Passage of referendum increases property values

Opinion: Letters To The Editor

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Letters in the newspaper show that emotions regarding the recent successful school referendum are still percolating. I offer the following as evidence that this measure not only benefits the elementary schools, but all Oak Parkers.

The cost of a failed referendum has long-term economic consequences for all homeowners, whether or not they have children. Better schools mean higher home values and, although all tax initiatives are painful, successful referenda help secure the long-term values of properties.

This is not just wishful thinking. Three respected economists (from George Washington University; University of California, Berkely; and University of Pennsylvania, Wharton School of Business) have studied the impact of passing a referendum on home values ("The Value of School Facilities: Evidence from a Dynamic Regression Discontinuity Design," by Cellini, Ferreira and Rothstein; Quarterly Journal of Economics, 125 (1), February 2010, 215-261.)

The authors concluded that "passing a referendum causes immediate, sizable increases in home prices. How sizable? The research showed that buyers are willing to pay "$1.50 or more for each $1 of facility spending." This means that, every time a house is sold after the initial approval of the referendum, the price is roughly $1.50 higher per dollar increase in the higher tax bill resulting from the referendum than it would have been without the referendum. If your taxes increase by $500, for instance, the value of your home increases by $750.

The interest that parents in Oak Park have in passing a referendum is obvious. The interest of those who do not have children, or those who feel their kids have gone through the system and are therefore not invested in the success of the referendum, is more subtle, but equally compelling.

My kids have graduated from Oak Park's elementary and secondary schools, but my desire for great education in Oak Park is undiminished. I also want my home to have the best chance to increase in value. I am grateful for the passage of the District 97 referendum.

Jim Whalen
Oak Park

Reader Comments

9 Comments - Add Your Comment

Comment Policy

Curious  

Posted: May 16th, 2011 12:41 PM

@Question Authority - Interesting that your perspective of recent Board meetings is that they are going backwards to 1990. They just approved additional tech spending for better student access, they are working on a program approval for poor readers, and they are looking at a new approach to world language. It's easy to sit in the back and claim they aren't doing the "right things." D97 is moving forward in a meaningful way with a true eye to fiscal responsibility.

Question Authority from Oak Park  

Posted: May 13th, 2011 6:32 PM

If the money generated by the referendum was being used by forward thinkers dedicated to helping our students learn to problem-solve, think for themselves, and collaborate it would most likely increase our property values in the long run. But, that's not what's happening. Go to a Board Meeting and decide for yourself whether or not you agree with the way the district is spending our tax dollars. We are on the road to 1990 and we will all pay the price for such poor decision making.

Read the Study First  

Posted: May 12th, 2011 8:34 AM

The study does not prove that property values increase. Whalen either did not read the study, didn't understand the study, or is trying to spread baseless propaganda. Sadly, I think it is the latter. Just because one sites something does not mean it is true.

Alan Reed from Oak Park, Illinois  

Posted: May 12th, 2011 5:42 AM

I'm waiting here patiently for my housing values to increase...a study said it, so it must be true! Any minute now....

Interesting  

Posted: May 11th, 2011 9:53 PM

@Jon D. Dang it, are you saying that this is NOT a way to turn lead in to gold and thus allow OP to recreate the housing boom?!? Doesn't ripping up the Irving playground count?

Jon Donohue  

Posted: May 11th, 2011 9:31 PM

Whalen extrapolated the findings in the study to apply to OP. The study warns that the reader should not "generalize this result beyond our sample." The study explicitly states that property values only increased for school referendum bond issues that were for "infrastructure improvements," not budgetary shortfalls as is the case for D97. The study only looked at California where property taxes are based on sales price, not market values. The list goes on, but you need to read the study.

Interesting  

Posted: May 11th, 2011 8:32 PM

And so, logically, we should have had a referendum that increased our property taxes by $100K per house - and then sold our house for $150K more - right? Can I suggest $1M more? Next? I want the VOP to raise our taxes in 2012, Township in 2013, Park District (again) in 2014 and then I'll sell my home for 1.5x more than whatever they want.

Ron from Oak Park  

Posted: May 11th, 2011 8:24 PM

Nelson lets not get too literal here,what Jim is saying is that potential buyers put a quality education at the top of their list.If you knew Jim Whalen you would know that he is the genuine article.

Nelson Taruc  

Posted: May 11th, 2011 7:01 PM

Mr. Whalen, your analysis of that study is wrong, as it has little parallel to Oak Park's referendum. First, that study focused on California, where they spend less per student vs. Illinois. They also have a far different funding structure. Second, that study focused on referenda for capital improvements. Our referendum was to address a budget shortfall, NOT for new buildings or renovations. You are misleading readers by applying that study to Oak Park.

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