The Cost of Upkeep: The Rose Fitzgerald Kennedy Greenway

State officials have announced a plan to ask businesses neighboring the Rose Fitzgerald Kennedy Greenway to help pay upkeep costs. Currently, the park is run by the Rose Fitzgerald Kennedy Greenway Conservancy, a government funded non-profit organization. State officials hope to conserve public funding by instituting a tax on surrounding business owners to pay for the upkeep of the park (Boston Business Journal).

The Kennedy Greenway

There is no doubt that businesses surrounding the Kennedy Greenway benefit from the proximity to the beautiful, well kept park. In fact, commercial real estate is flourishing. Last month, developers began construction on a $130 million high rise while the Atlantic Wharf reached full capacity. However, there is debate on who should be taxed for the upkeep of this public resource.

Using this logic, one could make an argument that property owners located by any public asset (let’s say a freeway) should help pay for its upkeep.

Economically speaking, the benefits of proximity to the Kennedy Greenway are reflected in a higher rent for tenants located around the park. Tenants across the street from the park pay substantially more in rent than tenants located beyond walking distance of it. If state officials claim that businesses benefit from proximity to the Greenway, those benefits will be reflected in the cost of rent.

One might argue that due to increased profit margins for the owner of the property, the owner should be subject to park taxation. However, the property owner is already paying a fair share of the upkeep costs via property tax.

For the 2012 fiscal year, the property tax for commercial properties is $31.92 per thousand dollars of valuation. Properties located near the Greenway, a well maintained public asset, have a higher valuation than those that are not. Landowners pay more in property taxes due to the increased value of their properties.

These property taxes are collected and then redistributed to third parties. A portion of the redistributed tax dollars is directed to fire services, ambulance services, parks, libraries, and other public amenities. Therefore, property owners pay for the benefit of being located near public goods that increase the value of their property.

Both business owners and landlords already pay for the benefits associated with the Kennedy Greenway. Is it fair to ask them for more?

Contact: dfayngor@abgrealty.net