Do Urban Parks Pay for Themselves? Property Value Capitalization and Municipal Fiscal Returns from Chicago’s 606 Trail

Investments in urban parks are frequently justified not only in terms of their environmental and recreational amenities but also in terms of their potential to fuel appreciation in neighborhoods and corresponding increases in local fiscal revenues. There is a substantial body of literature indicating that proximity to parks and other forms of urban open spaces can be capitalized into surrounding residential property values; however, there is relatively limited research examining whether these effects plausibly translate into fiscal revenues that could offset the costs of urban park projects. This study seeks to address this question in the context of Chicago’s 606 Trail, a 2.7-mile elevated rail-to-trail conversion completed and opened on 6 June 2015, after a publicly disclosed investment of $95 million in the project at the time of opening. Using property transaction data and a difference-in-differences event-study approach, this study estimates the impact of park completion on surrounding residential property values and converts these amenity capitalization effects into corresponding municipal fiscal revenues. The main contribution of this paper is to demonstrate that amenity capitalization and fiscal self-financing are analytically separate outcomes, even though park completion may be associated with corresponding increases in surrounding residential property values. The study contributes a framework for evaluating substantial urban park investments by drawing on both urban amenity studies and municipal finance studies.