Over at his new blog, Ron Beitler writes about a proposal for a greenway park in Lower Macungie Township:
The potential benefits of a trail network are numerous, and include the linking of communities within the township to each other and various points of interest such as schools, parks, historical sites and shopping centers. This bike-able/walkable trail would also potentially increase the land value of adjacent properties.
Ron is correct about this. The evidence is strong that parks increase land values. The shorter the distance to the park, the higher the increase in land values.
Sounds obvious right? The people with the greatest access to a nice public amenity will derive the most benefit from it. Lots of people would like to live right next to a nice park, since it would basically be like having an extra nice backyard. Consequently, people are willing to pay more to live next to a park, hence the increase in adjacent land values.
This raises an important public policy question. When the taxpayers spend money on parks, nearby property owners are getting a windfall. Their assets are becoming more valuable, not by their own doing, but because of a public investment. Why should adjacent property owners capture the windfall, and not the taxpayers?
I think the taxpayers should capture the windfall, and that is why I think it’s better to pay for public amenities like parks with Value Capture instead of general taxes.
Value capture is basically just a tax on assessed land value in a specific area. In this case, Lower Macungie Township would draw up a Greenway tax district around properties within maybe a half mile of the Greenway, and then tax the land values inside that district to pay for the Greenway. The taxpayers would be capturing the windfall in land values that Ron is talking about, and then using that windfall to pay for the Greenway.
In addition to parks, value capture and land taxes are also a good way to fund light rail, dedicated bus transit improvements, bike lanes, neighborhood tree planters, and any other public amenities where the closest landowners receive the most direct benefits.