The Impact of Greenways on Property Values: Evidence from Austin, Texas; An Assessment of Tax Revenues Generated by Homes Proximate to a Greenway
The study found that neighborhoods with access to and views of the trail command higher property values, and that these higher property values generate additional tax revenue for municipal and county governments. Trails may not pay for themselves based solely on higher property tax revenue, but the likely additional revenue would offset some of the expense.
This study would be useful for those interested in understanding how different types of trails, and access to trails, affect nearby property values. Because this study was conducted in neighborhoods in a large city, and on a flagship trail that provides important and unique access to recreation within the city limits, the estimated effects on property values are higher than they would be for a smaller community or where access to trails is distributed more evenly around the city.
Both studies were conducted in three distinct neighborhoods along the Barton Creek Greenbelt within Austin city limits. Austin had a population of 836,800 in 2013 and the county had a population of 1,063,248.
The Barton Creek Greenbelt is used by mountain bikers and hikers, and provides access for rock climbing and swimming. It begins near downtown and follows a creek for 7.9 miles.
These two studies evaluate the difference in property values and subsequent property tax revenue attributable to proximity to the trail. The authors ask whether proximity to the trail caused sufficiently higher property values such that the higher property taxes paid by landowners offset the city’s annualized cost of acquiring the greenbelt. These were academic studies; it is unclear whether any funders contributed to them.
The authors found a price premium for lots adjacent to the trail in two of the three neighborhoods studied, although variation in topography and physical layout determined the magnitude of price difference.
In the Barton neighborhood, properties close to the trail had a $44,332 (20% of mean sales price) premium. In the Travis neighborhood, properties adjacent to the trail fetched a $14,777 (6% of mean sales price) premium. The study found no effect on adjacent properties in the third neighborhood, Lost Creek. The lack of an effect in Lost Creek is attributed to the fact that properties adjacent to the trail are heavily wooded and have no views of, or access to, the trail.
The authors estimate the city received approximately $59,000 per year in taxes due to increased property values near the trail in the Barton and Travis neighborhoods. This amounted to approximately 5% of the city’s annual debt payments of $1.1 million for the original land purchase and trail development. Although the additional tax revenue from these neighborhoods does not compensate for the trail’s expense, the authors point out that many more Austin residents and visitors use the trail than just its neighbors. For a highly-valued community-wide resource such as the Barton Creek Greenbelt, the benefits will accrue far beyond the immediate neighborhoods.
Nicholls and Crompton (2005) also provide an overview of older studies from 1978-1995 that have measured the effect of greenways on nearby property values and/or ability to sell properties.
The authors estimated the difference in property values using a hedonic price model, a statistical approach that compares homes that are identical in all ways except for their proximity to the trail. The difference in price between the two homes compared is the value of being close to the trail. The authors estimated separate models for each neighborhood.
The property tax premium was calculated by multiplying the property value premium by the city’s mill rate. The authors then used the proportion of total property tax revenue that the city actually receives (the remainder goes to the county, hospital, schools, etc.) to determine the total benefit to the city.
Crompton, J., and S. Nicholls. 2006. “An Assessment of Tax Revenues Generated by Homes Proximate to a Greenway.” Journal of Park and Recreation Administration 24(3): 103-108.
Nicholls, S., and J. Crompton. 2005. “The Impact of Greenways on Property Values: Evidence from Austin, Texas.” Journal of Leisure Research 37(3): 321-341.