The impact of parks on property values: A review of empirical evidence
There is a positive impact of as much as 20% on property values abutting or fronting a passive park area. Heavily used parks catering to large numbers of active recreation users have lower proximate value increments. In most cases proximate properties tended to show increases in value when compared to properties outside a park’s service zone.
Crompton, J.L. (2001). The impact of parks on property values: A review of empirical evidence. Journal of Leisure Research, 33(1), 1-31.
The real estate market consistently demonstrates that many people are willing to pay a larger amount for a property located close to a park than for a house that does not offer this amenity. The higher value of these residences means that their owners pay higher property taxes. In many instances, if the incremental amount of taxes paid by each property which is attributable to the presence of a nearby park is aggregated, it is sufficient to pay the annual debt charges required to retire the bonds used to acquire and develop the park. This process of capitalization of park land into the value of nearby properties is termed the “proximate principle.”
The difficult fiscal environment that prevails in many cities, and the escalation of urban land values, have made the economic justification of park land and open space increasingly necessary in order to rebut the persuasive rhetoric of those who say: “I am in favor of parks and open space but we cannot afford the capital costs of acquisition and development because of more pressing priorities, or the loss of operational revenue that will accrue if the land is removed from the tax rolls.” Government officials often seek to enhance the tax bases of their communities by encouraging development. There is a widespread belief that this strategy raises additional revenues from property taxes, which then can be used to improve community services without increasing the taxes of existing residents. The notion that development brings prosperity is deeply embedded in the American psyche.
This paper reviews empirical evidence in the literature relating to three key questions: (1) Do parks and open spaces contribute to increasing property values (the proximate principle)? (2) What is the magnitude of this effect? and (3) How does distance effect the proximate principle?
The Basic Principle:
The premise that parks and open space have a positive impact on property values derives from the observation that people frequently are willing to pay a larger amount of money for a home located close to these types of areas, than they are for a comparable home further away. If this observation is empirically verified, then owners of the enhanced property are likely to pay higher property taxes to governments because of the increase in the property’s appraised value. in effect, this represents a “capitalization” of park land into increased property values for proximate land owners.
Results of approximately 30 studies which have empirically investigated the extent and legitimacy of the proximate principle are reported, starting with Frederick Law Olmsted’s study of the impact of New York’s Central Park. Only five studies were not supportive of the proximate principle and analysis of them suggested these atypical results may be attributable to methodological deficiencies. As a point of departure, the studies’ results suggest that a positive impact of 20% on property values abutting or fronting a passive park area is a reasonable starting point. If it is a heavily used park catering to large numbers of active recreation users, then the proximate value increment may be minimal on abutting properties, but may reach 10% on properties two or three blocks away.
Three key questions were posed in the introduction to the review of the later empirical studies. The first question asked whether parks and open space contributed to increasing proximate property values. Results from 25 studies that investigated this issue were reviewed and in 20 of them the empirical evidence was supportive. Examination of the five studies that did not support the proximate principle suggested that in four of those cases the ambivalent findings may be attributable to methodological limitations. The support extended beyond urban areas to include properties that were proximate to large state parks, forests and open space in rural areas. The rural studies offered empirical evidence to support not only the proximate principle, but also to refute the conventional wisdom that creating large state or federal park or forest areas results in a net reduction in the value of an area’s tax base.
Six of the supportive studies further investigated whether there were differences in the magnitude of impact among parks with different design features and different types of uses. The findings demonstrated that parks serving primarily active recreation areas were likely to show much smaller proximate value increases than those accommodating only passive use. However, even with the noise, nuisance and congestion emanating from active users, in most cases proximate properties tended to show increases in value when compared to properties outside a park’s service zone. Impacts on approximate values were not likely to be positive in those cases where (i) a park was not well maintained; (ii) a park was not easily visible from nearby streets and, thus, provided opportunities for antisocial behavior; and (iii) the privacy of properties backing on to a linear park was compromised by park users. The second question posed related to the magnitude of the proximate effect. A definitive generalizable answer is not feasible given the substantial variation in both the size, usage and design of park lands in the studies, and the disparity in the residential areas around them which were investigated. However, some point of departure based on the findings reported here is needed for decision-makers in communities that try to adapt these results to their local context. To meet this need, it is suggested that a positive impact of 20% on property values abutting or fronting a passive park area is a reasonable starting point guideline. If the park is large (say over 25 acres), well maintained, attractive, and its use is mainly passive, then this figure is likely to be low. If it is small and embraces some active use, then this guideline is likely to be high. If it is a heavily used park incorporating such recreation facilities as athletic fields or a swimming pool, then the proximate value increment may be minimal on abutting properties but may reach 10% on properties two or three blocks away.
The diversity of the study contexts also makes it non feasible to offer a generalizable definitive answer to the final question posed in the introduction concerned with the distance over which the proximate impact of park land and open space extends, However, there appeared to be wide agreement that it had substantial impact up to 500 feet and that in the case of community sized parks it extended out to 2,000 feet. Few studies tried to identify impacts beyond that distance because of the compounding complexity created by other potentially influencing variables, which increases as distance from a park increases. Nevertheless, in the case of these larger parks there was evidence to suggest impact beyond this artificial peripheral boundary, since the catchment area from which users came extended beyond it (Allen et al, 1985).
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