Development taxing policy reconsidered
At a special work session meeting on Tuesday, the Mandan City Commission polled lenders, developers and home builders about who should pay for above-ground improvements in new developments – the city through special assessment taxes or more up-front costs from developers.
“It appeared from this group that some of that cost should be put back to the developer,” said City Administrator Jim Neubauer.
Neubauer said while special assessments used to be $8,000 per lot owner to pay for a new development’s street improvements, the costs have jumped to $25,000 – $30,000 per lot. “We say, maybe we should not be ‘the bank’ any more as the city and passing it onto the home buyers. Maybe it’s time for the developer to pay for those costs upfront,” he said.
With the city paying off some $89 million in debt, it is looking for alternatives when new developments are built. About $45 million of city debt consists of special assessments. These costs are split between new development projects and maintenance road projects in the city, Neubauer explained. He said the city has scheduled to pay off the special assesment debt in 2028.
Neubauer said if the city can lower its per capita debt, the city can borrow at a reduced interest rate. “If a development goes bad, and there is special assessment debt out there, and it comes back to the city, everybody in the city ends up paying,” Neubauer said. “That’s something we’re trying to avoid.”
Commissioners also asked if developers will still build in Mandan if they pay more street-related costs. They debated whether a homeowner would prefer to know all the costs up-front instead having special taxes added later.
A majority of meeting participants said that local special assessment should cap at $15,000 per lot. No action was taken by commissioners, but they will use the poll to make a future decision about Mandan’s special assessment taxing policy.
By LeAnn Eckroth, Lee News