Park-PFI Succeeds Even in Municipalities of 23,000 — Strategies for Small-Scale Local Governments [2026 Edition]

Dismantling the "Too Small" Misconception

Adoptions start from a town of 4,159 residents. Ninohe City (22,999 residents) won a Japan Society of Civil Engineers Design Award.

Unit costs and amounts in financial examples without a cited source are illustrative assumptions, not statistically established market rates. Use estimates and comparable records appropriate to the target facility, location and business when preparing a project plan. Distinguish these assumptions from cited statistics and case expenditure.

When municipalities begin exploring Park-PFI (the Public Solicitation Management System), many arrive early at the conclusion that they are "too small." The reasoning typically runs: "Private operators won't come," "the economics won't work," or "this framework is only suited to large parks."

The empirical record, however, contradicts this assumption.

As of 31 March 2026, 203 parks nationwide have adopted Park-PFI[4]. That list includes Onuma Fishing Park in Atsuma Town (Hokkaido), Oboshi Park in Fujikawa Town (Yamanashi), Memuro Park in Memuro Town (Hokkaido), Yonabaru Beach Park in Yonabaru Town (Okinawa), Manyo Park in Yugawara Town (Kanagawa) and Kindaichi Neighbourhood Park in Ninohe City (Iwate)[4]. The populations of those six municipalities are 4,159 in Atsuma, 13,186 in Fujikawa, 17,242 in Memuro, 19,267 in Yonabaru, 21,671 in Yugawara and 22,999 in Ninohe[5]. Those six cases alone undo the narrative that Park-PFI is designed for large cities.

More specifically, the case of Iwate Prefecture's Ninohe City — population approximately 23,000 — stands as a symbolic proof of small-municipality viability. Kadaru Terrace Kanetaichi opened in March 2022 and received the Japan Society of Civil Engineers Design Award Excellence Prize in 2023.

This article provides a detailed account of the strategies that allow small municipalities to realize Park-PFI — covering the six success patterns, the reality of area eligibility, and the solicitation design that enables local businesses to take the lead.

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Six Small-Scale Success Patterns

Regional resource, problem-solving, glamping, vertical construction, package bundling, and community development company models — their characteristics and preconditions.

Park-PFI projects that succeed in small municipalities share recognizable patterns. Analyzing documented cases yields six distinct types.

Pattern 1: Regional Resource Model

Definition: Cases in which a region-specific resource — hot springs, natural scenery, historic assets — forms the revenue foundation, attracting private operators through its irreplaceability.

Representative case: Ninohe City, Iwate Prefecture — Kadaru Terrace Kanetaichi

Ninohe City has a population of 22,999 on the 2025 census preliminary count[6] and used a neighborhood park (standard 2-ha scale) for this project. The lead operator was "Kadaru Mirai," a locally funded quasi-public urban development company, which formed a special purpose vehicle (SPC) and simultaneously executed the replacement of a deteriorating municipal hot-spring facility and the Park-PFI project. The business composition — hot springs, sauna, overnight accommodation, restaurant, and indoor pool — is a revenue model anchored in the irreplaceable local resource of the onsen.

The enabling condition for this pattern is the presence of an irreplaceable local resource. Parks adjacent to onsen, cultural properties, or scenic attractions hold built-in drawing power. Customers visit for the resource itself, independent of whether a large national operator installs a standardized facility.

Pattern 2: Problem-Solving Model

Definition: Cases that position social infrastructure — childcare, disability welfare, medical facilities — as the "revenue facility," rather than food and beverage businesses.

Representative case: Mutsu City, Aomori Prefecture — Yanagimachi Children's Park

A licensed nursery school was installed in a small neighborhood park, simultaneously resolving a childcare waitlist problem and revitalizing the park. The nursery operator obtained an installation management permit and built and operates the nursery inside the park.

The primary strength of this pattern is its independence from footfall. Food and beverage operations fail at low-traffic locations, but nurseries and welfare facilities are supported by institutionally guaranteed demand, making them viable even in lower-traffic regional cities.

Municipalities that envision only food service as a viable business type may be systematically overlooking this pattern.

Pattern 3: Glamping Model

Definition: Cases built around glamping (experiential accommodation), which delivers high revenue per guest at modest initial investment.

Representative case: Mutsu City, Aomori Prefecture — PARK DAIKANYAMA

Mutsu City has a population of 49,699[7]. A local real estate company, Mutsu Real Estate Transaction Center, became the approved plan submitter and began operating accommodation, dining, a cafe and a dog run at Daikanyama Park in April 2022[8]. The company describes it as a glamping site in Daikanyama Park in Mutsu City, at the northern tip of Honshu.

Glamping's defining characteristic is its low capital requirement. Trailer houses and glamping tents require far less investment than permanent construction, shortening the payback period. Parks adjacent to agricultural land or coastline can command premium pricing through the promise of non-everyday experience.

Pattern 4: Vertical Construction Model

Definition: Cases that resolve small-footprint constraints by stratifying the program across multiple floors, expanding effective revenue-generating area.

Representative case: Beppu City, Oita Prefecture — Haruki River Park

On a site of approximately 0.92 ha — well under one hectare — this project created western Japan's first vertical urban park: a ground-floor supermarket beneath a second-floor artificial turf sports ground and café. The lead operator was Minerva Inc., a special purpose company formed by four companies led by local firms[9]. Under the operator's plan, usage fees and related payments to the city are projected at approximately ¥14 million a year[10].

Even a park initially dismissed as "too small to be viable" can expand its revenue-generating floor area through vertical construction. This pattern is particularly effective for constrained urban infill sites.

Pattern 5: Anchored to a Larger Project

Definition: Cases where multiple small parks, none of which are individually economically viable, are combined into a single solicitation package.

Representative case: Maebashi City, Gunma — Kokorun City Park

A single cafe with community space was placed in a 0.19-hectare[2] neighborhood park, at a project cost of ¥41 million over a 20-year term, operated by the nonprofit Sanwakai. The park was created inside the Japanese Red Cross site CCRC development, and the solicitation required collaboration with the local development group already working there.

For municipalities managing several street-block parks, consolidating them into a single solicitation reduces the barrier to private entry — an approach transferable to small-municipality contexts.

Pattern 6: Community Development Company Model

Definition: Cases in which a locally funded SPC or community development company serves as the lead operator, designing a structure that keeps revenue and employment circulating within the region.

Representative case: Ninohe City, Iwate Prefecture — Kadaru Terrace Kanetaichi (overlap with Pattern 1)

Kadaru Terrace Kanetaichi also qualifies as Pattern 6. By positioning "Kadaru Mirai" — a locally funded, quasi-public community development company — as the lead operator, the project avoided the risk of management flowing to large external corporations, and instead ensured that jobs and revenue circulated locally.

The enabling condition for this pattern is the existence of a "community development company" or a "capable SPC sponsor" within the region. Where a locally funded entity — backed by a chamber of commerce, agricultural cooperative, credit union, or local businesses — already exists, that organization can anchor an SPC.

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Area Eligibility in Practice

Maebashi City made a single cafe viable on a 0.19-ha park. The Beppu City Haruki River Park succeeded at 0.92 ha.

Another widespread misconception is that "our park is too small to qualify for national grants." A review of the actual requirements is warranted.

Minimum Area Requirements for National Grants

There is no statutory minimum area for installing publicly solicited park facilities under Park-PFI. Any park covered by the Urban Park Act is theoretically eligible from street-block park scale (standard 0.25 ha) upward.

The Integrated Social Infrastructure Grants — which subsidize designated park facility improvements — do not establish a blanket minimum area threshold. Projects are evaluated on their content, necessity, and expected impact.

Maebashi City's Kokorun City Park (approx. 0.19 ha) provides direct empirical confirmation. It sits below the 0.25-ha standard size of a street-block park, yet supports both a solicited facility and a designated park facility.

Beppu City's Haruki River Park (approximately 0.92 ha) also qualified as a national grant-eligible project at under one hectare, demonstrating that the assumption "one hectare or larger is required for grant eligibility" is factually incorrect.

Floor Area Implications of the Site Coverage Provision

Upon receiving Park-PFI certification, publicly solicited park facilities may utilize site coverage up to 12%, but the actual floor area this generates depends on the park's total area.

The 10 points of added coverage are shared with rest facilities, not granted separately to each. A park that already reaches 12% coverage through rest or sports facilities cannot add a Park-PFI amenity building (Guidelines, §2.3).

For a 0.25-ha (2,500 m²) park, 12% site coverage yields a maximum of 300 m² of building floor area — sufficient for a small café or retail shop, but too small for accommodation. A 1-ha (10,000 m²) park yields up to 1,200 m², more easily supporting mixed-use programs.

For smaller-footprint parks, Pattern 4 (Vertical Construction) can expand effective revenue floor area within the site coverage constraint.

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Solicitation Design for Local Business Leadership

Scoring design for Evaluation Item 2 and SPC formation methodology.

The belief that "large companies must lead" or that "local businesses lack the track record" is also largely misconception. Thoughtful evaluation criteria design can create an environment in which local businesses compete viably as lead operators.

Strategic Use of Evaluation Item 2: Local Business Participation

The MLIT guideline's Evaluation Item 2 covers "implementation structure," and explicitly includes "local business participation" as a sub-criterion. Increasing the point weight assigned to this criterion raises the incentive for local business involvement.

In all small-municipality cases reviewed here — Mutsu City, Ninohe City, and Beppu City — the lead operator was a local company or locally formed SPC. National large-scale operators did not serve as leads. This was not coincidental: the solicitation design was structured to produce this result.

Designing Consortium-Type SPCs

When local businesses serve as lead operators, forming a consortium (joint venture) effectively compensates for gaps in experience and track record.

A functional consortium structure typically follows this pattern:

This "hybrid" formation — local leadership paired with externally sourced operational know-how — is well positioned to score highly on Evaluation Item 2 (local participation) while also demonstrating sufficient operational and financial capacity.

The contrast with large-scale cases like the Kaiseizan Park project (where Daiwa Lease led) is clear: smaller projects naturally tend toward the inverse pattern, where local entities lead.

Eligibility Requirement Design

Setting excessively high track record requirements in the solicitation guideline's participation eligibility section (Clause 10) raises barriers that exclude local businesses. Rather than requiring "documented experience operating park facilities within the past five years," framing the condition as "documented experience operating facilities comparable to parks" broadens eligibility for local operators.

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Strategy for Projects Large Operators Skip

Conditions that reduce large-operator interest and how regional actors can fill that space.

Projects that are difficult for large consultants and operators to justify commercially represent opportunities for local businesses and smaller specialist firms.

Conditions That Reduce Large-Operator Interest

The following conditions, in combination, tend to reduce large-operator participation appetite:

1. Small project scale: When advisory fees fall below ¥5 million, or revenue facility sales are modest, the return-on-investment for large firms is insufficient.
2. Remote or rural location: High travel costs and the absence of local networks put large firms at a competitive disadvantage.
3. Local business preference in the design: When evaluation criteria incorporate local participation bonuses, operators with local networks hold a structural advantage.
4. Sounding participation incentives: When operators receive bonus points for participating in market sounding, those who engaged early — typically local actors — enjoy a compounding advantage.

These conditions can be deliberately designed into solicitations, creating a structure where "small project = local actors lead."

Domains Where Small Municipalities Can Excel

• Municipalities under 50,000 population, particularly towns and villages: Large consultants show limited interest; small PPP specialists and local firms compete more favorably.
• Parks adjacent to region-specific tourism assets: Branding requires local knowledge, giving local actors a genuine advantage.
• Problem-solving business types (childcare, welfare): Operators with deep knowledge of local social challenges are naturally better positioned.

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Support Programs for Small Municipalities

Feasibility study support and Integrated Social Infrastructure Grants.

The following support programs are available to small municipalities pursuing Park-PFI.

Integrated Social Infrastructure Grants

A national subsidy for designated park facility improvements (park paths, plazas, benches, etc.). Because the program involves adoption criteria, early consultation with the relevant MLIT Regional Development Bureau is important.

National Feasibility Study Support

A program providing partial national funding for the cost of market sounding and feasibility studies. For small municipalities, advisory fees of ¥5M–¥20M represent a significant fiscal burden, making this support program highly worth pursuing.

For detailed procedures and application requirements, refer to the MLIT Urban Bureau's Park-PFI resource page or contact the competent MLIT Regional Development Bureau directly.

Urban Development Fund (Vitalization Promotion Fund)

Where local governments lend project capital to private operators, the national government provides half the amount as a subsidized loan. The relative benefit of this mechanism is greater for smaller-scale projects.

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Alternative Approaches When Park-PFI Is Not Currently Viable

If a feasibility study concludes that Park-PFI is not viable at this time, park activation options still exist.

Phased approach: Conduct a lightweight sounding to gauge market interest first. If interest is weak, make targeted investments to improve the park environment and draw power, then commission another feasibility study two to three years later.

Combining with the Designated Manager System: Even where Park-PFI is not viable, the designated manager system can channel private-sector capacity into park management, partially realizing the intent of public-private partnership. This can also be framed as a preparatory step toward eventual Park-PFI adoption.

Exploring Small Concessions: If the park contains facilities not subject to the Urban Park Act — such as a former community hall or closed school annex — those facilities may be separately commercialized as small concessions. Refer also to What Is a Small Concession?.

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Before concluding that "small scale means Park-PFI is impossible," examine each assumption underlying that conclusion. Is the barrier "size," or "location conditions," or "solicitation design"? Decomposing the question often reveals that the actual barrier is solvable.

For support organizing the preconditions for Park-PFI in small municipalities and designing appropriately scaled projects, please contact ISVD.

Park-PFI Cases — All 203 Nationwide Parks

Detailed analysis of cases across population sizes — including the Ninohe City and Beppu City small-scale cases

Designing Park-PFI Scoring Criteria

How to weight Evaluation Item 2 (local business participation) to create a solicitation where local operators can lead

What to do next

When considering Park-PFI, examine the park's conditions, use and operator interest.

Assess the scope for new buildings against existing building footprints and the local ordinance. If there is no room to add buildings, consider reuse of existing facilities and other project methods.

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References

Park-PFI Utilization Guidelines for Improving the Quality of Urban Parks (Revised May 30, 2025) — Ministry of Land, Infrastructure, Transport and Tourism, Urban Bureau, Park and Green Space / Landscape Division (2025)

MLIT, Park-PFI Implementation Status (as of 31 March 2026) — Ministry of Land, Infrastructure, Transport and Tourism, Urban Bureau (2026)

Koriyama City, Kaiseizan Park Park-PFI Project (Official Page) — Koriyama City (2022)

PPP/PFI Promotion Action Plan (Fiscal Year 2025 Revision) — Cabinet Office, Private Finance Initiative Promotion Office (2025)

FY2024 seminar on Park-PFI cases for solving local issues: cases in small parks, programme document — Japan Park and Greenery Association (2024)