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Audit finds inaccuracies in city’s Parkland Dedication Fee program

Thursday, May 23, 2013 by Michael Kanin

An audit of the city’s Parkland Dedication program reveals that the Austin Parks and Recreation Department does not generally spend parkland fees collected from developers in the five years allotted by ordinance. The results of the audit were presented to the Council Audit and Finance Committee Wednesday.


One problem the parks department faces is that developers who do not complete projects by the end of the five-year window can ask for a refund of Parkland Dedication Fees up to 180 days after that period expires.


The report also finds that the department appears to be calculating some fees erroneously. In general, auditors found, fees associated with the program are lower in Austin than they are elsewhere.


Council Member Kathie Tovo found the results of the audit concerning. “We struggle so for resources in our parks department,” she said.


Tovo later qualified some of her concern, when she – along with the rest of her colleagues – discovered that completed developments couldn’t look for a refund after the close of the five-year window.


Parkland Dedication fees are established via the city’s Parkland Dedication Ordinance. According to the report, that document “requires residential developers of three or more dwelling units to provide for the parkland needs of residents by dedicating five acres for every 1,000 residents to the City for park and recreational purposes.”


The ordinance also provides for a fee-in-lieu system that allows developers to buy out of the program at a rate of $650 for each dwelling unit – minus any affordable housing included in the project. Those figures are what are at issue here.


As Tovo notes, the city’s parks department is perennially short of cash.


The audit found that the Parks Department currently holds $6.7 million in unspent funds that result from Parkland Dedication fees. It notes that city auditors tested FY2012 parkland dedication fee expenditures “and found that PARD could not confirm the source of funding for most of the sampled expenditures.”


It continued on to note that the department was unable to produce records for 44 percent of the expenditures. The report further concludes that, “for 21 of 43 (49 percent) transactions, PARD expended the funds over five years after collecting the fee.”


Austin Parks Director Sarah Hensley said that the delay in spending the money is partially due to the fact that she is restricted to spending the money derived from parkland dedication fees within a mile of a development project.


Hensley also argued that to make the most effective use of the funds, she and her department tend to wait for the fees to pool. That approach, she says, allows her and her colleagues to make a more effective expenditure when the time comes.


As for fee calculations, the auditor’s office found that they are “not always accurate, which puts the City at risk of collecting incorrect amounts from developers.” According to the report, of the 38 fee assessments collected by the department in FY2012, three did not correctly reflect the “the number of dwelling units.”


According to the audit, this resulted in $1,850 worth of undercharges and $5,200 worth of overcharges in FY2012.


In addition to all of that, city auditors made another observation: “The…fees required by the City are lower than the fees assessed by peer entities.”


Here, auditors examined nine other municipalities, including Travis County. They found that the city’s $650 per unit flat fee was below three of the four other entities that also used that approach. With its fee set at $1,500 per unit, Minneapolis was the high mark in this category. Only College Station – at $636 per unit – was lower than the City of Austin for parkland dedication fees.


Four other municipalities, Travis County among them, use a formula to arrive at the parkland charge per unit. The study notes that, though these can vary, it is estimated that these jurisdictions charge at least $1,000 per unit.


Tovo said that she’d “heard from the community for years now” that the city wasn’t calculating the fees correctly.


The auditor offered three findings: That Hensley should ensure that parkland dedication funds are spent within five years and that, in the a case where they might need an extension, she should develop a process for that eventuality; that Hensley should review their fee calculations and assessments for accuracy; and that the department should make all of its parkland dedication fee information available to the public – another issue raised by the report.


Hensley noted that she and her department are working with the city’s parks board to solve the issues noted by the city auditor. Management concurred with each of the auditors’ findings.

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