Our Vision. Our mission ARPA

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2 ARPA (Alberta Recreatin and Parks Assciatin) is a prvincial charitable nt-fr-prfit rganizatin with a vluntary bard f directrs dedicated t the prmtin f recreatin and parks and their benefits t the quality f life f all Albertans. Our Visin "A prvince, and cmmunities within, that embrace and practively use recreatin and parks as essential means fr enhancing individual well-being and cmmunity vitality, ecnmic sustainability and natural resurce prtectin and cnservatin." Our missin ARPA strives t build healthy citizens, their cmmunities and their envirnments thrughut Alberta. Fr mre infrmatin n ARPA, ur prgrams r services, r the benefits f recreatin and parks, please visit ur website at ARPA Grat Rad Edmntn, AB Canada T5M 3K6 Tll Free: Phne: Fax:

3 Table f Cntents Cmmunity Parks Have Pwer t Bst Prperty Values...1 The Prximate Principle: Answers T Key Questins...2 What is the Prximate Principle?... 2 Why is the Prximate Principle imprtant nw?... 2 What parks were included in this research?... 2 Hw was the research cnducted?... 2 What d experts elsewhere say abut the prximate value f parks?... 3 Hw des the Prximate Principle play ut in the Alberta cntext?... 3 Hw can cmmunities apply the Prximate Premium?... 3 D Alberta develpers benefit by prviding parks and pen space?... 4 Des ur tax base benefit frm parks and pen space?... 4 What design factrs ptimize the Prximate Principle?... 4 Wh needs t knw?... 4 What caveats must we emply when applying the Prximate Principle?... 5 Trends Impacting Park Space...6 Other Applicatins f the Prximate Principle... 7 Fr mre details, view the full reprt n line at r see the attached backgrunder and/r cntact: Rick Curtis, ARPA Executive Directr, rcurtis@arpanline.ca, Karen Paul, Serecn Management Cnsulting, kpaul@serecn.ca, Karen Snethun, ARPA Research Crdinatr, trayder@telus.net,

4 Cmmunity Parks Have Pwer t Bst Prperty Values Alberta s increasing urbanizatin pses significant challenges fr cmmunities seeking t balance affrdability and quality f life. In that cntext, this Alberta Real Estate Fundatin spnsred study cnfirms what experts elsewhere have shwn: where parkland is cncerned, it s nt either-r. Parks and pen spaces have great ptential t ffer nt nly crucial human and envirnmental benefits, but net ecnmic gain. Municipalities generally d recgnize that the value f parks extends beynd direct tax revenue generatin and is integral t the quality f life needed t supprt ecnmic develpment. They als knw that spending n parks, including prgramming enhances the scial capital f the cmmunity while detering negative scial behaviur. Experts such as Dr. Jhn Crmptn f Texas A&M University have shwn empirically that well integrated and maintained parks, pen spaces and waterways enhance nearby hme values, resulting in higher prperty taxes paid by these hme-wners. The higher taxes, nce aggregated, have the ptential t cver the debt required t acquire and develp the park. That benefit, termed the Prximate Principle ccurs in additin t the park s ability t fster healthier lifestyles and envirnments. Yet as Dr. Crmptn pints ut, the assumptin persists that investment in parks brings n ecnmic returns. This study,, shws that the Prximate Principle can be usefully applied in this prvince. Cnducted by Serecn Management Cnsulting, the study examines the value f prperties surrunding park space in newer subdivisins in six varied Alberta cmmunities. It finds sme prperties attracting premiums f up t 15% and paying mre prperty tax as a result. The value f these incremental taxes, nce aggregated, mre than equates t the annual csts f maintaining the parks in sme cases. In Alberta, park acquisitin and develpment csts in new sub-divisins are typically recvered by the develper thrugh lt sales, rather than financed by the municipality, s debt servicing is nt an issue. Nt all parks hwever, have as significant a psitive effect n prperty and tax values. In fact, prximate premiums range widely and can even dip belw zer fr a nisy r unkempt park that intrudes n privacy. But with careful planning, cmmunities acrss Alberta can integrate parks in a way that enhances the value nt nly f surrunding prperties, but f the entire cmmunity. Cmmunities can als emply these findings t ensure that municipal taxes are fairly distributed and thus avid unnecessary appeals. Funding fr this ARPA study was prvided by the Alberta Real Estate Fundatin. The Prximate Principle is ne f many ecnmic arguments fr the imprtance f parks. What yu ve gt in the end is an argument fr balanced park design. ARPA Page 1 Nvember 2007

5 The Prximate Principle: Answers T Key Questins What is the Prximate Principle? Residential hmes lcated clse t parks and pen spaces frequently sell at a premium. As a result, they generate increased prperty tax revenue. The incremental taxes can mre than equal the cst f servicing the debt required t acquire and develp the parkland. Experts in the field term the reality f this park-related benefit the Prximate Principle. Why is the Prximate Principle imprtant nw? New subdivisins are springing up all acrss Alberta as cmmunities respnd t ppulatin grwth and urbanizatin. A recent ARPA study, Municipal Green Space Allcatin: Practice and Prtcl in Alberta Cmmunities, fund that many cmmunities, including the fastest grwing nes, are taking an ad hc apprach t parks planning. Parkland tends t lse ut t ther pririties in that envirnment. Yet we knw frm ther research that parks and pen spaces are crucial t healthy living and quality f life. This analysis utlines cncrete ecnmic ratinale fr including ample and apprpriate park space in each new neighburhd and maintaining parks and pen space in lder neighburhds. It is widely accepted by all cmmunity builders that smart grwth invlves develpment that is envirnmentally sensitive, ecnmically viable, cmmunity riented and sustainable. Hwever, the tls that we create t insure smart grwth and the prcesses that we fllw as municipalities ften lie undevelped, are nt always fllwed and are ften disregarded in times f rapid grwth. What parks were included in this research? In cnsultatin with the ARPA Parks and Open Spaces Cmmittee, the prject cnsultants selected parks in six urban municipalities f varying size: Calgary (large urban) fur park types in the cmmunity f Hidden Valley Strathcna Cunty (small t mid urban/cmmuter) three mainly active parks in suth east Sherwd Park St. Albert (small t mid urban/cmmuter) fur park types in the cmmunity f Heritage Lakes Medicine Hat (mid urban) three park types in the cmmunities f Suthridge and Nrtheast Crescent Heights Oktks (small t mid urban/cmmuter) ne mixed use park in the cmmunity f Crystal Ridge Draytn Valley (small urban in a rural setting) ne mixed use park in the cmmunity f Nrthview The parks studied serve newer, sci-demgraphically average, mainly single family develpments that were nt influenced by majr reginal parks. The analysis fcused n parks designated as Municipal Reserve (MR), including a mix f active parks, parks assciated with schls and playing fields, linear parkways and smaller neighburhd tt lt parks. Hw was the research cnducted? T gather qualitative infrmatin, the team did a literature review, visited the chsen sites and cnducted interviews with stakehlders. Quantitative analysis included surveys in the chsen cmmunities, calculatins f capital and perating csts fr each park, calculatins f prximate premiums fr hmes near the parks and cmparisns f park csts t the incme gained thrugh incremental taxes generated frm the prximate premiums. ARPA Page 2 Nvember 2007

6 What d experts elsewhere say abut the prximate value f parks? Dr. Jhn Crmptn, distinguished prfessr at Texas A&M University, has built a bdy f research demnstrating the prximate value f parks, pen spaces r waterways. He has fund that being near t green space can raise prperty values as much as 20% fr an exceptinally well kept passive park, up t 30% fr hmes abutting glf curses and as high as 100% fr water views. He has fund prximate value extending three blcks frm the park and says it culd reach further. Blighted and unkempt r nisy and active parks and greenway trails, hwever, tend nt t have net psitive effect and can detract frm prperty value. In 2005, the City f San Carls in Califrnia applied the Prximate Principle fllwing Dr. Crmptn s mdel and fund that their lcal prperty tax base increased by $1.1 millin US due t 12 parks, which in turn cntributed ver $120,000 in prperty tax revenues. Hw des the Prximate Principle play ut in the Alberta cntext? Premiums are being paid fr living near parks in the Alberta sub-divisins studied. In general, the premiums vary frm abut 15% t less than 1% f the cst f hme and lt cmbined. High premium parks, attracting 10-15% abve the nrm, typically cmbine municipal reserve, envirnmental reserve and well-managed strmwater features t create a large enugh mass fr bth pleasant views and privacy. A cntiguus pathway set away frm the prperty line further enhances the value. Large, well buffered active cmmunity and shared schl site parks shw premiums f up t 10%. Mixed-use neighburhd and tt-lt parks typically attract mid-range premiums f abut 5-8%. Smaller, active parks that generate nise r intrude n privacy shw very lw prximate value f 1-2%, particularly if views are bstructed (e.g., by slid wden privacy fences). Landscaped buffer znes can smewhat mitigate thse negative aspects. Linear parkways add value cmparable t pen passive park space, althugh pr design, intrusin n privacy, presence f negative scial behaviur and unattractive fences may discunt the value. Narrw walkways sandwiched between fence lines with minimal landscaping, fr example, d nt appear t ffer a premium. Variatins in the prximate value f parks als reflect such realities as the verall supply f park space, cmmunity demgraphics, maturity and naturalizatin f landscaping and quality f the infrastructure. Develpers and market value based prperty assessment mdels apply an verall premium t a cmmunity with enhanced park r recreatinal amenities. Beynd that, premiums were fund t apply nly t lts abutting r frnting green space. Hw can cmmunities apply the Prximate Premium? Cmmunities wishing t calculate the prximate value f varius prperties are wise t use the full Prximate Value reprt (available at as a guide. Referring t specific park descriptins in Table 7.1, determine which Prximate Premium best applies t the park under analysis. Obtain assessment values fr hmes brdering the park frm yur municipal assessment department, r access that infrmatin nline, alng with the applicable tax rate fr the year in questin. Calculate the value f the cntributin as fllws: Prximate Premium x ttal assessment value x lcal tax rate = cntributin. Establish perating csts using ne f these tw methds: Multiply park size times per hectare rate, based n the mst cmparable park analyzed in the study, r ARPA Page 3 Nvember 2007

7 Estimate perating csts using the schedule fund in Table 7.2. Cmpare cntributin t csts. Aggregate fr all parks in the cmmunity. D Alberta develpers benefit by prviding parks and pen space? The presence f well-designed and ample parks helps subdivisins sell nt nly at higher prices, but faster, reducing develper carrying csts. Premiums fr hmes lcated arund Calgary s Hidden Ranch Park alne were calculated t cntribute just ver $875,000 (in tday s dllars) in added lt value, $100,000 mre than park develpment wuld cst in tday s dllars. Des ur tax base benefit frm parks and pen space? Estimates cnducted fr this study indicate taxes paid by hmes adjacent t parks can reasnably be expected t cver annual perating csts when the parks d nt have serius negative characteristics, ffer sme view benefit, d nt require high maintenance such as irrigatin and tuch enugh prperties t significantly bst cllective tax premiums. Havenwd Park in St. Albert is a particularly gd example f the pwer f well develped passive park space in cntributing t adjacent prperty values. The Prximate Premium is 15%, the highest f all parks cnsidered in this study. The park is ringed by husing, including a multi-family cluster n its nrth side, and has bth street and pathway expsure. The tax premium cntributin f the single family hmes alne cllectively exceeded annual perating csts by a factr f nearly 30% in the years studied. What design factrs ptimize the Prximate Principle? Design and management factrs can ptimize Prximate premium. Size matters. A ne- t tw-hectare park maximizes prximate value; large parks reduce the perimeter available fr prximate hmes and very small parks default t being n mre than a walkway r large backyard and attract little if any prximate value. Lts with views backing nt well-designed passive natural green space, especially with walkuts, have higher value. Prximate values n active parks are higher where landscaped buffer znes are incrprated. Dispersed park designs diminish the prximate effect past the first rw f hmes due t cmpeting influences. The highest cllective tax revenue premium results frm primarily passive parks f mderate size that are elngated t allw maximum individual prperty expsure t the parks. Develpers are learning t be much mre effective at engineering and integrating strm pnds, and that is increasingly imprtant in subdivisins with higher densities. In Oktks, strm pnds are integrated int wetlands using pathways and buffer znes. The lder methds f creating strm pnds resulted in stagnatin and little aesthetic benefit. Wh needs t knw? In a rapidly grwing prvince, decisins are made daily that wuld benefit frm an accurate understanding f the value brught by parks and pen spaces. Develpers can use the Prximate Principle t maximize the number f prperties expsed t parks and pen space and t price thse lts. Knwing that the cllective parks system within a new subdivisin may add up t a ttal cmmunity premium and thus help pay maintenance csts, they can justify ample park space and negtiate fair perating endwments with the city. Municipalities can use the Prximate Principle t help identify hmes near parks that are wrngly valued, particularly in areas where n hmes have recently sld. When assessments lag behind r exceed actual market values, the municipality invites the burden f assessment appeals. Park planners and decisin makers can be assured that the market is willing t pay, t a pint, fr a basket f park benefits including views, access, recreatin and expsure t the natural envirnment. ARPA Page 4 Nvember 2007

8 Parks peratrs shuld emply the Prximate Principle with cautin when defending budgets, recgnizing that the Prximate Premium justifies the distributin f taxes, nt the verall amunt f taxes cllected. It is mst realistic t justify parks peratins n the grunds f their diverse benefits, nt slely n this principle. It s gt t d with fairness. Municipalities want t be as accurate as pssible t avid appeals and t distribute the tax assessment fairly. Tax assessrs and rate payers can use calculatins based n the Prximate Principle t imprve the accuracy f the taxes charged fr prperties near and farther away frm parks. Market value assessments are applied in Alberta t calculate taxes t be paid, but assessrs d nt always have the benefit f cmparable market sales n and ff parks. In such cases it difficult t crrectly capture the Prximate Premium, and mdels fr adjusting fr park prximity can be arbitrary. Resident assciatins established by develpers can use the Prximate Principle t justify adjusted fee structures, such as higher fees fr immediate prximity and private access and lwer fees fr access withut views. Realtrs may use the Prximate Principle t calculate listing prices when direct market cmparables fr prperties abutting parks are unavailable. What caveats must we emply when applying the Prximate Principle? It s imprtant t nte that the Prximate Principle alne shuld nt drive park design. It is but ne tl amng many in the planning tlbx. In additin, the Alberta cntext differs in sme ways frm ther jurisdictins studied. Passive parks ften reap higher prximate premiums, but a mix f active and passive parks is essential t an active, healthy cmmunity. Thus the absence f active parks detracts frm verall cmmunity value. Over-emphasis n maximizing the edge effect by creating lng skinny parks culd leave us withut the massed naturalized areas needed t supprt bidiversity and regenerate natural areas. Factrs ther than parks may be influencing lt values. Fr example, sme suggest the value f prperties nt n a park is mre influenced by the enhanced design and standard f care f hmes abutting the park than by access t the park. The Prximate Premium justifies the distributin f taxes, but des nt directly impact the ttal amunt cllected. That amunt is set by a municipal budgeting prcess reflecting ratepayer expectatins and ther ften cnflicting pririties. In the municipalities studied, park budgets cme ut f general revenue and are nt directly linked t the relative tax revenue generated by the Prximate Premium. Many cmmunities d nt keep recrds that enable them t directly calculate the peratinal csts f individual parks. In many f the examples referenced by Dr. Crmptn, park csts are capitalized against future prperty tax revenues. In the Alberta examples studied, by cntrast, park csts are recvered thrugh lt sales. Thus the ecnmic beneficiaries f the Prximate Principle differ here. An increasing number f Alberta cities and twns have mved t market value assessments and may already be benefiting frm the realities highlighted by the Prximate Principle. Alberta municipalities and develpers must set aside a minimum f 10% f the land within the sub-divisin as MR (municipal reserve) fr parks and pen space, fllwing a standard set in the Municipal Gvernment Act f Unless the standard changes, the amunt f parkland available in ur cmmunities is unlikely t shift significantly. A cmmunity in which there are almst n prximate premiums may be the pinnacle f cmmunity and park develpment. This study fcuses n parks in newer subdivisins, nt parks in mature cmmunities r prperties that have nearby access t majr reginal, prvincial r natinal parks and pen spaces. ARPA Page 5 Nvember 2007

9 This study fcuses n individual prperties, but it may be mre useful t apply this framewrk t entire cmmunities. What are the factrs that give ne cmmunity higher verall assessed values that is, higher prximate premiums than anther? What is the ptimal mix f parks within a cmmunity? Hw d parks cllectively cntribute in well-planned cmmunities cmpared with thse lacking in pen space, dispersin, quality and variety? The answer t thse questins wuld further infrm the planning and design f subdivisins all acrss Alberta. Trends Impacting Park Space The fllwing 10 trends surfaced during this study, thrugh a literature review and thrugh discussins and analysis f parks in six Alberta cmmunities. 1. Municipal planners and develpers plagued by prperty inflatin may be tempted t cmprmise park and pen space develpment beynd the required 10% MR t prvide mre affrdable husing. Buyers may seek ut lwer-cst, less amply parked areas r chse hmes nt lcated n parks in rder t limit purchase csts and future taxes. 2. Higher residential density and the trend t bigger hmes n smaller lts are reducing private yards, thus increasing the use and value f public green space. Fr example, neighburhd tt lts may gain higher value as individual residential lts shrink t becme t small fr play structures. 3. The value f the urban frest is increasingly being recgnized fr cntributing t air and water quality, human health, bidiversity, carbn sequestratin, reduced energy use and ther such benefits. Yet urban frests are becming mre difficult t establish and maintain, and smaller private lts are less able t accmmdate large shade trees. In sme municipalities, mature trees need replacement and new subdivisins, typically develped frm frmer farm land, have limited pprtunity t integrate existing trees. Therefre, bulevards and ther treed spaces may be valued even mre and prximity t green space with mature tree stands may gain higher premium because f limited supply and high demand. 4. Municipal parks planners are increasingly cnsidering life-cycling. That is predicting future park perating csts relative t prjected use while anticipating the future needs f aging demgraphics. Fr example, municipalities tend t favur larger, cheaper t maintain parks that can be adapted fr active use ver smaller tt lt installatins. Yet the absence f tt lts may make a neighburhd less desirable t yung families and therefre mre difficult t market at the utset. 5. Sme municipalities are suffering frm the midstream cancellatin f the 1990s Urban Parks Prgram. Maintenance csts are high fr the capital intensive parks develped under the prgram, aging capital infrastructure is due t be replaced and the public is less enamred with highly develped park space, favuring natural areas instead. 6. Runff created by higher percentages f hard and built surfaces is creating need fr mre innvative and effective strmwater management. Strm pnds, canal systems and biswales are increasingly being integrated int naturalized municipal reserve sites, with a cmbinatin f private and public access. Better systems that are able t supprt greater bidiversity, cupled with evlving pubic acceptance, may increase the prximate premium assciated with parks that integrate such areas. 7. Increasingly, ER (envirnmental reserve) and PUL (public utility right f ways and strm water systems) and MSR (schl reserves) are being integrated with MR t extend the massing f parks and pen spaces. This integratin respnds t public demand fr mre natural areas while increasing the areas ability t supprt bidiversity. 8. Integrated land use fr parks and pen space prvides mre pprtunities fr dispersed designs that maximize the edge In the City f Calgary, ft and cycling traffic n the cntiguus pathway system equates t an estimated ne lane f cmmuter vehicular traffic. ARPA Page 6 Nvember 2007

10 effect. This allws fr mre private view benefits, access pints t passive space and pathways and therefre pprtunity t cllect higher tax revenues frm a greater number f adjacent residential prperties. 9. Municipalities are seeing high demand fr passive walking/cycling linkages. These linear parkways may be increasingly used as alternative transprtatin rutes. They are als attractive t develpers because they maximize the number f hmes backing directly nt green space. Their value will likely cntinue t increase as lt sizes shrink, especially in larger urban centres. 10. Municipalities are als experiencing prblems regarding the unauthrized use r adaptatin f parkland by adjacent residents wh are extending their private pen space beynd their prperty lines. Ravines and river valley prperties tend t be the prblematic residences. Develpers and prperty wners wh bject t such public use, ften resist prpsed slutins such as tp-f-bank trails r radways. 11. Park planning principles that deter negative scial behaviur by prviding street visibility may reduce the number f hmes backing nt parks and therefre dilute their ptential edge benefit. Similarly, park lighting may interfere with privacy. 12. Resident assciatin fees are being cllected in sme jurisdictins t ffset park perating csts beynd municipal standards. Parks maintained t higher standards may cntribute t higher prximate premiums, higher taxes and ptentially a tw-tiered park system. Other Applicatins f the Prximate Principle As in Dr. Crmptn s wrk, the Prximate Principle applies beynd traditinal parks t alternative pen spaces such as waterbased features and glf curses. While such spaces were nt addressed in the quantitative analysis f Alberta cmmunity park types, develpers cnfirmed that high premiums d apply t adjacent lts in these cases. As a rule f thumb, lt csts are abut ne-third f the ttal prperty. The premiums quted belw shuld nt be interpreted as applying t the entire prperty. Water features cmmand a significant premium fr all lts in the neighburhd, typically 25-50%. Views f natural wetlands are mst highly valued in anecdtal cnversatins, althugh prximity t stagnant strm pnds can have a negative effect due t dur and msquites. Lts backing nt private access recreatinal lakes demand a very high premium, likely %. Such features are supprted with resident assciatin fees, hwever, and the premium may be due in part t ther amenities such as private residents clubs. Glf curses attract lt premiums f 15-40%, but nly fr adjacent prperties with a view since residents can t access the space during playing seasn. On the plus side, glf curse layuts usually maximize the edge benefit (that is, the number f prperties adjacent t the park) and ffer winter serenity and pprtunities fr wildlife sightings. Glf curses may als prvide alternative use f undevelpable lands such as reclamatin sites r envirnmental buffer znes. And they can prvide future revenue t maintain the green space t a higher standard than the municipality culd attain. Even s, develpers may be better served by integrating ambient pen space int subdivisin plans because benefits are f value t a brader prprtin f hme buyers. ARPA Page 7 Nvember 2007