1. The Land Premium in Eugene/Springfield: Determining the price differentials of brownfield and greenfield parcels and the impact of the enterprise zone Ryan Bricker Jeremy Simantel

2. Community Values Eugene seems to value infill Vacant buildings Urban Growth Boundary –Established in 1970’s to limit sprawl

3. Land Types Greenfield –Free of use, no improvements to the land Brownfield –Contamination Risks Grayfield –Not contaminated with a building on it

4. Enterprise Zone West Eugene Enterprise Zone –Very selective area of coverage –Active years: 1987-1997 and 2005-Present Gap is useful in determining price effects Springfield Enterprise Zone –Wide area of coverage –Difficult to statistically analyze

5. Past Research No relationship between contamination and vacancy rates After remediation of known contaminated properties the price goes back up to match comparable uncontaminated properties Parcels of land that are known to be contaminated do sell but at a discount to comparable properties Study in Baltimore found that only 5% of properties didn’t sell over a 10 year study window A general conclusion that under-used land is not being driven by contamination but by other factors –Such as the land not fitting current use demands –Outdated infrastructure –Characteristics of the city itself detracting from redevelopment

6. Our study will determine the… Eugene/Springfield greenfield premiums Eugene/Springfield brownfield effect West Eugene Enterprise Zone's effect on market value

7. Statistical Analysis Market value through observed prices –Hedonic pricing model Control for characteristics of the industrial property that would influence selling price Price = f(characteristics of land)

8. Shortcomings of the Data 1) Time Mismatch –The data set includes historical prices but does not include historical characteristics –For instance a property selling in 1990 we would have the accurate selling price but that parcels characteristics would be as they are today

9. Data Shortcomings 2) Property Values and Land Values –We don’t have an accurate measure for building characteristics so we ran two regressions to look at strictly the selling price and then the selling price proportioned to the land –Used the improvement ratio which was the % of the improvements to the land relative to the land value –Both measures came from data the tax assessors put together

10. Statistical Analysis (continued) Price Depends on Acreage Intensity of development (Improvement Ratio) Distance to Eugene Center Distance to Closest HWY On-Ramp Distance to Closest I-5 On-Ramp West Eugene Enterprise Zone Brownfield Greenfield Eugene City Limits Industrial Zoning Year Sold

11. Two Models Sales price = f(characteristics of land) Portion of sales price attributed to land = f(characteristics of land) Derived by: Sales Price * (land ratio)

12. Main Determinants of Land Prices (Acres) Ln(Acres) – measures elasticity 1% increase in acreage = coefficient % increase in price VariableCoefficientSignificantStandard Error -- Sales Prices -- Ln(Acres)+0.6%Yes0.023 Ln(Acres) 2 -0.05%Yes0.016 -- Land Prices -- Ln(Acres)+0.57%Yes0.024 Ln(Acres) 2 -0.043%Yes0.0166

13. Main Determinants of Land Prices (Improvement Ratio) ln[(improvements) / (improvements + land value)] –measures elasticity of improvements 1% increase in improvements relative to lot value increases sales price by coefficient VariableCoefficientSignificantStandard Error – Sales Prices – Ln(ratio)+0.38%Yes0.0787 Ln(ratio) 2 +0.0475%Yes0.0155 Could not be Used in Land Prices Model (Endogeniety)

14. Main Determinants of Land Prices (Distance Variables) Enterprise Zone – Measures the effect of the nearest distance to Eugene City Center, Highway and I5 on ramp VariableCoefficientSignificantStandard Error – Sales Prices – Eugene Center-0.445%Yes0.0639 Highway OnRamp+0.026%No0.0458 I5 On Ramp+0.127%Yes0.07439 – Land Prices – Eugene Center-0.303%Yes0.07155 Highway OnRamp+0.053%No0.049 I5 On Ramp+0.082%No0.082

15. Main Determinants of Land Prices (Zoning) Zoning Classification – Measures what, if any, industrial zoning lot is under Depending upon the zoning of the site, the logarithm of the price will be increase/decrease by the coefficient VariableCoefficientSignificantStandard Error – Sales Prices – Zoning i1+0.45No0.686 Zoning i2-0.64No0.665 Zoning i3-0.65No0.664 – Land Prices – Zoning i1+0.168No0.622 Zoning i2-0.594No0.621 Zoning i3-0.598No0.620

16. Main Determinants of Land Prices (Zoning) Zoning Classification – Measures what, if any, industrial zoning lot is under Depending upon the zoning of the site, the logarithm of the price will be increase/decrease by the coefficient VariableCoefficientSignificantStandard Error – Sales Prices (2000-2006) – Zoning i1+1.516Yes0.329 Zoning i2+0.611Yes0.179 Zoning i3+0.527Yes0.156 – Land Prices (2000-2006) – Zoning i1+1.047Yes0.304 Zoning i2+0.504Yes0.177 Zoning i3+0.395Yes0.156

17. Main Determinants of Land Prices (Greenfield) Brownfield – measures whether or not parcel experienced If site was at one time a brownfield, the logarithm of the price will be increase/decrease by the coefficient VariableCoefficientSignificantStandard Error – Sales Prices – Greenfield-0.998Yes0.0857 Accounts for approximately 62.8% of an average plot’s price – Land Prices – Greenfield+0.16Yes0.07333 Accounts for approximately 17% of the an average plot’s price

18. Main Determinants of Land Prices (Brownfield) Brownfield – measures whether or not parcel experienced contamination at one point or another If site was at one time a brownfield, the logarithm of the price will be increase/decrease by the coefficient VariableCoefficientSignificantStandard Error – Sales Prices – Brownfield-0.239No0.385 Would be -$6,500 impact on average lot’s price – Land Prices – Brownfield-0.199No0.397 Would be -$3,250 impact on average parcel’s land’s price

19. Main Determinants of Land Prices (Eugene and Enterprise Zone) Enterprise Zone – Measures the effect of being in Eugene and the Enterprise Zone VariableCoefficientSignificantStandard Error – Sales Prices – Eugene+0.33No0.67 EZ Effective-0.1995Yes0.0973 EZ Property+0.16Yes0.0988 – Land Prices – Eugene+0.496No0.635 EZ Effective-0.268Yes0.102 EZ Property+0.097No0.105

22. Future Research Examine more closely the “value” buildings hold in relation to the types of firms entering Control for historical attributes West Eugene Enterprise Zone’s on things other than prices

23. Wish List Historical Characteristics (Greenfield, Zoning, etc.) Data on building attributes (Age, Square Feet, etc.) Other indicators of what some would call brownfields (besides contamination data) –Land use codes (vacant structures) Length of time on the market

24. Recap Enterprise Zone seems to have a negative effect Greenfields create premiums in land price Contamination’s effect is not clear in Eugene due to small amounts of recorded contamination

25. Questions? Questions/comments on anything?