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A City’s Strategy to Fund a Golf Course by Developing Homes on Proximate Property

William J. Boswell, John L. Crompton

Abstract


When cities create open space amenities such as parks and golf courses, the windfall gains of higher property prices attributable to the presence of these amenities accrue to the developers of those proximate properties. This case study reports how a city created a local government economic development corporation, which partnered with commercial firms to jointly develop a golf course community. The risk capital for the project came from city funds. The city’s intent was to structure the development so the city and its taxpayers captured a share of the windfall gains that its investment created. Thus, the city received 44 percent of the revenues accruing from the sales in the development. These funds, together with revenues from the development’s property taxes were used to retire the debt charges incurred in creating the golf course and the development’s infrastructure. The costs and revenue streams associated with the project are provided. The data suggest that the venture was both financially successful and effective in enhancing the image of a declining city. The city is now able to point to the project’s implementation as evidence of the start of a renaissance and of the city’s positive, can-do attitude. The case discusses both the political challenges involved in such a venture and the lessons that were learned from it.

Keywords


Golf course, public-private partnerships, windfall gains, proximate principle, amenity value.

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