Part 3 – Don Bruns’ Addresses Council on Transformative Urban Development – Costs and Losses

Facing Up to Transformative Urban Development

Abstract:

The real value of open space and parklands is often hidden behind a long-standing myth that development is the “highest and best use” of vacant land—even of land deemed to be “underperforming”. Long-term costs of development are too easily overlooked at the insistence that increased urbanization more than pays for itself. But this is a “myth”. Development increases municipal financial obligations needed to maintain public services and infrastructure that increased urban development requires, and it increases local taxes that benefits developers instead of our community. Littleton’s unique and definitive open-space and small-town character is also compromised by development’s significant social and environmental impacts. Consequently, the short-term economic benefits of urban development are over-valued; and long-term social, environmental and economic impacts are undervalued. On the other hand, open-space and parkland contributes positively to our quality of life, increases property values and thereby generates increased local tax revenue. John Crompton at Texas A&M calls this “The Proximate Principle.”

These impacts, plus and minus, are seldom if ever squarely addressed. Unless this situation is rectified, Littleton’s citizens will end-up paying for such indiscretion long after developers have left with their booty. This need not be. Council should instead insist that its planners study and identify the costs and benefits of development proposals and of reasonable alternatives, including maintenance of open space; that findings be reported to citizens; and that the Council itself become more open to citizen feedback. Otherwise, our city’s most distinctive brand—“Anything but Big”—and its most significant engine for productivity will be irreversibly compromised.

 

What is at Risk

It is understandable that developers would want the city to say “yes” to proposals they believe will generate the immediate income on which their livelihood depends. But affected community livelihoods and their quality of life also hangs in the balance. What is difficult to understand is why local decision-makers would ever turn a deaf ear to the voices of citizens concerned about sustaining their communities’ character and well-being and their insistence that elected representatives hold city administrators accountable for addressing them.

Indeed, Littleton’s residents are seeing decision makers get caught up in the urban development panacea, apparently for the sake of short-term economic gains from development activity. And that may well be because long-term economic costs to taxpayers; erosion of the city’s most significant benefits engine—its highly valued open space, defining community character; and adverse social, environmental and economic impacts are not being addressed.

Development: is it the Highest and Best Use?

John Crompton at Texas A&M has written extensively about this, explaining that the conventional wisdom prevailing among many decision-makers and taxpayers is that development is the ‘highest and best use’ of vacant land for increasing municipal revenues.” He notes that developers reinforce that view, claiming their projects “pay for themselves and then some” by increasing the municipal tax base, thereby lowering individual property taxes.

Councilwoman Brinkman echoed that same perspective at a January 7 meeting requested by the Palisade HOA to learn about the council’s knowledge of future use of the agriculturally zoned undeveloped land southwest of Mineral and Santa Fe. Ms. Brinkman indicated that she believed the economic value of this land makes maintenance of its open space character ill advised. This is illustrative, because this traditional way of thinking about development as highest-and-best use applies not only to the agriculturally zoned land at Mineral and Santa Fe, but to all of the city’s open-space and parklands which contribute to and help define the unique and most distinctive character of Littleton.

Crompton explains,

This myth resides deep in the American psyche and frequently has thwarted the conservation efforts of park and open space advocates. However,” he adds, “…the on-going resistance of residents to tax increases has caused some elected officials to scrutinize this conventional wisdom more carefully. This has led to investment in fiscal impact analyses and cost of community services (COCS) analyses.

 “COCS analyses 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 traditional belief that development pays its way is being discarded. The emerging prevailing view is that few developments generate sufficient tax payments to pay their way.” [1]

Open-space and parklands can play a significant role in reducing taxes for community citizens. Crompton writes:

“Findings from these analyses [COCS] have challenged conventional wisdom. They have consistently shown that the public costs associated with new residential development exceed the public revenues that accrue from it. The 98 cost of community services studies reviewed showed that 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. There was not a single instance among the 98 communities where taxes from residential development were sufficient to cover the costs of servicing them.” [2]

Facts to be Reckoned With

More than a decade ago, it Crompton explained that local municipalities were waking up to what’s really happening:

“COCS analyses 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 traditional belief that development pays its way is being discarded. The emerging prevailing view is that few developments generate sufficient tax payments to pay their way.” [3] Don – this is a repeat from the paragraph above but the footnotes are different.

As if to underscore the relevance of Crompton’s findings for Colorado’s Front Range communities, he provided another illustration right from our own back yard:

““The people who reside in developments require services. Natural parks and open space require few public services—no roads, no schools, no sewage, no solid waste disposal, no water, and minimal fire and police protection. This difference in cost of service provision was documented in the city of Boulder, Colorado, where it was found that the city’s costs of servicing non-open space areas exceeded $2,500 per acre, whereas the costs associated with open space in the city were only $75 per acre — less than 3% the cost of non-open space (Crain, 1988).” [4]

These findings beg asking whether the Council might be open to developing a greater awareness, appreciation and consideration of the importance and value of open-space vs. urban development, not only to Littleton’s citizens, but also to sustainability of the city itself itself.

The Proximate Principle

Open-space and parklands are magnets for people. Their amenities function as a balm for the stress of urban living, and proximity to open space is a useful for gauging neighborhood livability. Nearly 30 years ago Kaplan and Kaplan reported study results demonstrating reduced stress and improved life satisfaction by people who had visual access to natural elements such as trees and flowers. Open-space and parkland proximity to where people live is so significant that John Crompton authored a book entitled The Proximate Principle:

“The real estate market consistently demonstrates that many people are willing to pay a larger amount for property located close to parks and open space areas than for a home that does not offer this amenity. The higher value of these residences means that their owners pay higher property taxes. In effect, this represents a ‘capitalization’ of park land into increased property values of proximate land owners.

 “This process of capitalization is termed the ‘proximate principle.’ It means that in some instances if the incremental amount of taxes paid by each property which is attributable to the presence of a nearby park [or open-space] is aggregated, it will be sufficient to pay the annual debt charges required to retire the bonds used to acquire [the open-space or park] and develop the park.” [5]

To help decision makers adapt study results to local contexts, Crompton suggested that a 20 % positive impact on property values abutting or fronting passive parks or open-space as a reasonable starting point or guideline. For

Crompton wrote that “The value of a view of water has been proven conclusively….The significant, positive effect of a water view obtained in the remaining studies held across all types of water features, including ocean, lake, river, and canal.” He added: “The most recent evidence, however, suggests that the value of such a view is growing in importance relative to the value of a house. Studies since 1997 have listed premiums from 30% to 147% for full ocean views, and over 10% for partial vistas. Lake view premiums of 18% to 56% have been reported. One study found a 115% premium associated with a view of a creek or marsh.” [6]

The diversity of studies cited by Crompton also made it feasible to address the question of to what distances does the proximate beneficial impact of parkland and open-space extend:

“The diversity of the study contexts makes it feasible to offer a generalizable definitive answer to the third question addressed by the empirical studies which concerned the distance over which the proximate impact of park land and open space extends. There was consensus among the studies that it has substantial impact up to 500-600 feet (typically three blocks away from the park). In the case of community-sized parks (say upwards of 40 acres), it tended to extend out to 1,500-2,000 feet, but even in those cases the premium was small after 500-600 feet.” [7]

Yet more recent work notes that the distance to which the Proximate Principle positively affects property values is greater at larger parks, such as the Platte River Greenway:

“However, especially in the case of larger parks, it is likely there are additional economic benefits not captured by capitalization into increased property values beyond this peripheral boundary, since the catchment area from which users come extends beyond it.

 “This type of work is useful in that it provides a measure of the value of parks, whereas elected officials tend to think only of their cost. However, the focus is myopic since the value of parks to a community involves many factors other than proximity such as level of maintenance, maturation level of the park, ration of supply and demand and type of use.” [8]

Studies cited by Crompton revealed that “findings demonstrated that parks serving primarily active recreation areas were likely to show much smaller proximate value increases than those accommodating only passive usesuch as open-space. Findings also showed that impacts were not likely to be positive from poorly maintained parks, from parks where insufficient visibility contributed to anti-social behavior; and where park users compromised adjoining property owner privacy.

[1] J. L. Crompton, “Parks and Open Space: the Highest and Best Use of the Land?” Journal of Parks and Recreation Administration, 2001 (p. 135).

[2] J. L. Crompton, The Proximate Principle, National Park and Recreation Association, 2004 (p. 7).

 [3] J. L. Crompton, “Parks and Open Space: the Highest and Best Use of the Land?” Journal of Parks and Recreation Administration, 2001 (pp. 134-146).

 [4] Ibid. (p. 135).

[5] J. L. Crompton, The Proximate Principle, National Park and Recreation Association, 2004 (p. 1).

[6] Ibid. p. 5.

[7] Ibid, p. 4.

[8] J. L. Crompton, “The impact of parks on property values: empirical evidence from the past two decades in the United States,” in Managing Leisure 10, 2005, p. 216.

 

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