Setting Usage Fees and Occupation Fees in Park-PFI — The Revenue-Sharing Mechanism Explained [2026 Edition]

Private-sector cost obligations in Park-PFI fall into two broad categories: usage fees and occupation fees. These are frequently confused, but they differ in legal basis, applicable facilities, and calculation methods.

Usage Fees (Consideration for Permits to Install Publicly Solicited Park Facilities)

Usage fees are the consideration paid by private operators for receiving a permit to install and manage publicly solicited park facilities (revenue-generating facilities such as cafés, restaurants, and sports facilities).

Legal basis: Article 6 of the Urban Park Act; each municipality's urban park ordinance

Key characteristics:

• Consideration for the use of land in the installation zone
• May not fall below the amount prescribed by the relevant ordinance (Article 5-2, Paragraph 2, Item 4 of the Urban Park Act)
• Typically set as an annual or monthly amount
• Operators may propose an amount above the ordinance minimum, but may not propose an amount below it

Occupation Fees (Consideration for Occupying Space for Convenience Enhancement Facilities)

Occupation fees are paid by private operators when installing convenience enhancement facilities — such as signage, advertising towers, and bicycle parking — within the park.

Legal basis: Article 7 of the Urban Park Act; Article 16-2 of the Urban Park Act Enforcement Order; each municipality's occupation fee ordinance

Key characteristics:

• Consideration for occupying a defined space above or below ground within the park
• For signage and advertising towers, fees are typically calculated based on area or number of units
• Set separately from usage fees (specified in Item 6 of the solicitation guidelines)

Practical Distinction

---

Three primary calculation methods exist for usage fees. The applicable method varies by municipality, so reviewing the relevant ordinance is the essential first step.

Method 1: Fixed Rate (Area-Based)

The most common approach. The usage fee is calculated by multiplying the installation zone area by a per-unit rate (annual fee per m²).

Formula: Usage fee = Area (m²) × Rate (JPY/m²/year)

Advantages:

• Simple calculation, high transparency
• Operators can determine costs definitively at the project planning stage

Disadvantages:

• The usage fee does not change regardless of how well the business performs, limiting the municipality's share of success

Method 2: Revenue-Linked (Percentage of Sales)

The usage fee is set as a percentage of annual sales (typically 2–10%).

Formula: Usage fee = Annual sales × Rate (e.g., 5%), or max(fixed minimum, sales × rate)

Advantages:

• The municipality's income increases when the business performs well, delivering genuine revenue sharing
• When the business is struggling, the lower fee reduces financial pressure on the operator

Disadvantages:

• Confirming reported sales involves cost (auditing and financial reporting requirements)
• Mechanisms to prevent under-reporting of sales are required

Method 3: Hybrid (Fixed Amount Plus Revenue-Linked)

A fixed minimum amount is set, and where sales exceed a defined threshold, an additional percentage of the excess is charged.

Formula: Usage fee = Fixed minimum + max(0, (Annual sales − Base sales) × Excess rate)

Advantages:

• Secures a minimum income for the municipality while also capturing upside when the business performs well
• Operators can take comfort knowing the fixed minimum is the baseline obligation

Trend in adoption: In recent solicitations, the fixed rate or hybrid approach is most commonly adopted. The revenue-linked approach is better suited for large-scale projects or cases integrated with designated management, where the cost of sales verification is manageable.

---

What Is Revenue Sharing?

Revenue sharing refers to arrangements under which private operators return a portion of business revenue to the park management authority (municipality) beyond their usage and occupation fee obligations. The funds serve as a source of financing for park renewal costs, designated park facility maintenance, and new improvements.

Revenue sharing can take three main forms:

Revenue-Sharing Design at Kaiseizan Park, Koriyama City

In the Koriyama City case, revenue sharing was structured around two primary axes: (1) the private-sector cost share for designated park facility construction (minimum 10%), and (2) a proposal to reduce the designated management fee.

① Revenue sharing through designated park facility cost share:

• A minimum of 10% of total construction costs (approximately JPY 70.15 million out of approximately JPY 700 million) was required to be privately funded
• Operators could propose to exceed this amount, with higher contributions reflected in Item ⑥ of the scoring criteria

② Revenue sharing through designated management fee reduction:

• The gap between the designated management fee upper limit (JPY 1.44 billion over 19 years) and the operator's proposed actual fee constitutes effective revenue sharing
• Major Category 5 "Cost Reduction" in the scoring table allocates 70 points (14% of the 500-point total) to this dimension

Three Principles for Revenue-Sharing Design

Principle 1: Set achievable levels: Overly aggressive revenue-sharing requirements will deter applicants. Confirm viability through market research and sounding before setting levels.

Principle 2: Design with a long-term view: Assess whether stable revenue sharing is achievable throughout the 20-year project period. Structures that allow lower sharing during the initial investment recovery period (typically 5–8 years) and higher sharing thereafter are also viable.

Principle 3: Use it as a competitive element: Incorporating proposed revenue-sharing levels (construction cost burden, proposed usage fee amounts) into the scoring criteria allows the municipality to maximize its share of success through competitive dynamics.

---

Confirming the Usage Fee Ordinance Is the First Step

Before setting a minimum usage fee, the municipality's urban park ordinance or usage fee ordinance must be reviewed. Ordinances typically specify:

• Usage fee calculation method (fixed rate, revenue-linked, etc.)
• The underlying unit rate (JPY/m²/year, etc.)
• Conditions for usage fee exemptions or reductions

Critical constraint: The minimum usage fee stated in the solicitation guidelines may not fall below the amount calculated using the ordinance formula (Article 5-2, Paragraph 2, Item 4 of the Urban Park Act).

When an Ordinance Amendment Is Required

The following scenarios may require an ordinance amendment:

Ordinance amendment procedures: Ordinance amendments require council approval. Aligning the schedule with council plenary sessions must be confirmed in advance (a Phase 2 matter).

Confirming the Occupation Fee Ordinance

Occupation fees are also governed by the municipality's occupation fee ordinance (or the occupation fee provisions of the urban park ordinance), which specifies calculation methods and rates. The per-unit rates for each type of convenience enhancement facility (signage, advertising towers, bicycle parking, etc.) should be confirmed in advance.

---

How to Research Comparable Fee Levels

To understand usage fee levels at comparable parks, the following approaches are effective:

Information gathering approaches:

1. Using the MLIT Park-PFI case study database: The case study database includes business scheme summaries for adopted projects, some of which include usage fee information
2. Directly contacting comparable municipalities: Municipalities of similar population size and park scale are generally willing to share information (inter-municipal information sharing is relatively common)
3. Leveraging advisory firm knowledge: Consultants who have worked on comparable projects often hold non-public benchmark data

Framework for Setting Fee Levels

Usage fee levels should be set by balancing the following three perspectives:

Reference range for area-based rates (general guidance):

Usage fee rates vary significantly based on the park's location, visitor numbers, and commercial potential. Parks with high footfall in urban areas may command rates three to ten times higher than suburban parks. Across domestic cases, the range spans from a few hundred to several thousand yen per square meter per year.

Specific levels must be set based on visitor data for the target park, surrounding commercial land values, and rental rates for competing private facilities — with viability confirmed through market sounding.

Using the Proposed Usage Fee as a Competitive Element

By including the proposed usage fee amount in the scoring criteria of the solicitation guidelines, the usage fee can function as a competitive element.

In Koriyama City's case, proposed usage fees and revenue-sharing commitments were incorporated within "Category 5: Cost Reduction" — "Revenue Sharing" subcategory (40 points), creating a structure in which operators offering higher revenue sharing gain a competitive advantage.

---

Legal alignment checks:

• Confirmed that the minimum usage fee does not fall below the amount calculated under the ordinance formula
• Confirmed the per-unit rates in the ordinance for each type of convenience enhancement facility (signage, advertising towers, etc.)
• Confirmed whether ordinance provisions for usage fee exemptions or reductions (e.g., for persons with disabilities) apply and whether they are relevant

Financial viability checks:

• Simulated whether the expected business type can achieve viable unit economics at the proposed minimum usage fee
• Designed a sales confirmation mechanism (audit, financial report submission) if a revenue-linked method is used
• Confirmed that the private-sector cost share for designated park facilities (minimum 10%) is consistent with the financial projections

Competitive design checks:

• Decided whether to incorporate proposed usage fee amounts into the scoring criteria
• If incorporated, confirmed that the weighting is not so high as to induce price dumping

---

Guidelines for Improving the Quality of Urban Parks through Park-PFI (Revised May 30, 2025) (2025)

Kaiseizan Park Park-PFI Solicitation Guidelines (April 2022) (2022)

MLIT Park-PFI Utilization Page (2025)

Urban Park Act (Act No. 79 of 1956), Articles 5-2 through 7 (Most recently amended 2022)

---

• How to Write Park-PFI Solicitation Guidelines — Explanation of all ten legally required items including Item 4 (minimum usage fee)
• Designing Park-PFI Scoring Criteria — How to incorporate revenue sharing into the scoring criteria
• Park-PFI Full Process Roadmap — A four-year timeline from concept to opening
• Complete Guide to Park-PFI — Overview of the entire system and its special exemptions