Funding Use: Operations/Maintenance

Growth pays for growth, the saying goes, and these one-time fees are assessed on residential or commercial development to fund public infrastructure, including parks.

Zoning strategies allow a city to benefit from the real estate industry and use the funds for capital or maintenance projects. Two zoning strategies of interest include:

Incentives and bonuses: Offering developers and property owners zoning incentives to incorporate public amenities into their development plans or contribute to a special park endowment or public improvement fund.

Transfer of Development Rights: The Transfer of Development Rights (TDR) allows property owners to sell the development rights from their land for use on another. The original site is then protected as an open space under a conservation easement.

Maintenance and operations costs are often forgotten in tax levies and bond initiatives. By capitalizing maintenance costs, cities include those anticipated costs into the levy or bond proposal and set the funding aside in an endowment to cover future costs.

Tax Increment Financing Districts (TIF) collect property tax revenue within a designated geographic area and allocate it for a specific public improvement projects.

Based on the notion that well-maintained public spaces increase commerce, Business Improvement Districts are a form of public-private partnership that taxes businesses within a designated area and uses them for public improvements, often in downtown areas. Business Improvement Districts are a useful strategy for pooling revenue to support a common goal. BID funds are managed by a nonprofit corporation established by the district. BIDs are increasingly common in cities across the country, particularly for park maintenance.

A Green Benefit District, first created in San Francisco, is a public-private partnership property assessment district created by local property owners to fund neighborhood improvements. Revenue is used for parks, open spaces, the greening of streets and neighborhood beautification.

Many jurisdictions opt to levy taxes on the value of personal property, to fund parks and recreation initiatives. State laws vary whether revenue from property tax levies can be used for operating costs or capital investments. Property tax levies can be passed through legislative initiative or tax referendum.

Sales and use taxes can be passed by legislatures or by popular vote. Some jurisdictions allocate a certain percentage of local or state sales taxes to parks, while others pass specific sales tax measures dedicated parks and Special Park Districts. With any new tax measures, additional legislation might be required to prevent tax revenue from simply replacing general fund dollars—a zero-sum game.

General sales taxes apply to a broad base of goods. Substantial revenue, therefore, can be generated with a relatively low tax rate, keeping the per-household burden low. Sales taxes are regressive, however, and have a greater impact on low-earners, particularly when applied to essential goods, such as food and clothing. So called “sin taxes,” are a subset of sales taxes imposed on commodities or activities that are perceived to be unhealthy or have a negative societal effect±—cigarettes, gambling and alcohol for instance. Critics contend that these taxes also disproportionately affect low-income families.