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6.a Discussion on amending Park Dedication Requirements for Subdivisions Memorandum To: Scandia Planning Commission Reference: Park Dedication Requirements— Potential Ordinance Amendment Copies To: Neil Soltis, City Administrator Brenda Eklund, City Clerk Project No.: 16623.000 From: Sherri Buss, RLA AICP, Planner Routing: Date: February 7, 2018 The City Council had a recent discussion about funding for park improvements and the City’s park dedication requirements. The park dedication requirements are Section 12 of the Subdivision Ordinance (Chapter 3 of the Development Code). Council members questioned why the City had granted exemptions or deferments from park dedication for lots created in some recent subdivisions, including:  A outlot that was created as part of a subdivision. The subdivision conditions stated that the outlot may not be developed for residential use. The conditions stated that if the outlot were developed for residential use in the future, the City could require payment of the park fee at that time.  A minor subdivision that created a new vacant parcel and a parcel with the existing home. The park dedication fee was charged to the vacant parcel, but not to the parcel with the existing home. The fee for the new vacant parcel was deferred until the owners apply for a building permit (typically the fee must be paid prior to filing the final plat).  Lots created that are 20 acres or larger in size with at least 500 feet of road frontage. The Subdivision Ordinance specifically exempts such parcels from the typical subdivision process and requirements. (Chapter 3 of the Development Code, Section 1.5 (1). The Council also discussed a sentence in the current ordinance that states that “A developer may request a deviation from the presumptive requirements based upon the anticipated impact of that particular subdivision. The request must be made as part of the application for a final plat approval.” A copy of the ordinance with the phrase highlighted is attached. The City Administrator asked the Attorney to reflect on the three examples, and recommend whether the park dedication fee could be charged in these cases. The Attorney’s memo cites the State Statute that allows Cities to charge park fees for development, and interprets the intent of the statute for each example: Park Dedication Requirements Page 2 February 13, 2018 Scandia Planning Commission 1. Minn. Stat. 462.358, subd. 2c requires an “essential nexus” between park dedication fees and the “municipal purpose” sought to be achieved by the fees. The fees also must bear a “rough proportionality” to the need created by the proposed subdivision or development. In the case of the outlot, there is no need or municipal purpose created by the subdivision, since the outlot is not eligible to be developed. Requiring park dedication fees from that outlot would violate the essential nexus requirement, since there is no municipal purpose to receive fees for future park improvements from a lot that will never create any burdens or demands. This conclusion also seems consistent with Section 12.1 of the Subdivision Ordinance, which lays out the purpose and findings for park dedication requirements. Also, for phased developments that include outlots, the Ordinance at Section 12.5(3) allows the developer to decide whether to pay the entire park dedication fee or exclude the outlots, with payment due when the outlots are replatted for future phases. If a non-phased outlot is replatted or resubdivided in the future, then it would probably become eligible for park dedication fees, depending on what the project is. But fees at the time it is deemed to be an outlot, in my view, does not fall under the intent of the statute. 2. I agree, these larger lots created under Section 1.5(1) of the Subdivision Ordinance are not applicable to park dedication fees based on the current ordinance language. One rationale for this is perhaps these larger subdivided lots are going to be agricultural lands, thereby not creating much if any further demand on the parks system. And, these subdivisions are exempt from all requirements in Chapter Three, which would include issues related to premature subdivisions, lot line adjustments, minor subdivisions, etc., not just park dedication and park dedication fees. 3. Again, requiring a parks dedication fee to be paid by an existing house does not comport with the underlying state statute, and certainly the City’s S ubdivision Ordinance. What is the municipal purpose for charging park dedication on a house that has existed for some time? What if the house is 100 years old? I don’t see how we could make a finding that the house is creating demands on the municipal park system such that a fee should be extracted. Under Section 12.1 of the Subdivision Ordinance, “[n]ew development creates the need for new parks, open spaces and trails…” For the new subdivided lots, certainly park dedication would be required. And yes, if the house is in a newer development, there is likely a park dedication fee that has already been received, which is then specifically exempted from the requirements. You are likely familiar with U.S. Supreme Court precedent that turns a skeptical eye towards land or fee extractions made by municipalities from land developers. The nexus and rough proportionality tests in state law come from those Supreme Court decisions. So the burden is really on the municipality to show that park dedication fees in this case are warranted, over and above what is already required by state law and code. It would behoove the City to fall on the more conservative side of this ledger. Park Dedication Requirements Page 3 February 13, 2018 Scandia Planning Commission The Attorney’s comments suggest that the City may not charge park dedication fees for outlots that will not be developed, or for lots with existing homes, but he noted that a change could be considered to item #2. Based on his comments, the Planning Commission may consider a couple of questions related to the Park Dedication ordinance, and recommend whether changes should be made to the ordinance:  Should the Subdivision Ordinance section related to the 20-acre and larger lot sizes be changed, so that these parcels are required to pay the park dedication fee? While some of these larger parcels may be used for agriculture, most that have been developed recently in Scandia have been developed with a single-family home. Residents of larger parcels sometimes argue that they make little demand on local parks because their lot is a “park,” but they may be trail or park facility users.  Should the “flexibility” sentence be removed from the ordinance? Some communities have included this statement in their ordinances to allow developers of assisted living communities or memory-care housing to request exemptions from the park dedication fees, though the Scandia flexibility provision appears to be oriented toward “affordable” housing and is not restricted to senior housing. Housing developers are generally aware that the fees may be negotiated as part of the development approval process for unique circumstances.  Do you see any other items that may need to be updated in the Park Dedication ordinance? The City has not changed its Park Dedication fee for about 10 years, since the ordinance was last updated. The City Administrator reviewed the fees charged by neighboring communities, and found that Scandia’s is comparable to those of its neighbors (spread sheet attached). If the Commission recommends some amendments to the ordinance, the City would schedule a public hearing on the amendment(s) at the March Planning Commission meeting. SECTION 1.0 PARK DEDICATION REQUIREMENTS 1.1 Purpose and Findings. (1) Purpose. Pursuant to Minnesota Statutes, Section 462.358, Subdivision 2 (b), as amended and this Chapter, all owners or developers, as a prerequisite to approval of a plat, subdivision or development of any land, shall convey to the City or dedicate to the public use, a reasonable portion of any such land for public use as streets, roads, sewers, electric gas and water facilities, storm water drainage and holding areas or ponds, similar utilities and improvements or parks, playgrounds, trails or open space, said portions to be approved and acceptable to the City. (2) Findings. The preservation and development of parks, trails and open spaces in the City of Scandia are essential to maintaining our rural character, protect our natural beauty and recognize our history. New development creates the need for new parks, open spaces and trails which must be developed concurrently with development in order to implement the Comprehensive Parks, Trails, Open Space and Recreation Plan and maintain the current level of service and the quality of the environment for all. Therefore, new developments shall be required to contribute toward the City’s park system in rough proportion to the relative burden they will place upon the park system. 1.2 Dedication Required. In all developments, the owner of a subdivision shall, as prerequisite to approval of a plat or minor subdivision, convey to the City land for the public use as parks, playgrounds, trails or open space in an amount roughly proportional to the development’s share of demands on the City’s park and trail system as set forth in this section. If the City determines that land is not needed in the area of the proposed subdivision, the subdivider shall pay, in lieu thereof, a cash contribution to the City, or a combination of land and cash dedication at the City’s discretion. The dedication requirements of this chapter are presumptively appropriate. A developer may request a deviation from the presumptive requirements based upon the anticipated impact of that particular subdivision. The request must be made as part of the application for final plat approval. A deviation may be considered if the development provides affordable housing to low and moderate income persons, as defined by the Metropolitan Council. (1) Calculation of Land Dedication Requirement (A) Residential. In all new residential subdivisions, a minimum of 5% of the net area subdivided shall be dedicated for public use. The net area shall be the gross area of the subdivided property minus the area of wetlands, lakes and streams below the ordinary high water mark. Land areas so conveyed or dedicated for park, playground, trail and open space purposes shall be in addition to property dedicated for streets, easements, drainage, ponding or other public ways, and shall be in addition to open space requirements for open space conservation subdivisions pursuant to the Zoning Code, as amended. (B) Non-Residential. Park dedication for non-residential development will be negotiated between the city and the developer. The land area to be dedicated, or the fee in lieu, will be based on an evaluation of the potential need for parks, trails and open space generated by the subdivision and whether or not there is land within the development needed and/or planned for a park or trail in the Comprehensive Plan. (2) Cash in Lieu of Land Dedication. The amount of cash to be paid in lieu of land dedication shall be based on the fair market value of the land to be subdivided at the time of final plat approval, multiplied by the percentage of land required to be dedicated in Section 12.2 (1), above. Fair market value shall be determined as follows: (A) The city and the developer may agree as to the fair market value; or (B) The fair market value may be based upon a current appraisal submitted to the city by the subdivider at the subdivider’s expense. The appraisal shall be made by appraisers who are approved members of the SREA or MAI, or equivalent real estate appraisal societies. (C) If the city disputes such appraisal the city may, at the sudivider’s expense, obtain an appraisal of the property by a qualified real estate appraiser, which appraisal shall be conclusive evidence of the fair market value of the land. (D) The developer may pay a cash fee of $3,000 for each residential unit created as the presumptive fair market value of the land for which cash is paid. (E) Cash and Land Combination. The city, upon consideration of a particular development, may require that a lesser parcel of land should be dedicated due to particular features of the development. In such cases, a cash contribution shall be required in addition to or in lieu of the land dedication in order to ensure that the development contributes to the park system in rough proportion to its impact. 1.3 Suitability of Land to be Dedicated. (1) Any land to be dedicated as a requirement of this Chapter shall be reasonably adaptable for its proposed use and shall be at a location convenient to the people to be served. Factors used in evaluating the adequacy of proposed park and recreation areas shall include size, shape, topography, geology, tree cover, access and location. (2) Land conveyed or dedicated pursuant to provisions of this Chapter shall be located outside of drainage ways, floodplains and ponding areas after the site has been developed. (3) Subdividers shall be responsible for making certain improvements to the land dedicated for park, playground, trail and public open space purposes including, but not limited to, finished grading and ground cover for all park, playground, trail and public open spaces within their developments. No credit toward the required dedication shall be given for this work. 1.4 Standards for Location. (1) The Park and Recreation Committee shall make a recommendation to the Planning Commission prior to preliminary plat approval, as to the location and type of park facility required for each development. The Park and Recreation Committee shall consider the City Parks, Trails and Open Space Plan, other resources, and factors of density and site development in making its recommendation. (2) Where a proposed park, playground, trail, open space or other recreational area that has been indicated on the official map and/or Comprehensive Plan is located in whole or in part within a proposed subdivision, such proposed sites shall be designated as such and shall be dedicated to the City. 1.5 Procedures. (1) When land is to be dedicated to satisfy the park dedication requirement, separate lots or outlots shall be indicated on the plat drawings. Such lots or outlots shall be deeded to the city prior to issuance of any building permits within the plat. (2) When a cash fee is to be paid in lieu of land dedication, the fee shall be paid prior to the city’s release of the signed final plat for recording. (3) For plats that include outlots for future development or are developed in phases, the subdivider may pay the city either, 1) the required park dedication for the entire subdivision, including the outlots or future phases, or 2) the required park dedication excluding such outlots or future phases. The park dedication requirement shall be satisfied when such outlots are replatted or final plats are approved for future phases, as provided in the development agreement. (4) Cash in lieu of land contributions shall be deposited in the City’s Parks Capital Improvements Fund and shall be used only for acquisition and development or improvement of parks, recreational facilities, playgrounds, trails, wetlands, or open space. 1.6 Private Open Space. Open space privately owned and maintained shall not be given credit for parkland dedication. Where private open space for park, playground, trail, open space or other recreation purposes is provided in a proposed subdivision, and such space is to be privately owned and maintained by the future residents of the subdivision, the standards for open space conservation subdivisions as provided in Chapter 2, Section 6.6 of the Development Code shall be met. _____________________________________________________________________________________