Funding Use: Programming

A city’s general fund pays for most capital and operating expenses. The revenue comes primarily from property taxes and elected officials allocate the funds to city functions through the annual budget process. Parks and recreation funding can, therefore, vary, influenced by local politics, a city’s economic fortunes and the engagement of citizens in the budget process.

Parks and recreation departments are often the first to have their budgets slashed and the last to see them increased. Park advocates and nonprofits play an important role in ensuring consistent funding for parks year to year. Cities with strong nonprofits and organized advocates tend to have the most stable public funding for parks. For more information on making the case for parks and building a strong network of park advocates, see Other Resources below.

The US Department of Housing and Urban Development’s Community Development Block Grants (CDBGs) invests in urban communities to increase quality, affordable housing, improve community living environments, and expand economic opportunities. CDBG investments must benefit people of low and moderate incomes. As such, they can be a good source of funding for equitable park investments.

Under CDBG, public and nonprofit park leaders need to partner with local community development organizations and the city agency that manages the CDBG funds. Cities must develop a Consolidated Plan that sets local investment priorities and the projects need to meet the priorities outlined in the Consolidated Plan.

Because of their flexibility, CDBG funds have been tapped by many park systems. From 2010 through 2018, CDBGs funded nearly $900 million in parks and recreation projects. CDBGs can also provide for maintenance and operations, youth employment, and other park-related investments. The 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES) Act included $5 billion in funds for CDBG, an increase of $1.7 billion over the previous year’s funding.

New Markets Tax Credits finance projects that have social and economic benefit for low-income communities, including public housing authorities, schools, and community-based nonprofits. They attract private capital into low-income communities with tax credits in exchange for investments in Community Development Entities (CDEs).

They are complex, can be difficult to set up, often have high legal fees, and they need to generate a revenue stream to be viable, but for large projects in low-income communities, tax credits can be a significant source of funding. The park projects funded so far have included parks and recreation centers in Cincinnati, Ohio, Washington, D.C., and Pensacola, Florida.

As with all significant investments in low-income communities, existing residents should be involved in the planning and decision-making to ensure they benefit from the investments.

Opportunity Zones,¹ are a new federal tax incentive to encourage investment in recreation facilities and other park-like properties. However, because they are meant to support businesses (ideally ones that appreciate in value), it may be challenging to use them to directly improve public access to parks and green space. Given the current newness of the program, it’s too early to review their use in practice.

Parks are ideal venues for special events like concerts, a marathon or a wedding, which open revenue opportunities.

Many urban park systems find it profitable to have outside entities run restaurants, ice rinks and golf courses through a leasing agreement or royalties on sales. Concessions can increase the visitor rate and thereby parking fees.

In some cities, parking fees go to the city general fund and are then distributed, but not always to parks. Other park systems retain full control of parking revenues.

Funding park and recreation programs by revenue-generating activities decreases access to parks and programs for low-income residents. Equitable-access strategies include:

Free Park and Recreation Passes for members of households that qualify for TANF and SNAP benefits. Voluntary Fees are suggested donations for use. Those who can afford the donation contribute; those who cannot are not obligated. Scholarships are less effective, because few residents access them and volunteer programs in exchange free access can burden already-stressed families.

Programming Fees
Charging fees for usage of park programs—skating, golf, fitness centers, camps, concerts—is a common strategy for raising non-tax revenue.

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.