Ron Cheung

The Incidence of the Land Use Regulatory Tax

Land use regulation has been found to impose a substantial tax on housing within select U.S. metropolitan areas. In this article, we develop hypotheses regarding the incidence of this tax by income class and racial group within these areas. Parcel-level data from Miami-Dade County, Florida, are used to test our hypotheses. We find that, while the tax rises with a households permanent income, this rise is less than proportional, making it a regressive tax. We also find, controlling for household permanent income, that the tax is a higher percentage of the price of homes located in black neighborhoods in comparison to those located in white or Hispanic neighborhoods.

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.

Demographic Factors and Price Distortions in Insurance: Demographic Factors and Price Distortions in Insurance

Few papers have analyzed the potential linkages between price distortions and the specific demographic and political traits of customers. The existence of price distortions may have adverse and potentially unintended impacts on certain demographic groups, leading to significant public policy concerns. The current study uses census tract data and rating factors to examine age, income, and race demographics in an effort to determine if any subgroups of the population are adversely impacted by the price distortions of property insurance. The results suggest that Hispanics, lower income households, and specific age groups pay relatively more for insurance coverage than comparison groups.

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.

Demographic Factors and Price Distortions in Insurance

Few papers have analyzed the potential linkages between price distortions and the specific demographic and political traits of customers. The existence of price distortions may have adverse and potentially unintended impacts on certain demographic groups, leading to significant public policy concerns. The current study uses census tract data and rating factors to examine age, income, and race demographics in an effort to determine if any subgroups of the population are adversely impacted by the price distortions of property insurance. The results suggest that Hispanics, lower income households, and specific age groups pay relatively more for insurance coverage than comparison groups.

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.