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Dynamic Neighborhood Taxonomy A Project of LIVING CITIES By RW Ventures, LLC Building New Capacity for Neighborhood Development City of Seattle, May 5,

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Presentation on theme: "Dynamic Neighborhood Taxonomy A Project of LIVING CITIES By RW Ventures, LLC Building New Capacity for Neighborhood Development City of Seattle, May 5,"— Presentation transcript:

1 Dynamic Neighborhood Taxonomy A Project of LIVING CITIES By RW Ventures, LLC Building New Capacity for Neighborhood Development City of Seattle, May 5, 2009

2 Agenda Background: Developing New Tools for the Field Applying the DNT Tools: City Planning Examples Moving Forward: Implications and Next Steps I I II III Discussion IV

3 About Living Cities A partnership of financial institutions, national foundations and federal government agencies that invest capital, time and organizational leadership to advance Americas urban neighborhoods. AXA Community Investment Program Bank of America The Annie E. Casey Foundation J.P. Morgan Chase & Company Deutsche Bank Ford Foundation Bill & Melinda Gates Foundation Robert Wood Johnson Foundation The Kresge Foundation John S. and James L. Knight Foundation John D. and Catherine T. MacArthur Foundation The McKnight Foundation MetLife, Inc. Prudential Financial The Rockefeller Foundation United States Department of Housing & Urban Development LIVING CITIES PARTNERS:

4 The Challenge: Scarce Resources, Many Options Community-Based Organizations: select interventions, identify assets and attract investment Governments: tailor policy and interventions Businesses: identify untapped neighborhood markets Foundations: target interventions, evaluate impacts

5 Information Resources Few decision systems for neighborhood practitioners, investors and service providers Gap between practitioners and academics: need Clinical Economics(Sachs) Increasingly available, but more progress to be made

6 A New Capacity for Neighborhood Development Strategic planning linking neighborhood, city and region Centralized data and information systems Integrated analytic tools and impact monitoring Ongoing evaluation of results Strategy adjustment and refinement

7 Comprehensive Neighborhood Taxonomy BusinessPeople Real EstateAmenities Social Environment Improvement or deterioration within type Gradual vs. Tipping point From one type to another Port of entry Bohemian Retirement Urban commercialized Employment Education Crime Housing stock Investment activity

8 PHYSICAL: Distance from CBD, vacancies, rehab activity, … Theory and Data TRANSPORTATION: Transit options, distance to jobs, … CONSUMPTION: Retail, services, entertainment, … PUBLIC SERVICES: Quality of schools, police and fire, … SOCIAL INTERACTIONS: Demographics, crime rates, social capital…

9 Theoretical Framework Use Demand for Housing as Proxy for Neighborhood Health Look at Quality Adjusted Housing Values to Capture Neighborhood Amenities Look at Change in Quantity of Housing to Account for Supply Effects Amenities Structure Rent Housing Price

10 Final Product: The DNT RSI RSI Estimation Coverage Using Case/Shiller Method Time Period: 2000 - 2006 RSI Estimation Coverage Using DNT RSI Method Time Period: 2000 - 2006 Improving upon traditional repeat sales indices, the DNT RSI can be estimated for very small levels of geography, and is more accurate, more robust and less volatile.

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12 The Big Picture: Drivers of Neighborhood Change Mobility is the key mechanism of change Movers are attracted to areas with undervalued housing but sound economic fundamentals (employment, income, education, young adults) Being connected is important: proximity to job centers, access to transit, lower commuting times are positive Cultural and Recreational Amenities (art galleries, bars and restaurants) help, but are not the main event The Goldilocks Theory … … Neighborhoods of Opportunity are Just Right.

13 DETROITNotorious for its abandoned buildings, industrial warehouses, and gray, dilapidated roads, Detroit's Warrendale neighborhood was miraculously revitalized this week by the installation of a single, three- by-four-foot plot of green space. The green space, a rectangular patch of crabgrass located on a busy median divider, has by all accounts turned what was once a rundown community into a thriving, picturesque oasis, filled with charming shops, luxury condominiums, and, for the first time ever, hope. The Johansens, who just moved to Warrendale, enjoy some outdoor time. 3'-By-4' Plot Of Green Space Rejuvenates Neighborhood FEBRUARY 11, 2008 | ISSUE 4407ISSUE 4407 The Little Picture: Few Silver Bullets

14 Exploring the Relative Importance of Different Drivers of Change (1994-2004 Random Effects Model, Standardized Coefficients with 95% Confidence Interval)

15 Summary Implications Two major implications: 1.We need a framework for understanding neighborhoods as dynamic, specialized, and nested in larger systems 2.We need much better tools for customized analysis of local economies

16 Neighborhoods are Complex

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18 Neighborhoods are Dynamic

19 Neighborhoods are Nested in Larger Systems which drive the Flow of Capital and People Neighborhoods are Nested in Larger Systems Which Drive the Flows of People and Capital

20 Functioning Neighborhoods Connect Residents and Assets to Larger Systems Employment networks Entrepreneurial opportunities Business, real estate investment Expanded products and services Productive, healthy communities Undervalued, underutilized assets PovertyProductivity Connectedness Isolation

21 Applying the Framework STEP 1A: What type of neighborhood do you want to be?

22 Applying the Framework STEP 1A: What type of neighborhood do you want to be? Starter Home Community

23 Applying the Framework STEP 1A: What type of neighborhood do you want to be? STEP 1B: What drivers will get you there? Starter Home Community Specific Retail Amenities Child Care Schools Safety Affordability

24 ECONOMIC SYSTEM Applying the Framework STEP 2: Identify Relevant System Retail Markets Starter Home Community

25 Applying the Framework STEP 3: Identify Change Levers Within System Starter Home Community Commercial Land Assembly (production – costs) Specialized Market Data (exchange – finding costs) ECONOMIC SYSTEM Retail Markets

26 Applying the Framework STEP 4: Specify Interventions Starter Home Community Commercial Land Assembly (production – costs) Specialized Market Data (exchange – finding costs) ECONOMIC SYSTEM Retail Markets

27 Developing New Tools for the Field Question/GoalTool Tracking Neighborhood ChangeDNT Repeat Sales Index (RSI) How will a specific intervention affect its surrounding area?Impact Analyst What drivers differentiate neighborhoods with respect to a specific outcome of interest? CART Identify comparable neighborhoods based on drivers of change and other key characteristics Neighborhood Typology What neighborhoods are similar along particular factors of interest? Custom Typologies How does the impact of an intervention vary in different places? Geographically Weighted Regression Track affordability and neighborhood housing mixHousing Diversity Metric Anticipate and manage neighborhood changePattern Search Engine Identify true neighborhood boundariesNeighborScope

28 Where We Are Today Concept Prototype Testing and Refinement Launch Scaling Up Design The Product Development Process

29 Where We Are Today Concept Prototype Testing and Refinement Launch Scaling Up Design The Product Development Process DNT

30 Agenda Background: Developing New Tools for the Field Applying the DNT Tools: City Planning Examples Moving Forward: Implications and Next Steps I I II III Discussion IV

31 Agenda Applying the DNT Tools II a.Neighborhood Planning in Southeast Seattle b.Informing Use of the Housing Levy c.Zoning Changes in Northgate d. Ongoing Impact Monitoring

32 Neighborhood Planning in Southeast Seattle Key Issues: –Leverage light rail investment –Retain existing businesses and attract new ones –Minimize displacement as neighborhood improves Analytic Tools: –Neighborhood Typology –DNT RSI –Affordability reports –Impact Analyst

33 Area of Focus: North Beacon Hill

34 Logic and Approach Quickly Assess Current Conditions and Trends: –Select relevant indicators, compare North Beacon Hill to city and peers Identify Opportunities and Risk Factors Related to Light Rail Construction: –What do we know about impact of light rail and other changes taking place to this type of neighborhood? Select Interventions and Support Implementation: –What programs/interventions would make the most difference and how should they be implemented? Monitor Outcomes and Evaluate Results: –Are interventions achieving the desired outcomes? What could be done differently?

35 Current Conditions and Trends: Neighborhood Reports

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38 Neighborhood Reports + : Applying the DNT Neighborhood Typology Key Dimensions: People Income Age Foreign Born Place Land Use Housing Stock Business Types Variables

39 Neighborhood Reports + : Applying the DNT Neighborhood Typology Key Dimensions: People Income Age Foreign Born Place Land Use Housing Stock Business Types Variables Type 4: Port of Entry

40 Neighborhood Reports + : Applying the DNT Neighborhood Typology Type 4-D, Port of Entry: Stable Residents: Lower income, single family homes, stable resident base. High foreign-born population, high business diversity. Appreciating faster than its peers: since 2000, the RSI has increased by 98%, compared to 91% for its peer group. Over the past 2 years, properties have maintained their values, while they depreciated in mid-south Beacon Hill. A Neighborhood in Transition: Type 4-D neighborhoods can transition to Type 5-B, Urban Tapestry: High Diversity (higher income, lower foreign born population, lower unemployment). Based on HMDA data trends, it appears that such a transition is taking place, making this area more similar to the southern portion of North Beacon Hill. Potential Issues: –Signs of Financial Distress: high sub-prime lending activity; credit indicators (accounts past due, credit balance to limit ratios) reveal distress. –Impact of Light Rail?

41 Anticipating Change: Measuring the Effect of Light Rail Using the Impact Analyst What This Tool Does: Estimates impact of an event (e.g. construction of a light rail stop) on surrounding housing values (or on other outcomes, e.g. crime) Possible Applications: Evaluate the impact of a development policy Identify expected changes Choose among alternative interventions based on estimated benefits to the surrounding community Advocate for a specific intervention

42 How It Works PRELIMINARY – FOR ILLUSTRATION PURPOSES ONLY Monte Carlo Simulation to Estimate Impact Variation with Distance Homes within 1000 ft of an LIHTC site appreciate at a 4% higher rate than homes between 1000 ft and 2000 ft. Estimated Distance Decay Function – LIHTC Projects Distance from Project Location (in Miles) DNT Repeat Sales Index, 1 = No Impact

43 Expected Impact in North Beacon Hill Property values likely to increase significantly following construction of light rail stop Comparable Case Study: Dallas Light Rail Stop in Type 6 Neighborhood, 1996

44 Key Issue: Minimize Displacement as Neighborhood Improves What characterizes the neighborhoods that improved with less displacement?

45 DNT Findings: Drivers of Improvement in Place Improvement with Low Turnover Is Associated With: High Home Ownership Rates Low Vacancy Rates Access to Transit Reduction in Unemployment Presence of Employment Services High Social Capital High Percentage of Young Adults

46 Select Interventions: What Should We Focus on Here? Challenges and Opportunities Related to Light Rail Investment: Helps connect people to jobs Catalyst for commercial and mixed-use development Drives up property values, potentially causing displacement of original residents Analytic Tools Can Help Select and Implement Appropriate Interventions: Identify parcels for land banking Develop inclusionary zoning policy Target employment services and workforce development

47 Additional Tools and Applications Impact of Light Rail Stops on Other Factors (e.g. Crime, Congestion, Retail Sales, etc.) Leveraging Light Rail Investment: –Analyze impact of light rail in conjunction with other factors (e.g. different retail mixes, condo vs. rental, etc.) using DNT RSI and other outcome measures Commercial Corridor Analysis (Econsult): –Current shopping patterns and factors affecting them –Performance of individual shopping centers –Model impact of changes in one corridor on other retail centers in the city Ongoing Impact Monitoring

48 Agenda Applying the DNT Tools II a.Neighborhood Planning in Rainier Valley b.Informing Use of the Housing Levy c.Zoning Changes in Northgate d. Ongoing Impact Monitoring

49 Informing Use of the Housing Levy Key Issues: –Making the Case for Affordability –Targeting location of affordable housing units –Informing Implementation Analytic Tools: –DNT RSI –Affordability reports –Impact Analyst –Neighborhood Typology

50 Logic and Approach Making the Case for Affordable Housing –Track changes in housing affordability over time Targeting Interventions –Opportunities for preservation: identify existing pockets of affordability –Siting new projects: examine characteristics of project locations that have worked in the past, identify current comparables Informing Implementation –Identify features associated with affordable housing projects that maximize their impact on residents and community

51 Making the Case: Percentage of Affordable Homes, 1986-2006 1986 Affordable defined with respect to a household making AMI and spending 30% on housing

52 1988 Percentage of Affordable Homes, 1986-2006 Affordable defined with respect to a household making AMI and spending 30% on housing

53 1990 Percentage of Affordable Homes, 1986-2006 Affordable defined with respect to a household making AMI and spending 30% on housing

54 1992 Percentage of Affordable Homes, 1986-2006 Affordable defined with respect to a household making AMI and spending 30% on housing

55 1994 Percentage of Affordable Homes, 1986-2006 Affordable defined with respect to a household making AMI and spending 30% on housing

56 1996 Percentage of Affordable Homes, 1986-2006 Affordable defined with respect to a household making AMI and spending 30% on housing

57 1998 Percentage of Affordable Homes, 1986-2006 Affordable defined with respect to a household making AMI and spending 30% on housing

58 2000 Percentage of Affordable Homes, 1986-2006 Affordable defined with respect to a household making AMI and spending 30% on housing

59 2002 Percentage of Affordable Homes, 1986-2006 Affordable defined with respect to a household making AMI and spending 30% on housing

60 2004 Percentage of Affordable Homes, 1986-2006 Affordable defined with respect to a household making AMI and spending 30% on housing

61 2006 Percentage of Affordable Homes, 1986-2006 Affordable defined with respect to a household making AMI and spending 30% on housing

62 Targeting Interventions: Identifying Existing Pockets of Affordability

63 Developing New Projects: What Worked in the Past? Estimated Distance Decay Function – Seattle LIHTC Projects Distance from Project Location (in Miles) DNT Repeat Sales Index, 1 = No Impact Impact analysis of LIHTC projects: LIHTC Projects generally positive for surrounding property values No significant effect on crime rates Seattle Results: Larger, rehab projects had best results, particularly in lower income areas

64 Developing New Projects: What Worked in the Past? Analyzing Individual Projects (EXAMPLE: Roxbury LIHTC)

65 Developing New Projects: What Worked in the Past? Analyzing Individual Projects (EXAMPLE: Roxbury LIHTC)

66 Developing New Projects: What Worked in the Past? EXAMPLE: Working with developer to identify promising sites based on neighborhoods where previous projects were successful APPROACH: Develop scorecard using RSI, Typology and housing values

67 Result: Scorecard Identifies Most Promising Candidates Next Step: Isolate Factors Leading to Project Success

68 Additional Tools and Applications Refine Affordability Measures: –Incorporate public and subsidized housing stock, tie size of available units to size of households in need Identify Rapidly Appreciating Areas –Apply NeighborhScope tool to identify areas at most risk of displacement Impact of Other Housing Programs: –Section 8, Trust Fund,... Inform Implementation: –Analysis of impact of specific projects –Housing mix: best mix of housing for different types of neighborhood –Housing in Context: Identify mix of amenities and supporting services that maximize positive impact for residents and communities Ongoing Impact Monitoring

69 Agenda Applying the DNT Tools II a.Neighborhood Planning in Rainier Valley b.Informing Use of the Housing Levy c.Zoning Changes in Northgate d. Ongoing Impact Monitoring

70 Zoning Changes in Northgate Key Issues: –Informing Visioning Process –Guide Land Use Decisions Analytic Tools: –Neighborhood Typology –Impact Analyst

71 Logic and Approach Use Neighborhood Typology to Inform Visioning Process –What type of neighborhood do you want to be? –What demographics are you seeking to attract? –What mix of uses does that imply? Evaluate Impact of Alternative Uses –What will be the impact of different land uses on property values, crime, traffic, etc.? Support Land Development Process –Commercial parcels database to help track ownership, tax status, etc. to facilitate land assembly –Specialized market analysis to identify most promising type of retail and attract tenants

72 Possible Trajectories for the Neighborhood Given Current status and type, 2 alternative visions are attainable: Type 7: No Place Like Home Mostly residential, very stable neighborhoods with a suburban feel. The single family homes that line the streets of these communities house middle income families raising their children, as well as retirees that stay in the neighborhood after their nests are empty. Type 8: Close, Cool, Commercial Vibrant neighborhoods with high turnover in their population, which is composed primarily of young professionals living in high-end rental units and condos. Few children frequent the streets in these communities, but the population of 19-34-year-olds enjoys a high diversity and concentration of retail, services and entertainment venues.

73 Transitioning to a Different Neighborhood Type: Land Use Implications Type 6 New Development (Current) Type 7 Homeowners Type 8 Young Professionals Percent 19-34 Year Old 35%27%44% Home Ownership Rate 25%64%23% Mixed Use Development 0.1%0.3%1% Commercial Land Use 8%2%25% Single Family Housing 24%75%21% Entertainment Venues 3.692.434.26 Comparing Across Types: What Would it Take to Become a Different Type of Neighborhood?

74 Evaluate Impact of Alternative Uses New Shopping Center Estimated benefits to the community: $29 million in increased property values, or an average of $1,300 per home owner. EXAMPLE: New Shopping Center on Chicagos Southwest Side

75 Additional Tools and Applications Facilitate Land Assembly: –Reduce land assembly costs by increasing availability of info on developable parcels, including location, ownership, tax status, etc. Identify Most Promising Sectors: –Perform retail market analysis to identify leakage by retail sector Attract Developers and Retailers: –Compile key market potential metrics by site (including leakage, buying power, psychographic profiles, etc.) to attract developers and retailers Ongoing Impact Monitoring

76 Agenda Applying the DNT Tools II a.Neighborhood Planning in Rainier Valley b.Informing Use of the Housing Levy c.Zoning Changes in Northgate d. Ongoing Impact Monitoring

77 Logic and Approach Track Impact Over Time –See whats working and what isnt –Mitigate side effects Conduct Formal Evaluation –Formal impact analysis of alternative policies and programs –Evaluate what works best where Tie Impact to Cost –Evaluate cost-effectiveness of alternative strategies

78 Ongoing Impact Monitoring Monitor intervention results using select outcome measures Outcomes may include property values, crime, vacancy rates, unemployment rates, etc. Relate outcome to costs in order to evaluate where the program is more or less effective

79 Starting at least 1 year after program inception, conduct formal impact analysis to evaluate interventions. Evaluate in which areas the program has worked best, and why. Identify most cost-effective implementation strategies. Impact comparisons can be made across sub-areas within the same community area, and across sub-areas in different community areas but are the same neighborhood type. Results can be used to refine strategies and implementation, thus improving the effectiveness of future interventions. Monitor Impact: Modeling Strategies

80 Agenda Background: Developing New Tools for the Field Applying the DNT Tools: City Planning Examples Moving Forward: Implications and Next Steps I I II III Discussion IV

81 Where You Are Headed: Information Resources for the 21 st Century Automated analytic systems deliver answers, not just data, to inform decision making and expand market activity Established feedback loops between change theories and implementation results refine knowledge base Integrated data platform routinely collects information from city departments and outside sources

82 From Data to Decision-Making Tools

83 Next Steps: How Do We Get There? Incrementally Build Information Infrastructure: –Begin with centralized data capacity –Expand database over time –Start with metrics and tools that can be easily automated (e.g. RSI, Affordability) –Build technical skill set to refine analytics –Develop user-friendly platform Integrate strategic planning approach Establish feedback loops to refine plan and strategies based on implementation results

84 Agenda Background: Developing New Tools for the Field Applying the DNT Tools: City Planning Examples Moving Forward: Implications and Next Steps I I II III Discussion IV

85 Dynamic Neighborhood Taxonomy A Project of LIVING CITIES By RW Ventures, LLC Building New Capacity for Neighborhood Development City of Seattle, May 5, 2009


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