Update Report for League of Women Voters Minneapolis

Minneapolis Parks

Update Report for League of Women Voters Minneapolis

April 2016

Introduction

This update on Minneapolis parks is the result of study by a Parks Committee that was formed in the fall of 2014. The committee has met almost monthly since then, interviewed a variety of stakeholders about parks issues, and toured several current and future park sites. The committee sponsored a forum on April 7, 2015, entitled “Minneapolis Parks: Old and New – Protecting the Public Interest.” Committee members have participated in public hearings and meetings sponsored by the city and the Park Board.

LWVMpls has had an interest in Minneapolis parks ever since it supported a millage increase for park purposes in 1937. Three studies entitled Parks and Recreation Parts I-III in 1969 through 1973 resulted in new positions. Over the years LWVMpls has supported various initiatives and projects of the Minneapolis Park and Recreation Board (MPRB, or Park Board for short). Studies of financing for regional parks in 1985 and government structure in 1980 and 2006 added related information, and resulted in new positions. Units studied financing Minneapolis parks in 1995 and new parks issues in April of 2015.

This update reflects interest in new models for financing and managing parks in light of significant shortfalls in capital investments in neighborhood parks and new public/private partnerships on the horizon. The committee’s work has acknowledged the particular problems of funding neighborhood parks, a problem that led to the MPRB’s Closing the Gap: Investing in Neighborhood Parks initiative in 2015. This resulted in support by the LWVMpls board of a proposed parks referendum or an alternative plan. The committee also proposes revision of one LWVMpls position and approval of one new position, presented in a separate document.

Minneapolis Parks and Park Board

In 2015 Minneapolis was awarded the coveted best parks award from The Trust for Public Land for the third year in a row. This award is based on data from their ParkScore index which ranks the 75 largest cities in the country in three categories – acreage; facilities and investment; and access. ParkScore also provides park profiles for each city. While Minneapolis ranks highly in park spending per capita, ParkScore does not look at underlying financial stresses such as a decaying infrastructure. In her presentation to the LWVMpls parks forum in April 2015, Susan Schmidt, state director for The Trust for Public Land, pointed out that despite this high ranking, Minneapolis has some challenges, in particular some underserved neighborhoods, access to the upper river, and the need for downtown parks. She emphasized that new funding for parks is critical across the country, since there is no longer adequate public funding. Some sources include tax increment finance or value capture, parkland dedication fees, privately-owned public spaces (POPS), and philanthropy. Some of these will be discussed elsewhere in this paper.

The Minneapolis Park and Recreation Board, created by the Minnesota State Legislature and Minneapolis voters in 1883, oversees, develops, operates and maintains the Minneapolis park and recreation system. Its powers are set forth in the City Charter. The MPRB is an independently-elected, semi-autonomous board. Minneapolis voters elect nine commissioners every four years: one from each of the six park districts, and three that serve at-large. The Superintendent, hired by and accountable to the Board, leads the staff.

Minneapolis parks include 6,801 acres of parkland and water, 600,000 trees in parks and along boulevards, 160 neighborhood parks, 19 regional parks and trails, and 49 recreation centers. Pools, beaches, fishing piers, parkways, gardens, bird sanctuaries, golf facilities, multi-purpose sports fields, ice rinks and playgrounds are among the many amenities offered. The 2016 adopted budget provides for 505 fulltime staff and 354 part-time positions.

Regional and Neighborhood Parks

The Minneapolis park and recreation system includes neighborhood and regional parks. The distinction is important because of their different roles in the system and their different funding streams. The Closing the Gap initiative and resulting proposals relate only to neighborhood parks.

Regional parks are owned, operated, and maintained by the Minneapolis Park and Recreation Board, but they are also designated as part of the Metropolitan Council System of Regional Parks and Trails. The MPRB is one of 10 regional park implementing agencies. These parks are large in size, often more than 100 acres, and contain most of the natural areas in the Minneapolis park system. They are enjoyed by visitors from throughout the region, as well as Minneapolis residents, and provide largely passive, natural-resource based recreation opportunities such as trails, lakes for boating or swimming, and interpretive sites. They generally do not include built amenities or facilities for organized sports, although a few were grandfathered in since they were in place before the establishment of the regional park system.

The eight regional parks in Minneapolis are the Chain of Lakes, Nokomis-Hiawatha, Theodore Wirth, Minnehaha, North Mississippi, and three segments of the Mississippi River corridor – Mississippi Gorge, Central Mississippi Riverfront, and Above the Falls. The regional park system also includes almost all of the city’s parkways and trails. Within these large parks are many separately identified properties, such as Lake Harriet, Riverside Park, and Beard’s Plaisance. The Park Board counts 94 properties within the regional parks and trails

Regional parks account for 75% of park land in Minneapolis, but much of this is in natural areas that do not require high maintenance. They also do not contain such maintenance-intensive facilities as sports fields, wading pools, and recreation centers. So the Park Board estimates that in 2016 operation and maintenance of the regional parks will require $19.7 million compared to $48.7 million for the neighborhood parks.

Because regional parks serve regional visitors as well as Minneapolis residents, local tax revenues are supplemented by regional funding through the Metropolitan Council and state and federal funding sources. These resources are not available to neighborhood parks. Most capital expenditures in the regional parks come from these sources, although the Park Board also delegates some funds to strategic investments especially in the Mississippi River corridor. Most of the operating and maintenance costs for regional parks are paid by the implementing agencies. Some of the other agencies cover part of this cost by charging entrance fees, but the regional parks in Minneapolis are free. Regional funds cover an average of 9.5% of operating and maintenance costs.

Regional parks can also attract major private partnerships, contributions and grants, and can support money-making enterprises that are not available to neighborhood parks. Regional parks do not suffer from the level of funding gaps that plague the neighborhood parks. The Closing the Gap initiative does not include any regional park properties, and the proposed referendum or agreement would provide funding only for neighborhood parks.

Neighborhood parks, in contrast with regional parks, are smaller and serve their local Minneapolis neighborhood or community. In some documents there is a distinction between small neighborhood parks (one block or less) and somewhat larger community parks, but for the purposes of this document and the Closing the Gap initiative, the term neighborhood parks includes both, as well as a number of very small properties such as MPRB-owned triangles and circles.

Neighborhood parks include large numbers of physical amenities that require high levels of maintenance, including playgrounds, wading pools, athletic fields, tennis courts, and all 49 recreation centers. Funding for the 160 neighborhood parks is almost entirely through local property taxes. The Closing the Gap initiative investigated the condition and capital needs for neighborhood parks, including all of the recreation centers.

Other parks include thoseoperated as business-type activities, and these are not included in the Closing the Gap initiative. This category includes golf courses, ice arenas, and concessions. These park properties are grouped in the enterprise fund, are supported by their earned revenue, and are largely self-supporting.

Budget Process

The unique governing structure of the semi-autonomous Park Board means that the budget process is complex. A financial feasibility report on MPRB published by The Trust for Public Land points out that “While the Park Board is not a City of Minneapolis department, it is still intricately linked with the city” and describes the city and MPRB budget process as “consultative and deliberative.” The MPRB meets with the Mayor to present its “projections and needs.” The Mayor submits a recommended budget to the City Council and Board of Estimate and Taxation (BET), after which the BET sets the maximum tax levies. The MPRB budget for capital improvements (CIP) is presented to the Capital Long Range Improvement Committee (CLIC), an advisory body, for review and its recommendations to the Mayor and City Council. The MPRB (as well as the City and other boards) must hold public hearings on its budget and proposed taxes, following which the board sets and adopts its budget and a levy up to the BET’s maximum amount. Local Government Aid (LGA) from the state flows to the city, which allocates a percentage (12.9% in 2016) to the MPRB.

Budget Elements

The main elements of the Park Board budget are the General Fund, which is the main operating budget for most activities, and the Capitol Projects Funds, used for capital acquisition, construction and improvements. Other smaller funds relate to such things as enterprise operations like golf courses; tree preservation and reforestation, and self-insurance. Each of these funds has different revenue sources.

The MPRB’s 2016 budget totals $103,891,983, distributed as follows:

• $70,982,445 (68%) for the General Fund
• $21,697,600 (21%) for Capital Project Funds
• $9,468,696 (9%) for the Enterprise Fund
• $1,743,242 (2%) for the Special Revenue Fund dedicated to trees

The General Fund is the “operating fund established to account for all financial resources except those required to be accounted for in another fund… (and) includes activities such as environmental stewardship, planning, recreation, park safety and general government administration…” The operating budget is supported by property taxes (73%), Local Government Aid (LGA) from the state (13%), and other revenues such as fees and fines (14%). Expenditures from the General Fund are mainly for wages and fringe benefits (68%) and operating costs (28%). A small amount (4%) is transferred to capitol funds to provide for neighborhood park improvements.

Property taxes for Minneapolis properties go to several taxing authorities, mainly the city, the county, and the school district. The MPRB gets a part of the city’s portion, which is 40% of the total tax bill. Of that 40%, the MPRB gets 18.3%. So the Park Board estimates that it receives about eight cents of each property tax dollar. For 2016 the Board of Estimate and Taxation approved a 4.4% property tax levy increase for the MPRB - 4% for the General Fund and 0.4% for Tree Preservation and Reforestation.

Local Government Aid (LGA) is funding from the State of Minnesota to cities across the state, including Minneapolis. The City of Minneapolis transfers a portion of its LGA to the Park Board. For 2016 the MPRB anticipates receiving $9.2 million in LGA funds, or about 13% of the 2016 General Fund budget. State budget deficits resulted in a total of $8.5 million in cuts in state aids to the MPRB Budget between 2008 and 2011. While funds have stabilized since 2012 and will increase by $2.5 million in 2016, the amounts provided are somewhat lower than ten years ago when the amount was $11 million. The fluctuation and unpredictability of LGA are ongoing concerns.

The Capital Improvement Program (CIP) includes funding for improvements for both regional and neighborhood facilities. The funding sources for each vary, with each funding source having specific requirements and limitations.

Regional parks and trails receive capital funding from the Metropolitan Council’s Regional Parks funds, Parks and Trails Legacy Funds, lottery proceeds, and other outside funding such as specialized federal and state programs, and donations. Total regional park capital funding for 2016 is $13.19 million.

Neighborhood parks rely for capital investments on city-issued net debt bonds, a portion of the annual property tax levy (called Pay As You Go Capital Levy) and additional allocations transferred from the MPRB General Fund. The city pays the debt service on net debt bonds. Revenues from the new Park Dedication Fee will be used for capital improvements, but little has been allocated thus far. Other capital funding for neighborhood parks has included grants from Hennepin County and community donations.

The Enterprise Fund is intended to be a self-supporting fund to account for all business-type or enterprise activities such as golf courses, concessions, and ice arenas. Revenue comes from charges or fees for service, commissions, rents, and parking fees. Its income covers wages, operations, capital improvements, and debt service. Park Board staff is continuing to realign activities between the General Fund and Enterprise Fund, with a few problem areas remaining.

The Tree Preservation and Reforestation Fund is a special levy designed to deal with the threats from the Emerald Ash Borer and tree loss due to storms.

Budget Shortfall – Closing the Gap

One focus of the LWV update study is whether the MPRB budget is adequate and sustainable and enables the MPRB to carry out its responsibilities. Of special concern is the chronic tension between operational costs and capital investment needs in the neighborhood parks. In her 2016 budget message Superintendent Jayne Miller said:

“The MPRB is committed to establishing long-term financial sustainability in operations, rehabilitation, and capital infrastructure. We have made significant reductions to the general operating budget, implemented initiatives that allow us to operate with greater efficiency, and expanded creative revenue generating opportunities; however, rising costs and increased usage continue to strain our ability to financially meet all of the demands of the park system. Couple the operational pressures with unexpected expenditures related to an aging infrastructure and the continued under-funding of park maintenance and capital improvements; the MPRB has reached a critical juncture requiring significant work and attention to address the multi-million dollar gap between available resources and the increasing demands on, and needs of, the park system.”

To this end the MPRB embarked on an initiative in 2015 called Closing the Gap: Investing inNeighborhood Parks. From Februarythrough October the MPRB gathered and shared information about the current condition and service level of neighborhood parks and investment priorities for replacement, operating, and maintenance of existing park assets. Data was shared about long-deferred maintenance and deficits in the neighborhood parks due to years of funding reductions. Meetings were held throughout the city both to inform communities of funding challenges and to hear residents’ concerns, issues and priorities.

Two related planning projects are RecQuest and Service Area Master Plans.

RecQuest focuses on recreation centers, evaluating current recreational facilities and programs in light of the changing demographic profile of Minneapolis residents. This citywide assessment will form the basis of an investment strategy for recreation centers for the next 25 to 30 years.

Service Area Master Plans focus on the outdoor facilities in neighborhood parks, and are being addressed by geographic area. Plans will be developed for each of the city’s five service areas (North, Northeast/Southeast, South, Southwest, and Downtown/Citywide Regional Parks) to assure that outdoor facilities align equitably with community needs. These plans will create improvement plans for each neighborhood park and guide decisions on capital improvements, land acquisition, and development of new parks. Two plans, Downtown and South, are nearing completion. Others will begin in 2016.

Pressures for ongoing expenses compete with the need for funding for capital improvements and constitute the greatest challenge to financial sustainability for neighborhood parks. Between 2000 and 2015 the neighborhood capital improvement program (CIP) has been underfunded by $111 million dollars. Currently the MPRB invests $4-$5 million dollars annually in neighborhood park infrastructure; however, an investment of $14.3 million annually is needed to address deferred maintenance. Projected revenues for 2016-2020 CIP will result in an increase in the funding gap of $46 million and should revenue levels remain consistent, the gap is expected to grow to an additional $304 million from 2021 to 2040. Shifts from the operating budgets to meet some essential capital improvements at neighborhood parks have resulted in maintenance gaps in those same neighborhoods parks for an annual deficit of $2 to $3 million dollars