Greening Vacant Land

Susan M. WachterRichard B. Worley Professor of Financial ManagementCo-Director, Penn Institute for Urban ResearchThe Wharton SchoolUniversity of Pennsylvania

Green Infrastructure Symposium

October 21, 2009Pittsburgh, Pennsylvania

Objective: Creating communities of lasting value

From blight to hope

Quality of life for families

Neighborhoods with green space encourage community interaction, create safe blocks, bring nature to the city, promote healthy living and reduce crime rates, social isolation and visual blight

Learning how to do this is a work in progress.

Green in perspective

fostering communities that are not just environmentally sustainable

economically strong and equitable

six principles of sustainable communities outlined in the interagency partnership among HUD, DOT, and EPA: increased transportation choices

increased equitability, affordable housing opportunities

increased economic competitiveness

support for existing communities

leveraging of federal investment

value of communities and neighborhoods

City Strategies

Chicago Mayor Daley's initiative for gardens:

If city-owned, procedure exists to permit gardening with relative ease If privately owned, city assists with identifying owner and securing permission

If gardeners intend to stay for more than three years, referred to NeighborSpace, a non-profit that specializes in the management of community gardens and parks in Chicago.

CitySpace Program: unprecedented agreement between the City of Chicago, Chicago Park District, Forest Preserve District of Cook County, and Chicago Public Schools. In targeting greening projects on vacant lots, school playgrounds, and underutilized land along the Chicago River, the cooperative effort is helping Chicago achieve its open space goals, especially in neighborhoods where the amount of public land falls far below local and national standards.

http://www.afreshsqueeze.com/articleDtl.php?id=4a688243af834 New York

Bette Midler and New York Restoration Project started in 1995 to beautify open space and promote community gardening and expand community programs and encourage public pride MillionTreesNYC - started in 2007 to plant 1M trees in the 5 boroughs by 2017 http://www.nyrp.org/Parks_and_Gardens/Community_Gardens City Spaces program targets NYC neighborhoods least served by the current park system. For each $1

million playground, funding is raised by Trust for Public Land matched two-to one by the Dept of Education. TPL has created or enhanced more than 250 neighborhood parks in New York City, investing roughly $200 million in land purchases and in the design, construction, and stewardship of parks.

Flint, Genesee County http://www.thelandbank.org/

•“Green Investment Strategies: How They Matter for Urban Neighborhoods” – Susan Wachter, Kevin Gillen, and Carolyn Brown•“Transforming Through Greening” – J. Blaine Bonham Jr. and Patricia Smith

Penn Institute for Urban Research City in the 21st Century Series: University of Pennsylvania Press, 2008

www.upenn.edu/pennpresswww.upenn.edu/penniur

Philadelphia Green

Neighborhood Transformation Initiative (NTI): City commits $10 million in city funds for minimum 5 years, plus $296 million in bond proceeds

Vacant Lot Clean-up Program (VLCP) under Office of Managing Direct -- $4 million to clean 31,000 lots in first year with 225 staff

Department of Licenses & Inspections certifies lot as blighted to permit city access

Philadelphia-based landscape contractors do the actual work

Community Land Care, organized by Philadelphia Green, recruits maintenance workers: great opportunity for organizations that seek work for formerly homeless, ex-convicts, etc.

Learning how to do this, a work in progress

• Stabilization/“Clean and Green”• Costs $1.50 per sq ft. to “clean and green” a lot

• Costs ~ $2000 for an average size lot

• Maintenance• Costs $0.17 per sq ft. to maintain a lot (14 clean-ups April-October)

• Costs ~ $200 for an average size lot

• Community Land Care Program and other programs

• Since inception, ~ 10,000 total parcels

• http://www.philly.com/philly/news/local/64889342.html

• The Genesee County model, “State Rep. John Taylor (R., Phila.) has introduced a bill establishing a land bank to take moribund property from neglectful owners.”

Office of Sustainability

Philadelphia’s Challenges

Philadelphia GreenReclaim Abandoned Land

THE STUDIES

Green-city Strategies and Neighborhood Value

Wachter, Susan M; and Wong, Grace, “What is a Tree Worth? Green-City Strategies and Housing Prices”, Real Estate Economics, Vol. 36, No. 2, 2008. Available at SSRN: http://ssrn.com/abstract=1084652

Wachter, Susan; Kevin Gillen; and Carolyn Brown, “Green Investment Strategies: A Positive Force in Cities”, Communities & Banking, Federal Reserve Bank of Boston, Spring 2008. Available at: http://www.community-wealth.org/_pdfs/news/recent-articles/04-08/article-wachter-et-al.pdf

Wachter, Susan M; Kevin Gillen; and Carolyn Brown, “Green Investment Strategies: How They Matter for Urban Neighborhoods”, Growing Greener Cities, Ed. Eugenie L. Birch and Susan M. Wachter. Philadelphia: University of Pennsylvania Press (http://www.upenn.edu/pennpress), 2008. pp. 316 – 325.

Public/Private Partnershipsto Conserve and Improve Community Assets

• Problem and potential: how to realize the enormous benefits of reinvesting in blighted lands

• Private spaces: individuals respond with their own decisions and actions

• Public spaces: require shared governance and citizen stewardship for community action and public/private cooperation

Why the Study?• Need to quantify impact of policy

• Deficit in hard data

• Provide evidence as a tool for advocating for good policy

Quantification Methods

• Data on house sales, prices and location of greening investment from City and Pennsylvania Horticultural Society

• Hedonic study - before and after spatial investment impact on house prices, controlling for variables

• Geographic Information Systems (GIS) econometric methods - implemented at Wharton’s GIS Lab

Multivariate Hedonic Regression AnalysisWith the first 3 interactive terms measuring the effects of proximity to greenspace, then the estimated regression results are:

More than 30 variables are in the regression specification including: building and lot square footage, number of stories and fireplaces, garage, central air, type and condition of exterior, year of sale, census tract, distance to CBD (City Hall), and number of years since last transaction.

Adj. R2=0.60N=70,000

This regression only used data from 2000-2005. Similar regressions using data from 1980-2005 used over 200,000 sales records in the estimation.

(1.55)

......Lot) (Greened750,10$

(1.29) (3.87)

Park) Bordering(164,1$Tree) New(923,9$000,45$Pi

KK X

What matters for housing prices

Physical attributes more square footage;

a larger lot size;

better physical condition;

the presence of fireplaces, central air conditioning, and/or a garage;

Proximity to downtown

State of the overall market

Quantifying benefits of community investments

Commercial corridor improvement

Vacant land management

Neighborhood greening strategies

Business Improvement Districts (BIDs)

Impact on quality of life: schools, public safety, public transit

Vacant land management

Transition from abandonment to clean & green

Adjacency to a neglected vacant lot subtracts 20% of value

Stabilizing lots impart an additional 17% of value to surrounding homes

Impact of Public Investments

<= ¼ mile to a commercial corridor in

“excellent” condition (net impact)23% $19,021

¼ to ½ mile to a commercial corridor in

“excellent” condition (net impact)11% $9,097

Near a new tree planting 9% $7,443

Improvements to streetscapes 28% $23,156

Adjacent to vacant lot -20% ($16,540)

Adjacent to a stabilized and greened lot 17% $14,059

1% increase in crime index -14% ($11,578)

High-school dropout rate -5% ($3,970)

Located in a business improvement

district30% $24,397

<=1/8 mile to a subway station 3% ($2,481)

Neighborhood greening

Tree plantings, streetscapes -- container plantings, small pocket parks

Overall increase in house prices of 9% from tree plantings

Empirical strategy: trees

All single-family house sales in Philadelphia Housing characteristicsExact locations of house and tree

plantingsExploit the variation in time & location of

housing sales relative to those of tree plantings

Fairmount Tree Plantings Between Salescontrolling for tract-specific linear price trends

-1 -2 -3 -4 -5 -6

lrprice lrpdiff lrprice lrpdiff lrprice lrpdiff

Log lagged price 0.232 0.228 0.248

(0.005)*** (0.036)*** (0.024)***

Log lotsize 0.179 0.08 0.234 0.158 0.172 0.085

(0.007)*** (0.008)*** (0.049)*** (0.056)*** (0.031)*** (0.034)**

Log building size -0.412 -0.156 -0.473 -0.301 -0.404 -0.201

(0.011)*** (0.013)*** (0.068)*** (0.076)*** (0.047)*** (0.052)***

Number of stories in the parcel -0.024 (0.004) 0.074 0.092 0.069 0.063

(0.008)*** -0.009 -0.046 (0.052)* (0.032)** (0.036)*

exterior==FRAME (0.020) (0.011) 0.057 0.048 0.047 0.057

-0.016 -0.019 -0.128 -0.145 -0.076 -0.085

exterior==STONE 0.061 0.036 0.104 0.083 (0.004) (0.038)

(0.017)*** (0.020)* -0.105 -0.12 -0.07 -0.078

=1 if parcel has a non-rectangular shape -0.034 -0.036 0.097 0.085 0.048 (0.008)

(0.011)*** (0.014)*** -0.079 -0.09 -0.049 -0.055

=1 if parcel has central air conditioning 0.143 0.135 0.213 0.029 0.170 0.004

(0.054)*** (0.064)** -0.245 -0.277 -0.236 -0.265

=1 if parcel has garage 0.106 0.043 0.091 0.045 0.066 0.020

(0.007)*** (0.008)*** (0.046)** -0.052 (0.031)** -0.035

=1 if property is detached 0.037 0.038 (0.014) 0.023 0.019 0.057

(0.013)*** (0.015)** -0.081 -0.092 -0.053 -0.059

Time since previous sale -0.073 0.308 -0.116 0.861 -0.098 0.792

(0.004)*** (0.004)*** (0.059)** (0.043)*** (0.039)** (0.030)***

pTime since previous sale 12.67 -132.491 32.852 -273.837 23.09 -267.226

(1.410)*** (1.318)*** (17.992)* (12.627)*** (12.072)* (8.832)***

Tree planting within 100ft between sales 0.134 0.092 0.027 0.003 0.038 0.020

*controlling for year and quarter fixed effects (0.038)*** (0.045)** -0.039 -0.044 -0.039 -0.043

Linear trend X census tract dummies Yes Yes Yes Yes Yes Yes

Observations 71003 71003 1994 1994 4343 4343R-squared 0.64 0.21 0.75 0.54 0.71 0.45

All (ftrees) If td500=1 (ftrees) If td1000=1 (ftrees)

The visual and psychological impact of even the simplest of streetscape improvements, such as planting a tree or installing a sign, makes a huge impact on creating a quality environment and defining a place. There is no question that streetscape improvements increase housing values and make the public environment more appealing.

– Nancy Goldenberg

Vice President of Planning

Center City District

Learning How to do this: Work in Progress

Overarching Questions: How does the transformation occur? From blight to [?] Side lots Community gardens Open space Local farming

Implementation Questions: Economic development and land disposition? Land purchase or guerilla gardens? Who is to maintain? Providing for an evolving future?

But we do know that going from blight to green works!

Thank You

Susan M. WachterRichard B. Worley Professor of Financial

ManagementProfessor of Real Estate and Finance

The Wharton SchoolUniversity of Pennsylvaniawachter@wharton.upenn.edu