Economic Benefits Of Runoff Controls
People have a strong emotional attachment to
water, arising from its aesthetic qualities--tranquility, coolness, and
beauty. As a result, most water bodies within developments can be used as
marketing tools to set the tone for entire projects. A recent study
conducted by the National Association of Home Builders indicates that
"whether a beach, pond, or stream, the proximity to water raises the
value of a home by up to 28 percent." A 1991 American Housing Survey
conducted by the Department of Housing and Urban Development and the
Department of Commerce also concurs that "when all else is equal, the
price of a home located within 300 feet from a body of water increases by up
to 27.8 percent" (NAHB, 1993).
Although there are a limited number of natural
waterfront sites adjacent to lakes, rivers, streams, estuaries, or open
ocean, many opportunities exist to create waterfront property. Homes and
businesses can be sited along hydroelectric or water supply impoundments or
near the banks of artificial lakes created for wildlife, recreational, or
aesthetic reasons. A practice becoming more prevalent is to site
developments around man-made ponds, lakes, or wetlands created to control
flooding and reduce the impacts of urban runoff on neighboring natural
streams, lakes, or coastal areas. When designed and sited correctly,
artificial lakes or wetlands can help developers reduce negative
environmental impacts caused by the development process and increase the
value of the property. Certain urban runoff management controls can be
incorporated into a development in a way that provides aesthetic and
economic benefits. Urban runoff controls that are pleasing to the eye and
safe for children can lead to increased property values. Because the beauty
of natural surroundings can increase real property values and enhance the
quality of life, beautification of land areas adjacent to waterways and
detention ponds should be considered an integral part of planning by
developers. For
existing runoff controls that are unsightly, corrective renovations can be
made to increase the property value and quality of life.
Impacts and Controls
Urbanization causes changes and impacts to the
environment and our communities. Many effects of urbanization are positive,
such as new places for people to live and work, increased recreational
opportunities, and economic growth. However, some of the impacts might be
negative if they are not handled with foresight.
Development leads to an increase in the amount
of pollutants in an area. Sediment from construction sites can end up in
streams and rivers, choking plant and animal life. Oil and gas from vehicles
can leak onto roads and parking lots. Fertilizers and pesticides, if not
applied properly, can wash off lawns. Pesticides are often found in higher
concentrations in urban areas than in agricultural areas. Pet waste, if not
properly disposed of, can enter storm drains that lead to wetlands, streams,
or rivers. Household chemicals, such as paints and cleaning products, can
leak if not stored or disposed of properly. All of these pollutants can wash
away when it rains and end up in streams, rivers, lakes, estuaries, or
ground water. Many pollutants also bind to the sediment, so when sediment
washes away it takes the pollutants with it.
Urbanization also leads to loss of pervious
areas (porous surfaces) that allow rainwater to soak into the ground. This
can increase the amount and velocity of rainwater flowing to streams and
rivers. This increased speed and volume of water can have many impacts,
including eroded stream banks, increased turbidity and pollution, increased
stream water temperature, and increased water flow. All of these can have an
adverse effect on the fish and other organisms living in the stream and the
receiving waters. When rainwater cannot soak into the ground, the result can
be a loss of drinking water because many areas of the country rely on
rainwater soaking into the ground to replenish underground drinking water
supplies. Loss of trees due to urbanization can have negative impacts.
Trees are important for controlling the water
temperature along the shorelines of water bodies. Since many aquatic plant
and animal species are sensitive to changes in water temperature (trout, for
example), it is important to keep stream temperatures as close to natural
levels as possible. When the shade of trees is lost, the water temperature
can increase. "Best management practices," or BMPs, help address
these impacts. BMPs are designed to help reduce the amount of pollution in
urban runoff. Some help to control the volume and speed of runoff before it
enters receiving waters. Many help to increase the amount of rainwater that
soaks into the ground to restore groundwater. There are two general types of
BMPs: structural and nonstructural. Structural controls involve building at
"facility" for controlling urban runoff. There are a variety of
structural controls and most require some level of routine maintenance.
There are two types of structural controls that
have been documented as providing economic benefits: urban runoff ponds and
constructed wetlands. Nonstructural BMPs do not require construction of a
facility. For example, planning a development so that there are buffers
along stream banks and minimizing the amount of impervious area are types of
nonstructural controls. Structural and nonstructural controls can be used in
combination to manage runoff. Urban runoff management controls are now
widely accepted due to lessons learned from not planning properly for the
impacts associated with increased urbanization. Most local governments
require some form of urban runoff management for new development. They
require such controls for two reasons: to prevent pollution and to prevent
flooding caused by increased runoff, mostly from impervious areas. Usually
they require structural controls although some local governments give credit
for nonstructural controls.
Methodology
A literature review was conducted to examine the
impacts of urban runoff management ponds on property values. Many experts in
the real estate field and experts involved in management of urban BMPs/runoff
controls were contacted. Discussions with organizations including the Urban
Land Institute, the American Planning Association, and the National
Association of Home Builders proved valuable in identifying developments
that have incorporated urban runoff management requirements into site
development and have realized an economic benefit. Regional personnel of the
U.S. Environmental Protection Agency (EPA) were contacted and provided
information on their region of the country as well as potential case study
examples. Developers and realtors provided comparative values and
information on premiums charged for various properties nationwide.
Information regarding case studies was compiled
through literature reviews, site visits, and discussions with developers and
realtors. After the information- gathering process was completed, case
studies were selected. The case studies are representative examples of
positive economic impacts on new development, existing development, and
commercial property. Conclusions were made based on information gathered and
discussions with experts in the fields of real estate and urban runoff
controls.
Ponds and Wetlands for Urban Runoff
Control
Most structural urban runoff BMPs function on
the principle that it is best to hold runoff for a period of time. This
approach serves two functions. It controls the peak flow rates of water
released from a site, thereby controlling downstream flooding, and it allows
pollutants to be removed from the water column. There are many different
types of urban BMPs, many of which add value to adjacent property. This
focuses on two types of BMPs that are often used: urban runoff "wet
ponds" and constructed wetlands.
Wet Ponds
Wet ponds, as their name implies, are runoff
holding facilities that have water in them all the time. Storm flows are
held in the pond temporarily and then released to maintain healthy
downstream habitats. Sediment and other pollutants settle out of the water
and are not discharged to the receiving waters. Wet ponds are usually
vegetated, and the plants' roots hold sediment and use the nutrients that
are often contained in urban runoff. The ponds are designed to be big enough
to control onsite and offsite flooding in the event of a major storm. This
helps to control impacts on downstream habitats. Many of the
"lakes" in developments are actually detention or retention wet
ponds. Developers can design the wet ponds to look like natural lakes. Wet
ponds can be highly effective in removing sediment and in reducing nutrients
if they are properly constructed and maintained. They can usually be used
for large drainage areas. Wet ponds can be incorporated into new development
site plans and can enhance the value of surrounding property. Old wet ponds
can also add value to the surrounding property once they have been
aesthetically improved.
Constructed Wetlands
Wetlands serve an important function in
controlling the impacts of urban runoff. Because wetlands are heavily
vegetated, they serve as a natural filter for urban runoff. They also help
to slow the 
flow of water to the receiving waters and replenish groundwater. When
properly designed, constructed wetlands have many advantages as an urban
BMP, including reliable pollutant removal, longevity, adaptability to many
development sites, ability to be combined with other BMPs, and excellent
wildlife habitat potential (MWCOG, 1992).
Making Urban Runoff Management Work for
You
In many cases, developers are able to make
quicker sales and additional profits from units that are adjacent to a wet
pond. If the urban runoff management control is also developed to allow
passive recreation (e.g., a walking path around a lake or pond), the
recreational area and the wet pond/constructed wetland can become the
feature attraction when advertising the property. Adding walking trails,
fitness equipment, gazebos, bird houses, and other facilities to enhance a
detention area can be costly, but eventually additional profits are realized
(Sala, 1995).
The impacts of urban runoff management controls
on property values are site-specific (CDM, 1982). Controls can affect
property values in one of three ways: increase the value, decrease the
value, or have no impact. "Urban runoff controls are greeted with
varying degrees of skepticism and acceptance by residential versus
commercial property owners," according to Judith Costello Pearson,
Manager, Market Research, Fairfax County (Virginia) Economic Development
Authority. One must consider the appeal of an attractive urban runoff
management control along with the liability of open water. A childless adult
might perceive a wet pond as an amenity, but a family might view it as a
potential hazard to children.
Factors That Lead to Increases in
Property Value
Urban runoff systems with standing water often appear to be
natural systems. A clean lake or pond offers benefits to developers by
creating an ideal setting for model units and for the sales office. If
located close to the entrance and visible from the road, it will have
considerable curb appeal and can repay installation costs through faster
sales, in addition to raising the value of adjacent lots (Tourbier and
Westmacott, 1992). Developers can charge premiums (extra charges) for
property with water views, views of wooded land, or other amenities. Many
ponds planned for urban runoff control are also designed to provide
recreational facilities. They are often surrounded by walking trails and
picnic areas complete with gazebos and outdoor grills. The ponds also can be
used by nonmotorized boats like canoes and are excellent areas for
bird-watching. This natural setting creates a home for a variety of birds
and animals that homeowners find appealing. Fountains, often included in
plans, also add to the aesthetic qualities of the pond. Many developers have
capitalized on urban runoff regulations by designing aesthetic wet ponds and
marketing them as if they were natural lakes or ponds. In an effort to
incorporate landscape design into stormwater management planning to enhance
the value and quality of development, General Telephone of Marion, Ohio,
created an attractive wet pond ornamented with plantings, stones, and
pedestrian paths.
Runoff from the Hyatt Regency Ravina hotel
complex in Atlanta, Georgia, flows into a series of beautifully designed wet
ponds linked together by streams and waterfalls that are kept flowing by
recirculating pumps. A carefully designed wet pond at the Woods in
Rhinebeck, New York, provides flood control and water quality benefits, and
the waterfront created by the impoundment enhances the value of surrounding
townhouses (NYSDEC, 1992).
Factors That Lead to Decreases in
Property Value
Residential lots located near an urban runoff
pond are often a concern to home buyers with young children. Parents fear
their children will be attracted by the water or wildlife and drown. Incidents
of drowning in urban runoff management areas have occurred in residential as
well as commercial areas. Children who fall through frozen ponds or fall into
the water without knowing how to swim are usually the victims. Adults have
also drowned in detention ponds. A Chicago man fell into an 18-foot-deep
retention pond located on the property of a junkyard and drowned. According to
one real estate appraiser, safety is the only issue regarding urban runoff
management controls that adversely affects property value (Jablonski, 1995).
One solution is to construct a fence surrounding
the pond to deter entry and reduce accident potential. Chain-link fencing is
often used. Rusting, poorly maintained chain-link fencing reduces any
aesthetic qualities of the area, but fencing that has a black or green
protective coating is more attractive and can improve the appearance of the
runoff control. A "protective device" of the developer's choice
must be placed around ponds near residential areas with over 2 feet of
standing water or more than 2 hours of drainage time. The protective device
may be fencing or plantings of bushes and trees; in some cases, flat slopes
or shallow beaches extending at least 20 feet from the perimeter of the pond
are acceptable. These flat slopes or beaches provide protection for children
who could roll down steep slopes directly into the pond. Using flat slopes
reduces the amount of land available for development, however, and is the
least used option. Fencing is the most inexpensive solution and is used
frequently. It has been reported to be an "attractive nuisance,"
however, because some older children feel challenged to climb fences and
enter restricted areas. Requirements to construct wet ponds for urban runoff
management are a concern for developers, who lose the potential profit from
this otherwise buildable land.
This unrealized profit, or foregone value, can
be substantial if, for example, a builder is no longer able to construct
several planned townhomes (Rolband, 1995). Developers often increase the
number of homes built in the area available for development and reduce the
size of individual homes to recoup the foregone value of the property.
Poorly maintained wet ponds or constructed
wetlands are often unsightly due to excessive algal growth or garbage
build-up. These conditions are considered detriments by area residents and
people passing through the areas. Wet ponds and constructed wetlands can also
become mosquito breeding grounds. Mosquito problems usually can be reduced or
eliminated by designing the wet pond so that all portions of the basin are
connected to open water to allow natural predators to control the mosquito
larvae (Tourbier and Westmacott, 1992). Generally mosquitoes are not a problem
in the presence of a good biological community. Organic controls such as
mosquito-eating fish or insecticidal bacteria like Bacillus thuringiensis
israelensis (Bti), however, are also options where mosquitoes need to be
controlled.
Improving the Acceptance of Urban Runoff
Facilities
Effective landscaping can do much to overcome
the disadvantages of urban runoff systems and improve the appearance of
facilities. Banks of urban runoff storage areas and drainage ditches should be
graded smoothly into adjacent areas where feasible. Steep slopes should be
protected against erosion by stabilization techniques, such as gabions,
rip-rap, or other practices that detract as little as possible from the
natural setting. Planting and preservation of trees, shrubs, and other
vegetation should also be a part of the improvement plan (Poertner, 1974).
Sediment accumulation and waterlogging of otherwise usable land areas can be
avoided by the use of proper design, construction, and operation techniques.
Ponds used for urban runoff control can be spared from excessive sediment
accumulation by the use of forebays for silt collection. The amount of silt
transported can be reduced by directing runoff through vegetated areas or
specially designed runoff filters. Waterlogging of land surrounding urban
runoff storage areas can be minimized by sloping the ground toward storage
areas, eliminating water pockets, and minimizing the frequency and duration of
ponding on areas otherwise suitable for multipurpose use (Poertner, 1974).
Operation and Maintenance
Wet ponds and constructed wetlands require
periodic maintenance to preserve environmental and monetary benefits of
"waterfront" lots. However, the benefits of higher resale value and
quality of life typically outweigh the combined costs of the initial lot
premium and annual maintenance fees charged by homeowners' associations. In
fact, operation and maintenance costs of urban runoff retention ponds can be
as low as $62 per year for homeowners (MWCOG, 1983).
Case Studies
The following case studies highlight
developments where the incorporation of urban runoff controls resulted in
economic benefits to the local homeowners or developers. The case studies
detail how the presence of aesthetically designed runoff controls affected
both the initial sale value of new developments and the resale values for
existing developments.
New Development
A landmark survey by the National Institute for Urban
Wildlife indicated that 75 percent of the residents of Columbia, Maryland, a
community planned for a population of 100,000, prefer urban runoff ponds
that contain permanent pools of water, wetlands, and wildlife over the dry
ponds many municipalities prescribe for their subdivisions. Residents (94
percent) overwhelmingly believed that managing future runoff basins for fish
and wildlife as well as for flood and sediment control would be desirable.
Residents (92 percent) considered the view of birds and other wildlife to be
particularly important and felt that the sight of them outweighed any
nuisances they created. Perhaps most importantly, 75 percent of Columbia
homeowners felt that permanent bodies of water added to real estate values
and 73 percent said they would pay more for property located in a
neighborhood with storm water control basins designed to enhance fish or
wildlife use. The study in Columbia covered an area that contained 3 lakes,
22 runoff ponds with a permanent pool of water, and 9 dry detention basins
(Adams et al., 1984; Tourbier and Westmacott, 1992).
Residents of seven Champaign-Urbana, Illinois,
subdivisions with urban runoff detention ponds were questioned about the role
the pond played in their decision to purchase their home. Sixty-three percent
of the respondents living adjacent to a wet pond identified the pond as what
they liked most about their neighborhood. Seventy-four percent of homeowners
surveyed believed that wet ponds contributed positively to the image of a
subdivision as a desirable place to live. Only 3.5 percent felt a wet pond had
a negative influence on the image of their neighborhood. Overall, respondents
believed that lots adjacent to a wet pond were worth an average of 21.9
percent more than comparable nonadjacent lots in the same subdivision.
Eighty-two percent of all respondents said they would, in the future, be
willing to pay a premium for a lot adjacent to a wet pond (Emmerling-DiNovo,
1995).
Built in 1993, the Sale Lake subdivision of
single-family homes surrounds a 4-acre constructed wetland. Sale Lake
demonstrates environmental sensitivity in suburban development. Lots located
alongside the wetland sold for as much as $134,000, up to a 30 percent
premium over lots with no water view (St. Germain, 1995).
Highland Park, Illinois "Preservation is
not a problem for developers; it's a golden opportunity," insists the
president of the development company for Hybernia, a community of 122
single-family houses on a 133.5-acre site in Highland Parks, Illinois. The
site, zoned for 40,000-square-foot lots, was laid out around a constructed
pond/stream system and 27 acres of land approved as a state nature preserve.
The site includes 16.5 acres of ponds. Forebays at urban runoff inlets catch
sediments (Tourbier and Westmacott, 1992). Hybernia is a an example of
ecological landscape planning. Waterfront lots, which now sell for $299,900
to $374,900, draw a 10 percent premium above those with no water view (Margolin,
1995).
Virginia Chancery on the Lake, a condominium
development in Alexandria, Virginia, is a residential project with an
attractive 14-acre urban runoff detention area. Realtors are currently
promoting the wet pond as the development's feature selling point. The wet
pond will be surrounded by a walking trail, and a gazebo and fishing pier will
also be built. According to Ginger Harden, Sales Associate of Chancery
Associates LP, condominiums are priced between $129,990 and $139,990.
Condominiums that front the lake are selling at a $7,500 premium. For the
first four buildings on the market, a $5,000 premium was charged for units
fronting the lake. The lakefront units were the only units selling, and now
the premium has been raised to $7,500 (Harden, 1995).
A development consisting of apartments and
townhouses in St. Petersburg, Florida, Lynne Lake Arms, has four urban
runoff detention ponds on site. Three of the ponds are 3 to 5 acres in size,
and the fourth is a 25-acre pond with a large fountain in the center.
Apartments or townhouses rent for between $336 and $566 a month. Units
facing the three smaller ponds have a $15 per month waterfront premium;
units facing the large pond are rented at a $35 per month premium (McInturf,
1995). A small channel connects the large detention pond and one of the
smaller ponds. Even apartments fronting this channel have a $5 per month
waterfront premium.
The owner of a 72.3-acre parcel of land had
plans to fill deteriorating wetlands before building a subdivision. He was
persuaded to enhance them instead and now promotes enhanced and constructed
wetlands as the feature selling point of The Landing. A lake with 3,750 feet
of shoreline provides aesthetic and recreational value, as well as sensible
detention of urban runoff. Waterfront lots currently sell for $18,000 to
$40,000, a premium of up to $21,000 (150 percent) above comparable lots with
no water view (Baird, 1995).
Existing Development
Since their construction in 1971, units facing the
constructed pond in the townhouse community of Pinewood Lakes have sold at a
premium. Of the 497 units, all with exactly the same square footage
according to tax records, only 20 have direct water views in either the
front or the rear. Figures show the average 1994 sales price of townhouses
lacking the water amenity to be $93,833. The average waterfront sales price
is $100,000, a premium of $6,117. Higher sales prices for properties with
views of the water have been consistent for 23 years (Wade, 1995). Evans
Mills is an upscale community of 41 townhouses in the Tysons Corner area
built around an existing pond. Fairfax County tax records show Evans Mills
waterfront townhouses sell at higher prices. In 1994, waterfront homes sold
for an average $17,467 premium above the average $419,200 price of homes not
facing the pond (Wade, 1995).
Single-family homes can have higher initial sale
values as well as higher resale values when they face urban runoff detention
areas. County tax records reveal that land values in Franklin Farms, an
established residential neighborhood in northern Virginia, are highest when
located in view of its 5-acre urban runoff detention area, which is
surrounded by a walking path furnished by the developer.
"Waterfront" homes in this neighborhood sold for 10 to 20 percent
more initially and again at resale than land with no water view (Downham,
1995). (These percentages might be slightly higher than actual premiums due
to possible additional amenities in the waterfront homes.)
Commercial Property
Laurel Lakes Executive Park, commercial property
in Laurel, Maryland, also has created an attractive wet pond system. Office
space fronting the water rents at a premium of $100 to $200 per month
depending on the size and layout of the office space (Kalish, 1995). On
average, first-class office space located in Prince George's County with a
lakefront view rents for between $17.50 and $20.00 per square foot, whereas
properties without a view rent for between $16.50 and $18.50 per square foot
(Duncan, 1995). Fairfax County, Virginia Commercial office space also can be
valued higher when it fronts aesthetically designed runoff retention ponds.
The lakefront Lakeside at Avion and Tysons Pond, both located in Fairfax
County, Virginia, are examples of commercial projects that took advantage of
the requirement to implement urban runoff management controls by enhancing a
retention pond and then capitalizing on the presence of the pond when naming
the project. In Fairfax, Virginia, the average cost of commercial office
space without water as an amenity is approximately $15 per square foot. The
average leasing rate for commercial waterfront office space is $16 per
square foot (Constam, 1995; Goeller, 1995). In a soft commercial real estate
market, where office space is overabundant, it can be difficult to ask for a
premium of any kind. However, real estate brokers agree that, when all else
is equal, commercial waterfront property rents considerably faster than
space that does not front water (Berman, 1995; Constam, 1995; Goeller, 1995;
Pepper, 1995). Although a tenant might not be charged for a water amenity,
it can provide a steadier flow of income and fewer vacancies for the realtor
(Berman, 1995). Mike Pepper, Vice President of CB Commercial Real Estate
Group, Inc., declares that "There is absolutely a premium associated
with commercial lakefront property. Anything adding to the aesthetic value
is going to raise a property's value." Mr. Pepper concedes that in the
saturated market of northern Virginia, property with a water view might or
might not rent for a $1-$3 per square foot premium, but will always sell or
be rented more quickly (Pepper, 1995).
Conclusion
Environmental benefits are not the only valid
reason for encouraging developers to incorporate urban runoff controls into
new residential and commercial developments. Increased property values can
result from aesthetically landscaped controls. Both homeowners and developers
have realized benefits from beautification of areas adjacent to waterways and
detention ponds. Residents find the beauty and tranquility of water, as well
as fish, birds, and other wildlife, highly desirable. The beauty of natural
surroundings increases real residential property values by up to 28 percent
while also enhancing the quality of life. Commercial property owners, too, can
benefit when their property is adjacent to an aesthetically designed urban
runoff control. They can realize lower vacancies, lower tenant turnover, and
high rental prices. Real estate professionals agree that the more amenities a
property has, the faster it will sell or rent. Of course, to maintain higher
property values, aesthetics must be considered during the operation and
maintenance of wet ponds and constructed wetlands over the years.
Glossary of Terms
Best management practice (BMP):
A practice or combination of practices that are determined to be the most
effective and practicable (including technological, economic, and
institutional considerations) means of controlling point and nonpoint source
pollutants at levels compatible with environmental quality goals.
Constructed wetland: An artificial wetland system designed to
mitigate the impacts of urban runoff.
Forebay: An extra storage space provided near an inlet of a
wet pond or constructed wetland to trap incoming sediments before they
accumulate in the pond.
Gabion: A rectangular basket or mattress made of steel wire
in a hexagonal mesh. Gabions are generally subdivided into equal-sized cells
that are wired together and filled with stones, forming a large, heavy mass
used for shore protection.
Impervious area: A hard surface
area (e.g., parking lot) that
prevents or retards the entry of water into the soil,
thus causing water to run off the surface in greater
quantities and at an increased rate of flow.
Nonpoint source pollution:
Water pollution caused by rainfall or snowmelt moving over and through the
ground which carries pollutants. A nonpoint source is any source of water
pollution that does not meet the legal definition of point source in section
502(14) of the Clean Water Act.
Nonstructural control: A practice that does not require
construction of a facility to control urban runoff.
Premium: An additional charge for real estate property with
an amenity such as a water view or a view of wooded land.
Receiving waters: Lakes, rivers, wetlands, coastal waters,
and groundwaters that receive runoff.
Riprap: A protective layer or facing of quarrystone placed to
prevent erosion, scour, or sloughing of an embankment or cliff.
Sediment: The product of erosion processes; the solid
material, both mineral and organic, that is in suspension, is being
transported, or has been moved from its site of origin by air, water, gravity,
or ice.
Structural control: A practice that involves design and
construction of a facility to mitigate the adverse impact of urban runoff, and
often requires maintenance.
Urban runoff: The portion of precipitation, snowmelt, or
irrigation water that does not naturally percolate into the ground or
evaporate, but runs off the land into streams or other surface water. It can
carry pollutants from the air and land into the receiving waters.
Wet pond: Pond for urban runoff
management that is designed to detain urban runoff and always contains
water.