Are Developers paying too much in Platting Fees? Absolutely NOT!

If anyone has been paying too much for NEW infrastructure and development, it has been the tax payers of Sioux Falls. When the 2nd Penny sales tax was raised to a full penny over a decade ago to fund infrastructure expansion, the promise was developers would put in 40-60% into that fund in platting fees. That hasn’t happened, not even close. In fact, taxpayers at one point were putting in over 10x more into that fund then the developers.

Well apparently some developers are now crying the platting fees are too much (about $20K per acre on vacant lots in undeveloped areas). Sioux Falls City Councilor Greg Neitzert talked about it in a recent post on his Facebook page. He seemed to be sympathizing with the developer because they used the tired old excuse that they pass those prices to the consumer of the new development. Well duh. The consumer is getting brand new sewer, water, and roads, why shouldn’t they pay the cost? How is charging me extra in sales taxes fair? What do I get out of it except higher taxes and water/sewer rates?

In about 50% of US cities with populations of 25K or more they charge the developer a 100% of the cost of new development infrastructure, so current users are not subsidizing new growth. This makes sense, because as I have often argued, new growth without a plan to pay for it, makes no sense. Slow growth that is properly funded is fiscally responsible to taxpayers. When developers don’t have enough workers to build their developments, that should tell us that maybe the ‘growth’ isn’t needed. Who are you building and expanding for?

I think we should eliminate platting fees all together and have developers instead pay for the entire cost of new infrastructure. If the NEW development is really truly needed, it will pay for itself. That’s just common sense.



6 comments ↓

#1 D@ily Spin on 12.27.18 at 1:36 pm

Another way to look at this is that current residents pay ongoing for new development. When developers pay nearly nothing for new infrastructure via cheap platting fees, new development sells cheaper. There’s less property tax valuation. Isn’t this why there’s no budget for older neighborhoods repair and improvement.

#2 USD on 12.27.18 at 2:55 pm

Give Greg a break I’m sure he “researched it”.

#3 Mark on 12.27.18 at 6:52 pm

I think you need to sit down with someone who understands this more than those you have listen to. If abc developer puts in new development with 40 building sites it pays for roads, sewer, water asphalt, engineering. The city may build a nicer street leading to it such as Tea Ellis project but it does not pay for off site improvements within a development. In regards to money for. Older areas of town that new home owner pays for that as well. I am not a builder or developer but I understand the system.

#4 l3wis on 12.27.18 at 7:02 pm

You mean like the over $50 million the city, state and county gave to Foundation Park? How much did they put in?

#5 Mark on 12.27.18 at 7:13 pm

The story was about residential development. But another thing that a developer pays up front for is over sized water and sewer lines if there is a future area past them. Also they are forced to pay for large retention projects as in Galway Park. In other cases they are to get back this investments when future developers hook onto to lines in the project through cost recovery. But this is not always the case.

#6 l3wis on 12.27.18 at 7:20 pm

What do you think of just eliminating platting fees and just have a requirement that they pay 100% of the costs? I can guarantee they are not paying it all now. There may be some requirements as you suggested, but as I have seen with Foundation Park, and probably with the 85th Exchange, a lot of the cost is picked up by users and tax payers in the form of higher rates and taxes.

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