The “Ratables Chase”
Economics Of Open Space
There is a long-held belief about undeveloped land that even though it may be nice to look at, it is not economically productive, and that it only carries its weight in the local tax base after it is developed. Communities in growing areas are finding out that this belief is wrong. More and more studies are showing that conserving open land and carefully choosing those areas that should be developed is not contrary to sustainable economic health, but essential to it.
The choice is not one of environment and aesthefics versus economics. Land conservation can be a sound investment. Studies comparing the fiscal impacts of development to those of open space protection have found that open space has a more positive impact on a community’s economy than most conventional forms of suburban-style development, even when property is preserved through public dollars.
What the findings mean is that development is not a sure-fire economic boon, and protecting the resource base pays off. Development that destroys community resources and natural features is both economically and environmentally wasteful.
Several factors point toward the benefits of open space conservation and sensitive development:
-The benefits and costs of residential development and open space – According to 1989 figures from the United States Department of Commerce, each $ 1.00 of suburban development rateable costs, on average, $ 2.05 in service when averaged over a 20-year period (in other words, residential development usually results in a net tax loss). By contrast, farmland costs $ 0.24 for each $ 1.00 of rateables.
A 1989 study by Cornell Cooperative Extension of Dutchess County, NY, and the American Farmland Trust found that in the towns of Beekman and North East, residential lands required $1.12 to $1.36 for every dollar they contributed, while agricultural land required only $ 0.21 for every dollar it contributed in North East and $ 0.48 for every dollar it contributed in Beekman.
The difference lies primarily in the services that must be provided. Residential development places demands on the school system, police and fire, water and sewer, and other services. By contrast, farmland and other open space requires much less in the way of services, a situation that more than makes up for its lower tax rate.
-Commercial development is not the major contributor it once was – Businesses typically have a more favorable benefit/cost ratio, but account for a smaller percentage of rateables than in the 1950’s. Because communities are competing for businesses, and those businesses are facing stiff competition, the combination has forced down the percentage of the tax base contributed by the business sector. where businesses in the 1950’s paid 45 percent of the local taxes. [In 1991 they paid] only 16% they pay only 16 percent. And while businesses generally require fewer services than residential development, they attract development, where open space generally does not, at least to the same extent.
-Benefit cost ratio changes over time – Development may initially present a positive benefit/cost ratio, as many infrastructure needs such as water and sewer are subsidized by the Federal Government or bonding. But as years pass and maintenance requirements increase, the positive benefit/cost ratio begins to evaporate.
Open space has benefits in its own right.
-It often translates to tourism dollars. Outdoor recreation is a major component of the tourism economy, but also serves residents who consider access to parks, rivers and streams, historic sites, forest trails, hunting areas, or rural scenes important elements of their quality of life.
-Farming is still of vital importance to the region, generating $120 million annually.
-Open space reduces the danger of flooding and provides a natural filtration system for water. Suffolk County, New York’s groundwater recharge area acquisition program was~triggered by public awareness that uncontrolled growth threatened the quality and quantity of the county’s water supply. The county’s voters realized that protecting the groundwater system by buying important areas above it made better economic sense than finding another water source.
The ability of a natural floodplain to channel floodwaters efficiently – for free – can cause a public emergency when development gets in the way. The remedies needed to protect life and property after floodplains are improperly developed are limited and costly. Improper development of a flood plain, wetlands and stream borders can also affect the frequency and severity of floods, causing severe hardship for communities downstream.
-Protected open space increases the value of nearby or adjacent property. Results of a 1978 study of Boulder, Colorado’s greenbelt indicated that property value decreased by $4.20 for every foot of distance from the public open space. More recent studies of greenway corridor paths, park lands, and lands under conservation easements throughout the country, in settings ranging from the most urban to rural, have also found that access to protected open space is a valuable amenity in the real estate market.
Bond ratings are beginning to reflect the fact that unlimited or mismanaged growth can threaten a community’s fiscal health1 while land conservation and sound planing can help sustain it. The rating assigned to Howard County, Maryland, which lies in the rapidly growing Baltimore to Washington, D.C. corridor, is one example. In May, 1990, Fitch Investors Service gave the county a AAA bond rating for the issuance of over $55 million in bonds for capital projects because of its record and its specific plans for limiting and managing growth. In its report on the bond issue, Fitch states: “The recently completed general plan for future county development is an example of the county’s superior planning skill. A conscious decision has been made, after discussions with residents and business, to control future growth within the county to ensure that the quality of life continues to be desirable.”
The value of a productive farm field, a healthy wetland system, or an irreplaceable scenic vista goes far beyond dollars and cents. It is important to understand the real economic benefits of protecting open space. As the previous examples show, the benefits can range from filtering water and channelling floods for free, or avoiding the increased costs of serving homes arranged in sprawling grids, to attracting tourist dollars to the region, or influencing the bond ratings that govern the costs of long-term debt.
Too often communities are presented with a false choice between economic growth and open space protection.
Excerped from the 1992 N.Y.-N.J. Highlands Regional Study, U.S. Department of Agriculture. (parentheses and brackets added)