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STAFF REPORT Item: Park Dedication Fees A short-term strategy of the Comprehensive Plan calls on us to "Reevaluate the requirements of park dedication fees in new subdivisions and planned unit developments." There are two reasons for this discussion. The first is to determine if the City of Pequot Lakes should be charging a park dedication fee. The second would be to determine if our dedication fee is being fairly applied. Current Park Dedication Requirement Section 9m,Subpart 2,of the Land Use and Subdivision Ordinance states the following: In addition,for every new subdivision of land involving three or more lots which are to be developed for residential purposes, the Planning Commission, with the concurrence of the City Council, shall require a payment to the City, in lieu of a land dedication for conservation purposes or for public use as parks, recreational facilities, playgrounds, trails, wetlands or open space, of a sum not to exceed ten percent (10%), of the fair market value of the land to be subdivided. The fair market value of the land to be subdivided shall be the value as determined by the Crow Wing County Assessor at the time of Final Plat approval. The amount of the payment shall be set by the Planning Commission, with the concurrence of the City Council, after taking into consideration the open space, park, recreational or common areas and facilities which the applicant proposes to reserve for public use within the subdivision. Funds received by the City, in lieu of land dedication, shall be placed in a special fund in accordance with Section 462.358, Subdivision 2b, of the Minnesota Statutes. Should Pequot Lakes assess a park dedication fee? To answer this question,it is important to understand the reason for a park dedication fee. A park dedication fee is a form of exaction fee, a fee charged up front in a development directly tied to an expense created by new development. Some states provide for all kinds of exaction fees. For example, a roadway impact fee might be charged to pay part of the cost for the improvement of roadways outside of the development under the guise that the new development creates a need for the improvements. (North Slueter Road and the recent Hemmrich subdivision would be a place where this type of fee might be applied,if it were allowed). Exaction fees are a way to address the cumulative costs of development that would otherwise be picked up by the taxpayer. Another way to say this is that the fee is meant to offset the indirect subsidy that government provides developers at the expense of the taxpayer. (To continue using North Slueter as an example, the rest of the taxpayers and the property owners along this roadway are going to have to pay for improvements to the roadway, even though those improvements are unwanted and not necessary for the existing residents, because a property at the end of the road was developed. This is an indirect subsidy being provided to this development by these property owners and the taxpayers, something an exaction fee would address). A park dedication fee is the only exaction fee allowed in the State of Minnesota. City of Pequot Lakes Staff Report 6-1 December 15,2005