One of the interesting things about the methodology of the so-called “Bloomington School” founded by Vincent and Elinor Ostrom was their reluctance to use broad imprecise terms when describing various institutions such as “markets” or “government.” Vincent’s research on water rights in the Los Angeles area and Lin’s work on common pool resources made them both understandably leery of applying over-arching, black and white terms that missed much of the nuance of actual policy making and problem solving in the real world. People interested in reality frequently live in reality, and reality is messy and difficult to simplify.
I was thinking about their approach as I listened to a podcast from the Indianapolis Business Journal on the creation of a park in the Indianapolis suburb of Zionsville. The story behind the new park is very much a tale of the private and public spheres overlapping, but it raises questions about the possibility of competing, and perhaps conflicting “public” goals and incentives. It begins with Jim and Nancy Carpenter, owners of the nation’s largest franchised purveyor of wild bird feed, feeders, and other backyard equipment to attract birds for the purposes of bird watching. Jim Carpenter described himself as “an unemployed bird watcher” who very laudably turned his passion into a successful business.
The story of the new park, Carpenter Nature Preserve, began when the Carpenters purchased a privately owned 200+ acre golf course and then allowed the land to return to its “natural state.” They focused on keeping the cart paths accessible as hiking trails and let the natural plants and animals slowly reinhabit the course. But rather than keep the newly minted park private, they had a different goal in mind.
The Carpenters’ ultimate plan was to sell the property to the city of Zionsville. Once purchased from the Carpenters at approximately a million dollar discount from its assessed value, the city agreed to convert the land into a park and maintain it. The land has a diverse set of habitats and a wide variety of wildlife within its boundaries. Essentially the Carpenters were giving the city a sale price, asking the city to internalize the maintenance costs and thus permanently take the land out of private hands codifying their preferred use of the property.
The city purchased the park using some local money but also approximately 3 million dollars worth of federal grants designed for such projects. Thus, both the city and the national government are footing the bill and assuming that most citizens would approve of the expenditure and prefer a park to a golf course. Of course, someone else could have made a higher bid on the course when it was for sale and repurposed it into apartments or some other project, but presumably no one else did. The 6 million dollar assessed value is a bit unclear.
We are seeing an increasing blurring of the lines between for profit and “non-profit” ventures in the United States and elsewhere. The story is similar to the one told in the recently released film Wild Life in which the former CEO of Patagonia clothing dedicated his life to buying huge tracts of land (cultural reference fully intended!) in Southern Chile and creating a large nature reserve that was eventually “donated” to the Chilean government in exchange for agreements to maintain the park.
The question to me isn’t whether or not private individuals can or should purchase land for parks and reserves. The answer to that question is, absolutely. The more important question is whether they should then ask government officials to assume the cost and responsibility they don’t wish to have and impose those costs and their personal preferences onto other citizens. This was land that in private hands was producing tax revenue. Now it will be a tax burden. What’s more the land wasn’t donated—it was sold, albeit at a discounted price. But that process again assumes the overall preferences of “the public” are for a park and paying for such a park. Instead it looks very much like the preferences here are of a business owner who prefers bird watching to playing a leisurely 18 holes of golf.
Bright lines are tough to draw in the real world and increasingly what is “out of bounds” (to borrow a golf term) is tough to determine. I hope the citizens of Zionsville and their elected officials enjoy the new green space, but I also hope they realize there is no such thing as a free park.
READER COMMENTS
robc
Jun 22 2023 at 8:51am
I think a better model is theparklands.org.
It is a set of private, but open to public, parks, created with (mostly) private money and 100% maintained with private money.
It would have been better if it took no money from the Feds or the State, but there was some involved. The city’s contribution was to donate land that formed the bulk of 1 of the 4 parks. It was previously a city park but this took it off the city’s maintenance budget. So the opposite of the situation in this piece.
From the website:
G. Patrick Lynch
Jun 22 2023 at 12:56pm
Another good model is the American Prairie Reserve
Jim Glass
Jun 22 2023 at 6:00pm
We are seeing an increasing blurring of the lines between for profit and “non-profit” ventures in the United States and elsewhere.
Cooperative for-profit/government ventures have a long history. Here’s a landmark example of how things can go both right and wrong…
The NYC subway system opened in 1904 via an agreement which had for-profit firms operate the system after the city government financed the huge up-front capital cost. A whole lot of money had to be spent on digging tunnels and building stations before running the first train. No private firm could cover that. The private operators then reimbursed the city for the cost of servicing the bonds issued to finance the capital cost, plus a 1% service fee.
The whole deal was a huge success, especially for the citizenry, and became world-famous as such. An ideal model of private-public cooperation. But what is interesting is the dynamic that followed…
1 — After a few years everyone agreed to expand the system, again with city financing the capital cost by issuing bonds. But the politicians, seeing the large profits being earned by the operators, decided that taxpayers would get a better deal if they swapped the city’s right to receive debt service for a share of the profits of the system. So they did — and the city effectively became an equity owner instead of a debt holder. Reasonable enough on its face, and all was well for a while, until…
2 — During the post-WWI inflation, the city’s politicians decided to assure their re-election by permanently price-fixing the fare at 5 cents, the famous “nickel fare”. This wiped out the operators’ profits, which left the city entirely on the hook for the bonds, as it was now receiving neither debt service nor profits to cover them. And to stay solvent the private operators had to slash maintenance on stations, track and trains.
3 — By the 1940s the formerly plush stations were fully decaying, the formerly state-of-the-art trains were rattle traps, and the operators were broke with no hope in sight. The operators sold the system to the city, the politicians making the argument to those who opposed “nationalization” that this was fiscally necessary for the city to gain the system’s revenue to finally pay off the bonds that it had used to build the system. The city politicians took hands-on control operating the system.
4 — 1940s – 1970s. Under political management, productivity collapsed as wage rates and construction-operating costs exploded. With the politicians now on the hook to cover the cost of their unionized work force’s wages, the nickel fare quickly became history, the fare being hiked steadily. Maintenance was slashed to the bone and beyond. By the 1970s, trains were coming out of repair shops in worse shape than they went in (literally!). Stations were trash-strewn and residences for the homeless, trains were covered in graffiti inside and out (as seen in movies from the era — it’s true, I was there) and riding them, when they arrived, was an adventure giving meaning to “criminal underground”. Ridership plunged to 1910s-level, causing the system to bleed cash further.
5 — circa 1980. The state politicians, under pressure from the city’s citizens and businesses, removed operating control of the system from the city’s politicians and gave it to a quasi-governmental authority largely under state control. This didn’t reduce cost any but greatly improved quality of service, and ridership recovered.
Lesson from this 100+ years of history: Private-public partnerships definitely can work very well — but it is essential to assure that the incentives of the private and public actors are aligned and stay that way, lest things go off the track.
I hope the future politicians of Zionsville keep better faith with the intent of the Carpenters.
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