Why privately-financed public parks are a bad idea

By Felix Salmon
November 22, 2013

If you want to find the most valuable land in the world, you have to look for two things. Firstly, find a rich, densely-populated city. Secondly, take a map of the middle of that city, and look for open space: parks, rivers, lakes. Look at the land bordering that open space, where offices and apartments can avail themselves of spectacular views — that’s where land is going to be the most expensive. Indeed, ultra-luxury condo developer Arthur Zeckendorf recently told the NYT that once he finishes the building he’s working on right now, he doesn’t have anything else in particular that he’d like to build: “We have looked at every single site in Manhattan, but we haven’t found one that meets our criteria to be on a park.”

Naturally, the most expensive land in the world tends to attract the richest people in the world — the kind of people who are very good at marshaling money, and politicians, so that they can get what they want. Last year I wrote about John Paulson’s $100 million gift to Central Park — which is, of course, the park he lives next door to — and the way in which Central Park’s charitable status means that the US taxpayer is effectively chipping in a very large chunk of Paulson’s gift, possibly as much as half of it. Which is not an effective use of public funds.

Indeed, more generally, the big problem with the charitable-donation tax deduction is that it’s effectively a multi-billion-dollar tax expenditure on the rich, even as charitable donations by the majority of the US population don’t get subsidized at all. If it were abolished, or scaled back, the amount saved by the government would dwarf any reduction in charitable donations: in theory, the government could simply make up the entire shortfall and then some, and still come out ahead. As a rule, it’s always easier and cheaper for a government to subsidize something directly than it is to try to fiddle around with laws which have the same effect but don’t show up on the official accounts.

But those laws refuse to go away — and in the case of prime real estate next to urban open space, the situation is getting steadily worse, rather than better. The open space itself invariably is a public asset, which belongs to everybody — at least in theory. But you know how it goes: you move in somewhere, paying $10,000 per square foot for your spectacular view, and it doesn’t take long before you feel that it’s yours. You’ll donate money to it, you’ll improve it — and, since most philanthropy these days has a transactional element to it — you’ll expect a little something in return. Pretty soon, the public’s parks become rather less egalitarian than you might imagine. Here’s Benjamin Soskis:

For much of the twentieth century, the city’s public parks represented a robust vision of egalitarian, governmental support for the public welfare. But that vision, and that support, withered with the fiscal crisis of the nineteen-seventies, when city funding for parks was slashed dramatically. It has never recovered; no city agency has suffered as dramatic a drop in its workforce over the past four decades than the Parks Department. The fiscal crisis also inaugurated a shift toward private governance and administration, marked by the establishment of the Central Park Conservancy in 1980. The Conservancy, and others modelled after it, promised to provide an antidote to the messy and unpredictable city budgeting process. For the most part, they have proved an overwhelming success: Central Park and its well-endowed kin, neglected before the rise of the conservancies, look better than ever, and city residents of all classes continue to enjoy their offerings.

But such philanthropic arrangements are not without their critics. Some have worried about the general hazards of privatization—the risk of corruption, or conservancies abetting the exploitation of public parks by private interests. Others grew concerned that the private funding of certain flagship parks would sanction the erosion of public stewardship, leading to a two-tiered system in which certain green spaces flourish while the majority of the city’s nearly two thousand parks languish.

The exploitation of public parks by private interests is absolutely happening, and Alex Ulam has example after example, and doesn’t even mention the fiasco that was GoogaMooga, where a huge swathe of Prospect Park was effectively destroyed by a 2-day for-profit event, which paid the park a mere $75,000. He does mention this, though:

Damrosch Park, for example, a New York City park run by Lincoln Center for the Performing Arts, is closed off for seven to ten months every year for private events, such as Big Apple Circus and New York City’s Fashion Week. In addition to being regularly closed to the public, Damrosch Park has had 57 trees cut down and its distinctive granite benches removed to accommodate such events.

Behind all this, however, is something which is even more insidious. We now live in a world where rich people and big corporations actually get richer by donating tax-deductible money to supposedly public parks. The big news of the moment is that Hudson River Park, which has run out of money, is now going to be able to fund itself by selling its air rights to developers on the other side of the street. This is far from unprecedented: the High Line, a few blocks west, was funded in large part by a scheme where for every $50 you donated to the High Line Improvement Fund, you could add an extra square foot of floor area in any development you were building nearby. (Check out Appendix D on page 61 of this PDF.) Given that developers pay up to $600 per square foot for such rights, that was quite the bargain.

Meanwhile, on the other side of Manhattan, the Howard Hughes Corporation is proposing to build a 50-story tower right on the waterfront. And the principle that private money should pay to improve such sites seems to have become broadly accepted:

Catherine M. Hughes, chairwoman of Community Board 1, said she was glad to finally see the developer’s master plan, which appears to have met many of the community’s concerns. “We understand that in order for it to succeed and provide community amenities it needs to be economically viable,” she said.

In all of these cases, it would be cleaner, more transparent, and more efficient for the public sector to pay for the parks, while raising money through a simple auction of development rights if and when it thought that development in such areas was warranted. If lovely parks like the ones on the west side are public goods, then the public should pay for them — and if they increase property values, then the public should be able to reap the benefit by selling the newly-appreciated development rights. Instead, private developers acquire their development rights at unknown and unknowable cost, because it’s all hidden behind ostensibly charitable activity. (The development which includes that 50-story tower, for instance, will, we’re assured, “include a still-to-be-determined rescue plan for the financially ailing Seaport Museum”.) And development takes place not because it necessarily fits into any greater public plan, but just because it’s the only way that work gets done which has historically been the job of the city, rather than the private sector.

One bill, put forward by Daniel Squadron, a state senator from Brooklyn, would mandate that 20% of any charitable donation to Central Park or Prospect Park be used to support less glamorous parks in less glamorous neighborhoods. Whether such a bill would pass constitutional muster is unclear, but in any case it wouldn’t make much difference: there will always be ways around such things, especially when new parks are in large part being built by private-sector interests.

If the private sector is building parks like the High Line or the new Seaport, then those parks are going to be designed, from the very beginning, to privilege monied interests and rich-people preferences in general. (A visit to the High Line, any summer weekend, will confirm that the people who go there are decidedly well-heeled, the presence of large public housing projects very nearby notwithstanding.) He who pays the piper, calls the tune. Which is why, if we’re building public parks, the public should be paying for them. If we want to raise public income by selling development rights, that’s fine too. But let’s not conflate the two.

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