The purpose of this case is to review a broad overview of development related fees as well as to seek direction from the City Council if it desires to do a deeper dive study on any component discussed in this case. It can be very time consuming to do a full development fee analysis, as each community accounts for infrastructure needs slightly different. 

• Assessed versus Fee?
• Per Unit or Acreage?
• Based on Market Value?

Generally speaking, Staff believes that overall, our fees fall within the median range when looking at the total development costs. There are a number of factors that influence the range of total development costs from community to community.

• Desired amenities/quality of life
• Availability of existing infrastructure/development pattern
• Proximity to downtowns and metropolitan area

Due to the complexity of this case and the various multipage documents/plans, Staff has not attached each impacted system plan here. Depending on the focus of tonight's scoping meeting, detailed plans will be included with future discussions. 

DEVELOPMENT FEES

Park Dedication and Trail Development Fees

The City has a plan for park expansion to keep up with forecasted growth in households, population and employment. The quality of our parks and open space system appears to rank high on our biannual citizen survey. This expansion is largely funded by Park Dedication and Trail Development Fees. Currently, the cost of the planned expansion of the Park and Trail System outpaces the forecasted revenue from these fees. 

The City's Park Dedication Fee is generally within median range of peer communities. There is a significant difference between developed and developing communities. Developed Communities often have lower Park Dedication Fees, however struggle with long-term maintenance and replacement of existing parks. For example, several years ago Coon Rapids passed a Park Bond Referendum in the amount of $17M to replace and update several recreation facilities in that community.

A Trail Development Fee is less common, but is collected by a number of communities. Staff does note that the quality of our robust trail system ranks high on feedback from our community. 

When looking at our Park Dedication and Trail Development Fee together, the rate appears to be on the high end of median in order to achieve our desired plan/vision/quality of life. 

Water and Sanitary Sewer Trunk Fees

These trunk fees are largely variable based on development patterns when attempting to compare to other communities. Communities with lower densities and less connections per linear foot of pipe are likely to pay a higher per unit (residential) or per acre (commercial). The City has been consistently updating Comprehensive Water and Sewer Plans every 5 years to ensure that our fees are as close to median as possible. Funding is a balance of Development Fees paid by Developers based on new demand created as well as quarterly user fees paid by end user. 

Due to our development pattern, our sewer and water fees appear to be slightly to the high end of median, but within median when comparing other developing communities with similar development patterns. 

Stormwater Management Fees

The City has certain stormwater maintenance obligations on long range plans. This system ensures that residents and business owners do not generally experience unexpected flooding issues on their property. This fee pays for the construction of regional stormwater infrastructure that conveys rainfall runoff to area water bodies with acceptable water quality.

Cash In Lieu of Tree Preservation

The City instituted this fee within the past few years and it has only been collected once. The intent of this fee is to provide an option for Developers that are clearing an entire site of significant trees with little to no replacement on the new Landscape Plan. The City's Tree Preservation Ordinance was first adopted approximately 15-20 years ago in response to community feedback on wholesale clearcutting in a major residential neighborhood. It was updated within the past 5 years. The Tree Preservation Ordinance only kicks in at a certain threshold, and standard landscape requirements count towards the replacement requirement. As stated above, this only kicks in with major tree removal with little to no replacement on site. 

This fee is seldom collected and somewhat unique to Ramsey. There are other communities that do similar fees, but not an extremely common fee. 

SURETIES/FINANCIAL GUARANTEE

The City requires a financial guarantee to ensure the timely completion of required improvements, both public and private. This has been an important tool for local municipalities to ensure projects are not left incomplete. This is extremely common for public improvements, and receives little objection from Developers. This is common for private improvements as well, but to a much lesser amount. The City requires that this surety is in the form of cash or Letter of Credit.

Public Improvements

City Code requires a surety in the amount of 125% of the Engineer's Estimate. This provides a contingency as is commonplace with most capital improvement projects. Staff does not recommend any changes to this requirement, other than to tighten up the reduction/release process.

The need for tighter policies became evident during the mid-2000s recession. There were a number of projects with public improvements that were left incomplete with no remaining financial guarantee. This had an impact on the General Fund and other City Funds in order to complete public improvements. 

Private Improvements

City Code requires a surety in the amount of 150% of the Engineer's Estimate for private improvements for commercial and industrial projects, including apartments. The City has discretion to identify which improvements are required by City Code and does not need to collect based on the entire project. The City has routinely exercised this discretion to ensure that the City is not collecting a surety larger than what is needed. Common issues with completion include, but are not limited to, paving, curbing, grading/erosion control and landscaping. Unlike public improvements, the City is not likely to step into a project and complete private improvements. Of key importance, the City is obligated to ensure proper erosion control during construction or in the event of a project default. The surety also allows the City to clean up nuisances created by an uncompleted, defaulted project. 

Based on administration of several recent projects, Staff recommends that the surety amount be reduced to 25% of the Engineer's Estimate and held through a 1-Year Warranty Period after final completion. The warranty is already a requirement of any project. A majority of Developers do not object to the current obligation, but do note that other local municipalities have a lower rate. Staff does recommend that a surety should continue to be required, but is supportive of a lower amount. 

PERMIT FEES

The structure of collection of Building Permit Fees is required by the Minnesota State Building Code. For the most part, fees must be based on the value of the project. There are a few exceptions that allow flat rate fees. In the past, the Department of Labor of Industry, who administers the State Building Code, has expressed concern that Ramsey has too many flat rate fees and should be doing more based on valuation.

The amount collected based on this structure is up to the local municipality. Over the past 3 years, the City has been reducing Building Permit Rates (on average approximately 10%). At the same time, the City has been adding needed resources to keep up with work demand. With recent technology enhancements, the City has right-sized our permit fees. Our fees appear to be within the median range of peer communities. 

DEVELOPER FEEDBACK

Staff has reached out to a few Developers with experience in other communities for specific feedback on our general rates and charges.

Developer A - Medium Density Residential Developer

I see City of Ramsey Development Fees to be about $9,000 per lot. That is right in the middle of what we see. Peer Community A (Developed Community) is less than half. Peer Community B (Nearby Developing Community) is almost double. 

In my opinion, I don't have too much concern about the amount of the City Fee under the following circumstances:

• The fees are easy to find
• The fees don't change while we are under contract for the land
• The fees don't go up dramatically from year to year
• There is a clear nexus from the fees paid to the services delivered

Developer B - Single Family Residential Builder (Local/Regional)

The Park and Trail Fee (combined) is the highest of all the neighborhoods we develop (metro edge communities) at approximately $5,000. Ostego reduced their Park Fee significantly from $4,057 per unit to $1,986 per unit.

Developer C - Single-Family Residential Builder (National) - Captured from University of Minnesota Ramsey RCP Partnership

The City of Ramsey does have competitive fees when compared to other cities where we develop, which spread across the Twin Cities Metro. Two of those cities that are closest to Ramsey are Anoka and Otsego. Anoka is largely developed with few opportunities for large tracts of undeveloped land. Because of this, the land that is being developed is closer to established infrastructure and utilities, lowering the cost of trunk fees, staff processing costs, etc. Ramsey, on the other hand, does have more undeveloped land further outside the city center. As a result, Ramsey and Otsego's general trunk and application fees are higher to support the long-term maintenance to the new infrastructure.

Numbers wise, Ramsey falls about in the middle of Otsego and Anoka's fees. The same can be said when comparing all 2017 community fees - Ramsey's fees are about the median. While there are a lot of influencing factors out of city control, it is important to be aware of how they compare to others so that they can adjust accordingly to maintain that competitive edge. 

Note - this comment was reiterated by another Staff Member in this organization during a recent land sale discussion. 

30 Minutes

This case is being handled as part of normal Staff duties.

Community Development Director

Parks and Assistant Public Works Superintendent (Park Dedication and Trail Development Fees)
Finance Director (Format of Surety/Financial Guarantee)
City Engineer (Water, Sanitary Sewer and Stormwater Fees; Need for Sureties for Public Improvements)

The desired outcome of this case is to receive a broad overview of development related fees as well as provide direction as to scope of any deeper dive study desired by the City Council.