By any measure, Minneapolis had an impressive year for development in 2014.
But it had an unimpressive year for reaping park dedication fees from that development, compared to a number of suburbs.
The total value of building permits issued was a record $2 billion. That would be a near-record for the city even without the Vikings stadium. About 2,000 residential units were permitted, representing about one of every five units permitted in the metro area last year.
But drill down deeper into those numbers, and some significant projects escaped paying the new city-Park Board park dedication fee.
The top five projects that got Minneapolis building permits last year all beat the criteria in the ordinance triggering the fee.
They are the stadium, 401 Chicago Av., $793.7 million; the Ryan Downtown East development, 550-600 S. 4th St., $218 million; Wahu Apartments, 1024 Washington Av. SE, $64 million; 4 Marq Apartments, 400 Marquette Av., $59.9 million; Latitude 45 Apartments, 301 Washington Av. S., $53.9 million.
The ordinance adopted by the City Council and Park Board in late 2013 after years of debate exempts developments that either won approval of all required land use applications or submitted completed land use applications before Jan. 1, 2014.
So for 4 Marq, for example, its application was deemed complete in May, 2014, exempting it from the fee. although it didn’t actually obtain a building permit until last September, according to the city.
Just the three apartment projects that beat the fee would potentially have contributed more than $900,000.
That’s several multiples of the $221,000 that was actually collected in the first year of the ordinance. That yield was much lower than a number of suburbs collected in 2014. That's also partly because of the low fee, because some affordable housing was exempted and because downtown developments pay two-thirds of the normal fee.
Downtown suffers the most from the diminished collections because there's agreement that downtown is one of the most underserved areas of the city for parks.
Council Member Lisa Goodman, who led a successful effort to lower the fee and exempt many affordable housing units from paying it, said she doesn’t believe that developers rushed projects through to escape the fee. Park Commissioner John Erwin disagrees.
One piece of evidence that may support Erwin's point of view is that there was a gap of almost two months after the start of the year before the first fee was paid.
The one developer who returned Star Tribune inquiries last week was Hillcrest’s Managing Partner, Scott Tankenoff. He said that firm’s redevelopment of the former school headquarters at 807 Broadway St. NE had all of its approvals before the fee took effect.
“Fees and costs and taxes, they’re all part of the cost of doing business,” Tankenoff said.
(Photo above: Ryan's $218 milion Downtown East development was one of the top five permitted in the city last year, all of which beat the deadline for paying a park dedication fee.. Photo by Steve Brandt)