PC Meeting Date: December 18, 2025
To: Members of the Planning Commission
From: Mikayla Schmidt, City Planner & Interim Community Development Director
Bruce Jacobson, Consultant
Title
Consideration of Proposed Text Amendments to 5.2.6 Parks, Trails, and Open Space Dedication in Chapter 34 - Land Development Code.
Body
Action Requested:
The Planning Commission is asked to provide feedback and make a motion recommending support for the proposed text amendment to the park and trail dedication fees [specifically cash in-lieu-of land].
Summary Report:
Staff have been reviewing the existing park and trail dedication fees and are proposing changes to update the fees to current standards. Our park dedication fees are lower than most communities’ which is outlined in this staff report. As part of the Strategic Plan, the council has identified alternative avenues for revenue, which this fee would then support the city’s parks and trails.
Background
Minnesota State Statute Section 462.358 Subd. 2b. and 2c. (attached) provides enabling legislation to allow municipalities the ability to require parkland dedication or a cash equivalent for park acquisition and development.
Summary of State Statute Section 462.358 Subd. 2b. and 2c.
1. Land Dedication or Fee Requirement
a. Cities may require developers to dedicate a reasonable portion of land for public use, such as parks, playgrounds, or open spaces.
b. As an alternative, developers may pay a fee in lieu of land dedication.
2. Use of Fees
a. Fees collected under this provision must be used exclusively for the acquisition, development, or improvement of parks, recreational facilities, playgrounds, trails, wetlands, or open spaces.
b. These funds cannot be used for ongoing operation or maintenance.
3. Nexus and Proportionality
a. There must be a clear connection between the fees or land dedication requirements and the municipal purposes they serve.
b. The amount of land or fees required must be proportional to the impact of the proposed development.
The current park dedication and fee requirements for the city are attached and a summary is listed below.
City of Northfield - Chapter 34 - 5.2.6 Parks, Trails, and Open Space Dedication.
(D) Land Dedication Required.
(5) The amount of land required to be dedicated by the applicant for stated purposes in (1) above shall be based upon the net area (gross area minus area required for public streets, trails, and stormwater ponding) of the land to be subdivided which could be developed for residential, commercial, industrial or other purposes. The area shall be determined at the time of the preliminary plat and shall be calculated as follows:
(a) Residential Development.
|
Dwelling Units per Net Acre |
Percent of Net Land Dedicated |
|
0 to 3.9 |
12 |
|
4.0 to 7.9 |
9 |
|
8.0 or more |
6 |
(b) Commercial Development. Five percent of the gross area subdivided.
(c) Industrial Development. Two percent of the gross area for the purpose of trails only.
(K) Dedication or Cash-in-Lieu of Requirements. The city may elect to accept a cash payment in lieu of land dedication for parks, recreational facilities, playgrounds, trails, wetlands or open space purposes. In such cases the applicant shall be required to make such payment to the city's dedicated park fund based on the Estimated Market Value as indicated in the records of the County Assessor that is equivalent to a land dedication requirement as follows:
(1) Residential Development.
|
Dwelling Units per Net Acre Percent of Land Dedication Equivalent |
|
|
0 to 3.9 |
16 |
|
4.0 to 7.9 |
13 |
|
8.0 or more |
10 |
(2) Commercial Development. Five percent of the gross area subdivided.
(3) Industrial Development. Two percent of the gross area subdivided.
Basis for Evaluation of Existing Park & Trail Dedication Fees
The city anticipates residential and commercial growth in the coming years and this will place even greater pressure on the park system. Without an increase in the residential share of park dedication fees, the city risks falling behind in acquiring and enhancing park infrastructure to meet the evolving needs of both current and future residents. Many comparable cities have already adjusted their fee structures to ensure new residential developments adequately contribute to the long-term sustainability of their parks.
By aligning Northfield’s residential park and trail dedication fees with comparable cities, the park and trail fund can meet increasing costs to preserve, enhance, and expand park offerings without shifting the financial burden onto existing residents. Park and trail dedication fees will secure long-term sustainability of the existing parks and that new residential development contributes proportionately to the parks that will serve them for decades to come.
Case Study Review & Summaries
As part of the review and evaluation of changing the park dedication fees, staff reviewed other communities’ fees and requirements.
Case Study 1 - City of Owatonna
The City of Owatonna does not currently require park and trail dedication fees. They continue to explore this idea through Parks and Trails System Master Plan recommendations which encourages the city to explore adoption of a parkland dedication ordinance. The basis for this recommendation included that the fees provide the needed capital to fund parks and open space. As land develops they recognize the need to provide park land to accommodate the new residents. The same can be said for Northfield. The excerpt recommending park land dedication for Owatonna is attached.
Case Study 2 - City of Faribault
The City of Faribault park and trail dedication fees are similar to Northfield (see above).
Case Study 3 - City of Red Wing
The City of Red Wing park dedication is listed below. Information is limited to this chart included within their Zoning + Subdivision Regulations:
Case Study 4 - City of Hastings
The following excerpts from recent City Council Memorandum show the methodology, comparables and analysis of updating their park land dedication requirements. They show
examples of existing requirements for two subdivisions and appraisal-based requirements - see below:
Additionally, Hastings then completed a survey of 25 comparable cities. See below:
Staff then proposed to establish a $3,600 per unit parkland dedication fee for all units and proposed a phased approach to implement the change.
Case Study 5 - City of Ramsey
In 2022, staff recommended updating the park dedication fees for the City of Ramsey. The two charts below illustrate the current Park and Trail fees collected at the time of closing for all (or at least most) new development projects:
Ramsey completed extensive research to review and summarize park dedication fees to support their proposed changes - see below. These fees are from 2019 and 2020, so we can assume they have only increased since then.
Developer Reaction to Park Dedication Fees
The reaction from developers to park dedication fees is mixed; while some developers accept them as a cost of doing business, others challenge them as an unfair regulation that harms project feasibility and housing affordability. Reasons for developers' opposition include:
Financial burden and higher costs: Park fees are an additional expense that can make a project less profitable and sometimes even unfeasible. This is especially true for projects in high-cost, built-out cities, where fees are layered onto already-high land and construction costs.
Questionable "nexus" to the specific development: Some developers object that their project creates no new demand for parks and that the fees are an arbitrary tax. This has led to court challenges, arguing that fees are only proper when there is a "direct link" between the subdivision and the need for more parks.
Erosion of housing affordability: Developers argue that park fees, along with other impact fees, add to the cost of new housing and are ultimately passed on to the buyer or renter. This can increase the price of new homes and reduce affordability.
Slowing or stalling development: Faced with additional costs and reduced profitability, some developers may postpone or cancel projects, which can hurt local economic growth and worsen housing shortages.
Unclear spending and proportionality: Developers sometimes challenge how fees are calculated and where the money is spent. Legal precedents, including some from the U.S. Supreme Court, mandate that fees be "roughly proportional" to the development's impact. However, some developers argue that municipalities often fail to make these individualized determinations, instead using a one-size-fits-all formula.
To address developer concerns, cities and developers have explored alternative arrangements:
Donating land instead of cash: Some ordinances allow developers to dedicate a portion of their land to the city for park use instead of paying a fee. This is often an option for large suburban subdivisions but less common in dense, urban infill projects where available land is scarce.
On-site private parks with public access: In some cases, developers can receive credit toward their park fee by providing publicly accessible open space on their private property. This can take the form of plazas or green spaces.
Flexible fee structures: Cities have made some concessions by adjusting fee calculations based on property type, density, or location. For example, some cities have lower fees for downtown high-density developments or for certain affordable housing projects.
Targeted spending zones: Some regulations ensure that fees collected from a specific development must be spent on parks in the same geographic area. This provides a more direct link between a developer's contribution and a nearby community benefit.
It is important to note that developers' objections are often in conflict with city planners and park boards, who view these fees as an essential tool to ensure that new development is accompanied by the necessary public infrastructure. From a city's perspective, park fees are a way to fund growth responsibly; provide crucial funding for infrastructure improvements; and reflect increased demand for quality public space to serve a growing population.
Staff Recommendation
The recommendation from staff is to increase the park dedication fees for residential development to $2,500 per unit and non-residential subdivisions to $10,000 per acre of 10% of the fair market value, whichever is less. See the calculation below to show the analysis of arriving at $2,500 per unit.
Total Northfield park acreage is 564, divided by total city population 26,500 [including the colleges] = .0213 acres of parkland per person, multiplied by the average persons per household unit of 2.4 = .05 acres per household unit, multiplied by fair market value* of vacant land $54,700 = Park and Trail Dedication Fee per household unit $2,735 . . . adjusted to $2,500 per unit as a reasonable place to start with this amended approach to park and trail dedication fees. [*Note: fair market value is an average based on Rice County property values listed for these Northfield properties: Bluff View 2nd Addition, Harvest Hills 2nd Addition, Festler Farms, MnDOT Site, Northwest Business Park]
Alternative Options:
The Planning Commission could recommend not changing the fees at this time. The zoning code as a whole will be undergoing an update and reviewing park dedication will be part of the discussion. However, since we do not know the time of when new development would occur, it would be judicious to increase the fees now to capture those potential fees. Then when we get to the subdivision portion of the zoning code update, we can review the park dedication fees again and make any adjustments needed.
Financial Impacts:
If an increase in park dedication fees occurs, there will be more funds available for parks, trails, etc. as development occurs.
Tentative Timelines:
December 18, 2025: First discussion of Park Dedication fees with the Planning Commission
February 19, 2026: Public Hearing & PC Recommendation to City Council
March 2, 2026: First Reading at City Council
March 17, 2026: Second Reading at City Council and Summary Publication Notice
March 25, 2026: Summary Publication published in the newspaper
April 25, 2026: Ordinance goes into effect