The Price of Admittance
I cannot think of any decision I made the past week that reflects on the Coase Theorem, but we did make a decision this summer that the Coase Theorem explains.
The situation and relevant backstory:
My neighborhood is a small group of homes, perhaps 30, wedged into the side of Borderland State Park. Driving down the main road our neighborhood turns off, one would not know that there was a small neighborhood tucked into the trees. We don’t get through traffic, no one knows we are there. We also enjoy another not so small perk…the state park comes within 4 inches of the cul-de-sac on Rainbow Circle between the two end houses, for about 6 feet. Each house is on at least an acre, so the owners of the house where this occurs have been allowing neighbors to walk across their 4inch strip of property to access the park for over 30 years. Once you step over the strip, there is a short 75yard walk through a well-worn trail directly to the off-leash dog park in Borderland. We live 4 houses away from this entrance (if you don’t count walking around the corner). My older daughters used to take the dogs there daily. I would take the kids onto the trails all summer, many days after school and my whole household does a regular Sunday afternoon hike on the main trail year-round (still). It was one of the reasons we bought this house. The trail head was listed in the property listing and access to this trail has been noted by Borderland State Park since the area was developed in the late 70’s.
For residents of the neighborhood, not using this trailhead would require either a half mile walk along a busy road with a narrow sidewalk or driving to the entrance. For everyone neighbors or non-neighbors alike, it would mean going a almost a mile along the main trail. This trail head was a direct walk to the off-leash area. It is also a meeting place. The neighborhood is a walking neighborhood, people walking dogs along the road to and from the Park is an hourly occurrence. It connects the residents in ways that I cannot explain. Nearly every home here has a dog within. In the warm weather it was almost guaranteed that a quick jaunt over to the Park would net you a couple of neighbors. Most of the Smith Farm Board are residents of this neighborhood, putting significant money towards the preservation of this historic site among others within the Park.
During COVID the word got out. People from outside of the neighborhood started parking in the cul-de-sac and walking through. The neighbor who’s land the trailhead abuts took issue with this and contacted the police and even brought it up in a town meeting as he tried to have a no parking sign added to the cul-de-sac. The town said they did not have a valid reason to limit parking there, as there was not a safety issue and people were allowed to park there if they wanted to. Borderland opened a second parking lot on the corner of Allen and Bay Rd, about a half mile away on the main road, and we saw most of the people trying to slip into Borderland go away. However, DCR started enforcing parking payments this Spring for that lot and the influx began anew. One spring morning the neighbor was having a get together at his home and asked a non-resident to move his car further down the road. The driver refused, crossed over the neighbor’s property anyway and said some choice words. The next day there was a temporary fence, one of the plastic sheeting with metal stakes kind, along the neighbor’s property line. People walked around the fence onto the other houses property (where the park line was much further back). A few days later the fence extended all the way from the ends of both house’s driveways. Newly felled trees were lying across the trailhead to block easy access. The trailhead into Borderland was effectively closed.
The Stake Holders:
The first home owner, “Mike,” who owns the thin strip of land between the Park and the Cul-de-sac.
The second home owner, “Jim,” who owns the home next door with a much wider strip of land, at least 10 feet, between the culdesac and the Park.
The old neighbors, who have been using the trailhead for over 25 years with direct invitation.
The new neighbors, who have been using the trailhead less than 25 years with the knowledge of but with no comment from the owner.
The visiting non-residents that use the trailhead, crossing over “Mike’s” property, without permission.
The Park, that presumably wants increased visitors but also increased parking revenue.
The externalities of Mike’s action to block the entrance:
Mike faces social pressure from his neighbors.
Jim faces either the social pressure from blocking his side OR dealing with people on his property.
Long term neighbors (25+ years) lose access they have a legal right to use.
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Shorter term neighbors lose access but are less harmed as they do not have the use history to warrant a “right” to access.
Non-Residents now have to pay for parking.
The park could see reduced use.
Rights at play:
Mike’s right to his own property and control of it.
The long-term resident’s right of way to the trailhead which they had been given and allowed to use for more than 25 years. They had pictures of the neighborhood building the entrance with Mike, his wife’s comments and invitations to meet them along the trail going back to the beginning of Facebook and a neighborhood of residents all happy to write affidavits stating that they had been using that access point for over 25 years with Mikes express permission.
Transaction Costs:
Here is where we get into the Coase Theorem. With zero costs, the long-term residents threaten to sue for continued access (which they probably would win). Mike either builds a new fence with a door or removes it all together. Given the issue with non-resident use, Mike would probably choose the fence with a door. To maintain social standing, Mike would probably allow the new residents to pay for this fence. As the neighborhood is either going to walk to the Bay Rd entrance or through the trailhead, the Park does not lose parking revenue and maintains a close relationship with the neighborhood for continued support of Smith Farm. Borderland sees increased revenue from non-neighborhood parking that is now paying vs parking on street and slipping through Mike’s property. Everyone is happy.
That isn’t how it turned out. There are transaction costs. It is expensive to sue for property rights, even when you have proof of access galore. Many in the neighborhood banded together and spoke to Jim. If Jim took down his fence, then people could skirt the fence on Mike’s property and never actually BE on Mike’s property. All would be well, except for Jim who would now be responsible for Mike’s Ire and allowing strangers onto his property, taking on the liability associated with that as well. For Jim, it isn’t a matter of inches but of feet and he has a pool. That cost would be too great.
Borderland wrote a cease and desist letter to Mike to have the debris from the trailhead removed, which cost them money.
The long-term residents wrote a letter to Mike asking him to remove the fence and allow their continued access to the trailhead. Shorter term residents offered to fund an initial legal foray and began organizing how to go about this. We were part of this group (more on this later). The Smith Farm board met to discuss action, as cutting off this trial head reduced visitation to the site.
Raising the Costs:
Mike never removed that debris, instead he quietly donated a lot of land on the other side of Deer Meadow Rd (adjacent to his backyard, about 10 acres he would have donated to DCR upon his death anyways). Borderland quietly backed out of the fight and put up a sign saying “Not an Entrance to Borderland State Park, DCR” at the entrance of the trailhead. Social pressure was put upon several members of the Smith Farm Board by those involved with the Ames Mansion (and by extension DCR) and they stopped discussing the trailhead in meetings. Instead of responding directly to the long-term resident letter Mike hired a law firm to respond and included a photographed copy of the retainer check for $20,000 to fight.
The cost was too high. The new residents disbanded their commitment to fund a legal campaign, the older residents decided they didn’t care that much, and the fence remained. Mike was the only person happy with this result. For a while.
Mikes daughter and her two children moved in with him and his wife this September. Newly divorced, she and her kids have quickly become friends with the neighborhood. Five months after the fence went up, it is now down. This October the fence came down and word slowly made its way around the neighborhood that the way was now open. The trees were removed from the trail head and people are walking into Borderland again. The social cost to Mike was not an issue until his grandchildren were involved, understandably. It was enough to change his calculus. Access was not worth the estimated $40,000 it would have cost the pooled residents to fight and restricting it was at least worth $20,000 to Mike but it was not worth the social acceptance of his grandchildren. For now, it is down. Mike’s daughter tells me that he and Jim plan to put it back up in the spring to deter non-residents from parking and using the trailhead.
In my own opinion, I think the $20,000 was a retainer for general purposes and Mike uses that law firm for his business and personal work. He is a developer and must do a decent amount of business with them. I do not think that was a true $20,000 valuation. I also did not feel we should push for access. My husband was driving that train. I’m originally from Texas, where property rights are sacrosanct. I don’t even cross across the grass…anywhere. Texas also has much more land and at a lower price, so that factors into my understanding and my knee jerk reaction of preserving Mike’s right to control that strip of land. A strip he deliberately kept in place when he and Jim built this neighborhood.
There are other major issues though, more important than getting to the off-leash area quickly. Access to green spaces, to common goods and the message being sent…because the “nonresidents” entering through our neighborhood are mostly not white. It was worth a few thousand dollars to us to fight that battle, but not tens of thousands. Perhaps if it were a more visible issue or Mike had outright said it was the type of people coming in and out of the trailhead that he took issue with, then we would have pushed further. But we can get more “bang for the buck,” social justice wise, from other avenues and we do not have tens of thousands to fight this hill alone. We backed off, now have access, and we also have an uncomfortable knowledge of how much we’re willing to pay for social justice.
