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City staff recommends replacing private on‑site sureties with predictable fees and contract changes
Summary
Staff reported a proposed update to development application fees and financial sureties: remove private on‑site bonding/escrow for private on‑site improvements, replace with predictable fees, strengthen development contracts and add special assessment authority for unfinished work; off‑site public infrastructure bonding will remain.
Associate planner Matt Hayes Regan told the joint work session staff is drafting ordinance language to remove private on‑site surety requirements (bonding and escrow) for private on‑site improvements and to replace them with predictable application fees and strengthened contractual tools. Hayes Regan said staff’s fiscal review found the city historically used roughly 22% of the surety amounts collected, suggesting an opportunity to reduce upfront developer burdens while maintaining protections through other legal mechanisms.
Staff outlined alternatives used by peer cities (Bloomington, Duluth, Rochester and others), and said proposed changes would include updated development contracts, special‑assessment authority for unfinished work and an annually reviewed fee schedule that reflects staff effort and risk. Matt Hayes Regan emphasized that bonding requirements for off‑site public infrastructure will remain in place and continue to be managed by the city engineer.
Council members and staff noted the goals: reduce barriers for smaller and minority‑owned developers, improve predictability, and lower administrative burdens. Hayes Regan said draft ordinance redlines are in progress and internal stakeholder review has included the city attorney, community development, engineering and finance. Staff said the update will proceed to planning commission and then to council with a public hearing as required.
