The objective of this research is to evaluate a land value tax as a potential policy tool to moderate sprawling development in Nashville, TN, the nation’s most sprawling metropolitan community with a population of one million or more. To achieve this objective, the hypothesis is empirically tested that a land value tax encourages more development closer to preexisting development than farther from preexisting development. Specifically, the marginal effects of a land value tax on the probability of land development is hypothesized to be greater in areas around preexisting development than in areas more distant from preexisting development. The findings show that the marginal effects of a land value tax on the probability of developing parcels that neighbored previously developed parcels was greater than the probability of developing parcels that did not neighbor previously developed parcels. This finding suggests that land value taxation could be used to design compact development strategies that address sprawling development.