September 2020 - Parks & Recreation - 22

FINANCE FOR THE FIELD
The Role of Parks and Open
Spaces in Reducing Taxes
By John L. Crompton, Ph.D.

erate, so most of these costs are paid
by the 90 percent of existing taxpayers; even though they are adequately
serviced by the existing infrastructure.

The Empirical Evidence

I

n previous columns, I have reported empirical evidence demonstrating
that in most contexts, parks, trails, golf courses and open spaces have a
positive impact on property values. However, the development community frequently expresses a competing view on how land should be used
and so the question often becomes: Is an investment in park and open space
likely to yield a better return than if the land were used for development?
The prevailing conventional wisdom among many elected officials
and taxpayers is that development is
the " highest and best use " of vacant
land for increasing municipal revenues. Developers claim their projects
" pay for themselves and then some. "
They exhort that their developments
will increase a community's tax base
and lower each existing resident's
property tax payments. Thus, while
it may be accepted that a park is likely to contribute extra increments of
property tax from surrounding property to the local city treasury, developers frequently argue that much larger

property tax revenues would accrue if
the space was built out with homes.
However, there are two sides to
a balance sheet and the developers'
perspective conveniently omits the
additional capital and operating costs
of providing schools, sewers, storm
drainage, transportation, roads, water, fire and police protection, park
and recreation facilities, libraries,
general government offices, electricity, gas and solid waste disposal. If
a community grows by 10 percent,
these additional costs fall far short of
the property and sales tax revenues
the new 10 percent of residents gen-

Figure 1. Median Cost to Provide Public Services to Diﬀerent
Land Uses per Dollar Revenue Raise (n=151 communities)
$1.20
$1.16

$1.00
$0.80
$0.60
$0.40
$0.37
$0.20
$0.0

20

Parks & Recreation

$0.30

Commercial
& Industrial

Farm/Forest
Open Space

| S E P T E M B E R 2 02 0 | PA R K S A N D R E C R E AT I O N .O R G

Residential

In the late 1970s and 1980s, standardized procedures emerged for undertaking Cost of Community Services
(COCS) analyses. In the decades since
their introduction, this analytical tool
has become increasingly sophisticated
and has been used by many local governments to analyze the sources and
expenditures of taxation revenues.
The analyses identify three different land uses in a community -
residential, commercial/industrial
and agricultural/forest/open space
- and recognize that they produce
different amounts of tax revenues
and cost different amounts to service. The American Farmland
Trust reports the findings of 151
COCS studies, undertaken by more
than 40 different research teams in
26 different states (see Figure 1).
For every $1 million received in
revenues from commercial/industrial
and farm/forest/open space, the median amounts these communities had
to expend to service these sectors were
only $300,000 and $370,000, respectively. In contrast, for every $1 million
received in revenues from residential
developments, the median amount
the communities had to expend to
service them was $1.16 million.
While the supposed benefits of
growth are loudly and widely proclaimed by a community's growth
coalition, its associated costs are
rarely discussed. The results from
these studies refute the notion that
development of land is invariably its
" highest and best use, " which, sometimes, thwarts park and open space
initiatives (see Figure 2).
September 2020 - Parks & Recreation

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