Tag: View portland maine development economic

What’s in a view?

What’s in a view?


View of Casco Bay from the former Portland Company Site. Photo by David Harry of the Forecaster.

What’s in a view?

Recently, a controversy has arisen in Portland over the proposed development at the site of the former Portland Company.  The controversy has arisen because the proposed development may block the view of some neighbors (and the general public) of Casco Bay.

As always, the story is more complicated than it first appears. 

It is true that if the development were to block the view of some neighboring properties, that could result in a lower property value, as the view is part of what makes the property so desirable.  Economists call this “amenity value.”  Take two houses, identical in all aspects, except one has a gorgeous view and the other does not.  The difference in the housing price would be the “shadow price” of the view.  Environmental economists can determine this shadow price by regression analysis:  inputting all recent house sales and relevant property characteristics (square footage, lot size, age of the property – and the presence or absence of a view) into a statistical program, then “regressing” the sale price of each house on its characteristics.  Theoretically (under certain conditions), the researcher would then be able to isolate the effect of each characteristic on the housing price, and thus determine the “shadow price” of the view.  If that view were to somehow disappear (say through development), then the property owner would experience a loss, equal to that shadow price.

What happens when a developer (Mr. A) builds something that obstructs another property owner’s (Ms. B.’s) view, and thus inflicts a cost on Ms. B, equal to the shadow price of the view?  Theoretically, again, the developer could offer to compensate the home owner, and the two parties could come to Some mutually agreeable compromise.  (If you were fortunate enough to have studied environmental economics, you would recognize a version of the Coase theorem.)
Alas, real life is rarely as simple as economic models might suggest.  In real life, of course, such negotiation rarely takes place.  Instead, what we might expect to see are lawsuits, heated rhetoric, and an outcome that is hardly beneficial to all.

Let’s take a look at the facts in the case. A private developer is looking to build on the former site of the Portland Company on Fore Street. Neighbors (specifically a group calling itself the” Soul of Portland”) contend that the proposed development would block the view of Casco Bay from Fore Street, and thus deprive passers-by of the beautiful view.  Notice that the main argument here is not that the development would harm property values, but that the development would take away something that makes Portland unique. This is different from the pure “property value” route, and a good tactic for the “Soul of Portland” to take, as it doesn’t -on the surface- reek of self-interest.  It’s worth looking into the economic merits of this argument. How would we go about valuing the loss of this view not only to the private property owners, but to the general public?

Now, this becomes a case of non-market valuation. If the view (the “environmental good,” if you will) belongs to the public, and a private developer is going to deprive us of that good, then we need to determine by how much the public ‘s “well-being” would be affected. We might do this by asking people: “what would you be willing to pay to preserve this view?”  (Economists call this “contingent valuation.”)  The kicker, of course, is that people are rarely willing to pay what they say they are in surveys.  If the view is in a park, then economists might be able to conduct a travel cost study – finding out how far people travelled to see that view, and backing out the value of the view from there.  Planners can then decide whether or not to preserve that view, informed by the knowledge of the benefit that the community derives from that view on the one hand, and the benefit that would arise from development on the other.

In this case, however, I don’t think there’s any need to go that far.  Not 30 yards from the section of Fore Street from which the view may be blocked stands Fort Allen Park, a publicly owned, open-access park with the same (if not better) views, benches, binoculars, and a gazebo (where once I witnessed a tango club practicing – pretty cool!).  An even better, up close and personal view can be had from the other side of the Portland Company, from the Eastern Prom Trail, which will be preserved in any case, city officials assure us.

As any economist knows, something that is unique has great value. Something that has many close substitutes does not.  For what it’s worth,  my opinion is: develop the site with care. Use it to bring people to Portland to enjoy the beautiful views that we are extremely fortunate to have in many places around our beautiful city. Be sensitive to issues such as view corridors, public access, historic use, and affordable housing, if applicable.  But don’t deprive the city of a well-thought out development opportunity in favor of a special interest.  And to be honest, when I walk up the hill on Fore Street past the Portland Company site, I’m more interested in catching my breath than catching the view.

What do you think?