One way to pay for the places we play
Parks directors nationwide have cited lack of adequate funding as the biggest detriment to parks and recreation at the local level, affecting everything from the provision of quality programs and services to the acquisition and development of land and facilities.
It wasn’t always this way. The prosperity that characterized the post-World War II period led to unprecedented growth and expansion of local public parks and recreation. During the 1950s and ’60s, many cities and counties created parks and recreation departmentsto meet growing public demand for recreational facilities and opportunities. Those departments expanded recreation programs and services and developed new park lands and other recreation areas.
But as double-digit inflation, high unemployment and slow growth in personal income took their toll on taxpayers, a gloomy outlook prevailed and made the tax revolt of the late 1970s inevitable.
Many taxpayers believed that local governments wasted money, tax rates were too high, and taxes could be reduced without endangering basic or essential services. By the end of 1979, 36 states had passed tax limitation legislation or had initiated some form of reduction in sales, property, personal income or other local taxes.
Decreases in funding from property and other local taxes came at a time when the Reagan administration was reducing federal assistance to local governments. Moreover, federal grant-in-aid programs, such as the Land and Water Conservation Fund and the Urban Park and Recreation Recovery Program, which had become well- established sources of revenue for capital projects for local parks and recreation, were cut back or eliminated during the 1980s.
The continued perception of taxpayer resistance to higher taxes, in conjunction with the decline in federal assistance, has forced local governments to rely more heavily on non-traditional funding sources to finance needed capital projects for parks and recreation during the 1990s.
The case for lease/purchase
Local governments typically issue general obligation bonds to fund needed capital development and improvement projects. The ‘full faith and credit’ provision of general obligation bonds is both a blessing and a curse. On one hand, the unconditional pledge of the governmental unit to secure and pay back interest and principle owed through its authority to levy taxes generally makes the bonds easier to sell. Conversely, the requirement that voter approval must be obtained prior to issuing general obligation bonds has become a large hurdle in recent years. Taxpayer resistance to approving general obligation bonds, coupled with growing demand for services, has led to greater local use of lease/purchase financing to acquire needed equipment and facilities.
According to New York City-based Securities Data Corporation, the volume of municipal lease/purchases increased from $350 million to almost $15 billion from 1983 to 1993. Certificates of participation (COPs), also known as lease revenue bonds, are one innovative lease/purchase financing technique that has grown in popularity in the last decade. COPs, tax-exempt financing vehicles used by local and state governments and their related authorities to build public facilities, originated in California after the passage of Proposition 13 significantly reduced the ability of local governments to finance needed capital projects the traditional way – with general obligation bonds.
Initially, they were used to finance unpopular capital projects such as administration buildings, courthouses, parking garages and prisons. But as their acceptance as public financing vehicles gradually spread beyond California and other western states, COPs have been used with increasing frequency to fund downtown revitalization or urban renewal projects including parklands and other recreation areas.
The good and the bad
Still, one thing is certain: law enforcement is not the only realm in which there are “good COPs” and “bad COPs. ” From the taxpayer’s point of view, a good COP funds a one-time expense such as a new library, cultural arts building or recreation center. Conversely, a bad COP is used to finance ongoing expenses that taxpayers believe should be part of the governmental unit’s operating budget.
COPs are like general obligation bonds in several ways: * They are tax-exempt securities that are underwritten by banks; * Private investors purchase them; * They are used to fund capital development projects; and * They are bonds with fixed maturities and fixed interest rates.
But unlike general obligation bonds, COPs are not secured by the full faith and credit of the government issuer and do not require voter approval. COPs are secured by the particular capital project for which they are issued and are paid for either by project revenues or monies appropriated annually by the local government.
“Governments have to function, and leases happen to be an efficient way to create the capital governments need,” says David Cohen, sector manager of leases and pool financing at Chicago-based investment banking company John Nuveen & Co. He believes that COPs used to finance essential capital projects are an “extremely good credit risk.”
North Augusta, S.C., located across the Savannah River from Augusta, Ga., provides a good example of COP use for parks and recreation.
Public parks and recreation are important to the residents of this city of 16,000 people, and there is strong community emphasis on the provision of quality parks and recreation services. “A needs assessment was conducted during the fall of 1988 to identify and analyze the future recreational needs of the community,” says Robert Brooks, director of the parks and recreation department. Information obtained from the study served as the basis for the proposal, design and development of the Riverview Park Activity Center.
The 94,000-square-foot multiple-use facility, which opened in August 1993, is designed to complement an existing 133 acres of outdoor recreation facilities in Riverview Park.
The center contains four gymnasiums, a jogging/walking track suspended above the gymnasiums, two racquetball courts, a fitness area, two meeting rooms, an arts and crafts room, a concession stand, departmental office space and a brick patio overlooking the Savannah River.
The center typically serves the recreational needs of about 13,000 members and visitors each month,” according to center Director Mark Hooks. Of the 5,000 paying members, about 74 percent are North Augusta residents.
Funding sources
Funding for the $5.52 million center came from the city’s Capital Projects Fund and a lease/purchase agreement for the issuance of COPs.
The Capital Projects Fund is different from the reserve or contingency fund, Brooks says. The primary revenue sources are unspent monies from the general fund and a millage tax earmarked for the Capital Projects Fund.
North Augusta had put $2.4 million into the fund toward construction costs; however, the balance of the funding had to be obtained.
“City officials reviewed several possible funding alternatives before deciding that COPs were the least costly method of funding,” says Finance Director John Potter.
In February 1992, Mayor Thomas Greene and the city council authorized the lease/purchase financing for the construction of the center. “The decision to use lease/purchase financing was based primarily on two factors,” Potter says. “COPs offered a better interest rate than general obligation bonds, and they had a shorter payback schedule. Furthermore, the city of North Augusta has only used general obligation bonds to finance public utility projects.”
Brooks says city officials recognized the need for citizen input on construction of the proposed center and scheduled public meetings over a three-year period.
“Citizen input on the need for the project, selection of an architect, funding mechanisms and other issues was taken under consideration before the final decision was made to use COPs to finance the construction of the project,” Brooks says.
State laws vary
The steps used by local governments to issue COPs can vary from one state to another depending on individual state legislative acts. For example, some states require municipalities planning to issue COPs for capital projects to hold public hearings and/or obtain permission from a public board under the auspices of the state treasurer’s office prior to issuing COPs.
In the case of North Augusta, once it decided on COPs, the city followed the typical steps necessary to set up the funding mechanism:
* The governmental entity creates a corporation to buy the proposed property or facility; * The corporation serves as a trustee and issues/sells the certificates of participation to investors to raise the funds needed to purchase the property or facility; * The governmental entity leases back the property or facility from the corporation; * The governmental entity agrees to appropriate money annually to repay the lease payments; * The title of the property or facility is held by the trustee (corporation) for the benefit of the investors; and * The ownership of the property or facility passes to the governmental entity at the end of the lease period after all of the lease payments have been made.
North Augusta established Riverview Park Facilities, Inc., a private, nonprofit corporation made up of the five members of the North Augusta Parks and Recreation Advisory Board.
On March 1, 1992, the corporation issued $3.12 million worth of COPs underwritten by the Nashville, Tenn.-based brokerage J.C. Bradford Co. The COPs were sold in increments of $5,000. “Many of the COPs were purchased by local residents and a local bank,” Potter says, demonstrating strong local support for the project.
The city also increased the millage tax used to fund the Capital Projects Fund from 7.79 mills to 10 mills beginning with the 1992 fiscal year to help pay the principal and interest on the COPs.
Subject to terms of the capital project lease, Riverview Park Facilities owns the center while the city is responsible for its day-to-day operations during the 15-year base lease term. The city is now two years ahead of schedule on retiring the debt. “On June 1, 2005, the city of North Augusta will retire the debt from the sale of the COPs, the Riverview Park Activity Center will be paid in full, and the ownership of the center will be transferred to the city,” Potter says.
Nancy Gladwell is an associate professor and James Sellers a professor in the Department of Leisure Studies at the University of North Carolina at Greensboro.
When it opened in 1936, New York City’s Orchard Beach was a crowning achievement of the first La Guardia administration. Built with funds from the Depression-era Works Project Administration, the beach project was conceived and personally directed by the city’s new parks commissioner, Robert Moses.
Orchard Beach itself, located in Pelham Bay Park in the Bronx, is a mile-long crescent looking southeast toward Long Island Sound. It was totally man-made, created by trucking in millions of yards of fill for a swampland between Hunter’s Island and Rodman Neck, and topping it with a thick layer of fine white sand dredged from Rockaway Inlet.
The centerpiece is a colonnaded, classic-style bath house built by renowned architect Aymar Embury II to accommodate 6,000 bathers. The structure was designed to blend in with the wooded, hilly landscape behind it.
Over the years, wear-and-tear took its toll on the bath house and surrounding facilities, prompting the city’s department of parks and recreation to commit $3 million to a restoration project.
The project was designed in-house by the Parks Department, and New York City-based Gandhi Engineering provided construction management services. The restoration includes exterior reconstruction of the bath house and adjoining roofs, terraces and plazas. The parking lot was repaved and restriped, drainage was upgraded and new lighting systems were added to the lower plaza.
The contractor was New York City-based Marangos Construction, and historic preservation services were provided by architect Katrin Adam and landscape architect Judith Heintz, both of New York City, who served as subconsultants.
The beach remained open during the restoration, which began in January 1996 and was completed in late August 1997 at a total cost of $3.34 million.
A major blizzard in early 1996 made the going tough at first, according to Paul Cavota, director of field operations for the chief contractor. “I think it turned out to be a very good looking job,” he remarked.
To say parks are popular in Eagan, Minn., would be quite an understatement. The population of the Minneapolis/St. Paul suburb has grown 130 percent in the past 15 years, and families with young children have made up much of the growth.
As a result, during that same time period, the community built more than 22 parks. Currently it is adding four new parks every year, yet still has not kept up with demand, says Ken Vraa, director of parks and recreation. And parks, like most other government services or facilities, do not come with an accompanying wellspring of tax revenues.
However, the city recently took a step in the right direction thanks to a partnership with the Rotary Club, which raised about $15,000 to help fund two play structures at the new Blackhawk Lake Park playground.
“We didn’t begin by thinking in terms of private fund-raising to help finance the Blackhawk Lake playground,” Vraa says. “It only became an idea when we learned the Eagan chapter of Rotary International was looking for a youth-oriented community project to fund. When we presented this idea to them, they really got behind it.”
The idea was to develop a state-of-the-art play structure that would feature a variety of play elements for a wide age group, from toddlers to pre-teens.
The club raised money mainly through its annual art gala, which began as a silent auction for various art works and has expanded to include donated services such as gourmet dinners and airplane rides.
But not only was the club involved with fund-raising, it also helped with equipment selection and construction – all of which managed to stretch Eagan’s playground dollars even further.
Once the city and the club agreed to work together on the playground project, they formed a committee to review the kinds of play equipment available from various manufacturers. Officials toured other communities to look at recently installed play structures and to get an idea of what designs were successful.
“We looked at the number of up-and-down movements, the number of play elements and areas where children could interact with each other or the play structure,” Vraa says. “We learned from observation that colors make a difference, as do layout and orientation.”
The city sought durable equipment that did not require a lot of maintenance and would offer multi-dimensional play elements.
In addition, Vraa says the play structure had to comply with all the most recent requirements of the Americans with Disabilities Act, as well as Consumer Product Safety Commission safety standards.
The club also wanted equipment constructed with recycled plastic, aluminum and steel.
The city selected Landscape Structures, Delano, Minn., which participated in designing and planning the play structure.
The larger unit is a circular play system with six slides, 14 deck levels, two crawl tunnels and two clatterbridges. About 85 percent of the structure’s components are manufactured from recycled or reclaimed materials.
The smaller system features six decks, four slides, an arched bridge and a transfer module for wheelchair access. Creative panels feature such activities as tic-tac-toe, a finger maze, a zoo panel and a sand-and- water panel. Both structures feature gravel safety surfaces with generous fall zones.
When the time came to install the structures, the general contractor, the city and representatives of the equipment manufacturer supervised several dozen club volunteers one weekend.
For Eagan, cooperative efforts like the Blackhawk Lake Park project are becoming more common just at a time when funding sources are drying up.
“We also constructed a school-park playground that is jointly owned by the school district and the city,” Vraa says
When something has outlived its usefulness, it can either be torn down, continue to exist with no useful purpose or, as Harford County, Md., has discovered, be converted to something valuable.
The latter scenario is true of an abandoned railroad right-of-way and parkland that will be converted into a handicap-accessible, crushed quarry dust hiker/biker/equestrian trail.
The 2.3-mile long Ma and Pa Heritage Corridor, Phase I of a three-part project, will start at the county’s department of parks and recreation headquarters and extend north into the town of Bel Air.
The name, “Ma and Pa,” is a shorthand version of the Maryland and Pennsylvania Railroad Co., which stopped using the railroad line in 1954.
The railroad is said to have more curves than any other railroad in the country because of the piecemeal manner in which property rights-of-way were obtained when it was built, says Katherine Adams, a landscape architect with Harford County.
The project involves planning, engineering and providing environmental services to create the trail.
Planners are now considering such issues as stormwater management, forest conservation, wetland and stream impacts, floodplain requirements, location of facilities and approvals from all concerned regulatory agencies.
The team will then provide detailed engineering designs for the trail, including a bridge and culverts, parking areas, jerseywall separations, gates and barriers and buffer planting, along with a detailed construction cost estimate.
Phase I construction is expected to begin this fall and be completed by early summer 1998.
The cost for Phase I is estimated to be around $400,000 (all from ISTEA funds), according to Adams. All three phases will total seven miles in length and should be completed by 2000.
Fairfax, Va.-based Dewberry & Davis and Bel Air, Md.-based Chesapeake Environmental Management are handling the project.