Open Space Purchases, House Prices, and the Tax Base

This paper examines the effect of public acquisitions of open space on house prices and the municipal tax base. While a series of studies show that open space acquisitions raise values of nearby properties, no research to date appears to focus upon the effect of open space acquisitions upon local tax base. Existing studies focus on the effect of open space acreage on house prices. We examine the effect of open space expenditures on house prices at the municipal level. We find that a one-dollar increase in open space expenditures per housing unit is associated with average house prices that are about $13 higher and with a tax base that is about $15 lower per acre. Open space expenditures per housing unit also show a consistent positive effect on the percentage change in house prices over the period 1995-2000. However, we find no statistically significant effect from open space expenditures on the percentage change in the tax base over the period 1995-2000. Local funding (rather than state funding) for open space has a smaller impact on house prices but the effect is significant only in some specifications. Despite the negative effect of open space purchases on the tax base, we find that higher open space expenditures are associated with lower tax rates. In addition, we find that while higher tax rates are associated with a lower tax base, a larger tax base does depress tax rates. The percentage change in the general property tax rate over the period 1995-2000 shows a significant negative effect on the percentage change in the tax base per acre over the period.