FUNDING STRATEGIES FOR URBAN PARKS
There are numerous funding options to consider when planning for the establishment to an expansion of a major urban park. Capital costs vary greatly from project to project, based on quality of design, type and scale of amenities, and required infrastructure. Ongoing operations and maintenance costs also vary due to amenity types offered, as well as provisioning and intensity of amenity use. Park design also plays a role in cost variance. Due to a reliance on both private support and public funding, each destination relies on a different combination of financing. Therefore, the best strategy in creating a development plan is to critically assess local context, programming strategy, private funding opportunities, and park governance approaches.
Capital costs for destination urban parks can range dramatically, but in almost every instance they represent a significant commitment. Notable recent examples in the US ranged from $20 Million per acre for Millennium Park in Chicago to San Diego’s 2014 Waterfront Park which cost $4 Million per acre to construct. Operations and maintenance are also significant ongoing costs. Turning back to Millennium Park, it has one of the highest annual costs in the US with expenditures of over $680 thousand per year. Generally, high profile urban parks can anticipate expenditures of around $300 thousand per year.
In this context it is important to look to examples of public parks and their particular funding needs and solutions, in order to demonstrate general approaches based on successfully implemented park projects across the US.
key issues | capital costs
Capital costs for signature parks vary widely depending on quality of design; required infrastructure; and the type and scale of amenities.
* These amounts include the cost of subterranean parking and related infrastructure
key issues | Ongoing operations and maintenance (O&M)
Costs can vary widely depending on park. Ongoing operations and maintenance (O&M) costs are shown below.
Capital costs for the Millennium Park in Chicago were more than $20 million per acre, including parking and infrastructure. This twenty-five-acre park received capital support from both public and private sectors. Fifty-five percent of the money came from public funding with the rest coming from individual philanthropy. Currently half of their $1.3 million annual funding for operations and maintenance comes from the public, with the rest met through foundation support and private funding. Thirty-four percent of their private funding comes from philanthropy through the Millennium Park foundation, eight percent from the Millennium Park Foundation Endowment, and eight percent from earned income generated by private event revenue.
Millennium Park is designed as an active downtown destination, hosting iconic art and large-scale events and structures such as Cloud Gate (‘The Bean’), the Boeing Galleries, the Crown Fountain interactive art and video sculpture and events at the Jay Pritzker Pavilion. This scale of vision required significant private support for initial funding but creates a constant draw and demand.
Millennium Park | CHICAGO
Through its Department of Cultural Affairs and Special Events, the City of Chicago contributes approximately 50% of Millennium Park’s total O&M budget
Millennium Park Operations Funding by Source
Note that the Grant Park Symphony Orchestra also raises approximately $4.5 million per year to support programming at Millennium Park, in addition to the funding sources mentioned above.
New York—Brooklyn Bridge Park
Brooklyn Bridge Park, in New York, was designed to revitalize an underused industrial waterfront. This attracted public commitment for capital costs, but current operations and management is almost exclusively supported by taxes on redeveloped adjacent real estate. The capital cost for this seventy-five-acre park was $11.1 million dollars per acre, and the operations and management cost per acre is $460,000. Only one percent of the initial capital cost was provided by philanthropy. The park operates as an attraction primarily for locals, with some large-scale events that serve as a regional draw. Seventy-three percent of operations funding comes from real estate assessments and Payment in Lieu of Taxes (PILOT) programs, twenty-four percent is philanthropy based, three percent is from government grants, and only one percent is from earned income.
Brooklyn Bridge Park
The prospect of revitalizing an underutilized industrial waterfront attracted public commitment for capital costs, but O&M is almost exclusively supported by real estate fees.
Brooklyn Bridge Park Operations Funding by Source
Operations primarily supported by real estate value capture,totaling approximately $16 M per year in ground lease revenue from five adjacent development parcels.
New York—Bryant Park
Bryant Park, also in New York, is a heavily used, destination park in an extremely dense commercial and retail district. Just six acres in size, it’s a smaller park with an operation and maintenance cost of 1.3 million dollars per acre. These costs are funded primarily by park usage fees which account for thirty-four percent of the cost, this is an exceptionally high percentage that is achievable due to the unique context of the park n Manhattan. Twenty-one percent of funding comes from restaurant and rental income, sixteen percent from sponsorships and contributions, fourteen percent from concessions profits, twelve percent from BID assessments on neighboring property owners, and only two percent from miscellaneous other sources. Since the facility offers ample programming within an office district, it creates a sense of community that draws in guests, and special events generate revenue and help to support its brand.
Heavily-used “downtown gem” in bustling commercial office and retail district.
Bryant Park Operations Funding by Source
Operations supported by earned income and district assessments.
St. Louis—Forest Park
Another notable funding approach has been used in St. Louis, where the private nonprofit Forest Park Forever entered into an innovative partnership with the city in 2013. The 30-year-old nonprofit support corporation had long been key partner in funding the 1,400-acre Forest Park. The support organization agreed to raise $100 million in endowments for the park and buy $30 million in city bonds that would pay for capital improvements. The city would then pay the group back, with interest, over the course of 30 years with money made from existing general fund revenues and dedicated park revenue. The agreements not only cemented the agency’s shared role in the planning and running of the park, but also guaranteed both the cash to fund upcoming projects and the city’s commitment to funding the park in the future.
These approaches show some of the many ways major upran parks can be funded. Each tool and opportunity and must be evaluated for ease, practicality, and longevity, among other issues. While parks can be supported by public funding including local taxes, special levies, and park district/bid bonds. Some of these tools may be better suited to a specific situation needs than others. Earned income from park amenities which can include food and beverage sales, events, promotions, and parking fees/bonds can also play an important part depending on the earning potential of the facility. While these are all feasible options, some may be easier to maintain than others. Private funding includes corporate sponsorships, philanthropic contributions, and money from real estate rents can be an important part of the funding profile in parks situated in high visibility or marquee locations.
The programming, design, and phasing should be considered in order to access a greater variety of funding sources. Tools such as public funding, value capture through property rental and tax increment financing (TIF), and corporate and individual philanthropy can be integrated into the planning for the park itself. These tools for funding operations vary widely and will depend on existing resources and context.
Acquiring significant philanthropic funding requires powerful engagement, a compelling vision, and committed public funds. Typically, this is supported by a clear and well-presented plan and vision for the park facility. This plan must include clear strategies for governance in addition to presenting a quality design, attractive programming, that is sensitive to the local context.
It is important to include factors related to the market and community context in programming and design. Parks can range in function form a neighborhood park with local, passive programming, to being a a global, active presence as an event and festival venue such as Millennium Park depending on market conditions and context. There must be analysis of who the park will serve and attract, and if programming would match the community’s needs and desires. Examples of programming for local context are promenades and trails, natural recreation areas, outdoor furniture, dog parks, play areas, and rotating art installations. Larger, regional draws are likely to include special events, rides, restaurants and concessions, large, paid events, large recreational amenities, and iconic, permanent artwork.
Public and private approaches are being supplemented with new and innovative green financing in the form of environmental performance bonds and impact investing. While a relatively new approach to supporting the addition of green space in cities, performance-based financing models are gaining interest and should be watched closely, especially for green infrastructure projects such as parks. New and innovative collaborations for park funding are being tested in communities across the US, and there are many combinations of approaches as there are specific situations. Funding models and approaches must be crafted to respond to local needs and context. In order to secure long term success, the sustainability of funding must be established at the beginning of any park planning initiative.