海角大神

Public investment in urban infrastructure raises the value of nearby private investments. 聽Examples include new subways and parks in Beijing, seawalls in New Orleans and聽this example of nice riverside parks in New York City. 聽The article provides the details about the tug of war of who will pay the bill for the upkeep and maintenance to keep the nearby piers on the West side of Manhattan looking good.

Here is a quote from the NY Times article:

The interesting piece of economics here focuses on the fact that the public investment in "nice parks and piers" both benefits the public and directly benefits the nearby commercial businesses and property owners who now attract more people to want to spend time there. 聽In a "fair world", the commercial real estate owners and residential property owners nearby would be asked to pay for a larger share of these improvements since they will gain a windfall in benefits from higher rents as the amenity improvements will be capitalized into higher rental prices nearby as聽more people will be demanding services there and want to spend more time there. 聽

The profit seeking businesses seek to share the costs of the public improvements broadly and then gain the extra revenue. 聽That's good business!

So, there are really two issues here. 1. What is the optimal level of investment in "greening" the river parks and piers? 聽2. Who should finance this investment? 聽 If you believe that the beneficiaries should pay, then the nearby land owners should pay more for the local improvements in parks. 聽 聽Again, as the parks and and river area become nicer --- commercial landlords will be able to charge tenants more for locating there.