Chris Cunningham

Growth Controls, Real Options, and Land Development

Many urban growth controls attempt to check sprawl by restricting allowable new housing densities. However, land may be undeveloped to preserve its real-option value. Real options in land markets arise from uncertainty as to the optimum use of a site. By limiting allowable development choices, growth controls can narrow real options and potentially accelerate investment. This paper examines the effect of price volatility, a generator of option value, on the timing of development after the imposition of an Urban Growth Boundary (UGB) around Seattle. While the net effect of the UGB is to lower the likelihood of new housing outside the boundary by between 28 and 39, price volatility is no longer a deterrent to development.

Do Homeowners Associations Mitigate or Aggravate Negative Spillovers from Neighboring Homeowner Distress

Experiences reveal that the monitoring costs of the foreclosure crisis may be non-trivial, and smaller governments may have more success at addressing potential negative externalities. One highly localized form of government is a homeowners’ association (HOA). HOAs could be well suited for triaging foreclosures, as they may detect delinquencies and looming defaults through direct observation or missed dues. On the other hand, the reliance on dues may leave HOAs particularly vulnerable to members’ foreclosure. We examine how property prices respond to homeowner distress and foreclosure within HOA communities in Florida. We combine datasets of HOAs, sales and aggregate loan delinquency and foreclosures from 2000 through 2008. We find properties in HOAs are relatively less impacted by more distressed neighbor homes compared to non-HOA properties, but only when considering less severe delinquency rates. We also find that negative price effects from higher delinquency exposure rates are ameliorated for properties in larger and newer HOAs.

Public Investments in Education and Children’s Academic Achievements

Abstract While the benefits of additional schooling in the developing world are widely recognised, the best use of scarce resources to improve academic achievement remains unclear. We compare public investments in school infrastructure, school improvement grants, teacher qualifications, and attendance incentives on independently-gathered measures of academic skills as well as grade progression for 8–11 year olds in India. We match a rich household survey containing a skills-assessment module, the India Human Development Survey (IHDS), with detailed measures of each district’s education resources from the District Information Survey on Education (DISE). We also include border-pair fixed effects to control for unobserved heterogeneity. We find that incentives for children to attend school were associated with arithmetic, reading and writing skills, and grade progression. Investment in teachers were associated with greater probability a child could write and do more advanced math. Small improvement grants to schools were associated with better reading skills and writing ability. Investments in school infrastructure were only associated with improved writing ability.

Household Debt and Local Public Finances

In the wake of the Great Recession, steep declines in state and local government expenditures and employment were a large and persistent source of economic weakness. The business cycle was also characterized by large increases and decreases in household debt. We estimate the extent to which variation in local government revenues and expenditures can be explained by variation in the expansion of household debt from 2002 to 2007, and the contraction thereafter. We merge individual credit balance data with municipal financial data from the Census of Governments. Using Census block indicators, we are able to place approximately 12 million credit bureau records into over 6,000 cities and 4,500 school districts. Our results indicate that a one percent additional increase in mortgage debt caused a 0.15 percent increase in local governments’ own revenue and a 0.17 to 0.21 percent increase in expenditures. These relationships were evident during the expansion and contraction of mortgage debt. We also find evidence linking nonmortgage debt to municipal finances.

Who Supports Portable Assessment Caps?: The Role of Lock-Ins, Tax Share, and Mobility

We examine voter support in 2008 for Constitutional Amendment 1 in Florida, which modifies a Proposition 13-like property assessment growth cap by allowing homeowners to port their exempted value to a new home. Despite claims by amendment proponents that it would lower property taxes, we do not find that support was higher in precincts with a greater share of eligible property owners. Nor was support explained by the average size of existing exemptions. Instead, we find that precincts with more mobile households supported Amendment 1. In addition, we find evidence that voters understood how changing assessment methodology could affect their tax share. Under a conventional assessment cap, a homeowner who moves resets the assessed value to the market price, lowering the share of assessed value for remaining homeowners. Remarkably, we find that support for Amendment 1 falls as mobility in other parts of the city increases. This finding suggests that Amendment 1 was viewed as a way for high-mobility voters to shift the tax burden back to low-mobility homeowners. In addition, support is higher when a city has a high number of out-of-state immigrants, who have no tax exemption to port into the city, but support is lower when the city has high rates of in-state immigration. These findings suggest that voters are fairly tax savvy and as concerned with shifting the tax burden as they are with curbing absolute expenditures.