What will happen to Golden Valley property values if light rail is built?
There has been a lot of speculation about the impact of light rail on property values. While it is true that many studies show that homes near light rail stations increase in value, there are many exceptions. Property values in certain neighborhoods, specifically middle class and affluent neighborhoods, did not always see the their property values increase with light rail. In fact, some neighborhoods saw their property values decrease. Below is an excerpt that describes the experience of an Atlanta neighborhood that resembles the situation in Golden Valley, from “Impacts Of Rail Transit On Property Values:”
In Atlanta, the impacts of rail transit were tested in an area of DeKalb County along the East Line of the Metropolitan Atlanta Rapid Transit Authority. This study area was chosen because the neighborhood types served by the line to the north and south of the line are dramatically different enough to demonstrate if there are relative differences due to neighborhood types. The east line follows the right of way of freight railroad tracks stretching to the east from downtown Atlanta. As such, industrial uses lie on both sides of the rail transit line, generally adjacent to the right-of-way. These industrial uses, the railroads, and the MARTA East Line form a buffer between the neighborhoods to the north and south of the right-of-way. The areas to the north of the line comprised predominantly middle class neighborhoods with some prominent affluent sections. The areas to the south of the line are predominantly lower income, lower middle class neighborhoods. In 1980, the average value of housing on the north side of the tracks were more than twice the value on the south side of the tracks. At the same time, the mean family income on the north was close to twice that on the south side. The fact that these two dramatically different neighborhood types were served by the same transit line presented the opportunity to examine if the impacts of rail transit on property values depend upon the characteristics of the neighborhood.
Examination of the effects of proximity to rail transit for these two neighborhoods showed that proximity to rail showed a positive effect on property values on the south side, but a negative effect in the neighborhood on the northside. In the neighborhood on the south side, property values increased close to $1045 for every 100 feet a property was closer to the East Line. The opposite occurred on the north side. For every 100 feet a property was closer to the East Line, property values dropped by $965. This negative effect may be due to such factors as noise, perceptions of crime, and visual intrusion. The pattern of rising property values as one travels to the north of rail tracks may also have to do with the general pattern of rising incomes as one travels to the north. In addition, proximity to the industrial uses and the freight railroad right-of-way were may also be deterrents to high property values. In the case of the south side, the value of accessibility provided by the rail line more than compensated for these nuisance effects. On the north side, the value accessibility was not enough to compensate for the nuisance effects. (6)
The nuisance effects on the neighborhoods of Golden Valley effected by the Bottineau line clearly are greater than the benefits residents might gain by accessibility to transit. The property values of homes in Golden Valley near the Bottineau line will almost certainly decrease. Not only is Golden Valley considering adding light rail to a neighborhood that does not depend on public transit, they are negating the value of three parks (Sochacki Park, Mary Hills Wilderness Area, and Theodore Wirth Park).
What do parks do for property values?
Below is a study that demonstrates the many benefits of adding parkland to urban areas presented by the American Planning Association (visit their website for study resources):
KEY POINT #1:
Real property values are positively affected by parks.
More than 100 years ago, Frederick Law Olmsted conducted a study of how parks help property values. From 1856 to 1873 he tracked the value of property immediately adjacent to Central Park, in order to justify the $13 million spent on its creation. He found that over the 17-year period there was a $209 million increase in the value of the property impacted by the park.
As early as the 19th century the positive connection between parks and property values was being made. Olmsted’s analysis shows the real dollar amount impact of parks. His study was not a unique situation, however. Several studies conducted over the last 20 years reaffirm his findings, in cities across the country. Below are more examples of how proximity to a park setting is connected to property values.
KEY POINT #2:
Municipal revenues are increased.
Another component of the Central Park study was an assessment of increased tax revenue as a result of the park. The annual excess of increase in tax from the $209 million in property value was $4 million more than the increase in annual debt payments for the land and improvement. As a result of building Central Park, New York City made a profit.
Increased property values and increased municipal revenues go hand in hand. Property tax is one of the most important revenue streams for cities. By creating a positive climate for increased property values,the tax rolls will benefit in turn.As shown with Central Park, parks can both pay for themselves and generate extra revenue. In addition, tax revenues from increased retail activity and tourism-related expenditures further increase municipal monies.
KEY POINT #3:
Affluent retirees are attracted and retained.
KEY POINT #4:
Knowledge workers and talent are attracted to live and work.
“…cities are characterized by a sense of place, beauty in the natural environment, a mixed-use transportation system and a 24-hour lifestyle. These are the characteristics that will attract the creativity and brainpower that undergird the new economy.” Steven Roulac, futurist, The Roulac Group.
A significant change has occurred in the American economy. Industry today is composed of smokeless industries, high technology, and service-sector businesses, collectively referred to as the “New Economy.” The workers in the New Economy are selling their knowledge, as opposed to physical labor, as the main source of wealth creation and economic growth. These employees, referred to in studies as “knowledge workers” or “talent,” work in a “footloose” sector — companies are not tied to a certain location in order to achieve a competitive advantage.
What the companies are attached to is retaining their talent and attracting more talent. As a result, several studies have been conducted to determine what factors are important to talent when they are making employment decisions.
A survey of 1,200 high technology workers in 1998 by KPMG found that quality of life in a community increases the attractiveness of a job by 33 percent.
Knowledge workers prefer places with a diverse range of outdoor recreational activities, from walking trails to rock climbing. Portland, Seattle, Austin, Denver, and San Francisco are among the top cycling cities; they also are among the leaders in knowledge workers.
Workers attracted to an area are then positioned to put money back into the local economy through jobs, housing, and taxes, which then contribute to parks.
KEY POINT #5:
Homebuyers are attracted to purchase homes.
A 2001 survey by the National Association of Realtors (NAR) revealed that 57 percent of voters would choose a home close to parks and open space over one that was not.
In addition, the NAR survey found that 50 percent of voters would be willing to pay 10 percent more for a house located near a park or protected open space.
The National Association of Home Builders found that 65 percent of home shoppers surveyed felt that parks would seriously influence them to move to a community.
According to Economics Research Associates (ERA), a 1991 survey in Denver found that 48 percent of residents would pay more to live in a neighborhood near a park or greenway.
One of the most popular planned community models today is golf-course residential development. However, surveys have shown that the majority of people who live in golf course communities don’t play golf regularly — as many as two-thirds, according to ERA. They are attracted to the dedicated open space, the expansive views, and the guarantee that both elements will stay the same. By promoting, supporting, and revitalizing urban parks, cities can help attract a significant portion of the homebuying community.