City Council agrees to end fee formula
Lakeville City Council members agreed May 22 to set aside the city’s formula established in 2012 to set park dedication fees charged developers.
Park dedication fees were proposed to increase 5.9 percent based on the formula, but last fall a majority of City Council members was hesitant to raise the fees and delayed action until more information about the Park Dedication Fund could be reviewed and other options considered.
All City Council members except Luke Hellier agreed at the meeting to end the formula in favor of a 3 percent increase this year after reviewing a 10-year outlook of the fund and park plans.
A public hearing regarding the fee increase will be held in June, and it is expected to be implemented in July.
The council majority also to agreed to review the fund and the decision in December.
Hellier declined to indicate his opinion on the matter, stating, “I don’t want to touch it.”
The 10-year outlook showed the fund is projected to maintain a positive fund balance average of about $1.5 million, except in 2021 when it is projected to end the year about $52,000 in deficit.
The following year, the fund is projected to have a fund balance of about $970,000.
Mayor Doug Anderson said 3 percent increase makes sense for the city based on those estimates.
Anderson acknowledged the work that went into developing the formula by city officials before he was a City Council member, but said he has “a real philosophical difference” in following the formula when the city has a plan suggesting it could operate with the 3 percent increase.
He said without the formula, City Council members can make changes as necessary to respond to various conditions or if some of the underlying assumptions change in the budget.
Hellier advocated for increasing the park dedication fee for multi-family housing to match what other cities are charging, but City Administrator Justin Miller said the city has to tie the cost to local land prices.
Council Member Bart Davis said that is why the formula worked well.
Council Member Colleen LaBeau said developers pass the fee to new home buyers, increasing their costs to move to Lakeville.
She also expressed concern that raising the fee nearly 6 percent as proposed would create a high fund balance and encourage over-spending without consideration of long-term costs to maintain the amenities.
Park dedication fees can only be used for new and expanding park assets, leaving taxpayers to fund maintenance.
LaBeau said many park amenities in the city are under-utilized, and she hears from many people concerned about rising taxes.
“It would be great to put up everything possible and say how great it is because we got money from new development or commercial projects, but then there’s that maintenance piece,” LaBeau said.
Council Member Brian Wheeler advocated for the city to provide incentives to developers to establish associations that fund park maintenance.
LaBeau said the developer is in and out, so when they are gone the association may not be maintained.
Hellier also questioned if the association would then charge rent for local teams to use the amenities or if the homeowners in the development would be subsidizing the costs for the community team’s use.
Several council members advocated for holding a parks referendum to weigh whether the public wants to fund major projects that have been discussed both by city officials and Lakeville Area School District 194 parents and staff.
Recent ideas have included building a sports dome and playing fields on the 66-acre park planned in the Avonlea development off Cedar Avenue.
Youth sports advocates have called for more and improved amenities, a cause echoed by members of the Lakeville Parks, Recreation and Natural Resources Committee, all but one of whom attended the meeting and advocated to keep the formula and increase the park dedication fees accordingly.
Parks, Recreation and Natural Resources Committee Member Bob Swan advocated for keeping the formula to show concern for the children of all ages in the community.
He said Lakeville is growing because its parks help make the city a great place to live.
“It’s not all dollars and cents that should guide our decision on this,” Swan said. “But it’s the opportunity to be fulfilling to the community, and that does take dollars and cents.”
Fellow committee member Jeanne Peterson said she did not remember this much discussion when the park dedication fee declined 27.6 percent in 2012.
“We can say it went down 27 percent or we can say it was overcharged by 45 percent and it didn’t go down to the formula,” LaBeau said. “That’s the reality.”
City documents show the fee decreased 25.6 percent in 2012 and 2 percent in 2014. The fees increased by 9.2 percent in 2015 and have not changed since.
Current fees are $3,781 for a single-family lot, $2,572 for a medium-density townhome unit and $1,952 per unit for high-density multiple family developments.
LaBeau said the council’s job is to be fiscal good stewards, and many cannot afford constant tax increases.
LaBeau called for balance between city assets and the costs to maintain it.
Davis helped develop the formula, which is tied to estimated market values, and said whether they keep it or not, fee costs will change and create unpredictable costs for developers.
He said the 10-year plan gives the council flexibility to ensure there is enough money in the fund without accumulating excess dollars in it.
Wheeler said he supports the 3 percent fee increase because it is “a sound business decision for the city.”
Anderson said the parks plan and the 10-year analysis give the council tools to ensure they are on track and can meet plans in place.
He said by eliminating the formula, the council can adapt to varying conditions and concerns as necessary.
“We need to take control and we need to evaluate this on an annual basis, just like we do with our CIP (Capital Improvement Plan) and our budget,” Anderson said. “We take a look at our priorities, and that’s the responsibility we have as the governing body of this city.”