Tag Archives: parks

The Economics of Parks

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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

City Priorities in Hard Times

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Introduction

In this post, we share our latest research on city budget trends. The Great Recession (2008/2009) was the most traumatic downturn for cities in a generation. City’s budget responses to the recession help us understand city priorities. What happened to high-profile city services? We focus on police, fire, park and recreation, and libraries across the U.S. and in Texas.

Data Source

We used data from the U.S. Census Bureau Census of Governments for 2007 and 2012. These are the most comprehensive and accurate measures of local government spending. These Census years let us measure the change one year before the downturn to three years after the bottom. Because of the lag in property tax decreases, most cities saw their worst economy three years after the recession. This should mean that 2007 and 2012 represent the best and worst budget years since the 1980s for most cities.

We are reporting percentage changes in spending that have been adjusted for population growth and inflation. First, we calculated per-capital spending for each year, then changed the 2007 values into 2012 dollars using the state and local price deflator from the U.S. Bureau of Economic Analysis.

Core City Services

In this first look, we wanted to know what happened to the most high-profile city services. We included the two largest operating expenses for most cities: police protection and fire protection. We also looked at two other visible services: park and recreation (parks) and libraries.

Findings

Overall, cities nationally cut these four services more than did cities in Texas. Cities in the U.S. and in Texas saw much larger decreases in parks and library spending than in the two public safety areas. In the U.S., spending changed as follows: police (-0.1%), fire (-1.3%), parks (-8.5%) and libraries (-10.2%). The respective changes for Texas were: police (+4.0%), fire (+4.1%), parks (-9.3%) and libraries (-4.0%). So Texas public safety actually experienced higher funding levels after the recession. Remember that this calculation is adjusted for inflation and Texas’ faster growing population. While still cutting, Texas cut libraries less than U.S. cities overall. The U.S. and Texas had similar reductions in parks spending.

Summary observations:

Based on highly visible public services, the recession was a bigger hit to spending nationally that in Texas.

The largest city service in budget terms, police spending, was essentially held flat nationally, but grew in Texas. The recession was certainly a blow to police budgets, but in total, cities’ response was to slow the rate of growth in police spending and cut other services more.

This analysis does not tell us how tax and fee changes impacted cities’ budget strategy. We know that there were many fee increases nationally and some cities raised taxes. Cuts would have been deeper without those revenue strategies, but we will have to consider them another time.

What’s Next

Next week, we will continue our series profiling the economics of major city services when we turn to the service that faired worst in today’s post: park and recreation. In the meantime, let us know how we can help you make more confident economic and fiscal choices for your community. Contact Us.