Parks and Open Space: The Highest and Best Use of Public Land?

Abstract

Parkland advocates frequently find themselves in conflict with residential developers over the appropriate use for a piece of land. Invariably developers argue that their projects will expand the tax base and, thus, reduce existing residents’ property taxes. The paper summarizes the results from over 70 empirical studies that suggest that instead of leading to a reduction in property taxes, the consequence of residential development is usually a net increase in the property taxes paid by existing residents. These studies have used cost of community services analyses (COCS) to derive their conclusions. They consistently report that over a wide range of residential densities, and especially in rapidly growing communities, the public costs associated with residential development exceed the public revenues that accrue from it. The median net cost of residential development in the over 70 case studies reviewed was 15%. Thus, if the annual tax yield to a community was $1 million from a residential development, the median cost of servicing the development was $1.15 million. In this case, if the operation and maintenance costs associated with using the land as a park or open space were less than $150,000, then it would be a more cost effective use of the land for the community than residential development. Examples are given of communities in which COCS analyses have resulted in decisions to purchase land for open space rather than incur the likely losses from residential development.

A detailed review of the COCS case studies revealed three useful insights. First, communities with larger and rapidly growing populations appeared to experience greater net deficits on their residential land than did communities with smaller, more stable populations. Second, the use of a broad residential development category that was adopted in all of these studies often obscures substantial differences within it. For example, it has been shown that the more sprawling the growth, the higher the cost. Third, education costs are the major contributing source to the residential property deficits.

These findings provide park advocates with a credible entré into the economic development discussion and enable them to position parks as being a key component in a community’s economic viability. By showing their relative fiscal strength compared to residential development, advocates can refute the notion that parklands are a drain on local resources. The goal is not to prevent growth, but to encourage a balance between development and open space.