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Parks, open spaces, trails,
and greenways -- all forms of green infrastructure --
have a variety of economic impacts on nearby, and not
so nearby, properties. In particular, they can
have a significant influence on the land values of
local homes. This site previously featured a
piece that examined the effects that urban parks have
on the land value -- and consequent property taxes --
of nearby properties [find that piece here].
This piece builds on that subject and looks at how
communities can site an design parks so as to tailor
their effects on the residential property tax base to
best contribute to meeting the long-range smart growth
goals of the community.
Most municipalities recognize
that parks, trails, and open spaces can improve the
environmental health of their communities and
substantially increase the quality of life for
residents. However, many fewer municipalities today
are aware of the impacts parks and other open spaces
can have on a community’s economic well-being. Parks
can have a significant impact on the property
values—and hence the property taxes—of nearby
residential properties, helping to make parks more
affordable for municipalities. However, because the
effect of parks and other open spaces on property
taxes varies depending on the size, shape and type of
park involved, communities need to be better informed
about how parks affect the value of surrounding
residential properties. By doing so, communities can
maximize their ability to do smart growth planning to
meet the community’s social, environmental and
economic goals.
A review of approximately 30
empirical studies that looked at the extent to which
parks influenced the market value of nearby properties
(done by Prof. John L. Crompton of Texas A & M
University) shows that well-maintained parks have an
overwhelmingly positive effect on residential property
values. However, the actual aggregate property price
increment for any given park is determined by two
factors: the type of park in question, and the amount
of land that falls within the park benefit area—that
area surrounding the park in which residents and
businesses derive a tangible benefit from the park’s
existence. Empirical evidence shows that passive
recreation parks result in greater aggregate property
price increments than do heavily used park whose main
focus is active recreation, having such things as
swimming pools or lighted ball fields.
Specifically, Crompton reports
that the empirical evidence suggests that, when
compared to properties some distance away from a park,
properties adjacent to passive recreation parks are
likely to sell for a 20% premium. This premium
declines to zero for properties 2000 feet away. On the
other hand, properties immediately adjacent to heavily
used active recreation parks may have no positive
price increment, or even a slight negative price
increment, when compared to properties some distance
away from the park. However, that negative or neutral
price increment for properties adjacent to active
recreation parks increases to a +10% price increment
for properties located 1-2 blocks away (the distance
at which potential nuisance factors are no longer
present) and then declines to no price increment
roughly 2000 feet (6-8 blocks) away.
The specific property price
increment that affects any particular parcel relative
to a given park is primarily determined by the
distance that parcel is the park, measured from the
edge of the park. Thus, the aggregate property tax
increment related to a particular park is dependent
upon the amount of land surrounding the park that
falls within a given distance of the edge of the park.
There are two factors that influence the amount of
land that falls within the benefit area of a park: the
size of the park, and the shape of the park. For
example, if we assume that properties that are within
1000 feet of a park edge fall within the property
price increment area, a square 20-acre park, roughly
933 ft. x 933 ft., will have a price increment area of
approximately 177 acres, whereas a square 15-acre
park, 808ft. x 808ft., will have a price increment
area of approximately 166 acres.
If the shape of the 15-acre
park were changed to a rectangle, say 450ft. x
1452ft., rather than a square, the price increment
area would be approximately 179 acres, roughly the
same size as the price increment area of the larger
square 20-acre park:
Finally, if the 15-acre park
were U-shaped, two square parks joined by a trail or
wooded path, the price increment area would be
approximately 219 acres, nearly 25% larger than for a
square 20-acre park:
In general, the more elongated
the shape of the park the greater the property price
increment area will be for any given size of park.
It should be noted, however,
that a greater percentage of the total benefit area
for rectangular, serpentine, or linear parks lies
within 1-2 blocks of the edge of the park than does in
the case of square or circular parks. For active
recreation parks this means that, as the shape of the
park is elongated, the area close to the park that is
likely to experience a neutral or negative price
increment due to nuisance factors will increase in
size at a rate that is faster than the area likely to
have a positive increment (the area 2-8 blocks away
from the edge of the park). However, because the area
that is not subject to nuisance factors is typically
significantly larger than the area that is subject to
nuisance factors, the increase in the actual number of
acres in the positive price increment area will
generally be greater than the increase in the actual
number of acres in the negative or neutral zone.
Maximizing the positive
property price increment area of a new park by making
informed size and shape decisions will maximize the
property tax revenue bonus a municipality receives. In
so doing, the municipality will move the park closer
to economic self-sufficiency. However, although
increasing the aggregate property tax base is
generally viewed by municipalities as a positive
thing, increasing the property value of homes designed
for young families or low-income individuals can make
it more difficult for a community to meet its need for
these types of residential units. In order for
communities to best take advantage of the property
price increment that results when a new park is built,
the park, its shape, amenities, and location, and the
uses planned for the surrounding area should be
designed together to maximize the overall social,
economic, environmental, and quality-of-life benefits
to the community.
Green infrastructure directly
affects community residents not only in terms of
quality-of-life, but in terms of the cost of housing
as well. Communities engaged in smart growth planning
will need to consider parks when completing not only
the land use, agricultural, natural, and cultural
resource, utility, and community facilities elements,
but the housing element as well. For example, siting a
passive recreation park directly adjacent to low-to
moderate-income housing may make it more difficult for
the community to maintain the affordability of that
housing, a fact that may be contrary to a community’s
smart growth planning desires. What is needed is an
integrated approach to community planning that
maximizes the potential for green infrastructure to
approach economic self-sufficiency while still meeting
community environmental, recreation, and social goals.
References:
Crompton, John L. 2001. “The
Impact of Parks on Property Values: A Review of the
Empirical Evidence.” Journal of Leisure Research
33(1): 1-31.
For information on
a related subject, see How
Parks Pay for Themselves.
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