Raiding the Park Dedication Fee

Permanent link for future reference: http://cspgs.blogspot.com/2012/10/raiding-park-dedication-fee.html

The issue is raiding the park dedication fee for maintenance instead of buying park land.  Normally the maintenance of parks comes out of the City's General Fund budget.  Acquiring new park land comes out of the Park Dedication Fee fund.  The latest proposal, which will likely be approved at the City Council meeting on October 30th, is to open up the Park Dedication Fee fund so up to 80% can be used for maintenance. (Update 3/15/2014:  This was defeated by the City Council largely due to Council Member Dave Whittum's analysis which showed that the amount that would come out of the park dedication fee would not be enough to provide the current level of park service).

The idea behind the fund is that as developers increase the density they should provide land (or money to buy land) so that the city can have new parks for the new residents.  The latest proposal is to use the park dedication fee for park maintenance with a minimum of 20% reserved for land acquisition.  There is no requirement that 80% be used for park maintenance but since the city is neglecting to fund the parks adequately, that maintenance will come out of the dedication fee fund.  Then the city can cut to zero the park maintenance portion coming out of the general fund budget.

So what will happen when developers aren't building as much and the fee doesn't provide enough for maintenance?  That will occur when times are tough, so the general fund will be under strain as well.  Since there will have been no provision for park maintenance in the general fund there will be no park maintenance in tough times.  Park maintenance staff will be laid off and the parks will be neglected.  The track record the city council has lately is that parks neglected for long enough eventually get sold.

The city document discussing this (in a not very clear way) is RTC 12-255, available at:
http://sunnyvale.ca.gov/Portals/0/Sunnyvale/CouncilReports/2012/12-255.pdf

Revenues have increased for the city so why raid the dedication fee fund?  The underlying reason for this is that CalPERS, the state and city pension fund, is significantly increasing what they call the unfunded liability requirements.  Whenever CalPERS fails to make a 7.5% return on their investments (they made 1.1% this last fiscal year ending in June) they require the city to make up the difference.  This number has been increasing rapidly and will consume about $30M this coming year out of a general fund budget of about $150M.

There is another budget number which is bigger (over $200M) but that includes a lot of money from outside sources like the federal govt. and is dedicated to certain things which the city has no control over.  The general fund is the fund that the city can use for whatever it wants.