was projected to average about eight residential units per acre. The new calculations predict about 16 units per acre.

“We were underestimating,” Mullen said of the 2008 study.

Post-recession market changes are also a factor in the need to adjust the fees. Council Chairman Kenny Anderson, Jr. said when the council created platting fees they were estimated to generate $6 million a year. Then home sales slowed and rental demand grew, causing a surge in apartment units and a shortfall in platting revenue.

“It’s not even close,” he said. “This is to try to make up the difference.”

The increases, if approved by the Council, would take effect in 2017. The proposal has already been vetted by the city’s Infrastructure Review Advisory Board and a panel of mulit-family housing developers, according to the city’s website.

Councilor Greg Jamison said while he’s inclined to support the proposal, he’s concerned how it might affect the economy and demand for multi-use housing developments.

“If there’s an increase, the developer isn’t going to just suck it up. That’s going to get transferred to the end users, homeowners and tenants,” he said. “We don’t want any of that to happen. But we certainly need build more arterial roads.”

Arterial Street Platting Fees