Tax Increment Financing Implications of Municipal Parks in West Virginia: Spatial and Semi-Parametric Estimates

Authors

  • Mark L. Burton
  • Michael J. Hicks

Keywords:

Park Valuation, Tax Increment Financing, Spatial, Semi- Parametric.

Abstract

Th is research seeks to analyze local tax increment financing options for the construction and operation of park and recreational facilities in West Virginia. En route to accomplishing this objective, hedonic estimates of park and recreational amenities in Charleston and Huntington were performed in order to evaluate welfare gains associated with these amenities. Th is eff ort addresses several of the key concerns regarding hedonic estimations (i.e., the potential presence of non-linearities). Using both linear and semi-parametric hedonic pricing models corrected for spatial autocorrelation results indicated that the presence of a park increases home values within a census tract by roughly $2,600. A fi tness facility or trail increases median home value in a census tract between $10,600 and $11,060, depending upon model specifi cation. Th e total welfare gains of the two park systems analyzed roughly total $280 million in property value enhancements. Th is, in turn generates roughly $980,000 annually in incremental property tax revenues. Th is value would be much higher in most areas, since West Virginia has a very low property tax levy. Th is suggests that tax increment fi nancing may be a viable revenue source for the construction and operation of these types of recreational facilities, and should be considered by policymakers.

Published

2007-04-18

Issue

Section

Regular Papers