Using Developer Exactions to Build New Parks

As public sources of funding for parks have become scarce in many states, cities have increasingly looked to developers to pay for new parks, through “exaction” programs that charge builders for park demands created by their development.

A recent Trust for Public Land study, “Who’s Going To Pay For This Park: The Role of Developer Exactions in the Creation of New City Parks” by Peter Harnik and Laura Yaffe, examines twelve American cities’ developer exaction programs and finds that their success has been modest at best. The six cities that report their outcomes have, in aggregate, only acquired 60 percent of the land originally planned. The other six cities have failed to even track the outcomes of their programs.

Harnik and Yaffe cite as reasons for the failure of these programs a limited nexus--i.e., a limited distance that governments allow parkland to be from new development in order to fund it; high land costs; use of exaction funds for park maintenance instead of land acquisiton; and exemptions of developments such as non-profit buildings, which have constituted large percentages of construction in many cities in recent years.

Cities have limited ability to demand exactions; they must stay within the contours outlined by two Supreme Court decisions striking down exactions laws. Nollan v. California Coastal Commission, decided in 1987, required exactions to have a “rational nexus” with the stated government purpose of regulation; in that case, conditioning a permit for a beachfront home on a grant of public access to the beach did not comport with the stated public policy of preserving a view of the beach. Dolan v. City of Tigard, decided in 1994, added the requirement of “rough proportionality"--there, a shopping center developer could not be forced to build a bike path absent a showing that the shopping center itself generated a need for the bike path.

Still, Antero Rivasplata, the author of A Planner’s Guide to Financing Public Improvements, argues that cities may be too cautious in interpreting Nollan and Dolan. Rivasplata argues “an exaction may be imposed even if the development project itself will not benefit from it, when it is necessitated by the project’ impacts on identifiable public resources.” Therefore, even if a development does not benefit directly from a park, if it creates a strain on existing public parks in the area, funds may be used to provide a park elsewhere that alleviates that strain. Such reasoning could be used to significantly expand cities’ park exaction programs.

The Nollan decision, however, also holds peril for many of the cities that Harnik and Yaffe studied. Rivasplata believes that Nollan practically requires the documentation of the effects of development in order to assess fee exactions: “Adoption of detailed findings, supported by evidence in the hearing record, is crucial to the enactment of a legally defensible fee ordinance.” The Nollan decision presents the half of cities in the study without the ability to track their developer exaction programs with a stark reality: They must find a way to begin documenting development effects or risk losing fee ordinances in a court of law.