Of?ce of Mayor Betsy Hodges 350 S. Fifth St. Room 331 Minneapolis, MN 55415 TEL 612.673.2100 22,2016 .. .. . . .. . . . President Wielinski 2117 West River Road Minneapolis, MN 55411?2227 President Wielinski, i continue to support capital improvements to our parks. Furthermore, I have said that I am open as to the mechanisms used to provide such funding. Any pian 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. As I 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 underinvestment 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. I 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 ail others under our purview, inciuding 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, reiiable, and certain funding for a 21St 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. It is with disappointment that I 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 ofthe Whole on March 16th inciuded 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 a portion of the City?s remaining debt obligation to the 2001 library referendum, and the elimination of unidentified capitai projects. Whiie some of the sources cited may eventually result in real money, it is 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 buil 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 controi the disposition of any windfall funds. This money has been an explicit target of some iegislators as recently as 2015. Even if the 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 weil that pension funding and uncertainty go hand in hand. it may be that state pension fund investments continue to do weil. However we should not step 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 especiaily vigilant to hoid firm to sound, responsible fiscal principles in good economic times. Second, the 2016 Budget I proposed and the City Council adopted included a full accounting of existing and anticipated year?end fund balances for 2016. in addition, it changed the assumptions the City makes about expected non-property tax revenues. These revenues had been estimated conservativeiy 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 actuai 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 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 potentiai 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 servrces. Fourth, while it is clear that the City?s declining 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 i 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, i have focused on adjusting appropriations in areas where City departments have accumulated significant fund balances over muitiple years. For example, in the 2015 budget, I declined to recommend additional capital appropriation for Art in Public Places, my ciear support for that program notwithstanding, because the program had accumulated a fund balance that exceeded its ability to get projects out the door. I did this to ensure that the City did not tie 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 million worth of approved capital projects that have yet to have bonds issued, without a ciear 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. It is 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, I am committed to continuing to doing the necessary and difficult work, in cooperation with you and with the City Council, to find a real, reiiable, 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 16th. 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. lam concerned that the lack of public notice and hurried timeline refiects 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 15th, within six weeks of its initial 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 those decisions may be made. I expect the Board will override this veto, as it did my veto of the January resolution related to proposed referendum language. However, as i emphasized then, I 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, City of Minneapolis MINNEAPOLIS PARK AND RECREATION BOARD AN ACTION, RESOLUTION OR ORDINANCE in accordance with Article VI, Section 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 2016448 captioned as follows: Resolution 2016-448 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 cre ry of tKe/Bof?i Resolution 2016-148 Offered by: Wee-fax Seconded by: ful?l-m 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 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 are owned, operated and maintained by the MPRB, (ii) are generally less than 2 blocks in size, but can be larger, and are neither designated as part of the Metropolitan Council System of Regional Parks and Trails nor part of any of the 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 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 3 increase. 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 Neighborhood Park System. 5. 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 $105 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 MPRB 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, decreased 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 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. 2016448 Page 2 of 3 Whereas, it is understood and agreed that the City will pass a similar resolution supporting the 20 Year Neighborhood Park Plan and the MPRB and the City Wiil 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 capitai 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 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 ofthe 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 pubiic hearing, with the understanding that the City Council plans to consider its ordinance pursuant to the City Council?s normal timeframe for noticing intent, introducing subject matter and hoiding a public hearing for final adoption on April 15, 2016. Commissioner Nay Abstain Absent Bourn Erwin Fomey Musich Olson Tabb Vreeland Wielinski Young Adopted by the Minneapolis Park and Recreation Board In formal meeting assembled on March 16, 2016 Wi??linski, Presi nt Resolution No. 2016?148 Page 3 of 3