filed under: economics of trails
By Duygu Karadeniz, University of Cincinnati School of Planning (2008)
The study found that the Little Miami Scenic Trail positively impacts single-family residential property values, with sale prices increasing by $7.05 for every foot closer a property is located to the trail.
Across the United States, many conversions of abandoned railroad rights-of-ways into trails have faced opposition from surrounding property owners. Much of the opposition derives from the fear that developing trails would cause a decrease in property values because of loss of privacy, increase in noise, traffic, litter and crime. The objective of this study is to assess the impact of the Little Miami Scenic Trail on property values. To accomplish this task, the hedonic pricing technique was employed to measure the impact of the trail on single-family residential property values in southwest Ohio. Several of the variables used in this model were measured using Geographic Information Systems (GIS) software. The analysis suggests that, each foot increase in distance to the trail decreases the sale price of a sample property by $7.05. In other words, being closer to the Little Miami Scenic Trail adds value to the single family residential properties.
Trails have the ability to improve many aspects of our lives, including recreation health, and fitness. People who walk, jog, skate or cycle on trails reap health/fitness benefits such as a lower risk of heart disease (Lindsey 2004). Moreover, by improving their health through exercise, trail users may enjoy another benefit - lower medical bills. Trails may also provide transportation, environmental and visual/aesthetic benefits. If carefully planned, trails increase the number of people biking or walking to work and other destinations, decreasing traffic and air pollution (Lindsey 2004). Furthermore, the vegetation that grows along trails can serve as a wildlife corridor, facilitating the movement of animals (Hellmund and Smith 2006). This vegetation may also help to filter out pollutants coming from adjacent roadways, and provides visual/aesthetic benefits to nearby properties.
In some cases, trails may help to preserve local history and promote community pride. For example, rail-trails, or trails that are built within the right-of-way of an existing or former railroad, often provide access to historic features such as buildings, factories and bridges (Hellmund and Smith 2006). In this way, rail-trails help to protect the historic roots of communities. Trails may also serve as a social meeting place for local residents. On a regional level, trails offer connectivity between neighborhoods, thus promoting social interaction.
Last but not least, trails may provide economic benefits. Trail development may spur tourism, creating opportunities for economic development (bike rental shops, restaurants, etc.) along the trail (Lindsey 2004). This development may also encourage people to relocate to the community. Eventually, property values may rise as demand increases for real estate with access to the trail. Although their benefits are widely recognized, trails are sometimes regarded as an inefficient use of public funds because of development and maintenance costs (Crompton 2001). Thus, to justify future investments into trails, it is necessary to quantify their economic benefits. Positive valuation of trails may encourage local governments to develop and maintain new trails. For example, Frederick Law Olmsted justified Central Park in New York City with the future increases in property values and property tax revenues he claimed would occur after the park was developed (Crompton 2001).
Another perceived drawback to trails is that they decrease property values due to a loss of privacy, and an increase in crime, traffic and noise. For example, the Little Miami Scenic Trail in southwest Ohio was opposed by property owners from The Village of Terrace Park on the grounds that it would lower property values (Edwards 1999).
The objective of this study is to assess the influence of the Little Miami Scenic Trail on property values in southwest Ohio. To accomplish this task, the hedonic price technique will be employed to measure the impact of the trail on single-family residential property values in Hamilton County and Clermont County. The study seeks to answer the following related questions:
1. Does proximity to the Little Miami Scenic Trail affect the sale price of single family properties in Hamilton County and Clermont County?
2. If yes, what is the estimated impact (in dollars) of the trail on these properties?
3. How does the dollar-value impact of the Little Miami Scenic Trail compare to that determined for other trails?
To answer these questions, a hedonic price model will be developed using the sale prices of single family residential properties sold in Hamilton County or Clermont County from 2003-05 and located within one mile of a Little Miami Scenic Trail entrance. The one mile distance was selected based on findings from previous hedonic trail and open spaces studies. Structural, neighborhood and environmental characteristics to use in the model were determined after reviewing these studies and discussing their relevance to the present study.
Although much research has been done to measure the impact of open spaces on the property values using hedonic price technique, little work has been undertaken on the impact of trails to surrounding property values. A comprehensive review of the literature revealed just 17 studies concerning effects of trails on property values. Further, only five of these studies used the hedonic price technique to measure the impact of the trails. The impacts of land uses, however, were not addressed in these studies. Consequently, local land use is incorporated into the analysis conducted for this study.
Another notable feature of the present study is that it uses network distance to trail, which provides a more accurate measurement of distance from a property to the trail (Hammer, Coughlin, and Horn 1974). Only two of the trail hedonic studies used network distance. In addition, there have been no comparisons of the findings on the impact of trails on property values. Therefore, a conscious effort will be made to compare the findings of this research with those of similar studies.
Trails are sometimes regarded as an inefficient use of public funds (Crompton 2004). Opponents cite that trails are costly to maintain and that the land acquired for trails could be used to generate tax revenues. Further, some state that trails might decrease the values of nearby properties. Evidence from the present study, however, suggests that the Little Miami Scenic Trail provides financial benefits in terms of increased property values. All other factors held constant, Hamilton County and Clermont County sale prices increase by $7.05 for every foot closer a property is located to trail. This finding can be used by planners and policymakers to justify making future investments into the trail.
The notion that trails improve nearby property values is rooted in the so-called proximate principle (Crompton 2004). This concept suggests that the costs of developing and maintaining trails are eventually recovered by way of increased property tax revenues. Thus, increases in property tax revenues due to trail development can be retained to pay for future trail acquisition and development or to pay off the debt incurred from the initial investment into the trail.
Little Miami Scenic Trail is the longest multi-purpose trail in Ohio (OKI 1999). It was converted from an old railroad right-of-way. The trail extends more than 70 miles from Springfield, Clark County to the Little Miami Golf Center in Hamilton County (Ohio Department of Natural Resources 2006). The construction of the trail between Milford and Little Miami Golf Center was started in March 2006 and completed in June 2006. Additional plans to connect the trail to the Ohio River are underway. The Little Miami Scenic Trail is very popular, with over 150,000 users per year (OKI 1999; Henderson 2006). On a weekend day, users include over 400 bicyclists and almost 200 pedestrians (OKI 2006). Trail users spend an average of $13.54 per visit on food and auto expenses and $277 per year on related clothing and equipment (OKI 1999).
An unpublished study (PKG 1999) used an opinion survey to measure the impact of the trail on property values. Among the 61 local property owners who were surveyed, 51% felt the trail increased residential property values. To date, however, no analysis of property values near the Little Miami Scenic Trail has used the hedonic price technique.
Five of the hedonic studies reviewed for this thesis examined the impact of greenways/trails on property values. Of these five studies, however, only two used the same methods (linear regression and network distance analysis) as those applied here. An important finding from the first study (Correll, Lillydahl, and Singell 1978) was that property values increased by $10.20 for every foot decrease in distance to a greenway entrance. In the second study (Nicholls and Crompton 2005), however, the authors found that the premium for living one foot closer to an access point of a different greenway was only $3.97. The premium ($7.05) determined for the present study is roughly equal to the mean of the premiums from these two studies.
The low premium that Nicholls and Crompton (2005) observed may be due to the large geographic size of their study area. Among properties sampled by the authors, the mean distance to a greenway entrance was 5,244 feet. This suggests that many of the sampled properties may be located more than one mile (5,280 feet) from the trail. As noted in the Literature Review, the impact of a greenway/trail on property values may become insignificant beyond one mile from an access point. It follows that many property values in the Nicholls and Crompton (2005) study may not be affected by proximity to the greenway. If that is the case, then the premium for living one foot closer to a greenway entrance will be low.
Compared to the Nicholls and Crompton (2005) study, properties selected for the present study were typically located closer to a greenway entrance. In fact, the mean distance from a sample property to a Little Miami Scenic Trail access point was 3,390 feet, or about 0.64 mile. With a maximum distance of 3,200 feet, the properties sampled by Correll, Lillydahl, and Singell (1978) were located closer to a greenway entrance. This helps to explain why the premiums observed in these two studies are larger than that reported by Nicholls and Crompton (2005).
This study examined how the Little Miami Scenic Trail affects the sale prices of single-family residential properties in Hamilton County and Clermont County, Ohio. Using structural, neighborhood and environmental variables, a hedonic price model was developed for 376 properties located within one mile of the trail. This model demonstrated that proximity to the trail positively impacts property values. Specifically, the model results suggested that for every foot closer to the Little Miami Scenic Trail a single-family residential property is located, its sale price increases by $7.05. This finding is notable because rail-trails such as the Little Miami Scenic Trail are often criticized for having a negative impact on property values. This study suggests, to the contrary, that rail-trails can have a positive effect on the economic well-being of the surrounding community.
Published October 13, 2008
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