Sewer/Water connect - park fee analysis

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Dunbar Fees Analysis February 7, 2001 Page 4 II. PARK FEE ANALYSIS Residential. The standard Park Dedication fee for residential property is 8%of the land value,with a minimum fee of$3100 per dwelling unit and a maximum of$5300 per dwelling unit. The residential portion of the Dunbar site is valued at approximately$775,000. The standard park fee of 8% is $62,000. However, using the minimum per-unit fee, $3100 x 62 dwelling units is $192,200 or approximately 25% of the land cost. Although an argument can be made that higher density residential development has similar park needs and impacts as lower density housing, the relationship of park impact fees to land value becomes very disproportionate under higher density development. It can generally be assumed that in Orono,development of single family 2-acre and 5-acre lots will have land costs high enough that the maximum park fee of$5300 per unit almost always kicks in and developers will almost always be paying less than 8% in park fees. However, at densities of 4-6 units per acre or higher, even the $3100 per-unit minimum fee will far exceed 8% of the typical land cost per unit as can be seen on the attached table of Density vs Land Cost. This factor can become critical when attempting to meet City housing goals. In a situation where the City is providing incentives for a development that meets specified City goals, it may be appropriate to reduce or waive the park fees as a further incentive to such development. Minnetonka has recognized this via the following ordinance language: "400.030.7 The city council,at its discretion, may waive or reduce the requirements of this section when the subdivision includes a city-assisted development or redevelopment area or achieves some other public purpose and the requirements would create a financial hardship for the project." For projects not serving a specified public purpose, a further amendment of the park dedication requirements would be needed in order to lower park fees for higher density residential projects, if the Council were to conclude the current fees are inappropriate. Regarding the RPUD ordinance, Planning Commission has concluded that the required private recreation areas for RPUD developments should not be credited toward the Park Dedication requirements, as they serve different purposes. The "Private Recreation Area" language in the RPUD is from the Minnetonka Zoning Code,and is in addition to their Park Dedication requirement of 10%of the land area or(at Council option) a park fee. For comparison purposes, Minnetonka's park fees appear to be unrelated to the value of the land, and are significantly lower than Orono's park fees: Orono Minnetonka Single Dwelling $3100-$5300 $550 Townhome, duplex or multi-unit building $3100-$5300/unit $500/unit Office/Industrial $7750-13,250/acre $3000/acre Commercial $7750-13,250/acre $2400/acre