Unrealized Potential of Parkland Dedication: Funding Opportunity You May Be Missing

1. Are You Missing This Funding Opportunity?The Unrealized Potential of Parkland Dedication Ordinances John L. Crompton Distinguished Professor, Texas A&M University Council Member, City of College Station NRPA Congress, Las Vegas, September 2015

2. Long History On May 17, 1873, Edward Murphy, the donor of Murphy Square, secured the passage of a resolution that a plat should only be accepted by the city if a portion of the land so platted be dedicated to park purposes. Theodore Wirth (1946): History of the Minneapolis Park System (p. 17)

3. Long History • Montana 1919: “For the purpose of promoting public comfort, welfare and safety, such plat and survey must show that at least one-ninth of the platted area, exclusive of streets etc., is forever dedicated to the public for parks and playgrounds.” • Bluefield, West Virginia, 1923: “Not less than five per cent of the area of all plats shall be dedicated by the owner for parks and playground purposes except in the case of a very small area.” • Modern era: post 1960s • Accelerated with tax-revolt of late 1970s and 1980s

4. 4 Take-Away Principles • Change the anchor point

5. Anchoring • “Different starting points yield different estimates, which are biased to the initial values” • “People make estimates by starting from an initial value that is adjusted to yield the final answer”.

6. 4 Take-Away Principles • Change the anchor point • Enforce the “rough proportionality” standard required by 1994 US Supreme Court Ruling in Dolan vs City of Tigard

7. 4 Take-Away Principles • Change the anchor point • Enforce the “rough proportionality” standard required by 1994 US Supreme Court Ruling in Dolan vs City of Tigard • Does not raise the cost of housing

8. 4 Take-Away Principles • Change the anchor point • Enforce the “rough proportionality” standard required by 1994 US Supreme Court Ruling in Dolan vs City of Tigard • Does not raise the cost of housing • A core principle of “fiscal conservatism”

9. Core Principle of Fiscal Conservatism • Type of user fee. • New development generates a need for additional park amenities. The people responsible for creating that need should bear the cost of providing the new amenities. • Political imperative: Growth should pay for itself.

10. The Political Case for Parkland Dedication • Three options for paying for growth • Existing residents subsidize new park development • Lower the level of service (i.e., reduce the number of parks/quality of life) • Require new growth to pay for itself. • Tax outcomes are determined by front-end decisions, not back-end decisions. • Create infrastructure deficits for future generations.

11. The Political Case for Parkland Dedication • Fiscal conservatism • Those who benefit from services should pay for them. The “bedrock” of this philosophy.

12. Sources of Exactions “Police Power” Promote the health, safety, and welfare of residents (i.e., parkland dedication and improvements) Legislative enabling authority: Impact Fees

13. Impact Fees • Need state legislative authority beyond the health and welfare mandate of the city. • Much broader than parkland. Embraces all types of recreation amenities. • Collected at building permit not platting stage.

15. Sources of Exactions “Police Power” Promote the health, safety, and welfare of residents (i.e., parkland dedication and improvements) Legislative enabling authority: Impact Fees

16. The Potential and Actual Scope of Exaction Ordinances Improvements on Parkland Beyond the Neighborhood Level Dedication Beyond the Neighborhood Level Improvements on Neighborhood Parkland Fee-in-lieu of Neighborhood Parkland Dedication Neighborhood Parkland Dedication

17. The Potential and Actual Scope of Exaction Ordinances Improvements on Parkland Beyond the Neighborhood Level Dedication Beyond the Neighborhood Level Improvements on Neighborhood Parkland Fee-in-lieu of Neighborhood Parkland Dedication Neighborhood Parkland Dedication

18. 5th Amendment “Nor shall private property be taken for public use without just compensation” • Resolved by the 1970s through court cases • Key questions relate to: • Nexus principle • How much?

19. Legal Basis • City of College Station vs. Turtle Rock Corporation 1984 established constitutionality of parkland dedication but required: • “A reasonable connection between the increased population arising from the subdivision development and increased park and recreation needs in the neighborhood”

20. Nollan vs. California Coastal Commission (1987) • Reaffirmed the “rational nexus” clause (i.e., the need for dedication zones)

21. Zone Funds • Park Land fees will be deposited in a fund referenced to the park zone or community park district involved. Funds deposited into a particular park zone fund or community park district may only be expended for land or improvements in that zone or district.

22. Dolan vs. City of Tigard (1994) • Must be a “rough proportionality” between the requirements imposed on a development and the needs for park use projected to be forthcoming from the development • “No precise mathematical calculation is required, but the city must make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development.”

23. Legal Basis Codified • The Dolan case has been codified in the Texas statutes which mandate that: • “The developer’s portion of the costs may not exceed the amount required for infrastructure improvements that are roughly proportionate to the proposed development”

24. Implications of Dolan • Prior to the Dolan case, developers challenging a community’s park dedication ordinance had to prove it was unfair. The Dolan decision shifted the burden of proof to communities, so they must now justify that the ordinance is fair. Thus, burden of proof of the legitimacy of “rough proportionality” is on the city. • “Rough proportionality” is operationalized as a city’s current level of service. • Must be “individualized”. Cannot be an arbitrary amount imposed simply because it is comparable to another city. • National “standards” or comparables are irrelevant. • Cannot request disproportionate amounts from developers. • Accommodate different densities of development.

26. The Potential and Actual Scope of Exaction Ordinances Improvements on Parkland Beyond the Neighborhood Level Dedication Beyond the Neighborhood Level Improvements on Neighborhood Parkland Fee-in-lieu of Neighborhood Parkland Dedication Neighborhood Parkland Dedication

27. The Potential and Actual Scope of Exaction Ordinances Improvements on Parkland Beyond the Neighborhood Level Dedication Beyond the Neighborhood Level Improvements on Neighborhood Parkland Fee-in-lieu of Neighborhood Parkland Dedication Neighborhood Parkland Dedication

28. The Potential and Actual Scope of Exaction Ordinances Improvements on Parkland Beyond the Neighborhood Level Dedication Beyond the Neighborhood Level Improvements on Neighborhood Parkland Fee-in-lieu of Neighborhood Parkland Dedication Neighborhood Parkland Dedication

29. Scopes of Ordinances New Braunfels: “To provide adequate recreation areas and amenities in the form of neighborhood parks” Arlington: “To provide linear parks and neighborhood parks” Bryan: “To provide recreational areas in the form of community parks. Community parks typically serve an area with a radius of one mile, and most of these also serve as neighborhood parks”

30. Scopes of Ordinances League City: “To provide park and recreation areas in the form of neighborhood parks, recreational parks, regional parks, and connecting trails as a function of residential developments” Colleyville: “To provide adequate land for parks, recreation, and open space…to meet the demand and need of the future residents for open space and parks”

31. Non-residential Dedications? • Although non-residential development does not generate residential occupancies per se, it does create environmental impacts, which may negatively affect the living environment of the community. These impacts may be ameliorated or eliminated by providing park or open space areas which buffer adjoining land uses, prevent undue concentration of paved areas, allow for the reasonable dissipation of automotive exhaust fumes, provide natural buffers to the spread of fire or explosion, and provide separation of lighting, waste disposal, and noise by-products of non-residential operations and activities from adjacent residential areas.

32. Non-residential Dedications? cont. • The city has therefore determined that non-residential developments must provide dedicated parks and/or reserved open space at a ratio of one acre of parkland for every fifty-six non-residential gross acres of development or prorated portion thereof. Colleyville; Southlake

33. 3 Elements in the Calculation of the Amount of Park Dedication Requirements • A land requirement • A fee-in-lieu alternative to the land requirement • A park development fee

34. Neighborhood Park Requirements for Single Family Homes • Land Requirements for Neighborhood Parks • City has 280 acres of neighborhood parks • 2006 Total Population – 77,261 • The current level of service is one (1) acre per 276 people • 2.80 Persons per Household (PPH) for Single Family based on Census information. 276 people /2.80 PPH = 98 DUs 1 Acre per 98 DUs

35. Neighborhood Park Requirements for Single Family Homes • Neighborhood Park Acquisition Costs (Determines Fee in Lieu of Land) • One (1) acre costs $24,000 to purchase Single Family $24,000 / 98 DUs = $245 per DU

36. Neighborhood Park Cost Estimate Total $516,450

37. Neighborhood Park Requirements for Single Family Homes • Neighborhood Park Development Costs (Determines Fee for Development) • The cost of improvements in an average Neighborhood Park is $516,450. • One Neighborhood Park serves 2,207 people, based on a total city population of 77,261 being served by 35 parks (count includes neighborhood parks and 6 mini parks). • It costs $234 per person to develop an average intergenerational park. $234 x 2.80 PPH = $655 per DU

38. Neighborhood Park Requirements for Single Family Homes • Total Neighborhood Park Fee Single Family $245 + $655 = $900

39. Community Park Requirement for Single Family Homes • Land Requirement for Community Parks • Current level of service is 1 acre per 294 people • 2.80 PPH = 105 Dus Requirement =1 acre per 105 DUS

40. Community Park Requirement for Single Family Homes 2. Community Park Acquisition Costs (Determines Fee in Lieu of Land) • One acre of raw land costs $32,000 • $32,000/105 DUs = $305 per DU

41. Community Park Development Cost of “Basic Infrastructure” • Playground areas with shade covers $120,000 • Group picnic pavilion with restrooms $750,000 • Concrete walking trails, lights, benches, fountains $500,000 • Picnic tables, trash receptacles, and furnishings $ 50,000 • Lighted tennis courts (2) $140,000 • Lighted basketball court $ 50,000 • Roads and parking (200 spaces) $500,000 • Landscape improvements $250,000 • Design fees $140,000 • Total cost estimate $2,500,000

42. Community Park Requirement for Single Family Homes 3. Development Cost Per Dwelling Unit • 8 Community parks for a populations of 87,758 so • A Community Park serves 10,970 • $2,500,000/10,970 = $228 per person • $228 x 2.8 PPH = $638 per DU

43. Community Park Requirement for Single Family Homes Total Community Park Fee for a Single Family Home Land Cost $305 Development cost $638 Total Cost $943 per DU

44. Quadrant 4 $4,135 Quadrant 1 $6,217 Park Dedication Fees Per DU Quadrant 3 $3,368 Quadrant 2 $3,605

45. Leverage Potential of Early Investment in Parks • Implication of “leverage” – especially in relatively small communities projected to grow.

46. Leverage Potential of Early Investment in Parks Scenario: (i) Cities A and B both have a population of 10,000 (i.e. 4,000 dwelling units). (ii) Both cities will increase to 25,000 population (i.e. 10,000 dwelling units) in the next 10 years.

47. Leverage Potential of Early Investment in Parks (iii) City A has invested in 200 acres of public parkland, while City B has invested in 20 acres of public parkland. Thus, the existing levels of service are: City A: 1 acre per 20 Dwelling Units (4000/200) City B: 1 acre per 200 DUs (4000/20) (iv) Land costs in both cities are $30,000 per acre (v) Park development costs in both cities are $50,000 per acre

48. Leverage Potential cont. Initial Investment in Parks with G.O. Bonds: Private Investment Required by a Parkland Dedication Ordinance

49. Leverage Potential cont. Conclusion • At the end of 10 years growth, City B would have to issue an additional $36 million in G.O. bonds ($40 million - $4 million) to catch up with the amount of parkland it had failed to accrue from dedication in that 10 year period. • Thus, the total investment of taxes for providing equal provision of parkland would be $16 million in City A and $37.6 million ($36 million + $1.6 million) in City B.

50. Credit for Private Amenities • 27 of 48 Texas’ ordinances made no provision for this. • Up to 50% was most common authorization: • Up to 50% of the park dedication requirement may at the discretion of the City, be fulfilled by privately owned and maintained park and recreation facilities. Credit for private parkland must meet the standards of the Parkland Dedication Guidelines concerning adequate size, character and location. Corpus Christi