1. CITIES AND HOUSING POLICIES E151U: Housing and Urban Development

2. Theory The “City Limits” Explanation  Begins with a regional market of public goods (cities) similar to the market for private goods

3. Regional Market of Cities

4. 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)

5. Theory predicts cities will spend more on economic development than affordable housing, and that this propensity will increase as competition increases in the region Empirical Study “Test the theory” $ for affordable housingCompetition

6. 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

7. Dependent Variable Distribution: Non zero values logged (n=396) 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.

8. 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.

9. 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)

10. 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)

11. More Study Findings  Cities in regions with higher levels ofinter-city competition were more likely to spend own source dollars on economic development efforts; 1  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.

12. 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)

13. What did Mayors Think About Homeownership in Their Cities? Importance of increasing homeownership to their city’s fiscal health

14. What Type of Policy is Affordable Homeownership? Intercity Competition Support for Homeownership 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.

15. Results of Analysis There is a positive relationship between inter-city competition and support for homeownership 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 In other words…….

16. What are the Implications of These Findings? About local policy? About devolution? About the distribution of cities in a region ?

17. Orange County, CA Source: U.S. Census Bureau. N