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Dynamic Neighborhood Taxonomy

Dynamic Neighborhood Taxonomy. A Project of LIVING CITIES By RW Ventures, LLC. “Building New Capacity for Neighborhood Development” City of Seattle, May 5, 2009. Agenda. Background: Developing New Tools for the Field. I. Applying the DNT Tools: City Planning Examples. II.

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Dynamic Neighborhood Taxonomy

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  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 I Applying the DNT Tools: City Planning Examples II Moving Forward: Implications and Next Steps 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 America’s urban neighborhoods.” LIVING CITIES PARTNERS: 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 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

  4. The Challenge: Scarce Resources, Many Options • Community-Based Organizations: select interventions, identify assets and attract investment • Governments: tailor policy and interventions • Businesses: identify untappedneighborhood markets • Foundations: target interventions,evaluate impacts Need for Relevant, Timely and Accessible Information Resources

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

  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 DIMENSIONS  Neighborhood Metrics Business People Real Estate Amenities Social Environment EVOLUTION DRIVERS TYPOLOGY • Employment • Education • Crime • Housing stock • Investment activity • Improvement or deterioration within type • Gradual vs. Tipping point • From one type to another • Port of entry • Bohemian • Retirement • Urban commercialized DYNAMIC TAXONOMY

  8. Theory and Data Change in Price Change in Amenities Change in Demandfor the Neighborhood Change in Quantity PHYSICAL:Distance from CBD, vacancies, rehab activity, … Over 2,500 variables, spanning 15 years, covering over 2,000 census tracts 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 Housing Price Structure Rent Amenities • 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 forSupply Effects

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

  11. The Big Picture:Drivers of Neighborhood Change “The Goldilocks Theory” … … Neighborhoods of Opportunity are “Just Right.” 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

  12. 3'-By-4' Plot Of Green Space Rejuvenates Neighborhood FEBRUARY 11, 2008 | ISSUE 44•07 DETROIT—Notorious 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. The “Little” Picture: Few Silver Bullets

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

  14. Summary  Implications Two major implications: • We need a framework for understanding neighborhoods as dynamic, specialized, and nested in larger systems • We need much better tools for customizedanalysis of local economies

  15. Neighborhoods are Complex

  16. Neighborhoods are Complex PEOPLE Ethnicity, Age, Family Structure AMENITIES Physical environment, Entertainment venues, Public transit GOVERNANCE Infrastructure, Policing, Social Services SOCIAL ENVIRONMENT Civic engagement, Social networks, Community organizations BUSINESS Number, size and typeof businesses REAL ESTATE Commercial and Residential, Type and Quality of Housing

  17. Neighborhoods are Dynamic PEOPLE Change or lose jobs;have kids; move AMENITIES Environmental deterioration; development of parks, institutional anchors GOVERNANCE Changing infrastructure, services, enforcement demands SOCIAL ENVIRONMENT Change in crime, participation,social behaviors BUSINESS Entry, Investment, Failure REAL ESTATE Deterioration and renewal A Web of Interdependent Activities: “Organized Complexity” (Jacobs)

  18. Neighborhoods are Nested in Larger Systems Which Drive the Flows of People and Capital Neighborhoods are Nested in Larger Systems which drive the Flow of Capital and People SOCIALSYSTEMS ECONOMICSYSTEMS POLITICALSYSTEMS Labor Markets Social Capital GovernmentServices Business Markets Civic Networks Infrastructure Housing Markets PublicGoods Capital Markets Governance Consumer Markets Neighborhoods arise from the interaction of regional economic,social and political systems with physical place.

  19. Functioning Neighborhoods Connect Residents and Assets to Larger Systems Connectedness Poverty Productivity Isolation • Employment networks • Entrepreneurial opportunities • Business, real estate investment • Expanded products and services • Productive, healthycommunities • Undervalued, underutilized assets Goal: Neighborhoods that Build Capacity and Opportunity (AmartyaSen)

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

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

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

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

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

  25. Applying the Framework STEP 4: Specify Interventions • Interventions • Land banking • Buying power models ECONOMIC SYSTEM Commercial Land Assembly (production – costs) Retail Markets Specialized Market Data (exchange – finding costs) Starter Home Community

  26. Developing New Tools for the Field

  27. Where We Are Today The Product Development Process Concept Design Prototype Testing and Refinement Launch ScalingUp

  28. Where We Are Today The Product Development Process Concept DNT Design Prototype Testing and Refinement Launch ScalingUp

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

  30. 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

  31. 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

  32. Area of Focus: North Beacon Hill

  33. 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?

  34. Current Conditions and Trends: Neighborhood Reports

  35. Current Conditions and Trends: Neighborhood Reports

  36. Current Conditions and Trends: Neighborhood Reports

  37. “Neighborhood Reports +”: Applying the DNT Neighborhood Typology • Key Dimensions: • People • Income • Age • Foreign Born • Place • Land Use • Housing Stock • Business Types Variables

  38. “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”

  39. “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?

  40. 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

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

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

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

  44. 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 "Homeownership, Social Capital and Reduction of Unemployment are Key to Improving Neighborhoodswith Less Displacement

  45. 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

  46. 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

  47. 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

  48. 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

  49. 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

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