Rochester renews program canceling up to $20,000 in city fees for new homes

High taxes, excessive fees and regulations all conspire to make housing here considerably less affordable than in many other areas of the country. It only follows that reducing some of the government red tape driving up housing costs could make all the difference for some prospective buyers.

So Rochester initiated an experimental program two years ago to encourage new home construction in the city by reimbursing as much as $20,000 in city fees to owners of dwellings with a market value of up to $350,000.

“Really our goal here is to create new homeownership opportunities to spur the market to increase our supply of for-sale housing specifically,” Housing and Neighborhood Services Director Taryn Edens recently told Rochester City Councilors.

The fee cut proved to be enough of an incentive to contribute to the construction of 35 new homes in Rochester. Most new homeowners were reimbursed for well under the maximum of $20,000, putting the pilot program’s cost at about $224,000. But the payoff came at a critical time for many of them.

“I would say in virtually all of those cases the reimbursement was applied as a down payment assistance to the homebuyer,” Edens said.

As a result, the Rochester City Council has approved a resolution officially establishing the Home Ownership Creation Program. The requirements have been tweaked to enable residents making up to 115 percent of the local median income to qualify, along with newly built housing valued at up to $429,000. In addition, the Post Bulletin notes that larger developments can also qualify for reimbursement of city-paid fees.

In addition to seeking support for individual homes built below the established sales price, the program offers developers a chance to seek subsidies when 50 or more new homes are built, as long as enough homes are available below the established maximum sales price.

Developments with up to 100 homes would need to offer at least 60% of the homes within defined requirements, while a development with more than 250 homes would need to guarantee at least 15% of the houses met the set standards.

To qualify for the program, the homes must be built within city limits and will be restricted from rental use for at least five years.

The pilot program was funded by federal pandemic funding, while the next phase will be underwritten by state housing funding. Of course, the best solution would be to slash unnecessary government fees and regulations across the board for all home builders and buyers. In the meantime, the Home Ownership Creation program and similar subsidized efforts will only chip away at the affordable housing shortage largely of the government’s making.