In a 2008 paper with assistant professor of real estate Grace Wong Bucchianeri, Wachter argued that the property-value increase associated with tree plantings is largely attributable to “either social capital creation or a signaling mechanism.” In other words, tree plantings send a signal to prospective home buyers that the community is becoming more actively involved in improving the neighborhood. About a quarter of the increase, they contended, stemmed from the intrinsic value of the tree.

This underscores a related point, which is that the payoff of public investment in greening depends on where it’s carried out. ““It’s not just greening of the space that does it—it’s the fact that you’ve greened a space that previously was depressing property values,” says Kevin Gillen GrW’05, a research colleague of Wachter’s. (Wachter is currently on leave.)

“If you go out to Lower Merion and demolish someone’s home and convert it into a little park, will that increase the value of the home next door?” he asks rhetorically. “Yes? By that much? No. Because what was there before was pretty nice. But if you’ve got a blighted abandoned factory in Kensington, which is just all asphalt and soil that has chemicals in it, and rusty hulking buildings, and you convert that to a park, you have much bigger spillover effect on the nearby home values.”

Gillen, who has pressed this research forward as a vice president of Econsult, a Philadelphia-based economic consulting firm, says that the best areas a city can target for greening are “neighborhoods on the margins.”

“That is, they’re not completely distressed, abandoned neighborhoods. But they’re neighborhoods that are sort of at the tipping point of turning around,” he explains. “Where they do the least good are the neighborhoods that would be considered the most depressed in the city. They have the highest crime, the highest abandonment. Those neighborhoods need more help than just putting in a community garden. They need better policing, fire, trash collection. They need a lot more help than just converting a vacant lot. But in marginal neighborhoods, replacing an abandoned home with a community garden signals to the neighbors that, hey, maybe something is happening here, it’s turning around, you’ve got another amenity.”

The Penn Praxis report observes that even with Fairmount Park, the largest city-owned park system in the world, Philadelphia still has a need for more green spaces. “There are currently more than 200,000 Philadelphians, about 1 in 8 residents, who do not live within a 10-minute walk of a public green space,” the report notes. “Leaving this many citizens without access to park space is like leaving the entire cities of Allentown and Erie combined without access to parks.”

Among the variables that influence a house’s value—from the number of bedrooms and bathrooms to the number of garage bays (Wachter took 50 such variables into account in her New Kensington study)—“in general we find that public amenities are somewhere in the middle,” Gillen says.

“Any new kitchen can increase the value of your home a lot,” he adds. “[But] if you’re right next to an abandoned home being used for criminal activity, and the next day it’s a community garden, you can expect the effect to be pretty large. It’s not just that you have a community garden. It’s that the crime is gone, you’ve got a better view out your kitchen window, the air is cleaner, you’ve got a potential source for food.”

And unlike a lot of kitchen makeovers, the cost-benefit ratio of turning a vacant lot (or a cluster of them) into a pocket park can be very favorable.

“Measured bang for buck, it’s quite positive,” says Gillen. “Because in general what we often found is that the value created would often exceed the cost of doing it. If it costs you $10,000 to green a lot but it creates $15,000 in additional property value, then that’s a gain to taxpayers.”

The Penn Praxis report cites a study by Gillen and Todd Baylson GCP’04 which found that homes near newly converted green spaces appreciated in value at an average rate of 13.3 percent per year during a period when the average home value appreciated at a 7.8 percent annual rate. Over a seven-year period, this translated into a $22.2 million gain in incremental property-tax revenue.

Gillen is quick to emphasize that greening is not the end-all of urban invigoration.

“There’s a reason that we’re looking at this issue” in Philadelphia, he says. “And it’s because we’re not a growing city … These 40,000 vacant parcels represent dead assets on the city’s balance sheet. If something can be done with them, [the priority] should be to add to the tax base” via residential or commercial development.

“Of course the reason Philadelphia has so many vacant parcels and abandoned buildings, unlike, say San Francisco, is because we’ve basically been a depopulating and contracting city,” he adds. “On top of that, our construction costs are among the highest in the country, despite the fact that our home prices are among the lowest of large cities. So there’s economic incentive to systematically under-invest in maintaining or developing real estate.

“Insofar as the city is willing to take those steps to really turn it around and make it a competitive city, it’s going to have this problem with vacant and abandoned parcels. So the question becomes: What’s the next best thing you can do with them? And in that case, since you can’t develop them at market rate and do so profitably, then you may as well use some public moneys to convert them to some other use, to eliminate blight and enhance your tax base by improving local property values in the neighborhood.”

Penn Praxis’s Steinberg echoes that sentiment. “I think that really helps shape the economic argument for transforming vacant land,” he says. “Now that doesn’t mean it all has to be green space. We want people to move into the city, we want the tax base to rise, we want the school system to get better … All those things are important. But we have found that there is a direct impact between quality green space and property values, social cohesion, and then we get into public health and then all those other reasons.”
 


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FEATURE: The Park of a Thousand Pieces by Trey Popp
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