PFM Articles 
Preferential assessment for open space
JEFFREY O. SUNDBERG
PFM, Vol. 14 No. 2,
(2014)
Land with little or no development, often referred to as open space, can provide environmental and amenity benefits to society. Twenty-three states use tax expenditures as an incentive to keep land undeveloped. These tax expenditures are the result of preferential assessments that reduce the property taxes on qualifying parcels. The programs vary in many ways, including the method used to determine the tax expenditure on a particular parcel, the conditions necessary for qualification, and the penalty for altering the use of land enrolled in the program. This review examines the programs and discusses the different approaches used. It presents a case study of tax expenditures for open space protection in Georgia, demonstrating the technique used to calculate the expenditure and the wide variation in costs across counties. The methods used to determine the tax expenditure amount and the nature of the benefits received lead to concerns about the efficiency of the programs.
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