Greenbacks for Green Space
City moves to make development pay more for parks
Ah, a day in the park. When urban life hits red on the stress-o-meter, when the weekend finally comes, Austinites head to their neighborhood parks for a green respite. On a sunny spring Saturday, public parks in every part of town fill up with Austinites seeking R&R: tattooed youths playing ultimate Frisbee, extended families sharing birthday cakes, seniors chatting on park benches, parents chasing preschoolers around playscapes. Part of Austin's special character and appeal is the city's integration with nature; like our live music, our greenness sets us apart. Our city-funded trail and greenbelt systems, full of joggers, bikers, and walkers and the city sports fields booked solid by avid recreational athletes are integral to Austin's fitness ethic and outdoorsy self-image and even its tourism industry. Even in full-tilt-forward growth mode, Austin values its natural places. As infill development heats up and the central city densifies, neighborhood parks and their protected green spaces become an increasingly precious part of Austin's urban fabric.
Paying for an excellent city parks system, however, has proved anything but a day in the park. The Austin Parks and Recreation Department is chronically short on funds to improve the parks and facilities that the city already owns, and it struggles to acquire more parkland and amenities to serve a fast-growing population. To help address this persistent problem, PARD now is asking council for help; racing toward a June council vote (to beat the summer recess) is an amendment to the city's Parkland Dedication Ordinance. Since 1985, the city has assessed developers a parkland-dedication fee for each new home built in Austin but only in subdivisions. Intended to fund parks near new residents and thereby help PARD keep pace with the city's residential growth, fee revenues (which currently are based on land values) must be spent to acquire, develop, or improve nearby neighborhood parks.
Now, PARD is asking that the fee model be changed with the times. Staff has recommended that a $650 flat fee be assessed on each and every new housing unit in Austin including Downtown condo towers. Not surprisingly, high-rise developers who to date have proceeded with vertical villages fee-free are less than thrilled. While most stakeholder groups support some fee amendment, the level of quibbling over the amount, the method of calculation, and the details has been high. Critics like Charlie Betts, of the Downtown Austin Alliance, say that parks should be adequately bankrolled by the city's general fund and bond elections, rather than a fee that singles out developers. In part, the friction stems from a culture clash between PARD, run by cautious city bureaucracy lifers, and the hustling development community, for whom PARD has not adequately painted a vivid picture in the shade of green best understood Downtown of "what's in it for me."
Extensive research documenting the economic and property-value benefits of urban parkland has been published by professor John Crompton of Texas A&M (see "Real Value: The Parks Premium"). "The real estate market consistently demonstrates that many people are willing to pay a larger amount for a property located close to parks and open space areas," wrote Crompton in a 2000 report. A Trust for Public Land publication, "The Benefits of Parks," states, "Repeated studies over the years have confirmed that people prefer to buy homes close to parks, open space and greenery." It cites a Boulder, Colo., study that showed that the average value of homes next to a greenbelt was 32% higher than those 3,200 feet away. An Austin example might be the Nokonah, a pioneering urban condo development overlooking the Shoal Creek greenbelt, which has enjoyed especially strong sales and rapid appreciation of units.
A Suburban Model
A key reason Austin's Parkland Dedication Ordinance has become outdated: It was narrowly written to a suburban model. PARD assistant director Stuart Strong, who worked to get the original ordinance and fee in place, notes that in the sprawlin' 1980s most planners incorrectly assumed that growth was synonymous with suburbs. "It turns out, the model of growth has changed," Strong said. "We're a more mature city, and we're growing everywhere, including in the central city. The intent was not to apply the fee requirement selectively. The fee's purpose was to respond to growth. So the amendment is a midcourse correction to create fairness and equity and to bring the fee into alignment with current growth patterns."
As Austin seeks to contain sprawl and its troubling environmental and societal impacts, the city and the Envision Central Texas model are redirecting growth toward dense infill housing, especially Downtown. The proposed change to the parkland-dedication fee a new flat fee of $650 on each new unit built (single-family or multifamily) thus correlates with current thinking about desirable growth patterns. All that, plus the pure populist fun of making "fat-cat developers" share their perceived condo-tower riches with the park-going public.
Because the fee is currently triggered by subdivision, the more than $10.1 million collected since the fee's inception primarily has funded new parks and capital improvements in outlying areas of sprawl. Stressed Downtown and inner-city parks, on the other hand, have received only chump change. By way of comparison, in the last 22 years, the Walnut Creek Metro Park and Greenbelt (on far North Lamar at Yager Lane) together have received more than $970,500 from the fee. During that same period, hard-loved Pease Park on the Shoal Creek Greenbelt (between Enfield and MLK), of Eeyore's Birthday Party fame, has gotten a paltry $6,720. None of Austin's historic Downtown squares Republic Square, Wooldridge Square, and Brush Square has ever received a penny.
If assessed on all new housing units, the new $650 fee a bump up from the average $518 fee assessed now would generate significantly more dollars for Downtown and close-in Austin parks. PARD's rationale is thus: As these existing parks are used by more people (who cause more wear and tear) and as increased density drives a need to acquire and develop new central-neighborhood "pocket parks," revenues from the fee would rise in lockstep with development in order to cover the new residents' needs. By how much? In the city's 2006 budget year, more than $1.4 million in parkland-dedication-fee monies were appropriated (representing about 18 months of collections). With an across-the-board $650 fee, said Strong, "We could perhaps double that yield."
Mayor Will Wynn is an enthusiastic advocate of the proposed fee amendment. Always bullish on greater Downtown density, citizen fitness, climate protection, and a "greener" Austin, Wynn recently said he's "pushing to see that the ordinance is amended quickly." To fast-track a council vote before the summer recess, Wynn and Council Members Lee Leffingwell and Mike Martinez have an agenda item posted this week: Tell Planning Commission to get on the stick and forward its recommendation at its May 8 meeting so that the parkland-dedication fee gets to council speedily. They will also direct the city manager to provide all relevant recommendations pronto for council's consideration "at its earliest possible meeting thereafter." With new condo towers announced every day, Wynn said, "We need to make some hay while the sun is shining Downtown."
Regressive or Progressive?
Not everyone is so enthusiastic. Developers and Downtown types express concern (albeit self-interested) that yet another development fee will prove an economic drag on successful projects and on affordable housing, especially Downtown. As condo-honcho Perry Lorenz notes, developers roll all such construction costs into the pricing of new homes so ultimately, it's a pass-through fee to home buyers. The Austin Neighborhoods Council and others have expressed concern that a flat fee is unfairly regressive since it's the same for a tiny studio or a sprawling mansion; ANC proposes instead a sliding-scale fee based on square footage.
The Downtown Austin Alliance also wants a square-footage fee, but at just 25 cents per square foot $250 instead of $650 on a typical 1,000-square-foot condo. (This despite the fact that Downtown parks, for which the DAA currently must provide significant fundraising and volunteers, would get the biggest financial boost from the fee.) At its March meeting, the city's Downtown Commission carried a motion by Stan Haas to "encourage the Parks Department to consider not including any Downtown projects for these fees"; at its April meeting, the Downtown Commission unanimously voted to support the $650 fee but with caveats.
Many have grumbled that the deeper issue is inadequate general fund appropriations for parks. By assessing a fee on developers (and ultimately home buyers), the city avoids increasing the Parks Department budget or raising taxes to address PARD's budget woes. As Downtown Commissioner (and developer) Robert Knight put it, "We're just hiding the ball so we don't have to admit we're raising taxes in Austin."
Lorenz, who sits on the Design Commission and is its representative to the Downtown Commission, believes the city does need to fund its parks system more adequately but by tapping the increased revenues that high-rises generate for the ad valorem tax base. "It's a public embarrassment that more dollars are not spent and that Downtown parks are not nicer, but the money is already there [from increased property taxes] to maintain and improve these parks," Lorenz argues. He also advocates for fee payment upon the sale of units. In support of this view, the Downtown Commission asked the city to consider exacting the fee at the Certificate of Occupancy stage.
Some stakeholders, on the other hand, don't think the proposed fee is high enough. The ANC and the Design Commission each recommended that the average fee be raised to $750, not $650. Said ANC President Laura Morrison of the $750 figure: "This value is still far below per-unit fees in comparable cities like Portland and Seattle, where the fees range into several thousand per unit and is also well under the per-unit fee in Texas cities such as El Paso and Arlington. It reflects the needs that we have in Austin." (According to PARD, average parkland-dedication fees assessed in Portland, Ore., are $3,053 for single-family and $1,986 for multifamily; Seattle has fees of $1,050 to $3,000 per unit.)
While ANC favors a fee based on square footage, it advocates that the formula should equate to $750 for an average-size new home. (Nationally, that's 2,350 square feet.) Morrison also noted, "We feel that establishing small neighborhood 'pocket' parks should be a high priority." ANC hopes to see the increased fees used to acquire pocket parks in existing neighborhoods.
PARD director Warren Struss said pocket parks are indeed a priority. "As a department, we're retooling the way we look at those deficient needs and looking at the city from that perspective. Where are we not serving the city well? Parks are part of the infrastructure for all areas of the city." New pocket parks could be integrated, for example, into the city's current planning process for transit-oriented development zones dense new minicities with housing being planned around Capital Metro's planned rail stations and transit hubs.
Potentially most politically troublesome for the parkland-dedication fee at council could be concurrent affordable-housing initiatives. Just as the parks fee is flying toward City Hall, recommendations from the Affordable Housing Incentives Task Force are making their own trajectory. One recommended incentive: The city should waive all parkland-dedication fees for projects providing 10% or more affordable housing, per city guidelines. (The new Design Standards and Mixed Use Ordinance already waives the fee as an incentive for vertical mixed-use projects, which must include 10% affordable housing; ANC suggests dropping this incentive.) Given the conflict between parks and affordable-housing goals, other groups have counterproposals: Waive the parks fee just for the units designated as affordable, or create some type of sliding scale.
On yet another overlapping council trajectory: The Density Bonus Task Force recommendations from the Design Commission, which is integrating input from multiple groups. To qualify for a density bonus (upzoning to build a higher, denser project), a developer would earn "points" on a standard matrix of community benefits such as private donations to fund parks and, again, affordable housing. As the city hands out increased entitlements, allowing larger and potentially more profitable projects, runs the argument, it should exact benefits for the citizenry in return. "What sensible person would simply dole out those windfalls?" conceded developer Lorenz, whose partnerships recently have privately contributed to both parks and affordable housing. But like other high-rise condo developers, Lorenz has concerns about getting double- or triple-dipped.
How should a voluntary, optional "density bonus" system get weighed against an increase to a required parks fee? No one has quite figured it out. That will be council's job.
The Parks Budget Problem
Austin's park system historically has been underfunded, and in places it shows in long-deferred maintenance, missed opportunities to acquire key parkland, planning visions that have lain dormant for decades. Some facilities have become so run-down that they're depressing and potentially dangerous. With so many other competing needs in the city's annual budget, a soft amenity like parks and recreation has been the easy financial squeeze. In the 2006-2007 general fund budget of $534.6 million, for example, just 5.9% went to the Parks and Recreation Department while 65% went to Public Safety. And PARD's current budget of $44.5 million is its highest in years. "It's amazing what this parks system accomplishes and does on the budget we have," said Parks Board Chair Linda Guerrero. "But we need additional sources of funding."
Over the years, Austin has invested moderately well in its parks system but has failed to proactively view parks as an infrastructure and quality-of-life investment or to measure the returns. Yet Trust for Public Land research (and the examples of peer cities with which Austin now economically competes) shows that the returns on such investments indeed can be quantified. A well-used parks and recreation system promotes public health by encouraging physical activity, increasing regular exercise, countering obesity (and its attendant health-care costs), and enhancing mental health. Social benefits cited include reduced crime, expanded recreation opportunities, and stable neighborhoods with a strong sense of community. Environmental benefits include filtering storm-water runoff, pollution abatement, lessening the urban "heat island" effect, and climate protection (more parkland means more carbon-dioxide-absorbing trees and green space to offset the city's carbon emissions). Economic benefits which rule at budget time include tourism, increased property values (both residential and commercial), enhanced revitalization, and attracting and retaining major employers.
Not only must PARD operate and maintain existing facilities and programs such as youth and senior services, athletic leagues, golf courses, museums, pools and swim lessons, summer day camps, tennis courts, nature preserves, and environmental education but as the city grows, it must keep adding parks, pools, and playscapes close to the new residents. For this purpose, the Parkland Dedication Ordinance requires that developers dedicate part of their land for parks (5 acres per 1,000 new residents) or pay an equivalent fee in lieu of land, monies to be used for improving nearby parks. The 1985 ordinance noted that "Austin faces a severe shortage of local recreational space" based on projections in the 1979 Austin Tomorrow Comprehensive Plan (still the city's long-in-the-tooth comprehensive plan for managing growth).
As an "impact fee," parkland-dedication fees are widely assessed in cities across Texas, according to PARD's Strong. Their legality has been supported by Texas court rulings, provided that the revenues are used strictly for acquisition and capital improvements. El Paso currently has a fee of $1,370 per unit; Arlington assesses $1,100 per unit, Corpus Christi just $200.
(Another aspect under discussion is the way PARD slowly accrues monies in separate accounts for individual parks; this has resulted in unspent fee revenues being "saved up" for years for major projects. Currently more than $3.5 million has been appropriated and designated to specific parks but not spent. In part, this is because PARD has insufficient staff to execute the projects. New PARD positions are in the next fiscal year budget; staff time to design and implement fee-funded projects also can be funded through the fee.)
Over the years in Austin, relatively little parkland has actually been dedicated by developers on-site making the ordinance's very name something of a misnomer. Far more often, a fee is paid. (Avoiding the fee also has become a cottage industry for real estate lawyers, who use tactics to avoid subdivision and circumvent it.) Because the fee is triggered by the subdivision of a parcel of land, occasionally a Central Austin condo or apartment project (that just happens to require subdivision of a parcel) gets hit with the fee while the project down the street does not. It's in part this randomness and inequity that the fee amendment would correct.
Said Will Wynn of the current formula: "It has never made any sense whatsoever for Downtown. The fact is the majority of projects built Downtown whether residential, office, restaurant, or anything else don't require a subdivision; hence there's no parkland discussion to speak of."
One project that did trigger the fee was the Four Seasons Hotel. By the existing fee formula (based on land value), the hotel developer owed a whopping fee of $2 million. Council reduced the assessment to $186,000; that bought Austinites the open green space between the Four Seasons and Town Lake. The handsome stretch of Town Lake Trail, waterfront, and public parkland is a lovely amenity for the hotel, which maintains it. The win-win illustrates the potential for public-private gain, as well as the need to change the current fee-calculating formula Downtown, land is priced in square feet, not acres.
Funding Downtown Parks
It's especially instructive to consider how the amended fee, as proposed, would play out Downtown. Within Downtown's official boundaries Town Lake to MLK, Lamar to I-35 plus Town Lake's immediate south shore, including Zilker Park and the Town Lake Trail, PARD has identified more than $31 million in immediate and short-term parks improvement needs (see map and chart, at right). All of these projects are unfunded, and according to PARD, none of the projects on the chart will receive funds from the 2006 bond election. Many have languished as but a dream in a park planner's eye for years or, as in the case of a Riverside Boardwalk to close the 1-mile gap in the Town Lake Trail, even decades. Neither the city's general fund nor another bond election is likely to cover the bulk of them any time soon.
Downtown is fast becoming a residential neighborhood our most densely populated neighborhood, in fact. (Lorenz pointed out that his Spring condominium tower will have the same population as about 25 square blocks of Clarksville.) In 2005, Mayor Wynn set a goal of 25,000 residents living Downtown within 10 years. According to Michael Knox, in the city's Economic Growth and Redevelopment Services Office, that equates to nearly 15,000 urban abodes (at an average of 1.7 residents per unit). That will require new construction of another 6,500 or so living units (beyond the more than 3,200 built, 1,600-plus under construction, and 3,500 or more already in the city approvals pipeline which would all be fee-exempt). If all 15,000 nests-on-stilts are actually built and occupied, voilã! Downtown will have become a neighborhood of more than 25,000 potential trail-joggers, dog-walkers, and park-strollers.
How much in new revenues from parkland-dedication fees might that future construction yield? At $650 per unit assessed on an additional 6,500 residences (those not yet planned), the proposed fee would generate $4,225,000 in new revenues for Downtown parks. While that's a chunk of greenbacks, it would fund only about 7.5% of the identified Downtown green space needs. "All it does is ask growth to fund part of its impact," Strong said. "The city of Austin still shoulders the major burden."
Urban dwellers have an especially acute need for public open space. And as Design Commissioner Eleanor McKinney notes, "Urban open space Downtown requires a much higher [more expensive] level of development than a suburban park." Living in small units with no yards, Downtown Austinites increasingly will create demand for city parks within walking distance (three to four blocks) of their homes. For certain, about a quarter of the 25,000 residents will have dogs; imagine (or not) the odoriferous impact of 6,250 Downtown doggies being walked on steamy city sidewalks twice a day. Yet Austin currently has no plan for a Downtown dog park. (Parks Commissioner Jeb Boyt does have his eye on a possible location near the new library site.) In a few years, at least some of today's child-free urban hipsters will start spawning rug rats, who will need playscapes and pocket parks a short stroller-ride away.
Should Austin plan for a Downtown well-populated by families? That prospect appears dubious to City Demographer Ryan Robinson. Given the steep pricing of units, and particularly the trend toward smaller studios and one-bedrooms (with few three-bedroom units), he doesn't see Downtown Austin attracting a significant number of families. By contrast, he points to Vancouver, which has required that 25% of new units must be three-bedrooms, to make Downtown family-friendly. Those families can recreate in Vancouver's 1,000-acre Stanley Park, one of the largest and most gorgeous urban parks in North America, with its redwood forests and trails, lakes, gardens, aquarium, playing fields, splash park, and, oh yes, an oceanfront hike-and-bike trail.
Parents with young children already live in Downtown Austin, of course, including the mayor, who is more bullish on the future for families Downtown. "These new Downtown residents like my daughters and me will dramatically increase the use of our Downtown parks, creeks, and trails," he observed. "That is the best thing long-term that could possibly happen to our parks system but we should also utilize the economic prowess of this new development to capitalize needed improvements for those very residents (and everybody else).
"Now that we've reached our tipping point attracting residential development and repopulating Downtown," continued Wynn, "we should have an equitable, predictable, and transparent parkland-fee structure for Downtown residential development." He added, "I suspect that there are any number of developers who disagree with me about this, but I'll put my Downtown advocacy credentials up against anybody's."
Fees, Taxes, or Bonds?
One developer with a differing point of view is Kent Collins, board chair for the Downtown Austin Alliance. In discussing why he and the DAA are not more bullish on the parkland-dedication fee, Collins cited a high degree of frustration with "systemic issues" he's observed with the city's inadequate parks budget for operations, maintenance, and programming. Because PARD can't or won't spend parkland-dedication-fee revenues on these needs, Collins believes the fee is not the right parks-funding solution.
"We want our Downtown parks to be alive, have events, and have places for people to go," Collins said. His development company, Centro Partners, is developing Seaholm Power as well as the Domain and several condo/loft projects. "We don't think capital improvements is the real issue Downtown; we think it's operations and maintenance," he continued, explaining that the DAA partners with the Austin Parks Foundation to help PARD "fill in the gaps" for operating and maintaining Downtown parks. The serious PARD budget shortfalls have led to "a lack of confidence," said Collins, in investing in new parks and facilities, when PARD can't take care of what it already has: "You never get the level of maintenance you need. It's part of the general fund conundrum."
For these reasons, the DAA specifies in its fee position, "This new source of revenue might not be offset by general budget reductions." It also wants fees to be optionally payable to a certified nonprofit (such as the Austin Parks Foundation or Town Lake Trail Foundation); in the DAA's recent experience, these nonprofits can execute a project with far less overhead, making scarce dollars go further. The DAA also wants PARD to find a way to spend fee revenues on better operations and maintenance. Collins noted that PARD staff had not visited with the DAA board since making their $650 flat-fee recommendation. He said, "If we could be assured the city was taking care of O&M [operations and maintenance], I think we'd be happy to look at a revised fee structure" closer to what Parks is requesting.
Collins also pointed to the Dallas Parks & Recreation Department as a model. In Dallas, he said, "The citizenry has supported a huge increase in bond funding into the 21st century." When Dallas lost its 2001 bid to become Boeing's new corporate headquarters, the city learned that it was passed over, in part, due to its lack of recreational opportunities, especially Downtown. Civic soul-searching ensued (to the extent that Dallas has a soul), and a Downtown revitalization task force in 2002 issued this top recommendation: "Dramatically expand new parks and open spaces." Dallas now is executing its 2004 Downtown Parks Master Plan.
Collins thinks bonds are the way to go in Austin too, given that Parks has built up more than $30 million in long-unfunded Downtown parks needs. "That needs to be done through bond programs," he said, rather than by slapping a fee on residential developers. "They're never going to get it done this way. Let's figure out a way to get the total amount needed in bonds for Downtown parks." But like Dallas, he said, the city needs to sell people on an exciting parks vision not just expect a fee or tax increase.
The 2006 bond issue was the first one PARD devoted primarily to renovation and restoration projects. "It had become critical to take care of some deferred needs, things that hadn't had funding for two decades," explained Strong. Much of the money will go to unsexy but critical projects like replacing roofs, air-conditioning and electrical systems, and bringing facilities into compliance with state and federal requirements. While Austin will get a few fun new facilities such as a BMX/skate park PARD largely had to forego its wish list for new facilities or parks due to more pressing needs created by deferred maintenance.
"That's not the way bonds are supposed to be used," Collins said. "If you wait long enough on basic needs that should be funded through the O&M budget, it becomes a capital-improvement project." As bonds are issued only every six to eight years in Austin, another bond issue that could fund major new capital improvements now is unlikely before 2015.
John Crompton's research shows that the higher property values enjoyed by homes adjacent to parks and open space results in their owners paying higher property taxes. In some cases where city bonds finance a park's acquisition and development, his research shows, the additional property-tax revenues to the city can be enough to pay the annual debt charges on the bonds. The park, in essence, would pay for itself. (This line of thinking is similar to that underlying tax-increment financing districts, such as the TIF for the Waller Creek Tunnel.)
But right now, PARD understandably is most focused on a bird almost in hand the fee increase not some mythical, future bond issue, sudden city-management awakening, or annual general fund largesse. An obvious first place to spend fees generated Downtown would be on improving the three historic squares Republic, Wooldridge, and Brush where the DAA, the Downtown Austin Neighborhood Association, and other stakeholders are already engaged. With the commencement of the Waller Creek Tunnel project, which by eliminating floodplain issues will allow major redevelopment along the creek greenbelt all the way from Waterloo Park to Town Lake, the city has a tremendous opportunity to improve and better connect area parkland. Richly desired by all is an enhanced adjoining Waller Creek Trail, yet trail improvements are not funded within the $123 million tunnel budget. The below-grade trail now is blighted a hidden, trash-strewn "urban amenity" that is currently enjoyed primarily by the homeless, the socially marginal, and the law-averse.
Also included in the PARD estimates are desired improvements along the Shoal Creek Trail and Greenbelt on the west side of Downtown; Shoal Creek offers another long-unrealized opportunity to better integrate a natural waterway and trail into the cityscape. Adjoining Shoal Creek within Downtown are Pease Park, Duncan Park, and the soon-to-be-redeveloped Austin Recreation Center site.
Right now, more than 5,000 new units are under construction or in the city approvals pipeline. If a parkland-dedication fee of $650 per unit had been applied to all of those projects, they would have yielded $3.25 million for improvements to Downtown parks an opportunity that's largely been lost. (Several high-rise condo developers recently have pledged to voluntarily donate funds for parks, when seeking upzoning for taller projects.) Some parks advocates privately questioned PARD's passivity in not amending the fee sooner; Parks realized it was missing the gravy boat on multifamily projects way back in the 1980s yet waited two decades to act. It took the current tantalizing condo-tower boom to finally embolden PARD, at the urging of Guerrero, to request a fee amendment.
At a coffeehouse by the Town Lake Trail recently, while discussing developer grumblings that a $650 fee could deter new Downtown projects, Guerrero gestured out the window to all the building cranes and rising condo projects punctuating the skyline: "Does it look like it's very hard to develop Downtown to you?"
"It seems only fair that we should get a little piece of the pie of what's happening with the development boom and growth because the parks system is an economic benefit to every developer in this town," Guerrero asserted. She noted that Downtown condos all tout and market their ready access to the Town Lake Trail. "Developers need to recognize that the green space we provide enhances their property values and promotes their developments. They're being asked to contribute to the green infrastructure, to give back to their community and they're getting back as much as they're giving. So why is there so much resistance?"