How Public Parks are Funded (Part 1)
Updated: Mar 1, 2022
(Bridge at night, Emerald Necklace, Boston (project of the Emerald Necklace Conservancy)
Hello and happy mid-February.
In the Boston area, our Super Bowl Sunday was marked with an all day snowstorm, about 6 inches of light fluffy snow and no wind. As is typical with changing climate, we had a nearly 60 degree sunny day on Saturday. Many refer to this as "whiplash weather." Still, with the warming sun and longer daylight here in the Northeast as we approach spring (someday!) the snow does melt more quickly. It won't be long now...
I'm going to delve into park funding this week. This is a big topic and will take a few posts to cover, but with city budget processes beginning in earnest around the country for the coming fiscal year (especially those that begin on July 1, 2022) it seems like the right time. And for those of you keeping track, yes, this a more nerdy topic ;-)
As I've mentioned before, much of the funding for our public parks in towns, cities, and counties comes from a variety of taxes and fees. These comprise about 93 percent of total funding, with another 7 percent coming from parks nonprofits, based on research done by the Trust for Public Land. I'm going to cover sources of funds from the most common to the least common. Generally, there are some restrictions on how certain types of funds can be used.
The General Fund
The biggest source of funding for parks systems and indeed, cities overall, is the general fund. This is the destination for property taxes, sales taxes, and other fees collected by a local municipality. The general fund is distributed to city departments through the annual budget process. Most general fund dollars go to public safety (Police, Fire, EMS) and education—the latter if the municipality has direct ownership of the school district. (Note: many school districts have separately elected boards and a taxing authority in the Southern and Western United States.)
The competition for general fund dollars between city departments is fierce, as both public safety and education are always top priorities. Public works (water, wastewater systems), transportation, and other city-owned buildings and infrastructure need to be maintained as well as improved. As mentioned in previous posts, most parks and recreation departments receive less than one percent of a city's annual budget, and a big chunk of that is from the general fund.
The good news is that general fund dollars can be used for all parks expenses, including capital (land acquisition, new facility construction, or rehabilitation), programming, and operations and maintenance (usually referred to as O&M).
Bonds come from two sources: General obligation (G.O.) bonds are usually approved by voters in a public election. G.O. bonds give the city the permission to borrow money to do major projects that cannot be funded through the general fund or other recurring sources of income. General revenue (G.R.) bonds are backed by specific revenue generation, usually from water or electric utilities and usually authorized by a governing municipal body, such as a city council or appointed board of directors for a given utility.
For public park funding, G.O. bonds are common, and G.R. bonds are rare (primarily, you'll see them used for projects like capital mitigation work in a park where a water, wastewater, or electric utility project is occurring). Bond funds can only be used for capital projects, and there's usually a time limit to complete the work. The time limit is often related to when bonds are issued and when they mature.
Bond funds can only be used for capital projects; they cannot be used for programming, operations, or maintenance.
Reservation of certain public park amenities, such as picnic areas, pavilions, recreation, or arts centers, require groups or individuals to pay usage fees. Exclusive use of these types of facilities for special events is the most common type of usage fee, though usage fees are also collected for certain parking privileges, boat ramp usage, and marinas (boat slips). In most cases, usage fees are paid into the city’s general fund for allocation during the annual municipal budget process, as mentioned above. Some parking fees may be subject to a municipal parking authority, which may direct funds collected to street, sidewalk, and parking facility improvements.
Exceptions are fees and memberships collected specifically by and for golf courses and some tennis centers which can be deposited into a specified maintenance fund or trust account, common in some cities. This is usually called an enterprise fund. When a park facility (or group of facilities) is in an enterprise fund, its assumed that the fees collected will cover all costs associated with providing that service. The reality is often different, as both public golf and tennis facilities are continuing to see declines in usage across the United States since about 2000.
Parkland Dedication Ordinance or Park Impact Fees
This is a flat fee levied on new housing or hotel units that is paid into a city fund by a housing or hotel developer. The funds must be spent on park land acquisition or capital improvements for new parks often within a specific radius of the paying housing or hotel developer. The idea is to provide additional park and recreation facilities for the newly arrived population to a city. Parkland dedication funds can only be spent on capital projects, including land acquisition, park design and construction, and capital improvements in existing parks. Over one-third of the 100 largest U.S. cities have parkland dedication ordinances, but generally, they are more common in cities and counties seeing tremendous population growth.
Earned Income Revenue
Earned income is a category that includes concessions like food, drink, and sports equipment rentals, as well as ticketed events, which are often called special events. Trending examples in city park systems include food truck vending, kayak rental, and “locally made” craft fairs. The growth and acceptance of food trucks and other mobile concessions in parks and other public spaces in the past decade has greatly changed how contracts and agreements are created, how fees are collected, and the duration that a vendor can occupy a specific location. This is in stark comparison to traditional approaches for concessions in public parks, which are often multi-year and with limited seasons in a given year. Fees are usually a percentage of total sales and government agencies have the right to audit the concession vendors books to ensure the correct percentage is being paid.
Thanks for reading. We'll cover more funding sources in part 2, next week!