Gregory S. Burge

The Effects of Impact Fees on Multifamily Housing Construction

Development impact fees may create more housing opportunities for lower-income households within suburban areas if there is a fiscal incentive behind the adoption of exclusionary land-use regulations. Using panel data estimation techniques that allow us to control for unobservable heterogeneity and potential endogeneities, we estimate the effects of different types of impact fees on multifamily housing construction using data from Florida counties. Impact fees earmarked for public services other than for offsite water and sewer system improvements are found to expand the stock of multifamily housing construction within inner suburban areas. Water/sewer impact fees, on the other hand, are found to reduce construction throughout the entire metropolitan area. Copyright Blackwell Publishers, 2006

Effects of proportionate‐share impact fees

Abstract When it comes to paying for the significant costs of growth, local governments throughout the United States are usually the first line of financing. Yet because of a variety of factors, existing tax, fee, and inter jurisdictional transfer revenues may not be sufficient. Many hundreds (if not thousands) of communities rely in part on proportionate‐share impact fees to provide facilities concurrent with the effects of growth. Impact fees have numerous detractors, many of whom worry about their effect on affordable housing, economic development, and development patterns. A disparate literature has emerged addressing each of these concerns. This article synthesizes current knowledge about the market effects of proportionate‐share impact fees and finds that for the most part, they facilitate development in several important ways. Policy implications and guidance for future research are presented as well.

Do Tenants Capture the Benefits from the Low-Income Housing Tax Credit Program?

This article compares the rent savings accrued by recipient households over the life cycle of Low-Income Housing Tax Credit (LIHTC) projects to their allocated tax credits. A simple two-stage empirical procedure is developed and implemented for a selected medium-sized metropolitan statistical area. Using hedonic pricing parameters estimated in the first stage, LIHTC ceiling rents are compared to predicted market rents. The findings indicate rent savings constitute a relatively small fraction of the programs costs, suggesting developers and investors may capture some of the programs benefits. As this finding characterizes only one potential source of benefits of the LIHTC program, a brief discussion of other potential benefits to low-income households supplements the analysis.

Leaders, Followers, and Asymmetric Local Tax Policy Diffusion

Complementing recent theoretical models of tax competition with endogenous leadership, we empirically model local policy diffusion as a dynamic asymmetric process. Using a setting where local option sales taxes rapidly transitioned from nonexistence to ubiquity, we construct a policy leadership index to classify jurisdictions as leaders or followers. Using models that control for vertical tax competition effects, we show how asymmetric leader–follower dynamics characterize horizontal tax competition over the three decades that follow. A placebo test further supports our main conclusions. This methodological approach could be adapted to other settings where policies exhibit both extensive and intensive margins.

Housing Wealth, Property Taxes, and Labor Supply among the Elderly

We investigate the relationship between housing wealth, property taxes, and elderly labor supply using longitudinal data from the Health and Retirement Survey spanning the recent boom/bust housing cycle. When combined with MSA-specific house price indexes, the data provide plausibly exogenous variation in housing wealth, identified through within-MSA renter/homeowner comparisons. Our findings suggest that elderly households respond to variation in housing wealth and property taxes in the predicted opposing directions, that wealth influences labor supply to a lesser extent than factors like health and marital status, and that the effect of housing wealth on labor supply varies by gender and age.

Can Development Impact Fees Help Mitigate Urban Sprawl

Problem, research strategy, and findings: Local governments often react to sprawl by adopting urban containment policies to limit fringe growth and encourage core development. An alternative is to design impact fee programs accounting for the higher costs of providing services to remote locations. Zone-based impact fee programs carry this potential, but there is no empirical work investigating their effect on residential development. We explored the effects of a zone-based impact fee program on residential permits issued across the Albuquerque, NM, metropolitan statistical area using 21 years of data, identifying countervailing influences on density. The program mitigated sprawl by reducing the share of construction occurring near the urban fringe and by increasing the share in more centrally located areas, but there is no evidence the program increased core development. During a brief period when Albuquerque had impact fees but an adjacent community did not, we observed spillover effects that exacerbated sprawl. Takeaway for practice: Planners managing sprawl can use zone-based impact fee programs that account for the higher costs of fringe development to effectively increase the density of residential construction, but it may be necessary to use regional programs or coordinated efforts to prevent spillover to adjacent communities.

Competing for Foreign Direct Investment: The Case of Local Governments in China

This article explores the effects of locally adopted economic development zones and government spending promoting foreign affairs on foreign direct investment (FDI)–related employment in Chinese provinces. While these policies are motivated by a desire for employment growth, empirical evidence supporting their effectiveness has proven elusive. Using data from Chinese provinces covering 1999 to 2012, we explore this relationship using a dynamic system generalized method of moments approach. We find some evidence that trade zones enhance FDI-related employment but find none to support the idea that industrial development zones and spending to promote foreign affairs increase employment. Conversely, regional spillovers are consistently found to increase FDI-related employment in our main results and all robustness checks. We argue this highlights the importance of crowd-out effects and agglomeration spillovers, and that coordinating FDI promotion policy across regions may compare favorably to the current approach, which mainly encourages local competition over a largely fixed pool of aggregate FDI.

Do State Sales Taxes Crowd Out Local Option Sales Taxes

Abstract Currently, sales taxes are imposed at both the state and local levels in 37 US states. In these environments, vertical tax competition occurs as governments share a common sales tax base, and local jurisdictions have autonomy over sales tax rates. As cash-strapped states look to sales taxes for additional revenues, local governments may worry about potentially adverse revenue impacts, as consumers react to combined tax rate increases. This study examines state-municipal and county-municipal fiscal spillovers using an empirical approach that accounts for endogenous tax policy leadership and voter tax fatigue. Employing comprehensive longitudinal data from Oklahoma, we find that state tax hikes significantly crowd out future rate increases for the large group of jurisdictions that are designated as followers. Leader jurisdictions are not found to display crowd-out tendencies, a result that is consistent with recent work suggesting that leaders may be less influenced by vertical fiscal externalities than other jurisdictions.