The Hidden Value of Public Assets

by | Feb 9, 2015 | Uncategorized

An on-going debate between the cash-strapped Toronto District School Board (TDSB), the City of Toronto, and members of the community has shed new light on the importance of measuring the social and environmental value of publicly owned assets. At the center of this debate is a plan to sell underutilized schools like Bannockburn School and the two acres of green space adjacent to it.

The problem: members of the community don’t want to give up the green space. This is where parents can teach their kids to ride a bike and take them to play without worrying about their safety.

Furthermore this green space cools and cleans the air, absorbs storm water for the city, and raises property values. The TDSB ignores all this hidden value when assessing which schools should be on the chopping block. This leaves the surrounding community worse off after the sale as they will not be compensated for their loss.

There is good news to this story however – it is possible to estimate the dollar value of these community benefits. In fact the Business Case Evaluator (BCE) not only makes it possible to uncover this value, it makes it easy. So what is the value of 2 acres of green space in the City of Toronto? Roughly $870K with a range from $510K to $1.45M.

This is the value people get from the recreational opportunities, air quality enhancements, and property value uplift provided by the green space. The City also benefits from the green space – they collect more tax revenue from the higher property values. The chart below shows the division these benefits.

Division of Benefits

While this highlights the value of the green space to the community it should be thought of as the lower end of the benefits to the community. This is because the green space is also attached to a school which itself has hidden value. For instance, if parents have to drive their children further to school their leisure time will be reduced and vehicle emissions will be increased. Additionally these underutilized schools typically offer adult programs and are leased to community groups for use after-hours. The value of these programs should not be ignored when putting public land up for sale.

So, what does this all mean? When the TDSB thinks about putting a school up for sale they should be thinking about how to compensate the community for their losses. One option is to include this additional value in the sale price and transfer this extra cash to the affected community. Another is to structure the deal so that the lost social and environmental goods are replaced. For example, if the lot is sold to a condo building developer then local residents should get free access to the buildings gym, pool and other amenities. To minimize the change in air quality and storm water retention the building should have a green roof installed. And a community room should be included in the building for local community groups and adult education programs.

Put simply, if the sale of the school ignores the social and environmental value the green space and after school programs provide then the TDSB is selling the community and City short.

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