Tax Increment Financing for Optimal Open Space Preservation: an Economic Inquiry

linear function of preserved open space. In many empirical studies, the equilibrium land
price is estimated as a linear function of preserved open space. In such a context, even
more simple conditions can be identified. For example, in the linear case, the economic
condition for the socially efficient amount of open space to be self-financed would be

2      1 δ    P'(a⁰)       1              τw

max{------,------(1 +--)} < —≤--^l ≤---------+ +----------— for a small

L - a⁰ L - a⁰    τw    P(a⁰)   L - a⁰ - a^*  (L - a⁰)wτ + a^*δ

community or tax increment financing zone. For a large community where it is
reasonable to assume a spatially heterogeneous equilibrium land price, the condition is
modified by replacing the marginal change rate of equilibrium land price with its spatial
average.

V. Spatial Configuration of Open Space

To local land managers, the preservation of open space practically is a matter of how to
construct such open space to maximize its net social value. Is one large tract of open
space better than several small spatially separated ones? Where should the optimal open
space be located to maximize its amenity effect on local residents? How does the shape
of open space affect its amenity to local residents through the interaction of area and
access? Perhaps, local land managers are also interested in what is the possible spatial
configuration for the socially efficient, self-financed open space that is socially optimal.

In this section, we explore the effect of spatial configuration of preserved open
space on the value of community developable land and the financing capacity of property
tax increment. We relate the spatial structure of open space to be considered to the
practical question of how large, how many, what shape, and where to locate which local
land managers are most concerned with for preserving open space. We extend our

23

<<   21   22   23   24   25   26   27   >>

More intriguing information