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Assessing the Economic Spillover of HOPE VI Sean Zielenbach Dick Voith Michael Mariano.

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Presentation on theme: "Assessing the Economic Spillover of HOPE VI Sean Zielenbach Dick Voith Michael Mariano."— Presentation transcript:

1 Assessing the Economic Spillover of HOPE VI Sean Zielenbach Dick Voith Michael Mariano

2 Purpose of the Study Determine extent of HOPE VI developments’ spillover economic effects  on surrounding neighborhoods  additional economic activity in region  changes in tax revenues Cost-benefit analysis

3 Sampled Sites Boston (Mission Main & Orchard Gardens) Charlotte (First Ward Place) Kansas City (Guinotte Manor & Villa del Sol) Seattle (New Holly) San Francisco (North Beach) Washington (Townhomes on Capitol Hill & Wheeler Creek)

4 Determining Costs Net public costs of redeveloping & operating HOPE VI property  Public redevelopment subsidies (direct & indirect) +  Proceeds of any unit / lot sales -  Developer profit +  NPV of operating costs (30 years) -  NPV of Section 8 voucher costs (30 years)

5 Public Welfare Benefits Changes in surrounding residential property values (relative to prior trends)  Controlling for various locational & property factors  Value of new HOPE VI units Changes in implied rental subsidies  Difference between market rate & what tenants pay Changes in violent crime rates in area  Cost savings to society

6 Economic Impacts Multiplier effect of spending on redevelopment & operation of HOPE VI property  Less costs of operating traditional property Changes in local resident incomes & expenditures Changes in small business lending patterns Changes in residential lending patterns Benefits not necessarily net economic gains to society  Wealth transfer issues, opportunity cost of funds

7 Fiscal Benefits One-time impacts  Spending resulting from redevelopment supports jobs & salaries / wages Local income tax Sales tax on consumption Ongoing impacts  Property taxes from increased home values  Income tax / sales tax from higher local incomes Taxes paid by workers supported by add’l spending

8 Qualitative Case Studies In-depth interviews with key actors to understand local economic dynamics & relative importance of HOPE VI / other factors Comparison of HOPE VI sites with traditional public housing sites  What difference would a HOPE VI award make?

9 Increases in Property Values First Ward(Cha)$53.4 million Mission Main (Bos)$107.1 million$366K/unit New Holly (Sea)$53.7 million$48K/unit Orchard Gardens (Bos)$57.9 million$198K/unit Villa del Sol (KC)$8.1 million Wheeler Creek (DC)$14.0 million$30K/unit Inconclusive / insignificant results for the others

10 Bos: Mission Main Prop Values

11 Bos: Orchard Property Values

12 Seattle: New Holly Prop Values

13 Increases in Implied Rental Subsidies (NPV over 30 years) First Ward(Cha)$9.5 million$345/mo Mission Main (Bos)$108.8 million$1,117/mo New Holly(Sea)$2.9 million$56/mo Orchard Gardens (Bos)$16.8 million$670/mo Villa del Sol (KC)$2.9 million$223/mo Wheeler Creek (DC)$5.1 million$142/mo Inconclusive / insignificant results for the others

14 Savings from Reduced Crime First Ward(Cha)$17.5 million Guinotte Manor (KC)$13.4 million Mission Main (Bos)$5.8 million New Holly (Sea)$2.6 million North Beach (SF)$22.2 million Orchard Gardens (Bos)$4.9 million Townhomes (DC)$1.4 million Villa del Sol (KC)$16.3 million Wheeler Creek (DC)none apparent

15 Public Welfare Cost / Benefit PropertyNet CostsTotal BensNet Bens First Ward$7.9$73.3$65.4 Guinotte$10.4$13.4$3.0 Mission Main$126.2$140.0$13.8 New Holly$58.6$201.6$143.0 N Beach$36.7$22.1-$14.5 Orchard$82.9$68.3-$14.7 Townhomes$23.4$1.4-$22.0 Villa del Sol$8.8$25.4$16.6 Wheeler$31.5$24.0-$7.6

16 Conclusions Significant, widespread gains in property values Notable declines in violent crime Rising property values increase value of implied rental subsidy Considerable regional economic activity  Redevelopment, maintenance / operation  Higher incomes -> more consumer spending Positive fiscal impacts on local governments  Property, Income, Sales Taxes

17 Conclusions (cont.) Impact shaped by local market context  Presence of other economic activity, commitment of public & private sector  HOPE VI itself unlikely to spark significant neighborhood change single-handedly

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