When he first heard about it in December 2015, Hennepin County Commissioner Mike Opat called it “crazy making between levels of government.”
“It” was a dedication fee imposed by the City of Minneapolis on behalf of the Minneapolis Park and Recreation Board. Funded by money from the developers of new buildings, the fee was meant to fill the need for parks and open space created by new development.
But the county didn’t think it should have to pay when the projects it was building — such as the expansion of Hennepin County Medical Center or the transit-related development at Lake Street and Hiawatha Avenue — were benefiting the city. So, in response (or retaliation) for the $141,000 hit on the medical facility, the county cut the Minneapolis Park & Recreation Board out of its twice-yearly distribution of youth sports grants that are funded by the Target Field sales taxes.
The park board responded by complaining that the county board’s action hurt residents in areas desperate for park improvements. Stuck in the middle: the City of Minneapolis, which imposes and collects the park dedication fee, but turns all the proceeds over to the park board to spend.
Now, nine months later, a pending agreement between the Minneapolis Park and Recreation Board, the City of Minneapolis and Hennepin County may end the “crazy making.”
“I just thought to get into tit-for-tat over the dollars wasn’t good for anyone,” said Minneapolis City Council President Barbara Johnson.
‘It’s all taxpayer money’
Not long after the conflict went public, Johnson began talking to staff from the county and park board to find a solution. She said she had thought that when the program went into effect government entities would be exempt. “It feels to me that it’s taking out of one pocket and putting it into the other pocket,” Johnson said. “It’s all taxpayer money.”
On Wednesday evening, the park board will discuss — and is expected to approve — a change to the fee to exempt other government entities, redefining “developer” to eliminate the phrase “state agency, or political subdivision thereof.” (UPDATE: the board approved the change at it’s Wednesday meeting).
The same action would also refund money already paid into the fund by the city and Minneapolis Public Schools since the program was started. Three schools projects and four city projects had already paid $36,188 to the park dedication account. (The fees assessed to Hennepin County were held in escrow pending a resolution of the conflict.)
The evolution of dedication fees
The park dedication fees have been tweaked over the years to make it more of use to built-out cities like Minneapolis and St. Paul and the first-ring suburbs. Initially, it was charged only on new subdivisions, something that doesn’t happen very often in older cities. Redevelopment of existing housing was added in 2004 and industrial and commercial projects were included in 2008. Finally, in 2013, the Legislature set up a means for the fees to be collected by a city and then transferred to a park board.
The dedication fee is assessed when construction permits are received. Though the fees are based on market value, they 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. Affordable housing projects are also exempt.
Under the current program, the money collected has been spent in the same neighborhood where the fee is paid. And the money must go to expanded park services, not repairs or maintenance of existing facilities. Developers can also give land for parks or build spaces within projects that, while still privately owned, would be open to the public. The “woonerf” at the Mill City Quarter buildings between downtown Minneapolis and the Mississippi River, for example, fits into the later category.
Money could begin flowing again soon
The money withheld from the Minneapolis Park and Recreation Board by Hennepin County during the conflict came from the legislation that funded the construction of Target Field. A portion of the revenue from the special sales tax imposed to pay for the stadium is dedicated to funding youth sports programs. (Another piece of the tax goes to libraries.)
Begun in 2009, the program has distributed $17 million to 108 capital projects such as fields, lighting and playgrounds as well as 189 equipment requests for items such as soccer goals and wrestling mats. The county contracts with the Minnesota Amateur Sports Commission to administer the grant program, collecting requests and makes recommendations on which applicants should receive money. Hennepin County commissioners, however, make the final decisions.
Michael Schroeder, assistant superintendent for planning services at the park board, said if the board passes the changes to the development fee on Wednesday, and the city follows suit, the new ordinance should be in place by early October. The money from Hennepin County held in escrow will be released back to the county.
In turn, money from the sports grant program set aside but not distributed by the county during last year’s grant cycle will also be released. That means $225,000 could soon be going to reconstruct seven playing fields at Bossen Fields and $75,000 to reconstruct two seasonal ice rinks at McRae Park.
Hennepin County Commissioner Peter McLaughlin, who along with Opat had voiced the loudest objections to the payment of park dedication fees, called the resolution a “reasonable outcome” between the county and the park board. No other cities charge park fees on county construction projects. “The essence of this is we’re not going to have one unit of local government charging a fee to another unit of local government for building office space or clinic space in the community,” McLaughlin said.