07A - Park Dedication Fees - Laserfiche WebLink

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As cities grow,the demand for parks also grows. So does the tax base,although since spending on parks is a small percentage of a city budget, the increase of tax base is not quick enough to cover the demand for park spending. When used correctly,a park dedication fee is designed to fill this gap and provide for long-term fiscal discipline. Park dedication fees are designed to pay for capital improvements (e.g. land acquisition, new park equipment,etc...). A well-disciplined budgeting process ties the expenditure of monies on capital improvements to the park dedication fund. In this way,spending for parks is responsive to growth and does not provide a disproportionate burden on existing taxpayers. When a community grows, so does the tax base. Increases in the valuation of properties increases the amount of tax collected. Although most of the tax is going to pay for other functions of city government (roads,police protection, administration, etc...), a percentage will go towards maintenance of parks. That percentage means that maintenance dollars increase along with population growth and valuation increase,thus again removing any disproportionate burden on existing taxpayers. Assuming that the City of Pequot Lakes is going to create new parks and enhance existing parks in response to the increasing demand for parks that comes with increasing population, the question really becomes one of how to pay for these improvements. Should these costs be paid by developers through a park dedication fee, a fee that will be passed on to the purchasers of newly created properties,or should the costs be paid by taxpayers? Is the current park dedication fee being fairly applied? The mechanism and percentages for the current fee stick fairly close to state guidelines. Although that being the case, some recent applications have highlighted areas where a straight valuation may not fairly represent the additional demand for parks created by a specific development. To highlight this,consider the two following hypothetical situations: Situation is A property owner owns a shoreline property that has an estimated market value determined by the county assessor to be $15o,000. A proposed subdivision for this property creates 5 lake lots. The park dedication fee would be$15,000,which equates to$3,00o per lot. Situation 2: A property owners owns a large tract of off-lake property that has an estimated market value determined by the county assessor to be $150,000. A proposed subdivision for this property creates 85 lots. The park dedication fee would be $i5,000,which equates to $176 per lot. It would be difficult to argue that the lots created in situation i create seventeen times the demand for parks than the properties created in situation 2. To address this issue, the City could institute both a minimum and a maximum per lot fee. A minimum of$50o and a maximum of$i,5oo would have the following impact on the previous examples: Situation i(existing ordinance): $15,000 Situation 1(with min and max fee): $7,500 Situation 2(existing ordinance): $i5,000 Situation 2(with min and max fee): $42,500 City of Pequot Lakes Staff Report 6_2 December 15,2005