Caledonia Village Board Considers Development Study

The listened to a presentation made on Wednesday by a consultant they hired from Ehlers, which laid out a variety of land use scenarios on how the Village could grow and the financial implications of those decisions.

The Village Board wanted the : "what type of development should be encouraged, is there a value that should be targeted to maintain the current level of services, should the Village encourage development at all?"

Feeling the pressure to develop because of financial constraints, the Village Board wanted ideas on how they could develop Caledonia. State law prohibits local municipalities from increasing their tax levy. But the same law also allows them to raise the tax levy by the same percentage of growth. The problem was and still is that the Village hasn't been growing and there has been political pressure not to bring in commercial development into the Village. Board members have also grappled with over how best to develop the Village.

This wasn't a problem until the housing bubble burst and the Village lost the revenue stream they had coming in from construction permits. They've also lost state funding and costs continue to rise. Village officials argue that without development, their budget is unsustainable unless they can raise taxes.

Still, plans for a $55 million senior housing campus at the Siena Center could be presented as early as next month, but the property would be tax exempt.

So the question facing the Village is, if property taxpayers don't want their taxes to increase or see Village services diminish, how could they potentially develop with the idea of sustaining their budget?

According to the study there are four scenarios:

1. No Growth Position: resulting in a $0.06 increase in the mill rate annually for every 1 percent increase in expenditures.

2. Residential Growth Only: Average home value will need to be $287,000 to fund current operational standards.

3. Proportional development - current: Average home value will need to be approximately $245,000 to fund current operation standards.

4. Proportional Development - comparable: Average home value will need to be approximately $198,000 to fund current operational standards.

The average home value in Caledonia is $191,000. The report points out that high density development would have the highest impact to Village services, but the least impact would be industrial development.

 "(T)o reduce the impact of service cost to the average residential taxpayer, the more non-residential development occures, the less of an impact there will be to the residential taxpayer," the report indicated. "This must be tempered with location specific analysis to determine the impact of development pressure outside of current service areas."

While no decisions were made, Ron Coutts said the study would be considered by the Plan Commission and the Community Development Authority.

*This version of the story adds information from Ehlers report.