Real Value: The Parks Premium
Crompton's research shows that quality parks and open space directly increase the property value of homes. "In effect, this represents a 'capitalization' of park land into increased property values of proximate land," he writes. "Developers need to apportion the opportunity cost of park and open space lands in their projects to individual lots, and to establish these premiums based on the lots' locations." He compares the premium effect to that enjoyed by fairway homes in a golf-course community.
Crompton suggests calculating premiums using a sliding scale, based on the home's distance from the park. His research shows that the positive impact on property values applies within a three-block (500 feet) radius for neighborhood and larger parks. In addition, "Large parks are likely to have value to populations beyond the radius that can be captured by proximate capitalization."
However, his research shows that enhanced property values are created only by high-quality, well-maintained parks. Using a five-point scale, Crompton suggests that property value premiums be calculated according to park quality: Unusual Excellence equals 15% premium; Above Average equals 10%; Average equals 5%. Conversely, Below Average or Blighted parks could correspondingly lower proximate property values.
The suggested percentage premiums are averages for a three-block radius. The effect was found to be strongest immediately adjacent to the park. For the first block, Crompton documents several "recent, technically strong studies that reported premiums in the 16% to 22% range."
An average price for a nice Downtown Austin condo is $500,000; a 15% premium would be $75,000. Not a bad return on a $650 parkland-dedication fee.
Source: The Proximate Principle, 2004, National Recreation and Parks Association