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Estimation of the Effects of Development Impact Fees on Housing and Land Markets

Title: Estimation of the Effects of Development Impact Fees on Housing and Land Markets.
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Name(s): Shaughnessy, Timothy Michael, author
Ihlanfeldt, Keith R., professor directing dissertation
Holcombe, Randall G., committee member
Zuehlke, Thomas W., committee member
Department of Economics, degree granting department
Florida State University, degree granting institution
Type of Resource: text
Genre: Text
Issuance: monographic
Date Issued: 2003
Publisher: Florida State University
Place of Publication: Tallahassee, Florida
Physical Form: computer
online resource
Extent: 1 online resource
Language(s): English
Abstract/Description: This dissertation examines the incidence of development impact fees on housing and land markets by empirically estimating house and land price effects and effects on new housing construction in Dade County, Florida from 1985 through 2000. The demographic, economic, and political situation in Dade County is discussed in reference to the County's eventual adoption of impact fees as a public finance tool for generating revenue to fund infrastructure construction. Previous work on impact fees is analyzed, including theoretical literature that provides the foundation for the empirical work undertaken, as well as empirical literature on impact fee effects in other jurisdictions. A distinction is made between the two primary theoretical approaches to impact fee incidence, described as the "old view" and the "new view" theories. The theoretical differences imply three empirically testable hypotheses of the new view: the effect on new house prices can be greater or less than the fee and will equal expected future property tax savings, the effect on existing house prices will equal the effect on new house prices, and the effect on land prices will depend on whether the expected future property tax savings is larger than the impact fee amount. A metropolitan housing market model (DiPasquale and Wheaton's stock-flow model) is used to describe variation in price indices for constant-quality new and existing homes and vacant land in Dade County using county and region-specific variables, including a continuous measure of effective impact fees. Results show that an additional dollar of impact fees increases prices on both new and existing homes by about $1.60 which is shown to be consistent with expected future property tax savings, lending empirical support to the new view theory of impact fee incidence. Land prices fall in the presence of impact fees which is inconsistent with the new view, but hypothesized to be due to developer uncertainty whether future fees to be paid will justify a particular land price bid or will cover the future received house price. The presence of a land price effect implies an impact on new housing construction, and the stock-flow model and Mayer and Somerville's price change model estimates the effect impact fees have on housing starts. The suggested developer uncertainty attributable to the use of impact fees manifests itself in an estimated drop in new housing construction. The results provide support for the new view theory of impact fee incidence and are generally inconsistent with the old view. Developer uncertainty over future impact fee amounts could be tempered by predictable and consistent increases in impact fees as infrastructure construction costs rise.
Identifier: FSU_migr_etd-1786 (IID)
Submitted Note: A Dissertation Submitted to the Department of Economics in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy.
Degree Awarded: Fall Semester, 2003.
Date of Defense: July 17, 2003.
Keywords: land markets, housing markets, impact fees
Bibliography Note: Includes bibliographical references.
Advisory committee: Keith R. Ihlanfeldt, Professor Directing Dissertation; Randall G. Holcombe, Committee Member; Thomas W. Zuehlke, Committee Member.
Subject(s): Economics
Persistent Link to This Record: http://purl.flvc.org/fsu/fd/FSU_migr_etd-1786
Owner Institution: FSU

Choose the citation style.
Shaughnessy, T. M. (2003). Estimation of the Effects of Development Impact Fees on Housing and Land Markets. Retrieved from http://purl.flvc.org/fsu/fd/FSU_migr_etd-1786