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Valuing New Development in Distressed Urban Neighborhoods

We estimate the effect of design on the

assessed values of new housing units in

high-poverty Chicago census tracts with

a parcel-based hedonic regression in

which we distinguish between three

urban design types: enclave, traditional

neighborhood development (TND), and

infill. We find that urban design signifi-

cantly affects housing values, and infill

housing is more highly valued than

either enclave or TND housing. We also

examine the influences of individual urban

design features and find that residents

prefer entrances that face the street, and

facades constructed from the same material as adjacent buildings. They also

prefer parking in front of their homes, and

to be buffered from public streets. We

interpret the former to be preferences for

greater integration into the surrounding

neighbourhood, consistent with our

findings on infill.

Brent D. Ryan, AICP ([email protected]), is

co-director of the City Design Center and

an assistant professor of urban planning

and policy at the University of Illinois at

Chicago. His research interests include urban design, neighborhood revitaliza-

tion, and morphological change in urban

areas. Rachel Weber ([email protected])

is an associate professor of urban planning

and policy at the University of Illinois at

Chicago. She is the author of numerous articles, technical reports, and a book in

the fields of development finance, urban

real estate markets, and industrial

restructuring.

Does Design Matter?

Brent D. Ryan and Rachel Weber

housing construction boom occurred in some of the poorest urban neigh-

borhoods in the United States in the 1990s. Attracted by vacant land and new markets, and possessing access to cheap credit, for-profit developers

built a mix of housing, ranging from multifamily buildings to gated single-family homes in poor neighborhoods. The urban design of this new housing varied

widely. In this article, we examine whether urban design is a significant contributor

to the value of new housing in poor urban neighborhoods, assuming that resident preferences are revealed in the prices paid for different kinds of housing and that these in turn are reflected in their assessed values. We distinguish between three urban design types: enclave, traditional neighborhood development (TND), and infill. We perform a parcel-based hedonic regression to explain the values of new housing constructed in high-poverty Chicago census tracts between 1993 and

2003. We investigate the relationship between urban design and housing values in poor neighborhoods, about which little is known, because previous research on the effects of urban design on housing values has focused almost exclusively

on new urbanist projects in more affluent areas. We also hope to make local governments aware of the potential of urban design policies to create value in distressed neighborhoods and to reduce resistance to new development products among realtors and tax assessors who shape real estate market practices.

The Urban Design of New Inner-City Housing

Substantial amounts of privately financed housing have been constructed in distressed, inner-city neighborhoods during the past decade (Ryan, 200 6 a), transforming them through an influx of higher-income residents (Jargowsky, 2003; Wyly & Hammel, 1999) and capital. Urban design is particularly important in this context. In poor areas with large amounts of vacant land, developers can sometimes acquire whole city blocks and reshape street networks (Ryan, 2006b), creating more design options than elsewhere. Urban design may also reduce the social isolation of low-income households, enhancing their integration into the larger urban economy (Duany, Plater-Zyberk, & Speck, 2000; U. S. Department of Housing and Urban Development [HUD] 2000; Wilson, 1996).

journal of the American Planning Association,

Vol. 73, No. 1, Winter 2007

Ryan and Weber: Valuing New Development in Distressed Urban Neighborhoods

Studies of distressed neighborhoods in Detroit and Philadelphia (Ryan, 2002, 2006b), Pittsburgh (Dietrick & Ellis, 2004), and our preliminary observations in Chicago, show that new housing development in poor neighborhoods can be grouped into three urban design types: (1) infill, or scattered-site, development; (2) traditional neighborhood development (TND); and (3) enclave, or self-contained, de- velopment. Table 1 details some characteristics of each type.

Infill development (illustrated in Figure 1) occurs where small numbers of parcels are available for redevelop- ment on existing city blocks. This type of development does not change the neighborhood structure substantially be- cause new housing is located between existing buildings oriented to current street and lot subdivision patterns. TND and enclave developments (examples in Figures 2 and 3) occur where empty parcels are numerous enough to permit the construction of extensive, contiguous, new housing. These latter types allow designers much more flexibility in how they locate housing, open space, roadways, and parking areas.

TNDs integrate new development into their surround- ings by replicating the design features of existing neighbor- hoods, like street-facing housing and interconnected street grids. TNDs have much in common with new urbanist designs (Bothwell, Gindroz, & Lang, 1998; Morrow-Jones, Irwin, & Roe, 2004; Talen, 2001; Steuteville, 1999; Leccese & McCormick, 2000). In contrast, enclaves reject their contexts by spatially isolating new housing from their sur- roundings through the orientation and spatial placement of buildings and roadways. Bohl (2000) refers to enclave de- velopments as "inward-focused residential pods" (p. 767).

Urban. Design's Effect on Housing Value

Urban economists have demonstrated that a property's attributes affect its price in ways that can be measured (see Boyle & Kiel, 2001; Sirmans, MacPherson, & Zietz, 2005 for literature reviews). Few economists have specifically con-

sidered the design of the built environment (or if they have it has been in the context of new suburban developments) even though differences in urban design might affect housing prices by influencing development costs, amenities, and uncertainty about future development nearby.

Development Costs Each of the three types of urban design described

above uses space in a different manner, potentially affecting construction cost, sale price, and assessed value. Housing units in enclaves and TNDs are likely to cost less to build than comparable infill units because they can take advan- tage of economies of scale (Gyourko & Rybczynski, 2001), and may also have access to cheaper capital. Enclaves and TNDs are also likely to have lower per-unit legal and other costs of buying property compared to infill development. In other ways, enclaves and TNDs may be more expensive to build. They may require more land per unit than infill development, for example, for roadways, landscaping, and parking areas.

Amenities and Disamenities Our three urban design types also produce different

types of amenities. Enclaves and TNDs often provide additional site design amenities such as new infrastructure, landscaping, and convenient off-street parking. Parking for infill development by contrast, may be less safe because of heavier traffic and crime on alleys and streets.' The different design types also face differing constraints that influence their locational amenities. For example, enclaves and TNDs require large parcels, limiting their feasible locations more than is the case for infill. Finally, differences among design types may influence social interactions, which in turn in- fluence residents' safety and participation in neighborhood civic life (Newman, 1972; Bothwell et al., 1998; Duany et al., 2000; Jacobs, 1961; Whyte, 1988). Scholars have argued that existing urban neighborhoods and TNDs encourage more social interaction, and some have even tried to quantify these attributes. For example, Eppli and

Table 1. General characteristics of different urban design types.

Number of Number of developers urban design Physical per unit decisions integration

Development type Parcel size of land area possible with context

Infill Small Many Few High Traditional neighborhood development (TND) Large Few Many Moderate Enclave Large Few Many Low

101

102 Journal of the American Planning Association, Winter 2007, Vol. 73, No. 1

Figure 1. Typical infill-type housing.

Tu (1999) found that new-urbanist-style developments commanded higher prices than similar, suburban-style units. Song and Knaap (2003) found that residents of new urbanist communities were willing to pay more for development designed for internal connectivity, but not for development designed to be integrated with the surrounding environment.

New housing that is poorly integrated with its sur- roundings may stigmatize residents, particularly if they are low-income. Recent redevelopments of public housing projects have replaced enclave design features with TND features to integrate this housing better into its surround- ings (HUD & Congress for the New Urbanism, 2000). Infill housing is not spatially isolated, and does not distin- guish itself from its context as enclaves and TNDs do. This gives residents of new infill less ability to control access by outsiders, and thus risk, than residents of enclaves and

TNDs have, but this problem may be offset by improved community social controls, particularly if residents know each other well (Bothwell et al., 1998; Song & Knaap, 2003).

Future Uncertainty It is a disadvantage when potential homebuyers "do

not know with certainty how the neighborhood develop- ment will evolve or proceed over time" (Sirmans, Turnbull, & Dombrow, 1997, p. 615; see also Thorsnes, 2000). Different urban design types are associated with different levels of future uncertainty. The homogeneous nature of an enclave or TND assures purchasers that future units will be similar to existing ones. 2 This is generally less true of infill. One can therefore argue that enclave and TND models

help to internalize some of these potential negative externali- ties, and residents may be willing to pay a premium for this.

Ryan and Weber: Valuing New Development in Distressed Urban Neighborhoods 103

Figure 2. Typical traditional neighborhood development-type housing.

Because the influences described above work against one another, and their magnitudes are unknown, the literature does not permit strong apriori hypotheses about which urban design type (infill, TND, or enclave) will be the most desired and therefore most highly valued. The following sections describe our empirical investigation to reveal preferences for the urban design of new housing in low-income neighborhoods.

Data Collection and Analysis

We assembled construction permit data on all parcels (land lots and their built improvements, if any) on which housing units were constructed between January 1, 1993 and December 31, 2001 in census tracts where at least 20% of households had incomes below the federal poverty

line in 1990. This number is widely accepted as a thresh- old for neighborhood distress (Galster, 2002; Jargowsky 1997). Forty-six percent of Chicago census tracts were distressed in 1990 using this measure. We excluded from our analysis census tracts within 2 miles of the Central Business District (CBD). Although there were distressed neighborhoods inside this perimeter in 1990, infrastruc- ture improvements and massive amounts of new public investment since that time made them highly unusual.

We associated Cook County Assessor's Office data on new condominiums, attached and detached single-family homes, and apartment buildings with six or fewer units,

with construction permit addresses. Eighty-six percent of the building permit addresses could be matched to Parcel Identification Numbers (PINs)4 , yielding 1,227 parcels for which we had both construction permit addresses and assessment data. Within this group of records, we had

Ryan and Weber: Valuing New Development in Distressed Urban Neighborhoods 103

104 Journal of the American Planning Association, Winter 2007, Vol. 73, No. 1

Figure 3. Typical enclave-type housing.

complete information for a subset of 823 parcels, including critical data on the building characteristics of the structures on each parcel. We report results for both larger (N = 1,227)

and smaller (n = 823) samples for variables for which we had data in each case.

Dependent Variable We sought to explain housing value, which we measured

using 2003 assessed values. Because we had parcel-level data, our dependent variable was the assessed value of an entire parcel, not of an individual dwelling unit.5 In Cook

County, parcels are supposed to be assessed at 16% of their estimated market values. We relied on assessments instead of housing unit sales prices for several reasons. First, in low-income neighborhoods, where home ownership is less

common, only 17% of our small sample could be matched to sales transaction data.6 Second, examining only sold

properties may introduce selection bias if this sample is

significantly different from the unsold ones (Gatzlaff & Haurin, 1997). Third, assessments are good proxies for market values, as each Chicago parcel is reassessed every

three years based on any recent sales of the parcel in ques- tion and on sales of comparable parcels. 7 Although the use

of assessed values may introduce some degree of error into the model, we felt it was likely to be randomly distributed.

The Independent Variable of Greatest Interest: Urban Design Type

We hypothesized that urban design would have an

effect on assessed housing values even after other attributes that might influence demand were controlled. Determining

the urban design type of an individual parcel required us to define the "cluster" of similar new units to which it be- longed. Since TND and enclave developments contain

Ryan and Weber: Valuing New Development in Distressed Urban Neighborhoods

multiple units by definition, we needed groups of infill units which would be comparable to these.8

We first address-matched all qualifying building permits to a GIS database, defined a 250-foot buffer around the address on each permit, and joined overlapping buffers to create clusters. We felt that units separated by more than 250 feet would not be visible or closely accessible to each other, reducing the appropriateness of defining them as a group. We then eliminated clusters with fewer than 20 total units, since smaller developments might not have the urban design features needed to identify TND- and enclave- type developments.

We visited and photographed each cluster and matched these field data to high-resolution aerial photographs and GIS figure-ground illustrations to confirm infill clusters (Google, 2005; City of Chicago Department of Planning and Development, 2005; Cook County Office of the Assessor, 2005), then classified each remaining (non-infill) PIN in our sample as either an enclave or TND by deter- mining whether the following were present or absent:

1. parking (either a lot or individual spaces) in front; 2. roadways interior to the lot, such as driveways or

access roads; 3. front doors opening onto interior walkways,

roadways, or private open space; 4. extensive buffering (substantial trees, plantings,

open space, or landscaped berms) between the building and the street; and

5. faýade materials which differed from those of adjoining buildings.

Developments possessing three or more of the foregoing attributes we considered to be enclaves, and those lacking three or more we considered to be TNDs. We used these criteria as binary variables in later model specifications. Using multiple design criteria also permitted us to catego- rize developments that possessed only some of the design features and to analyze developments with mixed design features.

Figure 4 shows the geographic distribution of our sample, and Table 2 shows how the sample broke down by design type. The distribution was similar in both samples. In both samples average assessed values were significantly higher for infill clusters than for either enclave or TND clusters.

Other Independent Variables In addition to dummy variables for urban design types

and parcel attributes, we also included other site-specific variables likely to influence parcel value. Descriptive statis-

105

tics for these and the urban design variables are shown for both the small and large samples in Table 3.9

Model

We employed a standard hedonic model to regress urban design features on the assessed values of parcels with new construction in high-poverty Chicago census tracts. We adopted the following semi-log functional form because of an observed nonlinear relationship between assessed value and key parcel attributes like lot size (see Colwell and Munneke, 1997):

Ln(Assessed value) = ot + PX + 8Z +,ySCALE + XENCLAVE + ±TND +E

In the equation above, the dependent variable is the natural log of a parcel's assessed value in 2003, ot is the intercept, X represents a vector of characteristics of the structure on the parcel, Z a vector of neighborhood attri- butes, SCALE represents number of units in the cluster, and E represents an error term. The binary variables of ENCLAVE and TND each take on values of 1 if the parcel is located in an enclave or TND cluster and 0 otherwise. These two dummy variables are mutually exclusive.

Results

Table 4 shows our regression results. The adjusted R2

values range from 28% to 86%, indicating that the ex- planatory power of the models is, in some cases, very high. In most cases, the coefficients on the independent variables are as expected. Homes wiath the following attributes were assessed at higher values: more bedrooms and bathrooms; recent sales; and locations in higher-income areas, near the CBD, near Lake Michigan, and near transit stops. However, we are primarily interested in the urban design variables. Using both the small and large samples, the coefficients on the dummy variables for location in an enclave or TND are negative in Models I and 3. These results suggest locating in these types of development reduces value: an identical building constructed as infill is worth much more. Specifically, location in an enclave decreases housing value by between 22% (large sample) and 24% (small sample), and location in a TND development decreases value by between 21% (small sample) and 27% (large sample) compared to the same unit built as infill."

We then sought to discover which of the individual design elements characteristic of TNDs and enclaves

106 Journal of the American Planning Association, Winter 2007, Vol. 73, No. 1

Legend * CBD & Two Mile Radius

[• Chicago Community Areas

Housing Clusters

A Enclave Fi Infill O Neotraditional

Figure 4. Location and urban design type of sample construction permits.

Ryan and Weber: Valuing New Development in Distressed Urban Neighborhoods 107

Table 2. Percent of sample devoted to each of three urban design types and mean assessed values.

Percent of samples Mean assessed value

(SD)

Small sample Large sample Development type (n = 823) (N= 1,227) Small sample Large sample

Enclave 41% 36% $32,909 $31,872

(16,224) (14,723)

TND 21% 20% $31,372 $30,159

(18,466) (16,467)

Infill 38% 44% $49,688 $41,573

(18,220) (18,083)

housing consumers apparently do not like. In Models 2 and 4 we compared only TND and enclave parcels (i.e. we excluded infill). We found the majority of the coefficients on individual design element dummy variables to be significant under these conditions, and we were able to increase the explanatory power of the original models by substituting these criteria for the more general variables representing urban design types.

Specifically, our results showed residents to prefer some buffer between their living quarters and the street. They also preferred to have parking adjacent to the street, in front of their homes. These urban design features are characteristic of enclaves, and serve to separate housing from its surroundings. Two other variables, building mate- rial different from adjoining, and opens to the yard, had negative and significant coefficients, suggesting that resi- dents prefer to be more integrated into their surroundings. Street-facing building entrances and contextual facades, both typical of TNDs, increase the value of properties in contiguous developments. The fifth individual variable, the presence or absence of a private road, was contradictory: for the smaller sample it was an asset, while for the larger sample it was a liability.

Conclusions

Our findings indicate that urban design plays a mean- ingful role in determining housing values in low-income Chicago neighborhoods. Most importantly, infill housing appears to command a value premium, compared to both TND and enclaves. From this we understand consumers to value housing that is integrated into its urban context over

housing which is dissociated from it. People may associate urban developments that are homogeneous and dissociated from their surroundings with public housing, particularly in low-income neighborhoods.

We also conclude that the value penalty associated with TND and enclave developments could be reduced by better connecting these developments to the existing urban fabric. Two individual characteristics (front parking and street buffering) had positive impacts, while two others (private roadways and non street-facing entrances) had negative impacts. We conclude that residents valued indi- vidual urban design elements of both the enclave and TND models. They seemed to appreciate the convenience and safety of accessible, visible, parking in front of units; the privacy provided by separation from the street; and being a part of their surroundings, as expressed by contextual facades, street-facing entrances, and a shared public street. Our findings are consistent with those of previous re- searchers who found similar preferences among suburban dwellers (Morrow-Jones et al., 2004; Song & Knaap, 2003; Talen, 2001).

One caveat is that some of the observed value differ- ential may be due to different land acquisition and devel- opment costs for the different design types. However, interviews with housing developers active in these neigh- borhoods suggest that lack of economies of scale may add to the cost of infill development, and that enclaves require more roadways and landscaping than infill.11 Moreover, the design criteria variables remained statistically significant in the models run on data that did not include parcels developed as infill (Models 2 and 4).

We found that whether contiguous developments are designed as enclaves or TNDs they are less valuable than

108 Journal of the American Planning Association, Winter 2007, Vol. 73, No. 1

Table 3. Attributes of sampled parcels with new construction and the distressed Chicago census tracts where they are located, 2003.

Small sample (n = 823) Large sample (N = 1,227)

Mill Max Mean SD Min Max Mean SD

2,946 126,564 38,943 19,390 2,057 126,564 35,750 17,372

10 2.27 1.26

2 18 3.5 1.9

0Masonry exterior construction?

(0 = No, 1 = Yes)

1 .81 .39

520 34,000Square feet of land

Units in parcel

Units in cluster

1,957 1,680

1 .82

6 240 82 83

7 1.27 .87

6 240 83 85

Age of unit (years)

Tract median household income ($)

Tract percent owner-occupied

Tract percent Black

Tract percent Hispanic

Any recent sale? (0 = No, 1 = Yes)

Distance to CBD (miles)

Distance to Lake Michigan (miles)

Distance to elevated rail stop (miles)

Percent change in quartersection's

equalized assessed value, 1989-1997

Percent of quartersection's equalized

assessed value in commercial and

industrial uses

In an enclave? (0 = No, I = Yes)

In a TND? (0 = No, 1 = Yes)

Infill? (0 = No, I = Yes)

10 6.07 2.07

12,599 95,075 46,511 21,140

4% 71%

1% 98%

0% 80%

2.01 7.67

.22 5.06

.06 1.31

46%

39%

38%

22%

14%

42%

21%

.17 .38

4.02

2.29

1.30

.55 .30

588% 287% 149%

5% 70%

37% 16%

.41 .49

.21 .41

.38 .49

10 5.47

12,599 95,075 49,182 22,041

4% 71%

1% 98%

0% 80%

2.00

39%

31%

23%

16%

39%

20%

1 .12 .32

9.69

.06 5.06

.06 1.31

21%

3.91

2.27

1.34

1.16

.52 .28

588% 317% 151%

5% 70%

36% 15%

.36 .48

.20 .40

.44 .50

infill housing. This confirms the work of those theorists,

beginning with Jane Jacobs, who have argued that urban

development that is integrated is more desirable than that

which is isolated. Our results, showing that both the

enclave- and TND-style design models carry similar value

penalties, challenge the neotraditionalist argument that TNDs are superior to other models of urban design (see

Duany et al., 2000).

Our results should reassure those who believe that the best way to revitalize urban neighborhoods is to respect

and augment the urban design character of existing places

rather than to transform them in more dramatic ways.

Cities may want to consider these findings as they establish

both redevelopment guidelines and formal and informal

design standards for publicly assisted housing in distressed neighborhoods.

Assessed value

Full baths

Bedrooms

1 1

Percent of quartersection's equalized

assessed value in commercial and

industrial uses

In an enclave? (0 = No, I = Yes)

-0.543** (-6.164)

-0.219** (-4.765)

-5.024** (-12.192)

Ryan and Weber: Valuing New Development in Distressed Urban Neighborhoods

Table 4. Results of regression model predicting 2003 assessed value for sampled parcels.

Small sample

Model 1: Model 2: Design Design type characteristics De

(I) (I)

Full baths 0.029 0.046*

(1.928) (2.234)

Bedrooms 0.078** 0.089**

(6.125) (5.994)

Masonry exterior construction 0.029 0.025 (0 = No, I = Yes) (1.003) (0.886)

Square feet of land -. 000 0.000

(-0.073) (1.705)

Units in parcel -0.112"* -0.1 16**

(-3.789) (-2.974)

Units in cluster -0.000 0.010**

(-1.511) (9.213)

Age of unit (years) -0.029** 0.004

(-4.973) (0.687)

Tract median household income 0.000"* 0.000"*

(11.673) (5.410)

Tract percent owner-occupied -1.679** -3.402**

(-9.069) (-5.848)

Tract percent Black -0.389** 8.894**

(-6.010) (10.834)

Tract percent Hispanic -0.365** 20.919**

(-3.341) (11.543)

Any recent sale? (0 = No, 1 = Yes) 0.077** 0.038

(2.696) (1.417)

Distance to CBD (miles) -0.110"* -0.563**

(-7.774) (-6.492)

Distance to Lake Michigan (miles) -0.406** -0.491"*

(-1.574) (-3.057)

Distance to closest elevated rail stop -0.020 -0.173** (miles) (-7.495) (-3.446)

Percent change in quartersection's equalized assessed value, 1989-1997 -0.001"* 0.019"*

(-7.041) (11.381)

Large sample

Model 4: Design •e characteristics

(I)

-0.000**

-5.215)

0.048**

(3.195)

0.001

(1.479)

0.0 19"*

(2.717)

0.000"*

(6.934)

-0.847**

-4.480)

-0.201 *

-2.418)

-0.005

-0.038)

-0.040**

-3.176)

-0.312**

-4.694)

-0.060**

-3.733)

-0.000

-1.370)

-0.139

-1.304)

-0.203**

-3.496)

-0.000"*

(-9.781)

-0.019

(-1.135)

0.000

(0.723)

-0.013

(-1.419)

0.000"*

(8.946)

-1.710**

(-3.772)

1.945**

(4.703)

3.320**

(4.130)

-0. 104**

(-5.604)

-0.099

(-0.563)

-0.370**

(-8.306)

0.000**

(3.216)

0.496*

(2.536)

109

lodel 3: sign tyt

(1)

110 Journal of the American Planning Association, Winter 2007, Vol. 73, No. 1

Table 4 (continued).

Small sample Large sample

Model 2: Design characteristics

(t)

Model 3: Design type

(W)

Model 4: Design characteristics

(1)

In a TND? (0 = No, 1 = Yes)

Building material different from

adjoining? (0 = No, 1 = Yes)

Served by private road? (0 = No, 1 = Yes)

Parking lot in front? (0 = No, 1 = Yes)

Opens to yard? (0 = No, 1 = Yes)

Buffered from the street?

(0 = No, 1 = Yes)

Constant

Adjusted R 2

*p < 0 .0 5 **p <0.01

Acknowledgements This research was funded by a Lincoln Institute of Land Policy Planning

and Development Fellowship. We greatly appreciate the research

assistance we received from Dan Weiske and Nina Savar and feedback

from participants in the Lincoln Institute of Land Policy Planning and

Development seminar.

Notes 1. On-street parking may reduce the appeal of nearby developments by

congesting streets and reducing the "aesthetic appeal of the neighbor-

hood" (Guttery, 2002, p. 266; see also Bohl, 2000). Other scholars

disagree, citing narrow streets with on-street parking and slower traffic

as a positive contributor to perceptions of resident comfort and safety

(Appleyard, Lynch, & Mier, 1966).

2. Prior research has found that contiguous developments lend them-

selves to institutional arrangements, such as restrictive covenants, that

reduce future risks of negative neighborhood effects (see Alexandrakis &

Berry, 1994; Hughes & Turnbull, 1996; Speyrer 1989). Peiser (1984)

found slightly higher net benefits to "planned" (i.e., large-scale) versus

unplanned developments and Ellen, Schill, Susin, and Schwartz (2001)

found that larger-scale and denser developments had significantly larger

effects on values in the surrounding areas.

3. We largely avoided issues raised by subsidized housing developments

by excluding from our sample Class 4 parcels, which are those developed

by nonprofits.

4. We assumed that construction permits whose addresses we could not

match to assessment data either had incorrect address information, were

not built in time to be assessed in 2003, or had been built on newly

subdivided parcels. In order to determine if we were introducing bias

into the sample by requiring a match, we regressed critical locational

data (e.g., distance to CBD) against a binary variable indicating whether

the construction data were matched or unmatched. In none of these

regressions was this variable ever statistically significant, and so we

concluded that successful matches were spatially random.

5. We do, however, account for the number of units in each parcel by

including this information as an independent variable.

6. We expect that the assessor has access to more complete transactions

data and that, in reality, a larger share of our sample did indeed sell.

7. When a new building is built, the assessor reviews construction cost

information from the building permit and acquires any sales data. The

most recent sale price is a baseline market value that will be checked

against adjustment factors generated by regressions of area sale prices.

8. We developed the following technique to avoid over- and under-

sampling from clusters. We divided the "total construction value" listed

on the permit for the proposed project by assumed construction costs of

Model 1: Design type

(t)

-0.195** (-4.291)

-0.243**

(-5.273)

-1.840** (-11.084)

1.545**

(8.199)

3.853**

(13.031)

-5.227** (-12.238)

1.513"*

(7.132)

-2.638*

(-2.398)

.862

11.635"* (78.419)

.679

-0.412"* (-3.283)

-0.591*

(-3.343)

1.130**

(5.372)

-0.627**

(-2.833)

0.914"* (5.102)

8.873**

(23.529)

.496

692823

10.661*

(71.190)

.282

511 1227

Ryan and Weber: Valuing New Development in Distressed Urban Neighborhoods

$75,000 per unit, to obtain the number of units. If we could match fewer than 20% of these expected units with their PINs from the Assessor's Office, we eliminated the cluster to avoid under-sampling it. In clusters where we matched over 75% of the expected units, we randomly eliminated PINs to reduce the match rate to no more than

75% to avoid over-sampling. 9. Ideally, we would have also controlled for the housing tenure of each parcel as well as its land and development costs. Unfortunately, such data are considered proprietary information and is generally unavailable. 10. In a semi-log regression, the coefficient on a dummy variable can be interpreted as an elasticity as follows: when TND and ENCLAVE change from 0 to 1, the value of the parcel will change by [Exp(b) -1] x 100%. 11. We conducted interviews with Thrush Development Corporation and Applied Real Estate Analysis (AREA).

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TITLE: Valuing New Development in Distressed Urban Neighborhoods

SOURCE: J Am Plann Assoc 73 no1 Wint 2007 WN: 0734902098011

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