Contemporary Adaptations of Excess Condemnation and Benefit Districts: The Primary Vehicles for Financing Nineteenth Century Urban Parks in the United States

Abstract

Large public parks in the United States emerged in the 1850s and 1860s with the development of Central Park in New York City and Prospect Park in Brooklyn. Their development was predicated on the conviction that they would be self-financing and not be a drain on the public purse. To meet this criterion, the financing plans for both of them embraced the concepts of excess condemnation and benefit assessments. Because these two parks were the high-profile landmark bellwethers that inspired and informed widespread adoption of public parks by cities throughout the U.S., the two financing vehicles were widely emulated. 

The use of excess condemnation essentially ceased early in the 20th Century when the courts ruled that eminent domain was an abrogation of private property rights and unconstitutional when it was used to take land from an unwilling seller and subsequently re-sell parts of it to private interests for a profit. Nevertheless, in contemporary times its core principle has re-emerged in three different forms: the property lease model, which links a park with income-producing property that provides initial capital and/or dedicated ongoing resources to maintain and operate the park; reimbursement clauses in parkland dedication ordinances, which enable parkland to be acquired and developed ahead of development by using certificates of obligation or general obligation bonds for which a city will subsequently be reimbursed from the fees received from future fees; and tax increment funding, by which proximate property owners ostensibly pay for redevelopment costs rather than general taxpayers. 

Instead of funding parks with taxes collected citywide, benefit districts were used to levy assessments on properties within the use radius of a park. The tax was apportioned according to a formula reflecting the proportion of benefits accruing to each property owner. In contemporary times, local governments may similarly facilitate a majority of property owners agreeing to assess themselves an additional property or sales tax to pay for a higher level of service. Alternatively, businesses may do this by establishing a Business Improvement District, whereby businesses levy an assessment on themselves to develop or upgrade a park. 

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