Park pique: Hennepin County to withhold grants for parks to protest development fee

The Hennepin County commission was in a giving mood earlier this week.

Up to a point.

In its last meeting of the year, after approving its 2016 budget, the commission turned to a twice-a-year process of doling out grants to cities, schools and park districts for youth sports projects. The money comes out of the proceeds from the countywide sales tax imposed primarily to build Target Field.

But when it came to grants for the Minneapolis Park & Recreation Board, the commissioners balked. County administrators and all seven commissioners are not happy, it seems, about a  dedication fee imposed by the city on behalf of the parks.

The fee, which was adopted in 2013 and first collected in 2014, is assessed on all new construction projects. The purpose is to collect money or land from developers to provide for additional parks, trails, wetlands or recreational facilities that the developers’ new projects create a need for.

The county was surprised, however, that the ordinance doesn’t exempt projects built by other governments. That means that two recently announced projects  — a long-awaited transit-related development at Lake and Hiawatha and the new Hennepin County Medical Center expansion on Chicago Avenue — will be charged about $200,000 in park dedication fees. While other cities within the county collect similar fees from developers, Minneapolis is the first city to assess the fees on Hennepin County.

But with a resolution adopted by commissioners Tuesday, any city, school district or park board in the country that might try to collect such fees in the future was put on notice: If they do so, the amount of grant money they get from Hennepin County will be reduced a like amount.

The county acted after conversations with the City of Minneapolis and park board did not produce an exemption, county administrator David Hough told commissioners, so he proposed that the county use the sports grants as a way to recover the value of the fees.

“It seems kind of a crazy ordinance to me, but so be it if they want to have that,” said County Commissioner Mike Opat. “If we do a project in the city, they should either not apply for a grant or understand that it’ll come out of that end. Hopefully, this starts a discussion with the city that says, ‘We’re going to exempt the county from this fee because they are our partner in so many things,’” Opat said. “If another city does it, then we have a discussion with them and they go on the list.”

The only disagreement among commissioners was whether they should draft general language that applies to any city that seeks to collect park fees from county projects — or single out Minneapolis. Commissioner Peter McLaughlin suggested general language that would cover other cities in the future if they try to follow Minneapolis’ lead. That language passed over Opat’s objections.

“We should call out this policy for what it is, kind of a crazy making between levels of government,” Opat said.

Money for Bossen Field

The latest round of grant applications to the county would have secured $323,600 for the park board. The money was to help pay for reconstruction of ballfields at Bossen Field, on the southern edge of Minneapolis, and for field reconstruction and reconfigured seasonal ice rinks at McRae Park, also in south Minneapolis, as well as smaller amounts for items such as soccer goals, pitching machines, tumbling mats, basketball backboard and weight room equipment.

Countywide, the latest grants will total about $2 million. Since the program began in 2009, $15.4 million has been granted for improvements at 94 sports facilities and for 154 different small equipment projects. Of that total, $6.8 million has gone to the Minneapolis Park & Recreation Board, according to Hough.

Minneapolis Park & Recreation Board President Liz Wielinski said she was disappointed with the county action. Since the city ordinance requires that money from fees be used in close proximity to the project that paid the fee, it could have been used for needed improvements at Elliot Park — just across 8th Street from the main Hennepin County Medical Center campus. And the grants that will be reduced are for high-needs parks — especially the ballfields project at Bossen Field.

The county, and all local governments, are assessed many fees. She cited assessments for streets and sidewalks. The park dedication is no different, Wielinski said. “It seems a shame that this is where they’re going to say, ‘Line in the sand and you’re not double-dipping,’” she said. Since the new fees went into place, the city has collected about $1.6 million through November — money that can be used to purchase park land or make improvements to existing parks.  

Exemption not allowed?

Park dedication and in-lieu-of fees have been in existence for years, but have been adjusted regularly since at least 2004 to respond to city concerns the program wasn’t working as it should. At that time, local governments could get land or fees for new subdivisions as a way to pay for parks new residents would desire. But since cities like Minneapolis and St. Paul were mostly built out and unlikely to experience new subdivisions, park advocates pushed for a change that would allow the fees to be imposed on the redevelopment of existing sites.

In 2008, commercial and industrial projects were added. Then, in 2013, the Legislature arrived at a means for the city of Minneapolis and the park board to impose the fees and transfer the money to the board. The first collections started in January 2014.

The new method assesses a fee when construction permits are received. The commercial and industrial fees are initially based on market value, but are capped at $200 per employee related to the development. Residential projects are assessed at $1,500 per dwelling unit. Small projects of 5,000 square feet or less are exempt. And as per state law, the city exempts affordable housing projects.

Wielinski argues that the state law would not permit an exemption for other government buildings. The small business exemption, however, is not described in the state law but the Minneapolis council added it. How a city defines “commercial” and “industrial” in their codes can make a difference, as well. St. Paul revised its park dedication fee ordinance earlier this year, shifting from one that assessed fees based on the number of parking spaces in a project to one based on market value and number of new dwelling units.

The new St. Paul ordinance does not exempt senior housing, and has a lower rate for affordable housing. There are no other exemptions, said senior planner Allan Torstenson. But certain government or public uses are not defined as “commercial,” but instead as civic and institutional or as public services and utilities. Schools, libraries, recreational facilities, museums, churches and daycare centers are civil and institutional uses. Municipal or public service buildings are considered public services.

So while a hospital in St. Paul would be assessed the fee, a public service building would not.

In Minneapolis’ ordinance, however, those land use definitions are not used. Instead, all new projects are categorized as “development sites,” said Brad Carter, a development coordinator for the city who was among the staffers who helped draft the ordinance.