CITIES AND HOUSING POLICIES

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CITIES AND HOUSING POLICIES
E151U Housing and Urban Development
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TheoryThe City Limits Explanation

• Begins with a regional market of public goods
  (cities) similar to the market for private goods

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Regional Market of Cities
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Key Players in the Market

• Residents choose to live in communities that
  maximize their preferences for local services
  (Tiebout, 1956)
• Local decision makers
• seek to retain/attract middle- and upper-income
  residents
• consider the impacts of their taxing and spending
  decisions and seek to offer the best cost to
  benefit ratio (tax to service)
• compete with other cities by formulating policy
  to their city's economic advantage and
• avoid redistributive policy such as affordable
  housing and pursue developmental policy such as
  economic development (Peterson 1981 Downs,
  1994)

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Empirical StudyTest the theory

• Theory predicts cities will spend more on
  economic development than affordable housing, and
  that this propensity will increase as competition
  increases in the region

for affordable housing
Competition
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Empirical Study

• Survey Data gathered through a mail survey of
  city policymakers and staff
• The cities were in all areas of the country
• Census Data collected U.S. Census data from 1990
• Additional sources from publications

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Dependent Variable
Distribution Non zero values logged (n396)
Source Basolo, Victoria. 1999. The Impacts of
Inter-city Competition and Intergovernmental
Factors on Local Affordable Housing Programs.
Housing Policy Debate 10(3)659-688.
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Study Variables

• Dependent
• Local Housing Support
• Dichotomous 1 expended
• 0 did not expend
• Continuous expended, if any
• Independent
• Inter-city competition of cities in
  region (MSA)
• Other independent variables presence of
  planning, federal funding, growth rate, etc.

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Study Findings

• Cities in regions with higher levels of
  inter-city competition were less likely to spend
  any of their own source dollars on affordable
  housing compared to cities in areas with lower
  levels of competition
• Cities with entitlement status for federal block
  grant programs and cities with higher growth
  rates were less likely to spend their own source
  dollars on housing programs
• Cities spending higher levels of federal funding
  for housing, cities that had higher levels of non
  profit housing activity, cities with higher
  housing values, and larger cities were more
  likely to spend their own source dollars on
  affordable housing activities (Basolo, 1999)

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Study Findings

• The degree of inter-city competition appeared to
  have no effect on the level of own source
  expenditures on affordable housing in cities
• As the homeownership rate increased in cities,
  own source expenditures on affordable housing
  decreased
• Having an official housing plan, state-mandated
  housing set-asides, and population size were
  positively related to own source expenditures on
  affordable housing programs (Basolo 1999)

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More Study Findings

• Cities in regions with higher levels ofinter-city
  competition were more likely to spend own source
  dollars on economic development efforts1
• Cities with a formal economic development plan
  were more likely to spend own source dollars on
  economic development
• Cities with higher levels of support for economic
  development from elected officials were more
  likely to spend their own dollars on these
  efforts
• Cities in regions with higher levels of
  competition were more likely to spend more of
  their own dollars on economic development than
  affordable housing activities.2

• ________________________________
• Basolo, V. and C. Huang. 2001. Cities and
  Economic Development Does the City Limits Story
  Still Apply? Economic Development Quarterly
  15(4)327-339.
• Basolo, V. 2000. City Spending on Economic
  Development Versus Affordable Housing Does
  Inter-City Competition or Local Politics Drive
  Decisions? Journal of Urban Affairs 22(3)317-332.

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Is Affordable Homeownership a Special Case?
Our first goal is to increase citywide
homeownership from the current average of 40 to
75.  Why is this important?  Because
homeownership creates pride and security and
because homeownership builds our population base
which in turns builds our tax base.
--Mayor R. Filippi (2003)
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What did Mayors Think About Homeownership in
Their Cities?
Importance of increasing homeownership to their
citys fiscal health
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What Type of Policy isAffordable Homeownership?
Intercity Competition
Support for Homeownership

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Does this relationship hold? If yes, then Does
inter-city competition result in lower support
for homeownership? If yes, then this result
suggests homeownership policy is redistributive.
Does inter-city competition result in higher
support for homeownership? If yes, then this
result suggests homeownership policy is
developmental.
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Results of Analysis

• There is a positive relationship between
  inter-city competition and support for
  homeownership

In other words.
Higher levels of regional competition are
associated with cities that spent more on
homeownership programs versus other types of
housing programs
Affordable homeownership is viewed as
developmental policy, therefore, is more likely
to be supported by local policymakers
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What are the Implications of These Findings?

• About local policy?
• About devolution?
• About the distribution of cities in a region?

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Orange County, CA

Source U.S. Census Bureau.
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