The Economics of Parks

Introduction

Today we focus on parks for our monthly installment on the economics of major municipal services. Last month we started the series with police protection.

Parks are rich in economic content. They are a tiny share of municipal spending, but generate strong emotional support by many and skepticism by a few. The fiscal reality of parks is that, despite their growing reputation as tools of community and economic development, they don’t fare well in tough budget times. Local leaders and park enthusiasts can deliver better and more cost-effective parks by considering the economics more closely.

Spending Trends

First, some baseline facts about the nation’s local parks from the Census Bureau and the Trust for Public Lands:

  • Total annual local park and recreation spending: $30 billion
  • Largest source of funding: 75% from general funds
  • Typical acres per resident in large cities: 5 to 10 acres

Long-term park funding moves up and down with the business cycle. Communities increase spending in good times and dramatically cut it during recessions. According to the Census Bureau, during the last recession, national per-capita park spending fell 8.5%. In Texas, spending was cut by 9.3%.

Park Operating Costs

We can evaluate park costs by separating operating and capital needs. Estimating operating costs can be a challenge. When possible, local leaders should develop and use their historic spending and maintenance schedules. National benchmarks vary dramatically. They differ from place to place because of local conditions (climate, population density, etc.) and by size of park system. The National Recreation and Park Association, reports operating costs, by system, of between about $2,000 to over $27,000 per acre. The median operating cost was $7,666 in 2014.

A community’s standard of maintenance also influences potential costs. It may be reasonable for this to vary by type of park, but serious claims of unfairness can arise with inconsistent maintenance across a community.

Finally, in the enthusiasm over new park development, communities should be mindful that maintenance costs are perpetual and can increase as park assets age. This is especially true for showcase urban parks. The Trust for Public Lands reported Discovery Park in Houston and Bryant Park in New York City have per-acre costs of $229,000 and $433,000, respectively.

Park Capital Costs

By comparison, capital costs are easier to evaluate. Start with acquisition and construction costs and consider how they impact city debt limits and annual debt service costs. Siting the park can be guided by service indicators and using geographic information systems to compare the pros and cons of different potential sites.

When it comes to new park development, local leaders should also consider the real estate opportunity cost of building a new park. Parks can have a positive impact on nearby commercial and residential land values. Yet, a community should also consider what the tax base tradeoff might be if proposed park land were to be become private development. A careful analysis need not be the only basis for the decision, but there is a community interest in knowing what they are giving up and what they are getting from park developments.

Economic Benefits of Parks

More attention is being paid to documenting the economic benefits of parks. A convening of experts in Philadelphia produced case studies of major types of measurable benefits. These included improvements to nearby property values, sales tax increases from tourism to destination parks, and health and environmental benefits. This data can be collected through real estate records and surveys. There are costs to gathering this information, but it can be worth the effort to inform park planning and local budgeting.

Park planning that is informed by the economics of costs and benefits will lead to more sustainable park systems. More transparent balancing of park costs and benefits should help reduce the up and down pattern of park budgets. The community will this information can build a consensus on just how much their parks are worth to them. Local leaders will have the opportunity to include these projections in strategic planning and annual budget cycles. This should reduce the volatility of park budgets. Of course aesthetics and sentiment are naturally good reasons for supporting parks. To date, they just haven’t been adequate to building park systems that are resilient in the face of natural economic cycles.

What’s Next

Next week, we will take a look at the latest U.S. metro area Gross Domestic Product. This is the most detailed report of local area economic output and an important indicator for local leaders to understand and use in their fiscal and economic development work. In the meantime, let us know how we can help you make more confident economic and fiscal choices for your community. Contact Us

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