Proposed Rochester program seeks to spur creation of new homes at lower sales prices

Randy Petersen, Post-Bulletin, Rochester, Minn.
·3 min read

Apr. 21—ROCHESTER — A pilot program reimbursing city fees to spur the creation of lower-cost homes has helped reduce the cost of 35 new homes since it launched.

"The (Rochester City) Council approved the fee reimbursement pilot program on Feb. 23, 2022," Rochester Housing and Neighborhood Services Manager Taryn Edens wrote in a report to the council. "The program reimburses up to $20,000 in city-paid fees for the development of owner-occupied housing units built for $350,000 or less."

On Monday, the Rochester City Council will be asked to adopt the program as an ongoing effort to spur the creation of new homes that are affordable to residents earning up to 115% of the area median income.

The request will be part of the council's regular meeting at 6 p.m. Monday in council chambers of the city-county Government Center.

The pilot was supported with federal American Rescue Plan Act funds, which provided nearly $225,000 in combined support. To continue the project, the city expects to use a portion of $545,000 it received last year in state housing support.

Later efforts could be funded through the city's recent sales tax extension, which includes up to $50 million for an economic vitality fund that can be used to support housing construction.

As proposed, the new program will provide up to $20,000 in fee reimbursement for each home built with a price below $429,000 under current federal standards. The maximum sales price would be reset each year, using federal guidelines.

In addition to seeking support for individual homes built below the established sales price, the program offers developers a chance to seek subsidies when 50 or more new homes are built, as long as enough homes are available below the established maximum sales price.

Developments with up to 100 homes would need to offer at least 60% of the homes within defined requirements, while a development with more than 250 homes would need to guarantee at least 15% of the houses met the set standards.

To qualify for the program, the homes must be built within city limits and will be restricted from rental use for at least five years.

In addition to being asked to approve the transition of the pilot program, the City Council will be asked Monday to sell six city-owned residential lots in the Homestead Trails Neighborhood to First Homes Land Trust, with a sale price established at $1 per lot.

First Homes plans to build on the lots in an effort to provide homes that are deemed affordable to households earning up to 80% of the area median income.

Meetings scheduled to be held during the week of April 22 include:

Rochester

—City Council, 6 p.m. Monday in council chambers of the city-county Government Center, 151 Fourth St. SE. The meeting will livestream at

www.rochestermn.gov/meetings/council-meetings

and be available on Spectrum cable channel 180 or 188.

—Heritage Preservation Commission, 5 p.m. Tuesday in council chambers of the Government Center.

—Planning and Zoning Commission, 6 p.m. Wednesday in council chambers of the Government Center.

Olmsted County

—Rochester-Olmsted Council of Governments, noon Wednesday in conference room 186 at 2122 Campus Drive SE in Rochester.

—Olmsted County Board Retreat, 8:30 a.m. Thursday in room 161 at 2117 Campus Drive SE.

Rochester Public Schools

—School Board, 5:30 p.m. Tuesday in the boardroom of the Edison Building, 615 Seventh St. SW.