Assessing the Economic Spillover of HOPE VI
Sean ZielenbachDick Voith
Michael Mariano
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
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)
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)
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
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
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
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?
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
Bos: Mission Main Prop Values
$0
$50,000$100,000
$150,000$200,000$250,000
$300,000$350,000
$400,000$450,000$500,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Mission Main
Mission Main No Hope VI
Bos: Orchard Property Values
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Orchard Gardens
Orchard Gardens No Hope VI
Seattle: New Holly Prop Values
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
New Holly No Hope VI
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
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
Public Welfare Cost / BenefitProperty Net Costs Total Bens Net BensFirst Ward $7.9 $73.3 $65.4Guinotte $10.4 $13.4 $3.0Mission Main $126.2 $140.0 $13.8New Holly $58.6 $201.6 $143.0N Beach $36.7 $22.1 -$14.5Orchard $82.9 $68.3 -$14.7Townhomes $23.4 $1.4 -$22.0Villa del Sol $8.8 $25.4 $16.6Wheeler $31.5 $24.0 -$7.6
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
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