Minneapolis sits on $10 million meant for parks

More than $10 million collected from developers for improving Minneapolis parks remains unspent, the result of tight restrictions on where and how the Park Board can use the money.

Revenue from park dedication fees, which developers pay, has flowed in with the city's recent building boom. The Minneapolis Park and Recreation Board has brought in nearly $19.5 million in fees since it was imposed in 2014 but has allocated only about $9 million.

Park Board President Brad Bourn said he'd like to use more of that money, or it could soon become a "black eye" for the parks system.

"We need to start spending it, because if we don't start spending it we can't in good conscience charge for it," Bourn said last week. "The longer we sit on it, the more that I think you'll see developers challenging it."

Minneapolis charges developers $1,614 per residential unit and $215 per employee for commercial projects in what are known as "park dedication fees." Under state law, funds must be spent in the neighborhood where the development is happening and used for "development and improvement of parks," such as acquiring land and building trails or restrooms.

"New people are moving into communities, so we need to enhance parkland in order to provide them the same service that everyone else has," said Adam Arvidson, director of strategic planning for the Park Board.

Recently, the Park Board used $1.4 million from new apartments in the Prospect Park neighborhood to purchase Towerside Park. It also allocated money to add new lighting and expand a skate park in Elliot Park.

Still, millions in revenue from park dedication fees remain untouched. Much of that is from a development boom in downtown, the North Loop, Uptown and near the University of Minnesota. One neighborhood, Marcy-Holmes, has nearly $1.4 million in available fees, with the biggest share coming from Doran Cos.' 25-story apartment tower that's under construction.

"There are probably 86 different reasons as to why money has or hasn't been spent down in a particular neighborhood area," Arvidson said, referencing the number of city neighborhoods. "And the most common reason is that the amounts are really small and we don't have any other capital projects going on."

For neighborhoods that have accumulated a significant amount of money, the Park Board meets with the neighborhood organizations to learn how they'd like to use it. In the North Loop, where green space is scarce, Arvidson is working with the neighborhood to buy new parkland.

But a majority of neighborhoods have less than $50,000 in available fees, leaving the Park Board with no choice but to wait until it collects more money or shifts it to an existing project.

"We kind of have to add that to something else, otherwise it will barely even buy a bench," Arvidson told the Park Board this month.

Housing First Minnesota, which represents builders and developers across the state, questioned the park dedication fees. Earlier this year, the group released a report blaming municipal fees and regulations for jacking up housing prices in the Twin Cities.

"With the rapidly rising costs of housing, there's really no room for any inefficiencies in the housing production side," said Nick Erickson, the regulatory affairs manager for Housing First Minnesota. "If we have fees that are being collected and not used, that really sounds like something we probably should look at getting rid of."

Park leaders are eager to spend down the available funds on new park amenities. Bourn said he'd like to use fees to install a drinking fountain at the Rev. Dr. Martin Luther King Jr. Park in the Kingfield neighborhood.

Commissioner Jono Cowgill, whose district encompasses Uptown and downtown Minneapolis, said he'd like to see the Park Board get more creative in how the park dedication fees are spent. The projects, he said, should be "iconic" and reflective of the neighborhood's identity.

"It seems to me that we have a great opportunity with this particular program to really get community ownership," Cowgill said.

In St. Anthony West, the rise of new apartments brought the neighborhood hundreds of thousands of dollars in park dedication fees. Yet the neighborhood organization was frustrated that it could not use that money to make repairs, vice chairman Chris Linde said.

"The neighbors would really like to spend a lot of money on just maintaining a park," he said. "We're fine with everything, but can we get stuff redone or maintained better?"

Ultimately, the neighborhood pushed the Park Board to allocate the money for new pickleball courts in Dickman Park and a drinking fountain at BF Nelson Park, Linde said.

"In some ways this is a really great idea," Linde said of the fee. "But the devil is in the practice."

Brian Rice, legal counsel for the Park Board, recognized the housing boom brought a "deluge" of money to the park system. Now, he said, is the time to spend it.

"Everyone who paid this fee paid it with the expectation that they were giving it to the government in return for … some immediate or tangible benefit to their property," Rice told the Park Board this month. "A person who paid the fee could say, 'I paid it, and what am I getting for it?' And at this point, some people could say, 'Nothing.'  "

Miguel Otárola • 612-673-4753