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Rochester effort to spur affordable housing construction reimburses fees for first new home

City council ponders tweaks to pilot program following first approval

Sandstone.JPG
A home at 6045 Sandstone St. NW is being constructed Monday alongside several others in the Pebble Creek subdivision on the northwest edge of Rochester.
Randy Petersen/Post Bulletin
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ROCHESTER — A new Rochester housing incentive program faces tweaks after its first project was approved Monday.

The Rochester City Council unanimously approved reimbursing $5,191 in fees for a home being constructed on the northwest edge of the city.

The move was part of a recently implemented pilot program using $500,000 in federal COVID-relief funds to help create affordable owner-occupied homes.

Jean Dewitz of DeWitz Home Builders said the program is helping the new owners of the home being built at 6045 Sandstone St. NW by applying the reimbursed fees to the down payment for the $303,000 home.

The 1,200-square-foot home is a two-bedroom, two-bath rambler with a two-car attached garage and a full, unfinished basement.

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The city council approved the pilot program in February, offering to reimburse up to $20,000 in specific city fees for the development of a home with a price tag of $350,000 or less. The support is also available for the development of owner-occupied condos and townhomes, as well as re-use of other properties for similar housing.

Taryn Edens, Rochester’s manager of housing and neighborhood services, said the first case for the program pointed to the need for some tweaks.

“We learned this process for bringing it to the council for approval does delay closing for home buyers,” she said.

To address the issue, Edens and Dewitz requested the council consider allowing for blanket approval for future awards, which could mean the council approves potential fee reimbursement for all qualified home purchases in a single development and city staff makes the final decision on qualifications.

Dewitz said it would also help buyers secure funding, since she’ll be able to show banks the money will be available.

She also asked the council to consider more flexibility in the program.

As created, only fees generated this year can be approved for reimbursement, which means development fees and building permit fees for empty houses still being built can’t be reimbursed.

In the case of the Sandstone Street home, Dewitz said allowing past fees to be reimbursed would have provided the new owners with approximately $2,500 more for a down payment.

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“We need to be retroactive with some of these fees, because we have an immediate need. I can service some of the immediate needs,” she said, adding that she has 27 homes available in the Pebble Creek subdivision, which includes the Sandstone Street home.

Edens said the plan was created to spur new construction and increase the supply of lower-priced homes, which is why the policy was written to apply to fees generated this year and looking to the future.

Dewitz said that means it could be 18 months to two years before a new home is constructed that will be able to see the full benefit of the program.

As a compromise, council member Nick Campion suggested reimbursing 50% of any fees paid before this year.

“There would be some incentives for existing people to close on lots,” he said, adding that the main objective of opening new opportunities and encouraging more construction would remain in place.

The rest of the council voiced support for the proposed program changes, and Edens said she’ll bring the changes to a future council meeting for official review.


What happened: The Rochester City Council approved the first home in a pilot program designed to reimburse construction fees to spur the creation of more affordable owner-occupied homes.

Why does this matter: The program is using federal COVID-relief funds to help build homes to address affordable housing concerns.

What's next: The council will review potential tweaks to the program during a future meeting.


Randy Petersen joined the Post Bulletin in 2014 and became the local government reporter in 2017. An Elkton native, he's worked for a variety of Midwest papers as reporter, photographer and editor since graduating from Winona State University in 1996. Readers can reach Randy at 507-285-7709 or rpetersen@postbulletin.com.
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