Missing an Opportunity: In an Era of Fiscal Conservatism, Why Are Parkland Dedication and Park Impact Fees Underutilized?

Abstract

Parkland dedication and park impact fees are governmental exactions that are imposed as a condition for permitting development. They are manifestations of the Benefit Principle of government. This recognizes that if taxes are not to be raised and quality of life is not to be reduced, then those who benefit from services should be required to pay for them. In many communities, the political mantra is dominated by fiscal conservatism. Operationally, this generally means elected officials will not support increases in taxation. Hence, exactions designed to ensure growth pays for itself are consistent with this prevailing political mantra. Despite this “goodness of fit,” they remain underutilized. The paper examines the reasons for this and suggests strategies for surmounting these challenges. The evolution of parkland dedication and park impact fees is described, and their complementarity is explained. Often, they are mistakenly regarded as operational synonyms, but different operational implications spring from their different geneses and these are highlighted. Reluctance to utilize the full potential of exactions stems primarily from the beguiling myth that population growth in a community expands the tax base which keeps taxes low. This myth frequently stems from the “urban growth machine,” which has a strong self-interest in perpetuating it and the loudest megaphones through which to disseminate this message. Evidence that exposes this shibboleth is presented. Rationales for imposing maximum exactions are presented. In sum, those of us who are elected officials can address problems of growth in three ways: Raising taxes on existing residents, allowing the level of service to decline by doing nothing, or using parkland dedications and park impact fees to make new residents pay for the new parks demand they have created. An analysis is offered as to who ultimately pays for parkland dedications and park impact fees. There are three sets of stakeholders: New homeowners, developers, and landowners. The popular belief that the fees are passed forward to new homeowners is challenged. It is pointed out that the most likely scenarios are that (i) the costs are passed back to landowners, since developers will respond to higher dedications or fees by paying less for the land; or (ii) the costs of building a dwelling are mitigated by reducing its size and/or the quality of its fittings, finishing or landscaping. The concluding section examines why they are underused and suggests a viable strategy for surmounting opposition is to point out the opportunity cost to a community’s taxpayers of not implementing maximum dedications and/or impact fees. Subscribe to JPRA