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UBC Theses and Dissertations

Investigation of cost-benefit analysis as a tool in the evaluation of urban plans Barua, Anil Kanti 1968

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'AN INVESTIGATION- OF. COST-BENEFIT ANALYSIS AS A TOOL IN THE EVALUATION OF URBAN PLANS 'by ANIL KANTI BARUA B . Sc . Eng inee r ing ( C i v i l ) , East P a k i s t a n U n i v e r s i t y of Eng inee r ing and Technology, 1955 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE i n the School o f COMMUNITY AND REGIONAL PLANNING We accept t h i s t h e s i s as conforming to the r e q u i r e d standard THE UNIVERSITY OF BRITISH COLUMBIA A p r i l , 1968 In p r e sen t ing th i s , t h e s i s i n p a r t i a l f u l f i l m e n t of. the requirements fo r an advanced degree at the U n i v e r s i t y of B r i t i s h Columbia, I agree tha t the L i b r a r y s h a l l make i t . f r e e l y a v a i l a b l e fo r reference, and Study. I f u r the r agree tha t pe rmiss ion fo r ex tens ive copying of t h i s t h e s i s fo r s c h o l a r l y purposes may he granted by the Head of my Department or by h i s r e p r e s e n t a t i v e s . I t i s understood that copying or p u b l i c a t i o n of t h i s t h e s i s fo r f i n a n c i a l ga in s h a l l not "be a l lowed wi thout my w r i t t e n p e r m i s s i o n . School of Community and Reg iona l P l a n n i n g The U n i v e r s i t y of B r i t i s h Columbia Vancouver 8 , Canada Date : A p r i l , 1 9 6 8 ABSTRACT i i i The focus of t h i s s tudy i s on the a p p l i c a t i o n of c o s t - b e n e f i t a n a l y s i s as a me thodo log ica l technique fo r e v a l u a t i n g a l t e r n a t i v e s i n the urban p l a n n i n g p r o c e s s . I t i s hypothes ized tha t c o s t - b e n e f i t a n a l y s i s , by i d e n t i f y i n g the e f f e c t s and the i nc idence of va r ious courses of a c t i o n , p rov ides a bas i s fo r o b j e c t i v e e v a l u a t i o n of a l t e r n a t i v e p l a n s . I t i s assumed tha t c o s t - b e n e f i t a n a l y s i s , an economics t o o l , i s a framework w i t h i n which the va r ious e f f ec t s can be cons idered comprehensively . The method of s tudy i s p r i m a r i l y a c r i t i c a l rev iew of the l i t e r a t u r e . W i t h i n the a v a i l a b l e time and r e sou rces , an attempt i s made to app ly the c o s t - b e n e f i t techniques to s e l e c t e d areas i n the C i t y of Vancouver . Because of the magnitude of the problem i n v o l v e d i n the c o l l e c t i o n of cons ide rab l e da ta , most o f which i s apparen t ly u n a v a i l a b l e i n a r e a d i l y a p p l i c a b l e form, evidence f o r the v e r i f i c a t i o n of the hypothes is i s l a r g e l y drawn from the c r i t i c a l e v a l u a t i o n of the l i t e r a t u r e . The study f i r s t focusses on the genera l concept of c o s t - b e n e f i t a n a l y s i s , as i t appears to be t r a d i t i o n a l l y a p p l i e d , i n a' broad p e r s p e c t i v e of va r i ous me thodo log ica l techniques of p l a n e v a l u a t i o n . A rev iew of the c o s t - b e n e f i t techniques advanced by N a t h a n i e l L i c h f i e l d , Jerome Rothenberg and James C T . Mao r e v e a l s the f a c t tha t there i s a d i f f e r e n c e i n i v t h e i r "basic approach to urban development. L i c h f i e l d ' s "balance sheet" t r aces the e f f ec t s of development i n r e l a t i o n to the v a r i o u s sec to r s i n v o l v e d i n the development p r o c e s s . Mao suggests tha t the repercuss ions be t r aced i n r e l a t i o n to the bas i c o b j e c t i v e of the p r o j e c t . Rothenberg i s p r i m a r i l y concerned w i t h the d i s t r i b u t i o n of income among the r e l e v a n t popu la t i ons i n v o l v e d i n the process of development. The authors p o i n t out the l i m i t a t i o n s of t h e i r t echn iques . There are many i n t a n g i b l e and non-measurable items which are not t r e a t ed by the au thor s . There i s a l so the ques t ion of whether these t o o l s are v a l i d fo r e v a l u a t i n g urban p l a n s . Though adequate data are not a v a i l a b l e to f u l l y employ the above c o s t - b e n e f i t t echn iques , the l i m i t a t i o n s of the case s t u d i e s , p a r t l y imposed by the t h e o r e t i c a l f o r m u l a t i o n of" these techniques l ead to quest ions about the o p e r a t i o n a l v a l i d i t y of these t o o l s i n e v a l u a t i n g the i m p l i c a t i o n s of these p o l i c i e s i n the s tudy a reas . The study r e s u l t s r e v e a l the p r a c t i c a l problems encountered i n o b t a i n i n g comparable da ta , p a r t i c u l a r l y on p rope r ty v a l u e , s o c i a l costs o f slum l i v i n g , and m u n i c i p a l expendi ture and revenues fo r such s m a l l a reas . A s p e c i f i c methodology needs to be... developed fo r each to take these items i n t o account . ' The problem of i s o l a t i n g c e r t a i n e f f ec t s and a s c r i b i n g them to the redevelopment p o l i c y i n the s tudy areas i s a c r i t i c a l one. V Thus no v a l i d c o n c l u s i o n w i t h regard to the v e r i f i c a t i o n of the hypothes i s can he drawn i n the l i g h t of the case s t u d i e s . I t i s concluded tha t the t r a d i t i o n a l concepts of "cos t s " and ""benefits" are not a p p l i c a b l e In e v a l u a t i n g a l t e r n a t i v e urban p lans and-that c o s t - b e n e f i t a n a l y s i s r e q u i r e s a broad i n t e r p r e t a t i o n as a framework w i t h i n which the i m p l i c a t i o n s of a p l a n can be cons idered comprehensively and o b j e c t i v e l y i n r e l a t i o n to the def ined goals and o b j e c t i v e s . The f o r m u l a t i o n of goals and . o b j e c t i v e s , i t i s e v i d e n t , i s an i n t e g r a l pa r t of the a n a l y t i c a l t echn iques . There are many i n t a n g i b l e and non-measurable aspects which can not be t r e a t ed adequately w i t h i n the c o s t - b e n e f i t framework. However, one o f the advantages of c o s t - b e n e f i t a n a l y s i s i s tha t the p lanners and the dec is ion-makers may both become acquainted i n greater d e t a i l w i t h the , t r a d e - o f f s . Va r ious other a n a l y t i c a l methods l e a d to a more r e f i n e d c o s t - b e n e f i t c a l c u l u s fo r an o b j e c t i v e e v a l u a t i o n of urban p l a n s . I t i s important tha t the v a l i d i t y of me thodo log ica l techniques should be judged not o n l y by i t s o p e r a t i o n a l aspects but a l so by i t s conceptual approach to achieve the goals o f the urban p l a n n i n g p roces s . v i TABLE OF CONTENTS Page ABSTRACT , i i i LIST OF ILLUSTRATIONS v i i i LIST OF TABLES • • i x ACKNOWLEDGEMENTS x i CHAPTER I . INTRODUCTION 1 The S e t t i n g 1 Statement of the Problem 3 D e f i n i t i o n of Terms 5 The Purpose and Objec t ives of the Study . . . 6 The Hypothesis • • • 7 L i m i t a t i o n s , Scope and Method of Study . . . . 8 O r g a n i z a t i o n of the Thesis 9 I I . METHODOLOGICAL TECHNIQUES FOR EVALUATION OF ALTERNATIVES: AN OVERVIEW 11 E v a l u a t i o n of A l t e r n a t i v e s i n Urban P l a n n i n g ' 1 1 M e t h o d o l o g i c a l Techniques fo r E v a l u a t i o n of Urban P lans 15 T r a d i t i o n a l Approach 16 A n a l y t i c a l Approach 19 Relevance of C o s t - B e n e f i t A n a l y s i s . . . 26 C o s t - B e n e f i t A n a l y s i s 2 7 Economic E v a l u a t i o n : A P e r s p e c t i v e . . 2 7 General P r i n c i p l e s o f C o s t - B e n e f i t A n a l y s i s • • • 31 v i i Page L i m i t a t i o n s of C o s t - B e n e f i t A n a l y s i s . . 46 Summary 48 I I I . APPLICATION OF COST-BENEFIT ANALYSIS TO URBAN ELANNING: A BIBLIOGRAPHIC REVIEW 50 A u t h o r ' s Approach to Urban Problems and General Ob jec t ives 51 General Method of A n a l y s i s 55 A u t h o r ' s Q u a l i f i c a t i o n s and Comments 74 Summary 80 I V . CASE STUDY 83 Study Areas : Background and Method Used i n the Case Study 83 Study Area 1: Redevelopment Scheme Area D-4 88 Problem R e q u i r i n g A n a l y s i s 88 A p p l i c a t i o n of L i c h f i e l d ' s Methodology 94 A p p l i c a t i o n of Rothenberg 's Methodology 109 A p p l i c a t i o n of Mao's Methodology ' 112 Study Area 2 : Rezoned Area 115 Problem R e q u i r i n g A n a l y s i s 115 A p p l i c a t i o n of L i c h f i e l d ' s Methodology 119 A p p l i c a t i o n of Rothenberg 's Methodology 125 Review of the Case Studies 126 V . SUMMARY AND CONCLUSIONS 129 The Hypothesis i n the l i g h t of the Case S tud ies 130 Conclus ions 132 Assessment and Recommendations 137 BIBLIOGRAPHY 142 APPENDICES 148 . v i i i LIST OF ILLUSTRATIONS Page FIGURE 1. S t r a t egy fo r Eva lua t ion . 14 2 . Cumulative Present "Value of B e n e f i t s and Costs at d i f f e r e n t r a t e s of compound i n t e r e s t 4-1 MAP 1. L o c a t i o n , Study Area 1 and 2 84 2 . F u n c t i o n a l R e l a t i o n s h i p w i t h the Sur rounding , Study Area-.-? 1 and 2 86 3 . Zon ing , 1957, Study Area.: 1 and 2 89 4-. I n d u s t r i a l and Commercial Areas , 1957; Study Areas 1 and 2 90_ 5. Zon ing , 1967, Study Area^: 1 91 6. F i n a l A c q u i s i t i o n Map, 1967, Study Area 1 . . . 93 7- Assessed Land "Values, I960 - 1967, Study Area 1 98 8. Use o f Acqu i red and Resold P r o p e r t i e s , 1968, Study Area 1 105 9- Zon ing , 1967, Study Area 2 117 10. Reused P r o p e r t i e s , Study Area 2, (Showing use i n 1963) • • • • 121 11 . Reused P r o p e r t i e s , Study Area 2, ( (Showing use In 1968) 122 12. Assessed Land V a l u e s , I960 - 1967, Study Area 2 124 i x LIST OF TABLES Page TABLE 1. P a r t i e s i n v o l v e d i n the Development Process (A T y p i c a l L i s t ) l>+9 2 . The Balance Sheet of Development (Conceptual) 150 3- The S o c i a l Costs' and B e n e f i t s of Urban Renewal (A T y p i c a l L i s t ) ' 151 h. C o n d i t i o n of B u i l d i n g s i n Study Area 1, 1959 152 5- Comparison of Uses by Lots - Study Area 1 . . . 153 6. Assessed Value of Improvements and Use Code of the P r o p e r t i e s Acqui red and Resold by the C i t y , Study Area 1 15*+ 7. P r o p e r t i e s showing an inc rease i n the Assessed Value o f Improvements Adjacent to Study Area 1 156 8. Assessed Land V a l u e s , I960 and 1967 Study Area 1 157 9. Assessed Land V a l u e s , I960 and 1967 Adjacent to Study Area 1 158 10. Statement of Accounts (asof May 31, 1967) Study Area 1 159 11 . Comparison of C a p i t a l . C o s t s , 1967, Study Area 1 161 12. The Balance Sheet of Development, Study Area 1 163 13- B e n e f i t - C o s t Summary, Study Area 1 168 ih. The S o c i a l Costs and B e n e f i t s , Study Area 1 . 169 15. Discounted Value of F i n a n c i a l B e n e f i t s and Cos t s , Study Area 1 170 16. O v e r a l l E v a l u a t i o n of Redevelopment, Study Area 1 171 X Page TABLE 17- Comparison of Uses by L o t s , Study Area 2 . . . . 172 1 8 . Assessed Value of Improvements and Use Code of the P r o p e r t i e s Re-used, Study Area 2 173 19- Assessed Land V a l u e s , I960 and 1967 5 Study Area 2 175 20. Assessed Land V a l u e s , I960 and 1967, Adjacent to Study Area 2 177 x i ACKNOWLEDGEMENTS In submi t t i ng t h i s t h e s i s , I am indebted to my adv i so r P r o f e s s o r B . Wiesman, fo r h i s c o n s t r u c t i v e c r i t i c i s m , pa t i ence and guidance; and to D r . R. C o l l i e r fo r h i s good c o u n s e l . Most i n f o r m a t i o n on the case s tud ie s could not have been obta ined wi thout the s p l e n d i d c o - o p e r a t i o n of Mr . G. F . F a r r y , Study D i r e c t o r , Urban Renewal Study, C i t y P l a n n i n g Department and members o f h i s s t a f f . Mr . Urquhart of the Assessment Commissioner 's O f f i c e has been of great a s s i s t a n c e i n o b t a i n i n g i n f o r m a t i o n from the assessment records . I- am a l so most a p p r e c i a t i v e of the M e l l o n Scho la r sh ip awarded to me and I would l i k e to extend my thanks to D r . H . P . Ober lander . F i n a l l y , my acknowledgement i s due to Miss Aban Gamat f o r her a s s i s t a n c e i n the p r o d u c t i o n of the t h e s i s . CHAPTER I INTRODUCTION 1. THE SETTING The genera l area of i n v e s t i g a t i o n attempted i n t h i s s tudy i s tha t of the e v a l u a t i o n of a l t e r n a t i v e s i n the urban p l a n n i n g process In the context of Nor th Amer ica . The focus of t h i s s tudy i s on the a p p l i c a b i l i t y of c o s t - b e n e f i t techniques i n the e v a l u a t i o n of urban p l a n s . The e v a l u a t i o n of a p l a n i s based on c r i t e r i a which r e f l e c t the o b j e c t i v e s and v iewpoin t s of the dec i s ion -make r s . R a t i o n a l d e c i s i o n s i n the urban p l ann ing process are thus a matter of s u b j e c t i v e judgement."*" This f a c to r and the v a r y i n g c o n d i t i o n s which i n f l u e n c e t h i s f a c t o r make i t impera t ive to develop t o o l s which a s s i s t i n s e t t i n g some o b j e c t i v e c r i t e r i a fo r the e v a l u a t i o n of a l t e r n a t i v e s . The urban p l a n can be viewed as "an investment frame-work" w i t h i n which i n d i v i d u a l development d e c i s i o n s are coord ina ted so tha t the r e s u l t a n t whole i s i n the o v e r a l l 2 i n t e r e s t , of the community. While c o s t - b e n e f i t a n a l y s i s i s 1 - M a r t i n Meyerson and Edward C. B a n f i e l d , P o l i t i c s , P l a n -n i n g and P u b l i c I n t e r e s t (Glencoe, 1 1 1 . : The Free P r e s s , 1955)5 pp . 3 1 2 - 1 4 . ~ ~ . 2 N a t h a n i e l L i c h f i e l d , "Cos t -bene f i t A n a l y s i s i n Town P l a n n i n g , A Case Study - Swanley", Urban S t u d i e s , I I I , No. 3 (November, 1966), p . 216. e s s e n t i a l l y an economics t o o l , i t seems to provide an a n a l y t i c a l framework f o r e v a l u a t i n g the consequences of development d e c i s i o n s and' to a s s i s t choice among a l t e r n a t i v e d e c i s i o n s . While advancing "a choice theory of planning" Davidoff and Reiner defined planning as "a process f o r determining appropriate f u t u r e a c t i o n through a sequence of choice". From t h i s d e f i n i t i o n c e r t a i n c h a r a c t e r i s t i c s of planning can he enumerated: planning i s . e s s e n t i a l l y f u t u r e o r i e n t e d , i t i m p l i e s c e r t a i n a c t i o n , i t i s desired to be comprehensive, i t seeks achievement of c e r t a i n ends and i t i n v o l v e s e x e r c i s e of choice. Leaving aside the question whether a l l the above c h a r a c t e r i s t i c s are e x p l i c i t i n a l l planning f u n c t i o n s , i t can be stated t h a t planning i m p l i e s some value judgements and that there i s an i m p l i c i t attempt to achieve c e r t a i n ends. The planning process c o n s t i t u t e s the e n t i r e spectrum 1+ of planned a c t i o n s . In more p r e c i s e terms, using Chapin's expression, the process of planning can be viewed as a s e r i e s of e v o l u t i o n a r y and r a t i o n a l l y organized steps which lead to proposals f o r guiding urban growth and development. The a n a l y t i c a l framework of the planning process, however, P a u l Davidoff and Thomas A. Reiner, "A Choice Theory of P l a n n i n g " , Journal of the American I n s t i t u t e of Planners XXVIII (May, 1 9 6 2 ), p . 1 0 5 -h F. Stuart Chapin, J r . , Urban Land Use P l a n n i n g (2d ed U r b a n a , I l l . : U n i v e r s i t y of I l l i n o i s P r e s s , 1 9 6 5 ) 5 V• 3^9-3 v a r i e s depending on the p r e c i s e d e f i n i t i o n of planning and the des i r e d o b j e c t i v e s . A broad conceptual p l a n showing a growth p a t t e r n at the I n i t i a l stage i s developed through "a progressive- planning approach" i n t o a d e t a i l e d p l a n . 2. STATEMENT OF THE PROBLEM From the above d i s c u s s i o n i t f o l l o w s that through a complex process an urban p l a n i s developed embodying the proposals f o r guiding urban growth and development to achieve the community goals i n accordance w i t h a comprehen-s i v e community p l a n . Decisions have to be made on a s i n g l e p l a n , " the probable consequence" of which, i n the opi n i o n of the decision-makers, would be "preferable i n terms of the most valued ends". This i n v o l v e s e v a l u a t i o n of r e l a t i v e merits of a l l p o s s i b l e consequences of a l t e r n a t i v e p l a n s . The problem i s to make a r a t i o n a l d e c i s i o n . D i f f e r e n t a l t e r n a t i v e s w i l l n e c e s s a r i l y have d i f f e r e n t i m p l i c a t i o n s . A n a l y s i s of i m p l i c a t i o n s of various a l t e r n a t i v e plans requires i d e n t i f i c a t i o n and measurement of a l l the consequences r e s u l t i n g from a p a r t i c u l a r course of a c t i o n . There are various methodological approaches i n the ev a l u a t i o n of plans - from the t r a d i t i o n a l s i m p l i s t i c p l a n -ning approach to the h i g h l y a b s t r a c t mathematical and si m u l a t i o n model approach. Notwithstanding the advances i n h 5 a n a l y t i c a l approaches, N a t h a n i e l L i c h f i e l d suggests, i n the f i n a l a n a l y s i s the " b e n e f i t s " a c c r u i n g to the community from the i m p l i c a t i o n s of l a p l a n " must be r e l a t e d to the " c o s t s " i n v o l v e d . The comparison of a l t e r n a t i v e s w i l l be o b j e c t i v e to the degree to which " b e n e f i t s " and " c o s t s " f l o w i n g from each a l t e r n a t i v e can be i d e n t i f i e d , meaningfully measured and valued. "Since goals cannot be reached without the use of resources, the a n a l y s i s should b r i n g out the i m p l i c a t i o n s i n b e n e f i t s ( s e r v i c e s ) that would accrue to the community and costs (resources) at which they would be bought Viewed i n the l i g h t of the above d i s c u s s i o n , the process of e v a l u a t i o n of a l t e r n a t i v e plans r a i s e s two s i g n i f i c a n t i s s u e s . F i r s t , c r i t e r i a i n terms of c o s t - b e n e f i t . c o n s i d e r a -t i o n s involve, a n a l y s i s of a l l , and not a l i m i t e d range, of costs and b e n e f i t s r e s u l t i n g from the i m p l i c a t i o n s of a p l a n . The second i s s u e i n v o l v e s the o p e r a t i o n a l aspects of the t o o l . Cost-benefit: a n a l y s i s i s e s s e n t i a l l y an a i d to i n v e s t -ment choice. The problem of i t s a p p l i c a t i o n i n the evalua-t i o n of urban plans are those common to t h i s a n a l y t i c a l method. Nath a n i e l L i c h f i e l d , "Cost-Benefit A n a l y s i s i n C i t y P l a n n i n g " , Journal of the American I n s t i t u t e of Planners, XXVI (November, I 9 6 0 ) , p. 273^74. 6 I b i d . , p. 2 7 3 . 5 Often the two issues may not he c l e a r l y d i s t i n g u i s h e d i n d i s c u s s i o n s . The second i n v o l v e s t h e o r e t i c a l concepts of c o s t - b e n e f i t a n a l y s i s and i t s d i s c u s s i o n could be l i m i t e d to e x p e r t i s e i n the a n a l y s i s of economic problems. But the a p p l i c a t i o n of these concepts as a t o o l i n the urban planning process, as evident from the statement of the f i r s t i s s u e , i s a much more complex problem. 3- DEFINITION OF TERMS I t i s e s s e n t i a l , at t h i s stage of the d i s c u s s i o n , to define some s p e c i f i c terms which occur f r e q u e n t l y i n the body of the t h e s i s . Comprehensive Community P l a n "Comprehensive Community P l a n " i s synonymous w i t h "general p l a n " as defined by Kent: The general p l a n i s the o f f i c i a l statement of a mun i c i p a l l e g i s l a t i v e body which sets f o r t h i t s major p o l i c i e s concerning d e s i r a b l e f u t u r e p h y s i c a l development; the published g e n e r a l -p l a n document must in c l u d e a s i n g l e , u n i f i e d general p h y s i c a l design f o r the community, and i t must attempt to c l a r i f y the r e l a t i o n s h i p s between physical-development p o l i c i e s and s o c i a l and economic goals.7 Urban P l a n "Urban P l a n " i s d i s t i n g u i s h e d from "general p l a n " as defined above, which i s e s s e n t i a l l y "long range" and "general T. J . Kent, J r . , TJxe__Urban General P l a n (San F r a n c i s c o : Chandler P u b l i s h i n g Company, 1964), p. .18-6 i n nature", i n the sense that i t . i s d e t a i l e d r a t h e r than general'and i t i m p l i e s "the endless number of s p e c i f i c , d e t a i l e d , and short-range p r o j e c t s , ( .plans, and r e g u l a t i o n s that are based on the general p l a n and are intended to c a r r y out". k. THE PURPOSE AND OBJECTIVES OF THE STUDY Cost- b e n e f i t a n a l y s i s i s used to a s s i s t choice i n a l t e r n a t i v e investment d e c i s i o n s . In the p r i v a t e s e c t o r , the a n a l y s i s i s simple, since the decision-maker has a d e f i n i t i v e o b j e c t i v e of profit-making and the supply of and demand f o r goods produced are ad justed - through the market mechanism. But most " p u b l i c goods" are seldom marketable, and the consequences of a l l p u b l i c expenditure d e c i s i o n s are not n e c e s s a r i l y s u s c e p t i b l e of o b j e c t i v e e v a l u a t i o n . However, w i t h i n c r e a s i n g p u b l i c expenditure c o s t - b e n e f i t a n a l y s i s has been r e c e i v i n g growing a t t e n t i o n i n the p u b l i c s e c t o r . The complexity of urban systems and the changing concept of urban problems have l i m i t e d the use of c o s t -b e n e f i t a n a l y s i s as a t o o l i n the urban planning process. Yet there Is no accepted method f o r e v a l u a t i n g a l t e r n a t i v e plans to ensure that one w i l l serve the purpose b e t t e r than the other. The purpose of the study, t h e r e f o r e , i s to examine whether c o s t - b e n e f i t a n a l y s i s i s a r e l e v a n t 8 I b i d . , p. 3 5 -7 method f o r ev a l u a t i n g a l t e r n a t i v e p l a n s . More s p e c i f i c a l l y , an attempt i s made to i n v e s t i g a t e whether c o s t - b e n e f i t a n a l y s i s can meaningfully e s t a b l i s h c r i t e r i a f o r o b j e c t i v e e v a l u a t i o n . S t a r t i n g w i t h water resource development i n the United S t a t e s , c o s t - b e n e f i t a n a l y s i s has been a p p l i e d w i t h varying degrees of success to various other p u b l i c a c t i v i t i e s , such as h e a l t h , education,defense, t r a n s p o r t a t i o n , e t c . I n the subject of t h i s t h e s i s , there i s , however, scanty l i t e r a t u r e . The o b j e c t i v e s of t h i s t h e s i s are thus two-fold: f i r s t , to review the general p r i n c i p l e s of c o s t - b e n e f i t a n a l y s i s as a methodological technique f o r p l a n e v a l u a t i o n ; second, to review the s p e c i f i c techniques of c o s t - b e n e f i t a n a l y s i s as formulated and a p p l i e d to urban planning. In the l i g h t of a more p r e c i s e understanding of the general concepts of "c o s t s " and " b e n e f i t s " and the use of the technique, the i m p l i c a t i o n s of development d e c i s i o n s and the a p p l i c a t i o n of the technique to urban plans are examined. 5- THE HYPOTHESIS Based on the d i s c u s s i o n above i t i s hypothesized that "an i d e n t i f i c a t i o n of the effects of planned a c t i o n s , using  the technique of c o s t - b e n e f i t a n a l y s i s , provides a basis f o r  o b j e c t i v e e v a l u a t i o n of urban plans". 8 6. LIMITATIONS, SCOPE AND METHOD OF STUDY L i m i t a t i o n s and Scope The scope of t h i s study i s l i m i t e d f o r many reasons: The f i r s t i s the l i m i t a t i o n s of c o s t - b e n e f i t a n a l y s i s . The method of c o s t - b e n e f i t a n a l y s i s has been used p r i m a r i l y i n investment d e c i s i o n s and i n the e v a l u a t i o n of p r o j e c t s where both " b e n e f i t s " and " c o s t s " are l a r g e l y measurable i n monetary terms. But even i n t h i s context, there are many recognized l i m i t a t i o n s to c o s t - b e n e f i t a n a l y s i s , such as the problem of value judgements i n the i n t e r r e l a t i o n of various p r o j e c t s . The second i s the l i m i t e d l i t e r a t u r e p e r t i n e n t to t h i s t h e s i s . Only r e c e n t l y has i n t e r e s t i n the a p p l i c a t i o n of Q c o s t - b e n e f i t a n a l y s i s to urban planning been shown. A d d i t i o n a l l y , the t h e o r e t i c a l formulations of most c o s t -b e n e f i t techniques as a p p l i e d to urban planning have been s e r i o u s l y questioned. Method of Study The above l i m i t a t i o n s n e c e s s i t a t e that the method of study be p r i m a r i l y a c r i t i c a l . r e v i e w and e v a l u a t i o n of the A. R. P r e s t and R. Turvey, "Cost-benefit A n a l y s i s : A Survey", The Economic J o u r n a l , LXXV (December, 1965),pp•718-21. 1 0 I b i d . , pp. 713-21; also see M o r r i s H i l l , "A Goals-Achievement M a t r i x f o r E v a l u a t i n g A l t e r n a t i v e P l a n s " , Journal  of the American I n s t i t u t e of Planners, XXXIV (January, 1968), pp . tHi9-21. 9 a v a i l a b l e l i t e r a t u r e . W i t h i n the a v a i l a b l e time, and resources, an attempt i s made to apply the c o s t - b e n e f i t techniques under study to s e l e c t e d areas i n the C i t y of Vancouver. Because of the magnitude of the problem i n v o l v e d i n the c o l l e c t i o n of the re q u i r e d data, evidence f o r the v e r i f i c a t i o n of the hypothesis i s l a r g e l y drawn from the c r i t i c a l review and e v a l u a t i o n of the a v a i l a b l e l i t e r a t u r e . 7- ORGANIZATION OF THE THESIS I t i s e s s e n t i a l at the outset to be quite c l e a r about the t h e o r e t i c a l concept of c o s t - b e n e f i t a n a l y s i s . The technique can be b e t t e r appreciated I f " viewed from a broad p e r s p e c t i v e of e v a l u a t i o n methodology. The f i r s t chapter a f t e r t h i s i n t r o d u c t i o n i s devoted to a d i s c u s s i o n of the methodological techniques f o r the e v a l u a t i o n of a l t e r n a t i v e s i n the urban planning process. Procedures i n v o l v e d i n the e v a l u a t i o n of urban plans are r e c a p i t u l a t e d followed by an o u t l i n e d e s c r i p t i o n of various approaches to p l a n e v a l u a t i o n ; The t r a d i t i o n a l approach to urban pla n e v a l u a t i o n i s a s i m p l i s t i c method which aims at the attainment of certain^standards based on p r o f e s s i o n a l judgement. New approaches are more a n a l y t i c a l and are enriched by the i n t r o d u c t i o n of various types of models. Wit h i n t h i s p e r s p e c t i v e , the technique of c o s t - b e n e f i t a n a l y s i s i s explored I n the l a s t s e c t i o n of the chapter. T h e o r e t i c a l concepts of c o s t - b e n e f i t a n a l y s i s , i t s t e c h n i -10 c a l i t i e s and l i m i t a t i o n s are discussed. Chapter I I I i s a review of l i t e r a t u r e on the a p p l i c a t i o n of c o s t - b e n e f i t a n a l y s i s to urban planning. I n the b i b l i o g r a p h i e review, the t h e o r e t i c a l f o r m u l a t i o n of various techniques and t h e i r p r a c t i c a l a p p l i c a t i o n are discussed; the problems encountered are noted and a c r i t i q u e of the approaches i s o f f e r e d . In Chapter IV, an attempt i s made to apply the a n a l y t i c a l framework developed by N a t h a n i e l L i c h f i e l d , Jerome Rothenberg and James C. T. Mao.to two s e l e c t e d p r o j e c t s i n the C i t y of Vancouver. The f i n a l chapter i s f i r s t devoted to summarize what has been discussed above. This i s followed by an a n a l y s i s and i n t e r p r e t a t i o n of the study r e s u l t s to t e s t the hypothesis. Based on these observations, conclusions are drawn. 11 CHAPTER I I METHODOLOGICAL TECHNIQUES FOR EVALUATION OF ALTERNATIVES: AN OVERVIEW The technique of p l a n e v a l u a t i o n may vary depending on the degree to which plans are d e t a i l e d and on the desired r o l e of the p l a n . A new understanding of urban systems and changing concepts of urban problems are l e a d i n g to many s o p h i s t i c a t e d techniques i n the e v a l u a t i o n of urban p l a n s . In t h i s chapter the d i s c u s s i o n proceeds from a broad p e r s p e c t i v e of p l a n e v a l u a t i o n to d i f f e r e n t methodological techniques and then to the s p e c i f i c techniques of c o s t - b e n e f i t a n a l y s i s . 1 . EVALUATION OF ALTERNATIVES IN URBAN PLANNING In s e l e c t i n g the best p o s s i b l e set of p o l i c i e s f o r guiding the development of urban growth, many choices have to be made. The c r i t i c a l process of s e l e c t i n g a proper p o l i c y i n v o l v e s the e v a l u a t i o n of a set of p o s s i b l e a l t e r n a -t i v e s . Each set would r e s u l t i n d i f f e r e n t consequences. Eventual a d e c i s i o n on a s i n g l e set of p o l i c i e s , more s p e c i -f i c a l l y , a s i n g l e p l a n , depends on the desired consequences, and t h i s i n v o l v e s the goals and o b j e c t i v e s of the community f o r whom the p l a n i s prepared. Since the aspect of g o a l - s e t t i n g i s beyond the scope of the present d i s c u s s i o n , i t i s u s e f u l to keep i n perspect i v e 12 one of the s i g n i f i c a n t c o n s i d e r a t i o n s "involved i n achieving mastery of the m e t r o p o l i s , " as s p e l l e d out by Webb S. F i s h e r i n the f o l l o w i n g statement: ...some people, at l e a s t , should f o r g e t about the pragmatics and address themselves to the p o t e n t i a l i t i e s of the urban environment. Their task should be to create an image of the f u t u r e , a substantive image concerned w i t h the k i n d of l i f e that i s now t e c h n o l o g i c a l l y and economically p o s s i b l e . We should t a l k about what we want to be, how we want to l i v e , how we want to work, p l a y and consume: what the a c t u a l content of a d e l i g h t f u l urban existence should be f o r an enormous v a r i e t y of people. Let us overleap a l l the d i f f i c u l t i e s f o r a moment and t r y to discover what we are missing. I f we can construct a compelling image of the p o t e n t i a l i t i e s of our urban c i v i l i z a t i o n then we can., r e t u r n to the question of how to achieve i t . The r e l a t i v e merits of plans can be evaluated to the extent t h e i r goals and o b j e c t i v e s are c l e a r l y and e x p l i c i t l y s t a t e d . The value judgments and d i f f i c u l t i e s i n v o l v e d i n the process make i t more imperative than other-wise to analyze the e f f e c t s of d i f f e r e n t courses of a c t i o n and to appreciate t h e i r s i g n i f i c a n c e . What should be the c r i t e r i a f o r the e v a l u a t i o n of a l t e r n a t i v e s ? The answer to t h i s question i s fundamental to the process of e v a l u a t i o n and may be e l u s i v e . The question i s i n h e r e n t l y r e l a t e d to the problem of g o a l - s e t t i n g . U l t i m a t e l y a d e c i s i o n on the choice of an a l t e r n a t i v e r e s t s w i t h the c i t i z e n s and t h e i r p o l i t i c a l bodies. "Whenever the Webb S. F i s h e r , Mastery of the Me t r o p o l i s (Englewood C l i f f s , N.J.: P r e n t i c e - H a l l , Inc., 1962), pp. 1^2-53. 13 "basis of choice i s s u b j e c t i v e , or i s of an ambiguous nature, • i t i s d i f f i c u l t to prevent decision-making from becoming a p o l i t i c a l , l o g - r o l l i n g process.'^ There are innumerable forces shaping the urban environment; but which of them have causal r e l a t i o n s h i p s w i t h the changes proposed f o r a planned environment? And how can planners a r r i v e at the most des i r e d changes i n the environment? I n v e s t i g a t i o n s i n t o such questions and a search f o r o b j e c t i v e c r i t e r i a i n decision-making lead to a s o p h i s t i -cated e v a l u a t i o n of a l t e r n a t i v e s . Granted that the planner has to s p e c i f y the p o s s i b l e p o l i c i e s w i t h a view to making them o p e r a t i o n a l , i t i s , t h e r e f o r e , necessary to evaluate the e f f e c t s o f the p o l i c y d e c i s i o n s i n r e l a t i o n to the means a v a i l a b l e to implement them. F i g u r e 1 (page 14) i l l u s t r a t e s a s t r a t e g y f o r evalua-t i o n , showing the i n t e r r e l a t i o n s h i p of the elements. Based on the "values" of the community, goals and o b j e c t i v e s are f i r s t defined. W i t h i n t h i s frame of reference, c r i t e r i a f o r the e v a l u a t i o n of " c o s t s " and " b e n e f i t s " could be s p e c i f i e d , and the r e l a t i v e merits of f e a s i b l e a l t e r n a t i v e s could be evaluated to decide on a p r e f e r r e d a l t e r n a t i v e . Any r e -assessment of the p r e f e r r e d a l t e r n a t i v e i n view of other c r i t e r i a r e s u l t s i n a r e a p p r a i s a l of goals and o b j e c t i v e s . Jerome L. S t e i n , "Economic A n a l y s i s and Urban Develop-ment", Pl a n n i n g , 1964 (Chicago, 111. : American S o c i e t y of Planning O f f i c i a l s , 1964), p.77-g o a l s o b j e c t i v e s c r i t e r i o n c o s t - b e n e f i t ! f e a s i b l e a I t e r n a t i y e s a l t e r n a t i v e 15 C o s t - b e n e f i t c r i t e r i a are a u s e f u l i n d i c a t o r of the extent tha t a l t e r n a t i v e s . c a n be mean ing fu l ly compared. In some cases , i t may not p rov ide a complete treatment of a l l consequences r e s u l t i n g from a course of a c t i o n . When, fo r example, the i n t a n g i b l e and nbnmeasurable i m p l i c a t i o n s are of such p r o p o r t i o n that c o s t - b e n e f i t c r i t e r i o n may not be u s e f u l . N e v e r t h e l e s s , the dec is ion-makers w i l l i n these ci rcumstances make value judgement, knowing the l i m i t a t i o n s . 2 . METHODOLOGICAL TECHNIQUES FOR EVALUATION OF URBAN PLANS The e v a l u a t i o n of a l t e r n a t i v e urban p lans i s an i n t e g r a l p a r t of the urban p l a n n i n g p r o c e s s . Wi th the development of the p l a n n i n g p roces s , va r ious me thodo log ica l techniques for e v a l u a t i o n of a l t e r n a t i v e s have developed. The q u a l i t y of the p l a n which i s adopted depends much on the r e l i a b i l i t y and v a l i d i t y o f the techniques of p l a n e v a l u a t i o n . The' a r t of "p l ann ing" can be t r aced to the development of the f i r s t human se t t l emen t , but i t s r e c o g n i t i o n as a sc ience and technique f o r shaping the environment i s of recent o r i g i n . From i s o l a t e d problem s o l v i n g approaches -the movement of " c i t y b e a u t i f u l " , "pub l i c works" and "zon ing" , e a r l y i n t h i s century i n the Un i t ed S t a t e s , urban p l ann ing has developed as a co -o rd ina ted and comprehensive approach to urban, problems• As the approach to urban p l ann ing broadened : over the ages, so the expec t a t i on from p l ann ing 16 a c t i o n a l s o changed. Giedion's remark i n d i c a t i n g an approach to urban problems has relevance to the fbrmu'la.tio'nn of methodological techniques: At the moment....it i s . n o t important....to e s t a b l i s h the c o n d i t i o n s of growth, as i t i s to have an understanding of i t s r e a l s t r u c t u r e t h a t i s to become aware of what k i n d of growth i s going on w i t h i n the depths of our p e r i o d . We cannot grasp the c o n s t i t u t i o n of t h i s growth without knowing what methods of approach u n d e r l i e e x p l o r a t i o n s i n the d i f f e r e n t realms of thought and f e e l i n g . 3 The l i t e r a t u r e on urban planning gives an account of the h i s t o r y and development of the planning process. . ^ E x p l i c i t techniques of p l a n e v a l u a t i o n have only appeared w i t h the more recent development of a n a l y t i c a l methods. The techniques of p l a n e v a l u a t i o n are, t h e r e f o r e , discussed under two headings: T r a d i t i o n a l approach and A n a l y t i c a l approach. I t may, however, be emphasized that the t r a d i t i o n a l approach to ur.b'an planning has also evolved so that i t s d i s t i n c t i o n from the a n a l y t i c a l approach may be i n the degree of s o p h i s t i c a t i o n . Under the a n a l y t i c a l approach s e l e c t e d models are discussed. T r a d i t i o n a l Approach In the t r a d i t i o n a l approach, planning procedure revolves around c e r t a i n s p e c i f i e d design standards, sometimes based on approximate numerical r e l a t i o n s h i p s , such as s i z e and l o c a t i o n of f a c i l i t i e s , e.g., schools, h o s p i t a l s , e t c . , and S. Giedion, Space, Time and A r c h i t e c t u r e (Cambridge, Mass.: Harvard U n i v e r s i t y Press , 194-1-67), pp. 5^ 83 —8^ +. 17 the f o r e c a s t of t h e i r demand and upon the judgement of the p r o f e s s i o n a l s . This approach can he r e l a t e d to the o r i g i n of the planning p r o f e s s i o n when i t was' p r i m a r i l y concerned w i t h the design and promotion of p u b l i c works and the day-to-day c o n t r o l of p r i v a t e development. I t also r e f l e c t s the o r i e n t a t i o n of the p r o f e s s i o n s i n v o l v e d , such as a r c h i t e c -t u r e , landscape a r c h i t e c t u r e and engineering. The time dimension was a r e l a t i v e l y important f a c t o r . The focus has g r a d u a l l y broadened over the years as the plans tended to describe an end s t a t e and not the process of urban change. "The age of urban anarchy" gave way to "the foundation of planning i n democracy". Changes i n technology and the q u a l i t y and c o n d i t i o n s of l i f e a l t e r e d the b a s i s f o r the e v a l u a t i o n of plans to r e f l e c t the values, a s p i r a t i o n s and trends of the time. This process of planning has g r a d u a l l y been i n s t i t u t i o n a l i z e d i n urban governments. Tracing the l e g a l foundation f o r c i t i e s i n 'the States and the freedoms granted by the c o n s t i t u t i o n of the United S t a t e s , G a l l i o n and E i s n e r observed: . . . . i n s p i r e d by t h i s freedom the people of America created a vast domain of commercial and i n d u s t r i a l e n t e r p r i s e . . . . m u l t i t u d e of c i t y people....invest i n urban property and improvements..... The f r e e market economy determined the i n i t i a l environment changes. I m p l i c i t i n the planning f u n c t i o n was the due process of law.(Arthur B. G a l l i o n and Simon E i s n e r , The  Urban P a t t e r n ( P r i n c e t o n , N.J.: D. Van Nostrand Co. Inc., 1950), p. 165). \ 18 But p lans have g e n e r a l l y cont inued to he "based on s p e c i f i c des ign standards and p r o f e s s i o n a l judgements, "on ly r a r e l y are t h e i r o r i g i n s or r a t i o n a l e s made e x p l i c i t . They are t y p i c a l l y imbedded i n the i d e o l o g i c a l h e r i t a g e of the 5 i n d i v i d u a l p r o f e s s i o n a l groups tha t market • them". A n a l y z -i n g the form, content and nature o f a random sample o f over a hundred master p lans prepared throughout the past h a l f cen tury , Farbman observed tha t the p l a n document seldom had c o n v i n c i n g arguments to j u s t i f y t h e i r recommendations' . This inadequacy r e s u l t s from, what Farbman c a l l s " p h y s i c a l b i a s " , i . e . , "almost e x c l u s i v e l y d e a l i n g w i t h improvements 6 i n the p h y s i c a l environment". Thus, the t r a d i t i o n a l approach to p l ann ing suggests two th ings r ega rd ing the ques t ion of e v a l u a t i o n : the f i n a l document (or p lan) i s developed through a process o f a c c r e t i o n by i s o l a t i n g the p h y s i c a l dimensions of the p l a n and f o r e c a s t i n g t h e i r fu ture demand; and the d e c i s i o n on the requirements are based on p r o f e s s i o n a l judgements, but t h e i r r a t i o n a l e i s r a r e l y made e x p l i c i t . "To the degree tha t l e g i s l a t o r s accept the s tandards , f o r e c a s t s , preferences and designs as r e f l e c t i n g t h e i r own o b j e c t i v e s and o u t l o o k s , and to the degree tha t t h e i r p o l i t i c a l and f i s c a l powers M e l v i n M. Webber, "The Roles of I n t e l l i g e n c e Systems i n Urban-Systems P l a n n i n g , " Journa l of the American I n s t i t u t e  of .P lanners , XXXI (November, 1965) , p . 2 9 1 . 6 .David Farbman, "A D e s c r i p t i o n , A n a l y s i s and C r i t i q u e of the Master P l a n " (An Unpubl ished Mimeographed Report prepared fo r the I n s t i t u t e f o r Urban S t u d i e s , U n i v e r s i t y of P e n n s y l v a n i a , P e n n s y l v a n i a , 1 9 5 9 - 6 0 ) , chap. 2 . permi t them to act autonomously, they can indeed approximate 7 the behaviour of w e l l - s t a f f e d c o r p o r a t i o n e x e c u t i v e s " . A n a l y t i c a l Approach The development of a n a l y t i c a l techniques can be a t t r i b u t e d to two fundamental f a c t o r s : (a) The change i n s c a l e and [character of p l ann ing plroblems r e s u l t i n g from enormous urban growth and an i n c r e a s i n g l y widespread r e c o g n i t i o n of the need f o r a more s c i e n t i f i c approach. (b) An i n t e r - d i s c i p l i n a r y approach to urban problems and the progress i n the development of a n a l y t i c a l techniques i n r e l a t e d f i e l d s , such as economics, s o c i o l o g y , opera t ions r e sea r ch , e t c . and the development of computer t echno logy . The t r a d i t i o n a l approach developed fo r a p p l i c a t i o n under compara t ive ly s imple and s t a b l e urban c o n d i t i o n s can h a r d l y t a c k l e dynamic and complex s i t u a t i o n s . The changing concept o f urban growth as a system of v a r i o u s i n t e r r e l a t e d phenomena has made the me thodo log ica l techniques developed i n r e l a t e d d i s c i p l i n e s more p r o m i s i n g . In the remaining pa r t of t h i s s e c t i o n the genera l concept of models i s d i scussed and s e l e c t e d types of models designed to be used i n urban p l a n n -i n g are d e s c r i b e d . This w i l l p rov ide a p e r s p e c t i v e f o r an i n v e s t i g a t i o n i n t o the technique of c o s t - b e n e f i t a n a l y s i s . Webber, op. c i t . , p . 291. 20 General Concept of Mode l s : A model i s "an a b s t r a c t i o n , s i m p l i f i c a t i o n , or i d e a l -o i z a t i o n of a system or event" . I t attempts to desc r ibe or present the behaviour of the r e a l wor ld and to reduce complex systems to manageable p r o p o r t i o n s under c e r t a i n assumed c o n d i t i o n s . The o r g a n i z i n g concept o f a model i s based on a t h e o r e t i c a l framework of a phenomenon which was p r e v i o u s l y concep tua l i zed i n v e r b a l and l o g i c a l form. Two e s s e n t i a l p r o p e r t i e s o f models a r e : " F i r s t , they must account fo r a l l known f a c t s , and secondly , they must enable us to make p r e d i c t i o n s which may be t e s t ed by any 9 unbiased ...and'independent o b s e r v e r . " Al though "a model" and "a theory" are of ten used in t e r changeab ly , there i s a d i s t i n c t i o n between the two. A t h e o r i s t p r i m a r i l y seeks " l o g i c a l coherence" and ^ g e n e r a l i t y " . H i s emphasis i s on r i g o r o u s l o g i c a l d e r i v a t i o n of p r o p o s i t i o n s from pars imon-ious se ts of p o s t u l a t e s . On the other hand, a model b u i l d e r i s p r i m a r i l y concerned w i t h the a p p l i c a t i o n of t heo r i e s to concre te in s t ances and i s cons t ra ined by the a v a i l a b i l i t y o f data and i t s accuracy . A model must be e x p l i c i t and cannot be vague, whereas a t h e o r i s t having s a t i s f i e d the conceptua l s i g n i f i c a n c e o f h i s v a r i a b l e s and t h e i r f u n c t i o n a l Claude M c M i l l a n and R icha rd F . Gonzalez , Systems  A n a l y s i s (Homewood, 1 1 1 . : R i cha rd D. I r w i n , I n c . , 1 9 6 5 ) , p . 4 . ^ I b i d . , p . 7 (quot ing E . F . Beckenbach ( e d . ) , Modern  Mathematics fo r the Engineers (New Y o r k : M c G r a w - H i l l , 1 9 5 6 ) , p p . 2 1 1 - 1 2 ) . 21 i n t e r r e l a t i o n s h i p can propose a theory tha t i s r e l a t i v e l y vague. For use as a p l a n n i n g t o o l , models draw on t heo r i e s of urban form and p roces s , which are f o r m a l i z e d i n mathematical ex-10 p r e s s i o n s . A model i m p l i e s s i m u l a t i o n of the r e a l wor ld i n an a b s t r a c t way. Th i s i s t rue of a l l types of models - from s i m p l i s t i c a r c h i t e c t u r a l models to h i g h l y abs t r ac t mathemati-c a l and s i m u l a t i o n models . The .development of abs t r ac t models r e l i e s on the ex i s t ence of c e r t a i n se ts of i n t e r r e l a t i o n s h i p s i n the complex urban phenomena. Computer s o l u t i o n s of many complex r e l a t i o n s h i p s and computa t ional problems have f a c i l i t a t e d the p l a n n e r ' s t a s k s . However, the i d e n t i f i c a t i o n of the v a r i a b l e s and t h e i r s t a b l e r e l a t i o n s h i p s , which are used as b u i l d i n g - b l o c k s of a model, depend much upon the a n a l y s t ' s a b i l i t y . I n m o d e l - b u i l d i n g exact f u n c t i o n a l forms of the s t r u c t u r a l r e l a t i o n s must be d e t a i l e d . ( e . g . , Y = Log U + a(V/X) + Z° wi thout s imply s t a t i n g the r e l a t i o n -sh ips i n the genera l form Y = f ( U , V , X,Z.. . . ) and the v a r i a b l e s , ( Y , U , V , X,Z) and the parameters (a,b) must a l so be f i t t e d from e m p i r i c a l sources . ) I r a S. Lowry, "A Short Course i n Model D e s i g n " , J o u r n a l o f the American I n s t i t u t e of P l a n n e r s , XXXI (May, 1965), p . 160. 1 1 I b i d . , pp. 160-61. 22 Types of Models and T h e i r Uses . There are s e v e r a l dimensions by which models can he 12 c a t e g o r i z e d . B r i t t e n H a r r i s mentions t h r e e : F i r s t , accord ing to t h e i r des ign and o p e r a t i o n , models' may he " r e c u r s i v e " or " i t e r a t i v e " . I n the r e c u r s i v e p roces s , the s o l u t i o n to a problem i s sought s t epwise ; whereas i n the i t e r a t i v e method or one-step p r o j e c t i o n , a problem i s so lved wi thout c o n s i d e r i n g any i n t e r v e n i n g changes i n c o n d i t i o n s . Secondly , d i f f e r e n t methods of i n t r o d u c i n g the time dimension d i s t i n g u i s h models . One method cons iders o n l y major changes i n key f a c t o r s which are cons idered to - i n f l u e n c e i n d i v i d u a l behaviour , , and f u r t h e r o b s e r v a t i o n of i n d i v i d u a l behaviour over a l o n g p e r i o d i s i g n o r e d . The other method s t a r t s from the o b s e r v a t i o n of the t rend of aggregate behav iour . T h i r d l y , models are d i s t i n g u i s h e d by t h e i r o r g a n i z i n g concepts . In p l a n n i n g ana lyses , there appears to be two genera l c l a s ses of 1 3 models: Mathemat ica l Models and S i m u l a t i o n Models . . 12 B r i t t o n H a r r i s , "New Tools f o r P l a n n i n g " , J o u r n a l of  the American I n s t i t u t e of P l a n n e r s , XXXI (May, 1 9 6 5 ) , p• 9 3 • 13 , Chapin uses the terms "Growth Index Models" (or G r a v i t y Models) and " B e h a v i o u r a l Models" to d i s t i n g u i s h the two general c l a s se s of models i n t roduced i n p l a n n i n g a n a l y s i s . They seem to correspond to "Mathematical Models" and " S i m u l a t i o n Models" r e s p e c t i v e l y . I n Growth Index Models , i n d i c e s of va r i ous k inds are used to represent t h e " f o r c e s " r e g u l a t i n g the development p r o c e s s . Froces are then ma themat i ca l ly analyzed to determine t h e i r s i g n i f i c a n t r e l a t i o n s h i p s . The other c l a s s i s based on the b e h a v i o u r a l concept of development ( F . S tua r t Chapin , J r . , op. c i t . , pp . 4 7 7 - 8 7 ) . A d i s t i n c t i o n i s made between Mathemat ica l Models (a l so c a l l e d Computer Models , System Models) and S i m u l a t i o n Models (or System S i m u l a t i o n Models) by t h e i r conceptua l approach ( M c M i l l a n and Gonzalez , op. c i t . , pp . 1 3 - 1 6 ) . 23 There are s e v e r a l types of models under these two genera l c l a s se s now being a p p l i e d to urban p l a n n i n g , v a r i a -t i o n s depending on the conceptua l framework of the models and t h e i r mathematical f o r m u l a t i o n s . Va r ious types of models may be used i n combinat ion i n a s i n g l e s tudy and, i n f a c t , much depends on the stage of a n a l y s i s and the purpose of the models . S ince the use of s i m u l a t i o n models i n urban p l ann ing i s extremely l i m i t e d and most models are i n exper imenta l form, o n l y mathematical models are d i scussed he re . A mathemat ical model c o n s i s t s e s s e n t i a l l y of a set of v a r i a b l e s expressed i n the form of mathematical equations which may desc r ibe the va r ious r e l a t i o n s h i p s . In the p l a n n i n g p roces s , the most common c l a s s i f i c a t i o n of t he ' v a r i a b l e s a r e : Exogenous V a r i a b l e s are those which are not ^affected by the p l a n , but which can i n f l u e n c e t h e ' p l a n ( e . g . , s o c i a l , demographic, p h y s i c a l and other c h a r a c t e r i s t i c s ) . Some of these v a r i a b l e s may be changed by the p lanner and ; are c a l l e d c o n t r o l l a b l e or p o l i c y in s t rumen t s . O.thers are n o n - c o n t r o l l a b l e . Endogenous V a r i a b l e s are those i n the behaviour of wh ich , p lanners are i n t e r e s t e d . The p lanner proposes to change the c h a r a c t e r i s t i c s of these Sidney S'onenblum and Louis H . S t e r n , "The Use of Economic P r o j e c t i o n s i n P l a n n i n g " , J o u r n a l of the American  I n s t i t u t e of P l a n n e r s , XXX (May, 1964), pp . 110-23. 2 4 v a r i a b l e s . But some of the v a r i a b l e s r e s u l t i n g from the change may not be d e s i r e d . These are " i r r e l e v a n t " . B e h a v i o u r a l and S t r u c t u r a l r e l a t i o n s h i p s desc r ibe the i n t e r a c t i o n s . w i t h i n s o c i e t y and determine the e f f ec t s on endogenous v a r i a b l e s of change I n exogenous v a r i a b l e s and vice 1 v e r s a . The v a r i a b l e s and the parameters compr is ing the mathe-m a t i c a l equations are ass igned v a l u e s , and through computer s o l u t i o n s the consequences of the p l a n may be expressed i n a set of v a r i a b l e s which may a i d the dec i s ion -make r s . Many of the consequences may not be d e s i r a b l e . The p lanner may adjus t the p o l i c y ins t ruments a c c o r d i n g l y and may attempt to b r i n g many more exogenous v a r i a b l e s under c o n t r o l . Non-c o n t r o l l a b l e v a r i a b l e s are the assumptions under which the p l a n i s t e s t e d . Depending upon the v a r i a b l e s i n v o l v e d i n the model, whether they are t r ea t ed as i npu t s or as i t s ou tputs , mathe-15 m a t i c a l models may be d i s t i n g u i s h e d as f o l l o w s : D e s c r i p t i v e Models . The i r purpose i s to reduce the complex i ty of an urban environment by p r e s e n t i n g the r e l e v a n t fea tures of the s t r u c t u r e of the urban environment. They may o f f e r a shor t cut to f i e l d work by genera t ing r e l i a b l e , va lues f o r v a r i a b l e s which are hard to measure. They cannot, however, a s s i s t the p lanner i n choosing among a l t e r n a t i v e s . Lowry, op. c i t . , pp. 159-60. 25 P r e d i c t i v e Models . I n con t r a s t to the d e s c r i p t i v e type , here the e x i s t i n g . r e l a t i o n s h i p s between urban form and process are e s t a b l i s h e d . A\ knoweld-ge.; of the causa l sequence helps the p lanner i n p r e d i c t i n g the fu ture values of the " e f f e c t s " . I n the p r e d i c t i v e type , exogenous v a r i a b l e s are used as i npu t s i n t o the model w h i l e the endogenous v a r i a b l e s are the ou tpu ts . In u s i n g p r e d i c t i v e models, e f f ec t s of the ins t rument v a r i a b l e s have to be s p e c i f i e d . This i s done e i t h e r by separate s t ud i e s or by assuming t h e i r fu tu re behaviour . A l l p o s s i b l e consequences of a planned a c t i o n cannot be p r e d i c t e d . As such, c o n d i t i o n a l p r e d i c t i o n s may be used to a s s i s t i n d e c i d i n g on a l t e r n a t i v e a c t i o n s . This l a t e r type i s a l s o c a l l e d " c o n d i t i o n a l models" i n order to d i s t i n g u i s h them from the u n c o n d i t i o n a l v a r i e t y . P r e d i c t i v e models are w i d e l y used i n p l a n n i n g ana ly se s . P l a n n i n g Models . These are an i n v e r s e of p r e d i c t i v e models . The endogenous v a r i a b l e s become inpu ts w h i l e the exogenous v a r i a b l e s are the ou tpu t s . Th i s i n v o l v e s e v a l u a t i o n of the consequences of s e v e r a l f e a s i b l e a l t e r n a t i v e ac t ions l e a d i n g to the s e l e c t i o n of a s i n g l e course of a c t i o n , based on the p l a n n e r r s g o a l s . P l a n n i n g models, thus , help to t r ace the a l t e r n a t i v e sequence of a c t i o n s , which would op t imize the f i n a l outcome. A complete model f o r a complex urban s t r u c t u r e can be b u i l t up out of in tercommunicat ing sub-models r ep re sen t i ng 26 v a r i o u s elements, e . g . , r e t a i l l o c a t i o n , o f f i c e l o c a t i o n , e t c . E f f e c t s of d e c i s i o n s of the sub-models can he i n t e g r a t e d 16 at another l e v e l hy an appropr i a t e des ign of the model. But the man i fo ld problems of urban land development are yet to f i n d s o l u t i o n through appropr ia te land use models. Presen t l and use models are drawing on the exper ience of t r a n s p o r t a t i o n p l a n n i n g m o d e l s . Land use m o d e l s 1 7 developed so f a r are of the p r e d i c t i v e t ype . They attempt to e s t a b l i s h c a u s a l r e l a t i o n s h i p s i n the development p rocess , u s i n g va r ious concepts of development. Relevance of C o s t - B e n e f i t A n a l y s i s I n the d i s c u s s i o n on models I t was e x p l i c i t t h a t , i t i s d e s i r e d through t h i s approach to understand the complex i ty of urban phenomena, to apprec ia te the causa l r e l a t i o n s h i p s of va r i ous i n t e r a c t i n g forces i n order to p r e d i c t the fu ture va ' l ue ' o f e f f ec t s and to decide on a best set of planned a c t i o n s . Mathemat ica l fo rmula t ions and computer s o l u t i o n s to many complex problems have undoubtedly p rov ided a wider oppor tun i ty f o r a n a l y s i s of the i m p l i c a t i o n s of p l a n n i n g d e c i s i o n s under v a r y i n g assumptions. Improved unders tanding of the consequences of va r i ous assumptions and p o l i c i e s can l ead to a be t t e r assessment of "cos t s " and " b e n e f i t s " . 16 H a r r i s , op. c i t . , p • 93 • 17 Refers to the works of Hansen, Lakshmanan and F r y , Huff and A r t i e (Chapin , J r . , op. c i t . , pp.' 478-8l) . 2 7 I n the f o l l o w i n g s e c t i o n the technique of c o s t - b e n e f i t a n a l y s i s , as i t appears to he t r a d i t i o n a l l y a p p l i e d , i s d i s c u s s e d . The d i s c u s s i o n i s p r i m a r i l y concerned w i t h the a p p l i c a t i o n of t h i s t o o l to the p u b l i c s e c t o r . 3- COST-BENEFIT ANALYSIS C o s t - b e n e f i t a n a l y s i s i m p l i e s economic e v a l u a t i o n . Before t u r n i n g to the genera l p r i n c i p l e s of c o s t - b e n e f i t a n a l y s i s , a d i s c u s s i o n of the fundamental quest ions i n v o l v e d i n economic e v a l u a t i o n i s a u s e f u l p o i n t of depar tu re . Economic E v a l u a t i o n : A p e r s p e c t i v e Two no t ions are i m p l i c i t i n economic e v a l u a t i o n : e f f i c i e n t a l l o c a t i o n of l i m i t e d r e sou rces , and a measure of o b j e c t i v e a n a l y s i s i n making a d e c i s i o n on the a l l o c a t i o n of r e s o u r c e s . Expressed s i m p l y , " e f f i c i e n c y may be regarded as the r e l a t i o n s h i p between the q u a n t i t y of inpu t s and the amount 18 of r e s u l t i n g ou tpu t s" . The l a r g e r the u n i t of output per u n i t of i n p u t , the l a r g e r i s the e f f i c i e n c y . I n the p u b l i c or p r i v a t e s e c t o r , the d e s i r a b i l i t y of making a be t t e r a l l o c a -t i o n between a l t e r n a t i v e resource development p r o j e c t s or o ther uses of money i s beyond any doubt. K n i t i l i a and E c k s t e i n make t h i s s imple p r o p o s i t i o n i n the d i s c u s s i o n of "the concept of Economic E f f i c i e n c y " . They con t inue , i t "may not t e l l much i n a p r a c t i c a l s i t u a t i o n . . . Economic e f f i c i e n c y i s de f ined as a s i t u a t i o n i n which produc-t i v e resources are so a l l o c a t e d among a l t e r n a t i v e uses tha t any r e s h u f f l i n g from the p a t t e r n cannot improve any i n d i v i d u a l ' s p o s i t i o n and s t i l l l eave a l l o ther i n d i v i d u a l s as w e l l o f f as b e f o r e " . (John V . K r u t i l l a and Otto E c k s t e i n , M u l t i p l e Purpose R i v e r Development ( B a l t i m o r e , M d . : John Hopkins P r e s s , 1 9 5 8 ) , pp . 1 5 - l b J . 2 8 But quest ions have been r a i s e d whether i t i s p o s s i b l e to make any economic e v a l u a t i o n i n resource a l l o c a t i o n . The r a t i o n a l e of t h i s ques t i on l i e s i n the f a c t t h a t , i n the f i n a l a n a l y s i s , the o b j e c t i v e of economic e v a l u a t i o n i s . t o maximize human w e l f a r e , which i n v o l v e s va lue judgements. 19 K e l s o ' s model of the dec i s ion-making process I n economic e v a l u a t i o n of a resource development p r o j e c t shows how a d e c i s i o n based e x c l u s i v e l y on economic e f f i c i e n c y i s l i k e l y to be a s e r i o u s l y l i m i t e d v i ew. Economic e v a l u a t i o n or economic a n a l y s i s leads to c o n s i -d e r a t i o n of the forces ope ra t i ng w i t h i n a market mechanism. Goods and s e r v i c e s are s u p p l i e d by p r i v a t e entrepreneurs as w e l l as by the government; but the economy under which these two systems work are of a d i f f e r e n t nature., From an i n d i v i d u a l ' s p o i n t of v i ew , preference i n the a l l o c a t i o n and d i s t r i b u t i o n of h i s income between consumption and sav ing determines the aggregate purchase of consumers' goods and s e r v i c e s . Under these f o r c e s , p r i v a t e entrepreneurs a l l o c a t e t h e i r budget i n the t r ans fo rma t ion of va r i ous resources i n t o f i n a l goods. The p r i c e mechanism b r ings an e q u i l i b r i u m M. M. K e l s o , "Economic A n a l y s i s i n the A l l o c a t i o n of the F e d e r a l Budget to Resource Development", Economics,and  P iubl ic P o l i i c y i n Water Resource Development, Stephen C. Smith and Emery N . C a s t l e , (eds.) (Ames, Iowa: Iowa S ta te U n i v e r s i t y P ress ) , pp . 57-58• 29 20 between the demand for and the supply of goods and s e r v i c e s . I t f o l l o w s tha t p r i v a t e entrepreneurs do no t , under normal c i rcumstances , enter i n t o the p r o d u c t i o n of u n p r o f i t a b l e but o therwise s o c i a l l y d e s i r a b l e goods. Government i n i t i a t i v e i n such cases i s deemed s o c i a l l y wor thwhi l e . The nature of the p u b l i c economy under which the government p a r t i c i p a t e s i n the p r o d u c t i o n , d i s t r i b u t i o n and consumption of goods and s e r v i c e s i s a f f e c t e d by the f o l l o w i n g c o n d i t i o n s : Cond i t ions o f Consumption C o l l e c t i v e goods, ( e . g . Roads) . The p u b l i c economy p rov ides commodities which are not packageable or d i v i s i b l e . I n u s u a l t r a n s a c t i o n s , the p r i c e of a commodity may be f i x e d depending on the s a t i s f a c t i o n de r ived by the consumer and h i s w i l l i n g n e s s to pay. Under these circumstances the aggregate va lue to the consumers g ives the t o t a l s o c i a l worth of the p roduc t . E x t e r n a l economies of consumption. I n many i n s t a n c e s , the consumer of a good or s e r v i c e i s not This i s a s i m p l i f i e d v e r s i o n of the "compet i t ive model" . There are many assumptions, such as consumer's s o v e r e i g n t y , f ree market economy, p e r f e c t market c o n d i t i o n , r a t i o n a l behaviour of the consumers, e t c . For maximum e f f i c i e n c y , t h i s should be achieved i n a l l s ec to r s of the economy. This i s , however, a complex organism ( K r u t i l l a and E c k s t e i n , op. c i t . , Ch. I I , pp . 1 5 - 5 1 ) . . 2 1 Robert Dorfman, ( e d . ) , Measuring B e n e f i t s of Government  Investments (Washington, D . C : The Brookings I n s t i t u t i o n , 1965) , pp . 4 - 6 . 3 0 the so l e "benefic iary and the amount he i s w i l l i n g to pay does n<±t measure the e n t i r e va lue of the good or s e r v i c e to s o c i e t y . I n n e i t h e r case i s the p r o v i d e r of goods or s e r v i c e s able to c o l l e c t charges from the "benef ic ia r ies commensurate w i t h the b e n e f i t s r e c e i v e d . Cond i t i ons of P r o d u c t i o n Economies of s c a l e . Some works can be under-taken economica l ly o n l y on such a l a r g e s c a l e tha t they warrant p u b l i c inves tment . Government monopoly. I t i s d e s i r a b l e tha t c e r t a i n important c o l l e c t i v e goods are p rov ided by the government. Other Cond i t ions The m o t i v a t i o n of p r i v a t e developers i n e x p l o r i n g n a t u r a l resources i s not always s o c i a l l y d e s i r a b l e . For a balanced r e g i o n a l growth, i n c e n t i v e to p r i v a t e development might be g iven through v a r i o u s p u b l i c inves tments . As the above d i s c u s s i o n suggests,most p u b l i c goods and s e r v i c e s cannot be p r i c e d i n terms of t h e i r va lue to the i n d i v i d u a l b e n e f i c i a r y . The market p r i c e does not measure t h e i r t o t a l c o n t r i b u t i o n to s o c i e t y . Measurement of bene f i t s and costs o f such goods and s e r v i c e s v a r i e s w i t h i n a wide range depending on va lue judgements and many other l i m i t a t i o n s . H i s t o r i c a l l y , c o s t - b e n e f i t a n a l y s i s , as a t o o l of economic e v a l u a t i o n , found ex tens ive a p p l i c a t i o n i n p u b l i c resource a l l o c a t i o n . O r i g i n a t i n g as an a d m i n i s t r a t i v e device i n the improvement of n a v i g a t i o n by the Un i t ed Sta tes F e d e r a l Government as e a r l y as 1 9 0 2 , the technique of c o s t -b e n e f i t a n a l y s i s has been r e f i n e d over the years and the agreed genera l p r i n c i p l e s have been c o d i f i e d by the U . S . I n t e r - A g e n c y ° Committee on Water Resources i n i t s r epor t 2 2 p o p u l a r l y known as "Green Book". General P r i n c i p l e s of C o s t - B e n e f i t A n a l y s i s C o s t - B e n e f i t a n a l y s i s p rov ides a framework w i t h i n which the f a c t o r s to be taken i n t o account i n making economic c h o i c e s , can be cons idered comprehensively . For example, when a d e c i s i o n has to be made on which would be most w o r t h -w h i l e from among s e v e r a l a l t e r n a t i v e development p r o j e c t s . I n the s e l e c t i o n of the p r o j e c t , dec is ion-makers n e c e s s a r i l y seek to maximize "something". A survey of the l i t e r a t u r e on c o s t - b e n e f i t a n a l y s i s by P r e s t and Turvey shows tha t the f o r m u l a t i o n u n d e r l y i n g most c o s t - b e n e f i t analyses aims at "maximizing the present va lue of a l l b e n e f i t s l e s s tha t of a l l c o s t s , subjec t to s p e c i f i e d c o n s t r a i n t s " . 2 - ^ McKean r e f e r s 2 2 In te r -Agency R i v e r B a s i n Committee (Sub-Committee on cos t s and Budge t s ) , Proposed p r a c t i c e s fo r Economic A n a l y s i s  of R i v e r B a s i n P r o j e c t s ("The Green Book") ([Washington, D . C . U.S.Government P r i n t i n g O f f i c e , 1 9 5 0 ) . 23 P r e s t and Turvey, op. c i t . , p . 686. 32 to t h i s as the max imiza t ion of. "present wor th" , which i s def ined as "the present va lue of gains minus the present va lue of c o s t s " . The quest ions r e l a t e d to maximizing present wor th and the d i scount r a t e s that might he used to compute the present worth are d i scussed l a t e r i n t h i s chapter as w e l l as 25 the f o l l o w i n g . Quest ions i n v o l v e d i n the d i s c u s s i o n of c o s t - b e n e f i t . . . a n a l y s i s a r e : (a) Which b e n e f i t s and cos ts should be i n c l u d e d or excluded? (b) How should cos ts and b e n e f i t s be valued? (c) What should be the p e r i o d of. economic l i f e and the r a t e of i n t e r e s t ? (d) What are the r e l e v a n t c o n s t r a i n t s ? (e) What should be the exact form of c r i t e r i o n f o r e v a l u a t i o n of a l t e r n a t i v e s ? W i t h i n the scope o f the present d i s c u s s i o n , wi thout being i n v o l v e d i n many d ive rgen t •v iews on fundamental concepts , an attempt i s made to understand the e s s e n t i a l concepts of "cos t s" _ I _ , ' R . W. McKean, E f f i c i e n c y i n Government Through Systems_  A n a l y s i s (New Y o r k : John W i l e y and Sons, 1959)? p . 7 6 . 25 Such groupings of i s sues and the proposed order of d i s -c u s s i o n are a r b i t a r y . In f a c t , many authors have . fo l l owed d i f f e r e n t approaches i n the treatment of the i s sues i n v o l v e d i n c o s t - b e n e f i t a n a l y s i s . See, for example, P r e s t and Turvey, op. c i t . , pp . 686 -705; W . R . D . S e w e l l et a l . , Guide to B e n e f i t -Cost A n a l y s i s , Resources fo r Tomorrow '(Ottawa: Queen's P r i n t e r , 1 9 6 5 ) , pp» : 3 - 2 2 ; Otto E c k s t e i n , "Bene f i t -Cos t A n a l y s i s and R e g i o n a l Development", Reg iona l Economic P l a n n i n g , Wal te r I sa rd and John H. Cumberland, (eds . ) ( P a r i s : O r g a n i z a t i o n f o r European Economic C o - o p e r a t i o n , 1961); p . 360; and McKean, op. c i t . , pp . 7 5 - 7 8 . 33 and " b e n e f i t s " and problems i n v o l v e d i n the a p p l i c a t i o n of t h i s t o o l . Ca tegor ies of "Cos ts" and " B e n e f i t s " The va lue ca t egor i e s "cos t s " and " b e n e f i t s " may mean d i f f e r e n t t h i n g s . t o d i f f e r e n t peop le . Also depending on the l e v e l of d e c i s i o n - m a k i n g , concepts of cos ts and bene f i t s •may d i f f e r . I n order to d i s t i n g u i s h between e x t e r n a l and 26 i n t e r n a l e f f e c t s , Kuhn suggests tha t the area of concern of .the dec is ion-makers or ana lys t s must be d i s t i n g u i s h e d . W i t h l t h i s i n v i ew, Kuhn def ines the va r ious a c t i v i t i e s commensurate w i t h v a r i o u s l e v e l s of dec i s ion -mak ing a u t h o r i t y i n p u b l i c e n t e r p r i s e as f o l l o w s : P r o j e c t s : Smal l e s t t e c h n i c a l u n i t which can f u l f i l ] d e s i r e d p r o d u c t i o n or s e r v i c e o b j e c t i v e s . For example, a complete highway connec t ion , a complete b r idge w i t h i t s approaches, a complete subway i n s t a l l a t i o n , a complete a i r f i e l d runway; but not p a r t i a l p r o j e c t c o n s t r u c t i o n , such as g rad ing , b r idge abutment b u i l d i n g , t unne l e x c a v a t i o n , or runway drainage work. Programme or Technology: A number of p r o j e c t s i n t e r r e l a t e d by t e c h n i c a l , f u n c t i o n a l , and economic f a c t o r s . For example, a highway network, aasuhway system, or a system of a i r p o r t s and airways planned over a p e r i o d of t ime i n a g iven a rea . A c t i v i t y : P r o j e c t s and programmes seen w i t h i n a broad f u n c t i o n a l and t e c h n o l o g i c a l con t ex t . For 26 T i l l o E . Kuhn, P u b l i c E n t e r p r i s e Economics and  Transpor t Problems ( B e r k e l e y : U n i v e r s i t y of C a l i f o r n i a P r e s s , 1962) , pp . 8-9-34 example, the conduct of the t r a n s p o r t a t i o n f u n c t i o n as a whole: or the performance of c i t y p l a n n i n g , m u n i c i p a l s e r v i c e s , communications, energy supply or water resource a c t i v i t i e s ' * Economy: A l l a c t i v i t i e s w i t h i n the j u r i s d i c t i o n a l boundary l i n e s , u s u a l l y at the n a t i o n a l l e v e l . The concept can be shrunk (a m e t r o p o l i t a n r e g i o n can be s tud i ed as a " l i t t l e economy" i n i t s own r i g h t ) , or expanded (economic un ions , common markets , wor ld e c o n o m y ) . 7 The ca tegor i e s "cos t s " and " b e n e f i t s " , i n t h e i r broadest i m p l i c a t i o n s , i n c l u d e d i r e c t and i n d i r e c t , t a n g i b l e and 28 i n t a n g i b l e , . a n d other e f f ec t s which are def ined below: B e n e f i t s B e n e f i t s are the " p o s i t i v e " aspects of a c t i o n . These are v a r i o u s l y c a l l e d revenues, ga ins , rewards, ou tpu ts , ends, proceeds and incomes i n v o l v e d i n the development and o p e r a t i o n of a p r o j e c t or programme. P r i m a r y or d i r e c t b e n e f i t s are those b e n e f i t s which accrue to those people who make use of the goods and s e r v i c e s p rov ided by the p r o j e c t (or programme). " T h e o r e t i c a l l y , the r e a l va lue of these d i r e c t or i n d i r e c t b e n e f i t s i s the maximum 29 amount of money which the consumers are w i l l i n g to p a y . " 27 I b i d . , p . 10 28 ' D e f i n i t i o n of these terms . . is adopted from Sewe l l et a l . , op. c i t . , pp . 5 - 8 ; a l so §©e Kuhn, op. c i t . , pp . 7 - 8 , 30-31? and P r e s t and Turvey, op. c i t . , pp . 6 8 7 - 9 0 . 29 Sewe l l et a l . , op. c i t . , p . 5* 35 There i s , however, a l i m i t beyond which the next best a l t e r n a t i v e w i l l be sought . Secondary or i n d i r e c t .Benefits are the b e n e f i t s acc ru ing ou t s ide the p r o j e c t . Taking the case of a new highway, d i r e c t or p r imary b e n e f i t s are the sav ing i n time and t r a n s -p o r t a t i o n c o s t , and convenience. But improved t r a n s p o r t a t i o n may generate more t r a f f i c and may a l s o inc rease l and va lues i n the newly a c c e s s i b l e a reas . These are c a l l e d "stemming" secondary b e n e f i t s . E x t r a p ro f i t s .made by the t r u c k i n g companies.•. are c a l l e d " induced" secondary b e n e f i t s . I n computing secondary b e n e f i t s , care must be taken to assure tha t they r e a l l y c o n t r i b u t e to an inc rease i n net income of the community, and are not s imp ly a t r a n s f e r of p r o d u c t i o n from one p l ace to the o the r . I n t a n g i b l e b e n e f i t s may be d i r e c t as w e l l as i n d i r e c t . Goods or s e r v i c e s under t h i s category are not u s u a l l y marke tab le . They may, however, be measured by a s s i g n i n g some v a l u e . A d i s t i n c t i o n i s made between " i n t a n g i b l e s " tha t can be ass igned a monetary v a l u e , but the p r i c e of which i s not f i x e d through market mechanisms, and "non-measurable" which cannot be q u a n t i f i e d i n monetary terms. Costs P r i m a r y or d i r e c t c o s t s . I n con t r a s t to b e n e f i t s , cos ts are the "nega t ive" aspects of a c t i o n . Costs i n v o l v e a l l e f f o r t s , s a c r i f i c e s , i n p u t s , l o s se s and outgoes i n the produc-t i o n and o p e r a t i o n of a p r o j e c t or programme. I t i n c l u d e s 36 not o n l y a l l of the immediate monetary expendi tu res , hut a l s o a l l fu tu re p r o v i s i o n f o r economic l o s s e s , i n t e r e s t , p romot iona l expenses, e t c . A s s o c i a t e d cos ts are those costs which must be i n c u r r e d i n order to r e a l i z e the f u l l va lue of b e n e f i t s expected from the p r o j e c t or programme. These costs may be shown e i t h e r as a s u b t r a c t i o n from pr imary b e n e f i t s or as. an a d d i t i o n to p r imary c o s t s . I n the former case , i f the a s soc i a t ed cos ts i n v o l v e d i n a p r o j e c t are i n c u r r e d by d i f f e r e n t agencies , they can be shown s e p a r a t e l y . Secondary or i n d i r e c t cos ts are those i n c u r r e d i n the p r o d u c t i o n of secondary b e n e f i t s . For example, i n the case of the improved t r a n s p o r t a t i o n f a c i l i t i e s c i t e d above, to r e a l i z e the inc reased va lue of l a n d , f u r t he r expendi tures might have to be i n c u r r e d . Such cos ts are secondary cos t s of the p r o j e c t . I n t a n g i b l e cos ts are those values which are not marketable . Adverse e f f ec t s r e s u l t i n g from the r e l cc a t i o n o f c e r t a i n f a c i l i t i e s may be an example. Q u a n t i f i c a t i o n and assignment of va lue i n such cases may depend much on s u b j e c t i v e c r i t e r i a , or-when not measurable may be s t a t ed i n q u a l i t a t i v e terms. H i s t o r i c a l or sunk c o s t s . These i n v o l v e cos ts i n c u r r e d p r i o r to the i n t r o d u c t i o n of the g iven p r o j e c t . Such ,costs-or b e n e f i t s f l o w i n g from any p rev ious investments are u s u a l l y excluded from c o s t - b e n e f i t a n a l y s i s . 3? J o i n t c o s t s . C e r t a i n cos ts i n v o l v e d are not separable and share s e v e r a l purposes . These costs 'should be recognized and d i s t i n g u i s h e d from the separable cos ts fo r the purpose of a n a l y s i s . I n c o n c l u s i o n , f o r meaningful comparison of cos ts and b e n e f i t s f l o w i n g from a p r o j e c t or programme, the data should be m u t u a l l y comparable. P a r t i c u l a r l y , the i n t a n g i b l e cos ts and b e n e f i t s must be reduced to comparable v a l u e s . I t may, however, be mentioned tha t the above d i v i s i o n s between d i f f e r e n t va lue ca tegor ies are not always p r e c i s e . C l a s s i f i c a t i o n i n t o p r imary and secondary e f f ec t s i s a matter of choice." S i m i l a r l y , m a r k e t a b i l i t y and non-market-a b i l i t y of goods and s e r v i c e s i s a matter of degree. N e v e r t h e l e s s , i t he lps the ana ly s t to m a r s h a l l a l l the r e l e v a n t f a c t s i n a sys temat ic f a s h i o n , checking aga ins t any omis s ion of important f a c t o r s or doub l e - coun t ing . V a l u a t i o n of Costs and B e n e f i t s For comparison of costs and b e n e f i t s , a l l i npu t s and outputs should be expressed i n monetary terms to the grea tes t p o s s i b l e extent determined through the market mechanism. P r i c e s of inpu t s and outputs are l i k e l y to change over the years and necessary adjustments need to be made to a l l o w f o r the a n t i c i p a t e d changes i n r e l a t i v e p r i c e s . Some assumptions a re , however, necessary about the genera l p r i c e l e v e l . The e s s e n t i a l p r i n c i p l e i s tha t both b e n e f i t s and costs must be 3$ evalua ted at the same p r i c e l e v e l . U s u a l l y the p r i c e l e v e l p r e v a i l i n g i n the i n i t i a l year i s used to evalua te 30 a l t e r n a t i v e p roposa l s and t h i s should f a i r l y represent average c o n d i t i o n s . I f , however, any p o t e n t i a l change i n i n d i v i d u a l p r i c e s might s i g n i f i c a n t l y a l t e r the r e l a t i o n s h i p between the value of b e n e f i t s and costs computed on the present p r i c e l e v e l , these changes should be taken i n t o account . I n such cases p r o j e c t e d p r i c e l e v e l s should be used i n the a n a l y s i s . Non-marginal Change When the investment i n a p r o j e c t i s l a r g e enough, the market p r i c e at which p r imary b e n e f i t s and costs are evaluated may be a f f e c t e d . Th i s may a l so be due to changes i n p r o d u c t i o n func t ions r e s u l t i n g from changes i n t e c h n o l o g i c a l orirother c o n d i t i o n s . Under such c o n d i t i o n s , marg ina l change i n output and i t s v a l u a t i o n e i t h e r at new or o l d p r i c e s does not r e f l e c t the t rue va lue of b e n e f i t s . S i m i l a r l y , on the cos t s i d e , change i n f a c t o r p r i c e s and i n p u t s , might reduce the va lue o f the ou tpu t s . I n the a n a l y s i s , due to these non-m a r g i n a l changes, adjustment i n p r i c e l e v e l s may be necessary, . . T h i s , o f course , depends on the demand f u n c t i o n and the r o l e 31 of the p r o j e c t i n the system. P r e s t and Turvey, op. c i t . , pp. 6 9 0 - 9 1 . " I b i d . , p . 691 39 Market Imperfect ions Under m o n o p o l i s t i c c o n d i t i o n s , supp ly may not r e f l e c t c o r r e c t demand and v a l u a t i o n of costs and "benefits at the market p r i c e would not he a p p r o p r i a t e . These imper fec -t i o n s should be c o r r e c t e d . U s u a l l y a c t u a l l e v e l s of cos ts and corresponding b e n e f i t s are worked out to make the necessary account ing adjustments. Employment Under f u l l employment c o n d i t i o n s the market p r i c e or wage l e v e l approximates the " r e a l " cost of l a b o u r . But i t i s l i k e l y tha t the economy may not be f u l l y employed at a l l t imes . Under p a r t i a l employment c o n d i t i o n s , market va lues of d i r e c t cos ts and b e n e f i t s of a p r o j e c t ove r s t a t e the s o c i a l cos ts and underest imate the b e n e f i t s . B e n e f i t - c o s t c a l c u l a t i o n s have to take these f a c t o r s i n t o account , p a r t i c u l a r l y i n view of the employment e f f ec t s of a g iven p r o j e c t . I n the s o c i a l i n t e r e s t the a l l o c a t i o n of funds to l abour i n t e n s i v e p r o j e c t s may be a c r i t i c a l i s s u e f o r the dec i s i on -make r s . I n t a n g i b l e s As d i s t i n g u i s h e d e a r l i e r , i n t a n g i b l e e f f ec t s may be of two t y p e s : some-cannot be q u a n t i f i e d , and o the r s , a l though they can be q u a n t i f i e d , cannot be p r i c e d through the market I b i d . , pp. 6 9 ^ - 9 5 ; a n d Sewe l l et a l . , op. c i t . , pp . 1 9 - 2 0 . 4o mechanism.. The i d e n t i f i c a t i o n and q u a n t i f i c a t i o n of i n t a n g i b l e s i n v o l v e va lue judgements. U n l i k e the t a n g i b l e s , gains and cos ts r e s u l t i n g from i n t a n g i b l e e f f ec t s cannot be expressed i n the same u n i t . I n 33 such cases , McKean - ^ suggests the cost stream o n l y be d i scounted and the n o n - q u a n t i f i a b l e and non-measurable bene f i t s be expressed i n v e r b a l s ta tements . The weight to be g iven to the v a r i o u s i n t a n g i b l e e f f ec t s w i l l then be l e f t to the judgement of the dec i s ion -make r s . Choice of I n t e r e s t Rate and P e r i o d of Economic L i f e Economic L i f e of. a Project-^ The cho ice of an economic l i f e fo r a p r o j e c t i s h i g h l y s u b j e c t i v e and depends on the time preference of the present gene ra t i on . I t i s the p e r i o d over which cos ts of the p r o j e c t w i l l be spread and b e n e f i t s o f the p r o j e c t w i l l be eva lua ted . The economic l i f e of d i f f e r e n t types of p r o j e c t s w i l l d i f f e r depending on t.he p h y s i c a l f a c i l i t i e s i n v o l v e d , t e c h n o l o g i c a l changes, s h i f t s i n demand, e t c . The h ighe r the r a t e of d i scoun t the l e s s w i l l be the p e r i o d of the economic l i f e over whihh mia&t of the cumulat ive j)rgs.eht_value__Q.f b e n e f i t s w i l l be r e a l i z e d . The f i g u r e on the f o l l o w i n g page., ( F i g . 2, page 4 l ) i l l u s t r a t e s how the l e n g t h of the economic l i f e i s s i g n i f i c a n t l y a f f ec t ed by the assumed r a t e of d i s c o u n t . McKean, op. c i t . , pp . 98-99* P r e s t and Turvey, op. c i t . , p . 690. hi u 0) >> to o u -P Q) oj ft f-i O .p o to • © H U 0) ^•p <M ft o to p* <D O U -H 3 U -p ej •H > x) £ +> © ai ft W 0) M 3 H •d ctJ to •P © © a n o o © ft Y e a r a t w h i c h p r e s e n t v a l u e e q u a l s 90# o f m a x i m u m u l t i m a t e w o r t h 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 0 1 0 0 N u m b e r o f Y e a r s S e w e l l , W . R . D . , D a v i s , J o h n , S c o t t , A . D . a n d R o s s , R . W , , ' G u i d e t o B e n e f i t - C o s t A n a l y s i s , R e s o u r c e s f o F T F o m o r ' r o w , T o T T E a w a C a n a d a : Q u e e n ' s P r i n t e r , 1 9 6 5 ) , p . 1 7 . F I G U R E 2 . C U M U L A T I V E P R E S E N T V A L U E OF B E N E F I T S AND C O S T S AT DIFFERENT RATES. OF COMPOUND INTEREST 4 2 I n c o s t - b e n e f i t a n a l y s i s , a c t u a l streams of va lues expected over the assumed economic l i f e are es t imated and then d i scoun ted at "appropr ia te r a t e s " . I n f a c t , v a r i o u s values ' can be worked out and t e s t ed fo r va r i ous d i scoun t r a t e s . Adopt ion of appropr ia te d i scounts and the time h o r i z o n over which cos ts and bene f i t s are es t imated i s a c r i t i c a l i s s u e i n e v a l u a t i n g cos ts and b e n e f i t s . Choice o f I n t e r e s t and Discount Rates Costs and b e n e f i t s occur over t ime , more of ten i n an uneven p a t t e r n . W i t h i n the assumed economic l i f e of a p r o j e c t or a programme, cos ts and b e n e f i t s accrue at d i f f -erent p e r i o d s . Changes i n the l e v e l of outputs and t h e i r demand, t e c h n o l o g i c a l changes, e t c . , a l so b r i n g changes i n t h e ' p r i c e l e v e l over t i m e . Streams of cos ts and b e n e f i t s o c c u r r i n g through time thus may have d i f f e r e n t s i g n i f i c a n t v a l u e s . I n order to b r i n g them to some comparable b a s i s , the fu ture streams are d i scounted to t h e i r present v a l u e s . The choice of d i scoun t r a t e s depends on many f a c t o r s , such as the type and s i z e of the p r o j e c t , investment c o s t s , na ture of ou tputs , r i s k s i n v o l v e d , v i ewpo in t of the agency 35 under t ak ing i t , t ime p re fe rence , e t c . E c k s t e i n observed t h a t , i n the e v a l u a t i o n of p u b l i c p r o j e c t s , the choice of a •-^Otto E c k s t e i n , Water Resource Development (Cambridge, M a s s . : Harvard U n i v e r s i t y P r e s s , 1958), p . 94. 4 3 d i scoun t r a t e " i n v o l v e s s o c i a l va lue judgements about b e n e f i t s acc ru ing to d i f f e r e n t generat ions and the o v e r a l l o b j e c t i v e s " . I n s i t u a t i o n s where there are no budget c o n s t r a i n t s , or the outputs of new investments are marketable , the market r a t e of i n t e r e s t could be used fo r d i s c o u n t i n g . I n -the p u b l i c s e c t o r , the market-determined i n t e r e s t r a t e cou ld h a r d l y be used f o r d i s c o u n t i n g . When a p u b l i c agency borrows money, the d i scoun t sa te should be "the y i e l d tha t cou ld be earned i n next best o p p o r t u n i t i e s open to the 36 i n v e s t o r " . I f the funds are drawn by t a x a t i o n , the i n c i d e n c e of the t axes , the a l l o c a t i o n of s o c i e t y ' s cur ren t resources between investment and consumption and i t s impact on the whole economy have to be taken i n t o account . From an a n a l y s i s of these f a c t o r s , some r a t e of r e t u r n earned on the p u b l i c investment i n a p r o j e c t might be obta ined which cou ld 37 be used f o r d i s c o u n t i n g both cos ts and b e n e f i t s . 3 6 McKean, op. c i t . , pp . 7 6 - 7 8 , 9 8 - 9 9 - P r e s t and Turvey, however, p o i n t out that because of d i f f e r e n t i n t e r e s t t h e o r i e s and imper fec t ions i n the c a p i t a l market , there are arguments whether market r a t e s of i n t e r e s t do bear any c lo se r e l a t i o n s h i p to the marg ina l p r o d u c t i v i t y of investment and time p re fe r ence" (P re s t and Turvey, op. c i t . , p . 6 9 7 ) -3 7 McKean, op. c i t . , pp . 8 2 , 9 8 - 9 9 - Whi le d i s c u s s i n g "the o p p o r t u n i t y cost of c a p i t a l " , E S k s t e i n attempts to es t imate "the r a t e tha t would be an appropr i a t e measure of the s o c i a l cos t o f f e d e r a l c a p i t a l " ( E c k s t e i n , op. c i t . , P P - 9 7 - 9 9 ) -Treatment of R i s k and U n c e r t a i n t y I n the a n a l y s i s o f fu tu re bene f i t s and c o s t s , al lowances f o r r i s k s and u n c e r t a i n t y have to be made. Greater r i s k i s i n v o l v e d i n p r i v a t e investments than tha t i n government bonds and s e c u r i t i e s . As such, the d i scoun t on fu ture b e n e f i t s and costs of p r i v a t e investments should be g r ea t e r . Some r i s k s can be p r e d i c t e d w i t h some degree of confidence and adjustment f o r such r i s k s could be based on "an o b j e c t i v e es t imate of the p r o b a b i l i t y of t h e i r occurance" . Some are not p r e d i c t a b l e . However, a l lowances fo r these cou ld be made i n the assessment of b e n e f i t s and c o s t s , by the o O assumptions about the economic l i f e and by the d i scoun t r a t e . 3 9 Relevant C o n s t r a i n t s P r e s t and Turvey sum up the va r ious c o n s t r a i n t s involved ' ' i n c o s t - b e n e f i t a n a l y s i s : p h y s i c a l c o n s t r a i n t s , l e g a l c o n s t r a i n t s , a d m i n i s t r a t i v e c o n s t r a i n t s , d i s t r i b u t i o n a l con-s t r a i n t s and budgetary c o n s t r a i n t s . P h y s i c a l c o n s t r a i n t s may be the l o c a t i o n a l advantages and o ther p h y s i c a l i npu t s and outputs of a p r o j e c t , which might impose l i m i t a t i o n s on the choice among d i f f e r e n t p r o j e c t s . L e g a l c o n s t r a i n t s may be va r ious enactments and a d m i n i s t r a t i v e 3 8 , S e w e l l et a l . , op. c i t . , p . l o , P r e s t and Turvey, op . c i t . , pp . 6 9 9 . 3 9 P r e s t and Turvey, op. c i t . , pp . 7 0 0 - 0 2 ; E c k s t e i n , op . c i t . , pp . 6 9 - 7 0 * 45 c o n s t r a i n t s may "be r i g h t s , du t i e s and p r o c e d u r a l aspects of p u b l i c and p r i v a t e agenc ies . V a r i o u s p u b l i c under takings a f f e c t income d i s t r i b u t i o n w i t h i n the e n t i r e economy. T h i s , i n f a c t , r e f l e c t s the s o c i a l and p o l i t i c a l o b j e c t i v e s . Thus, equ i t y c o n s i d e r a t i o n s r a t h e r than economic e f f i c i e n c y may be the so le c r i t e r i a i n the f i n a l d e c i s i o n . Budget c o n s t r a i n t s may be i n the form of the a l l o c a t i o n of c a p i t a l expendi tures to j f f e c t the f i s c a l p o l i c y , or i t may be the t o t a l c a p i t a l a v a i l a b l e over a s p e c i f i e d p e r i o d . Form of C r i t e r i o n f o r E v a l u a t i o n of A l t e r n a t i v e s When b e n e f i t s and cos ts can be expressed i n money terms, they may be reduced to t h e i r present va lue fo r comparison. This data may be organized i n s e v e r a l forms which 40 can serve as c r i t e r i a f o r the choice of p r o j e c t s : Comparison of net b e n e f i t s ; Comparison of the r a t e s of r e t u r n on inves tments ; Comparison of the b e n e f i t - c o s t r a t i o s . For s i m p l i f i c a t i o n , i t i s assumed tha t the p r o j e c t s are m u t u a l l y e x c l u s i v e and tha t no c o n s t r a i n t s are operative.^ In the comparison of net b e n e f i t s , surpluses of bene f i t s over cos ts of s e v e r a l p r o j e c t s may be compared to f i n d the " Sewe l l et a l . , op. c i t . , pp . 12-13. These concepts are best exp la ined through mathematical fo rmula t ions by E c k s t e i n ( E c k s t e i n , " T e c h n i c a l Notes" , op. c i t . , pp . 50-79)' h6\ p r o j e c t which w i l l produce grea tes t net b e n e f i t s . T h i s , however, does not take i n t o account the abso lu te va lue o f the p r o j e c t s . Th i s c r i t e r i o n i s s u i t a b l e on ly when the nature of the p r o j e c t s and the s c a l e of development are s i m i l a r . I n the comparison of the r a t e s of r e t u r n on inves tments , the r e l a t i v e mer i t s of p r o j e c t s may be compared by working out the r a t i o of net annual r e t u r n to the c a p i t a l i n v e s t e d . This i s u s e f u l f o r comparing c a p i t a l i n t e n s i v e p r o j e c t s . The b e n e f i t - c o s t r a t i o i s the most important c r i t e r i o n i n comparing a l t e r n a t i v e s and i n r ank ing them. O b v i o u s l y , the p r o j e c t s hav ing r a t i o s l a r g e r than u n i t y are l i k e l y to be s e l e c t e d . Th i s g ives a measure of r e l a t i v e r a the r than abso lu te m e r i t . I t s r e l i a b i l i t y depends on the uni form e x p r e s s i o n of costs and b e n e f i t s . The adopt ion o f a c r i t e r i o n , however, depends on the type o f p r o j e c t . The use of d i f f e r e n t c r i t e r i o n w i l l markedly d i f f e r the rankings of p r o j e c t s and would l e a d to d i f f e r e n t r e s u l t s . Thus the choice of a c r i t e r i o n i n de te rmin ing the r e l a t i v e economic worth of a p r o j e c t i n v o l v e s the v i ewpo in t of the agency concerned. L i m i t a t i o n s of C o s t - B e n e f i t A n a l y s i s The p reced ing d i s c u s s i o n was d i r e c t e d at f i n d i n g answers to the major ques t ions i n v o l v e d i n the a p p l i c a t i o n of c o s t -bene f i t a n a l y s i s . The u l t i m a t e e f f e c t i v e n e s s of c o s t - b e n e f i t k7 a n a l y s i s l i e s on the a b i l i t y to t r a n s l a t e cos ts and bene f i t s i n t o monetary va lues f o r purposes of comparison. A l l t r a n s a c t i o n s a re , of course , e s t imates , subjec t to i n a c c u r a c i e s due to f l u c t u a t i o n s i n the va lue of money i t s e l f . A fu r the r l i m i t a t i o n to t h i s a n a l y t i c a l technique i s the d i f f i c u l t y i n t r a n s l a t i n g many i n t a n g i b l e and non-market f a c t o r s , such as environmental q u a l i t y and s o c i a l v a l u e s , i n monetary terms. The problem of va lue judgement and the i n t e r r e l a t e d e f f ec t s of ^anious p r o j e c t s a l s o l i m i t the u t i l i t y of c o s t - b e n e f i t a n a l y s i s . I n c l u s i o n or e x c l u s i o n of b e n e f i t s and c o s t s , t h e i r i n c i d e n c e , and the assignment of va lues to many i n t a n g i b l e e f f ec t s w i l l va ry w i d e l y i n d i f f e r e n t p o l i t i c a l , s o c i a l and economic c o n t e x t s . Developmental e f f ec t s of v a r i o u s p r o j e c t s are so i n t e r r e l a t e d t r M t more s o p h i s t i c a t e d a n a l y t i c a l t o o l s are r e q u i r e d to i n t e r p r e t the i n t r i c a t e r e l a t i o n s h i p s . Because of the margin of e r r o r , c o s t - b e n e f i t a n a l y s i s can best he a p p l i e d as a measure of r e l a t i v e r a the r than abso lu te mer i t of p r o j e c t s or programmes. The u l t i m a t e economic o b j e c t i v e i s to maximize net b e n e f i t s . The b e n e f i t - c o s t r a t i o may be a p p l i e d as a c r i t e r i o n to rank the p r o j e c t s or programm-es and to s e l e c t the most economic one. I n the e v a l u a t i o n of p r o j e c t s , i f there i s a l i m i t e d purpose and i f the e f f ec t s of the p r o j e c t s are cons idered m u t u a l l y e x c l u s i v e , c o s t -b e n e f i t a n a l y s i s w i l l serve as an e x c e l l e n t guide to d e c i s i o n -making. Iff h. SUMMARY This chapter has attempted to rev iew the genera l p r i n c i p l e s of c o s t - b e n e f i t a n a l y s i s , as i t appears to be t r a d i t i o n a l l y a p p l i e d , i n a broad p e r s p e c t i v e of va r ious me thodo log ica l techniques of p l a n e v a l u a t i o n . The process of p l a n e v a l u a t i o n i n v o l v e s a choice among s e v e r a l a l t e r n a -t i v e s by t r a c i n g a l l the e f f ec t s of a p a r t i c u l a r course of a c t i o n . The r e l a t i v e mer i t of a l t e r n a t i v e s could be eva lua ted to the extent the goals and o b j e c t i v e s are e x p l i c i t and c l e a r l y s t a t e d . But i t must be acknowledged tha t the va r ious i n t e r -r e l a t e d phenomena o f the urban system can h a r d l y be t r e a t ed as an aggregate of i s o l a t e d and independent elements . The a n a l y t i c a l approach p rov ides a deepened unders tanding of the urban phenomena. E s s e n t i a l l y , c o s t - b e n e f i t a n a l y s i s i s a device to a i d the dec is ion-makers i n s e l e c t i n g the d e s i r e d course of a c t i o n from among s e v e r a l a l t e r n a t i v e s . Desp i te the l i m i t a t i o n s of t h i s t o o l , c o s t - b e n e f i t a n a l y s i s does p rov ide a l o g i c a l framework f o r the e v a l u a t i o n of a l t e r n a t i v e courses of a c t i o n . Recogn iz ing both the l i m i t a t i o n s and the usefu lness of c o s t - b e n e f i t a n a l y s i s i n the p u b l i c sec to r of m e t r o p o l i t a n a reas , Benjamin C h i n i t z and Char les M. Tiebout observe: - 49 I n s p i t e of these somewhat p e s s i m i s t i c r e s u l t s , , we d e f i n i t e l y do not conclude that c o s t - b e n e f i t a n a l y s i s i s of no v a l u e . F o r , i f one were to suggest t h i s , the next ques t ion would be, what do you suggest as a s u b s t i t u t e ? In so f a r as c o s t - b e n e f i t a n a l y s i s i s merely another way •of l o o k i n g at o r d i n a r y marg ina l a n a l y s i s , there i s no a l t e r n a t i v e .^ "1 A cons ide rab le i n t e r e s t i n the s tudy of the r o l e o f c o s t - b e n e f i t a n a l y s i s i n the p u b l i c economy of urban 42 communities has been shown by economists . The p r imary reason i s t h a t , as the above authors suggest , i t i s of cu r ren t p r a c t i c a l i n t e r e s t , as there are p o l i c y i s sues 43 i n v o l v e d . 41 . . Benjamin C h i n i t z and Char les M. T iebou t , "The Role of C o s t - B e n e f i t A n a l y s i s i n the P u b l i c Sector of M e t r o p o l i t a n A r e a s " , The P u b l i c Economy of Urban Communities, J u l i u s Margol (ed.) (Washington, D . C . : Resources of the F u t u r e , I n c . , 1965) P- 259-42 See fo r example, I b i d . ; Howard G. Scha l l e r . , ( e d . ) , P u b l i c Expendi tu re D e c i s i o n s i n the Urban Economy ( B a l t i m o r e , M d . : John Hopkins P r e s s , 1963)• 43 J C h i n i t z and T iebou t , op. c i t . , p . 251. 50 CHAPTER I I I APPLICATION OF COST-BENEFIT ANALYSIS TO URBAN PLANNING: A BIBLIOGRAPHIC REVIEW Stud ies of the a p p l i c a t i o n of c o s t - b e n e f i t a n a l y s i s as a t o o l f o r the e v a l u a t i o n of urban p lans are l i m i t e d and i n an e x p l o r a t o r y s tage . I n f a c t , most s tud ies i n t h i s f i e l d are concerned' w i t h i t s a p p l i c a t i o n to urban renewal programmes. Th i s chapter w i l l be concerned p r i m a r i l y w i t h a review, of the s tud ie s under taken.by N a t h a n i e l L i c h f i e l d , Jerome Rothenberg and James C. T. Mao. They have been s e l e c t e d because the conceptual framework f o r c o s t - b e n e f i t a n a l y s i s developed by these authors i s broad enough to cons ider the va r ious e f f ec t s of urban p l a n n i n g . They have a l so i l l u s t r a t e d the use of t h e i r framework by a number of examples. The p r i n c i p a l authors reviewed i n t h i s t h e s i s present, t h e i r i n t e r p r e t a t i o n of urban problems as a p o i n t of depar ture , and w i t h t h i s p e r s p e c t i v e e s t a b l i s h the genera l o b j e c t i v e s of t h e i r a n a l y s i s . The t h e o r e t i c a l f o r m u l a t i o n of t h e i r methodologies i s then d i scussed and i t s p r a c t i c a b i l i t y i s examined by case s t u d i e s . I t i s , t h e r e f o r e , l o g i c a l to review the l i t e r a t u r e i n the same sequence. 51 1 . AUTHOR'S .APPROACH TO URBAN PROBLEMS AND GENERAL OBJECTIVES N a t h a n i e l L i c h f i e l d L ich f i e ld" ' " i s concerned w i t h a l l p a r t i e s p r i v a t e and p u b l i c , i n v o l v e d i n the process of urban development and shows how a l l the cos ts and bene f i t s to a l l . a f f e c t e d p a r t i e s can be recorded i n a "balance sheet of development".. While seeking the e f f i c i e n t use of c a p i t a l , L i c h f i e l d a l so shows h i s concern w i t h the max imiza t ion of the o v e r a l l i n t e r e s t of the community over time and the inc idence , of costs and 2 b e n e f i t s . Accord ing to L i c h f i e l d , Ihe key to the e v a l u a t i o n of 3 p l a n s . ' i s the "welfare t e s t " . The. p l a n i s fo r the community, and as such, a l l and not a l i m i t e d range of costs and bene f i t s should be cons idered i n the a n a l y s i s . This i n v o l v e s not on ly the t a n g i b l e . d i r e c t cos ts and b e n e f i t s , but a l so the i n t a n g i b l e rCpercuss iohs- . No s i n g l e p l ann ing p roposa l i s thus regarded-i n i s o l a t i o n , but as a p a r t of a co -o rd ina t ed p l a n of deve lop-ment, whether the development i s a p u b l i c or p r i v a t e sec tor p r o j e c t . N a t h a n i e l L i c h f i e l d , Economics of Planned Development (London: The Es t a t e Gazette L i m i t e d , 1 9 5 6 - 6 6 ) , pp . 1 - 5 2 . 2 L i c h f i e l d , "The E v a l u a t i o n of C a p i t a l Investment P r o j e c t s i n Town Centre Redevelopment", P u b l i c A d m i n i s t r a t i o n , XXXXV-(Summer, 1 9 6 7 ) , p. 1 4 4 . 3 L i c h f i e l d , " C o s t - B e n e f i t A n a l y s i s i n C i t y P l a n n i n g " , op. c i t . , pp . 2 7 3 - 7 4 . 52 The v iewpoin t of the decis ion-makers i s s i g n i f i c a n t i n a s ses s ing the inc idence- of costs and bene f i t s as w e l l as t h e i r d i s t r i b u t i o n among va r ious sec to r s of the community. L i c h f i e l d emphasizes the d i s t i n c t i o n between p r i v a t e and s o c i a l c o s t s . "The p r i v a t e sec to r no rma l ly takes account. of cos ts which i t must bear and b e n e f i t s i t can appropr ia te under cur ren t law and custom, but not o f the d i f f u s e d costs su f fe red by others which i t need not compensate nor of b e n e f i t s enjoyed by others f o r which i t cannot exact 4 • payment." S i m i l a r l y , i n the p u b l i c s e c t o r , p u b l i c agencies "seek to take account of costs and b e n e f i t s f a l l i n g on the p u b l i c at l a r g e " and attempt to "reduce the divergence between p r i v a t e and s o c i a l c o s t s " through p l a n n i n g . '• .Jerome Rothenberg 6 Rothenberg attempts to set f o r t h ? a conceptual frame-work f o r making c o s t - b e n e f i t a n a l y s i s of a s i n g l e urban redevelopment p r o j e c t compr is ing a component of an o v e r a l l f e d e r a l urban renewal programme under the Urban Renewal A d m i n i s t r a t i o n of the Un i t ed S t a t e s . L i k e L i c h f i e l d , a l though i n t e r p r e t e d i n a d i f f e r e n t way, Rothenberg i s concerned w i t h both t o t a l income and d i s t r i b u t i o n of income e f f ec t s among This i s a d e f i n i t i o n of p r i v a t e and s o c i a l cos ts used by A . C. P i g o u , T ibo r S c i t o v s k y , and K . W. Kapp ( i b i d . , p . 2 7 4 ) . I b i d . L i c h f i e l d , however, p o i n t s out tha t some p u b l i c agencies act as though they were p r i v a t e agenc ies . 6 Jerome.Rothenberg, Economic E v a l u a t i o n of Urban Renewal (Washington, D . C : The Brookings I n s t i t u t i o n , 1967) . 53 • v a r i o u s a f f ec t ed socio-economic groups. His d i s c u s s i o n on the l i s t i n g of the a f f ec t ed persons of a redevelopmeriient p r o j e c t and the d i s t i n c t i o n s among them i s very e labora te and e x p l i c i t : • We propose to aggregate toge the r , as a s i n g l e group, a l l i n d i v i d u a l s who are s i m i l a r l y a f fec ted by each type of consequence o f a g iven p o l i c y . Moreover , f o r each of these groups a sub-grouping may be performed i n terms of a few s tereotype c h a r a c t e r i s t i c s most perceived, i n l o c a l p o l i t i c a l d e c i s i o n - m a k i n g : f o r example ' f \rich versus poor , . c e n t r a l c i t y dwe l l e r s versus suburban i tes , m i n o r i t y groups versus m a j o r i t y g roups .7 I t f o l l o w s t h a t , i n the a p p l i c a t i o n of c o s t - b e n e f i t a n a l y s i s , the c r i t e r i o n used should r e f l e c t " t h e 1 t r u e ' value of s o c i a l we l fa re change". Rothenberg p r i m a r i l y seeks the "maximiza t ion of we l fa re among a r e l e v a n t p o p u l a t i o n " and not "maximiza t ion of p rope r ty values w i t h i n a c e r t a i n 8 a rea" . Choice o f the r e l e v a n t p o p u l a t i o n i s one of the c r u c i a l i s s u e s , s ince on i t depends the c o n s i d e r a t i o n of the d i s t r i b u t i o n of cos ts and bene f i t s of an urban renewal programme. Rothenberg r e l a t e s t h i s i s s u e to the source of f i n a n c i n g of such programmes, and the l e v e l of the d e c i s i o n -makers . 7 Rothenberg, "Urban Renewal Programmes",Robert Dorfman, ( e d . ) , op. c i t . , p . 295* 8 . ' . I b i d . James C. T. Mao 9 Mao presents h i s conceptual framework fo r c o s t -h e n e f i t a n a l y s i s i n measuring the e f f i c i e n c y of p u b l i c expendi tures for urban renewal . Without going i n t o e i t h e r the causes of the format ion of slums or the. e l a b o r a t i o n of p l a n n i n g f u n c t i o n s , Mao deals w i t h the questions.:, how to maximize the e f f i c i e n c y of p u b l i c expendi tures . . in urban renewal , and how to determine the amount of such expendi tures and t h e i r compos i t i on . He demonstrates h i s t h e o r e t i c a l framework through a case study of the Eas t S tock ton , C a l i f o r n i a , Urban Renewal P r o j e c t . R e f e r r i n g to the heavy burden of slums and b l i g h t , Mao def ines the nature and purpose of urban renewal programmes and the expected s o c i a l and economic b e n e f i t s of such programmes. Slum f o r m a t i o n , Mao observes , can be c h a r a c t e r -i z e d as .the " m i s a l l o c a t i o n of l and r e s o u r c e s " . L i c h f i e l d a t t r i b u t e s such obsolescence of the environment to-c o n f l i c t i n g i n t e n t i o n s of p u b l i c and p r i v a t e inves tment . I n L i c h f i e l d ' s s tudy, "the r epe rcuss ions of urban renewal were t r aced i n r e l a t i o n to va r ious a f f ec t ed p a r t i e s , such as consumers and p roducer s" , whereas Mao attempted to t r ace "the r epe rcuss ions d i r e c t l y i n r e l a t i o n to the bas i c o b j e c t i v e of urban r e n e w a l " . " ^ ^James C. T. Mao, " E f f i c i e n c y i n P u b l i c Urban Renewal Expendi tures Through B e n e f i t - C o s t A n a l y s i s , " Journa l of the  American I n s t i t u t e of P l a n n e r s , XXXII (March, 1 9 6 6 ) , . p p . 95-107.. " ^ I b i d . , p . 106. 2 . GENERAL METHOD OF ANALYSIS N a t h a n i e l L i c h f i e l d L i c h f i e l d developed a methodology fo r c o s t - b e n e f i t a n a l y s i s through a number of case studies."'""1" I n a l l these s t u d i e s , a l t e r n a t i v e l and use p lans are developed s u f f i c i e n t l y to def ine the a l l o c a t i o n of land; , fo r v a r i o u s uses . The e s s e n t i a l fea ture of L i c h f i e l d ' s method of a n a l y s i s i s based on the concept tha t a p l a n can be cons idered as a group of proposed, i n t e r r e l a t e d l and use changes. These changes cou ld be.viewed as a s e r i e s of p r o j e c t s to be implemented by p u b l i c and p r i v a t e agencies e i t h e r s i n g l y s r i n combina t ion . I n other words, L i c h f i e l d v i s u a l i z e s a p l a n 12 as a "programme of p r o j e c t s " . I t i s probable tha t d i f f e r e n t p r o j e c t s might be s t a r t e d at d i f f e r e n t times and tha t the f u l l outcome would be r e a l i z e d over d i f f e r e n t time p e r i o d s . See fo r example, L i c h f i e l d , " S p a t i a l E x t e r n a l i t i e s i n Urban P u b l i c Expe nd i t u r e s : A Oas.e Study, " J u l i u s M a r g o l i s , ( e d . ) , op . c i t . , pp . 207 - 50 ; -J 'Cos t -Benef i t A n a l y s i s i n Town P l a n n i n g , ,\A Case Study - Swanley' j" , op. c i t . , pp . 2 1 5 - 4 9 . A l s o , R e a l E s t a t e Research Programme, I n s t i t u t e of Business and Economic Research, U n i v e r s i t y of C a l i f o r n i a , B e r k e l e y , U . S . A . had undertaken a number of urban redevelopmentuistudies under the d i r e c t i o n of L i c h f i e l d , which were concerned w i t h the a p p l i c a t i o n of the c o s t - b e n e f i t technique developed by h im. 12 I b i d . , p . 2 1 9 . These f a c t o r s are not i n i t i a l l y cons idered i n the a n a l y s i s . The purpose i s not to ignore the i m p l i c a t i o n of the time d imension , but to s i m p l i f y the procedure at second s tage . They are g iven due c o n s i d e r a t i o n i n d i s c o u n t i n g the fu ture b e n e f i t s . A f t e r each p r o j e c t i s i d e n t i f i e d , the sec to rs i . e . the v a r i o u s "producers-1."1 and "opera tors" (who c o n t r i b u t e to the p r o d u c t i o n of s e r v i c e s r e a l i z e d from the p r o j e c t s ) and the "consumers" (who consume the products) are enumerated and arranged,, i n the form of Table 1 (Appendix A) . There i s a consumer corresponding to each producer and/or opera tor and " t r a n s a c t i o n s " occur between them. Cost to one Is a b e n e f i t to the o t h e r . The p r imary concern i n the a n a l y s i s i s 'to s y s t e m a t i c a l l y r eco rd a l l the cos ts and bene f i t s to a l l a f f ec t ed p a r t i e s i n a set of accounts and draw up a "balance 13 sheet o f development". The conceptual t a b l e i l l u s t r a t e s the "balance sheet o f development" (Table 2 , Appendix A ) . Care i s taken that no e f f e c t s , of concern to the community, however i n t a n g i b l e they may be, are omi t t ed . Thus, t h e i r i d e n t i f i c a t i o n , i n c i d e n c e , and when p o s s i b l e , t h e i r magnitude g ivey a p r e c i s e p i c t u r e of the proposed p l a n w i t h i n the c o s t - b e n e f i t framework. L i c h f i e l d , Economics of Planned Development, op. c i t . , pp . 4 - 8 and c h . 1 9 . 1 4 , Adopted from M o r r i s H i l l ( H i l l , op. c i t . , p . 2 1 . ) . 5 7 Costs and B e n e f i t s As mentioned e a r l i e r , each t r a n s a c t i o n r e s u l t s i n hoth cos ts and b e n e f i t s to producers and consumers. "The costs are the va lue o f the goods and s e r v i c e s used to produce and operate a p r o j e c t (the i n p u t s ) , and b e n e f i t s are the ^ 1 5 value o f the s e r v i c e s p rov ided (the o u t p u t s ) . " " L i c h f i e l d c l a s s i f i e s cos ts and b e n e f i t s i n t o three k i n d s : D i r e c t or i n d i r e c t , or p r i v a t e or s o c i a l i n the conven t iona l t e rmino logy . P r i v a t e r e l a t e s to cos ts which the producer or consumer must bear and to b e n e f i t s they can appropr ia te under cur ren t law and custom. S o c i a l r e l a t e s to the d i f f u s e d cos ts suf fe red by others whi.ch need not be compensated and b e n e f i t s enjoyed by others f o r which payment can not be exac ted . R e a l or t r a n s f e r . Rea l r e l a t e s to the nse of r e a l (economic) resources, ' , tha t i s l a n d , men and m a t e r i a l s ; whereas t r a n s f e r r e l a t e s to f i n a n c i a l resources which' are s imply t r a n s f e r r e d from one s e c t i o n of the community to another as a r e s u l t of t r a n s a c t i o n , wi thout u s ing up or adding to r e a l r e sou rces . The purchase o f l and i s an example. Rea l ( t e c h n o l o g i c a l ) or p e c u n i a r y . These r e l a t e i n the main to changes i n the va lue of e s t a b l i s h e d as opposed to new goods" and s e r v i c e s , brought about by e x t e r n a l changes. Rea l cos ts and benefi ts ' -a r i s e where there are changes i n a c t u a l q u a l i t y ( the o c c u p a t i o n a l atmosphere of an o f f i c e b u i l d i n g when .a new park i s crea ted near b y ) . Pecun ia ry changes i n va lue a r i s e s imply because of r e l a t i v e changes i n the supply or demand of goods and s e r v i c e s (value o f e s t a b l i s h e d houses when new up- to -da te houses are b u i l t ) . 1 6 1 5 L i c h f i e l d , " C o s t - B e n e f i t A n a l y s i s i n Town P l a n n i n g , A Case Study - Swanley", op. c i t . , p . 220. 16 I b i d . , pp . 220-21. 5-8 Because of the nature of costs and benefi ts . , the p a r t i e s . i n v o l v e d i n each t r a n s a c t i o n may not be c l e a r l y i d e n t i f i e d . For example, the cost of p u b l i c s e r v i c e s are met from tax revenues. But a l l those who pay-may not be b e n e f i c i a r i e s . V a l u a t i o n of Costs and B e n e f i t s When costs and b e n e f i t s are not measurable i n monetary terms, but are measurable i n other u n i t s , e . g . t ime , p h y s i c a l u n i t , e t c . , they are i n d i c a t e d s y m b o l i c a l l y . A d d i t i o n a l l y , . a v e r b a l statement s p e c i f i e s t h e i r o b j e c t i v e . The e v a l u a t i o n of the net balance expressed i n terms of f i g u r e s and symbols i s l e f t to the s u b j e c t i v e judgement of the dec i s ion -maker s . D i s c o u n t i n g Future B e n e f i t s and Costs For ease, of a n a l y s i s , ih€ the case study of Swanley, L i c h f i e l d i n i t i a l l y ignores the time p e r i o d r e q u i r e d fo r i m p l e -menta t ion of the p r o j e c t s . T o t a l c a p i t a l o u t l a y i s f i r s t es t imated wi thout d i s c o u n t i n g , and i s then t r a n s l a t e d i n t o a stream of annual cos ts at the "borrowing r a t e " f o r the p u b l i c 17 sec to r and at the " r i s k r a t e " fo r the p r i v a t e s e c t o r . ' The 17 1 • L i c h f i e l d adds (as a f o o t n o t e ) : . "The annual cost i n the p u b l i c sec to r i s taken at the annual annui ty to repay the l o a n ( i n t e r e s t p l u s redemption) over s i x t y years at s i x per cen t . The 8-g- percent i n the p r i v a t e sec tor a l lows a p r o f i t and a m o r t i z a t i o n element over the borrowing element ( I b i d . , p . 249). I n another case s t u d y , . f o r the annual cost i n the p u b l i c s e c t o r , •* L i c h f i e l d cons idered a p e r i o d of e igh ty years fo r l and and s i x t y years fo r c o n s t r u c t i o n , over which to repay the l o a n ( L i c h f i e l d , " S p a t i a l E x t e r n a l i t i e s i n Urban P u b l i c Exp en d i t u r e s : A Case Study" , op. c i t . , p . 223). revenues i n the p r i v a t e sec to r are based on the "rate of r e t u r n " , i . e . , the es t imated "net r e n t a l v a l u e s " . . I n the p u b l i c s e c t o r , where there are not market v a l u e s , the r a t e of r e t u r n i s taken t o . e q u a l the borrowing r a t e fo r c o s t s . From these annual cos ts and revenues, net annual gains or l o s s fo r each p r o j e c t are c a l c u l a t e d f o r comparison. L i c h f i e l d p o i n t s out tha t t h e o r e t i c a l i s sues a r i s e i n the s e l e c t i o n o f each i n t e r e s t rate. | but these are not d i s c u s s e d . Cost and revenue streams are then d iscounted back to t h e i r present worth at the average "rate of r e t u r n " f o r each 18 scheme. I t i s assumed t h a t . c o s t s f a l l at the beginning 1 9 and revenues at the end of each stage of implementa t ion . A f i n a l statement showing d iscounted annual cos ts and revenues p rov ides a bas i s fo r e v a l u a t i o n . The Choice of C r i t e r i a L i c h f i e l d ' s "balance sheet" p rov ides a statement of the reduced' s o c i a l accounts of a l t e r n a t i v e p roposa l s fo r a p r o j e c t . I f the statement i s not s u f f i c i e n t l y c o n c l u s i v e , i t can be a bas i s f o r va lue judgements. The record of accounts i n the balance sheet suggests tha t i t i s e s s e n t i a l l y the d i f f e r e n c e s i n a l l cos ts and b e n e f i t s tha t would accrue to each p a r t y tha t are sought . The revenue and cost streams are _ The d i s c o u n t i n g r a t e i n t h i s case i s presumably based on the expected r a t e of r e t u r n from s i m i l a r inves tments . 1 9 The scheme i s assumed to be implemented i n four stages cove r ing a p e r i o d of s i x t e e n y e a r s . 60 d iscounted back to va lues at a p a r t i c u l a r p o i n t of t ime, wh ich , i n the f i n a l s tatement, appear as va lues corresponding to the p a r t i e s i n v o l v e d . . The c r i t e r i o n "needs to be c a r e f u l l y s e l ec t ed accord ing to the c i rcumstances to i n d i c a t e 20 the course which shows the best va lue fo r money". The d i f f e r e n c e i n the d iscounted bene f i t s and cos ts i n the study of Swanley thus p rov ides a ba s i s fo r comparison. 21 In the study of a Cambridge, England , redevelopment p r o p o s a l , L i c h f i e l d attempts to evalua te the a l t e r n a t i v e p lans i n terms of the d i scounted r a t e o f r e t u r n on o u t l a y . In another study 22 i n S a n - F r a n c i s c o , L i c h f i e l d t r aces the d i f f e r e n c e i n cos ts and b e n e f i t s a cc ru ing to the community at l a r g e from the a l t e r n a t i v e courses o f a c t i o n . Jerome Rothenberg In p r e s e n t i n g h i s c o s t - b e n e f i t approach to urban renewal, 23 Rothenberg f i r s t s p e c i f i e s the a l t e r n a t i v e p o l i c i e s to be examined, and one of them i s "the s ta tus quo p o l i c y " . The consequences of 'other a l t e r n a t i v e s are compared w i t h those 20 L i c h f i e l d , " C o s t - B e n e f i t A n a l y s i s i n P l a n E v a l u a t i o n " , The Town P l a n n i n g Review, XXXV, No. 2 ( J u l y , 1964), p . 163. 21 L i c h f i e l d , " S p a t i a l E x t e r n a l i t i e s i n Urban P u b l i c E x p e n d i t u r e s : A Case Study" , op. c i t . , pp . 223-25. 22 L i c h f i e l d , " C o s t - B e n e f i t A n a l y s i s i n P l a n E v a l u a t i o n " , op. c i t . , p . 166. 23 Rothenberg, l o c . c i t . , p . 294. 62 of the s ta tus quo p o l i c y . Where p o s s i b l e , the changes are expressed i n monetary terms, and the i n t a n g i b l e s and non-measurable ones 'a re s p e c i f i e d i n "the form of d e s c r i p t i v e s ta tements . I t i s assumed that the a l t e r n a t i v e s are aimed at known g o a l s . Rothenberg argues tha t the r e l e v a n t a n a l y s i s must compare three a l t e r n a t i v e s as s t a t ed below: 1. The s ta tus quo p o l i c y of a l l o w i n g land-use to be determined by p r i v a t e market d e c i s i o n s , subjec t to the va r ious present governmental r e g u l a t i o n s and enforcement, i n c l u d i n g tax and c r e d i t p o l i c y . 2 . Redevelopment p r o j e c t s , designed to supersede market d e c i s i o n s i n the way desc r ibed above. 2 4 3 . A composite of a m e l i o r a t i v e p u b l i c ac t ions other than redevelopment, to "improve" on p r i v a t e performance i n those respec t s where p r i v a t e performance i s s u b o p t i m a l . 2 5 The t h i r d a l t e r n a t i v e as s t a ted above r e f e r s to "a p a r t i c u l a r package of p o l i c y measures designed to perform many of the same k inds o f f u n c t i o n s " as the second a l t e r n a t i v e . Rothenberg d i d not attempt to s e l e c t any set of p o l i c y measures, but suggests tha t there may be many p o s s i b l e sub-s t i t u t e packages. Such a l t e r n a t i v e s are d i s t i n g u i s h e d from "redevelopment" (second a l t e r n a t i v e ) by the nature of the p u b l i c p a r t i c i p a t i o n i n the at tainment of d e s i r e d g o a l s . For I b i d . Refers to the genera l o b j e c t i v e s of urban renewal which i n v o l v e s both t o t a l income and d i s t r i b u t i o n a l consequences. 2 ^ I b i d . , pp. 2 9 4 - 9 5 . 62 example, r i g i d enforcement of h e a l t h and b u i l d i n g codes, p r o v i s i o n of mortgage c r e d i t f o r d w e l l i n g s i n b l i g h t e d areas , reform of p rope r ty tax assessment, spot r e h a b i l i t a t i o n , e t c . , may be cons idered to combat slums. Costs and B e n e f i t s Rothenberg d i scusses three types of bene f i t s from urban redevelopment p r o j e c t s : i n t e r n a l i z a t i o n of market e x t e r n a l -i t i e s ; d i f f e r e n t i a l r e a l income e f f e c t s ; and sav ing i n s o c i a l cos t s of slum l i v i n g . Other aggregate b e n e f i t s , such as a e s t h e t i c s , are omit ted s ince they are " h i g h l y d i f f u s e 26 and not s u s c e p t i b l e to d e t a i l e d measurement". By i n t e r n a l i z a t i o n of e x t e r n a l i t i e s , Rothenberg means the improved p r o d u c t i v i t y of the l and w i t h i n the ne ighbour-hood, where p r e v i o u s l y , the l a c k of c o - o r d i n a t i o n among p r o p e r t y owners r e s u l t e d . i n inadequate maintenance of the p r o p e r t i e s , and the o v e r a l l s i t u a t i o n i n terms of "the q u a l i t y of hous ing s e r v i c e s " was " subop t ima l" . Redevelopment e f f ec t s l a n d va lues w i t h i n the development s i t e and t h i s leads to s p i l l o v e r gains to the ne ighbour ing l a n d . Rothenberg fu r the r suggests tha t changes i n l and va lue w i t h i n the redevelopment s i t e may a l so r e s u l t from change i n " r e l a t i v e l o c a t i o n a l e f f e c t " . To i s o l a t e the l a t e r e f f e c t , Rothenberg conven ien t ly assumes tha t "the sum of l o c a t i o n a l e f f ec t s i n the m e t r o p o l i t a n 26 Rothenberg, Economic E v a l u a t i o n of Urban Renewal, op. c i t . , pp . 116-20. 2 7 area i s z e r o " . ' This assumption has , however, "been 63 / e r , he  2 8 s e r i o u s l y , quest ioned by P r e s t and Turvey. The second e f f e c t i s the d i s t r i b u t i o n of r e a l income among the tenants and owners of the p r o p e r t i e s w i t h i n the redevelopment s i t e as a r e s u l t of changes i n the number and l o c a t i o n of housing u n i t s and commercial and i n d u s t r i a l p r o p e r t y . Such d i s t r i b u t i o n a l e f f e c t s depend on l o c a t i o n , income l e v e l , owner-tenant s t a t u s , and f u n c t i o n a l c l a s s i f i c a -2 9 t i o n of p r o p e r t i e s . The e l i m i n a t i o n o f r slums i s l i k e l y to produce some b e n e f i t s , s ince the ex i s t ence of slums has been a l l e g e d to generate se r ious e x t e r n a l diseconomies and s o c i a l e v i l s . However, quot ing va r ious sources on t h i s aspect , Rothenberg main ta ins tha t these types of b e n e f i t s and costs from redevelopment depend much on the r e loca t ee s and the r e l o c a t i o n 3 0 . programmes. V a l u a t i o n of Costs and B e n e f i t s Leaving as ide the ques t ion of t ax c o m p l i c a t i o n s , Rothenberg suggests that s i t e b e n e f i t s can be measured by the i n c r e a s e i n the t o t a l l and p r i c e i n the redevelopment s i t e co r r ec t ed fo r other i n f l u e n c e s on land p r i c e . This i s I b i d . , p . 1 2 4 . 2 8 P r e s t and Turvey, op. c i t . , p . 7 1 9 • 2 9 Rothenberg, l o c . c i t . , pp . 1 2 0 - 2 2 . 30 I b i d . , pp . 5 4 - 5 5 , 1 2 5 - 2 7 . 64 3 1 expressed i n the f o l l o w i n g equat ion assuming tha t a l l other i n f l u e n c e s on l and p r i c e are unchanged. • P S E = P S + P S where P^ - the t o t a l l and p r i c e change i n the redevelopment s i t e , P „ = the l and p r i c e change i n the redevelopment s i t e due to i n t e r n a l i z a t i o n of e x t e r n a l i t i e s , and Po - the t o t a l l and p r i c e change elsewhere i n the m e t r o p o l i t a n area (assumed due on ly to changes i n l o c a t i o n a l advantages) . I t i s f u r t h e r assumed tha t an important p a r t of l and p r i c e v a r i a t i o n s can he exp la ined by per c a p i t a income and pppu la -32 t i o n changes: Y N P = a 4 - b- Y + b 2 N where ^ P = l and p r i c e exp la ined by ' Y ' and ' N ' Y = per c a p i t a income N = p o p u l a t i o n a, b^ _ and b 2 are ' p a r ame te r s ' . From a time s e r i e s data of l and p r i c e , aggregate income and p o p u l a t i o n of .the redevelopment a rea , parameters of the above equat ionssare worked ou t . Us ing t h i s e s t ima t ing equa t ion , p r e - p r o j e c t and p o s t - p r o j e c t l and values are ca l^u -3 1 I b i d . , pp. 1 2 8 , 1 7 7 - 7 8 . 3 2 I b i d . , p . 1 7 9 . l a t e d fo r comparison. S p i l l o v e r e f f ec t s at s e l e c t e d areas can be s i m i l a r l y t r e a t e d . I n the numer ica l example c i t e d , Rothenberg presents the procedure w i t h many s i m p l i f y i n g assumptions. J Where income r e d i s t r i b u t i o n i s i n v o l v e d , Rothenberg suggests the source, of the r e d i s t r i b u t i o n and the groups o f i n d i v i d u a l s a f fec ted be i d e n t i f i e d . The aggregate money va lue o f the consequences of a programme prov ides a f i n a n c i a l assessment. Such aggregat ion can a l so be fo l lowed 34 f o r non-monetary e f f e c t s . Four d i s t i n c t i v e types of s o c i a l b e n e f i t s may r e s u l t from urban renewal : decreased f i r e hazards , decreased i l l n e s s , decreased c r ime, and decreased damage to p e r s o n a l i t y development. For methods of q u a n t i f i c a t i o n of these b e n e f i t s , Rothenberg c i t e s a number of s tud ies and p o i n t s out the problems i n v o l v e d i n the q u a n t i f i c a t i o n of the s o c i a l costs 3 5' of s lums. 3 3 I b i d . , p p . I 8 I - 8 7 . 34 • • " The problem i s to determine the types of aggregat ion acceptab le to s o c i e t y . Rothenberg attempts to i d e n t i f y the a f f ec t ed groups through an a n a l y s i s of va r ious k inds ;of consequences ( I b i d . , pp . 20 -22) . Some i d e n t i f i e d f u n c t i o n a l groups a r e : low-income f a m i l i e s and high-income f a m i l i e s ; s m a l l neighbourhood commercial e n t e r p r i s e s and l a r g e cha in e n t e r p r i s e s . Larger impact groups may be subdiv ided i n t o some of the s te reotype groups: p o o r - r i c h , whi te -nonwhi te , c e n t r a l c i t y d w e l l e r s - s u b u r b a n i t e s , w o r k e r s - e x e c u t i v e s , e t c . ( I b i d . , p . 22 ) . 3 ^ I b i d . , Ch. X . 66 D i s c o u n t i n g Future B e n e f i t s The b e n e f i t s d e a l t w i t h i n Rothenberg 's genera l model d i scussed above a re : the stream of t a n g i b l e e f f ec t s of the improved p r o d u c t i v i t y of l and o c c u r r i n g at a s i n g l e point- i n t i me ; and the change i n stream of s o c i a l cos ts of slum l i v i n g . In both cases , Rothenberg suggests tha t the r e l evan t ' market i n t e r e s t would be appropr i a t e f o r dis count ing a l l . fu ture b e n e f i t s . He argues that t h i s would r e f l e c t the t rue s o c i a l o p p o r t u n i t y cos t and s o c i a l time preference i n v o l v e d i n resource use . Even though.redevelopment i s f inanced by s e v e r a l l e v e l s of'' government, Rothenberg main ta ins tha t the market r a t e would be a c lose approximat ion of the s o c i a l o p p o r t u n i t y "cost of resources p rov ided by each l e v e l . • •56 The Choice of C r i t e r i a ^ The c r i t e r i a f o r e v a l u a t i n g a l t e r n a t i v e p o l i c i e s are e x p l i c i t i n the f o r m u l a t i o n of the a n a l y t i c a l t echn ique . The consequences of va r i ous a l t e r n a t i v e p roposa l s are expressed as d i f f e r e n c e s from the base a l t e r n a t i v e . These r e f l e c t "the p o s i t i v e and nega t ive changes i n w e l l - b e i n g of everyone who i s at a l l a f f ec t ed by each p o l i c y a l t e r n a t i v e 1 1 and p rov ide a b a s i s f o r r a t i o n a l d e c i s i o n . Thus Rothenberg attempts to maximize t o t a l wel fa re among a " r e l evan t p o p u l a t i o n " through an assessment of the " r e l a t i v e I b i d ' . , pp . 19-31 ' 67 d e s i r a b i l i t y " of the " r e l a t i v e urgency" of the renewal programme. Since the choice of the r e l e v a n t p o p u l a t i o n i s r e l a t e d to the l e v e l of d e c i s i o n - m a k i n g , the e v a l u a t i o n of a programme i s based on the same p e r s p e c t i v e . James C. T. Mao I n d e v i s i n g a method f o r a p p r a i s i n g the e f f i c i e n c y of p u b l i c renewal expend i tu res , Mao f i r s t attempts to i d e n t i f y and measure the cos ts and bene f i t s of a renewal programme. The measurable costs and b e n e f i t s are expressed i n monetary terms and then d iscounted to t h e i r present va lue (to a base year) f o r comparison. Costs and B e n e f i t s Keeping i n view the o b j e c t i v e s of p u b l i c expendi tures i n an urban renewal p r o j e c t , Mao d i scusses the b e n e f i t s under 37 three head ings : (a) b e t t e r a l l o c a t i o n of resources , , (b) s o c i a l i m p l i c a t i o n of slum c l ea r ance , and (c) improvement i n l o c a l f i n a n c e s . S i m i l a r l y , Mao cons iders two groups of costs of urban renewal - (a) s o c i a l costs of renewal which i n c l u d e s " d i s r u p t i v e i n f l u e n c e of r e l o c a t i o n on the p re - renewal r e s i -dents" borne by the community as a whole or an i n d i v i d u a l , and (b) monetary cos ts . - Table 3, (Appendix A) l i s t s i tems of cos ts and b e n e f i t s of urban renewal as d i scussed by Mao. The i tems i n the t a b l e , he p o i n t s ou t , are n e i t h e r exhaust ive Mao, op. c i t . , pp . 96-97-68 nor d e f i n i t i v e , but sugges t i ve . Depending on the nature of a p r o j e c t and the consequences, the items might v a r y . For example, Mao suggests tha t "improvements i n housing w e l f a r e " be shown as a benef i t , b u t . " i f i n a p a r t i c u l a r p r o j e c t , r e l o c a t i o n a c t u a l l y r e s u l t e d i n a d e t e r i o r a t i o n i n the housing wel fa re of those r e l o c a t e d , then we would have a o o nega t ive b e n e f i t , which i s . e q u i v a l e n t to a c o s t " . The improved a l l o c a t i o n of land may r e s u l t i n an inc rease i n p r o p e r t y va lues w i t h i n the renewal a rea . I t i s , however, not u n l i k e l y tha t the a l l o c a t i o n of a s u b s t a n t i a l p o r t i o n of the area f o r p a r k s , s c h o o l s , e t c . w i l l reduce the tax base. Depending on the new uses and the sca l e of the p r o j e c t s , the e f f e c t of redevelopment may extend beyond the p r o j e c t a rea . Three problems a r i s e i n the c o n s i d e r a t i o n of the i nc rea se i n p rope r ty va lue r e s u l t i n g from redevelopment: "the d e l i m i t a t i o n of the neighbourhood area , the s e l e c t i o n of an appropr ia te time p e r i o d f o r de te rmin ing the f u l l Impact of renewal , and the removal , from the observed .changes i n p r o p e r t y v a l u e , of any e f f ec t which i s extraneous to urban 39 r enewa l " . Mao suggests tha t d e l i m i t a t i o n of the ne ighbour-hood must n e c e s s a r i l y be a r b i t r a r y . In the study of Eas t S t o c k t o n . , C a l i f o r n i a , pro j e c t , he def ined the neighbourhood I b i d . , p . 9 7 -I b i d . , p . 1 0 1 . 69 area by the e x i s t i n g thoroughfares on a l l s i d e s , which he c a l l s , a r t i f i c i a l b a r r i e r s . I n the same study Mao i l l u s t r a t e s ho w e l l the other two problems mentioned above• B e n e f i t s from improved environmenta l q u a l i t y and c u l t u r a l va lues i n v o l v e s sub jec t ive . judgement . Many of the s o c i a l b e n e f i t s , f o r example, s a t i s f a c t i o n de r ived from be t t e r hous ing and a be t t e r environment 'depend much on the s o c i a l and economic s ta tus of the res iden t s , w i t h i n the redevelopment area'. These are i n t a n g i b l e b e n e f i t s . B u t , "to the extent tha t renewal .does reduce the costs o f p r o v i d i n g s e r v i c e s , hi t h i s r e d u c t i o n c o n s t i t u t e s a t a n g i b l e s o c i a l b e n e f i t " . V a l u a t i o n of Costs and B e n e f i t s • I n the measurement of inc reased p r o p e r t y va lue r e s u l t i n g from redevelopment, one of the i s s u e s . c i t e d e a r l i e r i s to cons ide r the Increase i n va lue 'which i s a t t r i b u t a b l e to the e f f e c t s o f redevelopment. . ..The inc reased monetary va lue a l so has to be adjusted fo r any change i n money v a l u e . I n the Eas t S tock ton s tudy, Mao observed tha t the ne ighbour ing proper ty , va lue (to the west of. the p r o j e c t ) had inc reased by about t w e n t y - f i v e per cen t , compared w i t h about e igh t per cent fo r p r o p e r t i e s i n S tock ton g e n e r a l l y . 'A net i nc rease o f seventeen per cent thus r e f l e c t e d the combined e f f e c t r e s u l t i n g from improved neighbourhood c o n d i t i o n s and a c o n s i -derable i n f l u x of r e l o c a t e e s i n t o t h i s a rea . Cons ide r ing _ I b i d . , pp . 101-02. hi I b i d . , pp . 102. 7 0 the net i nc rease i n p r o p e r t y va lue w i t h i n the r e s t of the d e l i m i t e d neighbourhood, an average inc rease of ten per • 4 2 cent was a t t r i b u t e d to the impact of redevelopment. • I n e s t i m a t i n g savings i n the cost of f i r e p r o t e c t i o n , a number of s i m p l i f y i n g assumptions were made. For example, the sav ing i n f i r e p r o t e c t i o n was computed from the a n t i c i -pated r e d u c t i o n i n f i r e c a l l s a f t e r redevelopment, assuming tha t the cost of f i r e p r o t e c t i o n was c o r r e l a t e d to the number of f i r e c a l l s . Mao, however, p o i n t s out tha t t h i s assumption i s v a l i d o n l y i f the average cost of f i r e p r o t e c -4 3 t i o n remains•cons tan t . ^ S i m i l a r l y , he worked out the savings i n h e a l t h p r o t e c t i o n and p o l i c e p r o t e c t i o n a f t e r the environmenta l c o n d i t i o n s improved. The methodology fo l l owed i n the l a t e r cases was not e l a b o r a t e d . I n the treatment of i n t a n g i b l e s , Mao adopted a s imple p rocedure . A l l t a n g i b l e costs were f i r s t d iscounted to t h e i r p resent va lue at the s o c i a l cost of c a p i t a l . Assuming the marg ina l e f f i c i e n c y to be the same as the s o c i a l cost of c a p i t a l , a l l t a n g i b l e b e n e f i t s were a l so d iscounted at the same r a t e . " I f t o t a l t a n g i b l e cost exceeds t o t a l t a n g i b l e benefits- , the d i f f e r e n c e i s the value which s o c i e t y must a s s i g n to the i n t a n g i b l e s i n order fo r the p r o j e c t to break even. I f t o t a l t a n g i b l e b ene f i t exceeds t o t a l t a n g i b l e cos t , D i d . , pp . 1 0 2 - 0 3 -4 3 I b i d . , pp . IO3-O7. 71 then the p r o j e c t ' s marg ina l e f f i c i e n c y i s h igher than the s o c i a l cost of c a p i t a l , even i f s o c i e t y ass igns a net va lue 4 4 of zero to the i n t a n g i b l e s . " Thus the dec is ion-maker i n d i r e c t l y ass igns monetary va lue on a ' s u b j e c t i v e b a s i s . "Since there i s ' no o b j e c t i v e bas i s of e v a l u a t i n g i n t a n g i b l e s " , Mao observes , "there can be no independent es t imate of the 4 5 marg ina l e f f i c i e n c y of a p a r t i c u l a r p r o j e c t " . D i s c o u n t i n g Future B e n e f i t s and Costs The streams of costs are d iscounted at the s o c i a l cost of c a p i t a l . For e f f i c i e n t a l l o c a t i o n of expendi tu res , i t 4 6 i s d e s i r e d tha t the i n t e r n a l r a t e of r e t u r n or the marg ina l e f f i c i e n c y of a p r o j e c t at which b e n e f i t s are d iscounted should not be l e s s than the s o c i a l cos t of. c a p i t a l . D w e l l i n g on the s o c i a l ' cos t of c a p i t a l , Mao d i scusses the i dea of "the o p p o r t u n i t y c o s t " of p r i v a t e and p u b l i c inves tments . Urban renewal expendi tures are borne by s e v e r a l l e v e l s o f government, which may i n c l u d e both borrowed and taxed funds. For borrowed funds and taxed funds, ' "oppor tun i ty c o s t s " v a r y . Drawing from a r e sea rch study a l r eady done on t h i s 'subject , Mao p o i n t s out that i f the oppo r tun i t y cost of 4 4 I b i d . , p . 9 9 -4 5 I_p_id., p . 1 0 0 . 4 6 "Since the cos ts o f urban renewal are f r e q u e n t l y i n t e r s p e r s e d w i t h b e n e f i t s over the l i f e of the p r o j e c t s , the r e tu rns from such p r o j e c t s are not cons tan t s , but v a r i a b l e s whose va lues va ry d i r e c t l y w i t h the s o c i a l cost of c a p i t a l " (Mao, " Q u a n t i t a t i v e A n a l y s i s of Urban Renewal Investment D e c i s i o n s " , The J o u r n a l of F inance , X X I I , No. 2 (May, 1 9 6 7 ) , p . 2 0 7 ) . 7 2 c a p i t a l becomes "a p o l i t i c a l l y - d e t e r m i n e d r a t e " , i t would '47 diverge from the s o c i a l cost o f c a p i t a l . For s i m p l i f i c a -t i o n , the s o c i a l cost o f c a p i t a l i s equated w i t h i t s o p p o r t u n i t y c o s t , and- i s "measured by t a k i n g a weighted 48 average of f e d e r a l , p r o v i n c i a l and l o c a l funds" . In the East S tock ton P r o j e c t , the s o c i a l cos t of c a p i t a l was as.ffiamed 49 ' to be 6.0 per cen t . 50 The Choice of C r i t e r i o n Mao cons iders two c r i t e r i a : one f o r the pu rpose ' o f de te rmin ing the s i z e o f the t o t a l . r e n e w a l , budget; and the o the r , f o r r ank ing the p r o j e c t s accord ing to t h e i r r e l a t i v e e f f i c i e n c y . I f fu ture b e n e f i t s and costs are d i scounted to present va lues at the s o c i a l cost of c a p i t a l , the f i r s t d e c i s i o n 4 7 • ' • Mao, " E f f i c i e n c y i n P u b l i c . . . . A n a l y s i s " , op. c i t . , p.. 99-I b i d . 49 ' I n the p r o j e c t under r e f e r ence , t w o - t h i r d s of the funds were f e d e r a l and the r e s t l o c a l . The l o c a l share was a l l borrowed•money, on which i n t e r e s t r a t e was 4.4 per cen t . The o p p o r t u n i t y cost of f e d e r a l funds was cons idered as about 3-5 per cent and that of the l o c a l share was measured as 7-3 VeT cen t . The weighted average of 6 . 0 per cent as the oppor tun i ty cos t of the resources used up i n the p r o j e c t was assumed to be the s o c i a l cos t of c a p i t a l ( I b i d . , p . 1 0 5 ) . I n the study conducted; by E c k s t e i n , the s o c i a l cos t of c a p i t a l was found to be-between 5..5 and 6 . 0 per cent ( K r u t i i l a and E c k s t e i n , op. c i t . ' , chapter 4 ) . 50 Mao, " E f f i c i e n c y i n P u b l i c . . . . A n a l y s i s " , op. c i t . , pp . 98-99-73 c r i t e r i o n would be s t a ted as below: B ( 1 4 - D T where B B t 1 -present va lue of fu ture b e n e f i t s , b e n e f i t s over a p e r i o d " t " , and the s o c i a l cost of c a p i t a l . S i m i l a r l y , K K t t where K K t 1 -( 1 + 1 ) present va lue of fu ture c o s t s , cos ts over a p e r i o d " t" , and the s o c i a l cost of c a p i t a l . Thus, net s o c i a l c o n t r i b u t i o n (W) of a p r o j e c t equals ¥ - B - K Assuming tha t there i s no budget c o n s t r a i n t , i n order to maximize net s o c i a l c o n t r i b u t i o n s , the government should keep on expanding i t s t o t a l budget u n t i l f o r marg ina l p r o j e c t , W - 0 . The marg ina l e f f i c i e n c y or the i n t e r n a l r a t e of r e t u r n on the marg ina l p r o j e c t c o i n c i d e s w i t h the s o c i a l cost of c a p i t a l . Given the budget c o n s t r a i n t fo r urban renewal programmes, which i s u s u a l l y decided, by the. p o l i t i c a l p rocess , the p rob lems is to a l l o c a t e the l i m i t e d budget among competing renewal p r o j e c t s . Assuming that a l l p r o j e c t s are independent, the d e c i s i o n r u l e i s t ha t the p r o j e c t s should f i r s t be ranked accord ing to t h e i r marg ina l e f f i c i e n c y , and the government 7h should undertake a l l p r o j e c t s f o r which the marg ina l e f f i c i e n c y exceeds the s o c i a l cost of c a p i t a l u n t i l the 5 1 budget I s used up. 3- AUTHOR'S QUALIFICATIONS AND COMMENTS r E x p l i c i t i n the approaches and genera l o b j e c t i v e s of a l l the authors d i scussed above'was a concern fo r the i n t e r e s t of the p u b l i c at l a r g e i n the e v a l u a t i o n of an urban deve lop-ment p r o p o s a l . I n f o r m u l a t i n g the a n a l y t i c a l methodology, the authors attempted to draw the d i s t i n c t i o n between cos t - , b e n e f i t analyses and f i n a n c i a l assessments. Reynolds puts i t t hus : C o s t - b e n e f i t analyses attempt to i d e n t i f y the va lue o f r e a l resources used i n development and to compare them w i t h the es t imated va lue .of r e a l net b e n e f i t s from the v iewpoin t of the whole  community. F i n a n c i a l , commercial or c o s t - p r o J i t assessments tend however to be made from the narrower p o i n t of v iew of the p r i v a t e developer . or l o c a l a u t h o r i t y , . . . . . The connec t ion between y economics and f inance i n t h i s context can be complex, w i t h many p i t f a l l s . , but b road ly speaking the i d e a l i s to make as wide an assessment as . poss ib l e w h i l e t r y i n g to ensure by p l ann ing and other p o l i c i e s tha t f i n a n c i a l i n c e n t i v e s w i l l conform. 5 2 ^ Mao, however, observes : " In s i t u a t i o n s where each p r o j e c t i s sma l l r e l a t i v e to the t o t a l c a p i t a l budget, t h i s method o f s e l e c t i o n r e s u l t s i n a p o r t f o l i o of investments which i s ve ry n e a r l y o p t i m a l . However, i n s i t u a t i o n s where each p r o j e c t i s l a r g e the r ank ing method f a i l s - because i t ignores the problem of i n d i v i s i b i l i t y . A much more e f f i c i e n t s o l u t i o n i s tha t of i n t e g e r l i n e a r programming" (Mao, " Q u a n t i t a t i v e A n a l y s i s of Urban Renewal Investment D e c i s i o n s " , op • c i t . , p . 1 9 9 ) • 5 2 D. J . Reynolds , Economics, Town P l ann ing and T r a f f i c (London: The I n s t i t u t e of Economic A f f a i r s , 1966), p . 5 0 -' 7 5 The c o m p l e x i t i e s i n i d e n t i f y i n g a l l b e n e f i t s and costs r e s u l t i n g from an urban development p roposa l and i n t r y i n g to measure the immeasurable are obvious from the d i s c u s s i o n so f a r . L i c h f i e l d c l e a r l y p o i n t s out the problems p e c u l i a r to p l a n n i n g a n a l y s i s . There are many i n t a n g i b l e s wh ich , by d e f i n i t i o n , cannot be excluded from the a n a l y s i s . "The i n t e r r e l a t i o n s h i p and interdependency of p r o j e c t s i n time and space, present p a r t i c u l a r compl i ca t i ons which w i l l be eased 53 i n the genera l development of p a r t s " . Though Rothenberg 's a n a l y t i c a l procedure i s p r i m a r i l y concerned w i t h the changes i n aggregate r e a l income and i t s d i s t r i b u t i o n , he acknowledges: There i s no g e n e r a l l y accepted method i n wel fa re economics f o r aggregat ing the d i v e r s e we l fa re e f f e c t s on d i f f e r e n t i n d i v i d u a l s , s ince there i s no g e n e r a l l y accepted way to compare the s o c i a l meaning of the w e l l - b e i n g of d i f f e r e n t ' i n d i v i d u a l s or of changes i n w e l l - b e i n g . 7+ I n a recent- a r t i c l e , Ar thur Maass urges a-major r e v i s i o n i n the a p p l i c a t i o n of c o s t - b e n e f i t a n a l y s i s to p u b l i c i n v e s t -ment expendi tures based on a subs tan t ive change i n the wel fa re bas i s of the a n a l y s i s . Present c o s t - b e n e f i t p r a c t i c e , he argues , i s p reoccupied w i t h c o n s i d e r a t i o n s of e f f i c i e n c y . Because the o b j e c t i v e s of most p u b l i c expendi tures are p r i m a r i l y concerned w i t h the r e d i s t r i b u t i o n of income r a the r than economic L i c h f i e l d , "The E v a l u a t i o n of C a p i t a l . . . " , op. c i t . , p . 1 4 5 -5 4 Rothenberg, l o c . c i t . , p . 2 0 . 76 e f f i c i e n c y , r e d i s t r i b u t i o n o b j e c t i v e s need to be emphasized xx most i n the e v a l u a t i o n of p u b l i c inves tments . The problems of the a p p l i c a t i o n of the c o s t - b e n e f i t technique to evaluate urban p lans are thus inheren t i n the genera l methodology of t h i s t o o l , such as (1) the measurement o f i n t a n g i b l e s , (2) the choice of a d i s c o u n t i n g r a t e , (3) the f o r e c a s t i n g of p r i c e when l a r g e investments are i n v o l v e d and (4) the s e l e c t i o n o f an appropr ia te c r i t e r i o n . Given these, l i m i t a t i o n s , L i c h f i e l d ' s p r imary concern was to formulate a framework fo r r e c o r d i n g cos ts and b e n e f i t s to a l l a f fec ted p a r t i e s i n a set of accounts . Commenting on L i c h f i e l d ' s approach, P r e s t and Turvey observe t h r e e - f o l d advantages: (1) S t a r t i n g on an a l l - i n c l u s i v e gross bas i s and then c a n c e l l i n g out to o b t a i n net s o c i a l b e n e f i t s and costs in su res aga ins t omis s ions . (2) \y The f i n a n c i a l consequences of any p r o j e c t are sometimes impor tan t , and i t may need to be redesigned i n the l i g h t of the d i s t r i b u t i o n ' of bene f i t s and c o s t s . (3) Whether or not f i n a n c i a l t r a n s f e r s are used to a f f ec t the f i n a l d i s t r i b u t i o n of net ga ins , tha t d i s t r i b u t i o n w i l l o f t en be r e l e v a n t to cho ice .56 Ar thur Maass, "Bene f i t -Cos t A n a l y s i s : I t s Relevance to P u b l i c Investment D e c i s i o n s " , The Q u a r t e r l y Jou rna l of  Economics, LXXX (May, 1966), pp. 208-26. X6 ' P r e s t and Turvey, op. c i t . , pp . 718-19-77 Though L i c h f i e l d ' s model framework i s set up to compare one p r o p o s a l w i t h another , i t can he extended to compare a number of a l t e r n a t i v e p roposa l s w i t h the s i t u a t i o n "without redevelopment". Whi le the "balance sheet of development" has the d i s t i n c t advantage of i d e n t i f y i n g cos ts arid b e n e f i t s and t h e i r i n c i d e n c e , the a l g e b r a i c summation of " v a r i a b l e s i n u n i t s other than money", " i n t ang ib l e s " , "non-measu rab l e s " , " n o n - c e r t a i n t i e s " , e t c . f o r r e d u c t i o n of v a r i o u s items r a i s e s ques t i ons . I t appears tha t L i c h f i e l d does not attempt to evalua te the sum t o t a l of the e f f ec t s of redevelopment i n terms of the t o t a l investment and the source of funds. He emphasizes: . . . . i t i n v o l v e s a .great dea l of va lue judgement. For example, i n s e l e c t i n g i n s t r u m e n t a l o b j e c t i v e s , i n comparing the amount of i n t a n g i b l e s i n d i f f e r e n t p r o j e c t s to a r r i v e at conc lus ions i n the remarks column; i n weighing e n t r i e s I n the r e d u c t i o n p r o c e s s ; i n drawing c o n c l u s i o n from the summation."57 B u t , he submits , the d e c i s i o n can be improved when the a n a l y s i s i s broken down to the sma l l e s t p o s s i b l e s ec t ions w i t h i n a " r igorous framework of r e a s o n i n g " . The l e v e l of dec i s ion -mak ing i s a c r i t i c a l i s s u e i n a s s i g n i n g cos ts and b e n e f i t s to the producers and consumers of L i c h f i e l d ' s model, as i t i s i n aggregat ing welfare fo r the " re levant p o p u l a t i o n " o f Rothenberg 's genera l model . L i c h f i e l d , " C o s t - B e n e f i t A n a l y s i s i n Town P l a n n i n g " , op. c i t • , p . 22h. 7 8 Commenting on Rothenberg 's c o s t - b e n e f i t approach, Anthony Downs . d i scusses the problems i n v o l v i n g "the omiss ion of important c o n s i d e r a t i o n s " i n s e t t i n g f o r t h a l i s t of a l t e r n a t i v e s . He warns tha t the omiss ion of important a l t e r n a t i v e s as w e l l as the omiss ion of important- v a r i a b l e s , such as the " p r o t e c t i o n of c u l t u r a l i n s t i t u t i o n s " may give m i s l e a d i n g r e s u l t s . There may be v a r i o u s types of r edeve lop-ment programmes i n v o l v i n g c learance of n o n - r e s i d e n t i a l areas fo r n o n - r e s i d e n t i a l use . Rothenberg 's f o r m u l a t i o n emphasized a c e r t a i n type of redevelopment i n v o l v i n g r e s i d e n t i a l slum c l e a r a n c e . Thus changes i n housing s t o c k , types of accommoda-t i o n , and t h e i r c o s t , .income l e v e l , owner-tenant s t a t u s , e t c . were cons idered s i g n i f i c a n t i n the d i s t r i b u t i o n of r e a l income. Where urban renewal programmes concern n o n - r e s i d e n t i a l uses , r e h a b i l i t a t i o n and conse rva t i on p r o j e c t s , p u b l i c hous ing , e t c . , the problem of de termining b e n e f i t s and cos ts in t roduces many ques t ions not covered i n Rothenberg 's a n a l y s i s . I n the f i n a l a n a l y s i s Rothenberg 's general model measures the b e n e f i t s from inc reased l and values as a f u n c t i o n of income and p o p u l a t i o n . Hi s attempt to d i s t i n g u i s h between the i nc rea sed l and va lue r e s u l t i n g from redevelopment and tha t from l o c a t i o n a l e f f e c t i s not very c l e a r . The assumptions tha t no net b e n e f i t s r e s u l t from any r e d i s t r i b u t i o n of income Anthony Downs, "Comments on Rothenberg 's Paper" , Robert Dorfman, ( e d . ) , op. c i t . , pp . 3^2-^1• 7 9 produced by renewal p r o j e c t s and that a l l costs and bene f i t s must be determined i n the context of f u l l employment of 59 resources r e q u i r e a good dea l of j u s t i f i c a t i o n . Though Rothenberg t h e o r e t i c a l l y e labora ted the i s sue of r e d i s t r i b u t i o n of income, he d i d not p rov ide any framework w i t h i n which t h i s can be cons idered comprehensively . S i m i l a r l y , methods fo r the measurement of savings from slum generated s o c i a l cos ts were drawn from the l i m i t e d s tud ies on these aspec t s . P a r t i a l example g iven by Rothenberg d i d not f u l l y i l l u s t r a t e the problems i n v o l v e d and t h e i r i m p l i c a -t i o n s i n the a n a l y s i s . Mao s t a r t e d w i t h l i s t i n g and e v a l u a t i n g the net amount of each type of cos ts and b e n e f i t s . H i s s i m p l i f i e d approach, though not d i r e c t l y concerned w i t h e v a l u a t i n g the d i s t r i b u -t i o n a l e f f ec t s of redevelopment on va r ious s ec t ions of the p o p u l a t i o n , appears to p rov ide a meaningful framework fo r the treatment of i n t a n g i b l e s w h i l e measuring the e f f i c i e n c y o f p u b l i c expend i tu res . Here, the dec is ion-maker i s f u l l y aware of the amount i n v o l v e d i n the t r a d e o f f . Mao l i s t e d the cos ts and b e n e f i t s under c e r t a i n broad headings and examined, the p r a c t i c a b i l i t y of h i s technique by a p p l y i n g i t to a slum c learance p r o j e c t . Thus, what cos ts and b e n e f i t s should enter i n c o s t - b e n e f i t c a l c u l a t i o n s depend much on the l e v e l of d e c i s i o n - m a k i n g . In a d d i t i o n , the F r e d e r i c k O'R Hayes, "Comments on Rothenberg 's Paper" , Robert Dorfman, ( e d . ) , op . c i t . , pp. 3 5 1 - 5 3 -80 problems of measurement of the e f f ec t s of urban-renewal were p e c u l i a r to the examples c i t e d by Mao. These, he suggests , should be c a r e f u l l y I n t e r p r e t e d i n g e n e r a l i z i n g the r e s u l t s . . Fac to r s found c r i t i c a l i n t h i s p a r t i c u l a r p r o j e c t may not be so i n a d i f f e r e n t type of p r o j e c t . h. SUMMARY The major f a c t s r e l a t i n g to the me thodo log ica l techniques o f c o s t - b e n e f i t a n a l y s i s advanced by L i c h f i e l d , Rothenberg and Mao reviewed i n t h i s chapter may be summarized as f o l l o w s : (a) There i s a d i f f e r e n c e i n the bas i c approach o f L i c h f i e l d , Rothenberg. and Mao to urban problems. (b) L i c h f i e l d advanced h i s "balance sheet o f development" i n which a l l the cos ts and b e n e f i t s to a l l a f f ec ted p a r t i e s i n v o l v e d i n the process ' o f development cou ld be r eco rded . A l l e n t r i e s i n the balance sheet are not n e c e s s a r i l y i n monetary terms. Since the balance sheet w i l l i n d i c a t e the i nc idence of the e f f ec t s of a development p r o p o s a l , L i c h f i e l d c l a i m s , i t can be a ba s i s fo r o b j e c t i v e e v a l u a t i o n of a l t e r n a t i v e s . L i c h f i e l d a p p l i e d h i s framework i n a number of i n s t a n c e s . Rothenberg shows h i s concern w i t h the d i s t r i b u t i o n of income among va r ious persons a f f ec t ed by a redevelopment p r o j e c t and the improvement of e f f i c i e n c y i n resource a l l o c a -t i o n measured i n terms of inc reased l and v a l u e s . H i s i l l u s t r a t i v e example, w i t h many s i m p l i f y i n g assumptions, u t i l i z e s o n l y . l a n d va lue changes r e s u l t i n g from redevelopment. The u n d e r l y i n g t h e o r e t i c a l concept of Rothenberg needs a good dea l of j u s t i f i c a t i o n . Mao i s occupied w i t h the economic e f f i c i e n c y i n p u b l i c expendi tures through c o s t - b e n e f i t a n a l y s i s . In t h e . e v a l u a t i o n of a p r o j e c t , h i s b a s i c sugges t ion is- that the repercuss ions of the p r o j e c t should be t r aced i n r e l a t i o n to the bas i c o b j e c t i v e of the p r o j e c t . In t h e i r observa t ions the authors p o i n t out the l i m i t a t i o n s of the a p p l i c a b i l i t y of the techniques i n the s p e c i f i c examples p rov ided and i n d i c a t e many other p r a c t i c a l problems tha t might be i n v o l v e d i n o b t a i n i n g the data r e q u i r e d to complete the frameworks developed by them. There i s no b a s i c sugges t ion rega rd ing the measurement of i n t a n g i b l e f a c t o r s , such as a e s t h e t i c s and environmental q u a l i t y . C i t i n g 8 2 the c o n t r i b u t i o n s of s e v e r a l au thors , Rothenberg d i scusses about the bene f i t s de r ived from the reduced s o c i a l costs of h e a l t h hazards , f i r e hazards , c r ime, e t c . A l l the authors admit tha t these items might be s i g n i f i c a n t i n the e v a l u a t i o n o f a l t e r n a -t i v e s . A rev iew of the l i t e r a t u r e enables a p r e l i m i n a r y eva lua -t i o n of the h y p o t h e s i s . The magnitude of the work i n v o l v e d i n complet ing .the a n a l y s i s developed by the authors appears to pose a great problem. In a d d i t i o n , the i n t a n g i b l e and nonmeasurable items which are not t r ea t ed by the above authors make i t d i f f i c u l t to draw a w e l l documented c o n c l u s i o n concerning the a p p l i c a t i o n of c o s t - b e n e f i t a n a l y s i s to the e v a l u a t i o n of a l t e r n a t i v e p l a n s . 8 3 CHAPTER IV CASE STUDY The purpose of t h i s chapter i s to employ the c o s t -b e n e f i t techniques .developed by L i c h f i e l d , Rothenberg and Mao i n two se l ec t ed ex-pos t . cases i n the C i t y ' o f Vancouver to i n v e s t i g a t e whether : evidence can be found to v e r i f y the h y p o t h e s i s . • The l i m i t a t i o n s , p a r t i c u l a r l y the problem of o b t a i n i n g data i n a r e a d i l y a p p l i c a b l e form,are evident from the p reced ing chap te r . I t i s , however, cons idered that the a v a i l a b l e i n f o r m a t i o n may p rov ide i n d i c a t i o n s Khich might be u s e f u l i n the v e r i f i c a t i o n of the hypothes is and i n drawing conc lus ions w i t h regard to the a p p l i c a b i l i t y of c o s t - b e n e f i t a n a l y s i s i n the e v a l u a t i o n of urban p l a n s . 1. STUDY AREAS: BACKGROUND AND METHOD USED IN THE CASE STUDY Background of the Study Areas The two study areas f a l l w i t h i n the "comprehensive redevelopment areas11"'" d e l i n e a t e d i n the Vancouver Redevelop-ment Study of 1957 and are shown i n Map 1 (page 84): C i t y P l a n n i n g Department, Vancouver Redevelopment Study, A Report prepared by the C i t y P l a n n i n g Department (Vancouver, B . C . : The C i t y , December, 1957), pp . 26-28. 8 5 Study Area 1 I s known as the Redevelopment Scheme-Area D - 4 . I n t h i s area a l i m i t e d redevelopment programme was fo l l owed i n v o l v i n g spot c learance of non-conforming uses and substandard s t r u c t u r e s , and environmental improvement. The redevelopment of the area was s t a r t e d e a r l y i n 1 9 6 1 and the p r o j e c t was considered complete by 1 9 6 7 -Study Area 2 i s a rezoned area from an RM-3 M u l t i p l e D w e l l i n g D i s t r i c t to an M - l I n d u s t r i a l D i s t r i c t ( l i g h t ) . The r ezon ing of the area was e f f e c t i v e from l a t e December, 1 9 6 1 . . / . . ' ' The 1 9 5 7 Study p rov ided g u i d e l i n e s fo r redevelopment i n the C i t y of Vancouver and suggested a course of a c t i o n to be f o l l o w e d i n implementing the programme of redevelopment. Among s e v e r a l of i t s . recommendat ions , i n the f i r s t f i v e - y e a r programme, s p e c i f i c p roposa l s were made to i n i t i a t e Redevelop-ment P r o j e c t No. 1 and to take c e r t a i n measures w i t h i n the r e s t of the areas d e l i n e a t e d fo r "comprehensive redevelopment" and " l i m i t e d redevelopment". However, i n the course o f t ime , the s t r a t e g y f o r redevelopment i n respec t to the two areas changed. The e x i s t i n g f u n c t i o n a l r e l a t i o n s h i p s of the two study areas i n the p e r s p e c t i v e o f the C i t y of Vancouver i s shown i n Map 2 (page 8 6 ) . The main reason fo r choosing these areas i s t h a t , d i f f e r e n t p o l i c i e s have been employed i n the two areas i n genera t ing the Metropolitan Commercial S t r i p Port & Large S i t e Industry-New I n d u s t r i a l Estate Small S i t e Industry Central Business D i s t r i c t Residential Redevelopment Area High Density Apartment Area Stanley Park Study Area MAP 2. FUNCTIONAL RELATIONSHIP WITH THE SURROUNDING, STUDY AREA 1 & 2 Co process so f urban renewal . The two areas are o f about the same s i z e . Though they might have d i f f e r e n t p o t e n t i a l s fo r development because of t h e i r r e s p e c t i v e l o c a t i o n a l and other inheren t c h a r a c t e r i s t i c s . Both have the same z o n i n g . • Method Used i n the Case Study Most i n f o r m a t i o n on the s tudy areas was c o l l e c t e d from the C i t y P l a n n i n g Department. Assessed va lues o f l and and improvements were compiled from the "assessment ca rds" i n the Assessment Commissioner 's O f f i c e . In te rv iews w i t h the o f f i c i a l s o f the C i t y P l a n n i n g Department and Assessment Commissioner 's O f f i c e and c e r t a i n Rea l E s t a t e Agencies opera= t i n g i n the C i t y p rov ided va luab l e i n f o r m a t i o n on the deve lop-ment of the s tudy a reas . HowWer, o n l y the data a v a i l a b l e i n a r e a d i l y a p p l i c a b l e fo rm ' cou ld be used . In Study Area 1, a l l three methodologies are at tempted. In Study Area 2, L i c h f i e l d ' s and Rothenberg 's methodologies are at tempted. Since no p u b l i c expendi ture d e c i s i o n was i n v o l v e d i n r e z o n i n g , Mao's methodology does not appear to be a p p l i c a b l e . ' I n both cases , the p r e - p r o j e c t s i t u a t i o n i s assumed to be tha t i n I960 and the p o s t - p r o j e c t s i t u a t i o n i s assumed to be tha t i n 1967. 88 2. STUDY AREA 1: REDEVELOPMENT SCHEME-AREA D-k Problem R e q u i r i n g A n a l y s i s Located south of F a l s e Creek, Area D-4 i s bounded, g e n e r a l l y by F i r s t and S i x t h Avenues, Bu r r a rd and G r a n v i l l e S t r e e t s . The t o t a l gnoss • area.. • i s gacxes;. I t c o n s t i t u t e d one of the four i s o l a t e d areas of Redevelopment P r o j e c t No. 1 o f the C i t y ' s 20-year Comprehensive Redevelop-ment Programme. The area was zoned as M - l I n d u s t r i a l D i s t r i c t fo r many y e a r s . • In Map3(page 89) the zoning can be seen and i n Map h (page 90) the predominant land use of the study area and. the a d j o i n i n g a reas . The area had the advantage of nearby t r ackage . Map 5 (page 9D shows the e x i s t i n g zoning of the s tudy area and i t s su r round ings . I t s p r o x i m i t y to Downtown and the F a l s e Creek I n d u s t r i a l area p rov ides c e r t a i n l o c a t i o n a l advantages fo r l i g h t i n d u s t r i e s and other a n c i l l a r y f a c i l i t i e s r e l a t e d to i n d u s t r i a l a reas . Some of the worst housing i n the C i t y was l o c a t e d i n t h i s a r ea . The c o n d i t i o n of a l l b u i l d i n g s i n the study area p r i o r to under tak ing redevelopment i s shown i n Table k- (Appendix A ) . Al though the area was zoned fo r i n d u s t r y f o r many yea r s , i t was s t i l l s u b s t a n t i a l l y i n r e s i d e n t i a l use . There were 108 i n d u s t r i a l or commercial s t r u c t u r e s and 79 ' r e s i d e n t i a l s t r u c t u r e s . An a n a l y s i s of the n a t u r a l process of r edeve lop -ment of the area s ince 1954 showed tha t o n l y l a rge s i z e l o t s wmzv MnjFP \mwi m im yni i f im e n s^>*^  I ! ru^^!r~ii"itr£!n r:"' ttfwj r f ^ i iptftf C M : ; ^ ? : : : : : '»« "IT" **• CTJ •** PVTI ^ 1111 B E 91191111 rjr: EiiHJ tssa i\""'vT rsBsa rrev.i z:::: I i ESS i s s LSCD BSa Sill ffiffi (•* ' nag* EH ESKE3 ^ -H E 3 H ':::::: csa t'--Q.fA'3.crr^ 3.cs3.r-' ' n •Hi: ! 1 1 EH i l l : / / /^ f^<5 p5 V///,J--£•".73 I j sc- ju U""J" — 31 .HMSil K5*!t! 0«*CrC C.-Xifl _ Hiti*jKiKJ ww taw WWMJ i:;:;..lL'.'.ij t;;£J ^ ' ^ D ' : ; : ; ^ v : . ; - " " ; J H l i f t n S - l fiS-2 • m CM- I C-I C-2 C -3 One Family Dwelling Two Family Dwelling Multiple Dwelling Commercial I n d u s t r i a l Vancouver Redevelopment Study,195? *KAP 3. ZONING, 1957t STUDY AREA 1 & 2 CO 11' l . v -> << A+AV/A A A-' //\..f //AS*.'A A ^AAMAAAAAA^J. Jli3 i re LL;J-- - - r-i I I a a a C PS" mu "11 1 « ^ J 3 « : I i . , J L__l l__3 .! Commercial Industry 1 Warehouses Vancouver Redevelopment Study, 1957 *MAP INDUSTRIAL & COMMERCIAL AREAS, 1957, STUDY AREA 1 & 2 5353 E%5?H g g g g g </////y/,<A ffifflffifr V/////////^A|^»<>»3 ^mm wmm [<X>»»»IJGF»»»^ ap^~ v g£!£S3 ESS2^ ^•••<tl¥¥¥fl B S / 1 /1 •'vi#?'-;4 i*.:-w'-?rt t&.&'ZJ, gg&S3 t/::-.v-.:yf-i \Wv&& rw;v::-.yj E\52/3?3 U-fr^ M • £4 r— ^ //roooflffi r*Hp~*r<rw re^RT<rr ^im^M WMfflk W^WA 1PI Kltzzj W/H Vs/i t£ Z Z Y / / A T77M RZZZ [7771 gZZZ 7773 fZ77] Eg bv.-.v.! h E g g g g K>a=aM [^ GS23 i#My<a D:*:&S.-'.-:I P:a.y>:ri " I - . 1 ly-v.-J {gsKaa 71i£2I3 rererei BSgg re^yfl cvi^n IVA7>I fe^i E^saa wmm g g g g j g g g g g g g yEIS l::v.'.«.l IH^vTi F?777Z1 F1^3 ija&s&a iv/.y.i fTTTTTn E ^ n ^ g g ^ . ^ y ? ^ ggsgg r>:a?:^:gi rerera I S ; m>ms\ f . y . ' . : i t.-y.'.v^ ^ ^ I T I r ? r ^ ^ ^ r 3 r 7 ! F n ^ One Family Dwelling Two Family Dwelling Multiple O^elling Commercial I n d u s t r i a l 'City Planning Dept, KAP 5. ZONING, 1967, STUDY AREA 1 ( 5 0 fee t x. 1 2 0 fee t ) occupied by o l d d w e l l i n g s .were being redeve loped . Most of the s m a l l s i z e r e s i d e n t i a l s t r uc tu r e s ( 2 5 f ee t l o t s ) c a t ego r i zed as "poor"and "very poor" ( 8 5 $ ) were s t i l l occupied by h i g h d e n s i t y tenements. I f the whole area was l e f t to p r i v a t e e n t e r p r i z e to redevelop through normal market t rends i t was cons idered u n l i k e l y tha t the then e x i s t i n g b l i g h t e d c o n d i t i o n of the area would improve i n the near f u t u r e and many p r o p e r t i e s , because o f h i g h market va lue ( i n r e l a t i o n to the s i t e a r ea ) , were a l s o 2 cons idered u n l i k e l y to enter the i n d u s t r i a l l and market . A l i m i t e d redevelopment programme was undertaken fo r t h i s a r ea , which "aimed at e l i m i n a t i n g the worst housing and c e r t a i n . r e s i d e n t i a l . s t ruc tu res" which were not expected to be redeveloped by " n a t u r a l " development. No changes were proposed i n zoning or the -street system. The p r o p e r t i e s acqui red and r e s o l d f o r l i g h t i n d u s t r i a l use t o t a l l i n g 4 . 4 3 acres are shown i n Map 6 (page 930"* A s a r e s u l t §f c l ea r ance , t o t a l p o p u l a t i o n ' 4 d i s p l a c e d was 2 6 4 pe r sons . Some of the c h a r a c t e r i s t i c s of _ . . . . C i t y P l a n n i n g Department, " C i t y of Vancouver Redevelop-ment P r o j e c t No. 1 " (An Unpubl ished Mimeographed Report prepared by the T e c h n i c a l P l a n n i n g Board,-November, 1 9 5 9 ) 5 pp. 6 - 8 , 4 4 - 4 7 . 3 C i t y P l a n n i n g Department, " C i t y of Vancouver Redevelop-ment P r o j e c t No. 1 " , op. c i t - . , p . 1 0 . 4 These are the f i n a l f i g u r e s obta ined from the f i l e s and maps of the C i t y P l a n n i n g Department. 93 r e s o l d by the C i t y C i t y Planning Dept. (29 s i t e s ) I | | 111 |l III! I M u m i M • M i l l W I W I I I I M M I I I I I 1 M • • l l l l ' - - " ~ *MAP 6. FINAL ACQUISITION MAP, 1967, STUDY AREA 1 94 the d i s p l a c e d as w e l l as the remaining p o p u l a t i o n of t h i s area are d i scussed i n subsequent a n a l y s i s . No d e t a i l e d i n f o r m a t i o n r ega rd ing accommodation present socio-economic c o n d i t i o n s , e t c . , o f a l l the d i s p l a c e d persons i s a v a i l a b l e from the C i t y . The ques t ion a r i s e s whether the p o l i c y . o f l i m i t e d redevelopment fo l l owed i n the s tudy area shows net gains to the C i t y . The b r i e f d e s c r i p t i o n above i s somewhat ske tchy . Other c h a r a c t e r i s t i c s of the area and p r o p e r t i e s w i l l be mentioned when r e l e v a n t . A p p l i c a t i o n of L i c h f i e l d ' s Methodology Keeping i n v iew the a n a l y s i s tha t f o l l o w s , the major o b j e c t i v e s i n the area under study has to be r e s t a t e d . The i n t e n t i o n w i t h regard to the s tudy a rea , i . e . "the l o c a t i o n and reasons fo r proposed•c learance a reas , and proposed re -use" was set out as f o l l o w s : i ) Removal of poor and very poor housing to improve housing c o n d i t i o n s ; i i ) E v e n t u a l removal of a l l o ther r e s i d e n t i a l uses from an i n d u s t r i a l zone; and i i i ) Removal of any n o n - r e s i d e n t i a l uses which :"_ i t i s thought might i n h i b i t good i n d u s t r i a l redevelopment, having regard to the b e n e f i t s obta ined i n . r e l a t i o n to the cost of removal .6 Scanty i n f o r m a t i o n about the d i s p l a c e d persons i s a v a i l a b l e w i t h the C i t y P l a n n i n g Department. 6 " C i t y P l a n n i n g Department, C i t y of Vancouver Redevelop-ment P r o j e c t No. 1", op. c i t . , pp . 44-45. Emphasis i n the above o b j e c t i v e s , desc r ibed i n d e t a i l i n the " C i t y ' s A p p l i c a t i o n fo r grant f o r P r o j e c t No. 1" under S e c t i o n 23 of the N a t i o n a l Housing A c t . / was "the. c l ea r ance , rep^anning , r e h a b i l i t a t i o n and modern iza t ion of b l i g h t e d or substandard a reas" . S ince "na tu r a l redevelopment by p r i v a t e e n t e r p r i s e " was not o c c u r r i n g w i t h i n a "reasonable- p e r i o d of t i m e " , the C i t y C o u n c i l decided to adopt the p o l i c y of " l i m i t e d redevelopment" pursuant to the recommendations of g the Vancouver Redevelopment Study of 1957- Al though c l ause 3 ( ° ) of S e c t i o n 23 o f the N a t i o n a l Housing A c t , 1954 • a l s o aims at "the improvement of" housing and l i v i n g c o n d i t i o n s " of the f a m i l i e s to be d ispossessed by the a c q u i s i t i o n and c learance of an a rea , the s o c i a l o b j e c t i v e was not made e x p l i c i t by the C i t y . The procedure i n v o l v e d i n the a p p l i c a t i o n of L i c h f i e l d ' s methodology f o l l o w s : See Appendix B f o r an e x t r a c t from the N a t i o n a l Housing A c t , 1954 ( S e c t i o n 23) a p p l i c a b l e at the time of under tak ing the Renewal Scheme. I n Appendix C i s reproduced the s a i d S e c t i o n 23 of the N a t i o n a l Housing Act as amended i n 1 9 6 4 . The s o c i a l o b j e c t i v e o f an Urban Renewal Scheme r s r f u r t h e r . c l a r i -f i e d and a m p l i f i e d i n the amended a c t . I ' C i t y P l a n n i n g Department, Vancouver Redevelopment Study, 1 9 5 7 , op. c i t . , P a r t I . See Appendix B 96 Comparison of Uses Before and A f t e r Redevelopment The study area 1 was zoned fo r i n d u s t r y (M- l ) f o r many years hut was s t i l l s u b s t a n t i a l l y i n r e s i d e n t i a l use . The 1959 survey shows the number of s t r u c t u r e s under va r ious uses (Table 4 , Appendix A ) . The c o n d i t i o n of a l l s t r u c t u r e s i s a l s o shown i n the t a b l e . As a f i r s t step to evalua te the c o n d i t i o n s before and a f t e r redevelopment, use changes r e s u l t i n g from redevelopment are compared. No major s t r e e t changes were proposed i n the a rea . An area of 4.4-3 acres was f i n a l l y acqu i r ed , c l ea red and r e s o l d fo r l i g h t i n d u s t r i a l use as shown i n the f i n a l a c q u i s i t i o n map (Map 6 , page 9 3 ) • Since no data on the s i t e area o f uses are a v a i l a b l e , the comparison Is made by l o t s i n Table 5 (Appendix A ) . An a n a l y s i s of the maps and the t ab l e shows the f o l l o w i n g : (a) Most of the sma l l s i z e l o t s i n r e s i d e n t i a l and mixed r e s i d e n t i a l uses and the vacant l o t s were acqui red and c l e a r e d , and r e s o l d fo r i n d u s t r i a l use . •(b) Clearance of substandard and b l i g h t e d r e s i d e n t i a l and n o n - r e s i d e n t i a l s t r u c t u r e s by the C i t y s i g n i f i c a n t l y improved the environmental condi t ion : . . 9 7 Comparison of Value of Improvements and' Land  Before and 4 f t e r Redevelopment Value of Improvements The comparison of the assessed value o f improvements of the p r o p e r t i e s acqui red and r e s o l d by the C i t y before and a f t e r redevelopment i s shown i n Table 6 (Appendix A ) . I t shows an inc rease i n the assessed .value of Improvements i n 1967 by n e a r l y 220 per cent over tha t i n I960 . This i s o b v i o u s l y due to re-use of most o f . t h e c l e a r e d l and as i n d u s t -r i a l or commercial s i t e s . Though the improvement i n environmental c o n d i t i o n has enhanced the a t t r a c t i v e n e s s of the area to new i n d u s t r y , there i s no apprec iab le e f f e c t i n the surrounding b locks ou t s ide the p r o j e c t a rea . "^ Table 7 (Appendix A) shows that the assessed va lue of improvements has inc reased fo r o n l y s i x i n d u s t r i a l p remises , but not s i g n i f i c a n t l y . A . H . Shaaf ' s o b s e r v a t i o n i n t h i s r espec t appears to be a p p r o p r i a t e : . . - t h e p r i v a t e investment d e c i s i o n of whether to r e h a b i l i t a t e or r ep l ace a p r o p e r t y i s not decided on the bas i s of a l t e r n a t i v e costs alone but a l s o on the r e l a t i v e values of the end products" of r e h a b i l i t a t i o n and replacement . Any p r o p e r t y owner would be expected to make h i s d e c i s i o n by comparing both costs and values and choosing the course of a c t i o n tha t r e s u l t s i n the g rea tes t va lue increment per d o l l a r of i n v e s t m e n t . H 1 0 S e e Map 7 (page 9 8 ) . 11 ' •• A . H . Shaaf, Economic Aspects of Urban Renewal: Theory, Po l i cy . . and Area A n a l y s i s . (Berkeley , C a l i f f . : U n i v e r s i t y of C a l i f o r n i a , I 960) , p . 7 . 98 •Ma I M i l l in ~ T T 1 — I — l - ' i I-I /OS, 6-00 J J J _ L _ L L I _ L 1 SECOND 111' • ^ . , 257 a: zoo, s/o Uli2gii i LL I LLU i T.n : i 11 i 9 at 51 1 — i JLg—r 291 AVE 1 _ : I • • • • >-• 4 * : m "1 44 • 7 a 3 * 1 X 5?7 -! >4 HIT;—re— Hi. s i EIGHTH AVE 1 2» « * / * 3i t 1 B 3 2* Mt Zl -V 9 — BROAIMWY FA1I.VIEW I! CQMMUCIAl II! (1L1££\ 196? Value QQ.1,%it) I960 Value Assessment Records (Tables 8 & 9 , Appendix MAP 7. ASSESSED LAND VALUES, i960 - 196?, STUDY AREA 1 99 Value o f Land The comparison of the assessed va lue o f land by b locks before and a f t e r redevelopment w i t h i n the redevelopment' area and i n the adjacent area (Map 7 5 page 9 8 ) i s shown. in Tables 8 and 9 . (Appendix A ) . W i t h i n the redevelopment area the average (median) i nc rease i n the assessed l and va lue i s hO per cen t . E x c l u d i n g the extreme v a l u e s , the average (median) i nc rease i n the adjacent area i s hh per cen t . Thus i t can not be suggested, tha t the renewal had a s i g n i f i c a n t e f f e c t on the' va lue of- the p rope r ty w i t h i n the p r o j e c t a rea . However, from t h i s comparison a lone , no v a l i d c o n c l u s i o n w i t h regard to the e f f e c t o f redevelopment on the p rope r ty va lues can be drawn. Many other ques t i ons , such as the market t rend i n l and va lues over .the e n t i r e C i t y of "Vancouver, 1 2 comparab i l i t y , of the 1 9 6 7 va lues w i t h the I 9 6 0 v a l u e s , e t c . are i n v o l v e d . Statement of Accoun t s : Costs and Recover ies The statement of accounts f o r the s tudy area as of M a y - 3 1 , 1 9 6 7 , - i s d e t a i l e d i n .Table 1 0 , (Appendix A)-. Net cos ts to the C i t y , and the P r o v i n c i a l and F e d e r a l governments - — T h e - b a s i s fo r assessment o f . p r o p e r t i e s ( l and and improvements) by . the C i t y changed i n 1 9 6 2 because of a s t a t u t o r y p r o v i s i o n . For a comparison of the assessed va lues before 1 9 6 2 w i t h those a f t e r 1 9 6 2 , they should be brought to a common b a s i s by an adjustment f a c t o r . This aspect of the problem has not been d i scussed i n t h i s s tudy. Since the r e l a t i v e change ra the r than the absolu te change i s of importance' i n t h i s s tudy, c e r t a i n conc lus ions w i t h regard to the r e l a t i v e changes can be drawn. 100 are shown i n the t a b l e . The C i t y ' s net expendi ture ( e x c l u d i n g i n t e r e s t ) on the p r o j e c t was & 58, 7 2 5 - Expenses and r e c o v e r i e s were spread over d i f f e r e n t p e r i o d s . For s i m p l i f i c a t i o n , , i t i s assumed that there was no time l a g between the C i t y ' s expendi tures and the r e c o v e r i e s from the s en io r governments. I t ' i s f u r the r assumed tha t the c a p i t a l funds were appropr ia ted i n equal annual ins ta lments over a p e r i o d of s i x years (1961/2 to 1966/7) and f inanced by C i t y bonds repayable over a twenty-year p e r i o d . An i n t e r e s t . r a t e o f 6.0 per cent per annum on the C i t y bonds i s used . The Cost and B e n e f i t A n a l y s i s Based on the L i c h f i e l d model d i scussed e a r l i e r , the cos t s . and . b e n e f i t s tha t would accrue to va r ious sec to r s are summarized i n the "balance sheet of development-" (Table 12, Appendix A ) . The f o l l o w i n g sec to rs are i d e n t i f i e d : For f i n a n c i n g the f i v e - y e a r C a p i t a l Programme fo r 1966-1970, p r e v a i l i n g i n t e r e s t ra te* fo r the C i t y bond i s sues was considered a p p r o p r i a t e . In 1965 5 new C i t y bond i s sues p a i d about 51" VeT cent i n t e r e s t , the average ra te of i n t e r e s t on a l l ou t s tand ing C i t y bonds being 4 .6 per cent ( C i t y of Vancouver, 1966-1970 C a p i t a l Programme, (September 29th p l e b i s c i t e s ) (Vancouver: The C i t y , September, 1965), p . 4 ) . P h i l i p H . F r i e d l y suggested the i n t e r e s t r a t e of 6.0 per cent as r e f l e c t i n g s o c i e t y ' s t ime preference schedule w i t h regard to urban renewal expendi tures ( P h i l i p H . F r i e d l y , "A Methodo-l o g y fo r Economic A n a l y s i s of R e t a i l Commercial F a c i l i t i e s i n Urban Renewal Areas" (An Unpubl ished Mimeographed Report prepared fo r the C i t y P l a n n i n g Department, C i t y of Vancouver, December, 1966), pp. 2 -7 . 101 Producers /Opera tors Consumers 1.0 Developers 2.0 New Users 1.1 P u b l i c Agency ' . 2 .2 Occupiers of New 1.3 P r i v a t e Agency P r i v a t e B u i l d i n g s 2 .4 Motor V e h i c l e Users 2.6 -Shopping P u b l i c 2.8 P u b l i c at l a r g e 3-0 Current Land-owners 4 .0 Current Occupiers 3-1 D i s p l a c e d • 4 .2 D i s p l a c e d 3.3. N o t - d i s p l a c e d 4 .4 N o t - d i s p l a c e d 5-0 C i t y C o u n c i l as L o c a l A u t h o r i t y 6 . 0 Rate Payers 5.1 M u n i c i p a l Costs 5.3 M u n i c i p a l Revenues In the . a n a l y s i s , i n order to assess the e f f ec t s of redevelopment, the comparison of cos ts and b e n e f i t s of r e - . development p r o j e c t ( c a l l e d Scheme A) i s shown w i t h the s i t u a -t i o n "without redevelopment" ( c a l l e d Sta tus Quo). To s i m p l i f y the comparison, the net ga in or l o s s to Scheme "A" over the s ta tus quo s i t u a t i o n i s shown. • The procedure i n v o l v e d i n drawing the "balance sheet of development" f o l l o w s : 1.0 P u b l i c and P r i v a t e Agencies as Developers The C i t y C o u n c i l acqu i red c e r t a i n substandard s t r u c t u r e s , and a f t e r c learance and c o n s o l i d a t i o n , • r e s o l d the acqui red p r o p e r t i e s fo r p r i v a t e development. P u b l i c ownership of the p r o p e r t i e s was r e t a i n e d u n t i l the development was completed 14 i n accordance w i t h the. c o n d i t i o n s of purchase . P r i o r to c lea rance there., was some r e n t a l revenue. The t o t a l expenditure was shared by the C i t y and the P r o v i n c i a l and F e d e r a l Govern-ments. A comparison of the c a p i t a l cos ts Is shown i n Table 11 See Appendix E fo r the c o n d i t i o n s of s a l e by p u b l i c t ender . 102 (Appendix A ) . The c a p i t a l cos ts r e l a t e to the t o t a l o u t l a y on l a n d , b u i l d i n g s and p r o j e c t expenses ( a d m i n i s t r a t i v e , l e g a l , e t c . ) - This i s then t r a n s l a t e d to a stream of annual cos ts at the assumed borrowing r a t e o f 6.0 per cent f o r the p u b l i c sec tor and at the assumed r i s k r a t e of 8-jr per cent fo r the p r i v a t e s e c t o r . In the absence o f net r e n t a l v a l u e s , however, annual r e t u r n cou ld not be worked ou t . In the s ta tus quo s i t u a t i o n , s i m p l i f y i n g assumptions are made. I t i s assumed tha t i n the absence of redevelopment there would have been no s i g n i f i c a n t p r i v a t e inves tment . An a n a l y s i s made by the T e c h n i c a l P l ann ing Board i n 1958 f o l l o w e d by a rev iew made by the C i t y P l a n n i n g Department showed tha t the' r a t e of " n a t u r a l " development s ince 195*+ was very s low. In the p e r i o d between 1959 to the end of 15 1962, i t was fu r the r slowed down. The. f o l l o w i n g conc lus ions are drawn: (a) The t o t a l f i n a n c i a l o u t l a y on the p r o j e c t was about 1-3 m i l l i o n . No p r i v a t e Investment was taken i n t o account w i t h i n the p r o j e c t area i n the s ta tus quo s i t u a t i o n . See C i t y P l a n n i n g Department, C i t y of Vancouver Redevelopment P r o j e c t No. 1, op. c i t . , p . 4 7 ; a l so see the correspondence dated May 2 7 , 1963 of the C i t y P l ann ing Depar t -ment, Redevelopment D i v i s i o n to the Board of A d m i n i s t r a t i o n :©hnDetai led Redevelopment Scheme Area D - 4 . ( i n the f i l e s of the C i t y P l a n n i n g Department); and Supra , pp. "88, § 2 . 103 (b) The cost of l and amounting $136,200 chargeable to the three governments i s the gross cost of a c q u i s i t i o n l e s s the r e c o v e r y . The purchase p r i c e o f land i s shown as a cost to the p r i v a t e purchaser . (c) The C i t y ' s share of the t o t a l expendi ture on renewal i s charged to i t s redevelopment s e r v i c e . , This cost i s expected to be o f f s e t by the inc reased tax on land" and improvements r e s u l t i n g from "bet ter use" . S i m i l a r l y p r o v i n c i a l and f e d e r a l expendi tures are charged to t h e i r t ax revenues. (d) T o t a l p r i v a t e c a p i t a l Investment on improvements as of 1967 was $659,010 ( twice the assessed v a l u e ) . This may no t , however, r e f l e c t the t rue c a p i t a l cost of the p r i v a t e development due to the v a l u a t i o n t echn ique . (e) P r i v a t e developers are expected to get t h e i r r e t u r n from the net r e n t a l v a l u e s , which depends o n . s e v e r a l f a c t o r s , 16 such as use , c l a s s of accommodation, terms of l e a s e , e t c . Net r e s u l t s i n annual cos ts are t r a n s f e r r e d to the balance sheet . However, i n the absence o f any i n f o r m a t i o n on a n n u a l ' r e t u r n s , no c o n c l u s i v e statement can be made. 2 ..0 New Users . . 2 .2 Occupiers of New P r i v a t e B u i l d i n g s . Occupiers are those who are c o n t i n u o u s l y us ing the premises , and not the Vancouver Rea l Es t a t e Board , " Indus t r i a l : ' R e n t a l V a l u e s , 1966", Trend News (Vancouver, B . C . : The Board , 1966) , p . 21 . v i s i t i n g p u b l i c . ' The cos ts and. bene f i t s to the new users are shown i n t h i s s e c t i o n by l o t numbers.' The f o l l o w i n g obse rva t ions can be made: New occupie r s have moved here because they cons idered the new l o c a t i o n more b e n e f i c i a l . Some of these b e n e f i t s are t a n g i b l e , e . g . r e n t , savings i n t r an spo r t c o s t s , i f any, due t o , p r o x i m i t y to r e l a t e d i n d u s t r i e s , more bus ines s , etc. . ; some b e n e f i t s are i n t a n g i b l e , e . g . l o c a t i o n a l advantage, b e t t e r environmental c o n d i t i o n , etc.. The a v a i l a b l e i n f o r m a t i o n shown i n Map 8 (page 10 5) i s t r a n s f e r r e d to the balance sheet . Though some of the b e n e f i t s are i n t a n g i b l e , i t may be concluded that there i s a net advantage, to Scheme A . 2.h Motor V e h i c l e . U s e r s . Improved environmental c o n d i t i o n and- the new i n d u s t r i a l or commercial premises w i t h p r o v i s i o n f o r car p a r k i n g may have minimized t r a f f i c hazards . However, there i s no evidence to draw any v a l i d c o n c l u s i o n . 2 .6 Shopping P u b l i c . They are the customers o f new commereial and i n d u s t r i a l p remises . The a t t r a c t i v e n e s s of environment and b e t t e r p a r k i n g may have inc reased the volume of shopping, depending p a r t l y on the a v a i l a b i l i t y and range of goods and s e r v i c e s . The shopping p u b l i c may or may not be b e n e f i t t e d i n terms of savings i n t r a n s p o r t a t i o n c o s t , choice of goods, e t c . S ince i n any c i rcumstance , the p u b l i c 105 § § § § § § C o m m e r c i a l (11 " ) * A s s e s s m e n t R e c o r d s S;::::lli I n d u s t r i a l (10 " ) *MAP 8. USE OF ACQUIRED & RESOLD PROPERTIES, 1968, STUDY AREA 1 106 would i n c u r r the expend i tu re , i t may i n v o l v e n e i t h e r cos ts nor b e n e f i t s to them. The improvement of the area has n e c e s s a r i l y b e n e f i t t e d the Granv i l l e -Broadway shopping cen te r . Whether this-b e n e f i t i s i n the l a r g e r i n t e r e s t of the community i s a ques t i on which has to be viewed i n the context of the C i t y as a whole . No v a l i d c o n c l u s i o n can the re fo re be drawn. 2.8 P u b l i c at l a r g e . Improvement of the area prevents f u r t h e r d e t e r i o r a t i o n of the environment and adds to i t s q u a l i t y . I t s va lue to the p u b l i c at l a r g e i s i n t a n g i b l e . 3-0 Current Land Owners; 4 .0 Current Occupiers 3-1 and 4.2 Land-owners and. Occupiers D i s p l a c e d . There are two c l a s s e s .of d i s p l a c e d land-owners - those whose p rop -e r t y was c o m p u l s o r i l y purchased and those who v o l u n t a r i l y so ld , t h e i r p r o p e r t i e s . Though the d i s p l a c e d land-owners r e c e i v e d the market v a l u e . o f t h e i r p rope r ty ( f i n a n c i a l c o s t ) , whether, i n the f i n a l a n a l y s i s , there i s any net bene f i t or cos t to them, can o n ly be a sce r t a ined a f t e r t r a c i n g the e.ffects of the subsequent a l t e r n a t i v e o p p o r t u n i t i e s they had. S i m i l a r l y the costs and bene f i t s to the d i s p l a c e d occup ie r s can be assessed on ly a f t e r a d e t a i l e d survey of a l l the a f f ec t ed persons before and a f t e r d i sp lacement . Scanty i n f o r m a t i o n i s - a v a i l a b l e about the households d i s p l a c e d from the c i t y - a c q u i r e d p r o p e r t i e s . No d e t a i l e d i n f o r m a t i o n i s . 1 0 7 a v a i l a b l e about the displaced, businesses and employees. No v a l i d c o n c l u s i o n c a n , . t h e r e f o r e , be drawn. 3-3 and.h.h Land-owners and Occupiers N o t - d i s p l a c e d . As a r e s u l t of redevelopment the owners and occupie rs of p r o p e r t y not d i s p l a c e d are a l so a f fec ted i n two ways -( i ) r e a l pecun ia ry changes i n the va lue o f the p r o p e r t y , and ( i i ) t r a n s f e r changes i n the p o t e n t i a l development va lue of the p r o p e r t y . This may occur d i f f e r e n t i a l l y w i t h i n the redevelopment area as w e l l as adjacent to i t . - Some e f f ec t s are d i f f u s e d and i n t a n g i b l e , and some are r e f l e c t e d i n the r e n t a l va lue as w e l l as i n the p rope r ty v a l u e . Tables 6, 7, 8 and 9 (Appendix A) and Map 6 (page 93) show changes i n the assessed va lue of lands and improvements before and .a f t e r redevelopment. , . S ince some adjustment f a c t o r s are r e q u i r e d to b r i n g the assessed va lue to a comparable b a s i s , as exp la ined e a r l i e r , the f i g u r e s are not t r a n s f e r r e d to the balance sheet . No v a l i d c o n c l u s i o n can, t h e r e f o r e , .be drawn. 5.0 C i t y C o u n c i l as L o c a l A u t h o r i t y 5'1 and 5-3 M u n i c i p a l Costs and Revenues. No c a p i t a l expendi ture was i n c u r r e d on m u n i c i p a l s e r v i c e s and u t i l i t i e s . M u n i c i p a l revenue from the p r o j e c t area has n e c e s s a r i l y inc reased a f t e r development. No data cou ld be obta ined i n the time a v a i l a b l e . Th i s would i n v o l v e c o m p i l a t i o n of the 108 t ax revenue from each l o t w i t h i n and adjacent to the p r o j e c t area and r e d u c t i o n of t h i s data to a comparable b a s i s . 6.0 Rate Payers C i t y C o u n c i l ' s b e n e f i t by way of tax income from the r a t e payers i s a r a t e paye r s ' c o s t . In r e t u r n , the r a t e payers r e c e i v e c e r t a i n s e r v i c e s . The r a t e payers w i t h i n the redevelopment area b ene f i t by way of improved q u a l i t y of s e r v i c e s , b e t t e r environment, e t c . Q u a n t i t a t i v e measurement of a l l the bene f i t s r e c e i v e d and the cos ts p a i d by the r a t e payers Invo lves a d e t a i l e d a n a l y s i s . But t h i s i s not attempted i n t h i s s tudy . No v a l i d c o n c l u s i o n can, t h e r e f o r e , be drawn. Assessment of the "Balance Sheet of Development" I f a l l the. data r e q u i r e d to complete . the balance sheet (Table 12,. A p p e n d i x . A ) , cou ld be ob t a ined , the summation would p rov ide a bas i s fo r a n a l y s i s and some c o n c l u s i o n w i t h regard to the e f f ec t s of redevelopment c o u l d be drawn. So f a r as the f i n a n c i a l o u t l a y i s concerned, there i s net cost to the p u b l i c as w e l l as to the p r i v a t e deve lope r s . The p u b l i c cos t s would be o f f s e t by the inc reased tax revenue. The r e tu rns to p r i v a t e developers would be i n terms of net r e n t a l v a l u e s . No data i n a r e a d i l y a p p l i c a b l e ' form a re , however, a v a i l a b l e . 1 0 9 In many s e c t o r s , f o r example the cu r ren t land-owners , cur ren t o c c u p i e r s , motor v e h i c l e u s e r s , shopping p u b l i c and p u b l i c at l a r g e , t he ' "ne t advantage" can be expressed i n terms of e i t h e r "not c e r t a i n " or " i n t a n g i b l e " . These sec to r s i n v o l v e a good dea l o f va lue judgement. The i n s t r u m e n t a l o b j e c t i v e s as noted i n the balance sheet p rov ide some b a s i s f o r va lue judgements. Thus, the conc lus ions w i t h regard to the e f f ec t s of redevelopment drawn from the "balance sheet o f development" are l i m i t e d by many s i m p l i f y i n g assumptions on the s ta tus quo s i t u a t i o n and the a v a i l a b l e d a t a . A p p l i c a t i o n o f :Rothenberg 1 s Methodology The a p p l i c a t i o n of Rothenberg 's approach i n v o l v e s a comparison of the " L i m i t e d Redevelopment P r o j e c t " w i t h the "Status Quo P o l i c y " . F o l l o w i n g .his methodology, three types o f b e n e f i t s have to be worked ou t i r ( 1 ) I n t e r n a l i z a t i o n •Benef i t s , (2) Income R e d i s t r i b u t i o n , and ( 3 ) Decreased S o c i a l Costs /Of Slums I n t e r n a l i z a t i o n B e n e f i t s This i n c l u d e s S i t e B e n e f i t s and . S p i l l o v e r E f f e c t s . By these e f f e c t s , Rothenberg means the improved productivity/;, 7" of l and w i t h i n the def ined boundary of the Redevelopment P r o j e c t as w e l l as i n the adjacent a rea , which could be a t t r i b u t a b l e to redevelopment. 110 S i t e B e n e f i t s " Tables ' 5 and 6 (Appendix A) and Map '6 (page 93) show the assessed l and values i n I960 and 1967• The d i s c u s s i o n of the changes i n l and values appears e a r l i e r i n t h i s 17 chap te r . In measuring the changes i n l and values a f t e r redevelopment, problems a r i s e because o f t h e , l o n g g e s t a t i o n p e r i o d . The p o s t - p r o j e c t s i t u a t i o n was assumed to be tha t i n 1967, i . e . when a l l the acqui red p r o p e r t i e s were d isposed o f f . In 1967 (Table 2 , Appendix A ) , 4 3 p r o p e r t i e s were s t i l l vacan t . Though a s i g n i f i c a n t number of p r o p e r t i e s w i t h i n the project- area were converted from r e s i d e n t i a l to commercial or i n d u s t r i a l uses , du r ing the p e r i o d of redevelopment. A long time., i n t e r v a l would however be r e q u i r e d to apprec ia te "the genera l fo rces tha t determine l and va lues i n the C i t y to have brought about n o t i c e a b l e changes i n these v a l u e s , a b s t r a c t i n g from redevelopment Only the changes i n land values over and above those of the genera l t r end could be a s c r i b e d to redevelopment. Rothenberg 's method of f i n d i n g the land p r i c e d v a r i a t i o n needs a time s e r i e s of l and p r i c e s , p o p u l a t i o n and per c a p i t a 19 income, going back "many y e a r s " , which cou ld not be ob ta ined . • 17 Supra, p . 9 9 . 18 Rothenberg, Economic E v a l u a t i o n of Urban Renewal, op. c i t . , pp . 1 7 8 - 7 9 . 19 Other p r a c t i c a l d i f f i c u l t i e s i n v o l v e d i n o b t a i n i n g comparable data on l and p r i c e were d i scussed e a r l i e r . (Supra, p . 99) . I l l S p i l l o v e r E f f e c t s The assessed l and va lues of the adjacent area to the south of the Redevelopment P r o j e c t , hounded by the major a r t e r i e s - G r a n v i l l e S t r e e t , Broadway and. B u r r a r d ' S t r e e t are shown i n the t ab l e s and map mentioned above. There i s no s i g n i f i c a n t v a r i a t i o n i n the change of the assessed l and va lues w i t h i n and adjacent to the p r o j e c t a rea . This may suggest tha t there i s no s p i l l o v e r e f f e c t . Income R e d i s t r i b u t i o n This i s measured, by. t r a c i n g the changes i n the p r i c e of p r o p e r t i e s and the p rope r ty ownership. No comparable and v a l i d data could be obta ined far t h i s purpose. The problems encountered i n drawing the "balance sheet of development" are e q u a l l y a p p l i c a b l e i n t r a c i n g the income r e d i s t r i b u t i o n r e s u l t i n g from redevelopment. Decreased S o c i a l Costs of Slums No comparable data on f i r e hazards , c r ime, e t c . f o r the area under s tudyare a v a i l a b l e . Bes ides the data problem, s u i t a b l e methodologies f o r the measurement of such items have to be developed, which i-s beyond the scope of t h i s , s tudy. Assessment of the " B e n e f i t - C o s t Summary" Without 'adequate data fo r e v a l u a t i o n of the p r o j e c t under study,. Rothenberg 's " b e n e f i t - c o s t summary" can not be completed. The s t r u c t u r e of the summary i s presented i n 112 Table 13 (Appendix A) to g ive some idea about the bas i c i n f o r m a t i o n r e q u i r e d to complete the t a b l e . The b e n e f i t s , p a r t i c u l a r l y the decreased s o c i a l cos ts of slums may be c r i t i c a l i n the o v e r a l l e v a l u a t i o n of the Redevelopment • P r o j e c t . A l s o , i n measuring the inc reased p r o d u c t i v i t y o f l a n d , no comparable t i m e - s e r i e s data over a l ong p e r i o d a r e a v a i l a b l e . I t may, t h e r e f o r e , be concluded tha t the above l i m i t a t i o n s s e r i o u s l y l i m i t the a p p l i c a b i l i t y of Rothenberg 's c o s t -b e n e f i t technique i n the e v a l u a t i o n of the p r o j e c t . ! A p p l i c a t i o n ' of Mao's Methodology An attempt . i s now made, to set up the a v a i l a b l e data i n the c o s t - b e n e f i t framework developed by Mao. To repea t , Mao's b a s i c approach i s to dev ise a method fo r a p p r a i s i n g the e f f i c i e n c y of p u b l i c renewal expendi tures by i d e n t i f y i n g and measuring the cos ts and b e n e f i t s of the renewal programme. The measurable i tems are expressed i n monetary terms and are then d iscounted to t h e i r present va lue to a base year fo r comparison. In Table 14 (Appendix A) a l l a v a i l a b l e e n t r i e s i n monetary terms are shown. I n t a n g i b l e e n t r i e s as w e l l as the data which could not be obta ined are a l s o i n d i c a t e d . . E x p l a n a -t o r y notes for the t a b l e f o l l o w : _ Supra, pp. 6 7 - 7 4 . (a) In i tem 1 . 1 ( bene f i t s ) $84 .9,800 equals twice the Increase i n the assessed va lue of 1'and ( i . e . $424,900) i n 1 9 6 7 over tha t i n I960 . 1 9 6 7 i s assumed to be the date of r e c k o n i n g . This may n o t , however, r e f l e c t the t rue inc rease 21 i n the l and v a l u e . (b) No break-down Is a v a i l a b l e fo r items on Survey and P l a n n i n g , and A d m i n i s t r a t i v e and C l e r i c a l expenses. The expendi tures on these items were i n c u r r e d over a p e r i o d of about ten yea r s , i . e . 1958 to 1 9 6 7 - However, the .expenditure statements show tha t about 50 per cent of the e s t i m a t e d . a d m i n i s t r a t i v e cos ts were spent i n the p e r i o d 1958 to 1 9 6 4 . The date of r eckon ing f o r the above items Ss , t h e r e f o r e , taken as 1 9 6 4 . (c) $ 1 3 6 , 2 0 0 i s the net cost of a c q u i s i t i o n , d e m o l i t i o n and c learance ( i . e . gross cost £630 , 700 l e s s r ecovery $494,500) which i s the land value w r i t e -down. The date of r eckon ing i s assumed to be 1 9 6 7 when a l l the- p r o p e r t i e s were-disposed o f f . (dO The assessed, va lue o f improvements on the acqui red p r o p e r t i e s amounted to $ 8 9 , 2 0 0 i n I 9 6 0 . D e m o l i t i o n was c a r r i e d out over a p e r i o d o f about four yea r s , Supra, pp. 97-99-114 i . e . I960 to 1964. For s i m p l i f i c a t i o n , n e g l e c t i n g the d e p r e c i a t i o n of undemolished improvements, the t o t a l va lue of improvements demolished i s cons idered to he $ 1 7 8 , 4 0 0 (equals 2 x $89 ,200) .. The date of r eckon ing i s assumed to he 1964. When completed, the Table 14 p rov ides a statement of the reduced s o c i a l accounts fo r the Redevelopment P r o j e c t . S ince i t con ta ins some i n t a n g i b l e and unobtained e n t r i e s , the i m p l i c a t i o n cannot be d i s cus sed i n the o v e r a l l e v a l u a t i o n of the p r o j e c t . 1 However, fd r the purpose of summation the f o l l o w i n g 1 assumptions are. made: (a) About 264'persons were d i s p l a c e d by c learance of sub-s tandard s t r u c t u r e s w i t h i n the p r o j e c t a r e a . I t i s assumed tha t pursuant to the o b j e c t i v e s of the r e l o c a t i o n p l a n under the p r o v i s i o n s o f the N a t i o n a l Housing A c t , a l l d i s p l a c e d dese rv ing persons were p rov ided w i t h b e t t e r accommodation i n p u b l i c housing p r o j e c t s . A l l non-economic r e l o c a t i o n cos ts cannot be t r aced and, a l s o , cannot he d e c i d e d l y a sc r i bed to redevelopment. (b) On the bene f i t s i d e , there has n e c e s s a r i l y been t a n g i b l e as w e l l as i n t a n g i b l e e f f ec t s of s3ium c l e a r a n c e . S i m i l a r l y , an improvement i n l o c a l 115 f inances i s ev ident from the inc rease i n the t axab le va lue of the p r o p e r t i e s . S ince these e f f ec t s are d i f f u s e d , i t may be assumed t h a t , i n the p e r s p e c t i v e o f the e n t i r e C i t y , the b e n e f i t s tha t could be appor t ioned to the p r o j e c t area on t h i s account are n e g l i g b l e . Wi th these assumptions, f i n a n c i a l b e n e f i t s and costs o f the Redevelopment P r o j e c t can be compared. Table 15 (Appendix A) shows the d iscounted values o f b e n e f i t s and costs to the base year I960. ' In Table 16 (Appendix A) an o v e r a l l e v a l u a t i o n of the p r o j e c t i s made fo r s e v e r a l s o c i a l cos ts o f c a p i t a l - 2 per cen t , 4 per cent and 6 per cent and the assumed marg ina l e f f i c i e n c i e s as shown i n the t a b l e . Even f o r the maximum s o c i a l oost of c a p i t a l (6 per cent) and the minimum assumed marg ina l e f f i c i e n c y (6 per c e n t ) , present va lue of t a n g i b l e b e n e f i t s exceeds the present va lue o f t a n g i b l e c o s t s . Thus, subject to the above l i m i t a t i o n s , i t can be concluded tha t the p u b l i c expendi ture on the redevelopment of the area was j u s t i f i e d . 3- STUDY AREA 2 : REZONED AREA Problem R e q u i r i n g A n a l y s i s The genera l l o c a t i o n of Study Area 2 and i t s f u n c t i o n a l r e l a t i o n s h i p to the surrounding areas are shown i n Map 1 and 2 (pages 84 and 8 6 ) . The area f a l l s to the n o r t h of Broadway 116 between Yukon S t r e e t , F i f t h Avenue and Main S t r e e t , and i s more p a r t i c u l a r l y def ined i n Map 9 (page 117)• The area compr is ing about 5^-5 acres was zoned. RM-3 M u l t i p l e 'Dwelling D i s t r i c t , p r i o r to 1961, as shown i n Map 3 (page 89). • "The whole of t h i s area was proposed fo r comprehensive i n d u s t r i a l redevelopment i n the Twenty-year Redevelopment P l a n , but as • an i n t e r i m , measure, having regard to. the : q u a l i t y and i n t e n s i t y of r e s i d e n t i a l use , the C o u n c i l r e s o l v e d tha t the s u b j e c t . a r e a should be r e t a i n e d as an RM-3 M u l t i p l e . 23 • • D w e l l i n g D i s t r i c t " . However, on a n . a p p l i c a t i o n from the m a j o r i t y of the p rope r ty owners i n the above a rea , the C o u n c i l r e s o l v e d to rezone the area to M - l I n d u s t r i a l D i s t r i c t on. the 28th December, 1961, as shown i n Map 9 (page 117) . 24 I n 1961, the c o n d i t i o n of the area was as f o l l o w s : Land Use and P h y s i c a l C o n d i t i o n s . The predominant sub- . d i v i s i o n was 50 fee t l o t s and the area consisted- mos t ly of s i n g l e - f a m i l y d w e l l i n g s and d w e l l i n g s converted i n t o s u i t e s and l o d g i n g houses. There were f i v e apartment b locks and a few sca t t e r ed non-conforming i n d u s t r i e s and s torage areas.- The vacant areas, were occupied by car p a r k i n g fo r the a d j o i n i n g i n d u s t r i e s . Table 17 (Appendix A) shows the d e t a i l s of l and use by l o t s . 23 •» Report to the Board of A d m i n i s t r a t i o n , ' C i t y of Vancouver, by the l e g h n i c a l P l a n n i n g Board, r ega rd ing "Rezoning A p p l i c a t i o n " Spptember 8, 1961, ( i n the f i l e s of the C i t y P l a n n i n g Depar t -ment) . 24 I b i d . 117 ••••4 '•••••\ •••••^ l i * * • ^ B ^ B s n a E E r a Gzas E^S ^ DZpEH E H H DZEEB ^  ^ 3 ^ imm/n mro 533533 ran ^ ™ Bffl'™ rv"^^ 5 ± ± 1 E £ BH3 EffiHig] !•»••! [ m r a EES rmrcrra c m rrrm ss[2 mwgMliiii^^^ EJXS s u a 5 5 1 5 a ^ ^ ^ l g i ^ EEig] g j s a CXT^ ESS • "53 I- X-~i7->1 ESS One Family Dwelling Two Family Dwelling M u l t i p l e Dwelling Wtim&r-SA Commercial I n d u s t r i a l C i t y P lanning Dept. 'Map 9. ZONING, 1967, STUDY AREA 2 sou 118 Most of the houses i n the s tudy area were b u i l t i n the p e r i o d 1 9 0 0 - 1 9 1 ? ' . Res ident owners occupied o n l y ^6 per cent of the 2 9 0 p r o p e r t i e s . A genera l w i n d s h i e l d check of the c o n d i t i o n of houses i n - 1 9 6 1 showed that 60 per cent of the houses had d e t e r i o r a t e d and that the r e s t were about the same as i n 1 9 5 6 . . S o c i a l C o n d i t i o n s . . Most of the people r e s i d i n g i n ' the area were d i s p l a c e d by p r i v a t e development from other c e n t r a l d i s t r i c t s . . Accord ing to a r epo r t of the S o c i a l S e r v i c e Department, 9 4 f a m i l i e s ' were r e c e i v i n g s o c i a l a s s i s t ance and 8 5 persons were on o l d age a s s i s t a n c e . ' The area was one of the worst slums i n the C i t y and was i n h a b i t e d by many m u l t i -problem f a m i l i e s . Ro d e t a i l e d s t a t i s t i c s of the s tudy area are a v a i l a b l e fo r f u r t h e r s o c i a l a n a l y s i s . Major quest ions tha t arose i n t a k i n g the p o l i c y d e c i s i o n on ' the a p p l i c a t i o n f o r r ezon ing the area were: (a) whether there was a market demand fo r i n d u s t r i a l l a n d ; . (b) whether the area was ready fo r i n d u s t r i a l use by by p r i v a t e or p u b l i c redevelopment; and (c) whether r ezon ing of the area would l ead to fu r t he r d e t e r i o r a t i o n of the area - s o c i a l as w e l l as p h y s i c a l . 119 Since the d e c i s i o n has been taken to rezone the area to M - l I n d u s t r i a l . D i s t r i c t , the problem i s to evalua te the e f f ec t s of t h i s d e c i s i o n . In other words, i n con t r a s t to the p o l i c y of a " l i m i t e d Redevelopment Programme" i n Study Area 1, Study Area 2 was l e f t to be redeveloped through the f ree market economy. An attempt i s made to determine whether any v a l i d conc lus ions ' can be drawn by a p p l y i n g the s e v e r a l c o s t - b e n e f i t frameworks as was done f o r Study Area 1. For Study Area 2, the p r e - p r o j e c t s i t u a t i o n i s a l s o assumed to be tha t i n I960, and the I960 s i t u a t i o n i s , compared to tha t i n 1967• In the case o f the Study Area 1, the 1967 s i t u a t i o n i s a c t u a l l y the p o s t - p r o j e c t s i t u a t i o n , but i n S tudy .Area 2, the redevelopment brought .about by r ezon ing w i l l cont inue f o r some t ime . . . A p p l i c a t i o n .of L i c h f i e l d ' s Methodology U n l i k e Study Area 1, no' p u b l i c expendi ture other than a d m i n i s t r a t i v e and c l e r i c a l expenses was i n c u r r e d . This may. be ignored fo r the purpose of t h i s s tudy . P r i o r to t r a c i n g the e f f ec t s of re.zoning by a t tempt ing to draw the "balance sheet o f development" the changes i n l and use , assessed va lues o f land and improvements w i t h i n and adjacent to the rezoned area need d i s c u s s i o n . 120 Comparison of Land Use The comparison of l and use by l o t s i s shown i n Tahle 17 (Appendix A ) . From an a n a l y s i s of the t a h l e the f o l l o w i n g are observed: i ) Between 1961 and 1967 the number of r e s i d e n t i a l l o t s decreased by about 25 per cen t , and the number of i n d u s t r i a l and commercial l o t s inc reased about 150 p.er cen t , i i ) Though there i s no change i n the number of vacant l o t s , a s u b s t a n t i a l number of l o t s have been c o n s o l i d a t e d presumably to meet the demand f o r l a r g e r i n d u s t r i a l and commercial s i t e s . R e s i d e n t i a l (var ious type's') and vacant p r o p e r t i e s re-used f o r commercial or i n d u s t r i a l purposes are shown i n Maps 10 and 11 (pages 121 and 122) . 'The i m p l i c a t i o n of t h i s change becomes s i g n i f i c a n t when the assessed jralue of improvements of these p r o p e r t i e s i s compared before and a f t e r r e - u s e . Change i n the Assessed Value o f Improvements and Land Value o f Improvements The inc rease i n the assessed va lue of improvements o f the p r o p e r t i e s re-used fo r commercial or i n d u s t r i a l purposes i s shown i n Table 18 (Appendix A ) . The inc rease i s n e a r l y 3 0 0 per cent and i s o b v i o u s l y due to redevelopment. Other e x i s t i n g p r o p e r t i e s show a s i g n i f i c a n t d e p r e c i a t i o n i n the assessed va lue o f improvements. MAP 10. R E - U S E D P R O P E R T I E S , S T U D Y AREA 2, (showing use i n 1963) IV! *MAP 11. RE-USED PROPERTIES, STUDY AREA 2, (showing use l n 1968) 123 Value of Land The comparison of the.assessed- l and values w i t h i n the rezoned area and i n the adjacent a r e a d e l i n e a t e d by the major a r t e r i e s i s shown i n Tables 19 and 20 (Appendix A ) , and i s a l s o shown i n Map 12. (page 124) . W i t h i n the rezoned area the average inc rease (median va lue) i n 1967 over tha t i n I960 i s about 300 per cent , whereas i n the adjacent area the inc rease i s o n ly 30 per cent , i n the same p e r i o d . The problem of comparing the assessed values of l and 2 5 d i scus sed e a r l i e r a l so a r i s e s he re . I t i s , however, apparent tha t there Is a s u b s t a n t i a l , i nc rease i n the assessed l and va lues w i t h i n the rezoned area which, can be a t t r i b u t e d to r e z o n i n g . Most of the b locks i n the adjacent area used fo r comparison a l r eady enjoy..a h i g h market demand. G i v i n g due c o n s i d e r a t i o n to t h i s f a c t , i t can s t i l l be assumed ; ' that the assessed l and va lue w i t h i n the rezoned area inc reased over and above the market t r e n d . There i s thus a net f i n a n c i a l ga in to the C i t y from inc reased tax revenues. Balance Sheet of Development S ince the data r e q u i r e d fo r the numer ica l summation of cos ts and b e n e f i t s to d i f f e r e n t sec to r s are not a v a i l a b l e , the "balance sheet of development" can be drawn on ly i n Supra, p .99 0' ,'J, ! i : 1 !_l_i_Li_!_ 1 1 ttLT/iF •p. 1 .. 1—1—T" 7;. I'M 23 Hi? rj • t| 1 11 UJ " W W 11 SSL FOURTH AVEL 31W rr mrm i—=^— • • i * -I Am SEVENTH AVE 1 I 3d d g j f : m : l ? • 1 1 0 0 1 250 »3g']i6''-f?3'4'; • P« i 36 | | | A H H l SIX1 b i d I ;^ rr!37 il~-.-f 25 I SEVENTH AVE 01X8 -! | i i EIGHTH AVE. : , , 23. i i 19 101, I6& 2 9,4 6 O JONATHAN ROGERS i 146 1 •>0 3.-03^ I -16,100— — 3 4 , 6 4 0 8^*°o\ 1967 Value ( n S . o i o I 9 6 0 Value Assessment Records (Tables 19 & 20, Appendix A) MAP 12o ASSESSED LAND VALUES, I960 - 196?, - STUD.Y AREA 2, I V ) -r 125 . a lgeb ra i c terms as shown i n Table 12 (Appendix A ) . P roduce r s /ope ra to r s and consumers for Study Area 2 are the 26 same as tha t f o r the Study Area 1, and the balance' shee.t f o r t h i s s tudy area w i l l be i d e n t i c a l i n form to the. above t a b l e . As. such, w i t h the a v a i l a b l e da ta , no v a l i d c o n c l u -s ions w i t h regard to the e v a l u a t i o n of the r ezon ing p o l i c y can be drawn. A p p l i c a t i o n of Rothenberg 's Methodology The assessed land Values shown i n Table 1 9 (Appendix A) r e f l e c t the inc reased p r o d u c t i v i t y of l and w i t h i n the s tudy a r ea . There i s a net i nc rease i n " s i t e b e n e f i t s " . However, w i t h t h i s data alone Rothenberg 's " b e n e f i t - c o s t summary" cannot be completed. "Income r e d i s t r i b u t i o n " and " s o c i a l cos ts of s lums" are c r i t i c a l i n • e v a l u a t i n g the repercuss ions of r e z o n i n g . Rezoning has presumably inc reased the l and value of the area at a much h igher r a t e than that of the adjacent a rea . Most of the r e s i d e n t i a l landowners were tempted to dispose o f f t h e i r p r o p e r t y at the inc reased p r i c e and to i n v e s t the money elsewhere . Most of the d i s p l a c e d tenants un less p rov ided w i t h accommodation i n l o w - r e n t a l housing schemes and adequately cared for by the community wel fa re s e r v i c e s , must 26 Supra, p . 1 0 1 . 126;" have pai'dO. a heavy s o c i a l c o s t . A d e t a i l e d s o c i a l a n a l y s i s of these d i s l o c a t e d households i s r e q u i r e d to measure the a c t u a l s o c i a l cos ts and bene f i t s of redevelopment through r e z o n i n g . Since no such data are a v a i l a b l e , no v l i d c o n c l u s i o n can be drawn w i t h regard to the e f f ec t s of r e z o n i n g . h. REVIEW OF THE CASE STUDIES The major l i m i t a t i o n s of the case s t u d i e s , as noted i n the -jp.r&aedlngg a n a l y s i s , are summarized as f o l l o w s : (a) Only data which are a v a i l a b l e i n a r e a d i l y a p p l i c a b l e form and which could be obta ined w i t h i n the a v a i l a b l e time and resources are used. (b) The assumed p o s t - p r o j e c t s i t u a t i o n i n Study Area 1 may not r e f l e c t the * f u l l impact of r edeve lop -ment w i t h i n the p r o j e c t area and i n the adjacent a r ea . This i s because of the long g e s t a t i o n p e r i o d r e q u i r e d fo r the p r o p e r t y value changes. (c) Absence of comparable data on p rope r ty va lues s e r i o u s l y l i m i t s the usefulness of the assessed va lues • (d) D e l i m i t a t i o n of the adjacent area l i k e l y to have s p i l l - o v e r e f f e c t s i s a r b i t r a r y . Though adequate data are not a v a i l a b l e to f u l l y employ the c o s t - b e n e f i t techniques advanced by L i c h f i e l d , Rothenberg 127 and Mao, the above l i m i t a t i o n s , p a r t l y imposed by the t h e o r e t i c a l fo rmula t ions of c o s t - b e n e f i t a n a l y s i s , l ead to the ques t ion of the o p e r a t i o n a l v a l i d i t y of these t o o l s i n e v a l u a t i n g the i m p l i c a t i o n s of the two d i f f e r e n t p o l i c i e s i n the s tudy areas . The s tudy r e s u l t s r e v e a l the p r a c t i c a l problems encountered i n . o b t a i n i n g the r e q u i r e d da t a . This i s due p a r t l y t o the nature of the p r o j e c t and p a r t l y to the s i z e of the s tudy a reas . Unless s p e c i f i c s tud ies a re 'under t aken , no aggregate data on p o p u l a t i o n , socio-economic c h a r a c t e r i s -t i c s , assessments, m u n i c i p a l expendi tures and revenues, e t c . are u s u a l l y a v a i l a b l e fo r such s m a l l a reas . In p a r t i c u l a r , i n f o r m a t i o n on the cos t o f t r a f f i c a c c i d e n t s , f i r e , c r i m e and h e a l t h hazards , are most d i f f i c u l t to fobtain. A s p e c i f i c methodology needs to be developed to take each of these items i n t o account . '. .. The'average (median) inc rease i n l and values i n 1967 over tha t i n I960 i s hO per cent i n Study Area 1 and about 3 0 0 .per cent i n Study Area 2 . I n ; both- cases , s p i l l o v e r e f f ec t s i n the adjacent areas are not s i g n i f i c a n t . But how much of t h i s i nc rease could be a s c r i b e d to redevelopment i n Study Area 1 and to r ezon ing i n Study Area 2 i s a major ques t i on . I d e a l l y , the i nc rease should be compared w i t h the 'market t r e n d ' of comparable i n d u s t r i a l l a n d , adjusted fo r the s i t u a t i o n a l f a c t o r . 128 The change i n p rope r ty va lue i s on ly one aspect i n the process o f redevelopment. Data on s o c i a l and economic c h a r a c t e r i s t i c s of the persons a f fec ted by redevelopment would r e v e a l the income d i s t r i b u t i o n aspect of redevelopment, which i s ' a c r i t i c a l f a c t o r I n the e v a l u a t i o n of the p o l i c i e s . W i t h l i m i t e d a v a i l a b l e da ta , no v a l i d conc lus ions w i t h regard to the p o l i c y of l i m i t e d redevelopment i n Study Area 1 and the p o l i c y of r ezon ing i n Study Area 2 can, t h e r e f o r e , be drawn. 129 CHAPTER V SUMMARY AND CONCLUSIONS This s tudy i s based on the hypothes is that c o s t - b e n e f i t a n a l y s i s , by i n d i c a t i n g the e f f e c t s o f planned a c t i o n s , cou ld p rov ide a bas i s f o r the o b j e c t i v e ' . e v a l u a t i o n of. a l t e r n a t i v e s i n .the urban p l ann ing p r o c e s s . I t was assumed that- c o s t - b e n e f i t a n a l y s i s p rov ides a framework w i t h i n which a l l e f f e c t s of a p a r t i c u l a r course o f a c t i o n could be dea l t w i t h comprehens ively . Such an approach, i t was cons ide red , would a s s i s t the dec is ion-makers i n making a r a t i o n a l choice among s e v e r a l p o s s i b l e a l t e r n a t i v e courses of a c t i o n . In chapter I I , the study approach f i r s t focusse<s on a d i s c u s s i o n of the genera l p r i n c i p l e s of c o s t - b e n e f i t a n a l y s i s , as i t seems to be t r a d i t i o n a l l y a p p l i e d , i n the broader p e r s p e c t i v e of va r i ous me thodo log ica l techniques of p l a n e v a l u a t i o n . Chapter I I I i s devoted to a rev iew of the l i t e r a -t u r e , p a r t i c u l a r l y the c o n t r i b u t i o n s of L i c h f i e l d , Rothenberg and Mao, d e a l i n g ; w i t h ' t h e a p p l i c a t i o n of c o s t - b e n e f i t . a n a l y s i s to urban p l a n n i n g . The me thodo log ica l techniques advanced by these authors enable:; a p r e l i m i n a r y e v a l u a t i o n of the hypo thes i s . ' In chapter IV , the conceptua l frameworks of c o s t - b e n e f i t a n a l y s i s developed by L i c h f i e l d , Rothenberg and Mao are employed i n two ex-post cases o f urban renewal i n the C i t y 130-of Vancouver . L i m i t a t i o n s of the me thodo log ica l techniques used and l i m i t e d data r e s t r i c t the conc lus ions w i t h regard to the v e r i f i c a t i o n of the h y p o t h e s i s . The hypothes is i n the l i g h t of the case s tud ie s i s d i scussed below. 1 . . THE HYPOTHESIS IN THE LIGHT OF THE CASE STUDIES The l i m i t a t i o n s o f the case s tud ies and the c o s t - b e n e f i t techniques employed i n the v e r i f i c a t i o n of the hypothes is are noted e a r l i e r . Only the data on the assessed value of l and and improvements and c e r t a i n other c h a r a c t e r i s t i c s of the p r o p e r t i e s ' could be obta ined i n a r e a d i l y a p p l i c a b l e form. Thus the a p p l i c a t i o n of the c o s t - b e n e f i t techniques p r i m a r i l y , i n v o l v e d an assessment of t h e . i n c r e a s e d p r o d u c t i v i t y of land measured i n terms of the inc reased land values r e s u l t i n g from redevelopment. The c o m p l e x i t i e s i n v o l v e d i n b r i n g i n g the data to a comparable bas i s preclude;.- a d e t a i l e d a n a l y s i s of the e f f ec t s of redevelopment on the p r o p e r t y v a l u e s . The c r i t i c a l ques t ion i s : , how much of these inc reased values can be a s c r i b e d to the p o l i c y of redevelopment i n Study Area 1 and to r ezon ing i n Study Area 2? The market t rend of l and values i n these areas i n the absence of any d e l i b e r a t e p u b l i c p o l i c y can on ly be worked out i n a h y p o t h e t i c a l s i t u a t i o n . T h i s , •131 however, does not p rec lude any q u a n t i t a t i v e analysisnof inc reased p rope r ty v a l u e s . B e s i d e s , the i nc idence of the e f f e c t s - t a n g i b l e as w e l l as i n t a n g i b l e , i s s i g n i f i c a n t i n -the e v a l u a t i o n of the p o l i c i e s . In Study Area 1, u s i n g Mao's methodology, w i t h many s i m p l i f y i n g assumptions on the "s ta tus quo s i t u a t i o n " , c e r t a i n conc lu s ions j u s t i f y i n g the p u b l i c expendi ture are drawn, Mao i s p r i m a r i l y concerned w i t h economic e f f i c i e n c y . L i c h f i e l d ' s balance sheet takes i n t o account a l l the consequences to v a r i o u s i d e n t i f i e d sec tors , i n v o l v e d i n the process of deve lop-ment. But the absence of r e l e v a n t data does not p rov ide any suppor t ing evidence to i d e n t i f y the e f f ec t s of redevelopment i n the a r ea . In Study Area 2, there was no e x p l i c i t p o l i c y of r e l o c a t i o n of the d i s p l a c e d persons r e s u l t i n g from r e z o n i n g . In view of the p r e - p r o j e c t socio-economic c o n d i t i o n of the a r ea , s o c i a l i m p l i c a t i o n s of the r ezon ing p o l i c y might have been most s i g n i f i c a n t ' . However, w i t h l i m i t e d a v a i l a b l e da ta , no c o n c l u s i v e statement can be made on the e f f e c t of r e z o n i n g . The conc lus ions w i t h regard to the v e r i f i c a t i o n of the hypothes i s i n the l i g h t of the case s tud i e s are thus r e s t r i c t e d by these l i m i t a t i o n s . 132 • 2. CONCLUSIONS The a n a l y s i s of the study r e s u l t s and a rev iew of the l i t e r a t u r e p rov ides a ba s i s f o r answering the f o l l o w i n g three major i n t e r r e l a t e d ques t i ons : 1. How v a l i d are the t o o l s of c o s t - b e n e f i t a n a l y s i s advanced by L i c h f i e l d , Rothenberg and Mao i n the e v a l u a t i o n of urban p lans? . 2. How u s e f u l i s c o s t - b e n e f i t a n a l y s i s , , as i t seems to be t r a d i t i o n a l l y a p p l i e d , i n the e v a l u a t i o n of a l t e r n a t i v e s ? 3- What i s the conceptua l v a l i d i t y of c o s t - b e n e f i t a n a l y s i s as a means of p l a n e v a l u a t i o n i n the urban p l a n n i n g process? How v a l i d are the t o o l s of c o s t - b e n e f i t a n a l y s i s advanced by L i c h f i e l d j Rothenberg and Mao i n the e v a l u a t i o n of urban plans,? In the choice of an a l t e r n a t i v e , L i c h f i e l d suggests tha t the o v e r a l l i n t e r e s t of the community should be the o v e r r i d i n g c o n s i d e r a t i o n . L i c h f i e l d ' s "balance sheet" t r aces the e f f e c t s o f development i n r e l a t i o n to the -var ious sec to r s i n v o l v e d i n the process of development. Though t h i s approach has a broader p e r s p e c t i v e , the absence of a p r e c i s e d e f i n i t i o n of the "goals ."may l ead to many c o n f l i c t i n g i n t e r e s t s of the p a r t i e s i n v o l v e d i n the process of development. The r e s o l u t i o n of such c o n f l i c t s i n favour of the " o v e r a l l i n t e r e s t of the community" i s l e f t to the judgement-of the dec i s ion -make r s . M o r r i s H i l l p o i n t s out the major c r i t i c i s m of the balance sheet as f o l l o w s : 5 133-. . . . i t does not appear to recogn ize tha t the b e n e f i t s and costs have o n l y i n s t r u m e n t a l v a l u e . B e n e f i t s and costs have meaning on ly i n r e l a t i o n ' to w e l l def ined o h j e c t i v e . . . . i t f a i l s to r ecogn ize tha t cos ts and b e n e f i t s can be compared on ly i f they can be r e l a t e d to a common o b j e c t i v e .1 . Rothenberg i s concerned w i t h the d i s t r i b u t i o n of income among v a r i o u s persons a f f e c t e d by a redevelopment p r o j e c t . and the max imiza t ion of wel fare among the " re levant popu la -t i o n s " . But he d i d not .advance any f ramework-wi th in which the e f f e c t s o f a p r o p o s a l could be d e a l t w i t h comprehensively . Mao suggests tha t the r epe rcuss ions of a p r o j e c t should be t raced, i n - r e l a t i o n to the b a s i c , o b j e c t i v e of the p r o j e c t . But i t appears tha t the o b j e c t i v e i s to maximize the o v e r a l l economic, e f f i c i e n c y i n p u b l i c expendi tures through, c o s t - b e n e f i t a n a l y s i s . Such an approach tends to subopt imize the non-economic o b j e c t i v e s . The l i m i t a t i o n s of these techniques are thus due p a r t l y to t h e i r t h e o r e t i c a l f o r m u l a t i o n and p a r t l y to the l i m i t a t i o n s of the genera l method of c o s t - b e n e f i t a n a l y s i s . Var ious i n t e r r e l a t e d phenomena o f the process of urban development add to the c o m p l e x i t y . General o b j e c t i v e s o f the me thodo log ica l techniques a l so d i f f e r . Thus . l i t can be s a i d that the techniques advanced by L i c h f i e l d , Rothenberg and Mao need H i l l , op. c i t . , p . 21 . 13^ refinement i n respec t of the d e f i n i t i o n of the "goals and o b j e c t i v e s " and the " re levan t p o p u l a t i o n s " l i k e l y to be a f f ec t ed by a p r o p o s a l , i n order to make the techniques a p p l i c a b l e i n the e v a l u a t i o n of urban p l a n s . How u s e f u l i s c o s t - b e n e f i t a n a l y s i s , as i t seems to be t r a d i t i o n a l l y a p p l i e d , i n the e v a l u a t i o n of a l t e r n a t i v e s ? T r a d i t i o n a l c o s t - b e n e f i t a n a l y s i s i m p l i e s economicr e v a l u a t i o n which leads to the i s sues of va r ious ope ra t ing forces of the market mechanism. Economic e v a l u a t i o n , regarded as a measure p f economic e f f i c i e n c y , seeks to maximize the "expected at ta inment o f the most va lued ends" by u t i l i z i n g scarce r e s o u r c e s . Whi le choosing among a l t e r n a t i v e investment o p p o r t u n i t i e s , a p r i v a t e entrepreneur endeavours to maximize h i s p r o f i t i n monetary terms. The pub l ic : s e c t o r , by i t s v e r y na tu re , has to take a wider view i n the sense that i t takes i n t o account the repercuss ions i n a l l s ec t ions of s o c i e t y . C o s t - b e n e f i t a n a l y s i s p rov ides a framework w i t h i n which the r e l e v a n t f a c t o r s r e q u i r e d i n making c e r t a i n investment d e c i s i o n s , can be d e a l t w i t h comprehensively . Hence, i n the p u b l i c s e c t o r , c o s t - b e n e f i t a n a l y s i s r a i s e s many quest ions i n v o l v i n g - i d e n t i f i c a t i o n of " cos t s " and " b e n e f i t s " , t h e i r measurement and r e d u c t i o n fo r comparison, choice of a c r i t e r i o n f o r the e v a l u a t i o n of a l t e r n a t i v e s , e t c . Answers to these quest ions va ry w i t h i n a wide range. 135 Thus, c o s t - b e n e f i t a n a l y s i s can best be a p p l i e d to a measure o f r e l a t i v e r a the r than absolu te mer i t s of p r o j e c t s which are of s i m i l a r type and magnitude and to rank them i n comparing a l t e r n a t i v e s . The technique i s most u s e f u l i n comparing p r o j e c t s when each p r o j e c t can be t r e a t ed as m u t u a l l y e x c l u s i v e and when the e f f ec t s of each can be eva lua ted i n a meaningful way. F i n a l l y , there i s the b a s i c ques t ion of the conceptual v a l i d i t y of c o s t - b e n e f i t a n a l y s i s as a means- of p l a n e v a l u a t i o n . The process of p l a n e v a l u a t i o n i n v o l v e s a choice among s e v e r a l a l t e r n a t i v e s by t r a c i n g a l l the con-sequences of a p a r t i c u l a r c o u r s e . o f a c t i o n . In chapter I I i t has been po in t ed out tha t the problem of g o a l - s e t t i n g i s fundamental to .the process of e v a l u a t i o n . The r e l a t i v e mer i t of a l t e r n a t i v e s could be evaluated to the extent tha t the goals and o b j e c t i v e s are e x p l i c i t and c l e a r l y s t a t e d . Some o b j e c t i v e c r i t e r i a i n the process of e v a l u a t i o n would l ead to a more r a t i o n a l d e c i s i o n . An urban p l a n may be viewed as a framework w i t h i n which i n d i v i d u a l d e c i s i o n s are coord ina ted to achieve c e r t a i n va lued ends. In the f i n a l a n a l y s i s , " b e n e f i t s " accrued to the community from the i m p l i c a t i o n of "a p l a n " must be r e l a t e d to the "cos t s " i n c u r r e d . L i c h f i e l d argues that the e v a l u a t i o n of a p l a n w i l l be o b j e c t i v e to the degree to which 136 " b e n e f i t s " and "cos t s " r e s u l t i n g from each course of a c t i o n 2 cou ld be i d e n t i f i e d , mean ingfu l ly measured and v a l u e d . -T r a d i t i o n a l l y , cos ts have been def ined as the va lue of "resources of l a n d , l abour and c a p i t a l " ( u s u a l l y fo r a p r o j e c t ) used to implement and operate a p r o j e c t w h i l e b e n e f i t s are the va lue o f "immediate p roduc t s , or s e r v i c e s , r e s u l t i n g from the courses - of a c t i o n f ! f o r which the cos ts have been p a i d " . In the e v a l u a t i o n of an urban p l a n , t r a d i t i o n a l concepts of cos ts and b e n e f i t s do not n e c e s s a r i l y imp ly the v a r i e d and wide range of consequences r e s u l t i n g from a p o l i c y d e c i s i o n . Though the o b j e c t i v e s of "p l ann ing" may va ry depending on the purpose i t i s de s i r ed to se rve , i t can be s a i d t h a t i t c e r t a i n l y i n v o l v e s an attempt to take i n t o account' the r e s u l t i n g cos ts and b e n e f i t s to the community at l a r g e , not o n l y evaluate the t a n g i b l e s , but the i n t a n g i b l e s as w e l l . Thus, the e v a l u a t i o n of a p l a n may or may not s imply i n v o l v e the e f f i c i e n t use of l a n d , l abour or c a p i t a l but a l l o ther non-economic c o n s i d e r a t i o n s , depending on the def ined g o a l . In i t s broadest i n t e r p r e t a t i o n , c o s t - b e n e f i t a n a l y s i s i s a framework w i t h i n which a l l the consequences o f a p a r t i c u l a r course of. a c t i o n could be evaluated comprehensively. Supra , pp . 51-52. 137 3 M o r r i s H i l l , wh i l e advancing h i s "goals-achievement m a t r i x " fo r e v a l u a t i n g a l t e r n a t i v e s def ines costs and b e n e f i t s i n terms of goals-achievement . "Thus b e n e f i t s represen t progress toward the d e s i r e d o b j e c t i v e s w h i l e cos ts represent r e t r o g r e s s i o n from des i r ed o b j e c t i v e s " . Costs and b e n e f i t s are def ined e i t h e r i n q u a n t i t a t i v e or q u a l i t a t i v e terms depending on how the o p e r a t i o n a l d e f i n i t i o n s of the goal are expressed. For a s u c c e s s f u l a p p l i c a t i o n of the goals-achievement m a t r i x i n the e v a l u a t i o n of a l t e r n a t i v e • p l a n s , the complex i ty of a s s i g n i n g proper weight to the va r ious i d e n t i f i e d sec to r s and .the o p e r a t i o n a l l y def ined goals remains . In making a r a t i o n a l d e c i s i o n , H i l l i n d i c a t e s the magnitude of the work tha t might be i n v o l v e d i n the e v a l u a t i o n of a l l the consequences of a course of a c t i o n . ' 3- ASSESSMENT AND RECOMMENDATIONS This s tudy has attempted to examine the technique of . c o s t - b e n e f i t . a n a l y s i s as a means of p l a n e v a l u a t i o n . I t has been apparent tha t the e x p l i c i t d e f i n i t i o n of the goals and. o b j e c t i v e s of a p l a n i s c r u c i a l i n e v a l u a t i n g i t s e f f i c i e n c y H i l l , op. c i t . , pp . 19-28. h I b i d . , p . 23. I b i d . , pp . 27-28. . 1 3 8 and e f f e c t i v e n e s s . The c o s t - b e n e f i t techniques reviewed i n t h i s s tudy are thus l i m i t e d by t h e i r genera l o b j e c t i v e s and approach to urban problems. The p a r t i a l a p p l i c a t i o n of these tools , a l so point-s out the o p e r a t i o n a l problems which must be r e s o l v e d i n order to make these t o o l s o p e r a t i o n a l l y v a l i d . I t may be noted tha t the ques t ion of the conceptua l v a l i d i t y of. c o s t - b e n e f i t techniques as a t o o l fo r e v a l u a t i n g urban p lans was omit ted from the d i s c u s s i o n wh i l e fo rmula t ing the h y p o t h e s i s , s i nce i t was assumed tha t c o s t - b e n e f i t a n a l y s i s i s r a the r an a n a l y t i c a l framework w i t h i n which the v a r i o u s f a c t o r s cou ld be eva lua ted comprehensively i n r e l a t i o n to the def ined goals and o b j e c t i v e s . The f o r m u l a t i o n of goals and o b j e c t i v e s , i t i s e v i d e n t , i s an i n t e g r a l pa r t of the a n a l y t i c a l t echn iques . The bas i c weakness i n r e l a t i o n to the c r i t e r i a suggested f o r an o b j e c t i v e e v a l u a t i o n of urban p lans and i t s assumptions thus l i e s i n the l i m i t a t i o n s of the me thodo log ica l t o o l s . These, l i m i t a t i o n s r e s t r i c t the v e r i f i c a t i o n of the hypothes is as fo rmula ted . In a d d i t i o n , the rev iew of the case s tud ies r e v e a l s the f a c t tha t the study p r o j e c t f o r an a p p l i c a t i o n of the c o s t - b e n e f i t techniques ought to be l a r g e enough such tha t the e f f ec t s of development could be s u f f i c i e n t l y i d e n t i -f i e d . Unless the area i n v o l v e d i n such p r o j e c t s c o n s t i t u t e s 139 a s t a t i s t i c a l u n i t or adequate comparable data are a v a i l a b l e , 'the c o l l e c t i o n of such i n f o r m a t i o n , f o r example, p rope r ty va lue t rends , , m u n i c i p a l expendi tures and revenues, s o c i a l c o s t s , e t c . , would be ah important p a r t of the c o s t - b e n e f i t s t u d i e s . Wi th t h i s thought i n mind, i t i s recommended that f u r t he r s tudy on c o s t - b e n e f i t techniques be d i r e c t e d f i r s t towards an examinat ion of t h e i r conceptua l approach to urban problems. The present s tudy reviewed o n l y the c o n t r i b u t i o n s of L i c h f i e l d , Rothenberg and Mao d e a l i n g w i t h a comprehensive framework w i t h i n which the authors attempted to evaluate the var ious- e f f ec t s o f a p a r t i c u l a r course o f a c t i o n i n r e l a t i o n to t h e i r de f ined o b j e c t i v e s . There are s e v e r a l s tud ie s d e a l i n g w i t h s p e c i f i c l i m i t e d aspects o f urban p l a n -n i n g , and c o s t - b e n e f i t a n a l y s i s has been a p p l i e d to appra ise 6 the e f f ec t s of va r i ous p roposa l s concerning l and usage, such as hous ing , i n d u s t r y , shopping cen t r e , r e c r e a t i o n , e t c . An attempt should be made to .draw from them such i n d i c a t i o n s which might be u s e f u l i n c l a r i f y i n g the i s sues under s tudy . The conceptua l framework of c o s t - b e n e f i t a n a l y s i s as a means o f e v a l u a t i n g a l t e r n a t i v e p lans would n e c e s s a r i l y i n v o l v e the f o r m u l a t i o n of goals and o b j e c t i v e s and the P r e s t and Turvey, op. c i t . , pp . 718-21. i d e n t i f i c a t i o n of v a r i o u s " sec to r s " (or "groups" or " re levant p o p u l a t i o n " ) which would he a f fec ted by the process of development. Such a framework would p rov ide a ba s i s f o r e v a l u a t i n g the consequences o f a l t e r n a t i v e courses e?<fr a c t i o n . A second d i r e c t i o n fo r f u r t he r s tudy may i n v o l v e the i d e n t i f i c a t i o n of the consequences r e s u l t i n g from va r ious courses of a c t i o n . Such consequences might be i n terms of monetary v a l u e s , environmental q u a l i t y , non-economic s o c i a l b e n e f i t s and/or c o s t s , e t c . Without a t tempting to t r a n s l a t e a l l the non-monetary and'non-measurable or i n t a n g i b l e e f f ec t s i n t o monetary v a l u e s , d i f f e r e n t sca le s could be developed fo r t h e i r comparison. Such a comprehensive p i c t u r e when viewed i n the p e r s p e c t i v e o f the e x p l i c i t goals and o b j e c t i v e s could be a ba s i s fo r r a t i o n a l d e c i s i o n . There a r e , o b v i o u s l y , many other areas which r e q u i r e e x p l o r a t i o n and s tudy . One of the advantages Sf c o s t - b e n e f i t a n a l y s i s of p l a n e v a l u a t i o n i s tha t the p lanners and the dec is ion-makers may both become acquainted i n greater d e t a i l s w i t h the t r a d e - o f f s . Improved unders tanding of the complex i -t i e s of urban phenomena and .var ious other a n a l y t i c a l methods l ead to a more r.ef.ine.d_c_qst-benefit c a l c u l u s f o r an o b j e c t i v e e v a l u a t i o n of urban p l a n s . Perhaps, the best way of conc lud ing t h i s study would he to r e i t e r a t e the b a s i c sugges t ion of M o r r i s H i l l : . . . . M e t h o d s should be judged on the bas i s of whether or not they lead, to proper conc lus ions i f i t can be assumed tha t the numbers and d e s c r i p t i o n s used i n the a n a l y s i s are the r i g h t ones. Ob ta in ing the r i g h t numbers and the d e s c r i p t i o n s of the i n t a n g i b l e e f f e c t s , though a fundamental problem, i s separate and d i s t i n c t from the problem of deve lop ing methods of e v a l u a t i o n . 7 H i l l , op. c i t . , p . 28. 142 B I B L I O G R A P H Y 143 BIBLIOGRAPHY Books Chapin , S tua r t F . J r . , Urban Land Use Planning; , Urbana, 1 1 1 . : U n i v e r s i t y of I l l i n o i s P r e s s , 1965-Dorfman, Rober t , ( e d . ) , Measuring B e n e f i t s o f Government  Investments, Washington, D . C : The Brookings I n s t i t u t i o n , 196?. E c k s t e i n , O t t o , Water Resource Development, Cambridge, M a s s . : Harvard U n i v e r s i t y P r e s s , 1958• F i s h e r , Webb S . , Mastery of the M e t r o p o l i s , Englewood C l i f f s , N . J . : D. Van Nos t ran t Co. I n c . , 1950. . G a l l i o n , Ar thur B. a n d ' E i s n e r , Simon, The Urban P a t t e r n , ; P r i n c e t o n , N - . J . : ' D . 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H i l l , M o r r i s , "A Goals-Achievement M a t r i x fo r E v a l u a t i n g A l t e r n a t i v e P l a n s " , J o u r n a l of the American I n s t i t u t e of P l a n n e r s , XXXIV (January, 1968), pp. 19-29- !~~ K e l s o , M. M . , "Economic A n a l y s i s i n the A l l o c a t i o n of the F e d e r a l Budget' to Resource Development", Economics  and P u b l i c P o l i c y i n Water Resource Development, Stephen C. Smith and Emery N . , C a s t l e , ' (eds.) , Ames, Iowa: Iowa S ta te U n i v e r s i t y P r e s s , 1965, P P • 55 _ 67-L i c h f i e l d , N a t h a n i e l , • " C o s t - B e n e f i t A n a l y s i s i n Town P l a n n i n g , A Case Study - Swanley", Urban S t u d i e s , I I I , No. 3 (November, 1966), pp . 215-49. ., " C o s t - B e n e f i t A n a l y s i s i n C i t y P l a n n i n g " , J o u r n a l of the American I n s t i t u t e of P l a n n e r s . XXVI (November, 19.60), pp . 273-79. , "The E v a l u a t i o n of C a p i t a l Investment P r o j e c t s In Town Centre Redevelopment", P u b l i c A d m i n i s t r a t i o n , XXXXV (Summer, 1 9 6 7 ) , pp. 1 2 9 - 4 7 . ' 145 L i c h f i e l d , N a t h a n i e l , "Cos t -Bene f i t A n a l y s i s i n P l a n E v a l u a t i o n " , The Town P l a n n i n g Review, XXXV, No. 2 ( J u l y , 1964), pp . 159-69. , " R e l o c a t i o n : The Impact on Housing W e l f a r e " , J o u r n a l of the American I n s t i t u t e of P l a n n e r s , XXVII (August, 1961), pp . 199-215. _ _ _ _ _ _ " S p a t i a l E x t e r n a l i t i e s i n Urban P u b l i c 'Expendi tures : A Case Study" , The P u b l i c Economy of Urban Communities, J u l i u s M a r g o l i s y (ed..),. Washington, D . C . : Resources fo r the F u t u r e , I n c . , 1965, pp . 207-50. Lowry, I r a S . , "A Short Course i n Model D e s i g n " , Jou rna l of the A m e r i c a n - . I n s t i t u t e -of P l a n n e r s , XXXI (May, 1965) , pp . 158-66. Maass, A r t h u r , " B e n e f i t - C o s t A n a l y s i s : I t s Re levance . to P u b l i c Investment D e c i s i o n s " , The Q u a r t e r l y Hournal  o f Economics, LXXX (May, 1966)', pp . 208-26. Mao, James C T . , " E f f i c i e n c y i n P u b l i c Urban' Renewal . - Expendi tures Through Benef i t -Cos . t . A n a l y s i s " , J o u r n a l  o f the American I n s t i t u t e of P l a n n e r s , XXXII (March, 1966) , pp. 95-107-, " Q u a n t i t a t i v e A n a l y s i s of Urban Renewal Investment Decisions' . ' 1 , The J o u r n a l of F inance , X X I I , No. 2 (May, 1967), pp. 195-207-P r e s t , A . R. and Turvey, R . , "Cos t -Bene f i t A n a l y s i s : A Survey" , The Economic J o u r n a l , LXXV (December, 1965), pp . 683-735-Sonenblum, Sidney and S t e r n , Louis H . , "The Use of Economic P r o j e c t i o n s i n P l a n n i n g " , J o u r n a l of the American ' I n s t i t u t e of P l a n n e r s , XXX (May, 1964), pp. 110-23. S t e i n , Jerome L . , , "Economic A n a l y s i s and Urban Development", P lann ing . 1964,. Chicago, 1 1 1 . : American S o c i e t y of P l a n n i n g O f f i c i a l s , 1964, pp. 77-80. Webber, M e l v i n M . , "The Roles of I n t e l l i g e n c e Systems i n Urban-Systems P l a n n i n g " , J o u r n a l of the American . I n s t i t u t e of P l a n n e r s , XXXI (November, 1965), pp . 289-96. s 146 Reports C i t y P l a n n i n g Department, C i t y of Vancouver Urban Renewal , Programme, Proposed Study under P a r t V of the  N a t i o n a l Hous ing -Ac t , Vancouver, B . C . : The C i t y , August 1966. - • C i t y P l a n n i n g Department, Vancouver Redevelopment Study, A Report prepared fo r the Housing Research Committee, Vancouver, B . C . : .The C i t y , December, '1957-C i t y of Vancouver, 1966 - 1970 C a p i t a l Programme,-(September 2 9 t h P l e b i s c i t e ) , Vancouver, B . C . : The C i t y , September 1965• I n t e r - A g e n c y ' R i v e r B a s i n Committee (Sub-Committee on Costs and Budge ts ) , Proposed P r a c t i c e s fo r Economic A n a l y s i s  of. R i v e r B a s i n P r o j e c t s ( " T h e Green B o o k " ) , Washington, D . C : U.S .Government P r i n t i n g O f f i c e , 1 9 5 0 . S e w e l l , W. R . D . , D a v i s , John, S c o t t , A . D . .and Ross , D .W. , Guide to B e n e f i t - C o s t A n a l y s i s , Resources fo r Tomorrow, Ottawa, Canada: Queen's P r i n t e r , 1 9 6 5 . Shaaf, A . H . , Economic ..Aspects of Urban Renewal: .Theory , P o l i c y and Area A n a l y s i s , . Research R e p o r t ' 1 4 , Rea l E s t a t e Research Programme, I n s t i t u t e of Business and Economic Research , B e r k e l e y , C a l i f f . : U n i v e r s i t y of C a l i f o r n i a , I960 , Vancouver R e a l Es t a t e Board , - R e a l E s t a t e and Business Trends, 1961, Vancouver, B . C . : The Board , 1961. Vancouver Rea l Es t a t e Board , Trend News, Vancouver, B . C . : The Board , 1966. Unpubl ished M a t e r i a l •- • Assessment Commissioner 's O f f i c e , C i t y of Vancouver,- Unpublished assessment records concerning the study a reas . C i t y P l a n n i n g Department, C i t y of Vancouver . Unpubl ished i n f o r m a t i o n p e r t a i n i n g to the s tudy areas a v a i l a b l e 1 i n the f i l e s and maps of the department. Ik7 C i t y P l a n n i n g Department, C i t y of Vancouver . " C i t y of Vancouver Redevelopment P r o j e c t Wo. 1", A Report P repa red - by the T e c h n i c a l P l a n n i n g Board , November 1959- (Mimeographed). (Unpubl i shed) . Farbman, D a v i d , "A D e s c r i p t i o n , A n a l y s i s and C r i t i q u e of the Master P l a n " , A Study Prepared fo r the I n s t i t u t e for Urban S t u d i e s , U n i v e r s i t y of P e n n s y l v a n i a , P e n n s y l v a n i a , 1 9 5 9 - 6 0 . (Mimeographed). (Unpubl i shed) . F r i e d l y , P h i l i p H. . , "A Methodology fo r Economic A n a l y s i s . o f R e t a i l Commercial F a c i l i t i e s i n Urban Renewal Areas" , A Report Prepared fo r the C i t y P l a n n i n g Department, C i t y of Vancouver, B . C . , December 1966. (Mimeographed). (Unpub l i shed) . 148 A P P E N D I C E S 149 APPENDIX A TABLE I PARTIES INVOLVED.IN THE DEVELOPMENT PROCESS (A TYPICAL LIST) Producers /Opera tors Consumers 1 O D i s t r i c t C o u n c i l as Developer . 2 .0 New Users 2 .2 Occupiers o f New P r i v a t e B u i l d i n g s 2 . 4 Occupiers of New P u b l i c B u i l d i n g s 2.6 Motor V e h i c l e Users 2.8 Shopping P u b l i c 2.10 P u b l i c ' at Large 3 O Current Land-owners 4 . 0 Current Occupiers 3 .1 D i s p l a c e d 4 . 2 D i s p l a c e d 3 • 3 N o t - D i s p l a c e d 4 . 4 N o t - D i s p l a c e d 5 .0 D i s t r i c t C o u n c i l as L o c a l . 6.0 Rate Payers A u t h o r i t y 5 .1 M u n i c i p a l Costs 5 •3 M u n i c i p a l Revenues Source: N a t h a n i e l L i c h f i e l d , "Cos t -Bene f i t A n a l y s i s i n Town P l a n n i n g , A Case Study - Swanley", Urban S t u d i e s , I I I , No. 3 (November, 1966), p . 2 2 4 . 150 TABLE 2 THE BALANCE SHEET OF DEVELOPMENT (CONCEPTUAL) PRODUCERS Scheme A -Scheme B-B e n e f i t s Costs B e n e f i t s Costs Sec- C a p i - Ann- Capife .Ann- C a p i - Ann- C§p,i- Ann-to r s t a l ' u a l t a l u a l t a l u a l t a l . ' u a l X . SEa 5Eb - JBd • -, • Kb - 8 c Y i x i 2 . - - i 3 1^ Z M-L • - M 2 - M 3 M ^ C O N S U M E R S x j - Ce 8f - • 8g- - Sh Y l • ^ " " ' 8 " Z;L • M X - M ' - M 2 - M ^ Source : M o r r i s H i l l , "A Goals-Achievement M a t r i x fo r E v a l u a t i n g A l t e r n a t i v e P l a n s " , J o u r n a l o f the American I n s t i t u t e of  P l a n n e r s , XXXIV (January., 1968), p p . 2 1 . No te s : 1. Var ious sec to rs a f f ec t ed hy the Schemes are cons idered both as producers (expressed as X , Y and Z). and "as consumers (expressed as X]_, Y-, and Zj) 2. Costs and b e n e f i t s are recorded as c a p i t a l (once fo r a l l ) i tems or annual ( con t inu ing) i t ems . 3- $>a, S b . . . . a r e cos ts or benef i t s , expressed i n monetary te rms . ' h. i-j_, ±2 • • • • represent i n t a n g i b l e i t ems . 5- M]_5 M 2 • • • • represent items expressed i n q u a n t i t a t i v e but non-monetary terms. 6."£ (-) i n d i c a t e s tha t no cost or b e n e f i t would accrue . 151 TABLE 3 THE SOCIAL COSTS AND BENEFITS OF URBAN RENEWAL (A TYPICAL LIST) B e n e f i t s 1.. B e t t e r a l l o c a t i o n of resources 1 a . Increase i n property-va lue 2 b . Value of p u b l i c improve-ments i n s t a l l e d 3 c . A e s t h e t i c and. c u l t u r a l 4-va lue o f planned communities 2. S o c i a l i m p l i c a t i . o n of slum 5 c learance a . Reduc t ion i n c r ime , d i s ea se , 6 f i r e s and j u v e n i l e d e l i n -quency b . Improvement i n housing wel fa re 7 c . Savings i n the cos ts of m u n i c i p a l s e r v i c e s 3- Improvement i n l o c a l f inances Costs Survey and p l ann ing costs A d m i n i s t r a t i v e expenses D e m o l i t i o n costs Value of improvements demolished Cost of p u b l i c improvements R e l o c a t i o n cos ts a . Economic b . Non-economic. Land value w r i t e -down . ." . Source : James C. T. Mao, " E f f i c i e n c y i n P u b l i c Urban Renewal Expendi tu res through B e n e f i t - C o s t A n a l y s i s " , Jou rna l o f the  American I n s t i t u t e of P l a n n e r s , XXX (March, 1966), p . 97• 152 TABLE 4-CONDITION OF BUILDINGS IN STUDY AREA 1, 1959 C o n d i t i o n R e s i d e n t i a l Non- Mixed R e s i d e n t i a l R e s i d e n t i a l & N o n - R e s i d e n t i a l No. of % No. of % No. of % S t ruc tu re s S t ruc tu re s S t ruc tu re s Very good - - 32 30 - -Good •- - 22 20 1 20 F a i r 12 15 24- 22 1 20 Poor 62 79 27 25 2 4-0 Very poor 5 6 3 3 1 20 T o t a l 79 • 100 108 100 5 100 Source: C i t y P l ann ing Department, " C i t y of Vancouver Redevelop-ment P r o j e c t No. 1" (An Unpubl ished Mimeographed Report prepared by the T e c h n i c a l P l a n n i n g Board , November, 1959)? p . M-6. 153 TABLE 5 COMPARISON OF USES BY LOTS STUDY AREA 1 a Number of Lots Use Use Code 1963 1968 Vacant 65 56 ' ^3 R e s i d e n t i a l S i n g l e F a m i l y 71 32 1 Duplex 77 • 7 -M i s c e l l a n e o u s 78 1 1 Convers ion 81 - 1 Commercial 82 2- 1 Apartment 8 3 ; 1 2 Commercial 85 87 89 I n d u s t r i a l 95 21 .33 b "Exempt" Va r ious 12 17 T o t a l 0 219 . 188 Source : Assessment Commissioner 's O f f i c e , C i t y of Vancouver . a " U s e Code" numbers are used o n l y i n connec t ion w i t h t axab le p r o p e r t i e s . (See Appendix D ) . ^"Exempt" p r o p e r t i e s are a l so i n v a r i o u s uses . . c D i f f e r e n c e i n the t o t a l number of l o t s i s due to c o n s o l i -d a t i o n . Notes : 1. In format ion on "Use" a v a i l a b l e from the "assessment r ecord ca rds" i s up dated a n n u a l l y , o l d use code.numbers being r ep l aced -by new numbers on the ca rds . S t a r t i n g w i t h . 1,964, i n f o r m a t i o n on assessment has-s been recorded i n separate set of c a rd s . Informat ion on use (Assessment record) i s thus a v a i l -able fo r 1963 and 1968 o n l y . 2 . P l a n n i n g Department land use c l a s s i f i c a t i o n may d i f f e r from Assessment Department land use c l a s s i f i c a t i o n . TABLE 6 ASSESSED VALUE OF IMPROVEMENTS AND USE CODE OF THE PROPERTIES ACQUIRED AND RESOLD BY THE CITY STUDY AREA 1 L e g a l a Assessed Value of Use Code D e s c r i p t i o n Improvements (3$) B l o c k Lot I 9 6 0 1 9 6 7 1 9 6 3 1 9 6 8 2 1 8 B 2 , 0 5 0 1 3 , 2 7 0 7 1 95 t t C 9 5 0 ) 1 0 , 9 7 0 7 1 ) 95 - ) 6 5 ) I t D 2 , 3 0 0 1 6 , 0 0 0 7 1 • 95 2 1 9 28 • 2 , 9 0 0 - exempt 6 5 228 • 4 -2 . 8 , 3 0 0 1 1 , 7 0 0 ' exempt 8 5 i i A 2 , 2 0 0 18,400 7 7 95 1 1 B 1 , 8 0 0 1 1 , 7 5 0 7 1 95 i t 4 -3 9 5 0 ) 1 7 , 4 8 0 7 1 ) 95 1 , 7 0 0 ) 7 7 ) 1 1 3 3 1 , 1 5 0 7 , 9 5 0 7 1 95 2 2 9 B 5 , 2 0 0 ) 9 , 8 0 0 82 ) • 85 1 , 8 0 0 ) 7 1 ) 3 0 0 ) 85 ) 8 , 0 0 0 ) 85 ) 2 3 0 C ( 5 & 6 ) 1 , 7 0 0 -3 ,200 85 95 1 1 A 1 , 1 0 0 ) - exempt 95 1 1 C(35&36) 1 , 3 0 0 9 , 5 0 0 exempt ) 8 5 7 0 0 ) 7 1 ) 1 1 D pa r t 3 , 4 5 0 - 85 6 5 (39) 2 3 8 A 1 , 7 . 5 0 ) _ 7 7 .) 6 5 1 1 - ) 65 ) B 3 , 1 5 0 - 7 1 85 1 1 C 2 , 0 5 0 1 6 , 5 0 0 7 1 95 1 1 D 9 0 0 ) 20,840 7 1 ) 8 5 7 0 0 ) 7 1 ) 1 5 0 ) 85 ) 2 3 9 G - ) — 6 5 ) 6 5 1 , 3 0 0 ) 7 1 ) 1 1 F 9 0 0 — 8 5 • exemp" TABLE 6 (cont inued) Lega l Assessed Value of Use Code b D e s c r i p t i o n Improvements (&) B l o c k Lot I960 1967 1963 1968 240 C 1,250 ) 11,245 65 ) 85 900 ) 71 ) 249 A(4&5 2,500 — • 77 65 pa r t ) u 5 (par t ) - - 65 65 II B 5,700 ) '37 ,100 77,85 ) 85 • 850 ) exempt ) 900 ) exempt ) 950 .) exempt ) II A(21-25) 800) 37,200 exempt) 85 1,250) exempt) 1,350) 71 ) 250 38 1,150 5,950 77 95 269. 4 1,400 3,750 77 85 II 8 2,200 71 65 II A 9,250 21,900 85 85 T o t a l 89,200 284,505 Per cent ga in • 220 Source: Assessment Commissioner 's O f f i c e , C i t y of Vancouver . a l e" fe rs to 1967- In I960, t o t a l number of l o t s was more than tha t i n 1967- The d i f f e r e n c e i s due to c o n s o l i d a t i o n . ^See Appendix D; a l so see notes on Table 5;-.(page 153)-.INS-TABLE 7 PROPERTIES SHOWING AN INCREASE IN THE ASSESSED VALUE OF IMPROVEMENTS ADJACENT TO STUDY AREA l a L e g a l . D e s c r i p t i o n B l o c k Lot Assessed Value of Improvements ($>) I 9 6 0 1 9 6 7 Use 1 9 6 3 Code c 1 9 6 8 248 17 ) 18 ) 1 , 6 5 0 ) 1 , 6 5 0 ) 12 , 600 6 5 ) 6 5 ) 85 270 11 13 • •\E - .17 ,350 2 0 , 7 0 0 18 , 500 .26,320 85 85 85. . 85 268 C 13,600 17,060 85 85 289 A ( l & 2 ) 7,400 8,700 85 85 290 6 1 , 9 5 0 1 0 , 3 6 0 85 85 308 ' 19 (E i ) 2 , 1 5 0 2 , 8 0 0 7 1 . 71 3 0 9 11 B(7&8) A 2 , 2 0 0 2 , 1 0 0 . 2 ,940 1 2 4 , 0 0 0 71 exempt 71 exempt Source: Assessment Commissioner 's O f f i c e , C i t y of Vancouver . Adjacent area l i k e l y to have s p i l l o v e r e f f ec t s i s a r h i t r a r i l y d e l i n e a t e d by the major- a r t e r i e s - Bur ra rd and G r a n v i l l e S t r ee t s and Broadway. (See Map 7 , page 9 8 ) . b R e f e r s to 1 9 6 7 . c • See Appendix D; a l s o see notes on Table 5 (page 1 5 3 ) -157 TABLE 8 ASSESSED LAND VALUES, I960 AND 1967 . STUDY AREA l a B l o c k Assessed Land Values ($) I960 1967 Increase ($) % 218 105,440 146,160 40,720 39 219 100,770 142,115 41,345 4 l 228 105,600 145,460 39,860 38 229 103,200 144,480 41,280 40 230 75,420 112,500 37,080 50 238 . 100,810 160,015 59,205 59 239 98,570 142,250 43,680 44 240 70,190 101,535 '31,345 44 249 93,415 149,825 56 ,4 io 60 250 (par t ) 14,055 21,125 7,070 50 269 81,310 . 104,497 23,187 28-270 (par t ) . 17,270 20,940 3,670 22 T o t a l 966,050 1 ,390,902 • 424,852 Average Increase - Median h-0% , A r i t h m e t i c 43 $ Source: Assessment Commissioner 's O f f i c e , C i t y of Vancouver . a See Map 7, page 98. 158 TABLE 9 ASSESSED.LAND VALUES, I960 AND 1967 ADJACENT TO STUDY AREA l a B l o c k Assessed I 9 6 0 Land Values (S) 1 9 6 7 Increase Ca I) % 24-8 95,84-0 129 , 3 1 0 3 3 , 4 7 0 3 4 250 (par t ) 34,035 4 -8 ,200 1 4 , 1 6 5 41 268 77,990 9 8 , 7 3 0 2 0 , 7 4 0 . 27 270 (par t ) 5 3 , 3 1 0 76,64-0 23,330 44 288. 28, 530 1 0 0 , 8 5 0 7 2 , 3 2 0 2 5 6 § 289 70,855 1 2 3 , 8 6 5 5 3 , 0 1 0 75 290 8 8 , 0 2 0 14-0,070 52,050 59 3 0 8 29,84-0 1 4 3 , 7 3 5 1 1 3 , 8 9 5 3 7 6 * 3 0 9 26,250 133,860 107,610 4 l 4 * 3 1 0 • 88,950 139,150 5 0 , 2 0 0 56 328 1 5 1 , 9 6 0 228,860 76 , 900 50 329 1 3 5 , 5 7 0 2 4 0 , 1 0 0 1 0 4 , 5 3 0 77 3 3 0 203,070 2 7 3 , 5 6 0 70,490 35 Average Increase - Median 4-4-%, ( e x c l u d i n g the extreme values A r i t h m e t i c 5 (*) ) • '0% Source : Assessment Commissioner 's a See Map 7, page 98. O f f i c e , C i t y of Vancouver . 159 TABLE 10 STATEMENT OF ACCOUNTS CAS OF MAY 3 1 , 1 9 6 7 ) STUDY AREA 1 P a r t i c u l a r s Amount ($) A . COSTS. 1. A c q u i s i t i o n and Clearance a . Purchase o f • P r o p e r t i e s i ) P u b l i c S t r ee t s and Lanes - i i ) Other munic ipa l ly -owned p r o p e r t i e s i i i ) P r i v a t e owned lands b . ' Payments fo r R e l o c a t i o n c . D e m o l i t i o n and Clearance 2 . M u n i c i p a l S e r v i c e s , U t i l i t i e s & Works a . Abandonment, R e l o c a t i o n and/or removal of E x i s t i n g S e r v i c e s , e t c . b . Proposed S e r v i c e s , U t i l i t i e s , e t c . 3« A d m i n i s t r a t i v e , C l e r i c a l , e t c . a . A d m i n i s t r a t i v e Cost i n c u r r e d by the C i t y . b . L e g a l and other fees c . P r o f e s s i o n a l fees 4- . Other Expenses Gross T o t a l Cost 685,000 B . . RECOVERIES 1. Salvage Value of B u i l d i n g s 2 . Net Revenue from b u i l d i n g s pending d e m o l i t i o n 3 • Net Sa le P r i c e 4 . S t r ee t s and lanes s o l d to the C i t y 5- Others T o t a l Recover ies ," 4-94-, 500° 6 3 0 , 7 0 0 s 54,300. 160 TABLE. 10 (cont inued) P a r t i c u l a r s Amount ($) C. NET COST OF ACQUISITION AND CLEARANCE $ 190 ,500 d D. SHARING OF NET COST 175,700 (net cos t l e s s non-shareable expenses amounting to $ 14,800) a . F e d e r a l Government (CMHC) 50$ JB 87,850 b . P r o v i n c i a l Government 2^% 43,925 c . C i t y of Vancouver 2% 43,925 E . ACTUAL EXPENDITURE OF THE CITY 58 ,725 e Source : C i t y P l a n n i n g Department, C i t y of Vancouver Inc ludes items 1(a) and 1 ( c ) . ^ Inc ludes items 3(a) , 3(t>) and 3(c) p lus " i n t r a - c i t y cos t " (non-shareab le expense) amounting to % 14 ,800. A d m i n i s t r a t i v e , C l e r i c a l , e t c . expenses are not shown s e p a r a t e l y fo r the study p r o j e c t . The amount shown here i s d i s t r i b u t e d p r o p o r t i o n a t e l y . c T o t a l r e c o v e r i e s from sa le of the acqui red p r o p e r t i e s , d Inc ludes non-shareable expense amounting to % 14 ,800. e ( S 43,925 p lu s % 14 ,800) . TABLE 11 COMPARISON OF CAPITAL COSTS, 1967 STUDY AREA 1 Items Status Quo (S) P u b l i c P r i v a t e T o t a l Scheme A (A) P u b l i c P r i v a t e T o t a l A minus S (-) T o t a l '(+) C a p i t a l Cost 1. A d m i n i s t r a t i v e , C l e r i c a l , e t c . 2. Land A c q u i s i t i o n & Clearance 3- M u n i c i p a l Se rv i ces & Other U t i l i t i e s 4- . B u i l d i n g s (Improvements) 5. I n t e r e s t dur ing implementa t ion of the Scheme . T o t a l C a p i t a l Cost Annual Cost f SE 54 ,300 a - % 54,300 136 ,200 b 4-94,500° 630,700 n i l n i l n i l n i l 569,010 u 569,010 xxO.0872 x 0.1057 16,600, 112,000 128,600 $ 54,300 630,700 • n i l 569,010 190,500 1,063,510 1254,010 ' 1,254,010 190,500 1,063,510 1254,010 , 1,254,010 128,600 a See Table 10 (pages 159-60) TABLE 11 (continued) Net Cost (Purchase p r i c e l e s s r e c o v e r i e s ) . c P r i c e p a i d by the purchase r s . • d . Investment i n improvements as of 1967 ( twice the assessed v a l u e s , see Table 13 (page 168). e No i n f o r m a t i o n cou ld be o b t a i n e d . f Convers ion to Annual Cost (assumed) i ) P u b l i c debt charges ( a l l gov t s . ) - 20 years @ 6% per annum to i n c l u d e i n t e r e s t f o r c a p i t a l . i i ) P r i v a t e developers - 20 years @ Qjt% VeT annum to i n c l u d e i n t e r e s t , a m o r t i z a t i o n and p r o f i t . No te : In the "Status Quo" s i t u a t i o n , i t i s assumed that there would have been no s i g n i f i c a n t p r i v a t e inves tment . See t e x t fo r e x p l a n a t i o n (pages 101-102) . H ro TABLE 12 BALANCE SHEET OF DEVELOPMENT STUDY AREA 1 .. S ta tus Quo (S) Scheme A (A) • . . Ins t rumenta l Sectors Number Ob jec t i ve s - B e n e f i t Cost B e n e f i t Cost B a l - Net "S" "A" Cap- Ann- Cap- Ann- Cap- Ann- Cap- Ann- ance Adv. i t a l u a l i t a l u a l i t a l u a l i t a l u a l to 1.0 D e v e l -opers 1.1 P u b l i c  Agency C i t y C o u n c i l P r o v . Govt . Fed . Govt. 1.1 Reduc-t i o n 1.3 P r i v a t e  Agency 1.0 Reduc-t i o n PRODUCERS/OPERATORS 3750 7500 16600 112000 128600 n o II o TABLE 12 (continued) Ins t rumenta l , Sectors Number Ob jec t ives B e n e f i t Cost B e n e f i t Cost B a l " N e t S" 'A" Cap- Ann- Cap- Ann- Cap- Ann- Cap- Ann- ance Adv. i t a l u a l i t a l u a l i t a l u a l i t a l u a l to PRODUCERS/OPERATORS 3.0 Current Land-owners 3 .1 i>.is-. . - $ a , i i , "Not placed' - - MQ_ C e r t a i n " 3-3 Not d i s - - - l B b , i 2 , "NotRe-p laced M 2 C e r t a i n " 3 .0 Reduc-t i o n 5.0 C i t y  C o u n c i l  as L o - c a l A u -t h o r i t y 5.1 M u n i c i -p a l Cost - n i l 5.3 M u n i e i - I t S d $d>$c "A" p a l Rev. 5-0 Reduc-t i o n TABLE 12 (continued) Sec tors Number "S" "A" Ins t rumenta l Ob jec t ives • Status Quo (S) B e n e f i t Cost Cap- Ann- Cap- Ann-i t a l u a l i t a l u a l . Scheme A (A) B e n e f i t Cost Cap- Ann- Cap- Ann-i t a ' l u a l i t a l u a l B a l -ance Net Adv. to 2 .0 New Users CONSUMERS 2.2 Occu-p i e r s  of new  p r i v a t e  b u i l d -ings Residen-t i a l Commer-c i a l Indus -t r i a l . 1 - 11 - 10 L o c a t i o n C o m p a t i b i l i t y B e t t e r Environment E x t e r n a l S e r v i c e )& e ^ 3 "Not C e r t a i n " 2 .2 Reduc-t l ion 2 .4- Motor  V e h i c l e Users - 22 Reduc t ion of t r a f f i c hazard 8 f, M4. "Not:-Certa i n 1 1 TABLE 12 (continued) Sta tus Quo (S) Scheme A (A) Ins t rumenta l Sectors Number Objec t ives B e n e f i t Cost B e n e f i t Cost B a l - Net "S" "A." Capi Ann-- Cap- Ann- Cap - ' Ann- Cap- Ann- ance Adv. i t a l u a l i t a l u a l i t a l u a l i t a l u a l to CONSUMERS 2 . 6 Shopping . P u b l i c 2 . 8 P u b l i c  at Large 4 . 0 Current  Occupiers 4 . 2 D i s p l a c e d 4 . 4 Not D i s -p laced 6.0 Rate  Payers - 2 6 4 Convenience, P leasan t Environment, Wider range, o f goods Q u a l i t y of Environment ) L o c a t i o n ) A s s o c i a t i o n \Occupa t ion ^Environment ) Improved-) q u a l i t y of ) s e r v i c e s , • ) B e t t e r )Environment * g: "Not C e r t a i n " " In tan -g i b l e " )» h ) i 7 . '.'Not ^ce r t a in" )IB 3 ) i « )M' 7 "Not c e r t a i n " TABLE 12 (continued) Notes : 1. I t i s assumed tha t there would have been no s i g n i f i c a n t development i n the "s ta tus quo" s i t u a t i o n . See t ex t fo r e x p l a n a t i o n (pages 1 0 0 - 0 9 ) • 2. I ) | a , ffi b . . . . are costs or b e n e f i t s expressed i n monetary terms, i i ) i -p . . . represent i n t a n g i b l e items.. i i i ) M-p • • • represent items expressed i n q u a n t i t a t i v e but non-monetary terms. 3» For f i g u r e s see Table 11 (pages 161-62) . Annual c a p i t a l cos ts d i s t r i b u t e d p r o p o r t i o n a t e l y . 4- . No v a l i d c o n c l u s i o n can be drawn on any s e c t o r . See t ex t (pages 1 0 0 - 0 9 ) . 5- A l g e b r a i c terms are shown i n the balance column, s ince they might represent e i t h e r b e n e f i t s or cos ts to Scheme A. 168 TABLE 13 BENEFIT-COST SUMMARY STUDY AREA 1 B e n e f i t and Cost Status Quo (S) Categor ies Scheme A "(A) 1. Resource Cost of P r o j e c t a . Gross P r o j e c t Cost g 685,OOO a b. Less Recover ies from Land c.. T o t a l Resource Cost 1 9 0 , 5 0 0 ° 2 . B e n e f i t s Produced by P r o j e c t a . Increased P r o d u c t i v i t y of the Land -b . Increased P r o d u c t i v i t y of Neighbour ing Area ( s p i l l o v e r ) c . Decreased S o c i a l Cost Assoc i a t ed w i t h Slum -3- T o t a l Cost not o f f s e t by S i t e Land B e n e f i t — -For a, b , c see Table 10 (pages 159-60) . Notes : 1. I t i s assumed tha t there would have been no s i g n i f i c a n t development i n the "Status Quo" s i t u a t i o n . See t e x t (pages 101-02) . 2 . Comparable data on items 2 ( a ) , 2(b) and 2(c) fo r Scheme A could, not be ob ta ined . See t e x t (pages 109-12) . TABLE l 4 THE SOCIAL COSTS AND BENEFITS STUDY AREA 1 B e n e f i t s Items Amount w Date of Reckoning Items Costs Amount (51) Date o f Reckon in 1.0 B e t t e r A l l o c a t i o n o f Resources : 1.0 Survey & P l a n n i n g ; i . l Increase i n Land Values 849,800 c 1.2 Va lue o f P u b l i c Improve-12 >ments i n s t a l l e d 1.3 Other Values 2 .0 S o c i a l I m p l i c a t i o n of Slum Clearance 2.1 Reduc t ion i n Crime 2 .2 Reduc t ion i n H e a l t h hazard ' 2.3 Reduc t ion i n F i r e hazard 3 .0 Improvement i n L o c a l Finances ' 1967 ' 2 .0 A d m i n i s t r a t i v e , 5 4 , 3 0 0 b C l e r i c a l , e t c . 3*1 A c q u i s i t i o n 3 .2 D e m o l i t i o n & Clearance , 4 .0 Value of Improve-ments Demolished 178,400 5.0 Cost of P u b l i c Improvements 6.0 R e l o c a t i o n Cost 6.1 Economic 6.2 Non-economic 7-0 Land Value W r i t e - 136,200 down d 1964 1964 1967 For a, b , c , d see t e x t (pages 112-14) Note Data on b e n e f i t s from i tems 2.0 and 3«Q a n d non-economic r e l o c a t i o n cos t could not be o b t a i n e d . See t e x t (pages 107, 111 and 114-15) . TABLE 15 DISCOUNTED VALUE OF FINANCIAL BENEFITS AND COSTS STUDY AREA 1 Assumed F i n a n c i a l B e n e f i t s ' F i n a n c i a l Costs ( C a p i t a l ) Discount P resen t P resen t Present Rate (% per annum) (1) Amount(S) (2) Value (I960) (3) Amount(S) (4) Value (I960) (5) . . a Amount($) (6) Value (I960) (7) T o t a l Costs (d i scounted) (8) - (5)+(7) 2 I 5 6 7 8 10 849,800 (Date of r eckon ing 1967) 740,000 (L690,000 64^,000 605,000 565,000 530,000 ' 490,000 435,000 232,700 (Date o f r eckon ing 1964) 215,000 206,000 199,000 184,500 136,200 (Date of r eckon ing 1967) 119,000 111,000 104,000 90,500 334,000 317,000 303,000 275,000 See Table 14 (page 169)• H O TABLE 16 171 OVERALL EVALUATION OF REDEVELOPMENT STUDY AREA 1 Assumed M a r g i n a l E f f i c i e n c y {% per annum) (1) Present Value of Tangib le Benefi ts(%) (2) Present Value of Tangib le Costs (3) Required Value of I n t a n g i b l e B e n e f i t s (*) (4) - ( 3 ) - ( 2 ) a S o c i a l Cost of C a p i t a l : 6% 6 565,000 ' 275,000 (-) 290,000 7 530,000 275,000 (-) 255,000 8 4-90,000 275,000 (-)' 215,000 10 4-35,000 275,000 (-) 160,000 S o c i a l Cost of C a p i t a l : k-% 4- 64-5,000 303,000 (-) 34-2,000 5 605,000 303,000 (-) 302,000 6 565,000 303,000 (-)' 362,000 7 530,000 303,000 (-) 227,000 8 4-90,000 303,000 (-) 187,000 S o c i a l Cost of C a p i t a l : - 2% • ' 2 740,000 334-,000 (-) '406,000 3 690,000 334,000 (-.) 356,000 4 645,000 334,000 (-) 311,000 5 605,000 334,000 (-) 271,000 Source : Table 1.5 (page 170) . a ( - ) i n d i c a t e s nega t ive v a l u e , i . e . the present va lue of t a n g i b l e b e n e f i t s exceeds the present va lue of t a n g i b l e c o s t s . 172 TABLE 17 COMPARISON OF USES BY LOTS STUDY AREA 2 Use 1961 a 1963 b ' 1968^ Number % Number % Number % Vacant ( 6 5 ) ° 19 6 . 5 22 7.6 . 20... 7.8.. R e s i d e n t i a l S i n g l e (71). 140 1^4 112 Duplex (77) ^0 53 ^1 Others 70 ^5 36 (78,81,82,83) . T o t a l 250 8 6 . 3 242. 84 .4 189 74.0 Commercial (85) 18 6 .2 21 7.3 . 37 14.4 I n d u s t r i a l C95) 0 - 0 - 9 3-0 "Exempt l , d 3 1.0 . 2 0 .7 2 0.8 T o t a l 8 290 100 287 100 257 100 Licence Department records ( i n the f i l e s of the C i t y P l a n n i n g Department., C i t y of Vancouver) . b Assessment Commissioner 1 s O f f i c e , C i t y of Vancouver . (Also see notes on Table 5, page 153)• F igu res w i t h i n bracket r e f e r to "Use .Code" numbers. (See Appendix D ) . d Exempt p r o p e r t i e s are a l so i n v a r i o u s uses . e D i f f e r ence i n the t o t a l number of l o t s i s due to c o n s o l i d a t i o n . 173 TABLE 18 ASSESSED VALUE OF IMPROVEMENTS AND USE CODE OF PROPERTIES REUSED, I960 & 1967 STUDY AREA 2a Lega l ' Assessed Value of Use Code 0 D e s c r i p t i o n Improvements (S) B l o c k . Lot ' ' - I960 ' 1967 1963 1968 14/302 A of 4,950 (par t ) 11 & 12 1,300 71 ' 95 16/302 11 . 2,4-00 12,350 77 : 95 (.part) 11 12 2,650 10,200 77 85 19/302 2 3,150 ) 8,5,100 77 ) 85 3,150 ) 77 ) 4,150 ) 81 ) •6,000 > 81 ) 2,900 ) 77 ) 2,900 ) : 77 ) 3,900 ) 81 ) - ) 65 ) 11 3 - ) 3,600 65) 95 - ) 65) 4 - ) • 65) 11 - - 65- 95 22/302 A / 2 , 3 _ 480 65 85 (par t ) 11 B / 2 , 3 2,300 580 71 85 11 C/2 ,3 2,500 480 71 85 11 4 4,550 825 81 85 32/200 A 13 2,130 7,950 71 85 (par t ) 33/200 A 16Wi ) 2,250 ) 72,900 71 ) 95 (par t ) ) ) ) 17 ) 3,550 ) 71 ) 18 ) 2,700 ) 12,450 71 ) 11 19 2,600 71 85 it C/20&21) 5,950) 27,000 85 85 2 2 E i ) 2,650) 77 TABLE 18 (cont inued) Lega l b Assessed Value of Use Code 0 D e s c r i p t i o n Improvements U ) 1968 B l o c k Lot I960 1967 1963 34/200A A/1) 2,150 ) 44,950 65 ) 85 B / l ) ( 2 4 ) 2,550 ) 71 ) C / l ) ( 2 3 ) 3,^50 ) 71 ) 2 ) 2,800 ) 65 ) it 5 b a l . ) & 6 pa r t ) 1,650 800 71 85 II 6 b a l . 100 690 78 85 II 14 5,850 41,100 71 85 35/200A 16 3,600 9,500 77 85 36/200A 13 2,700 12,850 71 95 II 15W ) - ) 32,000 65 ) 85 16 ) - ) 65 ) 45/200A " 14 4,000 ) 40,330 ' 71 ) 85 15 4,700 )•' 81 ) 16 3,900 ) 71 ) 46/200A 4 ) 4,550 ) 15,650 81 ) 95 5 ) 2,560 ) 71 ) 6 2,000 21,600 71 95 8 2,800 12,450 71 A/9 - 7,650 7,050 exempt 85 10 4,850 - 77 85 11 4,300 . 11,0 50 71 85 " 14.) 2,550 ) 36,650 71 ) 85 1 5 ) 3,800 ) 81 ) 48 /200A 3 3,600 14,300 77 95 ' (par t ) T o t a l 139,290 540,135 p:erse:eht ga in - 299 Source : Assessment Commissioner 's O f f i c e , C i t y of Vancouver. f^See Maps 10 and 11 (pages 121 and 122) . b Refe r s to 1967. °See Appendix D and notes on Table 5 (page 153)• 175 TABLE 19 ASSESSED LAND VALUES, I960 AND 1967 STUDY AREA 2<" Assessed Land Values(s) B l o c k I960 1967 Increase(S) ' % 14/302(par t ) 8 ,350 31 185 22 , 8 3 5 274 33/200A(par t ) 15 ,815 59 ,725 43 ,910 278 32/200A(par t ) 12 ,145 . 47 ,540 35 , 3 9 5 .' 295 3-l/200A(part) 12 180 39 ,650 27 ,470 225 16/302(par t ) 12 390 38 ,815 26 , 4 2 5 213 15/302 17 ,415 67 ,745 50,330 305 34/200A : 35 ,390 138 ,647 1 0 3 , 2 5 7 293 35/200A .24 ,470 87 ,195 62 , 7 2 5 : 256 3 6 / 2 0 0 A 24 ,325 99 ,325 75,ooo , 310 37/200A(part) 15 055 63 ,005 47 , 9 5 0 317 19/302 32- 075'' 102 165 70,090 ; 220 20/302 17 745 72 ,410 54 ,665 310 47/200A 29 ,460 129 ,965 100,505 340 46/200A 24 ,460 . 103 030 78 ,570 320 45/200A 24 ,345 103 o4o 7 8 , 6 9 5 320 44/200A(part) 16 ,994 44 ,885 27 ,891 165 22/302 (par t ) 12 315 48 ,970 36,655 300 2 l / 3 0 2 ( p a r t ) ' 8 ,645 38 265 29,620 335 48 / 200A(pa r t ) 14 ,760 58 ,910 44 , 150 ' 300 TABLE. 19 (cont inued) B l o c k Assessed Land' i 9 6 0 1967 Values (*) Increase(SB) % 4-9/200A (par t ) 10,4-60 4-0,800 3 0 , 3 4 0 300 50/200A (par t ) 11 ,.285 - 4 7 , 7 1 5 3 6 , 4 3 0 320 T o t a l 3 8 0 , 0 7 9 1 , 4 6 2 , 9 8 7 1 , 0 8 2 , 9 0 8 5 , 9 9 5 Average Increase Median - 300%, A r i t h m e t i c - 285% Source: Assessment Commissioner 's O f f i c e , C i t y of Vancouver . See Map 12 (page 1 2 4 ) . 177 TABLE 20 ASSESSED LAND VALUES, I960 AND 1967 ADJACENT TO STUDY AREA 2 a B l o c k Assessed Land V a l u e s ( ' I960 1967 I) • Increase(S) .% 6/302 38,080 55,405 17,325 46 11/302 82,400 102,970. 20,570 ' 25 10/302 54,620 68., 225 13,605. 24 21/200A 118,310 149,355 "• 31,045 26 22/200A •82,400 • 103,035 20,635 1 25 2 3 / 2 0 0 A 79,290 101,810 '22,520 : 28 24/200A 77,770 106,950 29,180 37 12/302 83,800 . 112,450 28,650 35 13/302 .78,900 98,625 19,725 : 25 1 4 . 3 0 2 1 (par t ) 24,650 34,420 9,770 39 33/200A (par t ) 60,900 77,070 16,170 26 32/200A (par t ) 41,200 51,515 10,315 24 31/200A (par t ) 39,125 51,515 ; 12,390 32 30/200A 64,580 100,850 36,270 56 17/302 84,270 113,245 28,975 34 16/302 (par t ) 41,190 51,105 9,915 24 37/200A (par t ) 33,610 44,935 11,325 33 18/302 85,200 114,540 29,340 34 44/200A (par t ) 93,704 92,960 (-).744 C-)0.8 1#8 TABLE 2 0 (cont inued) Assessed Land Values'"'($) B l o c k I960 1967 I n c r e a s e ^ ) 23/302 8 6 , 6 0 0 1 1 8 , 0 1 0 31,610 3 6 2 2 / 3 0 2 (par t ) 4 0 , 6 5 0 4 6 , 1 0 0 5 , 4 5 0 13 2 1 / 3 0 2 (par t ) 3 0 , 5 5 0 ' 3 4 , 6 4 0 4 , 0 9 0 13 4 8 / 2 0 0 A (par t ) 7 0 , 2 0 5 9 3 , 8 5 0 2 3 , 6 4 5 33 M - 9 / 2 0 0 A (par t ) 5 2 , 0 9 5 6 9 , 4 8 5 1 7 , 3 9 0 33 5 0 / 2 0 0 A (pa r t ) 49,955 66,600 ' 1 6 , 6 4 5 33 5 1 / 2 0 0 A 1 5 0 , 9 1 5 • 1 9 3 , 0 4 5 4 2 , 1 3 0 28 Average inc rease - Median 3 0 % , A r i t h m e t i c 3 0 $ Source : Assessment Commissioner 's O f f i c e , C i t y of Vancouver. See Map 12 (page 124) . Adjacent area l i k e l y to have s p i l l o v e r e f f ec t s i s a r b i t r a r i l y d e l i n e a t e d by the major a r t e r i e s -Main and Cambie s t r e e t s , F o u r t h Avenue and Broadway. (See Map 12, page 124) .. 179 . APPENDIX B EXTRACT FROM THE NATIONAL HOUSING.ACT PART I I I URBAN REDEVELOPMENT (Rep. and New. 1956, c. 9, s. 7-) \ 23. (1) In order co assist In the clearance, repianning, rehabilitation and modernization of blighted or substandard areas in • any municipality, the Minister, with the approval of the Governor in . Council, may enter into an agreement wich the municipality providing for the payment to the. municipality of contributions in respect of the cost to the municipality of acquiring and clearing, whether by condemnation proceedings or otherwise, an area of land in the taunicipality. (2) The contributions paid to a municipality under this .section shall not exceed one-half of the cost to the municipality or .the municipality and the province jointly, of acquisition and clearance, including costs of condemnation proceedings, as agreed between the Minister and the municipality, (3) No contributions shall be paid to a municipality under this section unless '. . (a) the government of the province in which the area is situated has approved the acquisition and-clearance'', thereof by the municipai'ity; .•:.._'•;•'.. (b) the costs of acquisition and clearance, including the cost of condemnation proceedings, less the amount of the contributions made under this section in respect thereof, are borne by the municipality or jointly by the munici-pality and the province; (c) the families to be dispossessed by the acquisition and clearance of the area are offered at the time of their dispossession housing accommodation in a housing project constructed under section 16, 19 or 36, at rentals that, in the opinion of the municipality and the Minister, are fair and reasonable, having regard to the family incomes of families to be. dispossessed, except where the municipality can establish to the satisfaction of the Minister that decent, safe and sanitary housing accommo-dation is available to the families to be dispossessed at rentals that, in the opinion of the Minister and the municipality, are fair and reasonable, having regard to the family incomes of the families to be dispossessed; and 180 (d) a substantial part of the area at the time of acquisition was, or after redevelopment'will be, used for residential purposes. (4) An agreement entered into under subsection (1) shall provide A (a) an estimate of the costs of the acquisition and clearance of the area; (b) that the municipality wil l acquire and clear the area; (c) that the area wil l be developed in accordance or in harmony with an official community plan satisfactory to the Hinister; .' •' (d) for the manner, terms and conditions of sale, lease, retention, exchange or other disposition of the area or any part thereof; .(e) for the times at.which the Minister's contributions 'will : . be paid to the municipality; (f) for payment to the Corporation of a share of the revenue from the project or the proceeds of sale or other disposition thereof proportionate to the contributions made under subsection (2); \ . (g) for. the examination, inspection and audit of the accounts of the municipality maintained in respect of the project; •.• v and \ •'••••'.''.;-; (h) for such other things as may be deemed necessary, ••" including the security that may be taken by the Minister ;.'•',-' by way of joint t i t le or otherwise to safeguard the Minister's rights of recovery out of the project. (5) The Corporation shall on behalf of the Minister carry out any agreement'entered into by the Minister under subsection (1). (6) Where a project i s undertaken under s e c t i o n 36 i n a bli g h t e d or substandard area, f o r the.purpose of c a l c u l a t i n g the Corporation's share of the c a p i t a l cost of the pro j e c t , the cost of a c q u i s i t i o n of the land for the project s h a l l be an amount, that, i n the opinion of the M i n i s t e r , represents a f a i r and reasonable p r i c e •for the land, not in c l u d i n g any amount i n respect of the cost of c l e a r i n g the land. ' 181 (7) Subject to subsection (8), the Mini B i t e r may, out the Consolidated Revenue Fund (a) pay to. the Corporation the coney required by the Corporation to. meet the'Minister's obligations under eny agreement entered into under subsection (1), and (b) pay to the Corporation, pure v. ant to an agreement between the Corporation and the Minister, the costs and expenses - of the Corporation incurred i n carrying out the Minister's responsibilities under agreements entered into.under subsection (1). (8) A payment made under subsection (7) shall not be greater than the amount by which the aggregate of (a) twenty-five million dollars, and (b) any additional amounts authorized by Parliament for the purposes of this subsection exceeds the total amount of payments made under.subsection (7). (9) Money received by the Corporation pursuant to paragraph (f) of subsection (4) shall be paid by the Corporation to the Receiver General and shall form part of the Consolidated Revenue Fund. (10) A reference in subsection (7) tc an agreement entered into under subsection (1) shall be construed to include a reference to an agreement made under subsection (1) of section 23 as in force before the coming into force of this section. (11) The Governor In Council may make regulations respecting the manner in which costs are. to be determined for the purposes of this section and providing for such other matters as may be deemed necessary and desirable for the carrying out of the purposes or provisions of this section. APPENDIX C EXTRACT FROM THE NATIONAL HOUSING ACT P A R T - I I I URBAN RENEWAL Definitions. Rep.end New. 1964, e. IS, ». 7. "Urban ' renewal «rea." "Urban renewal scheme." . Contributions ft'T prepara-tion of an urban renewal sceme. New. 1964. e. IB. s. 7. Contributions for Imple-menting an urban renewal scheme. New. 1964, e. 15 »: 7. (Rep. and New. 196M-, c . l ^ , s. 7-) 23. I n t h i s P a r t , " - ' (a) " u r b a n r e n e w a l a r e a " means a b l i g h t e d or s u b s t a n d a r d a r e a of a m u n i c i p a l i t y f o r w h i c h the government o f the prov ince i n w h i c h the a r e a is located has a p p r o v e d the i m p l e m e n t a t i o n of a n urban, r e n e w a l scheme; a n d (b) " u r b a n renewal s c h e m e " means a scheme f o r the r e n e w a l of a b l i g h t e d o r s u b s t a n d a r d a r e a of a m u n i c i p a l i t y t h a t includes (i) a p l a n d e s i g n a t i n g the b u i l d i n g s a n d w o r k s i n the area t h a t are to be a c q u i r e d a n d c leared b y the m u n i c i p a l i t y i n connect ion w i t h the scheme a n d f o r m a k i n g ava i lab le to persons dispossessed of h o u s i n g a c c o m m o d a t i o n b y s u c h a c q u i s i t i o n o r clearance, decent, safe a n d s a n i t a r y .' h o u s i n g a c c o m m o d a t i o n at r e n t a l s that , i n the o p i n i o n • o f the C o r p o r a t i o n , are f a i r a n d reasonable h a v i n g r e g a r d to the incomes of the persons to be dispossessed, (ii) a p l a n d e s c r i b i n g the proposed street p a t t e r n a n d l a n d use f o r the area, a n d the p r o g r a m f o r the c o n s t r u c t i o n or i m p r o v e m e n t i n the area of m u n i c i p a l services, schools, • ' p a r k s , p l a y g r o u n d s , c o m m u n i t y b u i l d i n g s a n d other p u b l i c f a c i l i t i e s , ( i i i ) a d e s c r i p t i o n o f the methods p lanned f o r m u n i c i p a l d i r e c t i o n a n d c o n t r o l of the use of l a n d i n the area, i n c l u d i n g z o n i n g , b u i l d i n g controls a n d s t a n d a r d s of o c c u p a n c y of b u i l d i n g s i n the a r e a ; -(iv) a d e s c r i p t i o n of the methods p l a n n e d f o r the i i n p r c v e -- - ment , r e h a b i l i t a t i o n or replacement of p r i v a t e l y owned f a c i l i t i e s , i n c l u d i n g h o u s i n g accommodat ion, t h a t w i l l cont inue i n the area , and the techniques p lanned f o r r e t a r d i n g s u c h f a c i l i t i e s f r o m b e c o m i n g substandard* a n d (v) the es t imated costs of the scheme a n d t h a t w i l l be developed i n accordance c r i n h a r m o n y w i t h a n official c o m m u n i t y plan. 23A. T h e C o r p o r a t i o n m a y , w i t h the a p p r o v a l c f the G o v e r n o r i n C o u n c i l , enter i n t o a n agreement w i t h a n y p r o v i n c e o r m u n i c i p a l i t y w h e r e b y the C o r p o r a t i o n w i l l contr ibute one-half of the cost of the p r e p a r a t i o n of a n u r b a n r e n e w a l scheme, i n c l u d i n g the cost of a l l economic, s o c i a l a n d engineer ing research a n d p l a n n i n g necessary t h e r e f o r . 23B. (1) W h e r e a n u r b a n r e n e w a l scheme has been approved b y the prov ince i n w h i c h the scheme is to be c a r r i e d out. a n d is acceptable to the C o r p o r a t i o n , the C o r p o r a t i o n m a y , w i t h the a p p r o v a l of the G o v e r n o r i n C o u n c i l , enter i n t o a n agreement w i t h t h a t prov ince or w i t h the m u n i c i p a l i t y i n w h i c h the scheme is to be c a r r i e d out pro-v i d i n g f o r the p a y m e n t of c o n t r i b u t i o n s equal to one-half of the a c t u a l cost, as d e t e r m i n e d b y the C o r p o r a t i o n , of ( a ) a c q u i r i n g a n d c l e a r i n g lands a n d b u i l d i n g s i n the u r b a n r e n e w a l area, i n c l u d i n g costs of condemnat ion proceedings a n d the costs of d i s p o s i n g of lands so .acquired a n d c l e a r e d ; (i>) installing municipal services or works, other than public buildings, in the urban renewal area; a n d (c) employing persons' • > ( i ) i n connection with the acquisition and clearance o f land i n the urban renewal area, (ii) t o assist owners of property affected by t h e urban renewal scheme to adjust to the implementation o f the s c h e m e , a n d ( i i i ) t o assist the relocation of persons dispossessed of hous-i n g accommodation by the implementation of the urban renewal scheme. ; (2) Every agreement entered into pursuant to subsection (1) payment t o s h a l l provide that the province o r municipality will pay to the w h e r e u n d " Corporation d i s p o s e d o f . N e w . 1 9 6 4 . (a) one-half of any moneys received from the sale, lease or other e.is. s. 7. disposition of land in the urban renewal area i n respect o f which the Corporation has contributed towards the acquisi-tion and clearance thereof; a n d ( b ) an amount equal to one-half of the value, as determined i n the manner provided in the agreement, of land in the urban renewal area retained by the province or municipality for • public purposes and in respect of which the Corporation has contributed towards the acquisition and clearance thereof. 23c. (1) In addition to the contributions made by the Corpora- ^ r a £* b a n tion pursuant to sections 23A and 23B, the Corporation may, with the renewat" approval of the Governor in Council, make a loan to a province or scheme, municipality described in section 23B to assist in the implementation.^ i^ .,""' o f those parts of an urban renewal scheme in respect of which t h e Corporation could, pursuant to paragraphs (a) to (c) of subsection (1) of section 23B, make a contribution. (2) A loan made under the authority of this section shall C o n d i t i o n s u n d e r w h i c h (a) bear interest at a rate prescribed by the Governor in Council; fcar.s may be m a d e . ( b ) not exceed two-third3 of the actual cost, as determined by the - ; e v" in-corporation, of implementing those parts of the urban e' 1 5 , s'7" renewal scheme referred to in subsection (1) after deducting therefrom all federal grants made or to be made in connection with that scheme; (c) be for a term not exceeding fifteen years; (d) be secured by debentures issued by the province o r muni-cipality; and (e) be repayable in full during the t e r m thereof with interest payable net less frequently than annually. 23D. (1) A loan made by an approved lender'to the owner of a ^ n . » f o r housing project located in an urban renewal area is insurable if p r o j e c t ! (o) the housing project meets the requirercente, or when repaired ^ ""^f cr improved will meet the requirement;, of an urban renewed ar-s inaur-B c h e m e acceptable to the Corporation for that area; iuw.issi (&) the housing project meets the housing standards prescribed T-by the Corporation; 184-I n s u r a n c e • f e e -N e w . 1 9 6 4 , e. 1 5 . s. 7 . F e e s t o b e p a i d t o M o r t g a g e I n s u r a n c e F u n d . N e - v . 1 9 6 4 . e. 1 6 , s. 7 . ( c ) the l o a n bears in teres t at a ra te p r e s c r i b e d b y the G o v e r n o r i n C o u n c i l ; (d) the l o a n does not exceed eighty-f ive per cent of the l e n d i n g va lue , as d e t e r m i n e d b y the C o r p o r a t i o n , of the' h o u s i n g p r o j e c t o r of the h o u s i n g project as i m p r o v e d ; a n d ( e ) t h e l o a n is secured b y a f irst m o r t g a g e u p o n the h o u s i n g pro-j e c t i n a f o r m p r e s c r i b e d b y r e g u l a t i o n a n d is repayable i n equal m o n t h l y i n s t a l m e n t s of p r i n c i p a l a n d interest over a t e r m n o t exceeding the usefu l l i fe of the h o u s i n g project , ' as d e t e r m i n e d b y the C o r p o r a t i o n , and i n a n y case not exceeding twenty-f ive years . (2) T h e i n s u r a n c e fee f o r a l o a n descr ibed i n subsect ion (1) s h a l l be t w o per cent of the a m o u n t of the a p p r o v e d l o a n o r a n i n s t a l -m e n t thereof, less the insurance fee component of the approved l o a n o r the i n s t a l m e n t thereof. (3) A l l i n s u r a n c e fees received b y the C o r p o r a t i o n under t h i s P a r t s h a l l be p a i d i n t o the M o r t g a g e Insurance F u n d establ ished b y the C o r p o r a t i o n under subsect ion (1) of sec t ion 10. 185 APPENDIX D ASSESSMENT COMMISSIONER'S OFFICE CITY OF VANCOUVER (APRIL, 1958). "USE"- CODE NUMBERS These code numbers are used on ly i n connec t ion w i t h t axab le p r o p e r t i e s . Code Nos / VACANT - This code to cover vacant p rope r ty of a l l t y p e s . I f any "Improvement V a l u e " i s entered on the r eco rd card then the p rope r ty must be a l l o c a t e d to one o f the other codes. ' 6 5 RESIDENTIAL - SINGLE FAMILY - P r o p e r t i e s typed ,on the Fmeld Sheet i n the " l " c l a s s i f i c a t i o n , e . g . 1/2, 1/8 e t c . , and.which are not marked or des ignated as "conver ted" . 71 RESIDENTIAL - DUPLEX - B u i l d i n g s of the duplex or "3" c l a s s i f i c a t i o n and those of the converted " 1 " c l a s s i f i c a t i o n where the conver s ion p rov ides the equ iva l en t of a dup lex . (Convers ion may or may not be i n d i c a t e d i n " type" column or space on F i e l d Shee t ) . ' 77 RESIDENTIAL MISCELLANEOUS - Sundry b u i l d i n g s used i n con junc t i on w i t h r e s i d e n t i a l p r o p e r t y . This i n c l u d e s such items as sheds and domestic garages or greenhouses. A l so i n c l u d e d i s the t axab le p o r t i o n of o therwise exempt p r o p e r t i e s such as churches and p r i v a t e s c h o o l s . I f p o r t i o n t axab le i s l and o n l y then p l ace i n code 65. - 78 RESIDENTIAL CONVERSIONS - Converted d w e l l i n g s w i t h accommodation fo r more than two f a m i l i e s . 8 l RESIDENTIAL COMMERCIAL - Combined r e s i d e n t i a l and commercial b u i l d i n g s where the r e s i d e n t i a l f l o o r area i s 75% or more of the t o t a l a r ea . 82 186 Code Nos RESIDENTIAL - APARTMENTS - B u i l d i n g s cons t ruc ted as three or more s e l f - c o n t a i n e d u n i t s . COMMERCIAL - B u i l d i n g s used fo r commercial purposes and i n c l u d i n g sundry b u i l d i n g s used i n con junc t i on w i t h a commercial u n d e r t a k i n g . Inc luded are such items as : 8 3 O f f i c e . B u i l d i n g s R e t a i l Bake r i e s Cleaners & Dyers Gas S t a t i ons S e r v i c e Garages Launderet tes Auto Courts Mote ls Hote l s Restaurants R e t a i l Stores-Banks Repai r Shops Blub or Lodge B l d g . Super Markets Theatres P a r k i n g Garages P a r k i n g Lots H o s p i t a l s Bowling A l l e y s Undertakers G o l f Courses Greenhouses P r i n t e r s I INDUSTRIAL - B u i l d i n g s used fo r e i t h e r l i g h t or heavy i n d u s t r y . Inc luded are such items as : Bake r i e s (Manufacturing) B o t t l i n g P l a n t s ' D a i r i e s (process ing) "Laundries (p l an t ) P o u l t r y Packers Meat Packers M i l l s G r a i n E l e v a t o r s C o n s t r u c t i o n Yards Warehouses Shipyards Brewer ies Canneries Cold Storage P l a n t s Foundr ies Sash & Door F a c t o r i e s R e f i n e r i e s Wharfs & P i e r s 95 APPENDIX E 187 EXTRACT FROM THE NOTICE INVITING TENDER FOR SALE OF -THE PROPERTIES ACQUIRED BY THE CITY IN STUDY AREA 1 CITY OF VANCOUVER REDEVELOPMENT PROJECT NO. 1 LIGHT INDUSTRIAL LANDS FOR SALE : In t he , a r ea hounded by Bur ra rd S t r e e t , G r a n v i l l e S t r e e t , : 1st and 6 th Avenues. The C i t y of Vancouver, i n . p a r t n e r s h i p w i t h the Government of Canada (Cen t r a l ) Mortgage and Housing Corpora t ion) and the P rov ince o f B r i t i s h Columbia, has , under i t s Redevelop-ment P r o j e c t No. 1, acqu i red and c l e a r e d c e r t a i n lands which are now o f f e r e d . f o r s a l e by the p a r t n e r s h i p , subjec t to the f o l l o w i n g c o n d i t i o n s : Lands to be c o n s o l i d a t e d i n t o s i t e s not l e s s than 50 fee t i n frontage wherever f e a s i b l e . Purchasers ' to be r e q u i r e d to' enter i n t o agreement w i t h the C i t y to-complete development w i t h i n three years from date of purchase . No purchaser s h a l l , excep t .wi th , the p r i o r w r i t t e n consent of the C i t y , r e - s e l l , l e a s e , sub - l ea se , or o therwise d ispose of l and i n the p r o j e c t area befor development i s completed on the s i t e . The C i t y to have the o p t i o n to repurchase the land at i t s purchase p r i c e i f development has not taken p l ace w i t h i n the r e q u i r e d t ime . The D i r e c t o r o f P l a n n i n g , on b e h a l f . o f the T e c h n i c a l P l a n n i n Board , w i l l e x e r c i s e s c r u t i n y of a l l development permi t a p p l i c a t i o n s i n t h i s area w i t h a view to ensur ing tha t a s u i t a b l e s tandard of development i s ob t a ined . The f o l l o w i n g s i t e s are now of fe red f o r s a l e : 1. 2 . 3-k. 188 The f u l l purchase p r i c e for each p rope r ty tendered upon must he s t a ted and the p rope r ty p r o p e r l y i d e n t i f i e d . The h ighes t or any o f f e r not n e c e s s a r i l y accepted. I f s a l e i s arranged through a l i c e n s e d R e a l Es t a t e Agent the C i t y ' s e s t a b l i s h e d commission of ° f the f i r s t $20,000 and 2\% on the balance w i l l app ly . Apply to P r o p e r t y & Insurance O f f i c e , C i t y H a l l , for. p l a n showing l o c a t i o n and s i z e of s i t e s , tender forms, and any fu r t he r i n f o r m a t i o n r e q u i r e d . R. THOMPSON, CITY CLERK, CITY HALL, 'VANCOUVER 10, B . C . December 1, 1964-. 

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