Development more taxing than open space

RELEASE: September 15, 2006 – Volume XXXV1, No. 37

When new development is proposed, whether houses, malls or office parks, you will hear the familiar chorus of “ratables!” But the chorus hits a flat note when light is shed on the actual impacts of development on local property taxes.

New Jersey’s property taxes are notoriously high. Anyone who’s paid property taxes or higher rents due to higher taxes understands the seductive mythology of the ratables chase argument. More homes or businesses mean more tax revenues in your town’s coffers and that lowers local property tax rates. But it’s funny how your taxes never actually go down, isn’t it? That’s because more development means more tax money for more services.

Like most good marketing, the hard sell on tax ratables is a simple, clear message and it’s been used effectively for decades to sell sprawl to the people of New Jersey. Smart consumers, however, read between the lines to be sure they are getting what they pay for.

Factor in the cost of schools and other local public services. Study after study shows that residential development is a net LOSS to municipalities – costing between $1.04 and $1.67 in services for every new $1 in tax revenue. The costs of these services increase in perpetuity.

In contrast, preserving farmland and natural areas requires a serious upfront investment of preservation dollars, but carries a much lower cost in municipal services in the long run. Burlington County’s Office of Land Use Planning studied Mansfield Township and found new residential units required $1.48 for services for every $1 in tax revenue; in contrast, farmland cost 27 cents in services for every $1 in tax revenue. The result, in the long term, is that open space and farmland prevents taxes from increasing and actually stabilizes local taxes.

Commercial development is often touted as the answer to this problem. After all, a new Wal-Mart doesn’t add school-age children to a town’s population. However, a 1992 study of Morris County towns by the Great Swamp Watershed Association concluded the addition of commercial ratables also failed to reduce taxes. Commercial ratables still require other municipal services like police, fire, sewers, water and roadway infrastructure and maintenance.

And don’t forget the other side of the coin. Multiple economic benefits come from preserving farmland and natural areas. A 2004 study by the New Jersey Department of Environmental Protection’s (NJDEP) Division of Science, Research and Technology found New Jersey’s parks and forests reap an annual $1.2 billion in revenue each year. Over 15 million park visitors create a ripple effect in the local economy, buying food, lodging, gas and souvenirs.

Many environmental benefits and services are harder to quantify – things like protecting and purifying our drinking water supply, purifying our air and controlling flooding. These benefits are estimated to be worth at least $140 million, based on the cost to build and engineer these environmental services, according to the DEP study.

New Jersey is now addressing property tax reform. The multiple economic savings of preserved lands must be part of the evaluation.

The Association of New Jersey Environmental Commissions (ANJEC) has compiled the results of similar studies from across the nation into an excellent resource paper on the comparative fiscal impacts of development versus open space. Check out the facts by visiting ANJEC’s website at http://www.anjec.org.

I hope you’ll contact me at info@njconservation.org for more information about conserving New Jersey’s precious land and natural resources

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