City, parks split over viability of park dedication fee

The Park Board calls it an “essential” financial tool while Council members feel there are too many unanswered questions

Jon Gurban is convinced: Minneapolis needs a park dedication fee.

“It is essential to our financial well-being,” he said at the June 18 Minneapolis Park and Recreation Board meeting. “I can’t stress that enough.”

Gurban, the Park Board superintendent, has been working for years to get the fee through state, city and park levels of government. The state Legislature gave its approval in 2005, and the Park Board signed on last July.

Yet three years after it first was mentioned in Park Board plans, a city committee is just now getting to it. And while Gurban and others with the parks repeatedly have said it is necessary for the money-troubled board, some Council members have expressed strong concerns over its viability.

Why such split opinions?

Straightforward?

A park dedication fee is a one-time charge to new developments. Developers either give up some of their land to create a park, or they are charged an amount dedicated to building or upgrading parks within a set proximity. In Minneapolis, it could apply to both housing and commercial development.

First mentions of a park dedication fee show how much the Park Board has expected it.

Just go back to the board’s 2006 budget, where it was suggested as a “very common” tool around the Twin Cities that made sense to bring to Minneapolis. The 2007 budget called authorization of the fee the top priority for the Park Board’s intergovernmental staff.

But those years came and went. Expectation turned to urgency.

“This fee is one of the most important initiatives that the board has worked on,” the 2008 budget said, “and we would like to get the fee implemented by March of 2008.”

That it still hasn’t passed has been much to Gurban’s chagrin.

“To me, this was pretty straightforward,” he said. “… You never know. I’m disappointed that it’s not in place already.”

At his previous position, with the statewide Minnesota Recreation and Park Association, he said he saw all sorts of fundraising mechanisms used for parks. “And one that is dominant throughout the state is the park dedication fee,” he said.

The fees are common in suburbs, where the constant flow of new developments has helped create a flood of green space. But they’re not found as often in big cities. St. Paul didn’t have one until last year.

What a fee would bring to Minneapolis, Gurban said, is help in paying for capital upgrades. Locations in the city that are more bricks and mortar than trees and grass — such as the Park Board’s current area of emphasis, Northeast — are ripe for the fee, Gurban said, especially if they get further developed.

Questions and concerns

City Council Member Scott Benson (11th Ward) said the idea of a park dedication fee is great. But he has a slew of concerns, chief among them the impact the fee could have in relation to affordable housing.

As proposed — and approved by the Park Board — projects that are purely affordable housing would not have to pay a park dedication fee. However, 20 percent of units in all housing projects receiving financial assistance from the city are required to meet affordable housing standards. Whether a park fee would be charged to those projects remains a gray area.

“If we are paying to help with affordable housing,” Benson said, “I don’t think we should pay a park dedication fee.

“I don’t see legally how you can build parks with money out of the Affordable Housing Trust Fund,” he said.

Upkeep could be another problem, he said. The Park Board already is strapped for money, and state law does not allow the fee to be used for maintenance and operations.

Council Member Lisa Goodman (7th Ward) — one of two Council members who earlier this year voted against a statement of intent for a park dedication fee — has said she felt it was disingenuous to say it would offset the additional stress on the park system that new development could cause.

And then there are the developers themselves. Benson said he’s concerned they could be scared off by the addition of a fee.

Gurban’s view is that developers will want to build where there’s green space. Better or more parks would give their properties more value, he said.

At least one developer, David Frank, of Schafer Richardson, agrees — to an extent.

“Philosophically, we agree parks and open space are a good thing,” Frank said. But he said it’s hard for his firm to support the fee at this point, especially not knowing any specifics.

In its currently considered form, the fee would be $2,000 per net new unit, meaning that for every new unit of housing added to a location, the developer gets charged $2,000. A 50-apartment development at a location where there had been a 40-apartment building would net the parks $20,000, for example.

The actual calculations would be more complicated than that, said Mike Kimball, community and government relations coordinator with the Park Board. Other factors, such as land value and location, could be taken into account.

The final numbers don’t matter that much to developer Jim Stanton. He said he isn’t convinced the money raised from the fee will be put to appropriate use, adding that the people who ultimately will pay aren’t so much the developers as the homeowners.

If the park system really wanted to add more parks in an area, Stanton said, it should do so with a tax district. The fee would inappropriately single out a small portion of the homeowner population, he said.

“Many cities have gotten to the abuse stage,” he said.

Frank didn’t go that far, making the point that he is all for promoting green space. However, the timing has him bothered. Regardless of Schafer Richardson’s eventual position on the fee, Frank said he believes it doesn’t make much sense to add costs in our current economic state.

“If we’re in an environment where the government has to lean on a struggling housing market, it seems wrong,” he said. “The housing market might not be able to stand that.”

‘Jigsaw puzzle’

Council members’ concerns might be laid to rest on July 15, when staff will report back to the Community Development Committee.

When this edition of the Southwest Journal went to press, Kimball, who helped city staff members prepare their report, said he couldn’t speak of its contents because it was not yet ready.

However, Park Board employees are hoping the response will be warm. General Manager Don Siggelkow said he’d be surprised if the fee weren’t in place by the end of the year.

Gurban said he hopes he’s right.

“This is an important piece to our financial jigsaw puzzle,” Gurban said. “It may be the biggest one.”

Dedication fees in other cities

St. Paul
The city next door passed a park dedication fee ordinance in the spring of 2007. It determines its fee a bit differently — through parking spaces.

Every parking space added to a development, either commercial or residential, requires a land donation or fee. That money must be spent in a district no farther than half a mile away from the development.

While the Minneapolis Park and Recreation Board reluctantly lowered its proposed per-net-new-unit fee to $2,000 from $3,000, fees in St. Paul are about one-tenth that amount.

Superintendent Jon Gurban, of the Minneapolis Park Board, said he didn’t think St. Paul’s fee would be very effective, saying they’d have to build a lot of parking to have any impact on parks.

“You want a fee to be able to do something [within five years],” Gurban said.

Apple Valley
This suburb has had a park dedication fee for more than 30 years, and to say it’s had an impact would be an understatement.

“Virtually every one of our parks was built with park dedication,” said Randy Johnson, Apple Valley’s park and recreation director.

The suburb has more than 50 parks, and that number is growing as more development pops up. Johnson said that each time a developer comes in, the city either dedicates a chunk of the land to parks, charges a fee or does a combination of the two.

Portland, Ore.
There are other big cities in the country that have versions of a park dedication fee, including Seattle, Kansas City and Charlotte, N.C. Perhaps the most notable of those, however, is the city Minneapolis often compares itself to.

Portland, Ore., has had what it calls a Park System Development Charge since 1998, a fee that has allowed the city to develop 8 acres of parks and invest in 281 acres of new parkland.

It’s been so successful, the city currently is considering expanding the charge.