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Developer Impact Fees Pay for Parks

Residents in downtown Los Angeles are leaping for joy because a brand new park is coming to the revitalized historic core.  Spring Street Park, which broke ground last October, will be the first public park in the neighborhood.  According to the 2010 U.S. Census, 15,000 residents moved into downtown between 2000 and 2010, without the addition of new public greenspace.  The city purchased the property from Council District 9 in 2009 with $5.1 million in Quimby funds.  California state law requires the dedication of land or in lieu fees for park or recreational purposes as a condition of new residential subdivision.  These fees are known as “Quimby fees.”  The 1965 Quimby Act authorizes the Los Angeles Department of Recreation and Parks to spend Quimby funds within one to two miles of a new subdivision.

California is not the only state that uses developer impact fees to purchase or maintain parkland.  According to the Center for City Park Excellence, 36 of the main park and recreation agencies within the 100 most populous U.S. cities have some variation of a developer impact fee and received $55.5 million and over 200 acres of parkland in FY 2010.  Even more impressive, cities spent $64.5 million from their developer impact fee accounts in that same fiscal year (fees collected do not have to be spent in the same year received).  At the top of the list was the Los Angeles Department of Recreation and Parks (spending $15.7 million), followed by the San Jose Department of Parks, Recreation and Neighborhood Services ($9.1 million), Phoenix Parks and Recreation Department ($9 million), Riverside, CA Parks, Recreation and Community Services Department ($8.4 million), and Portland, OR Parks and Recreation ($4.5 million).

It is interesting to note that, due to the current economic situation, develop impact fees are actually a declining source of revenue.  In FY 2008, 28 of the major park and recreation agencies received $101.6 million and almost 600 acres of parkland.  Of the $101.6 million received from developer impact fees, $71.6 million was spent in that same fiscal year.

Developer exaction programs have been adopted by many communities to help offset a variety of costs associated with new development.  A sizable percentage of these localities, recognizing that public parks, trails, open space and recreational facilities are critical to ensuring residents’ health and quality of life, have specifically set fees and/or required land dedication for parks.

The majority of these ordinances apply only to residential plats or subdivisions that create additional dwelling units.  A few ordinances also apply fees to office construction, hotels, schools, churches, nursing homes and other types of commercial or even industrial development.

The formulas used to assess the fee or generate acreage vary; some are based on the number of new residents, others on the number of units, others on the square footage of construction.  In addition, the ordinances differ in allowing a developer to substitute land or facilities for paying a fee; in setting the size of the geographical “nexus” within which the funds or land can be applied; in permitting uses for the funds (i.e. land acquisition, facility development, maintenance and even administration); in being flexible as to the types of facilities for which funds can be used; and in setting a time limit within which the funds must be spent or committed.

There is no nationally agreed-upon standard for land (or dollar) donations by developers, and different city or state ordinances use substantially different formulas to determine the exactions. In some cases the ratio is based upon population, in others on dwelling units; some cities prefer outright land gifts while others prefer money with which to buy land.

For more information about the role of developer exactions in the creation of new city parks, read an article here.

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