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ECONorthwest ECONOMICS - FINANCE - PLANNING DATE: February 12, 2018 TO: Matthew Arnold, Erica Stromeier of SERA Architects FROM: Matthew Craigie, Angelica True SUBJECT: REDWOOD CITY PARKS PROJECT - URBAN PARKS AND REAL ESTATE VALUES To help inform Redwood City's Parks Assessment Project, ECONorthwest reviewed research related to the effect of urban parks on real estate property values. SERA Architects, the lead consultant on the project, asked ECONorthwest to conduct this research, and to specifically look to see if there exists a positive connection between "quality" urban parks and higher real estate values. This brief document summarizes our findings. Research Findings We found several studies that indicate that there exists a relationship between parks, parklands, or open space with higher real estate values. In the studies that we reviewed, proximity to parklands generally led to higher property values, but the documented magnitude of this effect varied widely from study to study. Crompton (2005) conducted a similar literature review of park studies and concluded that properties abutting or fronting a passive park could see as much as a 20 percent increase in their values. In our review of individual studies, findings were more conservative. For example, Wachter and Wong (2008) estimated that tree plantings in Philadelphia led to only a seven to 11 percent increase in home sales prices from 1998 to 2003. In a 2009 report from the Trust for Public Land, Harnik and Welle surveyed a wide range of studies on the value of urban parks. Their report identified seven influence factors from parks that can be enumerated—property tax, tourism, direct use, community cohesion, clean water, and clean air. Foremost, their report estimated that an urban park, on average, adds approximately five percent to the value of homes within a 500 -foot radius of a park. Parks with exceptional recreational facilities, they found, may contribute as much as 15 percent to home values, whereas problematic parks (those that are poorly maintained or neglected) may subtract as much as five percent. Their report went on to estimate that the Washington D.C. urban park system, for example, generated nearly seven million additional dollars in property tax revenue for the District of Columbia in 2006. Regarding tourism, their report estimated a positive linkage between parks and increased tourist spending. Their report found that in San Diego, 20 percent of tourists visited a local park in 2006, and that 22 percent of these visitors came to San Diego specifically to visit its parks. Harnik and Welle estimated that additional tourist spending related to park trips contributed around 40 million dollars to the local economy. ECONorthwest I Portland I Seattle I Eugene I Boise I econw.com 24 SEPTEMBER 2018 The report also found that urban park systems enable individuals to save on health costs. A study surveyed in the report estimated that in 2006 alone, the Sacramento park system saved nearly 20 million dollars in individual health costs as result of the urban park system. Lastly, Harnik and Welle's report showed that urban park systems allow a city to save on stormwater costs and also provide other environmental benefits. The report estimated that the City of Philadelphia saved approximately six million dollars in stormwater management costs due to runoff reduction from its park systems in 2006. Related to environmental benefits, the report estimated that that Washington D.C.'s urban park system yielded nearly 20 million dollars in air pollution removal value in the same year. The results from other studies on the value of urban parks was more mixed. One relevant study, Wu, Xu, and Alig (2015), concluded that open space conservation can either increase or decrease total property values. If open spaces and parks are poorly suited to the needs of the community, increased conservation of open space can divert funding from other municipal services, lead to a higher property tax rate, a lower level of municipal services, and lower total property values. Only parks well-suited for their local community will lead to an increase in total property values and mitigate negative fiscal impacts, they argue. Some studies did show that proximity to an open space area or park may have a negative effect on real estate values. Hicks and Queen (2016) studied how the proximity to historic monument areas in Williamsburg, Virginia, affected home sales prices and surmised that there may be a disamenity effect associated with the noise and crowds these areas attract. They found that sales prices were higher for properties near but not adjacent to a historic monument. They found similar results for proximity to a golf course, resource protection area, or park, but the negative effects were not significant. However, it is important to note that parks can generate disamenities, such as noise or higher crime rates. While a close proximity to open spaces and parklands was generally shown to have a positive effect on property values, several studies indicated that this positive effect decays quickly for properties located farther away from the open space. Cho et. al. (2010) estimated that, on average, "after buffer radii of 2.2 and 1.5 miles, the positive marginal values attributed to additional developed open space and forest -land open space, respectively, approach zero" Similarly, Hicks and Queen found that a small increase in distance away from an open space led to a large decrease in a home's sale price ($1,400 to $2,000). One common element that was prevalent in many of the studies we reviewed was that the impact of an open space or park on real estate values must be considered on a case-by-case basis. In a 2005 review of more than 60 studies on the value of open space, McConnell and Walls concluded that it may be difficult for policymakers to rely on existing research to estimate the dollar value of an open space. The impact will depend heavily upon the design of the study, the needs of the community, and the design of the open space or park. 00 D 1 sv ECONorthwest 2 0 159 Iv