9.1. SR 05-16-2016
Request for Action
To Item Number
Mayor and City Council 9.1
Agenda Section Meeting Date Prepared by
Work SessionMay 16, 2016Zack Carlton, Planning Manager
Item Description Reviewed by
Park Dedication Fee Update Peter Beck, City Attorney
Reviewed by
Cal Portner, City Administrator
Action Requested
Receive information and provide direction on the preferred method for calculating Park Dedication Fees.
Background/Discussion
Staff discussed the findings of the residential land appraisal with Rita Trapp and the impacts to a multiple
techniques for calculating park dedication fees. Staff also spoke with legal counsel to ensure the
calculation methods comply with state statute. The attached memo from HKGi describes these methods
and assumptions.
The preferred method for calculating the residential fee moves away from a straight percentage of land
value as the previously discussed 10% was supported by one legal case 30 years ago and was based on the
park needs of that one community. The current statute suggests the dedication rate must be linked to the
future park needs of an individual community, and be supported by the Parks and Recreation Master
Plan. Cities are not encouraged to look elsewhere for comparisons, as the future park needs of each
community are unique, and should be evaluated as such.
The proposed formula used to calculate park dedication is based on three components. The average
household size (2.79 per 2010 census/Comp. Plan) and the desired acres of park land per person (0.03
per Parks Master Plan) are multiplied to establish the land dedication requirement (acres), and in
situations where cash in lieu of land is directed, the acres are multiplied by the fair market value of the
residential land class. The formulas are outlined below:
(household size) x (acres of park per person) = (acres of land required per residential unit)
2.79 x 0.03 = 0.0837 acres per residential unit
The dedication requirement is then applied to the fair market value of the three residential land classes
when cash in lieu of land is recommended. The formula used is outlined below:
(acres of land required per unit) x (fair market value) = (cash dedication per unit)
0.0837 x $16,855 (low density) = $1,410.76 per unit
0.0837 x $19,922 (medium density) = $1,667.47 per unit
0.0837 x $115,018 (high density) = $9,627 per unit
The formula creates a strong link between additional residents, the city’s plans for future parks, and
residential land valuations. However, the jump in value of the per-unit rate for the high density residential
land classes was surprising. The three values should not be the same as residents of higher density
developments (apartments) have a larger impact to the parks system since they do not have yards to
recreate in, and the value of the land is higher. If land dedication was required for a high density
development, the monetary value of that acre of park land would be greater than one acre in a single-
family development, so the per unit rate should be higher.
With that said, staff continues to research two components to the formula outlined above; 1) 2.79 is the
average household size for all of Elk River, is there a breakdown of that average that can be applied to
each density, apartments typically have a lower household size than single-family homes, and 2) what is
the best “average” to use for each land class? Staff will provide updated information and recommended
adjustments during the work session.
Financial Impact
If the park dedication cash rates described above hold, the estimated park dedication collected over the
next 20 years will be $11 million.
Attachments
HKGi Memo dated May 12, 2016
MEMORANDUM
Hoisington Koegler Group Inc. Q®
®®
Creating Places that Enrich People's Lives
TO:
Elk River City Council and Staff
FROM:
Rita Trapp, AICP
DATE:
May 12, 2016
RE:
Establishment of Park Dedication Rates and Fees
The completion of the appraisal study has provided the fair market value information needed for the
establishment of the park dedication rates and fees. City Staff, the City Attorney, and HKGi have
collaborated on the following recommended approach in determining the park dedication rate and
fee. This approach, based on the adopted Park and Recreation Master Plan and the appraisal study,
should improve the defendability of the park dedication ordinance if it should be needed.
As background, the establishment of park dedication rates and fees is regulated by Minnesota
Statutes. Subdivisions 2b Dedication and 2c Nexus of Section 462.358 Official Controls: Subdivision
Regulation; Dedication state that jurisdictions have the authority to require a reasonable portion of
the buildable land in a development to be dedicated to the public. An essential nexus between the
dedication imposed and its purpose must be established through an adopted park plan. While
municipalities may accept a cash fee in lieu of donation and may use those fees for park
improvements, statute does not state that the fee can be based on the cost of improvements a city
would like to make. Instead, it states that the fee must be based on the fair market value of the land
that otherwise would have been dedicated.
In the past, the City has established a park dedication rate and cash fee based on the region's
historical average, a comparison of other communities' rates, and what the marketplace would
support. City Staff has advocated that the park dedication rate should be adjusted to meet the
requirements identified in Minnesota Statutes. As cited above, a review of statutes indicates that a
better method would be to establish the amount of parkland needed for the rate of dedication and
the cash fee based on the estimated fair market of land by residential density class.
A starting point for the development of a park dedication requirement is establishing the amount of
parkland desired in the community. A historic industry standard that is commonly referenced is 10
acres per 1,000 people or 0.01 acres per person. A review of Elk River's existing park system shows
that the City has developed at the higher rate of 0.04 acres per person. Future park development
identified in the Park and Recreation Master Plan is estimated to be at the slightly lower rate of 0.03
acres per person. City Staff recommends use of the 0.03 acres per person rate as park dedication is
supposed to be reflective of additional parkland demand created by new development.
Hoisington Koegler Group Inc.
123 North Third Street, Suite 100
Minneapolis, Minnesota 55401
(612) 338-0800 Fax (612) 338-6838 www.hkgi.com
May 16, 2016 City Council - Park Dedication - 5/12/2016
Staff recommends that for consistency across different types of development patterns the City
maintain a parkland dedication rate that is on a per unit basis. To determine a land dedication per
housing unit rate, the number of acres per person needs to be multiplied by an assumed number of
people per household. The 2010 Census established the City of Elk River's persons per household to
be 2.79 persons per household. Multiplying 0.03 acres per person by 2.79 persons per household
yields a rate of 0.0837 acres of parkland per housing unit. This rate can then be multiplied by the
estimated value per acre established in the appraisal study to create a cash in lieu of land dedication
rate of $1,410.76 for low density, $1,667.47 for medium density, and $9,627 for high density. While
this may be lower than the current rate, it is important to remember that as the residential market
changes, this rate could be adjusted through an updated apprais100al study.
K
Park DedicationFee Update
Park Dedication
Cities are encouraged to look at their anticipated needs
for park land, rather than compare themselves to others.
Statute suggests that park needs must be supported by
parks master plan.
Each community is unique.
Park Dedication Formula
Create formula based on relationship between added
residents and park needs identified in Parks Master Plan
2.79 average HH size in Elk River
0.03 acres of park per person
Create per unit land dedication rate based on
assumptions
2.79 x 0.03 = 0.0837 acres of park per unit
Park Dedication Formula
For cash donation –apply required acreage to fair market
value established by appraisal study
0.0837 x $16,855 (low density) = $1,410.76/unit
0.0837 x $19,922 (medium density) = $1,667.47/unit
0.0837 x $115,018 (high density) = $9,627/unit
Adjust high density to HH size of 2.00 (national avg.)
0.06 x $115,018 (high density) = $6,901.08
Use lowest average market value
0.06 x $103,313 = $6,198.78
Park Dedication Formula
Create average value based on housing types
15% x $6,198.78 = $929.82
18% x $1,667.47 = $300.14
67% x $1,410.76 = $945.21
Sum of values -$2,175.17 per unit fee across density
$9.14 million in residential park dedication
Questions?
Residential Appraisal Study Results
Mean values for three densities (low, medium, high)
Remove outliers to establish fair value
Low density -$16,855 per acre
Medium density -$25,990 per acre
High density -$115,018 per acre
Additional Alternatives
Applicant pays for appraisal after preliminary plat
approval
Sale price of the property
Negotiation
Developer select alternatives
Require higher of multiple options
City Comparison
CityResidentialCommercialIndustrial
Elk River$3,712/du$7,440/acre$2,485/acre
Ramsey$2,210 to $2,600/ du$5,828/acre$5,056/acre
Rogers$3,500/ du$7,000/acre$5,000/acre
Big Lake10%10%10%
Otsego$3,370/ du$7,000/acre$3,500/acre
Maple Grove10% -11%+7.50%7.50%
Appraisal study application
Apple Valley
Need per resident and com./ind.per 1,000 sf
Calculation –(persons per unit or employees)x(acres
of park needed per person -.01)x(land value)
Inver Grove Heights
Percentage to collect per zoning district
Use appraisal and percentage to establish per unit fee
Appraisal study application
Burnsville
Calculates residential per NPRA standard (.01
acre/person) x (persons/unit) x (units) = acres
Interprets the % for cash dedication
Commercial and Industrial pay 5% of appraised value
Lakeville
12-17% of residential land based on density and 6%
of commercial or industrial lots
Apply rates to appraisal study to establish per unit fee
Residential
Current Proposed Proposed % of
Net Area Residential 2015 Net County Financial
Project Cost Per AcreDedication Per Dedication Dedication Current
PlattedUnitsValueImpact
Fee SchedulePer 10% Per 16% Rates
$ 50,462 $ 5,046 $ 3,712 $ 5,046 $ 1,334
Jenior P 15-04101136%
5.581$ 71,700 $ 12,849 $ 3,712 $ 7,170 $ 3,458
193%
Froehlichs Happy Corner P 08-07
Rural
5.621$ 66,100 $ 11,762 $ 3,712 $ 6,610 $ 2,898
178%
Rocky's Manner P 08-02
3.081$ 62,000 $ 20,130 $ 3,712 $ 6,200 $ 2,488
167%
Rocky Ridge Estates P 07-10
36.674$ 263,400 $ 7,183 $ 14,848 $ 26,340 $ 11,492
177%
Sunset Acres of ER P 06-16
$ 29,348 $ 27,950 $ 11,136 $ 2,935 $ (8,201)
Heritage Park P 15-031.05326%
$ 46,700 $ 38,595 $ 3,712 $ 4,670 $ 958
Clark Addition P 14-081.211126%
13.213$ 62,381 $ 4,726 $ 48,256 $ 6,238 $ (42,018)
13%
PrestigousWoodland Hills 2nd P 14-04
0.311$ 25,002 $ 80,652 $ 3,712 $ 2,500 $ (1,212)
67%
DHJ P 14-03
Urban Service
320$ 98,000 $ 32,667 $ 74,240 $ 9,800 $ 15,680 $ (64,440)
21%
Heritage Maples P 13-03
5.8560$ 477,000 $ 81,538 $ 222,720 $ 47,700 $ 76,320 $ (175,020)
34%
Depot at Elk River P 08-06
1.022$ 22,327 $ 21,889 $ 7,424 $ 2,233 $ (5,191)
30%
Rohlf's 2nd Addition P 07-04
0.831$ 3,700 $ 4,458 $ 3,712 $ 370 $ (3,342)
10%
Elk River TBS P 06-14
2.281$ 49,000 $ 21,491 $ 3,712 $ 4,900 $ 1,188
132%
Christian Farms P 06-13
8.952$ 129,200 $ 14,436 $ 7,424 $ 12,920 $ 5,496
174%
Trott Brook Hills P 06-10
Average/Acre $ 180,132 $ (235,612)
$ 1,456,319 $ 415,744 43%
$ 32,840
Residential Average % of Net County Value we currently collect:
29%
Commercial
2015 Net Current Proposed % of
Net Area Residential
Project County Cost Per AcreDedication Per Dedication Financial ImpactCurrent
PlattedUnits
ValueFee SchedulePer 10% Rates
MSB Campus Addition P 08-093.77Commercial$ 724,500 $ 192,175 $ 28,064 $ 72,450 $ 44,386
258%
Zane Street Commons P 08-085.46Commercial$ 356,800 $ 65,348 $ 40,644 $ 35,680 $ (4,964)
88%
Commercial
EDA Prop west of Westbound C33Commercial$ 228,600 $ 76,200 $ 22,332 $ 22,860 $ 528
102%
West of Subway by FairbaultFood C32.53Commercial$ 220,400 $ 87,115 $ 18,833 $ 22,040 $ 3,207
117%
$ 87,122 $ 45,260 $ 52,970 $ 7,710
Prop east of Alina Clinic C3 (outlot)6.08Commercial$ 529,700 117%
$ 2,060,000 $ 155,133 $ 206,000 $ 50,867
Average/acre133%
$ 101,591.88
Commercial Average % of Net County Value we currently collect:8%
Industrial
2015 Net Current Proposed % of
Net Area Residential
Project County Cost Per AcreDedication Per Dedication Financial ImpactCurrent
PlattedUnits
ValueFee SchedulePer 10% Rates
Natures Edge Business Center 2nd P 14-0537.78Industrial$ 774,900 $ 20,511 $ 93,883 $ 77,490 $ (16,393)
83%
Renner 4th Addition P 08-0511.85Industrial$ 521,900 $ 44,042 $ 29,447 $ 52,190 $ 22,743
177%
Industrial
Portside Addition P 08-01 (Metal Craft)9.8Industrial$ 832,300 $ 84,929 $ 24,353 $ 83,230 $ 58,877
342%
Cemstone P 07-094Industrial$ 78,400 $ 19,600 $ 9,940 $ 7,840 $ (2,100)
79%
Prop east of Metal Craft7.31Industrial$ 477,600 $ 65,335 $ 18,165 $ 47,760 $ 29,595
263%
County Property (outlot)19.62Industrial$ 1,281,938 $ 65,338 $ 48,756 $ 128,194 $ 79,438
263%
$ 3,967,038 $ 224,545 $ 396,704 $ 172,159
Average/acre177%
$ 49,959.19
Industrial Average % of Net County Value we currently collect:6%