Offce of Mayor Betsy Hodges
3505. lth St. - Room 331,
Minneapaks, MN 55415
Tel 612.673.2100
worusminneapolismn.gov
March 22, 2016
President Wielinski
2117 West River Road
Minneapolis, MN 55411-2227
President Wielinski,
| continue to support capital improvements to our parks. Furthermore, | have said that | am open as to the
‘mechanisms used to provide such funding. Any plan must be based in sound, long-term, sustainable fiscal policy.
Achieving that will require full, open, public deliberations. Any less would do a disservice to our parks and to
Minneapolis taxpayers.
AAs [have said, the need is real. Both our parks and our city streets suffer from an infrastructure deficit. Large cuts in
state funding, unnecessarily large pension costs prior to the 2011 reforms, and other factors have led to years of
lunderinvestment in both our parks and our streets. The need to keep cops on the streets, firefighters on the job, and
park centers open led to prioritizing operations over capital. None of us welcomed those bleak choices, but it was
crucial that we had the flexibility to preserve essential services.
As a result of those choices, we must reinvest in both parks and streets. | expect the Park Board to advocate for
parks. But, given our broader mandate, the Mayor and the City Council must take a broader view. We cannot view
funding for parks in a vacuum. We must balance the genuine need for park capital with all others under our purview,
including our property tax levy, public safety, economic development, equity, and streets,
It is my sincere hope that we can move forward together on a responsible solution that provides real, reliable, and
certain funding for a 21" century neighborhood park system. The action before me would not meet those ends. It
provides neither real, nor reliable, nor certain funding, and it provides neither the time nor the transparency needed
to ensure a lasting agreement. Its with disappointment that | must veto Resolution 2016-148 for several reasons.
FUNDING SOURCES
To this point no clear accounting of proposed funding sources has been provided to me, to our CFO, to the City
Council, or to the public. Sources alluded to in the discussion at the City Council Committee of the Whale on March
116" included anticipated savings due to unexpectedly positive performance of the state's pension fund investments,
existing or anticipated fund balances from under-projected non-property tax revenues and/or underspending by City
departments, potential tax capacity from the anticipated decertification of some TIF districts, savings from the
State's recent decision to take on 3 portion of the City’s remaining debt obligation to the 2001 library referendum,
and the elimination of unidentified capital projects. While some of the sources cited may eventually result in real
‘money, itis clear to me that as a package, this list presents more questions than answers.
First, while the better-than-expected performance of the State's pension fund during a bull market is good news,
‘and Minneapolis should benefit from that windfall, there are two reasons why it would be unwise to rely on
anticipated pension savings to pay for parks capital. First, Minneapolis does not control the disposition of any
windfall funds. This money has been an explicit target of some legislators as recently as 2015. Even ifthe City did
receive the benefit to which we are entitled this year, there is no certainty that the State would continue to meet
that commitment in future years. In addition, we know well that pension funding and uncertainty go hand in hand. It
‘may be that state pension fund investments continue to do well. However we should not step lightly into a twenty-
year commitment that relies on both speculation that the market will remain strong and that hypothetical benefits
from that strong market will continue to accrue to Minneapolis. We must be especialy vigilant to hold firm to sound,
responsible fiscal principles in good economic times,
‘Second, the 2016 Budget | proposed and the City Council adopted included a full accounting of existing and
anticipated year-end fund balances for 2016. In adition, it changed the assumptions the City makes about expected
nnon-property tax revenues. These revenues had rightly been estimated conservatively in the contracting economy,‘and thus had been higher than anticipated during the recent recovery. The 2016 Budget corrected for the current
‘economic recovery, and we should not expect to see fund balances in the future. In addition, we adjusted
‘department appropriations to match actual spending. Thus, any parks funding plan that relies on the expectation
that there will be future fund balances is not based on the reality of current revenues and expenditures.
‘Third, while there may be tax capacity freed for general use by the decertification of some TIF districts, the public
has been provided no information as to the amount of potential capacity, nor the impact of such a decision on the
property tax levy. It would be irresponsible to commit such potential funding without a full understanding of the levy
implications and an accounting of the trade-offs spending such funding on parks would necessitate with other core
Fourth, while its clear that the City’s dectining obligation to debt service for the library capital referendum is already
accounted for in the 5-Year Financial Direction, we have yet to account for the State’s commitment to take on a
portion of that remaining debt. While | do not object to the idea that this funding could be part of a Parks funding
agreement, we should be deliberate about understanding the impact of such a decision on the levy and other
commitments.
Fifth, | have been a proponent of taking a hard look at aligning our funding commitments to our ability to get,
projects done. in recent years, | have focused on adjusting appropriations in areas where City departments have
‘accurnulated significant fund balances over multiple years. For example, in the 2015 budget, | declined to
recommend additional capital appropriation for Art in Public Places, my clear support for that program
notwithstanding, because the program had accumulated a fund balance that exceeded its ability to get projects out
‘the door. | did this to ensure that the City did not tle up appropriations, and thus the property tax levy that supports
them, on projects that are not getting done. However, a decision now to use a reported $49 milion worth of
approved capital projects that have yet to have bonds issued, without a clear accounting of what those projects are,
the status of those projects, our commitment (or lack thereof) to completing those projects, and the relative cost to
the community of foregoing those projects would lack transparency and accountability. We have to do the work
before we make the decision,
Its our responsibility to taxpayers of Minneapolis to ensure that we are not making promises we cannot keep,
Despite my questions about sources of funding for the plan before me today, lam committed to continuing to doit
the necessary and difficult work, in cooperation with you and with the City Council, to find a real, reliable, certain
solution to our shared vision for parks.
PROCESS
‘The proposal before me for signature was unveiled to the public the morning of Wednesday, March 16". It was
voted on by the Minneapolis Park and Recreation Board that evening and reached my desk on Thursday morning,
less than 24 hours after it became public. 1am concerned that the lack of public notice and hurried timeline reflects
the fact that there is currently no real money identified to pay for this proposal
You propose adoption of this proposal, which would commit taxpayers to 20 years of funding, by April 15°, within six
‘weeks ofits intial publication. The request comes with no acknowledgment that these significant questions about
the sources of funding remain unaddressed, with uncertain impact on the property tax levy and on other known core
priorities, and insufficient clarity for the public on how funds might be spent or the process through which thase
decisions may be made.
| expect the Board will override this veto, as it did my veto of the January resolution related to proposed referendum
language. However, as| emphasized then, | am committed to working in cooperation with you, the Park Board, and
the City Council to find a real solution to reinvest in our parks and our streets. My door remains open.
Sincerely,
Mayor Betsy!Hod:
City of MinneapolisMINNEAPOLIS PARK AND RECREATION BOARD
AN ACTION, RESOLUTION OR ORDINANCE
In accordance with Article VI, Section 6.2(j), of the City Charter, there is herewith submitted to
you, the Mayor of the City of Minneapolis, an action, resolution or ordinance adopted by the
Minneapolis Park and Recreation Board which you may approve by affixing your signature
herein below or if you disapprove of same to return to the Board, with your objection thereto,
by depositing the same with the Secretary of the Board to be presented to the Board at their
next meeting where the question of its passage will be put again before the Board.
9.1 That the Board adopt Resolution 2016-148 captioned as follows:
Resolution 2016-148
Resolution Approving the 20 Year Neighborhood Park Plan Between the
Minneapolis Park and Recreation Board and the City of Minneapolis and
Directing the Superintendent and Legal Counsel to Prepare an Ordinance,
Concurrent with a City of Minneapolis Ordinance and Pursuant to the Normal
Timeframes for Noticing Intent, Introducing Subject Matter and Holding
Respective Public Hearings, to Implement the 20 Year Neighborhood Park Plan
for Consideration on April 6, 2016 and Final Adoption on April 20, 2016
PASSED__March 16, Ap
0 2 crefbry of tHe Bo,
“waerSSS—S~SResolution 2016-148
Offered by: Seoht Vrechew
Seconded by: Bathe Nol
Resolution 2016-148
Resolution Approving the 20 Year Neighborhood Park Plan Between the Minneapolis Park and
Recreation Board and the City of Minneapolis and Directing the Superintendent and Legal Counsel to
Prepare an Ordinance, Concurrent with a City of Minneapolis Ordinance and Pursuant to the Normal
Timeframes for Noticing Intent, Introducing Subject Matter and Holding Respective Public Hearings, to
Implement the 20 Year Neighborhood Park Plan for Consideration on April 6, 2016 and Final Adoption
‘on April 20, 2016
Whereas, Since the earliest beginnings of the City of Minneapolis and the creation of the Minneapolis,
Park & Recreation Board (the “MPRB”) in 1883, parks and open spaces have been a shared community
and civic value, with the park system constituting one of the most cherished and defining features of
what is Minneapolis;
Whereas, Because of the leadership of the MPRB and the support given by the City of Minneapolis (the
“City”), parks have developed over six generations to serve the public need for parks and recreation and
in that time Minneapolis parks have been repeatedly recognized nationally as one of the very best park
systems in the United States;
Whereas, The MPRB has identified a significant financial gap for necessary maintenance, rehabilitation
and capital improvements to the Minneapolis neighborhood park system;
Whereas, The City and the MPRB, working in partnership, have developed a 20-year financial plan to
close the neighborhood parks funding gap and desire to memorialize the plan in concurrent ordinances
(the "20 Year Neighborhood Park Plan");
Whereas, The 20 Year Neighborhood Park Plan includes the following elements:
1. The plan, as detailed in this resolution, will be set forth in concurrent ordinances adopted by the
City and the MPRB and be effective for years 2017 through 2036.
2. The financial resources provided under the plan will be used exclusively to fund the
“Neighborhood Park System,” which is defined as those parks that (i) are owned, operated and
maintained by the MPRB, (ii) are generally less than 2 blocks in size, but can be larger, and (ii)
are neither designated as part of the Metropolitan Council System of Regional Parks and Trails
nor part of any of the MPRB’s golf courses.
3. The City will provide the MPRB with $1.5 million in start-up funds by December 31, 2016 to be
invested in capital improvements to, rehabilitation of, or operating expenses relating to the
Neighborhood Park System,
4. The City will recommend that the Board of Estimate and Taxation ("BET") increase the adopted
base 2016 MPRB Park and Recreation Tax Levy amount of $52,583,000 by $3 million in 2017.
‘The MPRB and City Council expect that their members on the BET will vote affirmatively for this,
Resolution No. 2016-148
Page 1 of 3increase. It is the intent of the parties that this increase, which equates to approximately 1% of
all City tax levies for 2016, will remain in effect for the duration of the plan and be used to
increase funding for general operations of the Neighborhood Park System and not to supplant
other operations funding for the Neighborhiood Park System
Beginning in 2017 and continuing for the term of the plan, the City will provide the MPRB with a
guaranteed minimum annual amount of funding for Neighborhood Park System rehabilitation
and capital projects (“Neighborhood Park Projects”). The MPRB capital projects will be
identified in the City’s annual five-year Capital Improvement Program process, as amended from
time to time. The guaranteed minimum annual amount will be $10.5 million per year, the form
of which will be some combination of levy, cash or bond proceeds at the discretion of the City.
The City and the MPRE will review and adjust the guaranteed minimum annual amount every
five years based on a mutually acceptable objective measure of inflationary costs and other
salient factors on or before December 15, 2020, December 15, 2025, and December 15, 2030.
Examples of mutually acceptable objective measures of inflationary costs and other salient
factors will be set forth in the MPRB and City concurrent ordinances. The 2020, 2025, and 2030
adjustments will be approved by concurrent resolutions of the City and the MPRB. Any
adjustment approved in 2020 will be effective for years 2022 through 2026. Any adjustment
approved in 2025 will be effective for years 2027 through 2031. Any adjustment approved in
2030 will be effective for years 2032 through 2036. The expenditure of the guaranteed
minimum funding of $10.5 million and future adjusted annual amounts shall be under the sole
control of the MPRB, but must be used for Neighborhood Park Projects.
6. The MPRB and the City acknowledge and agree that each needs to be able to address future
unanticipated critical needs such as the occurrence of natural disasters, disease, and acts of god
("Unanticipated Critical Needs") and exigent economic events such as state-imposed levy limits,
decteased market value for tax capacity purposes, changes in the state's property tax
classification system and other potentially impactful events ("Exigent Economic Events”) and the
ordinance will not preclude the City and MPRB from addressing such Unanticipated Critical
Needs and Exigent Economic Events in managing their respective fiscal obligations. For any
applicable year within the 20 year period of this financing plan, the City Council may determine
that the occurrence of an Unanticipated Critical Need or Exigent Economic Event prevents the
City from maintaining the agreed upon level of support to the MPRB for that applicable year.
Such City Council determination and the amount of funding less than the $10.5 million or less
than a subsequent approved adjustment amount must be set forth in an amendment to the
ordinance for that applicable year.
Whereas, The MPRB will continue to receive 11.79% of the annual amount of Local Government Aid
funds that are awarded to the City each year, irrespective of the 20 Year Neighborhood Park Plan;
‘Whereas, The MPRB will continue to pay to the City the City’s administrative and benefit administration
fees, as amended from time to time, with a mutually agreed upon cost allocation methodology, at rates
proportionate to the rates the City applies to its own operations, irrespective of the 20 Year
Neighborhood Park Plan;
Whereas, The MPRB will retain its authority, as provided in the City Charter and State law, to request a
maximum property tax amount and rate from the BET and to adopt an annual property tax levy within
the maximum set by the BET, irrespective of the 20 Year Neighborhood Park Plan;
Resolution No. 2016-148
Page 2 of 3Whereas, itis understood and agreed that the City will pass a similar resolution supporting the 20 Year
Neighborhood Park Plan and the MPRB and the City will be preparing 20 Year Neighborhood Park Plan
concurrent ordinances that are consistent with this resolution; and
Whereas, It is further understood and agreed that, if adopted by both parties, the 20 Year
Neighborhood Park Plan concurrent ordinances are intended for the duration of the plan to be a
substitute for any levy referenda, charter amendments or other ballot measures to provide additional
funding for the MPRB outside of the existing annual levy and City capital budget processes; provided,
however, that should the City Council consistently (at least three consecutive years) exercise its right
under the ordinances to significantly reduce or suspend rehabilitation or capital funding for the MPRB,
the MPRB's obligation to not seek support from the public in the form of referenda, charter amendment.
or other ballot measures will no longer be binding and neither party will thereafter have any further
obligations under the 20 Year Neighborhood Park Plan concurrent ordinances;
RESOLVED, That the Board of Commissioners of the Minneapolis Park and Recreation Board approve the
20 Year Neighborhood Park Plan between the Minneapolis Park and Recreation Board and the City of
Minneapolis and direct the Superintendent and Legal Counsel to prepare an ordinance, concurrent with
a City of Minneapolis ordinance, to implement the 20 Year Neighborhood Park Plan and present it to this
Board of Commissioners so that it can be considered on April 6, 2016 with final adoption at its meeting
on April 20, 2016 pursuant to the Board of Commissioners normal timeframe for noticing intent,
introducing subject matter and holding a public hearing, with the understanding that the City Council
plans to consider its ordinance pursuant to the City Counci’s normal timeframe for noticing intent,
introducing subject matter and holding a public hearing for final adoption on April 15, 2036.
Commissioner Aye Nay | Abstain Absent
Bourn
Erwin
Pomey _X_
Musich x
Olson Ee
ey
¥
Tabb
Vreeland
Wielinski
Young
Adopted by the Minneapolis Park and Recreation Board yf
In formal meeting assembled on March 16, 2016 « Wy .
/ iW
wa in
ski, Presi
Betsy Hodges, Mayor,
Resolution No. 2016-148
Page 3 of 3