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12-11-02 PR5775 Wayzata Boulevard, Suite 555, St. Louis Park, MN 55416 Telephone: 952.595.9636 Facsimile: 952.595.9837 planners@nacplanning.com MEMORANDUM TO: Otsego Mayor and City Council Otsego Planning Commission Otsego Park and Recreation Commission FROM: Daniel Licht DATE: 11 November 2002 RE.: Otsego - Park Dedication Study FILE NO.: 176.08 - 02.01 BACKGROUND Our office has been directed by the City Administrator to prepare an evaluation of Otsego's present dedication requirements for park and trails. This information is intended to determine if Otsego's present requirements are fair to developers and adequate for addressing the park needs of the community related to new development. It must be emphasized that case law from Dolan v. Tigard requires the City's dedication requirements be related to the benefit of the effected property. The purpose of this study is to determine the relationship of the City's existing dedication fees to actual land acquisition and development costs. The basis of this analysis is raw land costs and projected improvement costs. The results of the study will illustrate how the City's present fees should be adjusted, if necessary, to meet the City's future park and trail needs related to new development. Exhibits: A. Sec. 21-7-18 Park Land Dedication B. Park Dedication Survey ANALYSIS Existing Dedication. For both residential and commercial/industrial dedications, it is the City Council's decision, with recommendation from the Park and Recreation Commission, whether land, cash or a combination thereof will be accepted. Existing requirements for Park Dedication are outlined in Section 21-7-18 of the Subdivision Ordinance. The City last updated its park and trail dedication requirements in August 1995. Residential park dedication requirement are 10 percent of the gross area being subdivided or a $950.00 per unit cash fee in lieu of land. Commercial and industrial properties are required to dedicate 10 percent of the gross area being subdivided or 10 percent of the fair market value of the property in an undeveloped state. Fair market value may be based upon appraisals, purchase agreements, comparable transactions or other records the City may rely upon. Otsego also requires a separate dedication for City trails, which was established in 1995 as well. The requirements of Section 21-7-18 of the Subdivision Ordinance require that any proposed trail conform to the City's bikeway plan. If no trails are proposed, the developer must pay a $125.00 per unit fee in lieu of land. As such, Otsego's total park and trail dedication fee in lieu of land is $1,075.00 per unit for residential uses. Surrounding Jurisdictions. The table attached as Exhibit B illustrates the park dedication requirements of several cities to the northwest of the Twin Cities. All of the communities require a 10 percent land dedication for residential subdivisions. There is significant variation between the communities in terms of cash dedications for parks in lieu of land, ranging from $700.00 to $1,300.00. Eight of the twelve surveyed communities, including Otsego, require commercial or industrial development to dedicate land for parks. Most require dedication of a percentage of raw land or a specified cash fee in lieu of land, as does Otsego. In terms of trail dedication, only five of the 12 communities surveyed, including Otsego required a separate trail dedication. Of these, Albertville requires dedication of trails only when shown on their trail plan, which is then credited towards total park dedication and Monticello requires sidewalks on one side of all new streets. Park Land Acquisition and Development. The following paragraphs analyze the costs of acquiring and preparing a parcel for development. The City would incur similar expenses if it were to elect to accept fees in lieu of land and acquire park lands on it own. As such, the following factors, based upon informal discussions with developers active in the City, must be considered in evaluating a aper unit' park dedication fee in lieu of land. For comparison purposed only, Crimson Ponds, Heritage Hills, Pheasant Ridge and Prairie Creek subdivisions were used as examples. Heritage Hills was developed with one -acre minimum lot sizes and individual on-site treatment and water systems. The other three subdivisions were all platted with urban sized lots within the East Sanitary Sewer Service District and are provided municipal sanitary sewer and water services. Raw Land Costs. In discussions with area developers, it has been determined that raw land is selling between $10,000 and $16,000 per acre. In the following analysis of raw land cost per lot, the $16,000 estimate is used. Per Unit Dedication. The City currently requires a cash dedication in lieu of land based upon a per unit fee. This method allows for simple calculation of park dedication fees in lieu of land from project to project based upon average raw land values and the assumption of low density development. The analysis above demonstrates that a flat park fee does not recognize the varying land values and/or development intensities occurring in the community. The following formula illustrates if the park dedication fee may need to be adjusted to reflect the relationship and benefit between park development and raw land values: Estimated Area # of Lots Density Cost of Raw Cost of Raw Single Family Per Unit Cash Raw Land Land Land Per Lot Cash Density Ranpe er acre Dedication in Heritage 64.5 ac. 38 0.59 $16,000 $27,158 Hills Lieu of Land Acre Crimson 120.0 ac. 180 1.50 $16,000 $10,667 Ponds x 10% $1,600 - Prairie 62.7 ac. 118 1.88 $16,000 $8,502 Creek $710 Pheasant 79.1 ac. 178 2.25 $16,000 $7,110 Ridge Per Unit Dedication. The City currently requires a cash dedication in lieu of land based upon a per unit fee. This method allows for simple calculation of park dedication fees in lieu of land from project to project based upon average raw land values and the assumption of low density development. The analysis above demonstrates that a flat park fee does not recognize the varying land values and/or development intensities occurring in the community. The following formula illustrates if the park dedication fee may need to be adjusted to reflect the relationship and benefit between park development and raw land values: Estimated Required Per Acre Single Family Per Unit Cash Raw Land 10% Land Cash Density Ranpe Dedication in Value Per Dedication Contribution (units/acre) Lieu of Land Acre $16,000 x 10% $1,600 - 1.50-2.25 $1,070 to $710 Notes: 1. Estimated raw land cost based upon developer interviews. 2. Average density estimates based on Prairie Creek, Pheasant Ride and Crimson Ponds Preliminary Plats Based upon the above analysis, a park dedication fee in lieu of land between approximately $700 and $ 1,070 is justifiable. This range of per unit park dedication fees in lieu of land would adress Otsego's existing park and trail dedication fee ($1,075 per unit), as well as being comparable to those of surrounding Cities illustrated by Exhibit B. Utilization of a fixed per unit fee does not automatically account for inflationary land values, differences in land value in various areas of a community, or variations in development densities. A final consideration not incorporated as part of the City's existing flat fee is an expense for developing the park and trail system, including land preparation, equipment, and construction. These factors can be included within the fee but must be justified based upon reliable estimates. Improvement Costs. The City adopted a Comprehensive Parks and Trails Plan in 2001 that outlined future park and trail locations to expand the existing system. The Parks and Trails plan basically anticipates developing new neighborhood parks for each square mile of new development and trails along all collector and minor arterial roadways. The plan also programs the need to establish a second community class park in the western areas of the City. The City prepared plans and specifications for a neighborhood park to be constructed adjacent to Otsego Elementary. This park, located within the east sanitary sewer service district is intended to be the prototype for all future neighborhood parks built in areas of new development. The lowest bid price received for construction of School Knoll Park in 2002 was $408,000. Assuming a one square mile service area with an average density of 2.5 dwellings per acre, these neighborhood parks would serve 804 households. As such, development costs for construction of new neighborhood park facilities would be equal to $507 per unit. Added to the existing $1,075 cash fee in lieu of land to address land acquisition and development, an appropriate cash fee in lieu of land would be equal to $1,700. Medium/High Density Dedication. The existing park dedication requirements do not distinguish residential dedication based upon density. As such, the park land dedication for medium and high density uses is the same as low density single family uses. Because there is a corresponding increase between higher density and impact to the City's park system, many communities will establish higher park land dedication requirements for medium or high density developments with a corresponding fee in lieu of land. The following table illustrates the impact in density changes for a hypothetical 40 acre development in terms of park land per household. As the present dedication is based upon the impact of a development at urban single family density, there is a diminishing return on net park land per household for medium and high density developments. Therefore, the land accepted for parks from medium and high density developments may not be adequate for actual park demands generated by the concentrated households. Land Area Gross Density Households Land Dedication Land Land/H.H. 40 ac. 1.0 du/ac 40 4 ac. 0.1 ac. 40 ac. 2.5 du/ac 100 4 ac. 0.04 ac. 40 ac. 5.0 du/ac 200 4 ac. 0.02 ac. 40 ac. 7.5 du/ac 300 4 ac. 0.01 ac. Based on this information, the following graduated scale can be used to determine park land dedication requirements. Except for the lowest density subdivisions, the graduated scale provides more a more equal land to household ratio. It is recommended that the Subdivision Ordinance be amended to include this graduated park land dedication requirement. Gross Density Land Dedication Requirement 40 ac. Example Land Land/H.H. 0>3 du/ac. 10% 4.0 ac. 0.10-0.03 3>6 du/ac. 13% 5.2 ac. 0.04-0.02 6>10 du/ac. 17% 6.8 ac. 0.03-0.02 10 du/ac. and over 20% 8.0 ac. 0.02 - NA > Trail Dedication. As noted above, Otsego is one of a few area communities that require a separate dedication for trails. Our office and the City Attorney have discussed whether separate exactions for parks and trails are justifiable. In consideration of applicable case law, it would be our recommendation that the exactions be combined into a single dedication fee in lieu of land. Further, the provisions Albertville has provided for in terms of providing trails where indicated on the trial plan and deducting the cost from the park dedication would also be appropriate. Commercial/Industrial Dedication. The City of Otsego currently requires a park dedication from commercial and industrial developments. The basis of such an exaction is that employees of a business within the City may benefit from the location of parks, trails and/or recreation programs. The present requirements provide for dedication of 10 percent of the gross land being subdivided or a cash fee of 10 percent of the fair market value of the undeveloped property in lieu of land. However, because the City typically would not plan for park facilities in areas planned for commercial or industrial development, the cash fee in lieu of land is most often accepted. Because the value of commercial or industrial property is significantly higher than residential land prices, the cash fees can be significant. This large amount for park dedication is potentially burdensome from a economic development standpoint. Given the importance of developing commercial and industrial land uses to support the local tax base and use of reserved sewer and water capacity, the City may consider eliminating the fee or reducing the present requirement for either or both commercial and industrial land to five percent. CONCLUSION Because of the Dolan case law, the City needs to evaluate its park and trail dedication requirements regularly to verify that they are equitable and related to the benefit to the impacted properties. This is a good practice to because it also helps determine if the City's park and trail dedication requirements are adequate to cover the costs of developing a park and trail system to serve new development. Based upon the analysis outlined herein, the present combined fee is likely an accurate indicator of the land costs the City would incur to acquire parkland. However, the present fixed per unit fee does not account for development costs. As such, the following changes to the City's current park and trail dedication requirements are recommended: The cash fee in lieu of land for residential uses should be raised to $1,700 per unit to account for land acquisition costs and development of neighborhood parks to serve new development in accordance with the City's park and trail plan and specs for a prototype neighborhood park. As plans are finalized for improvements to Prairie Park and a future second community park, these costs may also be incorporated as part of the cash fee. 2. The existing cash fees in lieu of land for park land and trails should be combined into a single fee, with credits for construction of any facilities shown on the City's Parks and Trails plan. 3. A graduated scale for park land dedication should be adopted to ensure a consistent land to household ratio for residential developments with varied density. 4. Consideration is given to eliminating or reducing park dedication requirements for commercial and industrial developments in support of economic development goals. PC. Mike Robertson Judy Hudson Andy MacArthur Ron Wagner runoff rate existing prior to development except as may be approved by the City Council. C. The City shall have the authority to remove the topsoil for its own purposes from all dedicated streets within its corporate boundaries. Said topsoil shall be utilized in the development project from which it is taken unless otherwise specified as part of a development agreement. 21-7-17: PROTECTED AREAS: Where land proposed for subdivision is deemed environmentally sensitive by the City, due to the existence of wetlands, drainageways, watercourses, floodable areas, vegetation, or steep slopes, the design of said subdivision shall clearly reflect all necessary measures of protection to ensure against adverse environmental impact. Based upon the necessity to control and maintain certain sensitive areas, the City shall determine whether said protection will be accomplished through lot enlargement and redesign or dedication of those sensitive areas in the form of outlots. In general, measures of protection shall include design solutions which allow for construction and grading involving a minimum of alteration to sensitive areas. Where these areas are to be incorporated into lots within the proposed subdivision, the applicant shall be required to demonstrate that the proposed design will not require construction on slopes over eighteen (18) percent, or result in significant alteration to the natural drainage system such that adverse impacts cannot be contained within the plat boundary. 21-7-18: PUBLIC SITES AND OPEN SPACES (PARK LAND DEDICATION): A- As a prerequisite to final plat approval, and at the sole determination by the City, applicants and/or developers shall dedicate land for parks, playgrounds, public o en spaces or trails and/or shall make a cash contribution to thecity's ar - se ral Funds roughly related to the anticipated e ec o e par 1 system. The amounts listed in this section are the City's best estimate of the dedication or cash contribution needed to offset the effect on those systems. The requirement may also be met with a combination of land and cash if approved by the City Council *Amended Ordinance No. 95-22, 28 August 1995 7-15 EXHIBIT A B. Land to be dedicated shall be reasonably suitable for its intended use as determined by the City and shall be at a location convenient to the public to be served. Factors used in evaluating the adequacy of proposed park and recreation areas shall include size, shape, topography, geology, hydrology, tree cover, access and location. C. The applicant shall confer with City Staff and the Parks and Recreation Advisory Committee at the time the preliminary plat is under consideration, to secure a recommendation as to the location of any property that should be dedicated to the public, such as parks, playgrounds or other public property. The preliminary plat shall show the location and dimensions of all areas to be dedicated in this manner. Such contribution requirement recommendations) will be sent to the Planning Commission for review and comment and subsequently to the City Council for their approval. D. When a proposed park, playground, recreational area, or other public ground has been indicated in the City's official map or Comprehensive Plan and is located in whole or in part within dedicate to thea ropriate governmental unit. f the applicant elects not to dedicate an area in excess of the lan uired the for a proposed public site that the City feels is in the public interest to acquire, the City may consider acquiring the ex urchase or condemnation. E. Land area conveyed or dedicated to the City shall not be used in calculating density requirements of the City Zoning Ordinance and shall be in addition to and not in lieu of open space requirements for planned unit developments. F. Where private open space for park and recreation purposes is provided in a proposed subdivision, such areas shall not be used for credit against the requirement of dedication for park and recreation purposes, unless the City Council finds it is in the public interest to do so. * G. The City, upon consideration of the particular type of 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 above the land dedication to insure that compensation is received for the full amount of the impact on the City's park and trail system. H. In all new subdivisions, ten (10) percent of the gross area subdivided, or a different percentage as the City Council shall determine to be reasonably necessary as a result of the subdivision approval, shall be dedicated for public recreation space or other public use as established by City Council resolution. The dedicated percent of the gross area subdivided shall be in addition to property dedicated for streets, alleys, easements, or other public * Amended Ord. No. 95-22, 28 August 1995 UNIX. ways. No areas may be dedicated for public use until such areas have been approved by the City Council as suitable and necessary for the health, safety, convenience and general welfare of the City. * I. When a subdivision is proposed, the Developer shall make a dedication of land for public park use, or shall pay a fee in lieu of such land dedication as follows: 1. Residential Development. 10% of the gross land area being subdivided, or a fee in lieu of land dedication as follows: $750.00 per dwelling unit commencing on the effective date of this amendment and for a period of one year thereafter, $850.00 per dwelling unit commencing one year from the effective date of this amendment and for a period of one year thereafter, and $950.00 per dwelling unit commencing two years from the effective date of this amendment and thereafter. 2. Commercial and Industrial Development. 10% of the gross area being subdivided, or 10% of the fair market value of the undeveloped land. Whether land or cash will be required is left solely to the discretion of the City. For purposes of this section, fair market value shall be determined by reference to appraisals, accepted purchase agreements, comparable market transactions or other pertinent records, at the discretion of the City Council or Parks and Recreation Commission. Undeveloped land shall mean raw land with only those improvements present on the property on the date of plat approval. Said amounts are the City's best estimate of the effect of the subdivision on the City's park system. J. All land proposed for trail and/or bikeway dedication shall be subject to the recommendations of the Parks and Recreation Advisory Board and the approval of the City Council. Such lands must also correspond and conform with the City's bikeway plan. * K. When a residential subdivision is approved, the developer shall pay a fee in lieu of dedication of land for trail purposes as follows: $125.00 per dwelling unit. Said amount is the City's best estimate of the effect of the residential subdivision on the City's trail system. L. The City may elect at its sole discretion to receive a combination of cash, land, and development of the land for park use. The potential cash donation generated by the dedicated land and/or the value of the development of land shall be calculated. That amount shall be subtracted from the cash contribution required by the Subsection I above. * Amended Ord. No. 95-22, 28 August 1995 7-17 M. Planned unit developments with mixed land uses shall make cash and/or land contributions in accordance with this Section based upon the percentage of land devoted to the various uses. N. Park cash contributions are to be calculated and established at the time of final plat approval. The Council may require the payment at the time of final plat approval or at a later time under terms agreed upon in the development agreement. Delayed payment may include interest at a rate set by the City. O. Cash contributions for parks and trails shall be deposited in either the City's Park Fund or multi-purpose trail fund and shall only be used for park acquisition or development, and trail acquisition or development as determined by the City. Additionally, said funds may be utilized anywhere within the City park and trail systems. P. Wetlands, ponding areas, and drainageways accepted by the City may not be considered in the park land and/or cash contribution to the City. Q. Property being replatted with the same number of lots and same number of dwelling units shall be exempt from all park land dedication requirements. If the number of lots or the number of dwelling units is increased, or if land outside the previously recorded plat is added, then the park land dedication and/or park cash contributions shall be based on the additional lots and on the additional land being added to the plat. If the additional land does not create additional lots, then each one-third (1/3) acre added shall be considered a new lot for purposes of calculating the dedication requirements. R. When land is dedicated and deeded to the City for park purposes, it shall be the responsibility of the City to maintain such dedicated property. S. Land dedication to the City shall be in the form of lots or outlots with approved lot and block numbers. T. If the applicant or developer does not believe that the estimates contained in this section fairly and accurately represent the effect of the subdivision on the park or trail system of the City, the applicant or developer may request that the City prepare in indepth study of the effect of the subdivision on the park and trail system and an estimate of that effect in money and/or land. All costs of such study shall be borne by the developer or applicant. if the developer or applicant requests the preparation of such a study, no application for development submitted shall be deemed complete until the study has been completed and a determination is made as to the appropriate amount of land or money necessary to offset the effects of the subdivision. * Amended Ord. No. 95-22, 28 August 1995 7-18 PARK AND TRAIL FEE INVENTORY OF OTSEGO AREA Northwest Associated Consultants, Inc. _February 7, 2000 CITY SINGLE FAMILY RESIDENTIAL PARK DEDICATION (per unit) COMMERCIAL/ INDUSTRIAL PARK DEDICATION TRAIL OR SIDEWALK DEDICATION Land Cash Land Cash Albertville 10% $1,300 commercial 10% industrial 5% commercial 10%/ industrial 5% of fair market value Trails as required by Plan, deducted from Park Fees Big Lake 10% $1,300 Brooklyn Park $1,300 $4,000 per acre Clear Lake 10% $750 $150 Clearwater 10% fee set by Council Dayton 10% $1,100 Elk River As required by Plan, equal to cash contribution based on fair market land value $1,200 As required by Plan, equal to cash contribution based on fair market land value commercial $3,000/ industrial $2,000 per acre Maple Grove 10% $1,125 71/2% commercial $3,600/ industrial $2,850 per acre Monticello 10% 10% raw land cost Sidewalks on one side of street Otsego 10% $950 10% $175 Plymouth 10% $1,600 10% $4700 per acre Rogers 10% $700 10% commercial $4,000/ industrial $2,000 per acre St. Michael 10% $1,100 10% commercial $3,000/ industrial $2,000 per acre $200 for residential EXHIBIT B CITY OF TSEGO ON THE GREAT RIVER ROAD December 31, 2002 Hopkins City Hall Park & Recreation Commission Chairmen 1010 15i Street South Hopkins, MN 55345-9475 Greetings, 8899 Nashua Avenue N.E. • Otsego, MN 55330 (763) 441-4414 9 Fax: (763) 441-8823 E-mail: cityhall@ci.otsego.mn.us The Otsego Parks & Recreation commission is presently looking into the possibility of building a skate park in our city, and I would like to ask a few questions about the one that you built under the Highway 169 bridge. My day job is at Supervalu, so I have been able to see the success that it is. The questions that I have are as follows. 1. What was the initial cost to build the park? 2. Has liability Insurance been an issue? 3. What have the operating costs been as of now? 4. Have there been many incidents and injuries to people using the park? 5. Do you have a fee to use the park? 6. What is the approximate number of people using the park on an average day? Any other information you would like to share would be greatly appreciated. Also, would it be possible for my commissioners and City Council members to tour the park with you to perhaps discuss further issues, concerns or questions they may have? Thank you very much for your consideration in this matter. Sincerely, Jeff Bartheld, Chairman Otsego Parks & Recreation Commission sl OTSEGO PARK & RECREATION COMMISSION MEETING MINUTES DECEMBER 11, 2002 - 7:00 PM 1. Chair Mike Day will call meeting to order. Mike Day called the meeting to order at 7:00 p.m. Roll Call: Park & Recreation Commission: Mike Day, Jim Gaikowski, Tom Constant, Rose Cassady, Pauline Nelson, and Jessica Stockamp. Absent: Terry Long and Tom Baillargeon. Councilmembers: CM Jerry Struthers. Staff: City Administrator Mike Robertson Approval of Agenda - Commissioner Constant, seconded by Commissioner Stockamp, moved to approve the agenda as presented. Carried 6-0. Lily Pond Park Plans Informational Hearing - Chair Day introduced the City's park designer Damon Farber, who described the plans for Lily Pond Park. In attendance were approximately 25 neighborhood residents. Residents questions and concerns dealt with; maintenance of park, kids hanging out there at night, picnicking and grilling on the north side of the park near existing homes, a fence on the north side of the park, the number of parking spaces for a neighborhood park, concerns the grills might start a fire, and a request that any trees being removed be transplanted within the park. Commissioner Day noted that the park was intended to serve a broader area than the Mississippi Pines subdivision, and that the number of parking spaces were reasonable because not everyone in the area was within walking distance of the park. Damon Farber stated that the majority of existing trees in park are packed closed together and only have branches at the top of the trees, and so would look unattractive if transplanted. Administrator Robertson said that the City would be responsible for weekly grass cutting and trash pickup, and Park & Recreation Commission, December 11, 2002 Page 2 that the Sheriff's deputies already patrol the area and would respond to any complaints about problems in the park. The Park & Recreation Commissioners' consensus after the public comments were that they would move the two picnic tables and grills on the north side closer to the parking lot and replace them with benches. They decided to wait to see if any of the other possible problems actually happened before taking action, particularly with regard to putting up a fence along the north edge of the property. Park & Trail Fee Report - Commissioners were in consensus after discussing the report that they concurred with staff's recommendation for an increase in Park Fees. City Update - Administrator Robertson and Councilmember Struthers updated Commissioners on recent Council actions. Mike Robertson noted the retirement of Commissioner Day and Commissioner Constant and thanked them for all their hard work and contributions to Otsego. Adjournment - Commissioner Stockamp, seconded by Commissioner Nelson, moved to adjourn at 8:45. Carried 6-0. Michael obertscn, City Administrator