Revenue light from first year of Minneapolis' park-dedication law

Minneapolis parks took in more than $220,000 last year as developers began paying a new fee to create or improve urban park space — and that number could go up dramatically in coming years.

"There's a wave of demand right now downtown and on the east side of the river," said Council Member Jacob Frey, whose downtown and North Loop ward could gain the most. "That's a huge win."

Minneapolis could have taken in a lot more than the $221,355 from 56 building permits on which the fee was charged during the first year of the ordinance.

But the Minneapolis haul was dampened by a comparatively low fee, an exemption for some new affordable housing and a rush by developers to get projects approved before the fee was imposed. Just a small fraction of new housing units actually paid the fee in the first year.

The new ordinance requires developers to give land or money when they build new housing or commercial space, a change designed to spur new parks in areas with few outdoor public spaces.

Park-dedication requirements for development have long been a feature of growing suburbs as they struggled to provide their growing populations sufficient outdoor amenities.

Woodbury collected nearly $850,000 in park fees last year from new homes or expanding businesses. Brooklyn Park topped that with $870,000. Plymouth collected $768,000.

How much money a city collects depends on multiple factors, including how high the fee is set, how much building occurs there and how many exemptions its law allows.

The most commonly paid fee level in Minneapolis last year was $1,500, the amount paid for a single housing unit. That's a fraction of the requirement set in some suburbs.

Woodbury's fee is $3,500 per housing unit. Brooklyn Park charges $4,600. St. Paul typically collects just $1,200.

The Minneapolis Park and Recreation Board, which adopted the park ordinance jointly with the city, initially wanted to charge $4,500 per housing unit. But the negotiations over the ordinance happened as the nation was struggling out of a deep recession.

Park Commissioner John Erwin said council members were fearful of imposing too high a burden on developers. Moreover, the city has a relatively mature and developed park system, compared to fledgling systems in fringe suburbs, said Minneapolis Council Member Lisa Goodman, who favored the lower fee.

Erwin said he thinks a number of projects now completed or under construction rushed to get city permits before the fee took effect. Minneapolis had shattered its previous record for building permit value in 2014. But many projects also were exempted, either as affordable housing or as developments that don't increase the number of residents or employees.

According to the city, it issued permits for 2,070 housing units last year. But Park Board figures show it collected fees on fewer than 150 of those. That's partly because the new law exempted developer applications completed before 2014 even if the permits were issued last year.

Erwin said with several large housing projects on the horizon in or near downtown, more money or pocket parks created by property owners will eventually result from the new law. The ordinance generally requires the fee to be spent on parks or trails within one-half mile.

For example, the proposed 450-apartment development on the East Bank's former Superior Plating site could generate up to $675,000.

That could dramatically reshape outdoor possibilities near downtown, an area Erwin and Goodman say is the city's most underserved area for parks.

"We missed out on millions of dollars just in the years it took for get this through," he said.

Former City Council President Paul Ostrow said an earlier law would have helped the Park Board to fund parks in the rapidly developing North Loop, where there are few parks.

With money restricted to being spent a half-mile from the development, funds are being set aside for use in neighborhoods where new housing is built, but the park fees are not enough to build new parks immediately. Erwin said he'd like to see it used for mini-parks with children's play lots.

A 2013 change in state law that clarified the ability of Minneapolis to use the tool — a response to threats of a lawsuit — was opposed by some developers. But those developers, and others planning large projects, didn't respond to inquiries about how the law is working.

One developer who opposed the law, Arnie Gregory, told legislators the fee would mean several Minneapolis projects he's involved in likely wouldn't go ahead. Nevertheless, he's now pursing a mixed-use North Loop project that would pay a fee of at least $90,000 for its new apartments.

The land under discussion is a strip of former railroad that crosses Minn's proposed Mill City Quarter development across from the former Milwaukee Road depot, which park officials see as a bike-walking connection to the riverfront.

Steve Brandt • 612-673-4438