I believe the correct answer is going to be "the development of the park." But it's hair-splitting, and I'm not sure the real GMAT would have a question that rests on such a tiny difference. It's a very tricky issue -- professional linguists who have studied the question of when native speakers prefer the possessive construction or the 'of' construction have never fully pinned down the answer, so far as I know, though some patterns have been identified.
I'm very curious as to where this item came from, and whether the people providing it claimed that there was a clear-cut rule that would explain why one is preferable to the other.