This note is the 11th installment in the structural analysis series of the Public Asset Utilization Research Laboratory (ISVD-LAB-005). It classifies seven years of results under Park-PFI (公募設置管理制度 — the public solicitation and management system), established by the 2017 amendment to the Urban Park Act (都市公園法), into three structural types from a revenue-structure perspective, and clarifies the conditions under which financial viability is achievable.
What Is Happening
Park-PFI (公募設置管理制度, the public solicitation and management system) is a scheme in which private operators install revenue-generating facilities (cafés, restaurants, sports facilities, etc.) within urban parks using their own capital, and then direct the resulting revenue toward park improvement costs. MLIT established the scheme through the 2017 amendment to the Urban Park Act (都市公園法). The permitted installation period for revenue facilities is a maximum of 20 years. The framework's backbone is the design under which park improvement costs are funded through return payments and usage fees to the park administrator (the municipality).
More than 300 cases have accumulated nationwide, and the scheme has reached a phase of established use. However, a clear structural gap exists between financially viable projects and those that are not. Location, facility scale, and the design of return payments determine the type of revenue structure.
Background and Context
The System's Mechanism and Three Design Variables
Revenue for private operators under Park-PFI divides broadly into three streams: "facility usage fee revenue," "retail and food-and-beverage revenue," and "parking revenue." Against these, municipalities collect an "installation permit fee (annual amount)" and a "return payment (allocated toward park improvements)," and in some cases also require "partial burden-sharing of improvement costs."
Three design variables determine whether financial viability is achieved.
| Design variable | Favorable direction for viability | Unfavorable direction for viability |
|---|---|---|
| Location | High-visitor urban or tourist parks | Neighborhood parks in residential areas |
| Facility scale | Total floor area over 1,000 m² | Total floor area under 500 m² |
| Return-payment rate | Less than 5% of revenue; fixed-amount method | More than 10% of revenue; variable method |
If the return-payment rate is set too high, private operators lose motivation to participate. If it is set too low, the municipality cannot secure sufficient funding for park improvements. This design balance directly affects both the number of applicants to a public solicitation and the long-term sustainability of the business.
The Fiscal Structure of Urban Parks as Background
The spread of Park-PFI reflects a structural problem: urban park maintenance costs have been placing fiscal pressure on municipalities. Japan has approximately 110,000 urban parks covering roughly 130,000 hectares. As depopulation continues, maintenance costs remain unchanged while renewal costs for aging facilities accumulate.
Under the designated manager system (指定管理者制度 — the system for outsourcing management and operations to private entities), municipalities cannot escape the structure of paying management fees themselves. Park-PFI is a "reverse-flow model" that generates park improvement funds from private-sector revenue—a direct institutional response to fiscal compression.
Reading the Structure
The Three-Type Divergence
Organizing seven years of cases from the perspective of revenue structure yields three distinct types.
Type 1: Standalone Revenue Facility (Stand-Alone Type)
This type places food-and-beverage or sports facilities in a section of the park and achieves financial viability from facility revenue alone. It is common in small-scale projects with a total floor area of 300–800 m².
The conditions for viability reduce to the volume of visitors. Parks with an average of 3,000 or more daily visitors can project annual sales exceeding ¥10,000,000 from café and light-meal turnover. Conversely, at neighborhood parks with low visitor counts, no amount of improvement in facility quality can raise the absolute number of customers.
Café installation cases at central parks in Osaka Prefecture and Aichi Prefecture include multiple confirmed instances in which return-payment obligations began within three years of facility installation.
Type 2: Park-Improvement Allocation Type (Cost-Allocation Type)
This type is designed so that facility revenue is allocated toward improvement costs for the park as a whole, explicitly articulating the investment-recovery logic for both the municipality and the private operator. The private operator develops revenue facilities, and the resulting revenue funds surrounding paths, restrooms, and plazas.
In this type, the area and standard of improvements to be funded determine the project scale. When total park improvement costs exceed ¥100,000,000, facility revenue alone cannot cover them, and a combination with MLIT's park facility improvement subsidies (Social Capital Development Integrated Grant — 社会資本整備総合交付金) becomes necessary.
Type 3: Mixed Development Type (Area-Value Type)
This form involves integrated redevelopment that encompasses privately owned land or commercial facilities outside the park. Because the primary revenue variable is the catchment draw of the surrounding area rather than the park's own commercial viability, it can only succeed in urban areas where surrounding land values are high.
At Tennoji Park in Osaka, integrated redevelopment incorporating commercial areas outside the park brought annual visitors to a scale of more than 5 million. Investment recovery for both the municipality and private operators is sustained not by facility revenue alone but by the enhancement of area value.
| Type | Primary revenue source | Conditions for viability | Risk |
|---|---|---|---|
| 1 Standalone revenue facility | Facility usage fees; food and beverage | 3,000+ daily visitors | Seasonal fluctuation in visitor numbers |
| 2 Park-improvement allocation | Facility revenue + subsidies | Scale of improvements; subsidy adoption | Subsidy schedule |
| 3 Mixed development | Area value enhancement | Central urban area; high land values | Long-term land value risk |
The Viability Barrier: Rigidity in Return-Payment Design
One of the primary reasons Park-PFI solicitations fail (zero applicants or only a single bidder) is the rigidity with which municipalities set return-payment rates. When a municipality sets the rate by precedent rather than by analysis, the resulting figure may render viability impossible at parks with limited commercial potential.
MLIT has issued guidance indicating that "the return-payment amount is set as a public solicitation condition, but operators may propose a higher amount as part of their submission" (Park-PFI Related Notifications). To prevent failures, it is necessary to conduct sounding (市場調査・官民対話 — market survey and public-private dialogue) before setting public solicitation conditions, ascertain the viability thresholds of private operators, and adjust return-payment rates accordingly.
What seven years of results make clear is that the success or failure of Park-PFI is determined not by "whether to use the system" but by "which type of park to use it for." Running a solicitation without first identifying which type applies will produce failure in the form of no qualified applicants.
References
Overview of the Park-PFI System Under the Amended Urban Park Act — MLIT Urban Bureau, Park and Green Space / Landscape Division. Ministry of Land, Infrastructure, Transport and Tourism
Park-PFI Case Study Collection — Ministry of Land, Infrastructure, Transport and Tourism. Ministry of Land, Infrastructure, Transport and Tourism
Framework for Urban Park and Similar Improvement Projects — MLIT Urban Bureau. Ministry of Land, Infrastructure, Transport and Tourism
PPP/PFI Promotion Action Plan (FY2025 Revised Edition) — Cabinet Office. Cabinet Office of Japan