Not all investments turn out the way we hope they will. With 18 empty lots left to sell and a $113,801 tab for sewer and water lines outstanding, the Winona City Council gave Meadows subdivision its third payment extension last Monday. Six years after the County Road 44 and Buck Ridge Drive property was subdivided and approved for residential development in 2007, Sweetwater Development has paid just over a third of its original $176,290 bill for city pipes. The council gave another four-year extension to the property's new owner, Eastwood Bank of Rochester, which acquired the remaining 18 Meadows lots in lieu of foreclosure.
The Meadows is within the former Winona Township, which was annexed by the city in 1996. Normally, city code requires developers to pay for pipes running into their subdivision prior to final approval of the subdivision; however, the City Council granted Sweetwater Development three extra years to sell properties and pay its bill.
The subdivision did well in its first months: five lots were sold for homes. Since the housing bubble burst in 2008, however, neither the city nor the developers have seen any further return on their investment in the property.
In 2010, the City Council gave Sweetwater Development another extension, this time for four years. A spokesman for the company told the council that the remaining lots would likely sell to pay off the fees within a year. One council member, Deb Salyards, voted against the extension, arguing that entrepreneurs should be prepared to accept the risks that come with business and that the city should not assume the investment risk by offering another extension.
Last Monday the council unanimously, and without discussion, approved a third, four-year extension on sewer and water payments for Eastwood Bank of Rochester.
Eastwood Bank of Rochester also acquired the remaining unsold lots in another Sweetwater Development subdivision in Rollingstone. However, Sweetwater Development still owns another property south of Garvin Heights Vineyard on County 44, a "bubble" of Wilson Township that was added to the city of Winona as part of the 2005 annexation agreement. That property has room for roughly 40 lots, but it has not been subdivided and utility lines have not been extended to the area.
Connection fees for sewer and water are intended to cover part of the cost of extending pipes to new developments. City staff members have long argued that there is no connection between annexation costs and recent sewer and water rate hikes, including increases of over 20 percent for some core city dwellers. Winona Post reports revealed that leading up to the hikes, consultants hired by the city recommended similar rate hikes to cover the cost of anticipated new construction, including the city's plan to spend tens of millions of dollars on pipes to extend city borders to Interstate 90 and fill the valleys in between with commercial and residential development.
As of last spring, the city had received only $279,438 in utility connection fees for properties annexed from Wilson Township to offset the $2.6 million it had spent to date on extending pipes. Approval of the Phillips development on County Road 17 was contested by a minority of City Council members.
This year, three new homes were developed in the Phillips subdivision, also known as Cobblestone Creek, making a total of nine homes on the 88 lots planned for its first phase and 14 more planned for a second phase. City staff explained part of Phillips' success has been actively building showcase homes to help sell lots.