PARD proposes delaying fee change that would double parkland costs for developers

The Parks and Recreation Department will likely ask City Council to delay a scheduled doubling this budget year of the fees developers pay to fund the acquisition and development of parkland around the city.

The dramatic increase is the result of guidelines laid out in the 2016 revision to the Parkland Dedication Ordinance that called for the fees to be based on the average cost of land acquisition over the previous five years.

With property prices throughout the city increasing substantially in recent years, the fee per residential or hotel unit was set to increase by around 120 percent. The fee schedule in place is split into different costs for low-, medium- and high-density projects, with the per-unit fee for high-density projects increasing from just over $1,500 to nearly $3,500.  The fee for low-density projects is scheduled to increase from just over $2,500 per unit to more than $5,600.

In a memo released Friday, PARD Director Kimberly McNeeley wrote that the department hasn’t prepared the development community and other stakeholders for the increase. She said PARD will soon ask City Council to consider an amendment to the ordinance that would leave the current fees in place while researching how other cities handle the administration of fees for parkland dedication, with that report expected by this April.

The memo reads in part: “During the FY2022 budget development process, the Parks and Recreation Department did not inform or communicate these considerable fee increases to internal or external stakeholders; thereby eliminating the stakeholder’s ability to appropriately consider impacts related to project financing and budgets. Pre fee adoption communication to stakeholders would have ensured an opportunity to effectively plan for future fees and consider affordability strategies, impact to affordability and project viability.”

The memo also notes that land acquisition costs for PARD have increased 166 percent in the most recent budget year.

The increases would possibly impact a revision being considered by the Housing and Planning Department for the fee-in-lieu option paid by developers to fund affordable housing programs around the city.

An attachment to the memo from the Housing and Planning Department notes that substantial increases in other fees on development projects could reduce the viability of some projects, or at least reduce the number of affordable units developers are willing to include in new construction because of the increase in parks fees.

“HPD would like the opportunity to conduct an Affordability Impact Statement for the FY21-22 Parkland Dedication fees to understand the impact of this development fee increase on housing as well as to discuss policy alternatives that could lessen the negative impacts on housing affordability. Many requirements that impact the cost of development have an impact on Affordable Housing Incentive Programs and can weaken the success of such voluntary programs, resulting in less affordable housing constructed without direct subsidy.”

A presentation to the Parks and Recreation Board last month about the parkland dedication ordinance noted that fees for parkland acquisition and development totaled around $14 million in the most recent budget year. Parks staff also noted that the ordinance has allowed for the acquisition of 125 acres of parkland since 2018.

The 2016 revision to the ordinance included the goal of making parkland accessible for all residents within a five- to 10-minute walk – or a ratio of 9.4 acres per 1,000 residents – and created a method to generate funding for parks acquisition outside of voter-approved bond projects.

As part of the planning and building process, developers can either provide new parkland in their project or pay the fees required by the ordinance. PARD uses that money to buy new parkland or make improvements to existing facilities.

In the presentation to the parks board last month, staff noted that parkland dedication fees have “increased exponentially” in recent years due to the 2016 ordinance amendment and the cost pressures on property throughout the city.

Photo of Swede Hill Pocket Park via Google Maps.

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