DEPARTMENT: Parks, Facilities, and Fleet Management
FILE TYPE: Regular Information
TITLE
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Review Of Parks Cost Recovery Framework And Discussion On Parks Funding Strategy
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PURPOSE/ACTION REQUESTED
Discuss the Parks Department's current cost recovery framework and the previously reviewed purpose and objectives of utilizing cost recovery metrics, particularly in the development of fees or to adapt service delivery to better align with County goals. Provide guidance on the continued use of the current cost recovery framework or direct staff to reevaluate. Discuss potential strategies to create consistent and reliable funding for the Parks Department and provide guidance to staff if all, some, or none of the options provided should be explored further.
SUMMARY
Cost Recovery Background: The Dakota County Parks Visitor Services Plan (VSP) was approved by the Dakota County Board of Commissioners by Resolution No. 17-541 (October 31, 2017). The VSP established goals to provide services that were relevant and accessible to more people, make the best use of investments in the park system, and provide services in a cost-effective, responsible manner. In particular, the plan included a recommendation to measure and track cost recovery levels. Since approval of the VSP, staff has also received feedback from the County Board regarding the need to evaluate Park user fees and charges.
Definition of Cost Recovery: Cost recovery is the amount of operational cost that is offset (i.e., recovered) by revenue other than taxes, such as user fees and charges. Measuring and tracking cost recovery levels does not necessarily create an initiative to generate more user fee revenue. Instead, the purpose is to:
• Identify the total cost of providing services;
• Determine the degree that the overall community benefits from each service versus the extent that specific users benefit; and
• Develop goals on how each service is funded in terms of the percentage of tax versus non-tax dollars.
Fundamentally, the process to determine cost recovery goals asks: what mix of tax subsidy versus fees should be associated with a service if an individual user receives greater benefit than the community as a whole?
Project Description: In 2020, working cooperatively with the Office of Performance and Analysis (OPA), the Parks Department developed a framework to measure and track cost recovery levels ( Attachment: Parks Cost Recovery Report Final). Based on previous feedback from the Board, staff uses cost recovery information to inform potential changes to fees, monitor program and service affordability, and consider operational adjustments to ensure efficient and effective service delivery.
Feedback Requested: Staff seek input and direction from the County Board on the merits of continued use of the existing cost recovery framework as an additional factor in decision making, especially regarding proposed changes to fees. Cost recovery levels are currently used to identify services where fees might be increased or decreased and inform an appropriate degree of change. If desired by the Board, the use of cost-recovery data will continue to be implemented as part of the annual budget development process.
Parks Funding Strategy Background: In 2009, the Dakota County Board of Commissioners included among their annual goals a specific goal for generating parks revenue. The Board charged the Parks Department with identifying potential revenue options to help support and stabilize future funding. The purpose of this OPA-led project was to explore three revenue areas within the Board goal for Parks operation and management. These included grants, fee‐based revenue, and philanthropic opportunities.
Within each, specific methods of generating revenue were further defined.
1. Grants:
a. Federal, state, and regional grants
b. Private foundation grants
2. Fees:
a. Admit fee (also known as an entrance fee, typically administered as a vehicle pass) 3. Philanthropy:
a. Sponsorship and Naming Rights (private partnerships for mutual benefit)
b. Events (fundraising or promotional events that generate interest and potential revenue)
c. Donations (all types, including memorials, bequests, and honorary)
d. Foundation (specific 501(c)3 organization established for the purpose of fundraising)
These revenue streams were identified for this project because they represent either areas not previously explored by Dakota County or areas where potential to expand capacity was believed to exist. However, the revenue potential from these options was still minor in comparison to traditional and more common sources of parks funding from governmental approaches such as property taxes, special assessment districts, sales and use taxes, bonds, and tax increment financing. It should be noted that the 2009 OPA Study was completed without any input from the CAO at that time. It references activities from jurisdictions that are subject to different laws and authorities than Dakota County and defines activities as philanthropic that have since been determined are not philanthropic; like sponsorships and naming rights.
2009 Findings and Recommendations: Benchmarking data demonstrated that Dakota County generally functioned with a smaller operating budget and staff than other park departments but serves a larger population. This poses both challenges and opportunities for revenue generation. Strategic planning and partnering help maximize limited resources while diversifying revenue approaches tap the potential interest of the population.
• Admit fees are not in place in Dakota County, although they have been previously discussed. Among Metro Regional Park Agencies, only two continue to charge admit fees in 2024 (Washington and Anoka). The primary benefit to an admit fee is the immediacy of its revenue potential and its relative stability as a funding source. However, considerations against an admit fee are the concerns about public access to parks and the costs of administering the admit fee.
• Philanthropy as a revenue source for parks was identified as good potential but acknowledged that it takes time and consistent effort.
• Grant opportunities continue to be a priority. However, it is important to keep expectations reasonable, as options are limited for general operations support of parks through grants.
• The report recommended (1) developing philanthropy as a continuum of options and partnerships, (2) establishing the necessary framework to implement corporate sponsorship opportunities, and (3) determining circumstances where admit fees would be considered in the future.
Since 2009, it has continued to be the position of the Dakota County Board of Commissioners for parks to remain free to access and the option of Admit/Entrance fees has not been embraced broadly. Philanthropic options have been explored in depth, and due to statutory limitations, very limited options have been pursued. In 2023, legal descriptions were provided for a number of these options and it was determined that the County will not pursue business transactions like sponsorships or naming. A donation program was developed in 2024 to identify what types of donations the County will accept. While the Dakota County Board of Commissioners authorized the establishment of a Friends of the Dakota County Parks program, it has since been discovered that the County can accept donations from a Parks Foundation or Friends Group, but does not have authority to create or run those entities.
External grants continue to be a significant source of funding for the Parks Department, although concerns regarding operations eligibility, stability, and consistency continue to be discussed.
In recent years, staff has identified additional potential funding sources for board consideration.
These include:
1. Increasing levy funding beyond the current average of 25%
2. Public/private partnerships to offset operations and maintenance
3. A park referendum
4. A Special Park District
5. Statutory authority for a Parks Foundation
6. Park entrance/admit fees
RECOMMENDATION
recommendation
Provide guidance to continue the use of the current cost recovery framework or guide staff to reevaluate current practices. Provide direction to staff to further explore all, some, or none of the potential funding strategies.
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EXPLANATION OF FISCAL/FTE IMPACTS
The use of cost recovery data is applied to aid decision-making regarding fees and to make operational adjustments for efficiency and effectiveness. The exploration of additional funding options for operations could add both revenue and expense to the Parks operating budget. These will need to be examined in more detail if the board directs staff to do so.
☒ None ☐ Current budget ☐ Other
☐ Amendment Requested ☐ New FTE(s) requested
RESOLUTION
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Information only; no action requested.
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PREVIOUS BOARD ACTION
17-541; 10/31/17
09-355; 07/21/09
ATTACHMENTS
Attachment: Parks Cost Recovery Report Final
Attachment: Dakota County Parks and Open Space Revenue Options 2009
Attachment: County Donation Plan Final 2.2024
BOARD GOALS
☒ A Great Place to Live ☐ A Healthy Environment
☐ A Successful Place for Business and Jobs ☒ Excellence in Public Service
CONTACT
Department Head: Geisler, Niki
Author: Geisler, Niki