A Property Tax for Parks?

by Anne Schwartz, Oct 30, 2008

Completion of the Greenwich Village section of the Hudson River Park raised real estate prices in the adjacent two blocks by 20 percent, according to a study released in September.

The study, commissioned by Friends of Hudson River Park with research by the Regional Plan Association and data from the Real Estate Board of New York, is consistent with previous research linking increased property values to well-maintained parks. Now, though, some parks advocates are exploring ways to tap into that increase to provide funds for parks.

Money for Hudson River Park

The Hudson River Park study found the park had the largest impact on sales of condominiums, whose prices climbed by 80 percent after the Greenwich Village section of the park was finished in 2003, compared to a 45 percent increase in neighborhoods to the north and south.

Friends of Hudson River Park, a nonprofit organization dedicated to the creation and preservation of the five-mile-long park along Manhattan's West Side waterfront from Chambers to 59th Street, is using the study as a springboard to see whether the increase in real estate values could provide money for the park through the creation of a special Business Improvement District, or BID, for the park. In a BID, property owners pay an additional assessment to upgrade and maintain their area with better sanitation, security, landscaping and other amenities beyond what the city provides. If approved, a Hudson River Park BID would be the city's first special real estate assessment district dedicated largely to maintaining and operating a park.

The Hudson River Park, a public park being built with public money, was established on a new funding model requiring commerce within its borders to pay for maintenance and operations. But development on piers designated for this purpose has been delayed for years because of neighborhood opposition and other issues, sowing doubts about whether it is possible to generate enough money from this source alone. Funding from a BID could fill the gap.

The proposal for a Hudson River Park "park improvement district" raises, once again, the issue of what is the best way to pay for keeping up all of the city's parks, as people expect more recreation and breathing space in the urban environment and more families opt to raise their children in the city. With the city sliding into recession or worse, finding a way to keep caring for parks becomes ever more important.

Transforming the Waterfront

Hudson River Park is the phoenix that rose from the ashes of Westway, the defeated proposal for an underground superhighway to replace the decrepit elevated West Side Highway. The park, also controversial, prevailed and construction began on it in 1993. Working closely with the park's creators and the city, the state Department of Transportation built a new landscaped roadway with lushly planted medians as well as a bikeway along the park's length that quickly became the most heavily used bike path in the country.

The first part of the park to be completed was in Greenwich Village. A once-decrepit stretch of piers and highway is now a ribbon of green unwinding between the bikeway and a waterfront promenade, with an irregular fringe of piers embedded with lawns, flower beds and neat groves of trees like pegs in a game board. The waters between and around the piers and grids of old pilings are designated as an estuarine sanctuary.

Shiny and new, the park still has a whiff of an architect's drawings, but on a fall evening it was in leisurely use. Four 10-year-olds tossed a football on a slender patch of grass buffered from traffic noise by a curving wall of trees and shrubs; people leaving work or walking their dogs made their way along the bench-lined promenade; others strolled down the piers out into the river to watch the sun set over Jersey City.

Across the street from the park, the change has been just as startling. New luxury condominiums, including three signature Richard Meier glass towers, have risen along West Street and several blocks inland.

An Unproven Funding Model

The expected cost of maintaining and running the fully complete Hudson River Park is $20 million a year, according to Connie Fishman, president of the Hudson River Park Trust, the city-state partnership that oversees the design, construction and operation of the park. That amount doesn't include capital maintenance. "We'd love to be able to have additional funding that comes from rents and other contributions on a regular basis to build a long-term capital maintenance fund, which is of course critical to keep in shape all the new stuff we're building," she said.

The state legislation setting up the park designated specific piers for development to generate enough income for running and maintaining the park. So far, however, the only major commercial development is the huge Chelsea Piers recreation complex.

The Brooklyn Bridge Park along the downtown Brooklyn waterfront is being created under the same funding paradigm where the park, in essence, must pay its own way. There, the plan to include high-rise luxury housing to subsidize upkeep has drawn fierce community opposition.

So far, it has not been shown that development in either of these parks can provide enough income to maintain them properly. Both waterfront parks will have higher than usual maintenance expenses because of the wear and tear from salt and wind, the difficulty of doing repair work in or near the water and the extra cost of maintaining piers.

In the controversy over the Hudson River Park's creation, opponents were concerned that as the park was built, the need for more funding would lead to increasing the area for development within the park. Although that remains a possibility, as people began to use the park and claim it as their own, a constituency has emerged to oppose large-scale developments that are not seen to benefit the community or fit in with the purpose of the park.

In the village, the 14-acre Pier 40 at West Houston Street was set aside for revenue-generating development. But in the past six years, the trust has not been able to find a developer with a plan that is commercially viable, brings in enough funding for the park and is acceptable to the community. The pier currently houses a parking garage that generates millions of dollars in revenue for the park, as well as a heavily used interim sports field in the garage's enormous interior courtyard.

Last March, the trust's board turned down a proposal for a huge entertainment complex anchored by Cirque du Soleil (dubbed Vegas on the Hudson by opponents) because of a dispute over lease terms. The developer, Related Companies, wanted a 49-year lease, which is not allowed under the park legislation. The trust then gave two community-based groups that had submitted plans 90 days to present a joint proposal. Their plan included new schools, camps and playing fields as well as parking and small retail operations, but the trust rejected that in October as not financially feasible.

"It remains to be seen whether even with a longer lease there is a proposal that can both satisfy the community and meet the economic needs of the park," said Fishman. "It's a big unknown right now."

A BID for Parks

Many cities with well-regarded park systems, including Chicago, Minneapolis and Seattle, generate funds for parks through some form of park district. In New York City, fees paid by residents and developers in Battery Park City cover the costs of gardening, maintenance and activities in its beautifully cared-for parkland.

Assessing property owners near Hudson River Park could help fund park maintenance, avoiding the need to compete with other city parks for public funding or to expand development within the park.

A Hudson River Park district would differ from a BID in that it would tax mostly residential properties, not businesses. "It would also be a very large district," said A.J. Pietrantone, executive director of Friends of Hudson River Park. "It intersects with other BIDs and would have to be done carefully," he said. The proposed district's large area could keep the assessment low, but the potential negative impact of a Hudson River Park BID on low-income property owners and small business owners would have to be addressed.

Friends has been discussing the feasibility of a BID with community members and property owners, said Pietrantone. He said that he is not sure how the worsening economy would affect prospects for park district. "We think that because the assessment we're talking about is small, the economy is less of a factor than if it were a full-service BID. Because of the pressure on the state budget, it makes it all the more important for us to look at alternative resources."

"For city parks, we're going to need both public funding and private funding," said Christian DiPalermo, executive director of the parks advocacy group New Yorkers for Parks. "We should be seriously looking at these dedicated sources."

However, he said, any funding mechanism should insure that the city addresses the needs of less affluent areas, particularly in the outer boroughs. "We would not want to see a system in which only neighborhoods that can afford the extra tax can create the BID. We have to make sure every park is getting a high level of service."