dynamic neighborhood taxonomy a project of living cities by rw ventures, llc building new capacity...

Dynamic Neighborhood Taxonomy

A Project of LIVING CITIES

By RW Ventures, LLC

“Building New Capacity for Neighborhood

Development”

City of Seattle, May 5, 2009

Agenda

Background: Developing New Tools for the Field

Applying the DNT Tools: City Planning Examples

Moving Forward: Implications and Next Steps

I

II

III

DiscussionIV

About Living Cities

“A partnership of financial institutions, national foundations and federal government agencies that invest capital, time and organizational leadership to advance America’s urban

neighborhoods.”

AXA Community Investment Program Bank of America The Annie E. Casey Foundation J.P. Morgan Chase & Company Deutsche Bank Ford Foundation Bill & Melinda Gates FoundationRobert Wood Johnson Foundation

The Kresge Foundation John S. and James L. Knight Foundation John D. and Catherine T. MacArthur Foundation The McKnight Foundation MetLife, Inc. Prudential Financial The Rockefeller Foundation United States Department of Housing &Urban Development

LIVING CITIES PARTNERS:

The Challenge: Scarce Resources, Many Options

Community-Based Organizations: select interventions, identify assets and attract investment

Governments: tailor policy and interventions Businesses: identify untapped

neighborhood markets Foundations: target interventions,

evaluate impacts

Information Resources

Few decision systems for neighborhood practitioners,investors and service providers

Gap between practitioners and academics: need “Clinical Economics”(Sachs)

Increasingly available, but more progress to be made

A New Capacity for Neighborhood Development

Strategic planning linking neighborhood, city and region

Centralized data and information systems

Integrated analytic tools and impact monitoring

Ongoing evaluation of results

Strategy adjustment and refinement

Comprehensive Neighborhood Taxonomy

Business PeopleReal EstateAmenitiesSocial Environment

Improvement or deterioration within type

Gradual vs. Tipping point

From one type to another

Port of entryBohemianRetirementUrban commercialized

EmploymentEducationCrimeHousing stock

Investment activity

PHYSICAL:Distance from CBD, vacancies, rehab activity, …

Theory and Data

TRANSPORTATION:Transit options, distance to jobs, …

CONSUMPTION:Retail, services, entertainment, …

PUBLIC SERVICES:Quality of schools, police and fire, …

SOCIAL INTERACTIONS:Demographics, crime rates, social capital…

Theoretical Framework

Use Demand for Housing as Proxy for Neighborhood Health

Look at Quality Adjusted Housing Values to Capture Neighborhood Amenities

Look at Change in Quantity of Housing to Account forSupply Effects

Amenities

Structure Rent

Housing Price

Final Product: The DNT RSIRSI Estimation Coverage Using Case/Shiller Method

Time Period: 2000 - 2006 RSI Estimation Coverage Using DNT RSI Method

Time Period: 2000 - 2006

Improving upon traditional repeat sales indices, the DNT RSI can be estimated

for very small levels of geography, and is more accurate, more robust and less volatile.

The Big Picture:Drivers of Neighborhood Change

Mobility is the key mechanism of change

Movers are attracted to areas with undervalued housing but sound economic fundamentals (employment, income, education, young adults)

Being connected is important: proximity to job centers, access to transit, lower commuting times are positive

Cultural and Recreational Amenities (art galleries, bars and restaurants) help, but are not the main event

“The Goldilocks Theory” …

… Neighborhoods of Opportunity are “Just Right.”

DETROIT—Notorious for its abandoned buildings, industrial warehouses, and gray, dilapidated roads, Detroit's Warrendale neighborhood was miraculously revitalized this week by the installation of a single, three-by-four-foot plot of green space.

The green space, a rectangular patch of crabgrass located on a busy median divider, has by all accounts turned what was once a rundown community into a thriving, picturesque oasis, filled with charming shops, luxury condominiums, and, for the first time ever, hope.

The Johansens, who just moved to Warrendale, enjoy some outdoor time.

DETROIT—Notorious for its abandoned buildings, industrial warehouses, and gray, dilapidated roads, Detroit's Warrendale neighborhood was miraculously revitalized this week by the installation of a single, three-by-four-foot plot of green space.

The green space, a rectangular patch of crabgrass located on a busy median divider, has by all accounts turned what was once a rundown community into a thriving, picturesque oasis, filled with charming shops, luxury condominiums, and, for the first time ever, hope.

The Johansens, who just moved to Warrendale, enjoy some outdoor time.

3'-By-4' Plot Of Green Space Rejuvenates NeighborhoodFEBRUARY 11, 2008 | ISSUE 44•07

3'-By-4' Plot Of Green Space Rejuvenates NeighborhoodFEBRUARY 11, 2008 | ISSUE 44•07

The “Little” Picture: Few Silver Bullets

Exploring the Relative Importance of Different Drivers of Change

(1994-2004 Random Effects Model, Standardized Coefficients with 95% Confidence Interval)

Summary Implications

Two major implications:

1. We need a framework for understanding neighborhoods as dynamic, specialized, and nested in larger systems

2. We need much better tools for customizedanalysis of local economies

Neighborhoods are Complex

Neighborhoods are Dynamic

Neighborhoods are Nested in Larger Systems which drive the Flow of Capital and People

Neighborhoods are Nested in Larger Systems Which Drive the Flows of People and Capital

Functioning Neighborhoods Connect Residents and Assets to Larger Systems

Employment networksEntrepreneurial opportunities

Business, real estate investment

Expanded products and services

Productive, healthycommunities

Undervalued, underutilized assets

Poverty Productivity

Connectedness

Isolation

Applying the Framework

STEP 1A: What type of neighborhood do you want to be?



Starter Home Community



STEP 1B: What drivers will get you there?


• Specific Retail Amenities• Child Care• Schools• Safety• Affordability

• Specific Retail Amenities• Child Care• Schools• Safety• Affordability

ECONOMIC SYSTEM


STEP 2: Identify Relevant System

Retail Markets



STEP 3: Identify Change Levers Within System


Commercial Land Assembly (production –

costs)

Specialized Market Data(exchange – finding costs)

ECONOMIC SYSTEM

Retail Markets


STEP 4: Specify Interventions


Commercial Land Assembly (production –

costs)

Specialized Market Data(exchange – finding costs)

ECONOMIC SYSTEM

Retail Markets

Developing New Tools for the Field

Question/Goal Tool

Tracking Neighborhood Change DNT Repeat Sales Index (RSI)

How will a specific intervention affect its surrounding area? Impact Analyst

What drivers differentiate neighborhoods with respect to a specific outcome of interest? CART

Identify comparable neighborhoods based on drivers of change and other key characteristics Neighborhood Typology

What neighborhoods are similar along particular factors of interest? Custom Typologies

How does the impact of an intervention vary in different places?

Geographically Weighted Regression

Track affordability and neighborhood housing mix Housing Diversity Metric

Anticipate and manage neighborhood change Pattern Search Engine

Identify “true” neighborhood boundaries NeighborScope

Where We Are Today

Concept

Prototype

Testing and Refinement

Launch

Scaling Up

Design

The Product Development ProcessThe Product Development Process

Where We Are Today

Concept

Prototype

Testing and Refinement

Launch

Scaling Up

Design

The Product Development ProcessThe Product Development Process

DNTDNTDNTDNT

Agenda




I

II

III

DiscussionIV

Agenda

Applying the DNT ToolsII

a. Neighborhood Planning in Southeast Seattle

b. Informing Use of the Housing Levy

c. Zoning Changes in Northgate

d. Ongoing Impact Monitoring

Neighborhood Planning in Southeast Seattle

Key Issues:– Leverage light rail investment– Retain existing businesses and attract new ones– Minimize displacement as neighborhood

improves

Analytic Tools:– Neighborhood Typology – DNT RSI– Affordability reports– Impact Analyst

Area of Focus: North Beacon Hill

Logic and Approach

Quickly Assess Current Conditions and Trends: – Select relevant indicators, compare North Beacon Hill

to city and peers

Identify Opportunities and Risk Factors Related to Light Rail Construction: – What do we know about impact of light rail and other

changes taking place to this type of neighborhood?

Select Interventions and Support Implementation:– What programs/interventions would make the most

difference and how should they be implemented?

Monitor Outcomes and Evaluate Results:– Are interventions achieving the desired outcomes?

What could be done differently?

Current Conditions and Trends: Neighborhood Reports

“Neighborhood Reports +”: Applying the DNT Neighborhood Typology

Key Dimensions:

•People•Income•Age•Foreign Born

•Place•Land Use•Housing Stock•Business Types

Key Dimensions:



VariablesVariables


Key Dimensions:



Key Dimensions:



VariablesVariables

Type 4: Type 4: ““Port of Entry”Port of Entry”

Type 4: Type 4: ““Port of Entry”Port of Entry”


Type 4-D, “Port of Entry: Stable Residents”: Lower income, single family homes, stable resident base. High foreign-born population, high business diversity.

Appreciating faster than its peers: since 2000, the RSI has increased by 98%, compared to 91% for its peer group. Over the past 2 years, properties have maintained their values, while they depreciated in mid-south Beacon Hill.

A Neighborhood in Transition: Type 4-D neighborhoods can transition to Type 5-B, “Urban Tapestry: High Diversity” (higher income, lower foreign born population, lower unemployment). Based on HMDA data trends, it appears that such a transition is taking place, making this area more similar to the southern portion of North Beacon Hill.

Potential Issues:– Signs of Financial Distress: high sub-prime lending activity;

credit indicators (accounts past due, credit balance to limit ratios) reveal distress.

– Impact of Light Rail?

Anticipating Change: Measuring the Effect of Light Rail Using the Impact Analyst

What This Tool Does: Estimates impact of an event (e.g. construction

of a light rail stop) on surrounding housing values (or on other outcomes, e.g. crime)

Possible Applications: Evaluate the impact of a development policy Identify expected changes Choose among alternative interventions based

on estimated benefits to the surrounding community

Advocate for a specific intervention

How It Works

PRELIMINARY – FOR ILLUSTRATION PURPOSES ONLY

Monte Carlo Simulation to Estimate Impact Variation with Distance

Homes within 1000 ft of an LIHTC site

appreciate at a 4% higher rate than homes

between 1000 ft and 2000 ft.

Homes within 1000 ft of an LIHTC site

appreciate at a 4% higher rate than homes

between 1000 ft and 2000 ft.

Estimated Distance Decay Function – LIHTC ProjectsEstimated Distance Decay Function – LIHTC Projects

Distance from Project Location (in Miles)Distance from Project Location (in Miles)

DN

T R

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dex

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= N

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act

DN

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In

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= N

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act

Expected Impact in North Beacon Hill

Property values likely to increase significantly following construction of light rail stop

Comparable Case Study: Dallas Light Rail Stop in Type 6 Neighborhood, 1996Comparable Case Study: Dallas Light Rail Stop in Type 6 Neighborhood, 1996

Key Issue: Minimize Displacement as Neighborhood Improves

What characterizes the neighborhoods that improved with less displacement?

DNT Findings:Drivers of “Improvement in Place”

Improvement with Low Turnover Is Associated With:

High Home Ownership Rates

Low Vacancy Rates

Access to Transit

Reduction in Unemployment

Presence of Employment Services

High Social Capital

High Percentage of Young Adults

Select Interventions: What Should We Focus on Here?

Challenges and Opportunities Related to Light Rail Investment:

Helps connect people to jobs

Catalyst for commercial and mixed-use development

Drives up property values, potentially causing displacement of original residents

Analytic Tools Can Help Select and Implement Appropriate Interventions:

Identify parcels for land banking

Develop inclusionary zoning policy

Target employment services and workforce development

Additional Tools and Applications

Impact of Light Rail Stops on Other Factors (e.g. Crime, Congestion, Retail Sales, etc.)

Leveraging Light Rail Investment:– Analyze impact of light rail in conjunction with

other factors (e.g. different retail mixes, condo vs. rental, etc.) using DNT RSI and other outcome measures

Commercial Corridor Analysis (Econsult):– Current shopping patterns and factors affecting

them– Performance of individual shopping centers– Model impact of changes in one corridor on other

retail centers in the city

Ongoing Impact Monitoring

Agenda


a. Neighborhood Planning in Rainier Valley




Informing Use of the Housing Levy

Key Issues:– Making the Case for Affordability– Targeting location of affordable housing units– Informing Implementation

Analytic Tools:– DNT RSI– Affordability reports– Impact Analyst– Neighborhood Typology

Logic and Approach

Making the Case for Affordable Housing– Track changes in housing affordability over time

Targeting Interventions– Opportunities for preservation: identify existing

pockets of affordability– Siting new projects: examine characteristics of

project locations that have worked in the past, identify current comparables

Informing Implementation– Identify features associated with affordable

housing projects that maximize their impact on residents and community

Making the Case:Percentage of Affordable Homes, 1986-2006

19861986

“Affordable” defined with respect to a household making AMI and spending 30% on housing“Affordable” defined with respect to a household making AMI and spending 30% on housing

19881988

Percentage of Affordable Homes, 1986-2006


19901990



19921992



19941994



19961996



19981998



20002000



20022002



20042004



20062006



Targeting Interventions: Identifying Existing Pockets of Affordability

Developing New Projects: What Worked in the Past?

Estimated Distance Decay Function – Seattle LIHTC ProjectsEstimated Distance Decay Function – Seattle LIHTC Projects

Distance from Project Location (in Miles)Distance from Project Location (in Miles)

DN

T R

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t S

ales

In

dex

, 1

= N

o I

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DN

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= N

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act

Impact analysis of LIHTC projects:

• LIHTC Projects generally positive for surrounding property values

• No significant effect on crime rates

Impact analysis of LIHTC projects:

• LIHTC Projects generally positive for surrounding property values

• No significant effect on crime rates

Seattle Results:

Larger, rehab projects had best results, particularly in lower income areas


Analyzing Individual Projects (EXAMPLE: Roxbury LIHTC)Analyzing Individual Projects (EXAMPLE: Roxbury LIHTC)


EXAMPLE: Working with developer to identify promising sites based on neighborhoods where previous projects were successful

APPROACH: Develop scorecard using RSI, Typology and housing values

Result: Scorecard Identifies Most Promising Candidates

Next Step: Isolate Factors Leading to Project Success


Refine Affordability Measures: – Incorporate public and subsidized housing stock, tie

size of available units to size of households in need Identify Rapidly Appreciating Areas

– Apply NeighborhScope tool to identify areas at most risk of displacement

Impact of Other Housing Programs:– Section 8, Trust Fund, ...

Inform Implementation:– Analysis of impact of specific projects– Housing mix: best mix of housing for different types

of neighborhood– “Housing in Context:” Identify mix of amenities and

supporting services that maximize positive impact for residents and communities


Agenda






Zoning Changes in Northgate

Key Issues:– Informing Visioning Process– Guide Land Use Decisions

Analytic Tools:– Neighborhood Typology– Impact Analyst

Logic and Approach

Use Neighborhood Typology to Inform Visioning Process– What type of neighborhood do you want to be?– What demographics are you seeking to attract?– What mix of uses does that imply?

Evaluate Impact of Alternative Uses– What will be the impact of different land uses on

property values, crime, traffic, etc.?

Support Land Development Process– Commercial parcels database to help track

ownership, tax status, etc. to facilitate land assembly– Specialized market analysis to identify most

promising type of retail and attract tenants

Possible Trajectories for the Neighborhood

Given Current status and type, 2 alternative visions are attainable:

Type 7: “No Place Like Home”

Mostly residential, very stable neighborhoods with a “suburban” feel. The single family homes that line the streets of these communities house middle income families raising their children, as well as retirees that stay in the neighborhood after their nests are empty.

Type 8: “Close, Cool, Commercial”

Vibrant neighborhoods with high turnover in their population, which is composed primarily of young professionals living in high-end rental units and condos. Few children frequent the streets in these communities, but the population of 19-34-year-olds enjoys a high diversity and concentration of retail, services and entertainment venues.

Given Current status and type, 2 alternative visions are attainable:

Type 7: “No Place Like Home”

Mostly residential, very stable neighborhoods with a “suburban” feel. The single family homes that line the streets of these communities house middle income families raising their children, as well as retirees that stay in the neighborhood after their nests are empty.

Type 8: “Close, Cool, Commercial”

Vibrant neighborhoods with high turnover in their population, which is composed primarily of young professionals living in high-end rental units and condos. Few children frequent the streets in these communities, but the population of 19-34-year-olds enjoys a high diversity and concentration of retail, services and entertainment venues.

Transitioning to a Different Neighborhood Type:Land Use Implications

Type 6Type 6

New New Development Development

(Current)(Current)

Type 7Type 7

HomeownerHomeownerss

Type 8Type 8

Young Young ProfessionProfession

alsals

Percent 19-34 Year Old 35% 27% 44%

Home Ownership Rate 25% 64% 23%

Mixed Use Development 0.1% 0.3% 1%

Commercial Land Use 8% 2% 25%

Single Family Housing 24% 75% 21%

Entertainment Venues 3.69 2.43 4.26

Comparing Across Types:Comparing Across Types:

What Would it Take to Become a Different Type of Neighborhood?

Evaluate Impact of Alternative Uses

New Shopping CenterNew Shopping Center

Estimated benefits to the community: $29 million in increasedproperty values, or an average of $1,300 per home owner.

EXAMPLE:

New Shopping Center on Chicago’s Southwest Side

EXAMPLE:

New Shopping Center on Chicago’s Southwest Side


Facilitate Land Assembly: – Reduce land assembly costs by increasing

availability of info on developable parcels, including location, ownership, tax status, etc.

Identify Most Promising Sectors:– Perform retail market analysis to identify

leakage by retail sector

Attract Developers and Retailers:– Compile key market potential metrics by site

(including leakage, buying power, psychographic profiles, etc.) to attract developers and retailers


Agenda






Logic and Approach

Track Impact Over Time– See what’s working and what isn’t– Mitigate side effects

Conduct Formal Evaluation– Formal impact analysis of alternative policies

and programs– Evaluate what works best where

Tie Impact to Cost– Evaluate cost-effectiveness of alternative

strategies


Monitor intervention results using select outcome measures Outcomes may include property values, crime, vacancy rates, unemployment rates, etc.

Relate outcome to costs in order to evaluate where the program is more or less effective

Monitor intervention results using select outcome measures Outcomes may include property values, crime, vacancy rates, unemployment rates, etc.

Relate outcome to costs in order to evaluate where the program is more or less effective

Starting at least 1 year after program inception, conduct formal impact analysis to evaluate interventions.

Evaluate in which areas the program has worked best, and why.

Identify most cost-effective implementation strategies.

Impact comparisons can be made across sub-areas within the same community area, and across sub-areas in different community areas but are the same neighborhood “type”.

Results can be used to refine strategies and implementation, thus improving the effectiveness of future interventions.

Starting at least 1 year after program inception, conduct formal impact analysis to evaluate interventions.

Evaluate in which areas the program has worked best, and why.

Identify most cost-effective implementation strategies.

Impact comparisons can be made across sub-areas within the same community area, and across sub-areas in different community areas but are the same neighborhood “type”.

Results can be used to refine strategies and implementation, thus improving the effectiveness of future interventions.

Monitor Impact: Modeling Strategies

Agenda




I

II

III

DiscussionIV

Where You Are Headed: Information Resources for the 21st Century

Automated analytic systems deliver answers, not just data, to inform decision making and expand market activity

Established feedback loops between “change theories” and implementation results refine knowledge base

Integrated data platform routinely collects information from city departments and outside sources

From Data to Decision-Making Tools

Next Steps: How Do We Get There?

Incrementally Build Information Infrastructure: – Begin with centralized data capacity– Expand database over time– Start with metrics and tools that can be easily

automated (e.g. RSI, Affordability)– Build technical skill set to refine analytics– Develop user-friendly platform

Integrate strategic planning approach

Establish feedback loops to refine plan and strategies based on implementation results

Agenda




I

II

III

DiscussionIV

Dynamic Neighborhood Taxonomy

A Project of LIVING CITIES

By RW Ventures, LLC

“Building New Capacity for Neighborhood Development”

City of Seattle, May 5, 2009

dynamic neighborhood taxonomy a project of living cities by rw ventures, llc building new capacity...

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