PROPERTY VALUES

* Protecting open space can stabilize or increase nearby or adjacent property values--avoiding the need for increased property tax rates.

* Studies in a wide range of urban areas have documented increases in real estate value for residences located near parks, with increments in real estate value attributed to individual parks ranging into millions of dollars. Homes near greenways have also been shown to sell for higher prices than those farther away.

TPL memo from Ernest Cook to Rand Wentworth. April 7, 1994.

With TPL's assistance, Burlington Vermont purchased a "20-acre property that -- when developed as parkland (right now it's a tank farm)-- will complete its waterfront (Lake Champlain) park system, which is seen as a primary catalyst in the future economic development of the city. Interestingly, the city also purchased (again with TPL's help) an adjoining 25-acre property that it plans to hold as an 'urban reserve' for a future generation of Burlington citizens to determine the appropriate development of-- probably a combination of residential and commercial. This property has been purchased with city pension fund money. The idea is that the property will appreciate dramatically in value as the new waterfront park is fully developed (the tank farm has a five year lease). This is a somewhat long-term vision of how parks can stimulate property values and new investment.

Fausold, Charles J. and Robert J. Lillieholm. 1996. "The Economic Value of Open Space: A Review and Synthesis." Lincoln Institute of Land Policy Research Paper.

**Do not cite without permission from authors.

"In urban or urbanizing regions ... where highest and best use (as determined by the market) is typically development, the open space value of land must be separated from its development value. Such a separation is in fact required when land is placed under a conservation easement." ...

"...as a significant market in high amenity natural land emerges (i.e., there are more comparable sales of land preserved for open space), it will be possible to apply the standard concept of highest and best use (i.e., the use which yields the highest return to the landowner) in appraising the value of the property. In fact, the open space value may be the highest and best economic use value (Adams and Mundy 1991)."

"... While such an approach would more accurately capture the values of open space discussed elsewhere in this paper, it may also make achieving open space preservation more expensive."

Enhancement value is the tendency of open space to enhance the property value of adjacent properties. It "is also explicitly recognized by federal income tax law. U.S. Treasury regulation Sec. 14(h)(3)(i) requires that the valuation of a conservation easement take into account (i.e., be offset by ) any resulting increase in the value of other property owned by the donor of the easement or a related person. Section 14(h)(4) sites as an example a landowner who owns 10 one-acre lots and donates an easement over eight of them: 'By perpetually restricting development on this portion of the land, (the landowner) has ensured that the two remaining acres will always be bordered by parkland, thereby increasing their fair market value...'"

Examples:

"Parsons (1992) found that land use restrictions in Maryland designed to protect Chesapeake Bay caused a considerable increase in housing prices, ranging from 14 to 27 percent for houses within the Critical Zone (1000 feet inland from the Bay and major tributaries) to between 4 and 11 percent for houses up to 3 miles away. Unfortunately, his analysis was not able to distinguish between price increase due to limitations on the supply of land available for development and increases due to the enhancement value of open space capitalized into the value of the land (and subsequently housing prices)."

"Thibodeau and Ostro (1981) utilized two methods to estimate the enhancement value of 8,535 acres of wetlands In Massachusetts's Charles River Basin. A multivariate regression analysis found that properties abutting the wetlands were valued $400 more than non-abutting properties, and that each acre of wetland added $150 in value to adjacent properties. A survey of 15 appraisers and realtors yielded the estimate that each acre of wetlands contributes $480 to the value of an abutting parcel of property."

"In rural areas where most land is open space and likely to remain so (or at least is perceived to be at low risk for development) both market and enhancement value will be negligible. However, in urban or urbanizing areas where open space is scarce or diminishing (or in rural areas with unique amenities such as scenic views) market and enhancement value will be high. For advocates of open space protection, enhancement value is important because it offsets the negative effects of removing the market value of the open space itself (which is usually tax exempt or taxed at a low rate) from the local property base."

McAliney, Mike (ed.) December 1993. Arguments for Land Conservation: Documentation and Information Sources for Land Resources Protection, Trust for Public Land, Sacramento, California.

According to the National Park Service, "the highest increase in property values occurs in cases where parks highlight open space with some recreational access and limited use." Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors, National Park Service, 1990 Edition.

A land developer from Front Royal, Virginia, donated a 50 foot wide seven mile easement for the Big Blue Trail in northern Virginia. The developer recognized the amenity value of the trail and advertised that the trail would cross approximately 50 parcels. All tracts were sold within four months. "Pathways Across America", American Hiking Society, 1990.

"In one section of San Diego County, homes with backyards overlooking dedicated open space sell for more that homes across the street. The homes next to open space are advertised as having the biggest backyards in San Diego County because of the dedicated open space." Bob Copper, Director, San Diego County Department of Parks and Recreation, July, 1993

"One developer in San Diego County found he could increase the sale price of his houses by 25 percent by scaling back his development 15 percent and adding natural open space corridors visible from every home." Bob Copper, Director, San Diego County Department of Parks and Recreation, July, 1993

"The old adage, 'That which is not on the tax rolls is the primary determinant of the value of that which is' is especially true when it comes to homes next to parks and open space." Bob Copper, Director, San Diego County Department of Parks and Recreation, July, 1993

Andrew, Mark. August 22, 1994. Hennepin Community Works: An Employment, Public Works, and Tax Base Development Program. Hennepin County, Minnesota.

A series of maps was created using GIS to illustrate opportunities for public investment such as parks, park systems, other investments for the program. One of these maps illustrates the general pattern of change in market values of land in Hennepin County.

"The largest concentrations of stagnant or decreasing home values occur in the communities northwest and southeast of downtown Minneapolis. ...Even within these areas, properties along the connected park systems ... are appreciating faster than properties away from the parks and parkways. This may be due to a number of factors, including marketplace value associated with such amenities, greater homeowner willingness to invest in upkeep and better initial construction quality."

"The greatest opportunities to stabilize the residential tax base and strengthen communities are in areas showing the most stress- northwest and southeast of downtown Minneapolis. Extending parks and public works into underserved areas should have a positive impact on private investment in these areas over time."

Lacy, Jeff. August 1990. "An Examination of Market Appreciation for Clustered Housing with Permanently Protected Open Space." Center for Rural Massachusetts Monograph Series. Amherst, Massachusetts.

"In recent years, many planners and municipal officials have been re-examining this 'neo-traditional' approach to the siting of new residential and commercial structures. Whether called open-space, village, community, cluster, or planned-unit-development zoning, the underlying principles are similar. The same number of homes that would be constructed under a conventional development plan (typically as single-family-detached units) are grouped more closely together on down-sized houselots, with the remaining area parcel left as permanently preserved open space. This undeveloped land, often 50% or more of the original parcel, is then managed by a homeowner's association, deeded to the municipality or a land trust, or retained by the original owner who has surrendered (sold) all of the development rights."

"One concern frequently expressed by those in the real estate and development professions is that because of the smaller houselot size, clustered housing, even with protected open space, will not necessarily appeal to the average American homebuyer as an investment.

The purpose of this study was to assess this statement:

"Market appreciation rates for clustered housing with associated open space can be equal to those for conventionally developed housing types."

This study, in Amherst and Concord, Massachusetts, found that clustered housing with open space appreciated at a higher rate than conventionally-designed subdivisions. Appreciation was measured as the percent increase in open-market sales price. The study compared one clustered development and one conventional development in each community. The clustered homes in Amherst appreciated at an average annual rate of 22%, compared to an increase of 19.5% for the more conventional subdivision. This translated into a difference in average selling price of $17,000 in 1989 between the two developments. In Concord, the clustered development appreciated at an average annual rate of 21%, compared to an increase of 18.4% for the conventional development. The difference in average selling price was over $100,000 in 1988 between the two types of development in the Concord area study.

"This study suggests benefits that can transcend even a significant reduction in house-lot size: The design flexibility inherent in an open-space layout leaves room for integrating the undeveloped lands into and around the groupings of structures. This ensures ready access to considerably more open space than would have been possible on a given, albeit larger, residential house lot."

"the home-buyer, speaking in dollar terms through the marketplace, appears to have demonstrated a greater desire for a home with access and proximity to permanently protected land, than for one located on a bigger lot, but without open-space."

Southwest Journal. July 1993. "Editorial /Opinion: Good idea faces a challenge as tough as rebuilding cities--winning support for big spending."

"The end result would be new taxpaying neighborhoods where slums had once pulled down property values, skilled workers who once were welfare recipients and several new jewels for the city park system.

Southwest Minneapolis doesn't stand to gain a single greenspace in the whole project, but it would still come out a winner because taxes on property here wouldn't have to continue to rise (or wouldn't rise as quickly) to make up for falling property values in other parts of the city. And neighborhoods full of employed people need fewer and less costly services than neighborhoods full of families in crisis."

PKF Consulting. June 1994. Analysis of the Economic Impacts of the Northern Central Rail Trail, Maryland Greenways Commission, Department of Natural Resources, Annapolis Maryland.

"Nearly all concurred that the Trail increases the attractiveness of the vast majority of properties within an easy walk of the resource. ...There are, however, a number of properties negatively influenced by the weekend convergence of Trail users. As certain popular parking facilities become full, users park on nearby private properties."

"The greatest value that the Trail adds to nearby properties according to developers and brokers is the increased salability of listings...if two identical properties are for sale and one is near the Trail and the other is not - the Trail is used as a selling point, and helps many nearby owners sell their property faster."

Fox, Tom. 1990. Urban Open Space: An Investment that Pays, The Neighborhood Open Space Coalition, New York.

In 1974, 336 properties in 16 different housing developments near Philadelphia's, Pennypack Park were analyzed using multiple regression analysis. The Regional Science Research Institute found that property value decreases the farther away it is from open space.

"At 40 feet, the park accounted for 33% of the land value. This dropped to 9% of the value at 1,000 feet and down to 4.2% at 2,500 feet. A net increase of $3,391,000 in real estate value was directly attributed to the park. Each acre of parkland generated about $2,600 in location rent. One interesting observation-- properties with backyards bordering the park had values slightly lower than properties a block away. Since the park wasn't a heavily used facility, researchers suggested that the decrease wasn't due to such things as noise or pedestrian traffic on the street, but more to property owners feeling vulnerable to people crossing their land when traveling to and from the park."

"A study of four different types of parks in Worcester, Massachusetts found that a house within 20 feet of a park was worth about $2,675 more than a similar house 2,000 feet away from the park. After 2,000 feet, the park's influence became negligible. Overall, the 219 acres of parks generated $349,195 of economic benefit. Researchers also found that natural landscapes created the highest values in adjacent property, although, characteristically, property next to active recreation facilities had slightly lower values. In this case the decrease was attributed to noise and pedestrian traffic. Property values one block away from the active parks, however, increased."

"The growing awareness of the value of views was described in a recent New York Times real estate article highlighting a host of amenities that influence the value of residential properties -- views were clearly the most significant. For various properties surrounding Central Park, the article estimated that the premium for views of the park ranged from $10,000 to $700,000 depending on the size of the apartment and the type of view." (New York Times, Nov.12, 1989 "Putting a Price on the Priceless in Manhattan")

Spickard, Steven E. May 18, 1993. "The Value of Parks," Testimony before the California Assembly Committee on Water, Parks, & Wildlife.

"Well maintained parks enhance surrounding property values.

"Golden Gate Park is responsible for $500 million to one billion dollars of the market value of real estate within walking distance of the park. This value generates $5 to $10 million per year in property tax revenue."

Brabrec, Elizabeth. 1992. "On the Value of Open Spaces." Scenic America: Technical Information Series v. 1 (2).

"On the west coast, Secretary of the California Resources Agency anticipated that $100 million would be returned to local economies each year from an initial park bond investment of $330 million. The returns were to be in the form of increased value of properties and stimulated businesses. (National Park Service, 1990)

Brabrec, Elizabeth. 1992. "The Value of Nature and Scenery." Scenic America: Technical Information Series v. 1 (3).

"Proximity to recreational trails did not adversely affect the desirability or value of adjacent properties along the (Heritage, St. Mark's and Lafayette/ Moraga) trails. Using a survey of landowners and real estate agents, researchers found a positive effect on property values as a result of trail proximity. Of those who purchased property after the trails had been constructed, the majority reported that the trails added to the property's appeal."

(Moore, Roger L.; Graefe, Alan; Gitelson, Richard; and Porter, Elizabeth, "Benefits of Rail-Trails: A Study of the Users and Nearby Property Owners From Three Trails", Washington, D.C.: National Park Service (1992).)

Ulrich, Dana. April 25, 1996. "Put a value on open space", Recorder Publishing Company.

"According to Greg Delosier of the New Jersey Association of Realtors, the exact amount by which a home's value increases with proximity to open space varies by community. But many studies have shown that in general, homes located adjacent to trails, parks, and even golf courses sell more quickly, are assessed at higher values, and are more likely to increase in value than homes not near open spaces.

For example, the Center for Rural Massachusetts found in a 1990 study that homes on acre lots in a cluster sub-division with open space appreciated 12.7 percent faster over 21 years, compared with similar homes on 1/2 acre lots in a sub-division without open space."

"A study by Correll, Lillydahl and Singell in 1978 found that a greenbelt in Boulder, Colorado increased property values in the surrounding neighborhood by $5.4 million. Additional tax revenues resulting from the higher property values were $500,000 annually. This increase covered the $1.5 million purchase price for the greenbelt in just three years.

Property values were closely correlated with proximity to the greenbelt, decreasing by $4.20 for every foot of distance from the greenbelt, up to 3200 feet."

Page last updated 04/03/2000