Connecting state and local government leaders
“For Wall Street to want to invest, there’s got to be something for them…” says Seattle’s park director.
Wall Street presents a promising investor for local park directors seeking long-term financing for new or rehabilitated recreation areas.
The National Recreation and Park Association recently hosted an innovation lab in San Diego to discuss best practices for cash-strapped agencies that can’t afford such projects on their own.
“For Wall Street to want to invest, there’s got to be something for them, and obviously there’s a financial incentive there,” says Jesús Aguirre, Seattle Parks and Recreation superintendent, in this video from the event. “For us on the public side, we’ve got to make sure we sell this as sound from a financial and revenue standpoint, but also it’s got to have a really good benefit.”
First steps for park directors should be researching capital opportunities and financing structures, while engaging Wall Street early—involving bankers and other experts on the project’s front end rather than simply asking for funding.
If the project plan isn’t realistically financeable, leveraging multiple sources of revenue instead of just tax dollars, Wall Street investors won’t be interested. And the same is true if the park director lacks vision.
“What is it that the city needs or the park district needs from this development?” asks Bob Cornwell, former principal at CSG Advisors. “Is it money? Do we need a revenue stream, or do we need a new recreation activity—a set of soccer fields? And how are those uses are going to impact the surrounding neighborhoods?”
Park directors must also understand Wall Street finance, as well as their own government’s finances, revenues and park operations and management costs. Fiscal analysts and lawyers exist in every city to assist in this regard.
In fact, a cohesive negotiation team should be formed by public agencies in the project’s beginning stages, consisting of the park leader, financial and land experts, an outside fiscal advisor, and a seasoned public real estate lawyer. That way a city won’t leverage too much of its future on a single deal.
“Don’t just take what the developer gives you in terms of their projections about the revenues that will be created,” Cornwell said. “But work with your public agency partners to create your own set financial books so that you can see what the financial impacts are.”
Dave Nyczepir is a News Editor at Government Executive’s Route Fifty.
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