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UBC Theses and Dissertations

The effects of local government expenditures on property values Lomas, Lisa Kapin


This thesis examines the property value impacts of neighbourhood improvements to infrastructure provided by local government. The direct and indirect effects of a revitalization effort are studied in order to determine whether neighbourhood improvement programs generate positive spill over effects (externalities) to surrounding single family homes. These impacts are examined for a number of reasons: (a) property value determination studies have thus far omitted a treatment of detailed neighbourhood infrastructure variables; (b) the literature discussing externalities created by government intervention has either focussed primarily on the negative effects created by federal intervention, been theoretical in nature, or has been empirically inconclusive or contradictory; (c) the implementation of a neighbourhood improvement program in Canada was conceived of as a policy which would protect the investment of housing rehabilitation projects and has thus been expected to create positive neighbourhood effects. The empirical analysis performed in this study examines neighbourhood improvements in general and a neighbourhood improvement program in particular. The Canadian Neighbourhood Improvement Program (NIP) is empirically analyzed using multiple regression analysis. An analysis of covariance technique allows us to test whether neighbourhood improvements have a greater impact on housing values if they were provided in NIP designated areas or in NIP years. The empirical results of this study indicate that there are very few externalities created by the NIP program. In some cases, improvements were found to have a negative impact on single family house prices indicating that some improvements generate a negative effect. In addition, living adjacent to a NIP designated area was found to negatively affect single family house prices in one of the study years. These findings imply that a justification for similar improvement efforts need to be based on something other than property value increases. Policy analysts should consider other economic and non-economic justifications for such efforts before embarking on similar programs.

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