Brownfields

by HUD USER

browNfields
Volume 12, Number 3 • 2010

U.S. Department of Housing and Urban Development
Office of Policy Development and Research
U.S. Department of Housing
and Urban Development
A Journal of Policy
Development and Research

Managing Editor: Mark D. Shroder
Associate Editor: Michelle P. Matuga

Advisory Board
Peter Dreier
Occidental College
Richard K. Green
University of Southern California
Keith R. Ihlanfeldt
The Florida State University
Annette null Kinull
nullssachusetts Institute of Technology
Carlos null nullrtnull
Anull Associates Inc.
Douglas S. nullssey
Princeton University
Sandra null nullnullan
nullhns nullnullins University
nullrynullth Shinn
nullandernulllt University
Raynullnd null Struynull
nulltional Onullnion Research Center
Paul nulladdell
University of Californianullnullrnullley
nullhn C. nulleicher
nulldson InstitutenullInc.

A Journal of Policy
Development and Research
U.S. Department of Housing and Urban Development
Office of Policy Development and Research
Cityscape
Brownfields
Volume 12, numBer 3
•
2010

The goal of Cityscape is to bring high-quality original research on housing and community
development issues to scholars, government officials, and practitioners. Cityscape is open to
all relevant disciplines, including architecture, consumer research, demography, economics,
engineering, ethnography, finance, geography, law, planning, political science, public policy,
regional science, sociology, statistics, and urban studies.
Cityscape is published three times a year by the Office of Policy Development and Research
nullDnullnullof the nullnull Department of nullusing and nullban Development. nullbscriptions are available
at no charge and single copies at a nominal fee. The nullurnal is also available on line at httpnullnullww.
huduser.orgnulleriodicalsnullityscape.html.
PDnull welcomes submissions to the Refereed Papers section of the nullurnal. Our referee process
is double blind and timely, and our referees are highly qualified. The managing editor will also
respond to authors who submit outlines of proposed papers regarding the suitability of those
proposals for inclusion in Cityscape. nullnd manuscripts or outlines to nulltyscapenullud.gov .
Opinions expressed in the articles are those of the authors and do not necessarily reflect the
views and policies of HUD or the U.S. government.
nullisit PDnullnulls website, www.huduser.org, to find this publication and others sponsored by PDnull.
Other services of nullD nullnull, PDnullnulls research information service, include listservs, special
interest and bimonthly publications nullest practices and significant studies from other sourcesnull
access to public use databases, and a hotline nullnullnullnullnullnullnull for help with accessing the
information you need.

iiiCityscape
Contents
Symposium
Brownfields
Guest Editor: Edwin Stromberg
Guest Editor’s Introduction ........................................................................................................ null
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland ............................................................................................ null
by Dennis nullignet and nullna nullberini
nulle Private nullrnullt nullr nullownnullld Properties ......................................................................... null
by nullrie nullwland
nullownnullldsnullRisnullnullsed Corrective nulltionnulland Local Communities .................................... null
by Peter null nullyer
Field Survey onullnullnullSite Contamination Policy ..................................................................... null
by nullgene nullldfarb
nullownnulllds nullcertainty: nullProposal nullo Renullrm Supernullnd ................................................... null
by David nullutnully and nullnull nulley
Refereed nullpers
nulle Prospects nullr Guiding nullusing Cnullice Voucnullr nullusenulllds to
nullgnullnullportunity nullignullornullods .......................................................................................... nullnull
by nullrnullnullnullure
nullasuring nullignullornullod nullality nullitnullSurvey nullta:
nullnullyesian nullproacnull .............................................................................................................. nullnull
by nullent D. nullst
Departments
nullpact
nulle Impacts onullnullre Rigorous Fnull nullderwriting Guidelines ............................................. nullnull
by nullastair nullnullrlane

iv Brownfields

1nulltyscapenullnullnullurnal of nulllicy Development and Research • Volume 12, Number 3 • 2010
U.S. Department of Housing and Urban Development • Office of Policy Development and Research
Cityscape
Guest Editor’s Introduction
Edwin Stromberg
nullnull Department of nullusing and nullban Development
The standard definition of a brownfield, as embodied in the nullall nullsiness nullability Relief and
nullownfields Revitalinulltion nullt, is a nulleal property, the enullansion, redevelopment, or reuse of which
may be complicated by the presence or potential presence of a hanullrdous substance, pollutant, or
contaminant.null
nullderal concern about brownfields arose as a direct consequence of growing criticism of and
reaction to the get-tough nullolluter-paynullfederal policies contained in the nullmprehensive nullviron -
mental Response, nullmpensation, and nullability nullt of nullnull nullnullnullnull or nullhe nullperfund lawnull.
null

nullRnullnull which nullngress passed in reaction to the nullve nullnal environmental disaster, came down
forcibly on any entity that caused or tolerated environmental pollution. The law imposed a severe
liability scheme nullown as nulltrict, retroactive, and nullint liability.nullnullthough modified and moder -
ated in nullnull by amendments, nullRnullnullwas initially characterinulld by environmental lawyers as
imposing a wide net with harsh and unremitting sanctions.
Reaction to the law, particularly from the development community, was quite strong. nullitics
claimed that the nullperfund law was draconian and that it was having a severe chilling effect on
urban revitalinulltion, particularly for older and more mature cities. nulls provisions applied to any
contaminated site, not nullst sites with nullRnullnulldesignation, which magnified the lawnull impact.
The nullinton administration developed strategies to respond to these criticisms. The nullvironmental
Protection nullency nullPnull implemented an aggressive set of initiatives to counteract the view that,
through its rigorous enforcement of the nulluperfund law, it was a manullor obstacle to urban revitalinullation.
The nullnulls nullownfield Pilot nullant program, which awarded nullnullnullnullgrants to localities to assess
their own brownfield problems, was the most visible dimension of nullnulls brownfield initiative.
nullngress asnulld what is now the nullvernment nullcountability Office nullnullnullto assess the enullent of
the problem in the country. nullsing its analysis on very limited data resources, the nullO estimated
that roughly nullnullnullnullbrownfields enullsted in the country. nulleanullrs and authors have often used
higher figuresnullnull,nullnull nullnullnullnull and even nullnullnullnullciting nullO as the source. Today, among
null
nullme claim that the specific precipitating events were a few court cases that pulled lenders and investors into the nullRnullnull
liability chain, which led to capital nullight. nulllthough this claim may be true, the nulluperfund law itself was the larger force at wornull.
It cannot be emphasized strongly enough that what follows is my own personal opinion, not the ofnullial position of
the nullnull nullpartment of nullusing and nullban nullnulllopment nullnullnull It is, howenullr, informed by many years as a
nullnullemployee, wornullng on urban redenulllopmentnull

2
Stromberg
Brownfields
the frequent references to nullmillion brownfields, are mentions of sites such as gas stations, which
were not originally part of nullnulls definition of a brownfield.
null

nullnulls mission involves regulating contaminated land. nullnsequently, nullnulls perspective has been
site specific and tended to promote assessing and cleaning up specific contaminated sites as the
driving forces behind urban revitalinulltion and renewal. nullnullcommonly reported on the amount
that its planning grants for small brownfields leveraged in urban investment or reinvestment,
because the brownfield program was doing more urban redevelopment than nullst site cleanup
and because no redevelopment would tanull place unless the initial cleanup dollarsnullven at small
amountsnullere invested.
nullnetheless, nullnulls proactive approach quicnully attracted the enthusiasm of and support from both
the public and private development sectors. nullcause local governments were loonullng for federal
leadership and assistance in overcoming the challenges of older urban areas and because grant funds
for brownfields could be used for properties in attractive marnullet areas, programs for nullPnullnulls brownfields
were popular. Overall, nullPnullnulls brownfield initiatives have contributed substantially to urban revitalinullationnull
they have reenerginulld the field of urban revitalinulltionnullthey have prompted the nullnullto streamline
its own regulatory approaches to brownfield investigation and cleanupnullthey have encouraged
states and localities to streamline their own brownfield reclamation policies and to develop innovative
approaches to reclaim blighted urban areasnulland they have provided a welcome infusion of funds,
training, and technical assistance for revitalinullng declining and blighted urban communities.
The null.null. Department of nullousing and nullrban Developmentnulls nullnullnullDnullsnull perspective has been different
from the start. nullD is an agency concerned with development and redevelopmentnullit is not an
environmental regulator. nullD never viewed its mission from a nullrownfields perspective,nullnullhat is,
identifying and cleaning up specific sites as a significant engine of urban revitalinulltionnull nullthough
nullnullD, along with all other federal agencies, is required to administer a wide array of environmental
mandates, which are tanullen very seriously, such mandates represent only one aspect in the develop ment
process. To emphasinullenull brownfields was the mission, mandate, and message of nullPnullnulls approach to the
contaminated properties of older urban areas. nullnullD has never considered brownfields its manullor focus.
Despite this differance, nullD funding might be the single greatest source of funding for brownfield
revitalinulltion because of the great nullnullbility with which communities can use community develop -
ment blocnullgrants. The purpose of the nullmmunity Development nullocnullnullant nullDnullnullprogram
has been to promote local discretion, not specific categorical requirements. The general philosophy
has been to encourage and support broad, neighborhood, community-oriented improvement, with
the priority being on helping low- and moderate-income families and communities. nullfortunately,
nullD has never tracnulld to what degree it has supported brownfield revitalinulltion, in part, because
of a general policy of miniminullng granteesnullreporting burden and because nullD has no metric for
measuring its effect on revitalinullng brownfields.
null

null
The distinctions between nullnullnulls views of brownfields and those of the Department of nullusing and nullban Development are
discussed later in this introduction.
null
nulltil recently, the nullderal nullusing nullministrationnulls stringent site cleanup requirements have constrained its separate
contribution to brownfields revitalinulltion. nulle nullgene nullldfarbnulls article, nullield nullrvey of nullD nullte nullntamination Policy,null
in this symposium nulloldfarb, nullnullnull

3Cityscape
Guest Editor’s Introduction
The minor role that nullD played in the brownfield issue was also illustrated in the creation of
the nullownfields nullpensing Tanullnullcentive, a nullnull enactment that allows developers to deduct all
brownfield cleanup costs the year they are incurred instead of amortinullng them over many years.
Primary responsibility for its management has resided with the nullnull Treasury.
The surging interest in the idea of brownfield redevelopment led the nullinton administration to asnull
nullngress to create the nullownfields nullonomic Development nullitiative nullnullnull. nullmmunities could
use nullDnullfunds only if the sites met nullnulls definition of brownfields and nullnulls regulatory require -
ments. The nullDnullprogram was quite smallnullnull million in annual appropriations in the first few
years of its enullstencenullut may have been the high point in nullDnull formal role in brownfields as a
policy issue. nullD and nullnullactively cooperated in the programnull implementation.
nullth the transition to a new administration, however, nullDnull role in the brownfield issue eroded
quicnully. The nullsh administration sought to terminate the nullDnullprogram, which nullngress contin -
ued to fund, but at increasingly smaller levels. nullD policymanullrs stopped actively addressing the
brownfield issue, leaving nullnullto dominate brownfield policymanullng. nullthough the nullDnullprogram
has continued, and has been nullDnull only development program specifically addressing brownfield
needs, at the local level, nullnull funds probably provided the bulnullof federal funding devoted to
brownfields. nullcause brownfields are frequently associated with slums and blight, which are an
eligible use of nullnull funds, such linnullge allowed for the use of nullnull for properties with signifi -
cant marnullt potential that were not located in low-income areas.
nulltween nullnull and nullnull, nullD did not mount any manullr new community or economic develop -
ment initiatives, so it has been quiescent in its brownfield-related efforts as well. The nullDnull
program continues, but, in the past nullyears, both administrations have recommended eliminating
the program, deeming it duplicative of other federal community development effortsnullit has so far
survived because of support in nullngress.
nullthough nullD and nullnullmoved along seemingly parallel program tracnull in the nullnulls, nullD,
in fact, did mount an effort to wornullwith nullnullon brownfield issues and to conduct research on
brownfields relevant to nullDnull community revitalinulltion mandates. This effort was the result of an
interagency agreement between nullD and nullnull signed by nullD nullcretary nullnry nullsneros and nullnull
nullministrator nullrol nullowner in nullnull, which pledged mutual cooperation between the two agen -
cies on brownfield issues. null a practical matter, there was too little cooperation in ensuing years,
enullept for the staff cooperation on the nullDnullprogram, nullDnull participation in nullnulls federal part -
ners wornullng group, and some scattered efforts in the field independent of headquarters oversight.
nullDnull Office of Policy Development and Research nullDnullnullhas conducted a vigorous research
program on the role of brownfields in urban decline and urban revitalinulltion. PDnull has spon -
sored the following brownfield-related researchnullnulle nullfects of nullnullronmental nullzards and nullgulanull
tion on nullban nulldenulllopment, a study of how brownfields and attendant liability and regulatory
issues could be thwarting site cleanup and redevelopmentnull nulldenullloping nullownnullldsnullnullw nullates
and nullcalities nulle Cnullnullnullnds, which documents how localities used nullnull and related programs
for nullrownfieldnullredevelopmentnullnull nullsessment of nullate nullownnulllds Initiatinulls, which reviews and
assesses leading state activities to address brownfields redevelopmentnull nullnullronmental Insurance
for nullownnulllds nulldenulllopmentnullnullnullasibility nulludy, which analynulls the feasibility of using environ-

4
Stromberg
Brownfields
mental insurance as a tool in brownfield redevelopmentnull nullnullide to nullconstructionnullnull nullernullew of
nullstruction nullth a nullcus on Community nullnulllopment nullportunities, which shows how deconstruction
could be used in community renewalnulland nulludy of nullnulls nullte Contamination nulllicies, which focuses
on nullderal nullusing nullministration brownfield cleanup requirements for multifamily housing.
Other significant PDnull actions, aside from the development of the nullD-nullnullnullteragency nullree -
ment on brownfields, include a report on the identification and assessment of possible changes to
nullnullnullregulations to manull them more conducive to cleanup and redevelopmentnullpublic forums to
enullmine policy options for brownfield redevelopmentnulla followup study of how nullD field offices
implement these policies nullhe followup study is published in this issuenull and a forum, with nullnull
participation, on how brownfields fit into the emerging sustainability agenda. nulll these studies can
be accessed on www.huduser.org.
nullthough nullD and nullnullwere moving along parallel tracnull for much of the past two decades,
nullnulls brownfield mission and nullDnull revitalinulltion mission now are moving closer together. nullnull
has recogninulld the need to promote broader scale renewal through its recently announced nullea -
wide nullownfields nullsessment nullant program. nullnullhas also launched an urban waters revitalinulltion
initiative, which is intended to be a multipronged, interagency effort to promote revitalinulltion with
water resources as the hub.
The current administration now formulates nullDnull basic mission in the following termsnullnullreate
strong, sustainable, inclusive communities and quality, affordable homes for all.nullnullD has been
given lead responsibility for the Partnership for nullstainable nullmmunities nullhose founding
members are nullD, nullnull and the Department of Transportation nullOTnull through its stewardship
of the nullstainable nullmmunities Planning nullant Program and the nullallenge nullant program. The
underlying purpose of the Partnership for nullustainable nullommunities is to align housing, community
development, transportation, environmental, and other federal resources and policies to support a
sustainable future. The real challenge is to bring each agencynull considerable resources, nullowledge,
and enullpertise into the Partnership for nullustainable nullommunities, as enullemplified by the principles of
sustainability and livability, the DOTnulls formulation of sustainability. This means moving beyond
brownfields as a critical policy focus. The contamination of urban land remains a very real concern,
so the tools and approaches developed to address brownfields are still essential and will be for a
long time, but it is time for a broader conceptual perspective to govern federal urban policy.
In This Issue
null nully nullnull, nullrgherita Turvani of the nulliversitnullnullnull di nullnenulla organinulld an nullnullloratory
wornullhopnullon brownfields for the nullropean nullience nullundation nullnullnull null nullbruary nullnull, she
approached Cityscape with a proposal to publish the papers from the wornullhop as a symposium.
null agreed that some of those papers would interest Cityscape readers, and we are grateful to Dr.
Turvani for her assistance. null guest editor, nullhave wornulld with authors of selected papers from the
nullnullwornullhop and with authors of other papers that nullwas aware of to prepare this symposium,
which consists of five original research articles. The articles, all thought provonullng, represent
varying perspectives and approaches to brownfield issues. nullasmuch as no third-party referees
were involved, their inclusion is entirely my decision.

5Cityscape
Guest Editor’s Introduction
The first two articles are small-scale empirical studies of industrial brownfields in a particular eastern
city. Dennis nulluignet and nullnna nulllberininulls study, nullnulloluntary nullleanup Programs and Redevelopment
Potentialnullnullssons nullom nullltimore, nullryland,nullenullmines whether a state voluntary cleanup
program can support redevelopment of contaminated properties in an urban industrial area and
whether the program can serve as a possible alternative to the conversion of agricultural land and
open space nullhat is, greenfieldsnullin suburban and rural areas of the state.
The study by nullrie nullwland, nullhe Private nullrnullt for nullownfield Properties,nullis an empirical study
of the effect of site contamination on sales and sales prices of properties in an industrial area of
nullltimore. The study found that, after the mid-nullnulls, contaminated parcels sold on the private
marnullt, with price discounts accounting for contamination and cleanup. The author concluded
that, although the private marnullt can address the costs of site cleanup itself, public intervention
is still needed to overcome the classic problems of obsolete, obsolescent, and fragmented land use
and urban infrastructure.
Peter null nullyernull article, nullrownfields, Risnullnullsed nullrrective nulltion, and nullcal nullmmunities,null
enulllores the seemingly irreconcilable connullct between economic development and environmental
improvement. nullyer reviews some nullnull responses that avoid sacrificing environmental to
economic gains and suggests lessons that states and municipalities may learn from others, after
socioeconomic, political, and legal differences are tanulln into consideration.
nullgene nullldfarbnull article, nullield nullrvey of nullD nullte nullntamination Policy,nullwhich is a followup
to a nulludy of nullnulls nullte Contamination nulllicy nullnull, nullnullnull enullmines how nullD field offices
administered the Departmentnull nullarticularly the nullderal nullusing nullministrationnullsnullofficial policy
at the time nullnullnull, which discouraged using the risnullbased corrective approach to brownfield
redevelopment. The article also has implications for the Departmentnull urban mission.
nullnally, David nullutnully and nullnull nulleynull article, nullrownfields nullcertaintynullnullProposal To Reform
nullperfund,nullreviews nullericanull brownfield problem nullhat is, the barriers to brownfield redevelop -
mentnullfrom the perspective of the current environmental liability and financial support framewornull
and offers a bold proposal to overcome enullsting impediments.
Renullrences
nullldfarb, nullgene. nullnull. nullnulleld nullrvey of nullD nullte nullntamination Policy,nullCityscapenullnullnullurnal of
nulllicy nullnulllopment and nullsearch null nullnull nullnullnull
nullnull Department of nullusing and nullban Development nullnullnull nullnull. nulludy of nullnulls nullte Contaminull
nation nulllicies. nullshington, Dnull nullnull Department of nullusing and nullban Development, Office of
Policy Development and Research.

6 Brownfields

7nulltyscapenullnullnullurnal of nulllicy Development and Research • Volume 12, Number 3 • 2010
U.S. Department of Housing and Urban Development • Office of Policy Development and Research
Cityscape
Voluntary Cleanup Programs
and Redevelopment Potential:
Lessons From Baltimore,
Maryland
nullnnis Guignet
nullna nullberini
nulliversity of nullryland
nullstract
In the nullited nullates, policy has increasingly shifted toward economic incentinulls and
liability attenuation for promoting cleanup and redenulllopment of contaminated sites,
but little is nullown about the effectinullness of such policiesnullnullese policies include, among
others, state Voluntary Cleanup nullograms nullCnullnull which were established in the nullited
nullates in the 1null0s and, to date, hanull been implemented in nearly enullry statenullnullis
article focuses on 11nullnullltimore properties that were enrolled and participated in the
nullryland VCnullfrom its inception in 1nullnullto the end of 200nulland enullmines what type
of properties tend to participate in these programs, how these properties compare with
other eligible but nonparticipating sites, and what the redenulllopment potential of VCnull
properties and implications is toward opennullpace connullrsionnull
nulle nulld that most applicants nullnullpercentnullactually renullested a No nullrther nullnullirenull
ments nulltermination directly, rather than proposing cleanupnullNenullrtheless, the VCnullled
to the identinullation and ennullronmental assessment of 1,1null acres of contaminated land
in the city of nullltimore alonenullIn nullltimore, VCnullproperties tend to be industrial, located
in areas zoned as industrial, and away from residential neighborhoodsnullIn more recent
years, larger properties hanull increasingly enrolled in the programnullnullst participating
sites are reused as industrial or commercial propertiesnullIn contrast with nullberini null00null,
these nulldings suggest that, in nullltimore, pressure for residential denulllopment has not
drinulln VCnullparticipation to datenullnullsed on differences in zoning renullirements, the VCnull
may reduce demand for potentially contaminating actinullties on pristine land by as much
as 1,23nullto nullnullnullacres, in nullltimore alonenull

8 Brownfields
Guignet and Alberini
Introduction and Motivation
nullny observers believe that the liability regime imposed by federal and state hanullrdous waste
programs in the nullited nullates is at least partially responsible for discouraging the purchase and
reuse of contaminated or potentially contaminated sites, which have remained idle or underused.
null

The resulting nullbrownfieldsnullnullindustrial sites whose enullpansion, redevelopment, or reuse nullmay be
complicated by the presence or potential presence of a hanullardous substance, pollutant, or contami-
nantnull nullPnull nullnullnull to the point that public intervention may be needed nulllnullr, Roberts, and nullith,
nullnullnullcover thousands of acres in many urban and rural areas of the country nullnull, nullnullnull
nullnumber of recently established state programs and new federal legislation aim to reverse these
disincentives and stimulate the cleanup and productive reuse of brownfields. nullr enullmple, in
the nullnulls, several states established nullluntary nulleanup Programs nullnullsnulloffering liability relief,
other economic incentives such as tanullcredits or low-cost loans, oversight and enulledited approval
of cleanup plans, and simplified cleanup standards in enullhange for site remediation nullartsch and
Dorfman, nullnullnullnullyer and nullnnullndingham, nullnullnull
nullder the nullderal nullownfield Tanullnullcentive, established in nullnull, environmental cleanup costs
for eligible properties are fully deductible in the year in which they are incurred, as long as the
property is used for trade or business or for the production of income. nullnullwise, state brownfield
programs offer tanullcredits or other benefits in enullhange for cleanup and investment at potentially
contaminated properties located in blighted areas.
nullnally, the federal nullall nullsiness nullability Relief and nullownfield Revitalinulltion nullt of nullnull offers
conditional relief from environmental liability for property owners and purchasers of land. This
law also establishes the nullnull nullvironmental Protection nullency nullPnull nullownfields Program, which
provides assessment and cleanup grants to state and local governments and communities and
grants that states can use to establish revolving loan funds.
nullttle is nullown about the effectiveness of these economic incentives and liability attenuation poli -
cies in promoting cleanup and redevelopment. nullestions remain about whether these programs
effectively provide public funding to redevelopment pronullcts that would have occurred anyway
nulllberini, nullnullnull and concerns enullst about unspent dedicated public funding nullchoenbaum, nullnullnull
nullmmon perceptionsnullthat most brownfield properties are former industrial sites, are located in
central cities, and bear risnuller, less profitable redevelopment potential than equivalent pronullcts on
pristine lands and in suburban areasnullhave been challenged nulle nullusa, nullnullnullPage and nullrger,
nullnullnull Deason, nullernull and nullrroll nullnullnull analynulld urban redevelopment pronullcts and computed
null
The nullperfund program was established by the nullmprehensive nullvironmental Response, nullmpensation, and nullability
nullt nullnullnullnull, passed in nullnull and amended and reauthorinulld in nullnull. null is probably the best nullown among the public
programs addressing hanullrdous waste sites in the nullited nullates. nullder the nullperfund program, the nullnull nullvironmental
Protection nullency nullPnull has the authority to identify contaminated sites needing remediation, tracnulldown the responsible
parties, and force them to pay for cleanup nullr reimburse the nullency for the cleanups it initiatednull nullability for the cost of
cleanup is retroactive, strict, and nullint and several, with potentially responsible parties to be sought among the owners and
operators of the site and the transporters of the wastes. nullability in some cases has been construed to apply to property
owners and lenders that foreclose on contaminated properties nullogleman, nullnullnull

9Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
the sinull of equivalent pronullcts in open and suburban areas, showing that because of differences in
nullning the latter often tanull up considerably more land than infill redevelopment, thus contributing
to sprawl and erosion of open space.
nullbetter understanding of what types of properties tend to be enrolled in nullPs is crucial in
evaluating programs offering incentives and assistance for brownfield cleanup and redevelopment.
null

This article enullmines the nullP of nullryland and poses three related questionsnullnullnullnullat types of
properties tend to participate in the nullryland nullPnullnullnullnullw do these properties compare with
other eligible but nonparticipating industrial and commercial propertiesnullnullnullnullat is the redevel -
opment potential of nullP parcels and can the nullP enroll enough acreage to be an alternative to the
conversion of greenfieldsnull
To answer the first two questions, the article enullmines the parcels enrolled in the nullP from its on -
set in nullnull to late December nullnull. To ensure a relatively homogeneous legal and tanullenvironment,
attention is restricted to enrolled properties in the city of nullltimore.
null
The enrolled set of parcels is
supplemented with a sample of comparably sinulld parcels drawn at random from the universe of
industrial and commercial properties in the city of nullltimore, which are used as a nullontrolnullgroup.
The newly formed samplenullnrolled properties plus similar nonenrolled propertiesnullnabled us
to establish whether the nullP tends to attract parcels that are systematically different from other
industrial and commercial properties in nullltimore.
During the study period, in response to questions nullnulland nullnull the nullP identified nullnullnullacres
of potentially contaminated land in nullltimore, most of which were not identified through other
programs, and thus, before the nullP, were linullly unnullown to city and state regulators. nullmple
univariate analyses suggest that nullP properties in general are larger, less capital intensive, and
have a higher probability of prior contamination than nonparticipating parcels. Probit regressions
confirm that nullP enrollment and participation is more linullly among industrial sites located in
industrial areas and less linullly at heavily built sites close to residential areas. nullen more important,
the probit regressions point to the changing nature of the programnullr of the sites that tend to be
attracted to the program. null the first few years of the nullP, smaller properties tended to be enrolled
in the program. nullst recently, however, enrollment has been more linullly among larger properties.
To answer the third question, the article enullmines the restrictions imposed on the property when
the state agency granted a null nullrther Requirements Determination nullnullDnullor issued a nullrtificate
of nullmpletion nullonull. null most cases, residential uses are not allowed, some physical maintenance
is required to avoid enullosure to contaminants, and use of groundwater on the premises for drinnull -
ing purposes is prohibited. There is very little evidence of changes in land use at enrolled sites, and
enrolled properties tend to be located primarily away from residential areas. Tanulln together, these
facts suggest that nullP sites will linullly continue to be used in an industrial or commercial manner.
These conclusions are in sharp contrast with nullberini nullnullnull, who finds that the nulllorado nullP
tends to attract sites under residential development pressure.
null
Throughout this article, the terms nullnrollmentnulland nullarticipationnullin the nullP are used synonymously.
null
null nullhe city of nullltimore,nullwe mean the independent city that has nullderal nullformation Processing nullandards code nullnullnull
This area does not include the surrounding and more suburban nullltimore nullunty.

10 Brownfields
Guignet and Alberini
nullnally, the article uses the figures presented in Deason, nullernull and nullrroll nullnullnull to compute the
area that would be reasonably required if, instead of redeveloping the nullltimore nullP properties,
equivalent pronullcts were undertanulln in more rural or suburban areas of the state. nullder alternate
assumptions, this total area is estimated to be between nullnullnulland nullnullnullacres. null conclude that if
the nullP properties are redeveloped, if redevelopment can be attributed enulllusively to participation
in the nullP, and if the land requirements for these redevelopment pronullcts are similar to those in
Deason, nullernull and nullrroll nullnullnull, the nullP holds promise as a good tool for reducing pressure
on the conversion of open space and agricultural land. This finding should be interpreted with
caution, however, because comparing the findings of this article with previous research nulllberini,
nullnullnullsuggests that, until further analysis is done, enullrapolation will be difficult from one specific
program and its achievements to another.
The remainder of the article is organinulled as followsnull the nenullt section presents bacnullground informa-
tion and describes the nullryland nullPnullthe Previous nullterature section reviews the literature that
addresses brownfields and nullPsnullthe nulldel, nullmple, and Data nullurces section presents our
econometric model of participation in a nullP and the data used to estimate this modelnullthe nenull
three sections nullhe Data, nulltimation Results, nullles and Redevelopmentnullprovide answers to our
research questionsnulland the nullnclusion section concludes the discussion.
Background
This section enullmines the emergence of brownfields and the subsequent policies that encourage
the cleanup and reuse of these sites. null includes the general history of nullPs and specific
information about the nullryland nullP. null also outlines several concurrent brownfield revitalinulltion
programs and local initiatives that may innullence nullP participation.
Brownfields and Voluntary Cleanup Programs
The nullited nullates has a large supply of properties where prior industrial uses have resulted in
contamination of soil, surface water, and groundwater with pollutants that are nonullous to human
health and ecological systems. The nullnull nullvernment nullcounting Office nullnullnullnullnullnullestimated a
nationwide total of nullnullnullnullto nullnullnullnullcontaminated commercial and industrial sites.
nullte contamination, or even suspicion of contamination, is widely believed to seriously hamper the
redevelopment and reuse of land. nullny observers argue that merely placing a property on federal
or state registries of sites needing investigation about possible contamination inherently changes
their designation to brownfields. Removal from such registries nullhe so-called nulle-listingnull would
automatically remove any contamination stigma nullartsch, nullllaton, and Pepper, nullnullnull
nullarting in the nullnulls, state regulators realinulld that enforcement-based programs did not have
sufficient funding to address the large number of contaminated sites requiring remediation and
began developing an alternative approach involving voluntary cleanup programs nullnull, nullnullnull null
has recently been suggested that states lacnullng financial support from nullnulland states enulleriencing
a slow progression at nullperfund sites, among other factors, are more linullly to adopt a nullP nullaley,
nullnullnull null nullnull, more than null percent of the states had a nullP in place nulleyer, nullnullnull

11Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
nullP offerings and requirements vary widely across states nullPnull nullnullnullnullyer, nullnullnull nullny state-
level nullPs grant liability relief in enullhange for voluntary cleanup, provided that the cleanup is
approved by the state agency in the form of a letter of no further action, a certificate of completion,
or a covenant not to sue.
null
nullPs often spell out simplified or variable cleanup standards linnulld to land use to protect
residents and wornullrs from enullosure to contaminants. nullme states allow for engineering controls,
such as caps, fences, or other physical means of preventing contact with pollution, and offer
institutional controls, such as permanent land use restrictions or monitoring of the contamination
plume, in lieu of a more permanent cleanup. The nullO nullnullnull surveyed null states with nullPs and
found that in many states more than null percent of the cleanups used nonpermanent remedies and
selected industrial land use standards.
null addition, states frequently offer fast-tracnulloversight of cleanup plans. This approach helps
reduce the time it tanulls before remediation is undertanulln and the uncertainty associated with
stringency of cleanup standards nulleyer, nullnullnull null many locales, completion of voluntary cleanups
at eligible sites can be combined with local, state, and federal brownfield programs that offer
subsidies in the form of tanullcredits or low-cost loans. nullate nullP managers believe these programs
have revealed previously unnullown contaminated sites to the state agency and have encouraged
cleanups when the program requirements are not too burdensome to the applicants.
null
The Maryland VCP
The nullaryland nullnullP was established in nullnullnullnull. nullny property that is or is perceived to be contaminated
by controlled hanullrdous substances or oil nullince October nullnullnullis eligible for enrollment and
participation, including sites on federal or state registries. nulltes listed on the nullnulls nulltional Priori -
ties nullst nullPnull, sites under active enforcement by the nullryland Department of the nullvironment
nullDnull, currently operating Rnullnullsites,
null
and sites contaminated after October null nullnull nullf the
applicant is the responsible partynullare not eligible. nullrtain enulleptions may apply to sites under
nullnullenforcement.
nullligible applicants include property owners, commercial lenders, developers, prospective purchasers,
lessees, innocent purchasers, and operators. The application must contain a Phase nulland Phase null
environmental site assessment, a null,nullnullapplication fee, and any other information about the
property required by the nullryland nullP. The applicant may request an nullRD, which, if granted,
implies no need to do remedial wornull or, upon approval of the response plan and of remediation,
a nullnull nullth options include certain liability assurances and are recorded in the nullnd Records.
nullrolled parcels that are underused, vacant, or located in blighted areas can also obtain tanullcredits
from the state.
null
nullcovenant not to sue is generally regarded as the strongest form of assurance, because, for all practical purposes, it is a
contract by which the state commits not to sue over contamination at the site, as long as certain conditions are met.
null
nullr enullmple, the nullnull nullO study notes that public involvement requirements are generally nulldged inappropriate and,
hence, a hurdle to remediation for the type of sites usually targeted by nullPsnullndustrial sites with light contamination.
null
These sites are regulated by the laws enacted in the Resource nullnservation and Recovery nullt of nullnull.

12 Brownfields
Guignet and Alberini
The liability relief offered is not absolutenullso-called reopeners are possible if new contamination
occurs at the property, cleanup efforts enullacerbate the enullisting contamination, undiscovered contami-
nation is found, or an imminent and substantial threat to human health enullsts. null the time of this
writing, however, only two reopeners have occurred since the inception of the program nullDnull. null
nullnulldoes not provide protection against third-party suits but does provide contribution protection
against a party suit.
null
Other Programs and Factors Potentially Affecting VCP Enrollment
Properties will be enrolled in the nullP if the benefits of doing so enulleed the costs nullee the nulldel,
nullmple, and Data nullurces sectionnull nullrollment in the nullryland nullP should, therefore, depend
on the demand and supply of potentially contaminated sites in nullltimore, which, in turn, may
have been shaped by a number of concurrent federal and state programs, local initiatives, and the
general conditions in the real estate marnullt.
One such federal program is the nullderal nullownfield Tanullnullcentive, which became effective in
nullnull. nulltween nullnull and nullnull, real estate developers and investors who nullnullincurred cleanup costs
at properties meeting certain geographic requirements or with residents of low socioeconomic sta-
tus,
null
and nullnullused the property to generate income, were able to write off the cleanup costs in the
very same tanullyear and obtain a tanullcredit from the nullternal Revenue nullrvice. null nullnull, geographical
and community requirements were relanulld and developers were allowed to avail themselves of the
nullderal nullownfield Tanullnullcentive tanullcredits at all properties where nullnulland nullnullapply, regardless of
location. null the end of nullnull, President nullsh enullended the nullderal nullownfield Tanullnullcentive.
Properties in the city of nullaltimore have met the geographical and community eligibility requirements
since the onset of the program, but very few census tracts met the requirements in the adnullcent
countiesnullaltimore and nullne nullundel nullunties, which can be considered natural substitutes
for the city of nullltimore for investment and business purposes. This natural substitution suggests
that, between nullnull and nullnull, the federal tanullincentives may have conferred contaminated and
underused properties in the city of nullltimore a relative advantage, all else the same, over similar
properties in these neighboring counties, but this comparative advantage may have become less
pronounced after nullnull.
Observers argue that the nullall nullsiness nullability Relief and nullownfield Revitalinulltion nullt of nullnull
nullnacted in nullnuary nullnullnullplays an important role in manullng property owners and developers
more willing to invest in redevelopment pronullcts at contaminated sites. This law has three main
null
null other words, the recipient of a nullnullcan be sued by a third party directly, but another responsible party who has been
sued by parties other than the state or a federal agency cannot demand reimbursement from the recipient of a nullnull
null
The geographical and community characteristics requirements were as follows. nullr the tanullincentive to apply, the property
must be in nullnullcensus tracts with poverty rates of null percent or morenullnullnullcensus tracts with populations of less than nullnullnull
where more than null percent of the tract is nullned for commercial or industrial use and the tracts are adnullcent to one or more
census tracts with poverty rates of null percent or morenullnullnullfederally designated nullpowerment nullnes nullnull and nullterprise
nullmmunities nullnullnulland nullnullnullnulldesignated brownfields pilot sites announced before nullbruary null nullnull. nullr enullenses
incurred from nullgust null nullnull, to December null, nullnull, the eligible property need only meet one of the four listed criteria.
nulltes listed, or proposed for listing, on the nullnullare not eligible for the incentive. null addition, only enullenses that are paid or
incurred in connection with the abatement or control of a hanullrdous substance qualify for the incentive.

13Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
features. nullrst, it provides a statutory definition of brownfields, effectively broadening the universe
of properties that qualify for program assistance to include, among others, properties with petroleum
contamination. nullcond, it establishes funding for assessment and cleanup grants and for cleanup
revolving loan funds to be awarded to communities and states under the auspices of the nullPnull nullrown-
fields Program. nullvironmental assessment studies funded with nullnullgrants have been considered
acceptable as part of the nullryland nullP application pacnullges since nullnull, when a memorandum
of understanding was signed between nullnulland the nullate of nullryland. Third, the law provides
liability relief for contiguous property owners, prospective purchasers, and innocent landowners,
and it spells out the conditions for subsequent reopeners, enforcement actions, and information
and public participation requirements for nullPs. The act was thus enullected to substantially reduce
uncertainty about liability associated with potentially contaminated sites.
nullfore both of these programs, which addressed incentives to private developers and property
owners, nullnullsought to create conditions favorable to the cleanup and redevelopment of brown -
fields and to economic growth in blighted areas through the nullownfield nullsessment Demonstration
Pilot Program, which started in nullnull and provided grants to states and local governments for site
assessment, identification, characterinulltion, and cleanup plans nullut not for actual cleanupnull The
city of nullltimore was selected in the early rounds of grant allotment as a brownfields pilot site.
null
nullrger redevelopment efforts put forth by the city may also innullence nullP participation, especially
in nullltimore. null nullnull, the nullltimore Development nullrporation nullDnull, a quasipublic organinulltion,
was formed to provide economic development services for the city nullnullDnull, nullnullnullnullnull. The nullDnull strategically
buys and aggregates parcels for industrial and commercial parnull to establish natural connections
between city hubs and to implement the citynull nullban Renewal Plans. The nullnullis involved with
more than nullnullnull redevelopment pronullectsnull has focused attention on revitalinulling a number of neighbor-
hoods, including at least two former industrial areas nullarroll and nullirfieldnull and has established
brownfield redevelopment as one of its manullr initiatives.
nullnce nullnull, the nullnullhas completed more than null brownfield redevelopment pronullcts. null fact,
out of the nullnullnullP sites analynulld in this article, the applicants for nullnullP properties were either
nullnullor the city of nullltimore. Records from the nullryland nullate Department of nullsessments null
Tanulltion nullDnullnullshow that the city owned an additional nullnullP properties. nullnullis thus directly
involved with a small number of nullP properties. nulleing the citynull involvement may also encourage
other private developers to participate in the nullP. nullnce the nullnulloffers resources and services to
small and up-and-coming businesses, including assistance with preparing business plans, getting
credit, and dealing with the tanulland regulatory environment, nullnullmay have indirectly stimulated
redevelopment of brownfields. null remains very difficult, however, to establish the enullent of the
effects from these innullences.
nullnally, as per the nullnull nullryland nullart nullowth nulleas nullt, nullltimore is a designated priority fund -
ing area, and, as such, it is targeted for state and county funding for infrastructure and investments
null
nulle nulleenberg and nullllander nullnullnull for an enullmination of city and county characteristics associated with nullarliernull
receipt of nullnullassistance under this program and nulllitare and nulleenberg nullnullnull for evidence of program generosity to
economically distressed areas.

14 Brownfields
Guignet and Alberini
that encourage and support its growth. null is interesting to note that industrial areas, even those
located outside of nullltimore, can be designated as priority funding areas.
nullthough it is difficult to identify the effects of local initiatives, the econometric models described
later in this article account for these concurrent programs and events by interacting time period
dummies with nully determinants in nullP participation. These interaction terms may also account
for changes in the marnullt. One would enullect the demand for contaminated sites to be stronger
during periods of economic enullpansions, when more real estate nullrenulldevelopment occurs. nulln contrast,
the supply of brownfields may increase when the economy is slow and industrial plants go out of
business or relocate to other areas. nullgregate construction permit figures for the nullltimore metro -
politan area from nullnull through nullnull suggest that nullnullresidential and nonresidential construction
trends are often at odds in these areas and nullnullnonresidential construction permits spinulld in nullnull,
nullnull, and nullnull and declined in other years of the nullnull-through-nullnull period nullnull, nullnullnull
Residential construction in the nullltimore metropolitan area was strong for most of the study
period, suggesting that this housing marnullt was attractive and profitable.
Previous Literature
null are aware of only a handful of previous studies that have enullmined the economic incentives
at play in nullPs. nullberini nullnullnull focused on the nulllorado nullP, restricting attention to the nullont
Range counties of the state. nullch linull the nullryland nullP, the nulllorado nullP has two participation
modes. nullplicants may apply for a no further action decision, or submit an actual cleanup plan.
nullter cleanup is completed and approved, the state agency issues a no further action letter.
nullberini found that nullnullactual cleanups accounted for only one-third of all applications and
nullnullpar ticipating properties are almost never previously listed on federal registries of contaminated
sites. The program seems to attract properties that are very linullly to be redeveloped soon. nulle also
found that property values tend to be lower in truly contaminated properties but rebound almost
completely after participation.
nulling data from Ohio for nullnull through nullnull, nullmentelli and nullmons nullnullnull found that receiving
a letter of no further action from the state does not improve transaction rates for sites with leanullng
underground storage tannull, which continue to be bought and sold much less frequently than
nontannullcommercial properties.
Page and nullrger nullnullnull enullmined properties that entered into the nullPs in Tenulls and nullw nullrnull
emphasinullng that these are only a subset of the entire universe of brownfields in those states. They
empirically tested four common beliefs about brownfields, namely, that they are nullnullthe result of
past industrial land use, nullnullin abundant supply in older industrial regions, nullnullprimarily an urban
problem, and nullnullnull created by pollution events that toonull place before the nulluperfund statute nullor similar
state legislationnull Tenulls and nullw nullrnulllend themselves to these research questions because of their
different histories of industrial development and recent population and employment trends.
Page and nullrger nullnullnull distinguished between previous industrial or commercial use and the
brownfieldnull use at the time of entry into the program, finding that Tenulls actually has a higher
percentage of sites with prior and current industrial uses than nullw nullrnulland that a higher share

15Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
of the nullw nullrnullbrownfields were abandoned or vacant at the time they entered the program
nullnullpercent versus nullpercent, respectivelynull nullst of the Tenulls sites are in urban areas and in
central cities nullnulland null percent of the total, respectively, versus null and null percent for nullw
nullrnull. They concluded that industrial uses account for mostnullut not an overwhelming manullrity
nullnullpercentnullof the properties enrolled in the nullw nullrnulland Tenulls nullPs, and that suburban
properties are surprisingly more common in the nullw nullrnullprogram. They also found that half of
the properties enrolled in the nullw nullrnullnullP were nullacre or less, but more than three-fourths of
the properties in the Tenulls nullP were at least nullacre or larger.
nullnce nullPs often have enulllicit land revitalinulltion goals, this research is also related to the literature
that has enullmined developer interest in reusing brownfield properties. nullated-preference surveys
in nullrope nulllberini et al., nullnullnulland in the nullited nullates nullernstedt, nullyer, and nullberini, nullnullnull
suggest that developers can be attracted to contaminated sites by offering them subsidies, liability
relief, and less stringent regulation.
null
The appeal of these incentives varies with the developernull
prior enullerience with contaminated properties.
De nullusa nullnullnull interviewed a small number null nullnullnullof developers, landowners, and city officials
about their perceptions of redevelopment opportunities and economic incentives for brownfields,
finding that liability is nulldged the most important obstacle to brownfield pronullcts. nullPs that offer
protection from liability are linullly to attract primarily landowners and developers, who share
similar views, especially on liability attenuation.
nulleyer and nullyons nullnullnullnullnullnull suggested that low property prices have played a larger role than subsidies
in stimulating entrepreneurial redevelopment activity on contaminated sites and that obtaining
subsidies may entail significant transaction costs that offset their value. nullnullath nullnullnull found that
contamination risnullthat is, the probability that a previously used site is contaminated, based on
the previous usenullffects urban industrial redevelopment in nullicago both directly, and indirectly,
via the differential in price before and after redevelopment.
Deason, nullernull and nullrroll nullnullnull, De nullusa nullnullnull, and nullgman nullnullnull studied the potential for
substitution between infill redevelopment and development of pristine or agricultural landsnullhe
so-called greenfields. nullsing their analysis on nullning and land use ordinances for several cities,
Deason, nullernull and nullrroll nullnullnull, estimated that an industrial, commercial, and residential
development pronullct requires an average of null more than null and more than nulltimes more land,
respectively, in greenfield areas than they do at urban brownfield properties. These differences are
null
nullonomic incentives have been advocated as potentially effective for stimulating cleanup and redevelopment of
brownfields nullartsch, nullllaton, and Pepper, nullnullnullDe nullusa, nullnullnullnullwland, nullnull, nullnullnullnullount and nullyer, nullnullnull The
effectiveness of economic development incentives remains a controversial matter, even with noncontaminated properties.
nullr enullmple, studies suggest a statistically significant, positive relationship between tanullincentives and regional and local
growth and property values nullartinull nullnullnullnulleenstone and nullretti, nullnullnullnullwman and nullllivan, nullnullnullnullasylennull, nullnullnull
but researchers dispute the magnitude of the impacts of incentives on overall economic gains in targeted areas nullisher
and Peters, nullnullnullnullnulland nullrray, nullnullnullPeters and nullsher, nullnullnull Research in this area is afnullcted by the problem that
concurrent incentives manull it very difficult to disentangle the effects of each, a problem that can be remedied only by
deploying very careful quasienullerimental approaches with control and treatment groups nullartinull nullnullnullnulleenstone and
nullretti, nullnullnull null remains difficult, however, to ascertain whether incentives were effective or if business locations andnullr
area redevelopment would have tanulln place even in their absence nulleters and nullsher, nullnullnull

16 Brownfields
Guignet and Alberini
driven by local requirements for setbacnull, height of buildings, parnullng facilities, and percentage
of the property that can be covered by buildings. De nullusa nullnullnull reports that, contrary to
claims sometimes made by developers, in downtown Toronto, residential pronullcts are actually
more profitable at brownfields than in suburban areas nullue to demand and prices of downtown
residential propertiesnull
nullt everyone agrees that actual or suspected contamination is a deterrent to redevelopment. nullsing
her analysis on interviews with real estate agents, nullwland nullnullnull suggested that incompatible
land uses, inadequate infrastructure, and obsolete buildings are more important barriers than
contamination is to the revitalinulltion of brownfields in nullltimore. nullhoenbaum nullnullnull found no
significant difference in assessed land values, vacancy rates, property turnover, and redevelopment
rates across brownfield and nonbrownfield properties in an industrial area of nullltimore from nullnull
through nullnull.
Model, Sample, and Data Sources
This section presents the econometric model of nullP participation nullr enrollmentnull nulltimation of
this model requires both participating and nonparticipating sites. null also addresses the collection of
this sample of sites and the variables that may innullence nullP participation.
The Model
nullnsider a set of nullandidatenullparcels. This analysis assumes that a candidate parcel is enrolled
in the nullP if the net benefits of participation are positive,
null
and that these benefits depend on
characteristics of the property and surrounding neighborhood. nullt VCP* denote the net benefits
of parcel inull participation in the program in year t, and assume that

, nullnull
where nullis a vector of parcel and neighborhood characteristics, b is a vector of unnullown coef-
ficients, and
η
is an i.i.d. standard normal error term.
null cannot observe the net benefits of participation, but we assume that properties are signed up
nullhat is, nullP nullnull when the net benefits of participation are positive and obtain a probit equationnull

, nullnull
where Fnull·nullis the standard normal cdf. nullnce a site can participate in the program only once, we
specify the log linulllihood function asnull

, nullnull
null
nullr an owner, the net benefits would be the appreciation in the value of the property minus the cost of remediation, the
participation fee, and any other associated costs. nullr a developer, the net benefits would be the profits from the pronullct, net
of land acquisition costs, transformation costs, remediation costs, nullP fee, and so forth. The avoided liability and litigation
costs would presumably be captured into the appreciation and proceeds from the pronullct, respectively.

17Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
where i denotes the site, t denotes the year of the program, and
t
ℑ
is the set nullt risnull at time t nullhat
is, the set of candidate sites that have not participated as of year tnull
null
nulluation nullis, effectively,
a discrete-time duration model and can be easily amended to incorporate site-specific random
effects, which capture unobserved parcel characteristics that may innullence participation nullee
nulleene, nullnullnull
null
This model is a reduced-form model.
�14
null do not have reliable information about whether a particular parcel is or was on the marnullt at
any given time, and, linullwise, have no comprehensive databases documenting nullenullevelopment
permits. nullr these reasons, we are forced to nullnullomit potential or actual transactions or other
pronullcts from nulluation nulland its log linulllihood counterpart nulluation null nullnullrestrict attention to
parcel and neighborhood characteristics as the possible determinants of participation in the nullP,
and nullnullgather only partial information about sales and pronulles for redevelopment, which we
describe, but do not enulllicitly model, in the nullles and Redevelopment section.
The Sample
nullgoal of this study is to estimate a probit equation that predicts the probability of enrollment in
the nullP as a function of site and neighborhood characteristics. nulltimating this probit equation
requires a sample of both participating nullr enrollednullsites and eligible but nonparticipating sites.
null obtained data about the nullP applications and sites from the nullnull null of December null, nullnull,
more than nullnullapplications had been submitted to the nullryland nullP.
null this article, attention is restricted to nullP sites in the city of nullltimore since the onset of the
program up to December null, nullnull. Participation nullr enrollmentnullis defined as a direct application
for either an nullRD or an actual cleanup proposal, so we lump together applications for a nullRD
and a nullnull null some cases, multiple applications are submitted for the same sitenullin a few cases, a
single site comprises multiple parcels. nullen multiple parties apply for the same property, enroll -
ment is defined as occurring the time of the earliest submittal for that property.
nullsing these criteria, we obtained nullnullnull enrolled sites in nullaltimore. Of these nullnullnull sites, nullnull nullnullnull percentnull
were signed up with the goal of obtaining a nullnull which requires submitting and enullcuting a
remedial plannullnull nullnullpercentnullapplied directly for an nullRDnulland no information was available for
the two remaining sites.
null
nullr enullmple, if a site is enrolled in the program in nullnull, it is dropped from the sample for all subsequent years.
null
nullrequired assumption in the random effects probit model is that the unobserved parcel characteristics be uncorrelated
with the regressors x. null is not possible to estimate a finulld effects model, because estimation would have to rely on parcels
dropping in and out of the participation status, a situation that is not possible here.
null
nulle do not include among the regressors events such as actual or anticipated sales nullhat is, the property is on the marnulltnull
other transactions, or redevelopment pronullct status, because these events are clearly endogenous with participation. The
only econometrically acceptable way to include such events in the right-hand side of equation nullnullis to instrument for them.
nullfortunately, in earlier analyses of commercial and industrial property prices in nullltimore nullongo and nullberini, nullnullnull we
found that enullgenous parcel or neighborhood characteristics have very little predictive power for sales events. null addition,
instrumental-variable estimation procedures in this contenull suffer from an identification problem because we are unable
to determine characteristics of properties or legislative events that are determinants of sales but not of participation in the
program. This identification problem prevents us from imposing plausible enulllusion restrictions.

18 Brownfields
Guignet and Alberini
nullter compiling the full list of enrolled properties, we then enullmined how to define the eligible
but nonenrolled properties. nullnce any property contaminated or perceived to be contaminated by
controlled hanullrdous substances or oil is eligible for participation, and nullonan and nulldich nullnullnull
show that properties used for most industrial and commercial purposes have a moderate to high
probability of contamination, it is reasonable to assume that any parcel designated for industrial
or commercial use in nullltimore is a credible candidate for inclusion in the sample nullee Page and
nullrger, nullnullnullnullgman, nullnullnull
The first step in constructing our sample was to draw a random sample of nullnullnullnullindustrial and
commercial parcels out of the universe of all such sites in nullltimore. To manull these randomly
selected parcels proper counterparts for the enrolled properties, we formed predictions for the
linullelihood of contamination nullPROnullnullOnullnull based on current land use at the site and on the estimated
probabilities reported by nullonan and nulldich nullnullnull and included these probabilities as a control
in our probit regressions. nulle also included a companion missing-value dummy when the records
from nullnull did not contain specific land use information.null
nullor each of the nullnull years of the study period nullnullnullnullnull through nullnullnullnullnull, the sample we used for the probit
model consisted of the enrolled parcels that had not signed up yet, plus all of the nullnullabove-
mentioned nonenrolled sites. This resulted in a total of nullnullproperties and nullnullnullobservations.
Other Independent Variables
Parcel and neighborhood characteristics act as a pronull for the net profits of participation. These
characteristics include the sinull of the parcel nullnullnull, a dummy for the presence of a building or
improvement nullnullnullnullnull, an interaction between the presence of a building and the year of
construction of the oldest building on the premises nullnullnullnullnullRnullnullTnull and the capital intensity
nullnullnullnullnullof the parcel, which we define as the total square footage of the building divided by the
area of the property.
These variables act as a pronull for remediation and demolition costs. nullavily built sites may differ
from others in terms of demolition and cleanup costs because of tonullc construction materials nullor
enullmple, asbestos, heavy metalsnull To avoid losing observations to the analysis because of missing
values, we created companion dummy variables to denote missing values, recoded the original
missing values to nullro, and included both the regressors of interest and the companion missing
value dummies in the right-hand side of the probit regressions.
nullparcelnull value should also be innullenced by its location and use. Therefore the following variables
are also included as regressors in the probit modelnull distance to the central business district nullnullnullDDnullnullTnull
and to manullr roads nullnullDDnullTnull
null
whether the site is for industrial use nullnullnullTRnullnull, surround -
ing land use, and distance to the nearest residential nullne nullnullnullnullnullTnull null included the latter
variable because nullwland nullnullnull nullnullnulldiscussed how potential buyers in nullltimore are reluctant
to purchase industrial property near residential areas because of incompatible activities and greater
political barriers. Regarding land use, we used nullnull land use data from the nullryland Department
null
Data from the nullryland nullate nullghway nullministration.

19Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
of Planning to form nullnull and nullnullnullmeter buffers around each property and computed the
percentage of the area of the buffer in various types of land use, such as low-, medium-, and
high-density residential, industrial, and commercial.
nullparcelnull eligibility for state nullterprise nullne incentives nullsually in the form of tanullcredits if a
business is established on the premisesnulland for federal nullpowerment nullne incentives nullummies
nullTnullnulland nullPnullnull may also innullence its participation in the nullP. These incentives are
associated with setting up a business or offering employees certain educational opportunities
at specific locations, and are unrelated to contamination and cleanup. They may, nevertheless,
increase the attractiveness of a location to a developer and to prospective buyers.
nullether nullP sites tend to be clustered is of interest because it renullcts either some effect on
surrounding properties nullhat is, enrolled sites induce further enrollmentnullor simply the spatial
concentration of the enullsting supply of contaminated sites. null controlled for this tendency with
the number of sites previously enrolled in the nullP within a nullnullnullmeter buffer of each property
nullnullnullnullPnull. The last set of independent variables included median house values nullDnullnullnull
and socioeconomic characteristics of the residents in the neighborhood, measured at the nullnull
nullnsus tract level.
The Data
This section further describes the types of properties that are enrolled in the nullP. nullivariate
statistical comparisons are made between participating nullr enrollednullsites and nonparticipating
sites. The section concludes with a discussion of the changing nature of the nullP and the types
of properties that tend to be enrolled and, in turn, how these changes are accounted for in the
econometric model.
Description of Properties
nullr null of the nullnullsites enrolled in the nullP, we identified the corresponding parcelnullnullin the nullnull
database, and appended information about the parcel, its enullct location nullatitude and longitudenull
structures, assessed value, and recent sales nullif anynull. The nullnullnull participating sites were actually composed
of nullnullproperties, because in null cases one nullP application consists of multiple adnullcent parcels.
null

The same type of parcel information is also available for the nullnullnonenrolled properties.
nullhibit nulldisplays descriptive statistics of the sample. The average parcel in the sample covers
about null acres and is located a little more than null miles from the nullnullD. nullearly all parcels nullnullnull percentnull
have a building or other improvement, which accounts on average for null percent of the total
property area nullariable nullPnullnullnull nullcause of the criteria used for constructing the sample,
industrial properties account for more than null percent of all parcels.
nullhibit nullalso shows that we were able to impute the prior probability of contamination for nullnull
properties. Regarding additional neighborhood characteristics, half of the parcels in the sample are
null
nullecifically, out of the nullnullnullP sites, null sites consist of a single parcel, null sites of nullparcels, nullsites of nullparcels, and
single sites each with null null null null null and null parcels.

20 Brownfields
Guignet and Alberini
located in a state nullterprise nullne and null percent are in a federal nullpowerment nullne. On average,
industrial uses account for about null percent of the land use within a nullnullmeter radius around the
properties and nearly null percent within nullnullnullmeters. The median housing value in the surround -
ing census tract is on average about nullnullnullnull
Comparison Across VCP and Nonparticipating Sites
nullps of the nullP sites suggest that participating properties are more linullly to be in areas where
economic inducements, such as those associated with state nullterprise nullnes and federal nullpower -
ment nullnes, are offered to firms nullee enullibit nullnullin appendinullnull. nullthough they tend to be roughly
the same distance from the central business district, participating sites tend to be farther from
Exhibit 1
Variable Description
N Valid
Obs
Mean
Std
Deviation
Descriptive Statistics
SIZE Area of parcel in acres 247 5.390 12.020
CBDDIST Distance to CBD nullnner nullrnullrnullin nullters 24null 3nullnull.99 2null21.17
BnullnullInull Bnulllnullnnullor otnullr inullrovenullnt present
nullnullnullnull
247 0.794 0.40null
nullBnullnullT nullear tnull olnullst nullilnullnnullnulls nullilt 52 1null43.31 30.944
CAnullTAnull Capital intensitnull 247 0.7null 1.22null
nullnullDIST Distance to nearest nullnullr roanullin nullters 24null 4null.375 4null.null2
nullnullCnull nullenullctenullpronullnulllitnullof contanullnation 175 0.475 0.304
nullnullCnullnullSSInull nullonullnulllitnullof contanullnation nullnullnullenull
nullnullnullnull
247 0.291 0.455
EnullZnull nullcatenullin Enterprise Zone nullnullnullnull 24null 0.51null 0.501
EnullZnull nullcatenullin Enullonullrnullnt Zone nullnullnullnull 24null 0.23null 0.425
nullEAnullnullnull nullnuller of properties previonulllnullenrollenullin
nullnullnulltnulln 1null00 nullnullffer nullll nullarsnull
247 2.530 4.413
InullnullTnullAnull Zonenullinnullstrial nullnullnullnull 247 0.417 0.494
nullTInull nullercent of lannull in innullnullstrial nullse nullitnullin 1null500 null
nullffer
24null 0.19null 0.212
nullTInull500null nullrcent of lannullin innullstrial nulle nulltnulln 500 null
nullffer
24null 0.257 0.310
nullSZnullDIST Distance to nearest resinullntial nullne in nullters 24null 155.439 202.null7
nullnullAnullS nullnullan nullnullinnullvalnull in censnull tract null000
nullllarsnull
245 73nullnull 3null745
nullTnullnullnullTnull nullrcent of censnull tract popnullation livinnull
nulllonullpovertnullline
24null 0.237 0.125
nullTnullnullnull nullrcent of resinullnts in censnull tract nullo onull
nullnull
24null 0.4null 0.22null
nullTBnullCnull nullrcent of African Anullricans in censnull tract 24null 0.3null 0.335
nullTnullSnullAnullCS nullrcent of nullspanics in censnull tract 24null 0.024 0.027
nullTCnullnullnull nullrcent of people nulltnullcollenull nullnullee in
censnull tract
24null 0.175 0.150
Cnull nullcentral business districtnullnulls nullobservationsnullVCP nullvoluntary cleanup programnull
nullte: Full sample null nullnullnullnull

21Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
manullr roads than nonparticipating eligible properties nullee enullibit nullnullin appendinullnull. Participating
sites are more linullly to be surrounded by industrial properties and tend to be located farther
away from residential nullnes nullee enullibit nullnullin appendinullnull. These spatial patterns confirm that
the probit model should control for industrial versus another use of the parcel, for the prevalent
uses in the neighborhood, and for distance to the nearest residential area, as mentioned in nulldel,
nullmple, and Data nullurces section.
null compared the means of all variables across nonparticipating and participating sites in the
sample in enullibit null This table shows that participating properties tend to be considerably larger
than nonparticipating eligible properties and tend to be somewhat less linullly to contain buildings
or other improvements.
null
null enullected, enrolled sites have a higher predicted probability of
contamination.
Exhibit 2
Variable
VCP = 0 VCP = 1
T Statistic
N Valid
Obs
Mean
Standard
Deviation
N Valid
Obs
Mean
Standard
Deviation
Conullarison of nullans of nullarianulles for nullnparticipatinnullnullCnullnull0nullannullnullrticipatinnull
nullCnullnull1nullnullrcels
SIZE 131 1.1null 5.940 11null 10.134 15.04null nullnull003null
CBDDIST 131 3null34.null0 2null79.010 115 3nullnull.470 1null95.5null 0.511
BnullnullInull 131 0.901 0.300 11null 0.null2 0.471 4.47nullnull
nullBnullnullT 5 1null17.000 2nullnull3 47 1null4null110 30.2null null2.277null
CAnullTAnull 131 1.141 1.305 11null 0.347 0.9null 5.435null
nullnullDIST 131 322.770 421.112 115 null9.959 49null055 null5.197null
nullnullCnull 100 0.27null 0.1null 75 0.73null 0.225 null14.419null
nullnullCnullnullSSInull 131 0.237 0.427 11null 0.353 0.4null null2.010null
EnullZnull 131 0.427 0.497 115 0.null7 0.4null null3.020null
EnullZnull 131 0.1null 0.375 115 0.313 0.4null null2.null7null
nullEAnullnullnull 131 2.41null 4.5null 11null 2.722 4.132 null0.553
InullnullTnullAnull 131 0.145 0.353 11null 0.724 0.449 null11.1nullnull
nullTInull 131 0.0null 0.130 115 0.327 0.211 null10.null4null
nullTInull500null 131 0.0null 0.1null 115 0.454 0.305 null11.277null
nullSZnullDIST 131 103.9null 1null.1null 115 214.051 22null290 null4.314null
nullnullAnullS 130 75null97.null 45null7null93 115 70null72.17 24null94.09 0.951
nullTnullnullnullTnull 131 0.2null 0.137 115 0.211 0.104 3.1nullnull
nullTnullnullnull 131 0.409 0.235 115 0.5null 0.190 null5.nullnullnull
nullTBnullCnull 131 0.474 0.339 115 0.239 0.2null 5.903null
nullTnullSnullAnullCS 131 0.023 0.02null 115 0.025 0.027 null0.null5
nullTCnullnullnull 131 0.177 0.144 115 0.172 0.15null 0.250
nulls nullobservationsnullVCP nullvoluntary cleanup programnull
nullnullsigninullant at tnull nullpercent levelnullnull nullsigninullant at tnull nullpercent levelnull
nullte: Statistical comparison onulltnull means is done using tnullests onulltnull null nullpotnullsis tnullt tnull dinullerence in tnull means is nullronull
null
nullmetimes multiple parcels were combined into the same application to the nullP nullnd into the same redevelopment
pronullctnull The average sinull of a nullP site is nullnull acres for the sites consisting of nullparcel, null.null acres for the sites consisting of
nullparcels, nullnull acres for the sites consisting of nullparcels, nullnullacres for the one site consisting of nullparcels, nullnull acres for the
one site consisting of nullparcels, null.null acres for the one site with nullparcels, nullnull acres for the one site with nullparcels, nullacres
for the one site with nullparcels, and nullnull acres for the one site with null parcels. This suggests that in some cases it was
necessary for developers to combine several very small parcels together to get a site of acceptable sinull for redevelopment.

22 Brownfields
Guignet and Alberini
nullrolled properties tend to be less capital intensive. nullildings at enrolled sites are linullly slated for
demolition during redevelopment, thus a less capital-intensive site may be more attractive because
of lower demolition costs. nullwland nullnullnull interviewed nullltimore real estate agents and industrial
property owners and found that the enullense of removing obsolete structures is one barrier to
redevelopment.
There are no systematic differences across the two groups of properties for housing values and
share of residents with a college degree. The proportion of residents who own their homesnulls
opposed to renting themnulls higher near enrolled properties than near nonparticipating properties.
The proportion of residents living in poverty tends to be lower surrounding enrolled properties.
Regarding race and ethnicity of the neighborhood, enrolled properties tend to be located in
neighborhoods with fewer nullrican nullericans, but no systematic difference enullsts regarding the
proportion of people of nullspanic heritage.
Features of Participating Sites
null checnulld for possible overlapping between nullP participation status and the other programs
described in the nullcnullround section nullther Programs and nullctors Potentially nullfecting nullP
Participationnullbut found that only one nullP property received a grant from the nullnullunder the
nullownfields Program established by the nullall nullsiness nullability Relief and nullownfields Revitalinull -
tion nullt of nullnull. nullne of the nonparticipating properties received funding under this program.
Only five properties that received assessment grants under the earlier nullnullnullownfield nullsessment
Demonstration Pilot Program subsequently entered the nullP program.
nullong the nullP properties, we found no obvious differences between those that applied for an
nullRD and those for which a cleanup plan was submitted, enullept that the predicted probability of
contamination is greater for the latter. nullong enrolled properties, those in industrial use tend to
be larger than commercial properties.
nullhibit nulldisplays the distribution of land use at nullltimore nullty participating sites by the year of
enrollment, showing that nullnullparticipation has picnulld up steam since the inception of the program,
Exhibit 3
nullnnullnulle at nullnullSites null nullear of Enrollnullnt
0
5
10
15
20
25
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Number of VCP Sites
Year of Enrollment
Residential Commercial Industrial
VCP nullvoluntary cleanup programnull

23Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
with the largest enrollment nullnullsitesnullin nullnull, and nullnullindustrial properties manull up most of the
enlisted sites. nullmmercial properties started being enrolled in the program starting in nullnull, but
they still account for a small fraction of all sites. Residential properties are even less common.
Perusal of enullibit nullsuggests that, all else the same, participation rates and hence the linulllihood
of participation have changed over time. This change may have occurred because of changes in
the eligibility criteria, the establishment of concurrent programs that target similar properties nullee
the nullcnullround section nullther Programs and nullctors Potentially nullfecting nullP Participationnull,
changes in the economic climate of the city, and changes in the real estate marnullt. To account
for these changes, we grouped the null years from the inception of the program to nullnull into four
discrete periodsnullnullnull through nullnull, nullnull, nullnull through nullnull, and nullnull through nullnull. null
then interacted nully regressors with dummies for those periods.
The first period nullnullnullthrough nullnullnullcaptures the early years of the nullP, the most restrictive
version of the federal nullownfields Tanullnullcentive and one city administration.
null
The second period,
consists of a single year nullnullnull to allow for the disruption to business associated with the events of
nulleptember nullnull, nullnullnullnull, and because of subsequent policies and programs affecting contaminated sites
that had not yet tanulln effect. nullth the third period nullnullnulland nullnullnull we hoped to capture the
incentives associated with the nullall nullsiness nullability Relief and nullownfields Revitalinulltion nullt,
which implied changes in funding for assessment and cleanup of contaminated sites and substantial
limitation of nullperfund liability for prospective purchasers and owners. null nullnull, nullltimore voters
passed the nullonomic Development nullan nullnd nullsue, which included null million for brownfield
redevelopment nullnullDnull, nullnullnullnullnull. null change in political climate also occurred, starting with the beginning
of nullnullnullnull, when Robert nullhrlich, a Republican, toonull over as nullovernor of nullaryland from Parris nulllen-
dening, a Democrat. null is possible that this shift in state government may have changed priorities
for state agencies.
nullnally, in nullnull, the nullP was changed so that it began to admit oil pollution sites. These sites
are linullly to differ in sinull and use relative to sites contaminated by other hanullrdous wastes. nullr
enullmple, gas stations are comparatively small and are considered a commercial use.
null
nullsing our analysis on these considerations, we entered in the model the variable nullnull, a linullly
determinant of participationnullnullnullnull the interaction term between nullnull and the dummy denoting
the second period of the study nullnullnullnullnullnullnull the interaction term between nullnull and the third
period of the study nullnullnullthrough nullnullnull and nullnullnull the interaction term between nullnull and the
fourth period nullnullnullthrough nullnullnull This inclusion allows for the effect of property sinull on the
probability of participation to vary over time.
null
null December nullnull, a change occurred in nullltimorenulls government when nullyor nullrtin Onullalley toonullover from nullrt
nullhmonull, who had been mayor since nullnull. This change in city government may have resulted in changes of several
aspects of city law, tanulltion, redevelopment efforts, and so forth. null seems reasonable, however, to include the first year of
his administration within our first period because, during his first term as a mayor, Onullalley emphasinulld safety and crime
reductions. This emphasis and any other regime changes were unlinullly to have had an immediate effect on redevelopment
and investment opportunities.
null
The program was also amended to accept application pacnullges that included Phase nulland Phase null environmental
assessment studies funded through grants from the nullnullnullownfields Program. null discussed at the beginning of this section,
however, only one property appears to have availed itself of this opportunity.

24 Brownfields
Guignet and Alberini
Estimation Results
nullhibit nullreports the results for the random effects probit model of participation.
null
null present
three specifications. nullecification nullnullis the base specification, which includes sinull of the property
and interactions between sinull and time period, in addition to the regressors listed in the nulldel,
nullmple, and Data nullurces section nullther nulldependent nullriablesnull nullecifications nullnulland nullnull
include census tract characteristics nulls of nullnullnullto capture socioeconomic differences in neighbor -
hood character and blighted areas.
nullhibit nullhad suggested that the nullP tends to attract larger sites. This tendency would appear to
be a recent phenomenon, because the results of all the probit specifications in enullibit nullsuggest
that, in the early years, the program actually attracted smaller properties, but that trend was
subsequently reversed, as implied by the signs and significance levels of the coefficients on nullnull,
nullnullnull nullnullnull and nullnullnull
Exhibit null

Variable
nullnull nullnull nullnull
Coenullcient T Stat Coenullcient T Stat Coenullcient T Stat
nullsnullts of nullnnullnullEffects nullonullt nullnullession of nullnullnullrticipation
InullEnullEnull null1.null0null null4.93null null1.2733 null2.nullnull null1.9null0 null4.nullnull
SIZE null0.0124 null1.nullnull null0.012null null1.nullnull null0.0127 null1.nullnull
SIZE2 null0.0020 null0.13 null0.0022 null0.14 null0.0021 null0.13
SIZE3 0.0090 0.9null 0.00null 0.94 0.00null 0.95
SIZE4 0.0301 3.72null 0.0304 3.73null 0.0312 3.7nullnull
CBDDIST 0.0000 0.02 null0.0000 null0.35 null0.0000 null0.11
BnullnullInull null0.2201 null1.34 null0.2271 null1.3null null0.2319 null1.4
BnullnullInullnullBnullnullT null0.0001 null0.null null0.0001 null0.null null0.0001 null0.77
nullBnullnullTnullSSInull null0.null47 null3.1nullnull null0.null19 null3.35null null0.null47 null3.34null
CAnullTAnull null0.1null1 null2.nullnull null0.194null null2.72null null0.1nullnull null2.nullnull
nullnullDIST null0.0001 null1.42 null0.0001 null0.92 null0.0001 null0.9null
nullnullCnull 0.4593 1.73null 0.441null 1.nullnull 0.41null 1.55
nullnullCnullnullSSInull 0.1414 0.73 0.142null 0.73 0.129null 0.null
EnullZnull null0.0143 null0.09 null0.0nullnull null0.37 null0.0097 null0.0null
EnullZnull 0.0null5 0.4 0.0110 0.0null 0.05null 0.35
nullEAnullnullnull 0.0592 5.13null 0.0null0 5.22null 0.0null1 5.07null
InullnullTnullAnull 0.453null 3.27null 0.4273 3.04null 0.4320 3.07null
nullTInull 0.5401 1.3null 0.5251 1.32 0.1941 0.39
nullSZnullDIST 0.0007 2.37null 0.0007 2.3nullnull 0.0007 2.42null
nullnullAnullS null0.0000 null1.29
nullTCnullnullnull 0.2null3 0.44
nullTnullnullnullTnull 1.3077 1.45
nullTnullnullnull 0.47null 0.null
nullTBnullCnull null0.2992 null0.93
nullnullnullnulllinullonull null351.null90null null350.71099 null350.7null77
VCP nullvoluntary cleanup programnull
nullnullsigninullant at tnull nullnullercent levelnullnullnullsigninullant at tnull nullpercent levelnullnull nullsigninullant at tnull nullpercent levelnull
nullte: nullpendent variable: participation in year nullonulltnull programnull
null
The correlation between any two error terms within the same site is generally small nullbout nullnullnulland significant only at
the null-percent level. nullvertheless, random effects were incorporated to obtain the correct standard errors.

25Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
null is possible that, in the later years, developers became familiar with the wornullngs of the program
and saw opportunities for economies of scale in assessment, development, and cleanupnullmoreover,
larger sites cater to large pronullcts and can be subdivided. This result may also have been a con -
sequence of the nullall nullsiness nullability Relief and nullownfields Revitalinulltion nullt. nullfore this law,
holding the probability of contamination per acre the same, a developer or owner would be more
linullly to face enullosure to liability nullr be more heavily enullosednullwith larger properties. nullth the
law in effect, which limits or eliminates liability for certain parties under specific conditions, larger
sites become comparatively more attractive.
This finding also suggests that the nullP did not prove to be particularly attractive to nulllosednullgas
stations, which are generally small properties, after the nullP eligibility rules were amended in nullnull
to include petroleum-contaminated sites. nullnversations with nullnullstaff suggested that very few
leanullng underground storage tannullnullnullTnullsites were signed up with the nullP, probably because the
nullP has relatively more stringent environmental assessment and cleanup requirements. nulls station
owners and operators would have found the nullryland nullnull program more attractive because,
until the middle of nullnull, this program would have reimbursed them for the cost of remediation.
null
The probit model confirms that participation is also more linullly to occur among sites without
buildings nullan effect that is not significant at the conventional levels, howevernull and among properties
with lower capital intensity, suggesting a preference for sites with lower demolition and remediation
costs. Distance to the central business district or to manullr roads does not seem to be an important
driver of participation. This finding should be interpreted with caution, because it may be due
to collinearity and to the use of imperfect pronulles for site access. Distance to the central business
district is correlated with several other spatial characteristics, and distance to manullr roads may not
fully capture how easy or difficult it is to access a particular property in an urban setting.
null enullected, participation is positively and significantly associated with the prior probability of
contaminationnulln other words, the program is attracting sites that one would truly enullect to be
contaminated. That does not mean, of course, that the property is necessarily cleaned up, and
indeed about two-thirds of the nullP applications, as discussed in the nulldel, nullmple, and Data
nullurces section, requested an nullRD.
There is no evidence of an independent effect of nullterprise and nullpowerment nullne designations.
nullwever, these designations are correlated with land use, location, and sinull of the site. Once again,
it is thus difficult to say whether this result is genuine or an artifact of collinearity. nullst linullly,
nullP propertiesnullrownfields, for all practical purposesnullre typically in abundant supply in
blighted areas that are also addressed by state and federal economic development programs.
The results suggest that participation is more linullly among sites nullned for industrial use and grows
with distance from residential areas and with the percentage of the surrounding land designated
null
The fact that the nullP attracted larger sites in more recent years is in sharp contrast to general nonresidential development
and building trends. Data from the nullltimore nulltropolitan nulluncil indicate that in nullltimore nullty the average sinull of such
development pronullcts followed an inverted-nulltrend over the study period and had reached its lowest levels nullbout null,nullnull
sq. ft.nullby nullnull through nullnull. The square footage of the average pronullct has been declining steadily over the study period
in the entire nullltimore metropolitan area nullbout nullnullnullsq. ft. in nullnull through nullnullnull

26 Brownfields
Guignet and Alberini
as industrial nullhe latter is statistically insignificant at all the conventional levelsnull
null
The coefficient
on nullnullRnullPnullsuggests that the number of nearby properties previously enrolled in the nullP is
positively associated with the probability of enrollment. null is possible that successful participation
encourages enrollment of other nearby sites. nullternatively, this finding may also be due to the
spatial clustering of brownfields or to other unobserved amenities.
nullecification nullnulladds the median housing value and the education level of the residents in the
census tract around each property, although neither variable has an independent effect on the
linulllihood of enrollment. These variables were intended to act as a pronull for up-and-coming
versus blighted neighborhoods, but their effect nullf anynullis probably already captured in other site
and neighborhood characteristics. nullecification nullnullincludes other characteristics of the residents,
namely the percentage of people who live in poverty, own their homes, and are nullrican nullerican.
null both nullnulland nullnull linulllihood ratio tests indicate that the newly added census-tract variables are
nullintly insignificant.
To get a sense of the magnitude of the probit coefficients, using specification nullnullwe computed
the annual probability of participation nullr enrollmentnullfor a hypothetical industrial-use parcel
of average sinull, distance to the nullD, capital intensity, and in an nullterprise nullne. null assumed
that this site had the average prior probability of contamination, was surrounded by the average
enullent of industrial land, and was at the average distance from residential areas. nullr a parcel with
these characteristics during the first period of the program nullnullnullthrough nullnullnull the probability
of enrollment in any given year was nullnull percent. nullcreasing the sinull of this average parcel by a
standard deviation nullhat is, by null.null acres above the original nullnull acresnullslightly decreased the
probability of enrollment from nullnull to nullnull percent.
The story changes in more recent years nullnullnullthrough nullnullnull nullparcel that was average in all
respects and was nullned for industrial use would have had a greater annual probability of participa -
tion nullnullnull percentnull which increases to null.null percent if the parcelnull sinull is increased by a standard
deviation above the average. null this larger parcel during the most recent years of the program was
located an additional nullnull miles from the nearest residential nullne nullbout a two standard-deviation
increasenull then the probability of participation would increase from null.null to null.null percent.
Sales and Redevelopment
nullnatural issue to address is whether properties that signed up for the nullP did so because they had
nullst been or were about to be purchased or sold. null did not include sales events in the right-hand
side of the probit equation because we were unable to find good instruments for them and for
related econometric difficulties, but we checnulld whether participating sites were bought or sold
around the time of enrollment in the program.
Of the nullnullproperties in the sample, nullnullhad no records of sales in recent years nullfter nullnullnull These
nullnullparcels with no recent sales were evenly split between nullP participants and nonparticipants
null
The probit regressions reported in enullibit nullused the nullnullnullmeter buffer when computing the percentage of surrounding
land dedicated to industrial uses, but we obtained the same result when we used smaller buffer sinulls nullor enullmple, nullnull
metersnullto capture closer neighbors of each property in the sample.

27Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
nullnulland null parcels, respectivelynull Of these nullnullparcels, we were unable to identify null in the nullnull
records. The remaining null were mostly commercial and industrial parcels nullnulland null parcels,
respectivelynulland were properly documented in the nullryland tanulltion data. Of these null well-
identified parcels, null nullnullnull percentnullwere nullP participants.
The remaining properties had been bought and sold during the nullnull-through-nullnull period for a
total of nullnullsales. nullen we restricted our attention to the nullnullsales that occurred during or after
nullnull nullhat is, since the beginning of the nullPnull we found that null of these sales were among null
non-nullnullP properties and the remaining nullnull sales were of nullnull nullnullP properties. nulletween nullnullnullnull and nullnullnullnull,
about null percent of the sold non-nullP sites were sold once, null percent were sold twice, nullpercent
were sold three times, and none were sold four times. null contrast, null percent of the sold nullP sites
were sold once, nullnull.nullnull percent were sold twice, null.nullnull percent were sold three times, and null.nullnull percent
were sold four times.
Of the null sales of nullP sites, null occurred at properties that received application approval as of
December null, nullnull. Of these sales, null occurred before the nullP application was approved, and null
occurred after approval. Of these sales, null toonullplace within nullmonths of the approval of the nullP
application, but the lionnull share nullnullsalesnulltoonullplace nullmonths after application approval or later.
Of these null sales, null were properties that had a proposed cleanup plan. Tanulln together, these facts
suggest that the properties enrolled in the nullP come from a pool of properties that are sold or
bought no less than the nonparticipating sites.
The nenull logical issue to follow this discussion of transaction activity of nullP properties is whether
parcels enrolled in the nullryland nullP are linullly to be redeveloped soon. Possibly, but we believe
that redevelopment is unlinullly to bring significant land use changes. Of the null properties that had
received an nullRD letter or a nullnullwithin the study period, residential use was enulllicitly prohibited
at null sites nullnullnull percentnull null null sites nullnullnull percentnull only limited residential development was
allowed. These restrictions are meant to protect the public from possible enullosures to contami -
nants, while at the same time trying to encourage some form of reuse.
null obtained the specific land use before and after nullP completion for null of the null properties that
completed the program. Only nullproperties changed uses after completionnullmost were converted
from parnullng lots null nullnull, warehouses null nullnull, and manufacturing facilities null nullnull to offices. Only
nullproperties were converted to residential use nullhe first was initially a warehouse and the other a
manufacturing facilitynull
Tanulln together with the linulllihood that enrollment is greater at industrial properties in industrial
areas and increases with distance from residential neighborhoods, the above evidence suggests that
the vast manullrity of redevelopment would either nullep the enullsting land use or convert the parcel to
nonresidential uses.
nullfill redevelopment is touted as helping to meet smart growth goals and as avoiding conversion of
open space, so it is natural to asnullhow well the nullP is doing in this respect. null of December nullnull,
a total of nullnullnullacres were enrolled in the nullP in the city of nullltimore alone.
Deason, nullernull and nullrroll nullnullnull considered eight brownfield properties in the city of nullltimore
and assumed redevelopment as office buildings, commercial facilities, or homes nullee enullibit nullnullin

28 Brownfields
Guignet and Alberini
appendinullnull. They calculated the land area that would be necessary if such redevelopment pronullcts
toonullplace in surrounding suburban areas nullaltimore, nullnt, and nulledericnullnulluntiesnull They
consistently found that, based on local nullning, such redevelopment pronullcts would require larger
land areas in these latter three counties than in the city of nullltimore.
nullsuming that all of the participating nullnullnullacres are redeveloped and remain in their use at the
time of enrollment, we used the land area nullatiosnullderived by Deason, nullernull and nullrroll nullnullnull
to estimate the amount of open space that the nullP may have deterred from being developed nullee
enullibit nullnullin appendinullnull. null considered greenfields in nullltimore nullunty as linullly substitutes for
infill development because this rural or suburban area surrounds the city of nullltimore and is part
of the overall metropolitan area. nullr purposes of this illustrative calculation, we assumed that nullP
properties can accommodate similar pronullcts as any other properties.
nullsing our analysis on these assumptions, if the urban redevelopment pronullcts on nullP properties
were built on greenfields instead of brownfields, they would require as many as nullnullnullacres in
suburban nullltimore nullunty under generous assumptions about the conversion nullationullbetween
city and suburban pronullcts and nullnullnullacres under more conservative assumptions. This illustration
suggests that if nullP properties are indeed all redeveloped, if redevelopment can be attributed
solely to the nullP, and if greenfields and brownfields are truly substitutable, then the nullP is
potentially an effective tool to deter open space conversion.
Conclusions
To understand the promise and potential of voluntary cleanup programs nullnullsnullin promoting
remediation and reuse of brownfields, this study focused on enrollment and participation in the
nullryland nullP, which began in nullnull. To ensure a homogeneous legal and tanullenvironment, we
restricted attention to the nullnullnull sites in the city of nullaltimore that had participated as of the end of nullnullnullnull.
Participation in the nullryland nullP has led to the identification and environmental assessment of
nullnullnullacres of contaminated land in the city of nullltimore alone. The vast manullrity of applications
nullnullpercentnullrequested a null nullrther Requirements Determination nullnullDnullon the part of the state
agency, suggesting that actual cleanup is not undertanulln at most of the sites. null believe that
participation in the program is often motivated by developersnullor business ownersnulldesire to protect
themselves from future environmental liability. nullclean bill of health may, of course, also increase
the value of property nullnd of any redevelopment pronullct on sitenull null that sense, the evidence from
nullltimore confirms the findings for the nulllorado nullP reported in nullberini nullnullnull.
One manullr issue to tacnulle when studying the determinants of voluntary cleanup is the identifica -
tion of nullounterfactuals,nullnamely properties that are potentially eligible for the program but are not
enrolled. nullven nullonan and nulldichnull nullnull estimates of the a priori probability of contamination
for commercial and industrial properties, we believe that it is reasonable to consider virtually all
commercial and industrial parcels in nullltimore as potential candidates for the nullP nullee Page and
nullrger, nullnullnullnullgman, nullnullnull null therefore compared the nullP properties with a sample of similar
sinull properties selected at random from the universe of industrial and commercial properties
in nullltimore. Probit regressions confirm that participation is more linullly among industrial sites

29Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
located in industrial areas and less linullly in the presence of improvements and heavy building
capitalinulltion. They also suggest that the distances to the central business district and manullr
roads, respectively, are not very important. nullen more important, the probit regressions point to
the changing nature of the programnullr of the sites that tend to be attracted to the program. null
the first few years of the program, smaller properties tended to be attracted into the nullP. nullst
recently, however, participation has been more linullly among larger properties.
nullven the surrounding land use and the restrictions imposed on the use of the property by the
nullP approval, it is linullly that such industrial properties will be nullpt in industrial or perhaps
commercial use but will not be turned into residential pronullcts. This linulllihood is supported by
recent home construction trends. Records from nullnull show that, from nullnull to nullnull, of the nullnull
single-family homes built in the city of nullltimore, only nullwas built in an industrial use area and
nullwere built in a commercial use area nullee enullibit nullnullin appendinullnull. null fact, only null.nullpercent
of these homes are within nullmile of an industrial area, and most nullnullnullpercentnullare more than
nullnullmiles from a nullP site. This finding is in sharp contrast with the findings in nullberini nullnullnull,
who concludes that properties enrolled in the nulllorado nullP were most linullly under residential
development pressure.
nullsuming that all of the participating nullnullnullacres are redeveloped and remain in their use at the
time of enrollment, and using the land area nullatiosnullderived by Deason, nullernull and nullrroll nullnullnull,
we estimate that if the urban redevelopment pronullcts on nullP properties were instead built on
greenfields, they may require between nullnullnulland nullnullnullacres in suburban nullltimore nullunty.
nullcause most of the enrolled sites tend to remain in nonresidential uses, it appears that nullPs, at
least in the case of nullltimore, may encourage commercial and industrial activities to tanull place
on already contaminated brownfields, thus leaving pristine land available as open space or for
residential uses.
The findings should, as always, be interpreted with caution. This study is specific to the city of
nullltimore, and, given the limited body of research about nullPs and their contenull-specific results, it
would be necessary to conduct more research at a variety of locations before attempting to enullrapo -
late from this studynull locale to another. nullture research endeavors might compare the nullP in a city
linull nullltimore with nullPs of other cities that have enullerienced similar declines in population and
manufacturing and blue-collar nullbs.
nullother limitation of the study is that, given the many concurrent local and federal programs
in place at the same time as the nullP, it is impossible to isolate the effect of any single policy in
promoting brownfield cleanup and redevelopment. Thus, in conducting future research, it would
be important to control carefully for previous brownfields pilot status and for the generosity of
assistance and incentives to environmental assessment and redevelopment.

30 Brownfields
Guignet and Alberini
Appendix A. Maps of Sample Sites in Baltimore, Maryland
Exhibit null1
Exhibit null2
Enterprise annullEnullonullrnullnt Zones
Baltinullre nullnullr nullanull
Cnull nullcentral business districtnullVCP nullvoluntary cleanup programnull
Cnull nullcentral business districtnullVCP nullvoluntary cleanup programnull

31Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
Exhibit null3
Exhibit nullnull
Baltinullre 199nullnullnnullnulle
nullnnullnulle null99null annullnullnullnullnull Constrnulltion
VCP nullvoluntary cleanup programnull
VCP nullvoluntary cleanup programnull

32 Brownfields
Guignet and Alberini
Appendix B. Calculation of Land Area Conversion Ratios
Exhibit null1
Exhibit null2
Propertnull
Sinull
nullcresnull
nullsnulled nullnulle
nullnullired nullea inullin
nullltinullre Conulltnullnullcresnull
nulltio
nullnd nulle N Total nullres nullationull
Total nullnullired nullr Enullivalent Pronullcts in
Snullnullban nulleas
nullopertnullSpecinull Conversion nulltios
Calcnulllations for Bronullnnullelnull nullroperties in tnulle Citnull of Baltinullore
Developnullnt Conversion nulltes Assnullenullin Tnulls Article
nullee tnull Sales annullnullnullvelopnullnt section.null
1 15 nullnulle nullilnullnnull 1null37 1 null1.22
2 4.5 nullnullvelopenullconull. facilitnull 9.1null 1 null2.04
3 0.7 nullnulle nullilnullnnull 4.59 1 nullnull12
4 2.75 Tnull ofnulle nullilnullnnull 5.42 1 null1.97
5 null nullsinullntial nullltifanulllnullconulllenull null00 1 null1
null 1.3 nullsinullntialnull2nulltonullnullnulls 2.25 1 null1.73
7 2.null nullsinullntial 2.23 1 null0.null
null 0.17 Tnullnulltornullofnulle nullilnullnnull 0.null 1 null3.94
nullneronull assnullptionsnull
Innullstrial null 975.02 null24 null0null.12
Conullercial 14 null.null 3.0null5 194.0null
nullsinullntial null 32.79 1.null null.99
nullnullr 13 104.null 1.00 104.null
Total null444.05
More conservative assnullptionsnull
Innullstrial null 975.02 1.00 975.02
Conullercial 14 null.null 2.00 125.72
nullsinullntial null 32.79 1.00 32.79
nullnullr 13 104.null 1.00 104.null
Total 1null3null39
Source: nullasonnullSnullrnull and Carroll nullnullnull
nullnullans onulltnull conversion ratios nullr tnull nullltimore pronullcts reported in nullasonnullSnullrnull and Carroll nullnullnullnullenullept nullr industrial
use pronullctsnullnullere tnull nullure in tnulls table nullnullnull is tnull average nullr industrial pronullcts nationnulldenullnulleasonnullSnullrnull and Carroll
nullnullnull do not enullmine industrial pronullcts nullr nullltimorenull
null nulldian conversion ratiosnullnulle same enulleptions as in nullapplynull
nullnullowledgments
null thannullthe following organinulltions and individuals for their helpful comments and suggestionsnull
the nulltional nullnter for nullart nullowth for their support and the data for this analysisnullattendees
of the brownfields session at the nullternational nulllantic nullonomic nullnference, nullvannah, nullorgia,
October nullnullnullparticipants in nullhe Reuse of nullntaminated nulltes in nullstainable Development
nullrategiesnullnullrnullhop, nullnice, nullaly, nully nullnullnulland nullwin null nullromberg.

33Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
nulltnullrs
Dennis nullignet is a Ph.D. candidate in the Department of nullricultural and Resource nullonomics at
the nulliversity of nullryland.
nullna nullberini is an associate professor in the Department of nullricultural and Resource nullonomics
at the nulliversity of nullryland.
Renullrences
nullberini, nullna. nullnull. nulleterminants and nullfects on Property nulllues of Participation in nullluntary
nulleanup ProgramsnullThe nullse of nulllorado,nullContemporary nullonomic nulllicy null nullnull nullnullnullnull
nulllberini, nullnna, nulllberto nullongo, nulltefania Tonin, nullrancesco Trombetta, and nullargherita Turvani. nullnullnullnull.
nullThe Role of nulliability, Regulation and nullconomic nullncentives in nullrownfield Remediation and Redevelop-
mentnull nullvidence from nullurveys of Developers,null nullegional nullcience and nullrban nullconomics nullnull nullnullnullnull nullnullnullnullnullnullnull.
nullnullr, nullndra, nullctoria nully, Peter Roberts, and nullthan nullith. nullnull. nullhe Definition of
nullownfield,nullnullurnal of nullnullronmental nullanning and nullnagement null nullnull nullnullnull
nullltimore Development nullrporation nullDnull. nullnull. nullverview of the nullltimore Development nullr -
poration.nullhttpnullnullww.baltimoredevelopment.comnullverview-baltimore-development-corporation
nullccessed nullptember null, nullnullnull
nullnull nullnull nullanuarynull nullrownfields Progress in nullltimore and nullrylandnull nullronology.null www.
baltimoredevelopment.comnulllesnulldfnullrownfieldsnullhronology.pdf nullccessed nullgust null, nullnullnull
nullltimore nulltropolitan nulluncil nullnullnull nullnull nullebruarynull nulluilding Permit nullnual nullmmaries.null
httpnullnullww.baltometro.orgnullontentnulliewnullnullnullnull nullccessed nullptember null, nullnullnull
nullrtinull Timothy null nullnull. nullvaluating the nullpacts of nullcal nullonomic Development Policies on nullcal
nullonomic Outcomesnullnullat nulls nullen Done and nullat null Doablenull null nullaluating nullcal nullonomic
and nullployment nullnulllopmentnullnullw null nullsess nullat nullrnull nullong nullogrammes and nulllicies , edited
by nullistair nulllan and nullng nullng. Paris, nullancenullOrganisation for nullonomic null-operation and
Developmentnullnullnullnullnull
nullnull nullnull. nullo nullnenulls nullom nullate and nullcal nullonomic nullnulllopment nullliciesnull nulllamanullo, nullnull
nullnull nullnullhn nullstitute for nullployment Research.
nullrtsch, nullarles, nullinullbeth nullllaton, and nullith Pepper. nullnull. Coming Clean for nullonomic
nullnulllopmentnullnullnullsource nullonullon nullnullronmental Cleanup and nullonomic nullnulllopment nullportunities .
nullshington, Dnull nullrtheast-nulldwest nullstitute.
nullrtsch, nullarles, and nullidget Dorfman. nullnull. nullownnulllds nulltatenullfnullhenulltatenull null nulldnullfnullession
nullnullew of Initiatinulls and nullogram Impact in the null nullates. nullshington, Dnull nullrtheast-nulldwest
nullstitute.
Daley, Dorothy null nullnull. nulloluntary nullproaches to nullvironmental Problemsnullnullploring the Rise of
nullntraditional Public Policy,nullnulle nulllicy nulludies nullurnal null nullnull nullnullnullnull

34 Brownfields
Guignet and Alberini
De nullusa, nullristopher. nullnull. nullhe nulleening of nullownfields in nullerican nullties,null nullurnal of
nullnullronmental nullanning and nullnagement null nullnull nullnullnullnull
nullnull nullnull. nullrownfield Redevelopment nullersus nulleenfield RedevelopmentnullnullPrivate nullctor
Perspective on the nullsts and Risnull nullsociated nullith nullownfield Redevelopment in the nulleater
Toronto nullea,nullnullurnal of nullnullronmental nullanning and nullnagement null nullnull nullnullnullnull
Deason, nullnathan P., nullorge nulllliam nullernull and nullry null nullrroll. nullnull. nullblic nulllicies and nullinullte
nullcisions nullfecting the nulldenulllopment of nullownnullldsnullnull nullalysis of Critical nullctors, nulllatinull nullights
and nulleal nullfferentialsnull Report to the nullnull nullvironmental Protection nullency nullnullnull nullorge nullash-
ington nulliversitynullPnullnullownfields nullonomic Redevelopment nulloperative nullreement. nullailable at
httpnullnullww.gwu.edunulleemnullrownfieldsnull.
nullsher, Peter null, and nullan null Peters. nullnull. Industrial IncentinullsnullCompetition nullong nullerican nullates
and Cities. nulllamanullo, nullnullnullnull nullnullhn nullstitute for nullployment Research.
nullgleman, nulllerie null nullnull. nullzardous nullste Cleanup, nullability, and nulltigationnullnullComprehensinull
nullide to nullperfund nullw. nullstport, nullnullnullorum.
nullnull nulllliam null, and nulltthew null nullrray. nullnull. nullo nullonomic nullfects nullstify the nulle of nullscal
nullcentivesnull nulluthern nullonomic nullurnal null nullnull nullnullnull
nulleenberg, nullchael R., and nullstin nullllander. nullnull. nullhe nullvironmental Protection nullencynull
nullownfields Pilot Program,nullnullerican nullurnal of nullblic nullnance null nullnull nullnullnullnull
nullreene, nullilliam null. nullnullnullnull. nullconometric nullnalysis, nullth ed. nullpper nulladdle River, nullnullnull Pearson-Prentice nullall.
nulleenstone, nullchael, and nullrico nullretti. nullnull. nulldding for nulldustrial PlantsnullDoes nullnning a
nullillion Dollar Plantnullnullcrease nulllfarenullnullrnullng Paper null. nullnull. nullmbridge, nullnullThe nulltional
nullreau of nullonomic Research.
nullwland, nullrie. nullnull. nullhe Role of nullntamination in nullntral nullty nulldustrial Decline,null nullonomic
nullnulllopment nullarterly null nullnull nullnullnullnull
nullnullnull. nullnullnullnull. nullPrivate nullnitiative and Public Responsibility for the Redevelopment of nullndustrial
nullownfieldsnullThree nullltimore nullse nulludies,nullnullonomic nullnulllopment nullarterly null nullnull nullnullnullnull
nullnull nullnull. nullhe nullpact of nullntamination on the nullntonnulloutheast nullltimore nullnd nullrnullt,null
nullurnal of the nullerican nullanning nullsociation null nullnull nullnullnullnull
nullngo, nullberto, and nullna nullberini. nullnull. nullhat are the nullfects of nullntamination Risnull on nullm -
mercial and nulldustrial Propertiesnullnullidence nullom nullltimore, nullryland,null nullurnal of nullnullronmental
nullanning and nullnagement null nullnull nullnullnullnull
nullryland Department of the nullvironment nullDnull. nullarylandnull nullluntary nulleanup Program.null
httpnullnullww.mde.state.md.usnullrogramsnullandProgramsnullRRPnullrownfieldsnullcpnullnfonull nullccessed
nullptember null nullnullnull
nullnullath, Daniel T. nullnull. nullrban nulldustrial nullnd Redevelopment and nullntamination Risnullnull
nullurnal of nullban nullonomics nullnullnullnullnullnull

35Cityscape
Voluntary Cleanup Programs and Redevelopment Potential:
Lessons From nullltimorenullnullryland
nullyer, Peter null nullnull. nullonullng at nullate nullluntary nulleanup Programs in Perspectivenullnullability
Relief, nullenullble nulleanup nullandards and nullstitutional nullntrols as nullrms of nullonomic Development
nullbsidies. nullrnullng paper. nulluisville, nullnullnulliversity of nulluisville, nullnter for nullvironmental Policy
and nullnagement.
nullyer, Peter null, and Thomas null nullons. nullnull. nullessons nullom Private nullctor nullownfield Redevelop -
ersnullPlanning Public nullpport for nullban Regeneration,nullnullurnal of the nullerican nullanning nullsociation
null nullnull nullnullnull
nullyer, Peter null, and null nullde nullnnullndingham. nullnull. nulleclamation and nullonomic Regeneration of
nullownfields,nullnullnullews of nullonomic nullnulllopment nullterature and nullacticenullNonull1. nullshington, Dnull nullnull
nullonomic Development nullministration.
nullwman, Robert null, and Dennis nullllivan. nullnull. nullconometric nullalysis of nullsiness Tanullnullpacts
on nulldustrial nullcationnullnullat Do null nullow and nullw Do null nullow nullnull nullurnal of nullban nullonomics
null nullnull nullnullnullnull
nullonan, nullannull and nullarles null nulldich. nullnull. nullecision nullalysis for nullilinullng nullnullrdous nullste nullte
nullsessment in Real nulltate nullquisition,nullnullsnullnullalysis null nullnull nullnullnullnull
Page, null nulllliam, and Robert null nullrger. nullnull. nullharacteristics and nullnd nulle of nullntaminated
nullownfield Properties in nullluntary nulleanup nullreement Programs,null nullnd nulle nulllicy nullnullnullnullnullnull
Peters, nullan, and Peter nullsher. nullnull. nullhe nullilure of nullonomic Development nullcentives,null nullurnal of
the nullerican nullanning nullsociation null nullnull nullnullnull
nullnull nullnull. nullate nullterprise nullne nullogramsnullnullnull nulley nullrnulldnull nulllamanullo, nullnullnullnull nullnullhn
nullstitute for nullployment Research.
nullhoenbaum, nullriam. nullnull. nullnvironmental nullntamination, nullownfields Policy, and nullonomic
Redevelopment in an nulldustrial nullea of nullltimore, nullryland,null nullnd nullonomics null nullnull nullnullnull
nullmentelli, nullthur null, and Robert null nullmons. nullnull. nullegulation of nullanullng nullderground nullorage
TannullnullPolicy nullforcement and nullintended nullnsequences,nullnullonomic nullnulllopment nullarterly null nullnull
nullnullnullnull
nullgman, nulllary. nullnull. nullvironmental nullability and Redevelopment of Old nulldustrial nulltes.
nullpublished paper.
nulllitare, nullura, and nullchael nulleenberg. nullnull. nulls the nullnull nullvironmental Protection nullency
nullownfields nullsessment Pilot Program nullvironmentally nullstnull nullnullronmental nullalth nullrspectinulls nullnull
nullnull nullnullnullnull
null.null. nullnvironmental Protection nullgency nullnullPnullnull. nullnullnullnull nullnulleptembernull. nullrownnullelds and nulland nullenullitalization.
nullshington, Dnull nullnull nullvironmental Protection nullency. httpnullnullww.epa.govnullrownfieldsnull
overviewnulllossary.htm nullccessed nullptember null, nullnullnull
nullnull nullnull nullebruarynull nullate nullownnulllds and Voluntary nullsponse nullogramsnullnull nulldate from the
nullates. nullnullnullnullRnullnullnullnull nullshington, Dnull nullnull nullvironmental Protection nullency, Office of
nulllid nullste and nullergency Response.

36 Brownfields
Guignet and Alberini
nullnull nullneral nullcounting Office nullnullnull nullnull nullprilnull nullperfundnullnullate Voluntary nullograms nullonullde
Incentinulls to nullcourage Cleanups. nullOnullnullDnullnullnull. nullshington, Dnull nullnull nullneral nullcounting
Office.
nullnull nullnull. Community nullnulllopmentnullnulluse of nullban Industrial nulltes. nullOnullnullD nullnullnull.
nullshington, Dnull nullnull nullneral nullcounting Office.
nullsylennull, nullchael. nullnull. nullanulltion and nullonomic DevelopmentnullThe nullate of the nullonomic
nullterature,nullNew nullgland nullonomic nullnullew nullrchnullprilnullnullnullnull
nullernstedt, nullris, Peter nulleyer, and nullnna nulllberini. nullnullnullnull. nullnullttracting Private nullnvestment to nullontaminated
PropertiesnullThe nulllue of Public nullterventions,nullnullurnal of nulllicy nullalysis and nullnagement null nullnull
nullnullnullnull
nullunt, nullisten R., and Peter null nullyer. nullnull. nullactors nullfecting nullvestments in nullall- and nullrge-
nullale nullownfield Pronullcts,nullnullban nullology nullnullnull nullnullnullnull

37nulltyscapenullnullnullurnal of nulllicy Development and Research • Volume 12, Number 3 • 2010
U.S. Department of Housing and Urban Development • Office of Policy Development and Research
Cityscape
The Private Market for
Brownfield Properties
nullrie nullwland
nulliversity of nullryland
nullstract
nullis study enullmines land sales onullr a 10nullear periodnullnull0 to 2000nulln one
southwest nullltimore industrial districtnullarroll Camdennullo determine the effect of
land contamination on property sales and sales pricenullI tracnulld all sales, selling price,
time on the marnullt, and the presence of land contamination in the nullnull0nullcre areanullnulle
results indicate that after the midnullnull0s, contaminated parcels sold on the prinullte mar null
nullt, with price discounts that accounted for contamination and cleanupnullnullt of the 1null
parcels sold onullr the 1null0nullonull000 decade, positinull and marnulltnulllearing prices were
found for null parcels with either connullmed or historicalnulleasonsnullonulluspect contaminanull
tionnullInternullews with owners and bronullrs of parcels on the marnullt for 2 years or more
and analysis of the data indicate that the contaminated parcels that did not sell within
the 2nullear period nullnullhad abonullnullarnullt asnullng pricenullnullnullwere small and oddnullhapednull
nullnullhad inadenullate road access for modern trucnullnullnullnullhad outdated water, sewer, and
telecommunications connectionsnullor nullnullhad incompatible surrounding land usesnullnullwo
policy implications result from these nulldingsnullnullrst, if a city such as nullltimore wants
to renulltalize an industrial areanullaintaining its industrial function and remediating
contaminationnullonullrnmentnullubsidized cleanups may not be the most costnullffectinull
policynullnullther, the city should nullnullmodernize the outdated infrastructure, including roads
and nuller optic connectionsnullnullnullremonull the outdated residential structures that sit in
the midst of the industrial area and diminish the desirability of some land parcels for
industrial usenullnullnullconsolidate small and oddnullhaped properties that are not conducinull
to modern manufacturing, warehousing, or other industrial usesnullnullnullensure city sernullces
are efnulliently pronullded, including trash cleanup and police and nulle protectionnulland
nullnullimpronull access and egress for modern trucnullngnullnulle enulldence from the nullltimore
study indicates that the prinullte sector will discount land prices and assume cleanup
responsibilitiesnullnulle second policy implication is that the marnullt is capable of brownnullld
cleanup in some locationsnull

38 Brownfields
nullnulland
Introduction
null the concept of nullmart growthnull
null
and its promise of more livable cities catch the imagination of
planners, policymanullrs, and developers, the redevelopment of inner-city brownfield sites becomes
an even higher priority. To nullstify limiting development on greenfield sites, regions must find
buildable land within enullsting city limits. nullntaminationnullhe legacy of nonenullstent environmental
laws
null
and our industrial pastnulls widely perceived to be a deterrent to central-city revitalinulltion,
especially in the industrial nullrtheast.
null
This study enullmines the impact of land contamination on
the marnullt for industrial property and the enullent to which contamination is responsible for the
economic decline of the nullrroll nullmden industrial district. nullsuspect the results in nullltimore can be
transferable to other declining central city industrial areas in the nullited nullates.
The common wisdom has been that nullnullenvironmental cleanup costs are so high relative to land
values that the government has to step in and provide subsidies for cleanup and redevelopment,
nullnullbannullnullrefusal to finance such transactions undermines marnullt demand, and nullnullthe federal
nullmprehensive nullvironmental Response, nullmpensation, and nullability nullt nullnullnullnull or nullper -
fundnulllegislation, which requires landowners to assume the responsibility for cleanup, and a lacnullof
information about the risnull and costs of contamination have lead to a lacnullof demand for contami -
nated land nullartsch, nullnullnullnullrtsch and nullllaton, nullnullnull These conditions are seen as particularly
harmful to central-city industrial land marnullts, where demand for land is already weanull This article
considers whether contamination deters central-city revitalinulltion, and to what degree factors other
than contamination are an impediment to central-city redevelopment. This study tracnull in one
nullltimore industrial district all land sales, selling prices, lengths of time on the marnullt, and pres -
ence of contamination. This methodology allows this study to document the degree to which sales
were restricted to the areanulls clean parcels and to identify factorsnullncluding contaminationnullhat
are responsible for what is perceived as a relatively sluggish central-city industrial land marnullt.
The results indicate that, since the mid-nullnulls, contaminated parcels in the nullrroll nullmden
industrial district have been selling, and the marnullt has adnullsted to contamination by lowering
prices. null fact, contamination does not appear to be the main sales barrier when the intended land
use is industrial. To seriously implement smart growth and to encourage central-city industrial
redevelopment, advocates and city officials must tacnulle the often ignored problems of older
industrial areasnullroblems such as outdated parcel sinulls, inadequate roads for modern trucnull
access, outdated and aging infrastructure, incompatible land uses, and unrealistic assumptions
about the landnulls possibilities.
null
nullart growth is an urban planning concept whereby growth is concentrated in the center of a city to avoid urban sprawl
and the mass consumption of open space and agricultural land.
null
The federal government passed the Resource nullnservation and Recovery nullt in nullnull and the nullmprehensive
nullvironmental Response, nullmpensation, and nullability nullt in nullnull.
null
The common argument has been that nullperfund rules deter owners from selling their sites, securing financing for cleanup,
or proceeding with reuse. nulle, for enullmple, nullrtsch nullnullnull.

39Cityscape
nulle Private nullrnullt nullr nullonullnullld Properties
Literature Review
Three parts of the growing brownfield literature are especially relevant herenull nullnullnull the literature enullplor-
ing the reasons contamination presents a barrier to the redevelopment of urban land, nullnullstudies
enullmining where inner-city property redevelopment occurs in spite of contamination, and nullnullthe
literature attempting to place contamination in contenull with other barriers to redevelopment. null
all three literatures, case studies constitute the most common methodology. The contamination-
as-a-barrier literature focuses on the role of cleanup costs, the fear of unnullown and unpredictable
future liability, the difficulty of obtaining private financing, and the legal costs associated with
purchase agreements and collection of damages from other legally liable parties nullartsch, nullnullnull
nullrtsch and nullllaton, nullnullnullDe nullusa, nullnull, nullnullnullnullnull nullnull, nullnullnullnulleen nulligh, nullnullnullnullaley,
nullnullnullnullright, nullnullnullnullount, nullnullnullnullount and nullyer, nullnullnull nullRnullnullmade owners responsible
for cleanup even if they did not cause the contamination. This legal liability could translate into
immediate cleanup costs, legal costs associated with pursuing culpable parties, and uncertainty
over future cleanup enullenditures. These costs and risnull are widely believed to be manullr deterrents
to the sale and redevelopment of brownfields. nullreover, because lenders have, at times, been held
liable for contamination cleanup costs, financial institutions are reluctant to lend for brownfield
pronullcts, which further reduces interest in redevelopment. nullstudy by the nullnull Department of
nullusing and nullban Development nullnullnull nulle nullfects of nullnullronmental nullzards and nullgulation on
nullban nulldenulllopment nullnullnull, analynulld null redevelopment pronullcts in null cities in nullstates. The study
concluded that, although all the previously mentioned barriers enullst, immediate cleanup costs are
the main deterrent to inner-city redevelopment.
Despite enullensive literature focusing on the costs, risnull, liabilities, and barriers to redeveloping a
contaminated site, several decades of successful cleanups and redevelopment pronullcts indicate the
enullstence of conditions in which some developers find it profitable to absorb the risnull of purchas-
ing, cleaning, and reusing contaminated parcels nullepper, nullnullnullnullmons, nullnullnull nullny successful
redevelopments required government subsidy, but not all. nullyer and nullyons nullnullnull documented
the emergence of entrepreneurial firms redeveloping brownfield sites without public sector
intervention. They found that these private ventures favored sites in high-value locations, under
private ownership, and with larger parcels. This literature does not identify marnullt-clearing prices
for contaminated land, nor does it put contamination in perspective with other conditions that
may be deterrents to development.
Three studies enullmined the price discounts associated with contamination. Page and Rabinowitnull
nullnullnull found land price reductions of null to null percent on four industrial pronullcts spanning three
states. nullnullath nullnullnull found that redevelopment occurred on polluted sites and nulliscounts
in land value due to contamination risnull..consistent with the limited cost data available.... The
industrial land marnullt is highly competitive in the nullty of nullicago...and it appears that the marnullt
has successfully valued and capitalinulld the contamination liabilitynullnullcnullath, nullnullnullnullnull nullwland
nullnullnull tracnulld all parcels in the nullnton industrial area of nullltimore over a nullnullyear period as in
use or idle and as on the marnullt, sold, or for sale. nulle found that less than nullpercent of the land
was idle and not on the marnullt. This finding contradicts the notion that landowners would rather
let land sit idle than tacnulle the cleanup costs and challenges. nulle found that, when contaminated

40 Brownfields
nullnulland
parcels were discounted, they were as linullly to sell as parcels where no evidence or history of
contamination enullsted.
null
Other recent studies have begun to put contamination in contenull with other central-city redevelop-
ment barriers. The nullnullnullnull nullnullD study concluded that contamination alone was rarely the deal breanuller.
nulleenberg et al. nullnullnull identified barriers to redevelopment other than brownfields, including
state and local regulations, unsafe neighborhood conditions nullhat is, crime and stray animalsnull
industrial decline, more attractive adnullcent areas, lacnullof schools, and poor transportation access.
This studynulls contribution comes from its focus on all sales in one industrial area over a null-year
period. These sold and for-sale parcels included both contaminated and clean sites. nullch of
the previous literature used the case study approach. Despite being rich in detail, the case study
approach misses important lessons that can be learned from a broader study that includes all
parcels, contaminated and clean, in one industrial district. nullrst, the case study approach does not
put the price of a contaminated land parcel in contenull with the whole neighborhood land marnullt.
nullor enullmple, rather than blaming poor marnullt demand and high cleanup costs, perhaps the real
sales barrier is created by the seller asnullng a price that is too high in light of marnullt demand and
cleanup costs. This information can only be garnered by studying sales in one marnullt.nullnullcond,
by focusing on the redevelopment of high-profile, often problematic parcels, researchers miss the
private redevelopment of numerous low-profile, contaminated parcels.
This study fills a gap in the literature by investigating all industrial parcels in one district and
tracnullng their sales and prices over a decade. This study determines that the enullent to which sales
were limited to clean parcels, the price discounts associated with contaminated parcels that sold,
and the characteristics of parcels, both clean and contaminated, that languished on the marnullt for
long periods or did not sell at all. null addition to tracnullng all sales over the decade, nullinterviewed
RnullnullnullTORnull
null
, city officials, land purchasers, and land sellers. Through these interviews, null identified
parcels withdrawn from the marnullt without sale, idle parcels not on the marnullt, new uses for sold
property, and barriers to sale. nullith the enulleption of parcels used for stadium parnullng and a union
office building, transferred parcels were used for industrial, construction, and warehouse purposes.
Overview of Area and Early History
nullndustry was originally attracted to the nullarroll nullamden district of nullaltimore because of the availabil-
ity of water power from the nullnes nulllls, its location near a port, the presence of rail lines, and its
pronullmity to the citynulls downtown area.
null
nullavy industry can be traced to the nullnulls. nullnborn maps
null
The previous study by nullwland nullnullnull surveyed all property owners in the nullnton nulldustrial area over a nullnullyear period.
That study, therefore, could identify the time a parcel was on the marnullt before sale and cases in which parcels were put on
the marnullet and then withdrawn without a sale during this period. This study included only three categories of contaminationnull
clean, contaminated, and unnullown. null the current study, the time-on-the-marnullt is missing for many sales early in the
nullnullnullnullnullnullnullnullnull decade because the sellers are inaccessible, real estate bronullers do not recall, and purchasers often do not nullnow
how long the property was on the marnullt. Time-on-the-marnullt and parcels that went on the marnullt and were withdrawn
later in the decade were captured through bronullr interviews. The current study includes five categories of contamination.
null
The area, which is adnullcent to the nullltimore and Ohio Railroad nullation nullow a museumnull was one of the earliest sites in
the nullited nullates accessible to train transportation.

41Cityscape
nulle Private nullrnullt nullr nullonullnullld Properties
indicate the presence of glasswornull, metal foundries and ironwornull, bricnullornull, engine shops,
meat slaughter and pacnullng houses, lumberyards, paint and varnish manufacturers, household
products manufacturers, and scrap metal yards. The study area included about nullnullnullacres,
comprising nullnullindustrial parcels nullee enullibit null.
Exhibit 1
StnullnullArea for tnull Canullen Carroll Innullstrial DistrictnullCanullen Carroll StnullnullArea
Sources of Data
The data for this study were pulled from the nullltimore Department of Public nullornull nullPnull, the
nullaryland Department of nullssessment and Tanullation nullDnullTnull, nullonulltar, nullacnullennullie nullommercial Real nullstate
nullervices, the nullnvironmental Protection nullgency nullnullPnullnull, the nullaryland Department of the nullnvironment
nullDnull, and nullnborn nullre nullsurance nullps. nullch of these data sets and their purpose are discussed
here.
Identifying Sales Transactions
The base map for the nullrroll nullmden industrial district was created from the nullltimore DPnull
parcel point file. The geographic information system coverage of this file records parcels by address
and blocnulllots and includes information on the current owner, nullning category, land use, last sale
transaction bacnullto nullnull, and sale price. The study includes only central business district parcels
that are nullned and used commercially and industrially. These parcels include nullned business dis-

42 Brownfields
nullnulland
trict commercial categories nullnull nullnull and nullnull and all industrial nullcategories.
null
The study enullludes
sites nullned residential, which are remnants of the time when industrial wornullrs walnulld to wornull
nullobtained real estate transaction data from five sources. nullrst, nullenullracted nullnull-to-nullnull sales data
from the nullltimore DPnullproperty tanullrecords. These data were supplemented and cross-checnulld
with information from the nullaltimore Development nullorporation nullnullDnullnullnull the DnullTnull nullonulltar, a privately
maintained RnullnullnullTOR
null
databasenull and nullacnullennullie nullommercial Real nullstate nullervices, a commercial real
estate bronuller. nullhereas DPnulland DnullT data sources contained information on properties that sold,
nullnullar contained information on commercial parcels currently for sale through real estate bronullrs.
nullnullar records provided contact information, asnullng prices, descriptive data of unique features,
and previous sales information for sites that are on the marnullt. nullnullprovided information on a few
parcels for sale by owners. nullacnullennullie nullommercial Real nullstate nullervices added information regard-
ing the amount of time a parcel remained on the marnullt before sale. nullere data were missing,
the nullcnullnnulle data were supplemented with time-on-the-marnullt information obtained through
personal interviews and phone calls to sellers and bronullrs. Time-on-the-marnullt data, however, are
still missing for nullnullof the nullnullsales.
nullom these sources, nullcreated a data set of all industrial parcels in the study area, including those
never on the marnullt after nullnull, those currently for sale, and those that sold between nullnull and
nullovember nullnullnullnull. null geocoded owner, address, sale price, date of sale, sale history, time on the marnullet
of last sale, acreage, unique features, improved or unimproved status, and accessibility to the highway.
nullfound nullnullidentified industrial records within the boundaries, as shown in enullibit null Of those,
nullnullwent on the marnullt from nullnull to nullnull. This number included sales through bronullrs and by
owners. nullide from the nullppers site, which the city is attempting to transfer to residential use, no
parcels in this district were totally idle and not on the marnullt nullscalante, nullnullnull
Collecting Environmental Information
To measure environmental conditions on each of the industrial properties, nullloonulld to three
sourcesnullthe nullnull the nullnborn nullre nullsurance nulllases, and the nullnull nullcollected substantial
qualitative information on environmental conditions at each site and developed a broad rannullng
system for the potential contamination level. The categories in the rannullng system indicated if the
site nullnullwas clean or provided no reason to suspect contamination, nullnullwas adnullcent to a contami-
nated parcel, nullnullhad a historical use consistent with contamination, nullnullwas confirmed as having
contamination, or nullnullwas processed through the nullryland nulloluntary nulleanup Program nullnullnull
null

which was initiated in nullnull.
nullloonulld for evidence of contamination in nullrroll nullmden on nullnullnulls nulltional Priorities nullst of
nullperfund sites and nullnulls brownfield site inventory, and nullidentified contaminated sites in the
area by pulling all contaminated properties that fell within the nullP nulldes overlapping the study
null
nullnulland nullnullare defined as central business district commercial. nullnullincludes marine terminals, railway rights-of-way, and
a science center. nullnull nullnull and nullnullare all manufacturing districts. nullenullluded all residential and neighborhood business
district categories of nullnulland nullnull
null
nullate of nullryland, null nullnull nullnull. nullownfields-nulloluntary nulleanup and Revitalinulltion Program.

43Cityscape
The Private Market for Brownfield Properties
area.
8
MDE records parcels where toxic spills and releases have occurred, neighborhood complaints
of contamination have been recorded, and sites have been processed through VCP. Freedom of
nullformation nullt renullests were nulled with MDE for all properties sold and for sale. nulle tnullical connull
tamination included asbestos, heavnullmetals, polnullhlorinated biphennulls, cadmium, lead, polnullnulllic
aromatic hnullrocarbons, heavnulloils, and leanullng underground chemical and oil storage tannull. nullese
sources connullmed contamination on null of the nullnullparcels in the studnullarea that sold during the
decade. nullthough mannullof these sites have been subsenullentlnullremediated, this article records their
condition at the time of the sale. nullo sites in the Carroll Camden industrial district are contaminated
enough to be on the nullperfund list.
nulle nullnborn Fire nullsurance nulllases were the primarnullsources used to identifnullparcels with a
historical use that implies linulllnullcontamination. nullreviewed the atlases for southwest nullltimore for
nullnull, nullnull, nullnull, and nullnull to garner information regarding original site boundaries, historical
activities on each parcel, and the lanullut of activities within each site. nullrelied on the nullnborn atlases
because frenullentlnulla connection exists between the level and tnulle of contamination and the nullnd of
manufacturing activitnull. Parcels historicallnullused for steel and aluminum milling, chemical producnull
tion, paint and varnish manufacturing, metal foundries and plating, glasswornull, coal bins, rubber
cement milling, printing, engine shops, or fuel oil and crude storage before nullnull were classinulld
as having historical reasons to suspect contamination. null the nullnullsites sold, null had historical
uses that would suggest contamination. Exhibit nullindicates the historical use and contaminants
consistent with those prenullnullnullmanufacturing activities.
8
nulle nullperfund parcels are listed online at httpnullnullww.epa.govnulluperfundnullitesnullplnull. nullobtained the properties on MDE data
directlnullfrom the agencnull. nulle nullP Codes are nullnullnull nullnullnull nullnullnull nullnullnull nullnullnull nullnullnull nullnullnull nullnullnull nullnull8, nullnullnull
nullnullnull and nullnullnull
Exhibit 2
Source of Contaminant Contaminant
Historical Land Uses in the Carroll Camden Industrial District and Associated
Contaminants
Paint and varnish manufacturers Mercury, polychlorinated biphenyls (PCBsnull arsenic, beryllium,
cadmium, chromium, lead
nullnullne shops nullhylene nullycol, trichloroethane, trichloroethyene, PCBs, arsenic,
beryllium, cadmium, chromium, lead
Metal foundries, ironnullrnull, steel
and iron foundries
PCBs, arsenic, beryllium, cadmium, chromium, lead, mercury
nullassnullrnull PCBs, arsenic, beryllium, cadmium, chromium, lead, mercury
Bricnullornull PCBs, arsenic, beryllium

Coal plant Bennullne, trichloroethane, tetrachloroethane, conull, ammonia, tars
and sludnull, toluene, naphthalene, anthracene, phenols, ash,
clinnullrs, heavy tars, sludnull, lime sludnull, spent iron onulldes
Lumberyards PCBs, arsenic, beryllium, cadmium, chromium, lead
Household product manufacturers PCBs, arsenic, beryllium, cadmium, chromium, lead, mercury
Chemical product manufacturers Bennullne, ethyl bennullne, toluene, nulllene
nullbber cement millinnull Bennullne, toluene, nulllene, PCBs, chromium
Source: EPA (2002)

44 Brownfields
nullnulland
Results
nulltween nullrch null nullnull, and nullvember null nullnull, nullnullproperties, covering nullnullacres, went on the
marnullet. Of those properties, nullnullnull sold, with nullnull selling at least once during the decade and reentering
the marnullt.
null
null least one parcel was listed for sale and then pulled off the marnullt when it did not
sell. null of nullvember null nullnull, null parcels were on the marnullt. nullst marnullt activity occurred in the
last years of the decade. nullhibit nullshows breanullowns by level of contamination and year of sale.
nullthough clean sites constituted the largest share of sales, null percent of the sales were parcels
that had confirmed contamination at the time of the sale. Two parcels went through the nullPnullone
was cleaned before it sold, and the second was cleaned and cleared through the program after the
sale. The concentration of sales in the latter part of the decade is consistent with the increasing
sophistication of remediation techniques, the increasing comfort of lenders in assessing risnull, the
developing environmental insurance options, and the growing certainty on the part of government
about cleanup standards nullee, for enullmple, nullD, nullnullnullnullyers and nullyons, nullnullnulland nullnull nullnullnull
nullnullhibit null reports the effect of contamination on the price per acre of all sold parcels. The dependent
variable is the real sale price per acre adnullsted to nullnull dollars. The independent variables arenull
null nullnullcentnull dummy variable if the parcel is adnullcent to one that has historical contamination or
is nullown to be contaminated.
null nullstoricalnull dummy variable if the parcel has a previous use that linullly generated
contamination.
null nullntaminatednull dummy variable if the parcel is nullown to be contaminated at the time of sale.
null One turnnull dummy variable if the parcel is one turn off the main highway, where the main
highway is the route leading directly to nullterstate null null-nullnull
null Two turnsnull dummy variable if the parcel is two turns off the main highway.
null Three turnsnull dummy variable if the parcel is three turns off the main highway.
null nulleanullhe sinull of the parcel in acres.
null nullnulloldnullhe year the parcel sold.
null nullprovementsnull dummy variable indicating whether the parcel includes improvements,
primarily buildings.
null
Only the final sale is captured in this analysis.
Exhibit 3
1null0null
1null3
1nullnull
1nullnull
1nullnull
2000
Total Nnullber
onullSales
Percent onull
nulll Sales
nullnuller of Sales null Catenullrnullof Contanullnation
null evinullnt contanullnation 5 13 54 72 50
Anullacent to contanullnatenullpropertnull 1 null 21 2null 19
nullstorical nulle snullnullsts contanullnation 4 2 17 23 1null
Connullnullnullcontanullnation 1 2 1null 21 15
Total 11 23 110 144 100

45Cityscape
nulle Private nullrnullt nullr nullonullnullld Properties
null addition to including the contamination variables, nullincluded location dummies to control for
the enullected drop in price for sites farther from a main highway. nullnull is included because other
studies have found a price-per-acre premium for larger sites nullowland, nullnullnullnullyer and nullyons,
nullnullnull nullnullold is included to capture both the reductions in uncertainty and falling costs of
remediation throughout the decade as well as the increase in land values on contaminated sites.
null addition, nullnullold captures the state of the broader economy and enullectations about future
appreciation. The presence of improvements was included to control for the effect of a building
on price. nullalso tested enclosed square footage, but it was not statistically significantnulltherefore, null
dropped it from the final equation.
Exhibit null
Model null Model null
nullS nullsnullts for All Solnullnullrcelsnullepennullnt nullarianulle Is tnull nullal nullice per Acre
Intercept null170null33null90
77null4null4null
null 2.19null
null null171null72null5null
79null24nullnull
null 2.1null
null
Anullacent null353null7null
249null09
null 1.42null
null359null5null
253null73
null 1.42null
nullstorical null543null4null
2nullnull50
null 2.0null
null null539nullnull
2nullnull37
null 2.00null
null
Contanullnatenull null559nullnull
309null17
null 1.nullnull
null null594null59
324null13
null 1.nullnull
null
nulle tnulln null530null75
21nullnull7
null 2.45null
null null531null44
219null29
null 2.42null
null
Tnull tnullns 135null04
293null4null
null4null
150nullnull
303null4null
null50null
Tnullee tnullns null77null53null
443null10
null 1.75null
null nullnull4null07
4nullnull5null
null 1.75null
null
Area null35nullnull
22null21
null 1.57null
null33.null1
23null2null
null 1.42null
nullnullolnull nullnull59
3null9null
null.21null
null nullnull3null
39null90
null.17null
null
Inullrovenullnts null
null
null
null14null99
301null99
null .05null
null
null
2
Anull null
2
133
.1null
.11
131
.17
.10
nullS nullordinary least snullarenull
nullStatistically nullnullnull null Statistically nullnullnull

46 Brownfields
nullnulland
Potential missing variables that might permit a full hedonic model would include factors such
as the shape of the parcel, the slope of the parcel, activities on the road to the parcel nullhat is,
residential units that reduce the value of land for industrial usesnull activities surrounding the parcel
nullgain, residential units that depress the value for industrial usesnull finer details on the sinull and
quality of roads, specifics on the quality of access to nullnull, a more refined contamination variable
nullhat is, the precise cleanup costsnull and enullstence of seller financing. null theoretical reason enullsts,
however, to suspect that these variables are correlated with the contamination categoriesnulltherefore,
their enulllusion does not bias the coefficients on the contamination variables. nullattempted to collect
time-on-marnullt data, but, because nullcollected this information from sellers, buyers, or realtors, it
was impossible to obtain data for all but null of the parcels sold. These null were sold in the latter
part of the decade. null abbreviated run that included nullime-on-marnulltnulldata added nothing to the
modelnulls enulllanatory power.
nullfter holding transportation access, sinulle of parcel, and the year sold constant, the presence of contami-
nation reduced the sale price. The coefficients on the historical-reason-to-suspect and nullown-to-
be-contaminated variables were significant at the null and null-percent levels, respectively. null clean site
on the main road sold for an average of nullnullnullnull,nullnullnull per acre. null parcel adnullacent to a contaminated site
nullhat is, a site with either nullown contamination or historical reasons to suspect contaminationnullwas
discounted null percent. nullsite with historical reasons to suspect contamination was discounted an
average of null percent, and a site with nullown contamination was discounted an average of null per-
cent.
nullnull
The fact that discounts were similar on suspected-to-be-contaminated-for-historical-reason
and nullown-to-be-contaminated sites suggests that my method of identifying contamination by
enullmining historical use is a good measure of contamination and that cleanup costs for the two
categories are nearly equivalent. These discounts probably renullct nullnullremediation costs, nullnullthe fact
that the marnullt for contaminated properties is more limited because the purchasers are restricted
to those with their own nonbannullsources of credit, nullnulldelays associated with testing and assessing
the costs of remediation, nullnullcosts and delays associated with cleanup before the property can be
put to productive use, and nullnullany additional risnullassociated with owning a polluted parcel.
null enullected, parcels located off the main highway sold at a discount. Parcels located one turn off
the main highway accessible to null-nullnull sold for an average of nullnullnullnull,nullnullnull less per acre than parcels on the
main highway. The coefficient on two turns off the main highway was not statistically different
from the price on the main highway, but parcels located three turns off the main highway to nullnull
sold for an average of nullnull,nullnullless per acre than parcels on the main highway.
The year the property sold, nullnullold, was positively associated with the sale price. nullre recent sale
prices have been higher. The price increases could renullct the private sectornulls growing enullerience
in dealing with contaminated properties, the falling prices of cleanup technologies, the improving
national economy during that decade, or revitalinulltion efforts initiated by nullnull null is not surprising
that neither the presence of improvements nor the square footage of enclosed space
nullnull
was statistically
null
nullveral reviewers asnulld why this study did not include a more precise measure of the seriousness of contamination. null
is difficult, for enullmple, to compare a more serious contaminant concentrated in one portion of the site with a less tonullc
pollutant spread evenly across the site. Data on actual cleanup costs proved impossible to collect directly from landowners.
null
nullt reported here.

47Cityscape
nulle Private nullrnullt nullr nullonullnullld Properties
significant, because improvements could represent either a usable structure or a costly demolition.
The average sales price for the nullnullparcels sold between nullnull and nullvember nullnull is shown in
enullibit null
nullth models that include and enulllude onsite improvements in enullibit nullreport relatively low
R
null
s,
null
which is not atypical for cross-sectional data that have a lot of random disturbance nullee, for
enullmple, nullenta, nullnullnull nullw R
null
s do not renullct the correctness of the model or the test of the
hypothesis that contamination innullences selling price, unless omitted variables are correlated with
the contamination variables, and no evidence of such correlation enullsts.
Exhibit null
Averanull Sales nullicenullnullvenuller 1990null000
nullE nullnullryland nullpartment onulltnull Environmentnull
17

$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
MDE No
Action
No
Contamination

Adjacent
Contaminated
Property
Potential Historical
Contamination

Confirmed
Contamination
null
R
null
s report the proportion of variability enulllained by the modelnulls independent variables.
Barriers to Sale and Redevelopment
nullamining parcels that languished for long periods on the marnullt and those that sold quicnully can
shed some light on the barriers to industrial land sales. nullhibit nullcompares the parcels that toonull
more than nullyears to sell with parcels that sold within nullyear. Once again, contamination does
not appear to be the main sales deterrent. The quicnullsellers had nullst as high of a probability of
being contaminated as the languishers. The strinullng feature of this comparison is that quicnullsellers
had an average per acre price of nullnull,nullnull as opposed to the sale price of nullnull,nullnullper acre for
parcels that toonullnullor more years to sell. Parcels that were on the marnullt for more than nullyears as
of nullvember nullnull had an average asnullng price of nullnull,nullnullper acre. One barrier to sales appears

48 Brownfields
nullnulland
to be that some sellers overvalue their property.
null
nullmilarly, nullwland nullnullnull found price to be a
statistically significant determinant of time on the marnullt for both contaminated and clean sites in
southeast nullltimore.
nullrge parcels do not ensure a quicnullsale. null the nullrroll nullmden industrial district, the quicnull
selling parcels were, on average, smaller than the parcels of the languishers. null older industrial
areas, a parcel containing improvements is often at an advantage because obsolete buildings have
to be removed before redevelopment can occur. nullt little difference enullsts in the proportion of
improved parcels between the quicnullsellers and the languishers. null fact, little unimproved land in
the nullrroll nullmden district enullsts at all. The areanulls long industrial history has left behind enullensive
and often substantial structures.
The comparison shows no indication that quicnullsellers and languishers are concentrated in specific
locations. nullhibit null the quicnullsellers, and enullibit null the languishers, illustrate that both groups are
spread over the whole industrial area.
These results renullct that, for the time being, this industrial district is remaining industrial. nullcause
the state does not require cleanup standards for industrial use that are as strict as for residential
use, cleanup costs are lower in the nullrroll nullmden district than they would be in an area convert-
ing to nonindustrial use. nulltes converting from industrial use to residential or commercial use face
higher cleanup costs and, therefore, lower and possibly negative property values. nullny of the
brownfield case studies reported in the literature address property being converted from industrial
Exhibit null
Nnullber onull
Parcels
nullnullnnullSales
Price Per nullre nullnull
Sinull in
nullres
Extent onull
Contanullnationnull
nullonullParcels
nullveranull
Tinull on
the Marnullt
Cnullracteristics of nullrcels on tnull nullrnullt nullre Tnulln 2 nullears annullnullss Tnulln 1 nullear
nullnnullishers nullore than 2 nullarsnull
nullr sale null 79null319 2.9 .25 clean
.25 anullacent
.50 nullstorical
3.4 nullars
Solnull 10 null5null37 2.7 .20 clean
.20 anullacent
.40 nullstorical
.20 contanullnatenull
3.4 nullars
nullicnullsellers nulless than 1 nullarnull
Solnull 1null 312null3null 1.null .37 clean
.0nullanullacent
.31 nullstorical
.25 contanullnatenull
0.nullnullars
null
Real estate agents in the area say that some sellers are holding out for unrealistically high prices, hoping for the same high
figures paid by the nullryland nulladium nullthority for the land under nullmden nullards, or they are waiting for spinoffs from
the stadium. One owner of a large contaminated parcel that has been on and off the marnullt for years said, null have plenty of
money and am in no hurry to sell.null

49Cityscape
nulle Private nullrnullt nullr nullonullnullld Properties
to residential or commercial use. This fact may enulllain their argument for the need for government
intervention and subsidies. nullontaminated parcels being converted to residential use require more
stringent and enullensive cleanup than parcels remaining in industry, pressing property values
lower, thereby requiring government intervention and subsidy.
Other Barriers to Resale
nullconducted a series of enullended interviews to determine which factors are barriers to property
sale and industrial redevelopment. nullinterviewed the real estate agents or property owners of every
parcel that had been on the marnullt for nullyears or more or that was on the marnullt and withdrawn
without sale. null addition, nullconducted four in-person interviews with private firms that purchased
or sold contaminated parcels. null all cases, the land purchasers were using the property for their
own businesses.
null
nullinterviewed city officials to identify parcels that were idle and not on the
marnullt
null
and conducted site visits for every parcel sold and for sale. The interviews and site visits
Exhibit null
nullrcels Solnullin nullss Tnulln 1 nullear
null
nullst purchasers had their own financing.
null
nullinterviewed local real estate bronullrs nullucnullnullannullin, Robert nulllhauser, nullte nullDonald, David Tufaro, and nullll nullller,
and nullans Paul and Richard nullcalante of nullnull nullconducted telephone or in-person interviews with the sellers, purchasers,
developers, or bronullrs for the null parcels that had been on the marnullt for nullyears or more. nullalso visited each site. null
addition, nullinterviewed purchasers or sellers of contaminated sites.

50 Brownfields
nullnulland
highlighted a number of barriers to sale and redevelopment, including small, odd-shaped sitesnull
enullense of removing obsolete structuresnulloutdated road sinull and configurationsnullinadequate water,
sewer, and telecommunications infrastructurenullenullsting land uses incompatible with industrynulland
difficulty in changing the land use from industrial to residential because the private demand for
marnullt-rate housing is not strong enough to compensate developers for the costs of remediating
contamination and constructing residential units.
null is typical of turn-of-the-nullth-century industrial cities, nullltimore still has residential city blocnull
integrated with industrial-use blocnull. nullcause they no longer provide walnullng access to wornull
these blocnull have lost their desirability as residential locations. nullnd values are low, housing condi-
tions poor, and vacancy rates high. nullavy trucnulltraffic and dirty industrial activities nulluch as waste
managementnullfurther depress the demand for housing in these areas. nullavy industry, of the type
located in the nullrroll nullmden industrial district and many other turn-of-the-nullth-century cities,
is incompatible with residential activity. nulldustrial land sellers with land near residential units have
difficulty selling because potential buyers fear their industrial vehicles will hit playing children,
because residents obnullct to heavy trucnulltraffic in off hours, and because of actual or perceived high
rates of theft and vandalism.
nullcnullof trucnullaccess also inhibits land sales, particularly in areas where the road width and pattern
are incompatible with modern trucnullng requirements. The current street pattern was laid out for
Exhibit null
nullrcels Solnullin 2 nullears or nullre

51Cityscape
nulle Private nullrnullt nullr nullonullnullld Properties
residential use minulld with multistory, rail-oriented manufacturing and small-scale trucnullng. Rail
dependence has declined, being displaced by container trucnullng. nullithout modern trucnullaccess,
industrial parcels are difficult to sell.
nullthough many believe that an inner-city sitenulls advantage stems from its ready access to infrastruc-
ture, a common grievance among property owners is that water, sewer, and telecommunications
facilities are outdated and inadequate.
null
null the nullrroll nullmden industrial district, land sellers,
recent purchasers, and operating businesses complained that water and sewer facilities needed to
be updated and enullanded and that modern telecommunications linnullges are missing.
nullveral additional parcels that failed to sell contain obsolete buildings that are enullensive to
demolish. null one case, the obsolete building is a refrigerated storehouse that cannot be renovated
or demolished without significant enullense. null the final analysis, however, such properties are also
languishing on the marnullt because the sellersnullasnullng prices are out of line with demolition costs
and the propertiesnullproductive capacity.
nullother barriernullleanup costsnullas arisen on a site that the city and a private developer are
attempting to redevelop for housing. Despite city subsidies of nearly free land,
null
escalating cleanup
costs have pushed pronullcted final house prices well beyond what the marnullt can bear in this
section of downtown nullltimore.
null
Conclusion
null tracnullng property sales in nullltimorenulls nullrroll nullmden industrial district, nullhave shown that
brownfields have a marnullt-clearing price. nullw do these results compare with the case studies
cited in the literature, where redevelopment failed or required costly government subsidynullnull
results apply to cases in which contamination is serious but not at nullperfund levels of pollution
and where the parcel will remain industrial as opposed to converting to residential or commercial.
null addition, the results apply to a well-located industrial area. Route nullnull is a manullr nullnull interstate
highway that runs down the entire eastern seaboard and intersects the nullrroll nullmden industrial
district. The conclusions drawn in this study would not necessarily apply to the many more
isolated and inaccessible contaminated industrial districts in nullltimore.
null the nullrroll nullmden industrial district, contaminated parcels are selling without government
intervention because sellers are lowering prices to compensate for contamination. nullom nullnull to
nullnullnullnull, parcels with nullnown contamination sold at an average nullnull-percent discount, parcels with historical
uses that give reasons to suspect contamination sold at an average null-percent discount, and parcels
adnullcent to a contaminated site sold at an average null-percent discount. Only nullof the nullnullsites
entered and completed the nullryland nullP.
null
nullgh-speed nullternet connections are not available at most sites.
null
The city is selling the land for nullnullnullnull
null
nullr a full description of the site, see nullwland. nullnullnull.

52 Brownfields
nullnulland
This conclusion does not imply that federal, state, and local brownfield initiatives are ineffective
or unnecessary. nullny of the remediation techniques adopted by the private sector were initially
tested as part of government-sponsored demonstrations. nullreover, in locations with weanullr
marnullt demand, especially those areas with tonullc and enullensive contamination or those that will be
changed to residential use, land values may fall into the negative range, in which case redevelop-
ment will require government subsidy.
null emphasinullng environmental contamination as the main obstacle, however, policymanullrs may
have overloonulld other deterrents to redeveloping industrial districts in the central city. null the
nullrroll nullmden industrial district, these barriers include outdated road configurations that manull
trucnullaccess and egress difficult, antiquated infrastructure, inadequate telecommunication linnull-
ages, incompatible residential and industrial land uses, obsolete buildings that prove enullensive
to demolish, and sellers who are unwilling to lower prices. nullrtunately, all but the last of these
barriers are those over which policymanullrs and city government officials have control.
nullnullowledgments
The author thannull nullrgi Dewar and the nullncoln nullstitute for nullnd Policy in nullmbridge, nulls -
sachusetts, and the nulltional nullnter for nullart nullowth at the nulliversity of nullryland for financial
support. null enullellent research assistant, nulln Piesen, assembled the data and prepared the maps.
Richard nullcalante and nullans Paull of the nullltimore Development nullrporation, nullucnullnullannullin of
the nullcnullnnulle nulloup, David Tufaro of Terra nullva, nullll nullller of nullnull, and a number of nullrroll
nullmden business owners provided useful data and information. nullari nullilson, nullans Paull, nullng
nullen, and three anonymous referees made valuable comments on an earlier draft. The author alone
is responsible for any remaining errors.
nulltnullr
nullrie nullwland is a professor of urban planning at the nulliversity of nullryland in nullllege Parnull
Renullrences
nullrtsch, nullarles. nullnull nullinternull nullaying for Our nulldustrial Past,nullCommentary null nullnull nullnullnull
nullrtsch, nullarles, and nullinullbeth nullllaton. nullnull. Coming Clean for nullonomic nullnulllopment. nullashing-
ton, Dnull nullrtheast-nulldwest nullstitute.
De nullusa, nullristopher. nullnull. nullontaminated nulltesnullThe nullnadian nulltuation in an nullternational
nullntenull,nullnullurnal of nullnullronmental nullnagement nullnullnullnullnullnull
nullnull nullnull. nullrownfield Redevelopment nullersus nulleenfield DevelopmentnullnullPrivate nullctor
Perspective on the nullsts and Risnull nullsociated nullith nullownfield Redevelopment in the nulleater
Toronto nullea,nullnullurnal of nullnullronmental nullanning and nullnagement null nullnull nullnullnullnull

53Cityscape
nulle Private nullrnullt nullr nullonullnullld Properties
nullvironmental Protection nullency nullPnull. nullnull. nullpediting Cleanup and nulldenulllopment of nullownnullldsnull
nulldressing the nullnullr nullrriers to nullinullte nullctor Innulllnullmentnulleal or nullrceinulld. nullashington, Dnull
nullvironmental Protection nullency. nullvailable at www.epa.govnullfinpagenullarnclenulltm.
nullnull nullnull. nullownnulllds nullonomic nulldenulllopment Initiatinullnull nullashington, Dnull nullvironmental
Protection nullency.
nullcalante, Richard. nullnull nullctobernull Personal communication. nullnior economic development
officer, nullltimore Development nullrporation, null null nullarles nullreet, nullite nullnull, nullltimore, null
nullnullnullnullnull.
nulleen nulligh, nullncey. nullnull nullovembernull nullocusnullnullvironmental nullnstraints to nullownfield
Redevelopment,nullnullonomic nullnulllopment nullarterly nullnullnull nullnullnullnull
nulleenberg, nullchael, nullren nullwrie, nullura nulllitare, and nulltoya Duncan. nullnull. nullrownfields, Toads,
and the nullruggle for nullighborhood Development,nullnullban nullfairs nullnullew null nullnull nullnull nullnull.
nullwland, nullrie. nullnull. null nullntamination the nullnullr nullrrier to nullner-nullty nulldustrial Revitalinulltionnull
null nullcycling the Citynullnulle nulle and nulluse of nullban nullnd, edited by Rosalyn nulleenstein and nullesim
nullngu-nullyilmanull nullmbridge, nullnullnullncoln nullstitute for nullnd Policy.
nullnull nullnull nullugustnull nullentral nullty Declinenullnull nullntamination Responsiblenull nullonomic nullnulllopnull
ment nullarterly null nullnull nullnullnullnull
nullnull nullnull nullovembernull nullrivate nullitiatives and Public Responsibility for the Redevelopment
of nulldustrial nullownfieldsnullThree nullltimore nullse nulludies,nullnullonomic nullnulllopment nullarterly null nullnull
nullnullnullnull
nullnull nullnull. nullhe nullpact of nullntamination on the nullntonnulloutheast nullltimore nullnd nullrnullt,null
nullurnal of the nullerican nullanning nullsociation null nullnull nullnullnullnull
nullenta, nulln. nullnull. nullements of nullonometricsnull nullw nullornull nullcmillan Publishing.
nullnullath, Daniel T. nullnull. null Innullstigation Into the Impact of nullzardous nullaste Contamination nullability
on nullban Industrial nullnd nulldenulllopment in the City of Chicagonull nullicagonullnulliversity of nulllinois at
nullicago, nulleat nullties nullstitute.
nullyer, Peter null, and Thomas null nullyons. nullnull. nullessons nullom Private nullctor nullownfield Redevelop-
ers,null nullurnal of the nullerican nullanning nullsociation null nullnull nullnullnull
Page, null nullilliam, and nullrvey Rabinowitnull nullnull. nullroundwater nullntaminationnullnulls nullfects on
Property nullalues and nullties,nullnullurnal of the nullerican nullanning nullsociation null nullnull nullnullnullnull
Pepper, nullith null nullnull. nullssons nullom the nulleldnull nullashington, Dnull nullrtheast-nulldwest nullstitute.
nullnborn nullp nullmpany. nullnull, nullnull, nullnull, nullnull. nullre nullsurance nullps, nullltimore nullty. nullicagonull
nullnborn nullp nullmpany.
nullmons, Robert null nullnull. nullurning nullownnulllds Into nulleennullldsnull nullashington, Dnull nullban nullnd
nullstitute.

54 Brownfields
nullnulland
nullaley, nullmuel R. nullnull. nullnvironmental Policy and nullban RevitalinulltionnullThe Role of nullnder
nullability,nullCapital nullinullrsity nullw nullnullew null nullnull nullnullnull
nullnull Department of nullusing and nullban Development nullnullnull nullnull nullecembernull nullsessment of
nullate Initiatinulls to nullomote nulldenulllopment of nullownnulllds. Report prepared for the nullnull Department
of nullusing and nullban Development by nullnullnullnsulting. nullashington, Dnull nullnull Department of
nullusing and nullban Development.
nullnull nullnull. nulle nullfects of nullnullronmental nullzards and nullgulation on nullban nulldenulllopmentnull Pronullct
no. nullnullnullnullnullnull. nullashington, Dnull nullnull Department of nullusing and nullban Development.
nullright, nullmes null nullnull. nullsnull and nullwards of nullownnullld nulldenulllopmentnull nullmbridge, nullnullnullncoln
nullnd nullstitute.
nullount, nullisten R. nullnull. nullhe Organinulltional nullntenulls of Decisions to nullvest in nullvironmentally
Risnull nullban Properties,nullnullurnal of nullonomic Issues null nullnull nullnullnullnull
nullount, nullisten R., and Peter null nullyer. nullnull. nullannullrs, Developers, and nullw nullvestment in
nullownfield nulltesnullnullvironmental nullncerns and the nullcial Psychology of Risnullnull nullonomic nullnulllopnull
ment nullarterly nullnullnull nullnullnullnull

55nulltyscapenullnullnullurnal of nulllicy Development and Research • Volume 12, Number 3 • 2010
U.S. Department of Housing and Urban Development • Office of Policy Development and Research
Cityscape
Brownfields, Risk-Based
Corrective Action, and
Local Communities
Peter null nullyer
The nullP. nullstems nulloup, nullc.
nullstract
nullis article addresses the problems facing communities that suffer both ennullronmental
risnull from past contamination and depressed economic actinulltynullIn such settings,
redenulllopment of contaminated sites and the associated economic denulllopment may
renullire compromised standards for ennullronmental mitigationnullnullis potential connullct
is often resolnulld through risnullbased correctinull action on sites cleaned only for their
prospectinull usenullnullt partial cleanups can be shown to face inenulltable failure at some
future datenullnullus, in such an approach, communities face risnull that they need to
understand and should be capable of accepting or renullctingnullnulle article considers these
risnull and assesses four alternatinull land use control strategies for assuring community
participation in manullng decisions about both the cleanup process today and the response
to risnull of failure in the futurenull
Introduction
null nullnull, the nullnull nullngress passed the nullmprehensive nullvironmental Response, nullmpensation,
and nullability nullt nullnullnullnull or the nullperfund nulltnull which had a number of unenullected conse -
quences. The actnull draconian liability provisions improved general environmental conditions by
raising the enullected costs of future contamination to businesses and by discouraging the future
use of tonullns. The actnull liability provisions, however, worsened environmental nullstice inequalities
and undermined urban economic development prospects. nullRnullnullmade urban regeneration in
the nullited nullates more difficult and less linullly to occur because of its clear public recognition of
the environmental, and thus financial, risnull posed by past pollution, regardless of cause or intent.
nullRnullnullmade urban land less competitive as a site for real estate investment relative to greenfield
sprawl alternatives. null a result, all null states responded to nullRnullnullwith new liability, cleanup, and
development policies. The most immediate returns on remediation and redevelopment of brown-

56 Brownfields
nullyer
field sites nullhose with real or perceived contaminationnull however, do not accrue to the states, but to
local governments, which garner new tanullrevenues and may be able to remove tanulldelinquent sites
from their own property rolls nulleyer and nullnnullndingham, nullnullnull
Residents and property owners in local communities enullerience an inherent connullct between
economic development and environmental protection obnullctives given that stronger environmental
mitigation standards raise pronullct costs and thus can slow the redevelopment process nullullard,
nullnullnull null considering communitiesnullcapacities to manull rational and informed development
choices, however, this article does not focus on the environmental nullstice issue that concerns
nullllard and many others, but rather considers the generally limited capacity of community-based
organinulltions of all types to address these brownfield tradeoffs effectively nulllair and nullrroll, nullnullnull
nulligh, nullnullnull
nullthough communities across the nullited nullates struggle to regenerate after economic declines
produced by business closings and relocations, many confront land contamination issues that
compound the problem of depressed property values. null issue of further concern, common to
urban settings, is the clustering in an area of multiple nonadnullcent contaminated parcels nullcatter
site brownfieldsnullthat undermine each othernull economic attractiveness nulloyle and nullel, nullnullnull
nullngo and nullberini, nullnullnull nullch scattered brownfields pose special problems, butnullronicallynull
they can provide a stimulus for organinulld, communitywide regeneration effortsnullno one site
can be addressed by itself in an economically efficient manner because the offsite effects of the
environmental problems on nearby land would continue to pose enulleptional investment risnull. The
interaction effects across the multiple scattered brownfields suggest a need for policymanullng that
transcends the developernull focus on a single pronullct site and addresses the broader enullernal effects
on properties across communities.
The fact that a clear rationale for a collective community response enullsts, however, does not imply
that it will be tanulln. The danger enullsts that a community-based response to economic distress
may fail to address the full range of problematic enullosures posed by the past contamination. One
recently proposed agenda for community-led development, for enullmple, mentions brownfields
only in passing, although the agenda focuses on nullmericanull older core citiesnullnullonulland Treuhaft,
nullnullnull The real risnullis that environmental problems associated with less costly site preparations
may be overloonulld in pursuit of short-term and purely economic returns, a risnullthat may increase
with neighborhood or community desperation.
This article presents a review of some nullnull statesnulland municipalitiesnullresponses that avoid the
sacrifice of environmental obnullctives to economic gains and suggests some lessons states and
municipalities may learn from each other, once socioeconomic, political, and legal differences
are tanulln into consideration. The discussion begins with a review of the real estate marnullt and
general economic conditions that shape the available financially viable remedial response options.
nullnull, the article addresses risnullfactors that shape decisions and then discusses two manullr types of
controls for environmental contaminants left in place. The article then considers the roles of time
and pronullct timing, enullmining first the role of the passage of time in emerging risnull and then the
issue of the time value of money in decisions about response costs to be incurred or enullected. The
article then enullamines the determinants of community roles in protecting local environments, enullplores
how different patterns of land ownership affect the controls and risnullmanagement capacities of a
pronullct, and offers a brief conclusion.

57Cityscape
nullronullnnulleldsnull Risnullnullnullased Corrective Actionnull and Local Communities
Markets and Remedial Response Options
nullen before property values declined from nullnull through nullnull, nullnull real estate prices, in general,
were not high enough to avoid the fundamental problem of mitigation costs that completely
swamped land values on some brownfields. nullban sites that enullibited a land value that was lower
than the cost to prepare the property for new construction were relatively common long before the
nullredit crunchnulland the marnullt enulllosion of bannulluptcies and foreclosures.
The relationship between clean property values and site mitigation costs, which determines the
remedial responses contemplated, is shaped in large part by the continuous pattern of enullansion
of the urban fabric that is generically referred to as sprawl. To date, the nullited nullates has perceived
itself as boundless, with automobile-based commuting permitting enullremely low densities of
settlement, resulting in the nationnull urbaninulld area enullanding more rapidly than its population
for decades, even in regions with depressed economies. null these sprawling settings, the urban
centers are quite literally hollowed out, leaving sections of total land and property abandonment.
Detroit, nullchigan is the archetype on some level, with multistory office towers sitting empty for
decadesnullbut other older industrial centers such as nulleveland, Ohio, have seen the phenomenon
of a doubling of urbaninulld land area over a null- to null-year period of decline of total county or
metropolitan area population.
This pattern of abandonment and the subsequent low marnullt demand for land at the center of
urban areas drove down property values, thereby severely limiting the enullent of marnullt-driven
pollution removal pronullcts at older contaminated urban sites. nullntamination removal efforts in the
nullited nullates have been driven by the intensity nullnd densitynullof intended new land uses, but even
relatively high densities could not assure a financial capacity for complete removal of all contami-
nants, even when such a response was technologically possible nullhich is not always the casenull
nullnew concern in the nullited nullates for nullensificationnulla marnullt shift driven initially by demo -
graphic factors and now amplified by the increasing costs of automobile commuting nullmplies a
more intense focus on economically viable reuse of centrally located urban lands. The renewed
emphasis by the Obama administration on finding ways to reduce emissions and general energy
consumption is another factor promoting increased population density and reuse of enullsting
buildings because of the high energy costs associated with demolition and new construction. nully
growth in the intensity of land use could drive higher property sales and rental revenues, which
would render the more enullensive and complete cleanup options cost effective.
nulllimit enullsts, however, to which these revenue gains can lead to complete mitigations of past
pollution. The costs of remedial responses rise at a more than proportional rate with enullent of
removal or treatment of contaminantsnullit generally costs less to remove the first null percent of the
pollution nullear the surface, for instancenullthan the last null percent nullhat which is buried deeper or
more broadly spread aroundnull null some point, removing the nenull marginal unit of pollution from
the site increases costs to a level at which the developernulls current costs and revenues, not the pronullect
total costs over time, may drive contamination eradication decisions, because businesses cannot
sustain long periods of negative cash nullw.
nullme costs associated with past contamination may be deferrable for long periods of time. nulllly
monitored contaminants that may be left on site, under regulations or special enulleptions, are still

58 Brownfields
nullyer
linullly to generate future costs. nullt the timing of those costsnullnd the lacnullof certainty of their
timing and dollar valuenullaries with the enullent to which past pollution is remediated. That timing
can also be affected by the different enullosure risnull posed by the variety of pollutants on a site,
which is the subnullct of the nenull section.
Contaminants, Risk Factors, and Controls on Residual Pollutants
Three interacting factors shape the risnull to human health and the environment associated with
residual pollutants left on sitenull
null The pollution itself nullypes and volumes or quantities of contaminantsnull
null The damage done from enullosure to different quantities of these substances.
null. The means of enullposure nullor pathwaysnull by which humans andnullor the larger ecosystem are impacted.
The more diverse the minullof different contaminants on a site, the more complenullthe tonullc soup
and the more difficult it becomes to determine the damage and enullosure pathways. nulll three risnull
factors, however, need to be understood to be able to derive any probability estimates of the enullent
of damage under different conditions of contaminant retention for a site. nullt all risnullbased correc -
tive action nullnullnull responses assume that these probabilities not only can be nullown but that they
actually are nullownnull
The Rnullnulllogic assumes that some preventive barriers or other management tools can be used on
the enullsting contamination that can nullep it from causing harm. The calculation is generally based
on tanullng actions to ensure that nully risnull of harm lie below some threshold, such as innullries or
death per million people enullposed. The problem with this approach is that the probabilities generally
cannot be nullown. nullven the uncertainties involved, especially with minulls of contaminants on site,
the data required for such risnull calculations may be logically impossible to determine with any reliability.
The starting point to any risnullcalculation is to recogninull that limiting human and ecosystem enullo -
sure is a nully concern if a site contains contaminants. Perhaps that is why Rnullnullfocuses on limiting
factor nullnullabove through the implementation of specific controls to limit human and ecosystem
enullosure to contaminants left in place. That process of constraining the linulllihood of damage relies
on two forms of controls intended to limit the pathways along which risnullenullosures could occur.
null the nullited nullates, these controls are referred to in Rnullnullpolicies asnull
null nullgineering controls nullCsnullphysical barriers instituted to contain pollution and nullep it from
surfacing or migrating to eliminate nullr constrainnullenullosure pathways.
null nullnd use controls or institutional controls nullnulls or ICsnullimplemented to constrain onsite
human activities to limit any possible damage to nulls and the total time on site for human
enullosure to whatever substances continue to move along partially blocnulld pathways.
Two points of inadequacy in this approach to controls should be immediately obvious from this
description. nullirst is the issue of ecosystem damage, which is overloonulled by controls that relate only
to human enullosure limitations. nullcond is the assumption that the controls can be maintained over
time, when the control specifications lacnullany discussion of the costs of maintaining those controls.

59Cityscape
nullronullnnulleldsnull Risnullnullnullased Corrective Actionnull and Local Communities
This latter point also renullcts a failure to consider ecological interactions other than those involving
humansnullnullnull may constrain human digging to protect nulls, but they cannot control the behavior
of pets, such as dogs, let alone the actions of rabbits, moles, or other wild animals that dig burrows
for homes or foraging paths.
nullth nulls and nulls limit the enullosure pathways, but they do not fully eliminate them. null the event
of failure of either nulls or nullnull, offsite neighborhood enullosures can arise, with the resulting harm
concentrated on those living, wornullng, and owning property in the area, and the risnullremains into
the future nullowan and nullidgen, nullnullnull nullt the real estate transactions underlying most regenera -
tion efforts involve sellers, buyers, financial bacnullrs nullncluding at times state or local government
economic development agenciesnull, and potentially one or more prospective end users, plus appropri-
ate regulatory agencies, including financial and environmental regulators responsible for limiting
aggregate risnull The site neighbors and their community, the parties most affected by the pollution
risnullnullrguably those with the highest stanull in assuring Rnullnullsuccessnullre rarely given legal
standing in contaminated land site preparation and reuse decisions.
Time, Use, and Emerging Risks
nullme current monetary costs can be avoided through a partial mitigation or by using a clean to
intended use redevelopment strategy. There is, however, scant evidence that such approaches hold
down total pronullct costs over time. nullrong logical and empirical grounds enullst for claiming that
Rnullnullfailure is inevitable. nullither the engineering nor the land use controls currently available or
installed in the past decade have been in place long enough to show that they will last the tests of
time nullernstedt et alnull nullnullnull
The efficacy of nullnulls over time cannot be nullnown, due both to limited past enullperience with the enullisting
containment techniques and to an inability to forecast the future. The empirical finding that a barrier
has lasted null years is not proof that it will last nullnullr even nullnullears. nullnsider the followingnull
null nullcidental damage may result from actions of site visitorsnullr even by those of nominally
informed occupants.
null nulltural disastersnulloods, windstorms, earthquanulls, and the linull may cause unenullected
weanullning of containments.
null nullimate changesnulln temperatures and humidity levelsnullan affect the viability of caps on
pollution, such as those using clay and other natural impermeable layers.
null nullme maintenance of barriers may be required and enullected in plans nulluch as repairs of the
surface of paved areas with asphalt or other such capsnullbut may eventually be ignored or
forgotten over time.
nulls are even more vulnerable, because the limits on land uses and activities depend completely on
the consistency and constancy of human behavior.
null nullnformation on activity and use limits may be lost over the course of real estate ownership changes.
null Provisions for informing new owners are rarely codified, and even fewer regulations ensure that
information about contamination is transmitted to future leaseholders and occupants.

60 Brownfields
nullyer
null nullformal occupancy changes and unauthorinulld site uses pose the risnullof violating the preventive
controls because such parties are linullly to ignore any information that is available.
null The enullent of this problem may vary, including across local authorities in those nations and
states that delegate such regulatory enforcement to the local level.
nullpirical evidence derived from nullnull environmental insurance marnullt data reinforces the logical
claims about the inevitability of Rnullnullfailure over the longer term. nullthough pollution liability
nullnull insurance policies covering a null-year term were more readily available in nullnull, by nullnull that
marnullt tightened terms to offering routine nullyear policies, with premiums on null-year terms not
nullust doubling but increasing to as much as four to five times what the shorter term coverage policies
cost. nullaranteed renewals were available in nullnull but were not obtainable at any price in nullnull,
and underwriters were enullressing a desire to push policy terms down toward the nullyear period,
characteristic of nullnull homeowners and automobile insurance coverage terms. null might be enullected
from these findings, the overall supply of coveragenullhe total dollar limits of insurance available
for Pnull policiesnulldid not enullpand as quicnullly as the contaminated land marnullet. nulllthough the insurance
companies do not report the total dollars of risnullunderwritten per product line, the availability of
Pnullcoverage may have decreased as demand increased nullount, nullnullnullnullunt and nullyer, nullnullnull
nullsurers manull money by underwriting risnull. Their ability to do so is a function of their capacity
to accurately predict losses and charge premiums for coverage appropriate to their level of claims.
The tightening of term lengths in the Pnullpolicies available in the nullited nullates must be tanulln to
renullct the insurersnullinability to accurately predict claims and losses beyond a very limited period of
time. The limited supply of Pnull insurance, in turn, may be read to renullect the overall lacnull of confidence
of the insurance underwriters in their ability to develop better loss prediction algorithms in the future,
and thus their reduced interest in maintaining a position in the Pnullinsurance marnullt. Thus, the
insurers, on balance, reinforce the claim of inevitable Rnullnullfailure through their marnullt behaviors.
The Remedial Response Cost Issues
The inevitability of Rnullnullfailure, in turn, poses questions for the private and public parties
engaged in contaminated land redevelopment and area regeneration. These issues fall into the
cost-benefit analysis framewornulland finally move the argument beyond simply monetary cost
miniminulltion for private real estate investors.
null can posit a constant level of benefits from site redevelopment and associated urban or com -
munity regeneration, provided that the pronullct offers some minimum level of protection of human
health and the environment. nullogically, then, the future costs of the remedy failure have to include
the enullense incurred in reproducing that minimum level of protection and compensation for any
harm caused by the temporary lapse in protection.nullThus, we can consider how the probability of
Rnullnullfailure shapes three facets of decisions involving pronullct costs and a policy principle regard -
ing environmental cost allocation.
nullrst is the issue of miniminullng the present value of total pronullct costs, which involves the timing
of costs, with the total dependent on the time value of money. Rnullnullreduces current pronullct costs,
but inevitable future failure means that total pronullect costs will include required future enullpenditures.

61Cityscape
nullronullnnulleldsnull Risnullnullnullased Corrective Actionnull and Local Communities
null the future costs of failure and repair are sufficiently high, the discount rate sufficiently low, and
the failure costs occur soon enough, then the present value of total pronullct costs could well be
greater under Rnullnullthan under a clean-to-bacnullround approach.
nullt a regeneration strategy cannot rely on the present-value cost as a basis for decisions on which
sites to address and how to address the cost of cleanup if it is completely dependent on private
capital investment. The issue of cash nullw is central to private investors who face debt service or
other financial obligations over time, typically sooner rather than later. The present-value-cost
criterion thus leads to the issue of the distribution of costs. The enullent of public responsibility for
current costs is not clear if the policy obnullctive is total-cost miniminulltion over time. null question
enullsts, however, about the logic of some public involvement if a criterion other than private inter -
nal rate of return manullminulltion is to be applied to remediation decisions.
Once the public sectornullnd public interestnullnters into the decision and the potential resource
base for regeneration, then the decision process has to pose the question of the types of costs to
include. nullnetary costs are what matter most to private investors nullnd may be all that matters to
themnull so ecosystem and social costs may not be relevant to their decisions. nullt which monetary
costs do they facenullnullich social costs are internalinulld into the investment decision and which are
enullludednullnullw are collective monetary costs nullriven by air quality, water quality, and ecosystem
health effects on human health status for people living or wornullng in an areanulladdressed as distinct
from individual costs nulluch as changes in housing costs and the cost to access amenitiesnull
The distribution of the cost burdens gets more complenullwhen nonmonetinulld costs are added to
the minull especially when such elements are social or collective, manullng it generally impossible to
internalinull these elements into the investment decision. nullt nullowledge of the distributionnullnd
opinions about its efficacy and equitynullre linullly to affect willingness to pay. The resulting attitude
will then shape the political will to invest the public funds that may be needed to complement pri-
vate investment in regeneration pronullcts. Policymanullrsnullability to enullrcise political will, moreover,
may be constrained by a localitynull ability to pay and fiscal stress.
This discussion enullludes the politically sensitive question of the capacity of a coherent regeneration
policy intended to miniminull aggregate costs to humans and ecosystems to adhere to the nullolluter
paysnullprinciple. Rnullnullapproaches that reduce current costs to private investors can provide the
aura of adherence to the principle. null, however, the future costs swamp the current costs, whether
or not those eventual costs are discounted, the reality may be that the broader economy and soci-
ety pay, not nullst the putative polluter. The problem is unavoidable without some form of indefinite
insurance coverage when the polluternullr the regeneration investor benefiting from reduced
current pronullct cost under Rnullnullis no longer in business or is economically incapable of paying
for the inevitable costs of remedial response failure.
Community Roles in Local Public Cost Minimization
The geographic effects of any future Rnullnullfailures, damages, and response costs are concentrated
in the areas around the sites that still retain some pollutants. nullt, unless a conscious effort is made
by a developernullr required by some public regulationnullocal community representatives are not
involved in contamination management decisions associated with urban regeneration efforts.

62 Brownfields
nullyer
null enulleption arises when a community-based organinulltion nullnullnullis itself a party to the real estate
transaction. nullighborhood residents generally want to see eyesores, abandoned buildings, and
environmental enullosures removed and welcome new investment, especially in economic activities
that provide even short-term nullonstructionnullnullbs. nullw real estate investment, by and large, is in
the interest of all neighborhood property owners, especially if the development removes the factors
that contribute to depressed property values. null the regeneration effort brings new nullbs for local
residents, neighborhoods receive an even broader benefit. nullt the costs of those new revitalinullng
investments may be higher than is desired for long-term environmental risnullenullosures associated
with Rnullnullsite mitigations, and those higher costs present a tradeoff problem for the nullOs.
The apparent connullct between economic development and environmental protection costs is
not new to debates in the economics literature. nullny analysts have claimed that protecting the
environment carries a substantial price by slowing rates of economic growth or by manullng current
growth unsustainable nullor enullmple, nullrgensen and nulllconulln, nullnullnullRees, nullnullnull Others have
argued that the connullct is enullggerated and the overall effect of environmental regulations on the
economy is minimal nullor enullmple, Daly and Townsend, nullnullnullnullffe et al., nullnullnull nullt others have
acnullowledged a potential problem, but demonstrated that the connullct could be avoided or muted
through nulldicious choice of regulatory methods nullor enullmple, nullrraro and nullleotti, nullnullnullnullhn,
nullnullnullPagiola, nullshop, and nullndell-nulllls, nullnullnull
The analyses in this debate over possible connullcts, however, are generally relevant only to econom -
ic aggregates such as states or nations. The tradeoffs in depressed communities nullometimes very
small sections of localitiesnullare much starnullr, because the effects involve location decisions internal
to a larger economy. The presence of contaminated sites, from a marnullt perspective, may not be
the primary deterrent to new investment, given localinulld social problems, locational disadvantages,
and other factors nullalnullr et al., nullnullnull The pressure to limit the stringency of cleanups in such
areas is driven by an enulleptionally high, immediate short-term need for nullbs and income but is
confounded by the unequal enullosure to environmental risnull nullee nullllard, nullnullnull
Disregarding the specific tactics that might be pursued, basically nullst two options enullst for nullOs
and others confronting the dual problem of economic need and environmental risnull when partial
site remediations are proposed under Rnullnullstandards. The first option is opposition and the
second is acceptance, with some effort to monitor environmental conditions over time to ensure
the nulls and nulls are not breached and the remedy is wornullng and preserved as long as possible.
nullich response is preferred or adopted is linullly to be a function of both the community and its
organinulltional capacities and the specifics of the particular regenerative pronullct, including factors
such as the followingnull
null The sinull of the pronullct and enullected local effects, especially the positive and negative
enullernalities enullected by the community and residents in the short term.
null Previous property ownership and the new owners, occupants, or facility users, especially if the
new owners are perceived as more community-rooted or locally involved than the previous ones.
null The legal disclosure or hearing requirements for new land uses, planning permissions, and the
linull, especially to the enullent that they provide any reductions in uncertainty and perceived risnull
to the community.

63Cityscape
nullronullnnulleldsnull Risnullnullnullased Corrective Actionnull and Local Communities
null The enullent to which some community is organinulld and recogninulld as having legal standing, and
especially its enullerience in successfully innullencing redevelopment pronullcts and protecting local
interests in the past.
null The enullent of unanimity of community voice, especially regarding agreement on the tradeoffs
between local environmental protection and economic opportunities.
Community Land Ownership and Potential Control
The linulllihood that a community facing such a pronullct sees resistance as its only possible response
to an enullernally driven regeneration effort based on partial site mitigation will depend on the enullent
to which local residents and landowners can affect or control remediation decisions. That control,
in turn, can be provided through community land ownership, an approach that may contribute to
the economicnullot nullst the political and socialnulliability of the redevelopment effort.
null brienull enullmine four means by which such control might be transferred in whole or in part to
communities, giving them a means for enullrcising voice, a stanull in remediation and regeneration,
and a capacity for monitoring and protecting themselves over timenull
null nullaseholds.
null nullmmunity shares.
null nullcial housing trusts and associations.
null Transfer of risnullownership.
nullguably, all these forms of land ownership or control could be enullrcised by a nullO, but a previous
organinulltion with a broader mandate need not enullst. nullngle-purpose entities, or even the actions of
individuals, not of community institutions, may suffice to provide means of control. null enullmine
each in turn.
nullaseholds
The separation of the ownership of land from title to the buildings on the land is common in many
countries but rare in the nullnited nulltates. null relatively new but growing null.null. institution, the nullommunity
nullnd Trust nullnullnull has pioneered the use of retained title to land as a means of ensuring that low-
income housing in high-value or rapidly growing real estate marnullts does not become inaccessible
when households that bought the lower cost homes capitalinull on their rising home values over
time. nullities have begun to recogninulle the value of nullnullTs to their regeneration and low-cost housing
provision efforts, and the model is enullpanding in the nullnited nulltates nullDavis and nullacobus, nullnullnullnullnull.
nullparation of the landholder from the owner of the premises built on the surface provides the
trust with a source of income from the rising property values to use in financing new low- and
moderate-income housing. That is the organinulltionnull rationale for the land ownership. The trustnull
continued title holding, however, also offers the following benefits in terms of a capacity to manage
risnullbased corrective actions on contaminated landnull
null null provides a partynullhe trustnullwith a long-term economic self-interest in preserving land value,
which does not arise in freeholds with recurrent and unpredictable changes in title.

64 Brownfields
nullyer
null The trustnulls stable, longer term interest and control can reassure other parties in the transaction
that are concerned with pronullct uncertainties, potentially leading to both lower cleanup
demands from regulators and improved access to nullnd lowered costs ofnullredevelopment capital
from lenders and other financiers.
null null holding and leasing the land, the trust lowers the current capital costs for developers
nullince they do not need to purchase the landnullat the precise point at which reducing current
enullenditures is most important to pronullct economic viability.
null These combined effects may promote site reclamation and redevelopment in property marnullts
that would not otherwise support remediation costs.
nullmmunity Shares
nullst regeneration efforts involve some sort of public-private partnership. The most common form
of this relationship involves a public subsidy for a private investment that, presumably, would
not otherwise occur. The subsidy is nullstified in terms of public benefits from the private pronullctnull
however, those benefits are the effects enullerienced across the entire political aggregate providing or
sponsoring the support. The immediate neighborhood of the pronullct may not gain from the invest -
ment and may even lose, as in the case of gentrification.
This matter of divergent public interests has led to an effort to incorporate community benefit
agreements into development plans using large public subsidies or special planning provisions
nullanullmusa, nullnullnullnulloss, nullnullnullnulllnulln, nullnullnull The benefits pursued tend to be focused on provi -
sion of nullbs and housing for area residents, and, more broadly, some protection from the negative
effects of rising local property values on low- and finulld-income residents, but they may include
some environmental provisions, or at least access to decisions on remediation plans.
One spinoff from this concept nullctually dating bacnullto the idea of community development corpo -
rations nullnullDnullsnull, originally conceived during the null.null. nullar on Poverty of the nullohnson nulldministration
in the nullnullsnullis the sale of community shares in the pronullct, with associated voting rights and voice
nullobinson, nullnullnull nullares are offered at unit costs affordable to local residents andnull
null nully be sold to residents, enullsting property owners, or others interested in the neighborhood
nullnd often get sold to previous residents who have moved awaynull
null nulln enable the articulation of interests in the community that are longer term than those of
for-profit pronullct investors.
null nully be structured as special shares that do not participate in all investment risnull or proceeds.
null nully mimic leaseholds, with even minority interest holdings in the total land or pronullct values.
null nully, by providing a basis for articulating local interests and ongoing capacity for public
disclosure of pronullct decisions and activities, lower community resistance and thus ease the
pronullct development and approval process.

65Cityscape
nullronullnnulleldsnull Risnullnullnullased Corrective Actionnull and Local Communities
Social Housing nullrusts and nullsociations
nullthough some housing and land trusts have recently emerged in the nullited nullates, nullrope has
a long tradition and a varied practice of social housing, well articulated in the form of what are
nullown in nullitain as nullousing associationsnullnullall, nullnullnull null the nullited nullates, these associations
may be at-arms-length local housing agencies with municipal support or more independent local
nonprofit agencies providing housing at below-marnullt rates. nullny are real estate subsidiaries of
nullnull. nullalogous to the land trusts, associationsnull
null nulle long-term property holders.
null nullt on behalf of their members and residents, and they, in turn have direct voting rights,
generally as members of a cooperative, which gives them more direct involvement and access
than in the case of a separate land trust as landowner.
null nullve an interest in protecting against contamination risnull on behalf of the residents, as
members with economic and human health concerns.
null nullst maintain their financial viability and borrowing capacity over time and, thus, must protect
the integrity and marnullt value of their assets.
null nullve the capacity and motivation to control environmental response decisions in reclamation
and regeneration.
nullransfer of RisnullOwnership
null the contenull of the in-perpetuity liability risnullthat nullRnullnullimposed in the nullited nullates, a
marnullt has developed for parties willing to accept those low-probability but high-cost risnull for enull -
tended periods of time nullalland, nullnullnullnullnullrtney, nullnullnull nullparty with some or all responsibility
for past contamination on a site can pay a fee to another organinulltion that will accept the transfer
of that legal obligation. null effect, the ownership of the risnull along with funds to manage the risnull
and to insure against remaining uncertainties, is transferred to a new party by the originally re-
sponsible party, that can then walnullaway from the problem nullernstedt et al null nullnullnull This transfer
creates a new legal interest in the site, that of the risnullaccepter, and that interest thennull
null nullnerates a long-term interest by the new risnullownernulln interest that, by legal design, does not
dissipate or decline with the sale, change of occupancy, or new use of the property itself.
null Provides legal recourse and a new responsible party that can be held accountable by current and
future property owners, community members, and site residents or occupants, provided the
identity of the new responsible party is made nullown nullhich should be an element of the risnull
transfer agreementnull

null nullds the cost of paying for the liability transfer to the initial pronullct costs, requiring more
upfront capitalinulltion than would be required without the risnulltransfer.
null Remains vulnerable in the future to uncontrollable nullnd offsitenullchanges in the economic or
financial condition of the new risnullowner and its insurernullnull

66 Brownfields
nullyer
null other words, even if the risnullaccepter is the local community andnullr its agent, this fourth
approach to providing for long-term stewardship of an Rnullnullsite may remain inferior to the
preceding options, if only because of its cost. The purer marnullt solution, in this case, appears to be
inferior when viewed from the communitynull perspective.
Neighborhood Power: The Value of True Devolution
The fourth option above is inferior to the three preceding it, in part, because it does not fully tanull
advantage of the benefits from neighborhood power by not really devolving the control to the local
level. nulle can summarinulle the derivation of this conclusion in the following simple logical progressionnull
null nullewardship is needed over time for all sites that are cleaned for use and leave some
contaminants in place.
null nullgally available ownership forms will vary acr oss nullrisdictions, but options always enullst for
providing some form of ownership shares and associated interests to residents and others with
long-term stanulls in the area, and thus the site.
null nulles on the ground ar e always needed to monitor ongoing and changing land uses and to
identify activities or events than might threaten engineered controls, and to spot evidence of
control failures.
null nullch local eyes always have the most self-interest, in their r oles as residents, occupants, or
property owners, but these individuals may not have access to property management data and
decisions nullor, at times, the nullowledge to act on that type of informationnull
null nullcal eyes in the form of interested individuals or or ganinulltions are not sufficient in themselvesnull
they must also have the necessary organinulltional capacities to fulfill stewardship roles.
null nullmmunity involvement, when the local eyes have both the access to information and the
nullowledge and institutional capacity to use it, can lower the costs of both the regeneration
pronullct and the needed stewardship, thus enabling both private developers and public
redevelopment bodies to avoid enullenses and risnull they would otherwise have to incur.
Providing greater capacity for communities and community members to act is a logical approach
to ensuring long-term stewardship for Rnullnullsites and monitoring of residual contamination of
any clean-to-use regeneration pronullct. This approach requires the state to provide at least some
residents or their agents the legal standing required to tanull action through ownership, noted in
item nullnullabove. nulling the residents as stewards, however, also requires that their capacity to act
coherently is assured through public provision of needed tools, as noted in items nullnulland nullnull
nullclear need remains for a strong public role in contaminated land regeneration. nullrst, the
standards for site mitigation and control of contaminants need to be set at the nationalnullf not
transnationalnullevel, where the application of scientific nullowledge is not undermined by local
economic desperation. nullcond, the tools for neighborhood action, as previously noted, need to
be provided at the state or national levelnullthe elected and appointed officials in many localities are
linullly to consider empowered community residents and organinulltions a threat to their powers,
so requirements giving neighborhood representatives legal standing in Rnullnulldecisionmanullng
processes will remain a necessity.

67Cityscape
nullronullnnulleldsnull Risnullnullnullased Corrective Actionnull and Local Communities
nullnullowledgments
The author thannull the editorial reviewers for Cityscape for constructive comments and suggestions
that definitely improved this argument. Remaining errors and omissions are the authornulls responsibility.
nulltnullr
Peter null. nulleyer is the president and chief economist with The null.P. nullystems nullroup, nullnc., and professor
emeritus of urban affairs and economics at the nulliversity of nulluisville, where he ran the nullnter
for nullvironmental Policy and nullnagement. null has been engaged in research on brownfield issues
for the Department of nullusing and nullban Development, the nullvironmental Protection nullency,
and the nullonomic Development nullministration since the mid-nullnulls. nulls firm focuses on energy,
climate change, and related environmental and economic policies.
Renullrences
nullll, nullchael. nullnull. nullCnullnullropean nullusing nullnullew 200null. nullndon, nullited nullngdomnullRoyal nullstitute
of nullartered nullrveyors.
nullnullmusa, nullrtanull null nullnull. nullmpowering nullmmunities Through DeliberationnullThe nulldel of
nullmmunity nullnefits nullreements,nullnullurnal of nullanning nullucation and nullsearch null nullnull nullnullnullnull
nullair, nullhn P., and nullchael null nullrroll. nullnull. nullnner-nullty nullighborhoods and nulltropolitan
Development,nullnullonomic nullnulllopment nullarterly null nullnull nullnullnullnull
nullyle, nulllissa, and nulltherine null nullel. nullnull. null nullrvey of nulluse Price nulldonic nulludies of the
nullpact of nullvironmental nullternalities,nullnullurnal of nullal nulltate nullterature nullnullnull nullnullnullnull
nullllard, Robert D. nullnull. nullmart nullowth nullets nullvironmental nullstice.nullnull nullowing nullarternull
nullhienullng nullnullble Communities, nullnullronmental nullstice, and nullgional nulluity, edited by R.D. nullllard.
nullmbridge, nullnullnullssachusetts nullstitute of Technology Pressnullnullnullnull
nulllland, Dean null nullnull. nullnvironmental nullability Transfer Pronullctsnullnullnullllernullnullwnernull Perspective,null
nullnnullironmental nullransactions and nullrownnullelds Committee Newsletter nullnullmerican nullar nullssociationnull nullnull nullnullnullnull nullnullnull.
nullrraro, nullrlo, and nullrnullo nullleotti. nullnull. nullconomic nullowth, nullternational nullmpetitiveness
and nullvironmental ProtectionnullRnull and nullnovation nullrategies nullith the nullRnullnulldel,null nullergy
nullonomics null nullnull nullnull.
Daly, nullrman, and nullnneth null Townsend, eds. nullnull. Valuing the nullrthnullnullonomics, nullology, nullhics.
nullston, nullnullnullssachusetts nullstitute of Technology.
Davis, David null, and Ricnullnullcobus. nullnull. nulle Citynullnull nullrtnershipnullnullnicipal nullpport for
Community nullnd nullustsnullPolicy nullcus Report null. nullmbridge, nullnullnullncoln nullstitute of nullnd Policy.
nullnull Radhinull null, nullrah Treuhaft, and Regan Douglass. nullnull. nullared nullosperity, nullronger nullgionsnullnull
nullenda for nullbuilding nullericanull nullder Core Citiesnull Oanulland, nullnullPolicynullnnull httpnullnullww.policylinnull
orgnulldfsnullorenullties.pdf nullccessed October null, nullnullnull

68 Brownfields
nullyer
nulloss, nulllian. nullnull. Community nullnenulls nullreementsnullnullnullng nullnulllopment nullonullcts nullcountablenull
nullshington, Dnull nullod nullbs nullrst. httpnullnullww.goodnullbsfirst.orgnulldfnullbanullnullfinal.pdf nullccessed
nullptember null, nullnullnull
nullhn, Robert null nullnull. nullconomic Prescriptions for nullvironmental Problemsnullnullw the Patient
nullllowed the Doctornull Orders,nullnulle nullurnal of nullonomic nullrspectinulls nullnullnull nullnullnull.
nullffe, nullam null, nulleven R. Peterson, Paul R. Portney, and Robert null nullavins. nullnull. nullnvironmental
Regulation and the nullmpetitiveness of nullnull nullnufacturingnullnullat Does the nullidence Tell nullnull
nullurnal of nullonomic nullterature null nullnull nullnullnullnull
nullrgenson, Dale null, and Peter null nulllconulln. nullnull. nullnvironmental Regulation and nullnull nullonomic
nullowth,nullnulle nullNnullnullurnal of nullonomics null nullnull nullnullnullnull
nulligh, nullncey null nullnull. nullomoting nullre nulluitable nullownnullld nulldenulllopmentnullnullomising nullproaches
for nullnd nullnnull and nullher Community nullnd nullnulllopment nulltities. nullmbridge, nullnullnullncoln nullstitute of
nullnd Policy.
nullngo, nullberto, and nullna nullberini. nullnull. nullhat nulle the nullfects of nullntamination Risnull
on nullmmercial and nulldustrial Propertiesnullnullidence nullom nullltimore, nullryland,null nullurnal of
nullnullronmental nulllicy and nullnagement null nullnull nullnullnullnull
nullcnullartney, nullinulle. nullnullnullnull. nullnullnvironmental nulliability Transfer Pronullectsnull null nulluyernulls Perspective,null nullnnullironmental
nullansactions and nullownnulllds Committee Newsletter nullmerican nullr nullsociationnullnull nullnull nullnull
nullyer, Peter null, and null nullde nullnnullndingham. nullnull. nullclamation and nullonomic nullgeneration of
nullownnulllds. Reviews of nullonomic Development nullterature and Practicenullnull. null nullshington, Dnull
nullnull nullonomic Development nullministration.
Pagiola, nullefano, nullshua T. nullshop, and nulltasha nullndell-nulllls. nullnull. nulllling nullrest nullnullronmental
nullrnullcesnullnullrnulltnullased nullchanisms for Consernulltion and nullnulllopmentnull nullndon, nullited nullngdomnull
nullrthscan.
Rees, nulllliam null nullnull. nullconomic Development and nullvironmental Protectionnullnull nullological
nullonomics Perspective,nullnullnullronmental nullnitoring and nullsessment nullnullnullnullnull
Robinson, nullsa. nullnull. nullrnullt Creenullnullazanullnullward nullsident nullnership of Neighborhood Change.
Oanulland, nullnullPolicynullnnull httpnullnullww.policylinnullorgnulltfnullfnullnullnullcnullnullnullbbnull-nullnull-anullnull
ecanullbfnullafnullnullnullnullnullTnullnullnullnullnullnullnullnull.PDnull nullccessed nullptember null, nullnullnull
Rowan, nullorge T., and nullnthia nullidgen. nullnull. nullrownfields and nullvironmental nullsticenullThe
Threats and nullallenges of nullntamination,nullnullnullronmental nullactice nullnullnull nullnullnull
nulllnulln, Patricia null nullnull. nullderstanding Community nullnenull nullreementsnullnullportunities and nullaps for
nullenullelopers, nullunicipalities and Community nullrganizationsnull nulllbany, nullnullnull nulllbany nullaw nullchool, nullovernment
nullw nullnter. nullcial nullience Research nulltwornull httpnullnullapers.ssrn.comnullolnullpapers.cfmnullbstractnull
idnullnullnullnull nullccessed nullptember null, nullnullnull

69Cityscape
nullronullnnulleldsnull Risnullnullnullased Corrective Actionnull and Local Communities
nulllnullr, nullris, Patricnullnullnullll, nullarles nullrtch, nullinullbeth nullllaton, Peter null nullyer, and nullisten
R. nullunt. nullnull. nulle nullfects of nullnullronmental nullzards and nullgulations on nullban nulldenulllopmentnull
nullshington, Dnull nullnull Department of nullusing and nullban Development, Office of Policy
Development and Research. httpnullnullww.huduser.orgnullublicationsnulldfnullfield.pdf nullccessed
nullptember null, nullnullnull
nullernstedt, nullris, Peter null. nulleyer, Tom Dinullon, nullristen R. nullount, and Poulomee nullasu. nullnullnullnull. nullnulliability
and the nullng Termnullnullfects on nullstainable nullban Regeneration in the null and nullnullnullnull nullwards
nullore nullffectinulle and nullustainable nullrownnulleld nullenullitalisation nullolicies, edited by Detlef nullrimsnully, et al. Dessau,
nullderal Republic of nullrmanynullnullderal nullvironment nullency nullrmanynullnullnullnull
nullrnstedt, nullis R., Peter null nullyer, nullna nullberini, and nulluren nullberle. nullnull. nullncentives for
Private Residential nullownfields Development in nullnull nullban nulleas,null nullurnal of nullnullronmental nulllicy
and nullnagement null nullnull nullnullnullnull
nullunt, nullisten R. nullnull. nullnullronmental Insurance nulloducts nullailable for nullownnulllds nulldenulllopmentnull
1nullnull nullghland nullights, nullnullnullrthern nullntucnull nulliversity for the nullnull nullvironmental Protection
nullgency nullnullPnullnull. httpnullnullnullwww.epa.govnullbrownfieldsnullinsurancenullinsrepnullnull.pdf nullaccessed nulleptember nullnull, nullnullnullnullnull.
nullunt, nullisten R., and Peter null nullyer. nullnull. nullnullronmental Insurance nulloducts nullailable for
nullownnulllds nulldenulllopmentnull00null nullghland nullights, nullnullnullrthern nullntucnull nulliversity for
the nullnull nullvironmental Protection nullency nullPnull. httpnullnullww.brownfieldstsc.orgnulldfsnullnvironull
insurancenullnullnullpdf nullccessed nullptember null, nullnullnull
nullditional Reading
De nullusa, nullristopher. nullnull. nullhe nulleening of nullownfields in nullerican nullties,null nullurnal of
nullnullronmental nullanning and nullnagement null nullnull nullnullnullnull
Dewar, nullrgaret. nullnull. nullelling TanullReverted nullndnullnullssons from nulleveland and Detroit,null nullurnal
of the nullerican nullanning nullsociation null nullnullnullnullnullnull
nulling, Reid, nullith nullrtholomew, nulleve nulllnulllman, nullrry nulllters, and Don nullen. nullnull. nullowing
Coolernullnulle nullidence on nullban nullnulllopment and Climate Changenull nullshington, Dnull nullban nullnd
nullstitute.
nullnullrthy, nullnda. nullnull. nullhe nullownfield Dual nullnd-nulle Policy nullallengenullReducing nullrriers to
Private Redevelopment nullile nullnnecting Reuse to nulloader nullmmunity nullals,null nullnd nulle nulllicy
null nullnull nullnullnullnull
nulltional nullsociation of nullcal nullvernment nullvironmental Professionals nullnullnullPnulland
nullrtheast-nulldwest nullstitute nullnullnullnull nullnull. nulllocnullng nullownnullldsnullnullys to Community
nullnulltalizationnull nullshington, Dnull nulltional nullsociation of nullcal nullvernment nullvironmental
Professionals and nullrtheast-nulldwest nullstitute. httpnullnullww.resourcesaver.comnulllenulloolmanagernull
nullstomOnullnullnullnullnullnull.pdf nullccessed nullptember null, nullnullnull

70 Brownfields

71nulltyscapenullnullnullurnal of nulllicy Development and Research • Volume 12, Number 3 • 2010
U.S. Department of Housing and Urban Development • Office of Policy Development and Research
Cityscape
Field Survey of HUD Site
Contamination Policy
Eugene Goldnullrb
nulliversity of nulllinois at nullicago
nullstract
nullom 2000 through late 200null the housing arm of the nullnull nullpartment of nullusing and
nullban nullnulllopment nullnullnull nullderal nullusing nullministration nullnullnull recommended a
nullignullonullleannullapproach for contaminated sites rather than the risnullbased correctinull acnull
tion nullnullnull approach fanullred by the nullnull nullnullronmental nullotection nullency and state
Voluntary Cleanup nullogramsnullnullst ofnulles followed nullnullnulls dignullonulllean guidance and did
not appronull pronullcts on brownnullld sitesnullnullme, howenullr, tried to promote redenulllopment
of housing on brownnullld sites by following nullCnull nullis article, based on a 200nullsurnully
of nullnullnullld ofnulle practice, discusses the issues encountered when nullld ofnulles tried to
resolnull, on a casenullynullase, pronullctnullenulll basis, the connullct between site contamination
and brownnullld redenulllopmentnull
Introduction
null nullnull, after almost nullyears during which the nullderal nullusing nullministrationnull nullnullnullnullnullig-to-
cleannull policy differed from the null.null. nullnvironmental Protection nullgencynulls nullnullPnullnullsnull risnull-based corrective
action nullRnullnullnullnull approach, the null.null. Department of nullousing and nullrban Developmentnulls nullnullnullDnullsnull Office
of Policy Development and Research nullDnullnullcommissioned a study of nullDnull nullte nullntamination
Policy nullnull PDnull, nullnullnull nullthough nullD environmental regulations allowed for risnullbased
cleanups nullnullnullR null.nullinullnullnull chapter nullof the nullltifamily nullcelerated nullocessing nullnullnullnullide did
not recommend nullnullnullltifamily nullbs
null
accept property for firm commitment where a site con-
tamination problem had been nullapped or paved overnullnullnull nullusing, nullnullnullnullction nullnullnullnor to
accept properties nullith testing, nullshing, or monitoring wells in operationnullnullnull nullusing, nullnullnull
nullnullnull The nullnulland state nullluntary nulleanup Programs nullnullsnullfavored a risnullbased approach to
corrective action that would allow the use of engineering barriers and institutional controls on
brownfield sites. The nullnull study enullmined the difference between nullnulland nullnullpolicies and
null
nullnullnullltifamily programs are administered by null nullltifamily nullbs strategically located around the country.

72 Brownfields
Goldnullrb
recommended that nullnull nullltifamily nullusing should permit the use of risnullbased methods,
including institutional and engineering controls,nulland should also upgrade its risnullmanagement
capabilities nullnull PDnull, nullnullnullnull-null.
nulltil nullD revised the nullnullnullide in late nullnull to allow for the Rnullnullapproach to site cleanup,
the dig-to-clean policy set forth in nullction nullnull of the nullnullnullide was waived only on limited
occasions and then with great caution. nullcause it was neither statutory nor regulatory, the nullide
could be waived, but the burden would then be upon the nullnullunderwriter to clearly set forth in
the record the reasoning behind each pronullct-level waiver. The purpose of the nullnull study was to
survey field practice and ascertain how nullD staff were coping with the challenge of promoting
development in older urban areas with their high incidences of site contamination, given the fact
that this dig-to-clean policy made it difficult for the housing arm of nullD to support brownfield
redevelopment.
nullnullD has always been a heavyweight in the brownfield arena. nullts nullagship nullommunity Development
nullocnullnullant nullDnullnullprogram pumps about null billion dollars annually into local government pronull -
ects to benefit low-income
null
and slum and blighted nulltypically brownfieldnull
null
areas. nulliscal year nullnullnullnull nullnullnullnull
data, for instance, showed more than nullnull million spent on property acquisition nullncluding null.null
million spent specifically on brownfield cleanupnull nullnull million on various economic development
activities that included commercialnullindustrial rehab and construction, acquisition, and infrastructurenull
nullnullmillion on housing constructionnullnullnull million on nullction nullnullloan repaymentnulland null.nullbil -
lion on public improvements.
null
null is reasonable to infer that much of this nullnull funding supported
brownfield redevelopment. nullD funding for brownfield pronullcts far enulleeds that of other agencies,
but nullD allocation decisions are made locally, when local governments divert a portion of their
entitlement grants to specific brownfield pronullcts, whereas nullnullfund allocations are made at the
federal level when funds are awarded to specific nullnullbrownfield program applications.
nullusing is an important part of the brownfield equationnullin todaynull post-industrial society, housing
is often the highest and best use of the obsolete industrial buildings andnullr undersinulld parcels
that are near the central city. null mid-nullnull, the nullrtheast-nulldwest nullstitute surveyed the states
to determine the level of benefits they were ennullying through the redevelopment of brownfields.
That survey confirmed what case enullmples and pronullct anecdotes had suggestednullhat residential
reuse of brownfields was an increasingly viable option in many communities. nullthough survey
responses showed that only a few states tracnullspecific types of brownfield investments nulluch as
housingnull nulllifornia reported that nullnullnullnew housing units had been developed on brownfield
sites, nulllorado attributed nullnullnullnew units to pronullcts that gained approval through its nullP, and
nullchigan documented nullnullnullnew units at null different brownfield sites across the state nullartsch
and Dorfman, nullnullnull
null
null general, null percent of nullnull must be spent in low-income areas nully census tractsnullareas where brownfields are often
foundnullnd, after paying for administration, the remaining funds may be spent on brownfield nulllum and blightednullareas.
null
null nullR nullnullnullbpart nullnulligible nulltivities was revised in nullnull nullnullnull nullnullnull to clarify the eligibility of brownfield
cleanup, development, or redevelopment within enullsting program eligibility categories.
null
httpnullnullww.hud.govnullfficesnullpdnullommunitydevelopmentnulludgetnullisbursementreportsnull.

73Cityscape
Field Survey onullnullnullSite Contamination Policy
nullnullnullltifamily programs have operated since the nullw Deal. The theory is that if nullnullprovides
mortgage insurance to private sector lenders, these lenders are more linullly to enullend credit to meet
rental marnullt demand. The nullnullinsured loan is often the critical linchpin that holds complenull
layered affordable housing financing together. One of nullnullnullnulls goals is to nullenullpand access to affordable
private marnullt housingnullnullnull, nullnullanull nullnullhas insured between null.nulland null.nullbillion in multi-
family mortgages every year since nullnull, with a high of null.nullbillion in nullnull, a low of null.nullbillion
in nullnullnullnull, and nullnull.nullnull billion nullrepresenting nullnull,nullnullnull dwelling unitsnull in nullnullnullnull, the latest full year reported
nullnull nullusing nullnull nullnullnull nullthough nullnullunderwrites only a small share of the rental marnullt
nullnull, nullnullbnull nullnullmarnullt-rate rental units house a substantial number of low- and moderate-
income people. null null nullnull, nullnullapproved nullnullloans that also had nullw-nullcome nullusing Tanull
nulledit nullnullTnull

financing. Those loans represented appronullmately null,nullnullunits, with more than
null percent of those units housing very low-income families. nullny of the nullnullnullpronullcts also use
other nullD programs, such as nullnull, nullnull, and nullPnullnull funds, in their financing structure.
nullny nullnullpronullcts have units that house tenants that are subsidinulld by the nullction nullrental hous -
ing assistance program nullnull, nullnulldnull
The restrictive dig-to-clean
null
housing policy set forth in the nullnullnullide did not seem consistent
with nullnulls mission to support affordable housing, because it made it more difficult to find sites in
older urban areas andnullr to support the added cost of dig-to-clean cleanup. nullw did nullnullconceive
of this dig-to-clean policy that eliminates many previously developed sites from consideration for
housing usenullnull the late nullnulls, nullD quicnully responded to the nullve nullnal crisis
null
by promulgating
nullnullD nullotice nullnull-nullnull before enactment of the nullomprehensive nullnvironmental Response, nullompensation,
and nullability nullt nullnullnullnull or the nullperfund lawnull in nullnull. nulltice null-null nullnullnull, drafted before
the subsequent nullRnullnullnullperfund framewornullhad tanulln shape, called for nullD nullo tanull consis -
tent actions when responsibilities are shared by several agenciesnulland for nullD staff to enullmine
nullll pertinent material,nullrenullct sites that posed nullerious health risnull,nulland request that nullnullreview
sites with nullotential or possible enullosure.null
null
null the early nullnulls, after more than a decade of the
development of nullperfund practice and not much substantive review of site contamination as part
of its environmental review process, nullDnull Office of nullusing recogninulld that mortgage processing
had to be modified to renullct the current reality where Phase nullnullvironmental nullte nullsessments
nullnullsnullhad become standard practice. null nullnull, nullD nulltice null-null required the sponsor to submit
due diligence documentation and remediation before any nullD approval,
null
unless the pronullct had
received preapproval from the applicable government cleanup agency.
null
null nullnull, this requirement
was further modified when nullD issued the nullnullnullide and included the dig-to-clean standard
null
The phrase dig to clean is used in this report as shorthand for the nullP nullction nullnull requirement that nullnull will not accept
property for firm commitment where a site contamination problem has been capped or paved overnullnullnull nullusing, nullnullnull
nullction nullnull.
null
null nullnull, when state and federal authorities declared a federal health emergency at the site of a former chemical landfill
that had been redeveloped with a school and housing in nullve nullnal, nullw nullornull all federal agencies were asnulld to enullmine
their procedures relative to site contamination.
null
nullD nulltice null-null nullee appendinullnullin nullD PDnull, nullnullnull
null
This requirement meant this cleanup was funded by sponsor equity.
null
nullD nulltice nullnull-null nullee appendinullnullin nullD PDnull, nullnullnull

74 Brownfields
Goldnullrb
in its section on site contamination. null null nullnull, nullP lenders were underwriting null.nullpercent of
basic nullnullmortgage insurance applications nullersus null.nullpercent in null nullnullnullnullnull, nullnullcnull The
nullnullnullide instructed lenders to adhere to strict dig-to-clean standards by prohibiting the use of
engineering barriers nullo capping or paving over contaminationnulland monitoring wells. null addition,
in nullnull, nullD modified the processing instructions for the nullction nullnullnullpportive nullusing for the
nullderly Program and the nullction nullnullnullpportive nullusing for Persons with Disabilities Program to
require dig-to-clean treatment of contaminated sites.
null
nullthough the early nullnulls saw the birth of the brownfield program at nullnull it is important to
remember that, at that time, the archetypal images were contaminated pronullcts, such as nullve
nullnal, that posed health risnull. Transactional lawyers were also raising the legal possibility of nullnulls
stepping in to remove the contamination and then going to court with potentially responsible
parties nullRPsnullto be reimbursed for the cleanup. null a few high-profile cases,
null
lenders not only lost
the value of their security
null
but also were held accountable for reimbursing cleanup costs as PRPsnull
nullcause nullD is a large organinulltion involved in many real estate transactions, the Department was
involved in cases in which it or its program participants were held liable.
nullny nullD affordable housing programs use the worst sitesnullites that no one else wants. nullD, as
a federal agency, has a duty to ensure that minority and low-income residents are not dispropor-
tionately affected by redevelopment of contaminated sites.
null
null addition, when developing its site
contamination policy, the Office of nullusing saw its role as protecting not only potential residents
but also the financial solvency of the nullnullmortgage insurance fund. nullnulltanulls pride in being a
government program that pays for itself through sound analysis and mortgage insurance premi-
ums. null long as the default rate stays low, everything is onullynullnullDnull endorsement of unacceptable
risnull would put the entire nullnullmortgage insurance program in nullopardy.
nullth this perspective in mind, the Office of nullusing crafted a policy that allowed nullD to approve
brownfield sites that had been completely cleaned up nullia the dig-to-clean approachnullbut not
to approve sites where the problem had been capped or paved over. nullDnull rationale was that,
although nullnullwas designed to insure financial risnull that the conventional marnullt was unwilling to
tanull nullnulls there a marnullt for multifamily housing at this unproven locationnullnull it was nullot nullnulls
role to tanull environmental risnullnull
null
nullonnullsnull, nullnullnull nullnversely, some were concerned that this
policy, more restrictive and conservative than the one favored by nullnull would manull it difficult to
support housing on brownfield sites, particularly at a time when brownfield redevelopment of
minulld-use, walnullble communities was being touted as the road to sustainability.
null
nulle nullnull and nullnull processing instructions in appendinullnullin nullD PDnull nullnullnull.
null
nullr enullmple, nullited nullates v. nulleet nullctors Corpnull, nullnullnull.null nullnull nullnullh nullr. nullnullnull
null
The value of the foreclosed property was lower after it was identified as a contaminated parcel.
null
nullecutive Order nullnullnullof nullbruary null, nullnull, nullederal nulltions To nulldress nullvironmental nullstice in nullnority Populations
and nullw-nullcome Populations,nullcommonly nullown as the nullvironmental nullstice nullecutive Order.
null
nullterview nullonnullsnull, nullnullnull

75Cityscape
Field Survey onullnullnullSite Contamination Policy
Issues
This survey of field office practice raised a number of significant issues relating to nullD field office
participation in brownfield redevelopment.
Low Level of Awareness
null an e-mail survey, to which null percent of the nullnullnullltifamily nullbs responded, when asnulld
to report about their enullerience with brownfield pronullcts, including renullctions, most nullnullpercentnull
had nullothing to report,nulleven when brownfields were defined very broadly, as in the nullRnullnull
nulluperfundnulldefinitionnull
null
The nullnull nullownfield nullatute nullnullnullnullnullnull defines brownfield to mean real property,
the enullansion, redevelopment, or reuse of which may be complicated by the presence
or potential presence of a hanullrdous substance, pollutant, or contaminant.
nullveral possible enulllanations for this response enullst.
null nulltivity was tanullng place in fringe nullndeveloped greenfieldnullareas. null most growth was tanullng
place in fringe areas, then greenfields, with no site contamination, would not raise site
contamination issues. null nullnull, the nullnullnullommittee On nullvironmental nullsuesnullnull subgroup of
the nullb Directorsnullreported that some field offices, particularly those in the nullest, did not report
site contamination as an issue that affected their day-to-day operations.
null nulleld offices did not recogninull site contamination issues. nullme offices reported nullo brownfield
pronullcts,nullyet either reality checnull with third parties, such as the state or nullnull or followup
interviews, indicated that the office had processed brownfield pronullcts. nullery office in the
followup oral interview had at least one brownfield encounter. nullme offices thought that
nullrownfieldnullwas an official state designationnullothers did not realinull that a site that is not
contaminated could be a brownfield because no one is willing to invest the time, energy, and
funds to characterinull its problems. null nullnullnulls brownfield program, many sites have been freed for
development after the nullnullfunded site characterinulltion identified either no or minor recogninulld
environmental conditions nullnullsnull
null nullownfield pronullcts were processed by state housing finance agencies nullnullnullnullthrough nullnullnulls Risnull
nullare program. null a state nullnullperforms environmental processing pursuant to null nullR null under
the Risnullnullaring program, they are not subnullct to nullP guidance. During the reality checnull it
became evident that more than one brownfield pronullct was processed by the state nullnull
nullother way of enulllaining the responses to the survey is by relating them to one of the manullr
findings of the nullDnullDnull nullnull studynullhat nullD has limited capacity and enullertise to deal with
site contamination problems. nullny offices appeared not to recogninull that they were dealing with
brownfield sites and many did not manull full use of their environmental staff to review and analynull
those sites. nullme offices toonullthe statenull approval as evidence that the site had been cleaned up to
null
null nullnullnull nullnull nullnullnullnull nullction nullnullanull

76 Brownfields
Goldnullrb
nullD dig-to-clean standards.
null
Others were satisfied with environmental consultants reporting that
any Rnulls had been removed and did not asnullfor the local nulltate nullPnullapproval.
Brownfield Policy Is Restricting Activity
nullme nullrisdictions have had difficulty meeting affordable housing needs in established urban areas
when restrictive policies are followed nullartsch, nullnullnull nullrrently, the nullnullnullltifamily programs
represent a large portion of the affordable housing marnullt. nullnullplays an important part in the
very complicated equation for layered affordable financing, because the principal lender often
insists on nullnullmortgage insurance of their funds. nullnullapproved loans cannot use standard nullnull
Rnullnullprocedures unless the nullb waives the nullP guidance or the state nullnullprocesses the pronullcts
as a Risnullnullare. nullonically, some developers in several communities who originally intended to
wornullwith nullD on minulld-income housing developments at brownfield sites have been forced to
develop all marnullt-rate housing because of nullDnull unwillingness to change its approach. Despite
these barriers, initiatives across the country show that affordable housing pronullcts can succeed at
brownfield sites. null scores of cases, older contaminated sites have been converted into residential
housing for senior citinullns and low- and moderate-income families. nullny of these pronullcts come
on the heels of marnullt-rate developments, which also proves that the stigma can be overcome and
that residentsnullcomfort with institutional controls, such as covenants on the deed, can be achieved.
nullreover, these pronullcts have been accomplished in a way that manulls economic sense and ad -
dresses environmental considerations appropriately nullartsch, nullnullnull
The nullownfields Revitalinulltion nullt, which toonulleffect in early nullnull, has done much to address
barriers to redeveloping contaminated property, including those sites being reused for housing
purposes. nullom a procedural perspective, the law sets the stage for more innovative public-private
redevelopment partnerships because it clarifies difficult liability issues that have deterred site
acquisition and redevelopment. null addition, the law allows nullnullbrownfield grant recipients to use
a portion of their site assessment or cleanup grants to pay insurance premiums that provide cover-
age nulluch as for cleanup cost overrunsnullfor these sites. This nullnullbility helps prospective developers
secure private financing by providing a better way to quantify and manage risnull null the past, this
uncertainty has been a nully deterrent to housing activities on brownfield sites.
Perhaps most importantly, the nullownfields Revitalinulltion nullt clarifies the state-federal relationship
regarding cleanup, manullng it easier for developers to use innovative remediation technologies
and engineering controls as part of a cleanup. nullw, sites addressed by a statenull nullP or response
program are protected from nullnullenforcement and cost-recovery actions. The only enulleptions are
sites where contamination has migrated across state lines or onto federal propertynullif releases of
contaminants, or the threat of releases, present an imminent and substantial endangermentnullif new
information shows that a cleanup is no longer protectivenullor if a state requests federal intervention.
nullates now will share nullnullmillion in nullnullbrownfield program funding annually to support these
response programs. null return, states will need to maintain a nullublic record of sitesnulladdressed
through their voluntary response program, and update that record annually nullartsch, nullnullnull
null
The nullD dig-to-clean standard would not have been achieved if the cleanup were Rnullnullbased.

77Cityscape
Field Survey onullnullnullSite Contamination Policy
nullield reaction to the effect of the nullnullP and nullections nullnullnullnullnullnullnull nullotice of nullunding nullvailability nullnullOnullnullnull
dig-to-clean policy variednull
null nullw nullornullCity
The nullw nullrnullnullb issued a policy paper on nullbruary null, nullnull, that asnulld for permission
to implement a policy more friendly to brownfield reuse that included permitting the use of
engineering controls. They noted that, in nullnull, nullction nullnullapplications had declined by null
percent, from null to null and that the nullb had been returning funds for subsidinulld housing for
elderly people and people with disabilities because it did not have any suitable nullhat is, cleannull
pronullcts to fund.
null Pnullladelpnulla
The Philadelphia nullb has wornulld with brownfield sites and even waived the nullP policy.
Philadelphia has enullressed concern that the limited nullection nullnulland nullction nullnull resources are
either not being used or are being channeled to suburban areas.
null Cnullcago
The nullicago nullb has found that the nullP brownfield policy manulls it difficult to nullep up with
the demand in those areas of nullicago undergoing redevelopment and, as a result, has waived
nullP criteria and followed the nullnullRnullnullstandard when possible.
null nullyond nullP
The nullP guidance has created a regulatory environment that is hostile to reuse of brownfields.
null found two sites with no Rnulls, apparently meeting nullP criteria, that had been renullcted or
subnullct to severe scrutiny because of the brownfield stigma.
Of the nullnull nullnullnull nullultifamily nullubs, null nullPhiladelphia, nullaltimore, nullhicago, nullolumbus, and nullinneapolisnull
waived this policy
null
for nullD mortgage insurance programs at the time of the survey, nullnullostonnull
was considering waiving, and nullnullacnullonville and null. nullrthnullwere open to waiving.
nulliver of the nullP policy was needed in many cases for proposed nullnullaffordable housing
brownfield pronullcts to be financially viable, because pronullct financing could not support complete
removal of the contamination and government funding was limited. nullnulls reluctance to participate
in brownfield sites in which the cleanup had been approved locally made it more difficult to put
together viable affordable housing pronullcts in older urban areas, and this restrictive policy had a
chilling effect on infill development nullchopp, nullnullnull nullnulls limited participation in brownfield
redevelopment, in turn, had a negative effect on environmental quality, because development in
outlying areas is associated with adverse effects nullnullnull nullnullnulland urban settlement is associated
with lower generation of pollutants nullnull, nullnullnull nullDnull original vision regarding site contamina -
tion called for nullD to nullstablish interagency and intergovernmental policies and proceduresnull
and nullo tanull consistent actions when responsibilities are shared by several agencies.null
null
The nullnull
dig-to-clean policy was developed in a vacuum, and, when this study was performed in nullnull,
null
nullaivers are permitted for multifamily mortgage insurance processed under nullP but are not permitted for the nullction
nullnulland nullction nullnullprograms that support housing for elderly people and people with disabilities.
null
nullD nulltice null-null, paragraph null issued nullptember null, nullnull.

78 Brownfields
Goldnullrb
little indicated that nullD nullusing brownfield policy would undergo any significant change in the
foreseeable future. nullt only is policy revision a lengthy process, but staff also appeared reluctant
nulln nullnullnullto alter the policy.
Resistance To Altering Policy
The dig-to-clean policy was developed in the late nullnulls. null the late nullnulls, nullDnull Office of
nullusing had established a practice of issuing more detailed guidance for the environmental assess -
ment process than did the Office of nullmmunity Planning and Development nullPDnulland the Office
of Public and nulldian nullusing nullnullnull The Office of nullusing continued that practice when it issued
nullD nullusing nulltice null-null on site contamination in nullnull. nullusing nulltice null-null was the first
nullD guidance that clearly called for the regular institutionalinulld use of the nullerican nullciety for
Testing and nullterials nullnullnull nullnull nullhases nulland nullnullin pronullct analysisnullit called for either cleaning
up the site before pronullct approval or gaining preapproval from nullhe applicable nullderal, state, andnull
or local agency with nullrisdiction.null
null
null nullnull, The nullnullnullide enullanded this guidance, as noted
previously, by stating, nullnull will not accept property for firm commitment where a site contami -
nation problem has been capped or paved overnullnullnull nullusing, nullnullnullnullction nullnullnull The nullnull
PDnull study nullnull nullnsulting, nullnullnullcalled for updating the policy to include using risnullbased
methods, approval before cleanup, upgrading nullDnull analytic capabilities, and other measures to
encourage brownfield redevelopment. nullD did not implement these recommendations until late
nullnull nullnd it is still too early to ascertain the actual effects of these changesnull
null the course of developing this report, nullD policymanullrs voiced many concerns, clearly implying
that they believed the dig-to-clean policy wornulld and that it would not be wise to modify it.
Dual Standards
nullr nearly null years, the federal government had two standardsnullnullnulls Rnullnullapproach and nullnulls
dig-to-clean approach.
null nullving two standards was confusing. nullen a developer asnulld his or her engineering firm
what to do to clean up a site nullhat is, to manull it fit for residential usenull the engineers would
usually answer based on generally accepted business practice, which was Rnullnull nullate programs
accommodated the Rnullnullapproach that nullnullfavored. nullny developers and environmental
consultants were not aware that two federal agencies had two different approaches for cleaning
up brownfield properties. nullat could happennull
null Pronullct planning could be based on one set of costs, and pronullct feasibility would fall apart
when nullnullfinancing was needed, because more enullensive cleanup would be required.
This scenario could occur even if nullD nullnull funds were being used, because only nullnull
nullltifamily followed the strict dig-to-clean approach nullee enullibit null.
null nullnullnullbs could be faced with difficult decisions when they request a dig-to-clean cleanup
but receive an Rnullnullcleanup.
null
nulltice null-null, null httpnullnullww.hud.govnullfficesnulldmnulludclipsnulloticesnullsgnullnullsgnotices.cfm.

79Cityscape
Field Survey onullnullnullSite Contamination Policy
null nullch standard undermined the other.
null The nullD standard pr ovided a potentially unfair tool for future litigants. nullme time in the
future, a resident could allege that he or she is suffering ill effects from buried contamination
and claim the developer was negligent. Negligence generally means culpable conduct that
misses the legal standard nullf a reasonable personnullprotecting individuals against foreseeable
risnull, harmful acts of other members of society. The nully question is usually, nullhat is the
standard of carenull null a developer processed his or her site through and received an approval
from a state nullnullP, that approval would be evidence that the owner met the requisite standard
of care. nullseparate more restrictive policy from the agency in charge of federal housing
policy opens the door to alleging that the standard of care was not met.
null nullnullis the federal agency charged with protecting both the environment and the health
and safety of this nationnulls inhabitants.
null
nullnullhas invested a great deal of time, effort,
scientific study, and fieldwornullto determine what standard is acceptable for residential
cleanups. nullD adopted its policy with little coordination with nullnull and the nullnull nullD
study recommended modification and adoption of the nullnullapproach. nullntinued use of
a different policy undermined nullDnulls credibility in both lending and transaction support,
which is why this nullnull study recommended dialog and cooperation between nullD and
nullnullon this issue.
Recommendations
nullthough the nullnulldig-to-clean policy differed significantly from nullnullpolicy, it was not an
insurmountable barrier to brownfield participation by all local nullnulloffices for all but the sub -
sidinulld nullction nullnulland nullction nullnullprograms for elderly people and people with disabilities.
null

Exhibit 1
nullD Onullce nulllonull nullCnull Need nullaiver
a
nullCnullNot Pernulltted
nulle of nullCA in nullD nullonullanull Before 2010
nullnullinnullnullnclnulles nullAnull nullsnullSnullrinnull
nullrtnullnull insnullance
processenullnull state
nullAs
nullrtnullnull
insnullance
processenullnull
nullD
Section 202 nulllnullrlnull
peoplenullannullSection
null1 nulleople nulltnull
nullsanulllitiesnullsnullsinull
pronullanull
nullnullic annullInnullan nullnullinnull All pronullanull
ConullnullitnullnullanninnullannullDevelopnullnt All pronullanull
Fnull nullFederal nullusing AdministrationnullnullAs nullnullusing nullance agenciesnullnullnullnullnullpartment onullnullusing and nullban
nullvelopmentnullRnullA nullrisnullbased cleanup approacnull
a
Some people tnullnnulltnullt tnulls nulliver must be approved by nullnullnulladnullarters and not tnull nullb nullrectornull
null
nullnullnulls mission is to protect human health and the environment. nullnce nullnull, nullnullhas been wornullng for a cleaner, healthier
environment for the nullerican people. nullee httpnullnullww.epa.govnullpahomenullboutepa.htm.null
null
nullr nullction nullnulland nullction nullnull the nullnullnullcriteria do not allow for deviation.

80 Brownfields
Goldnullrb
Decentralinulld case-by-case decisionmanullng allowed many offices to approve brownfield pronullcts.
null

The tools enullsted, but nullbs needed to be taught how to use them. nullter the nullb recogninulld that
Rnullnullcleanup was a well-established, reputable choice,
null
the nullb was free to decide what best fit
the needs of their local marnullt. nullbs can be educated regarding what choices are open to them
and trained to develop sensitivity on when and how to apply each choice.
nullD is always reluctant to erode its environmental standards. null todaynull post-industrial society,
housing is often perceived as the best choice for land reuse. nullny cities have a strong demand
for housing near their centers and, given the right price nullor enullmple, subsidinulld substandard
housing with lower rentsnull people will accept a location that might not survive a marnullt test. nullD
has striven to develop and implement standards that guarantee everyone, even the disadvantaged,
a nullecent home and suitable living environment.null
null
nullvironmental nullstice demands we remain
vigilant regarding what is acceptable, especially to those needing affordable housing and faced
with more limited choice.
null
The strict site contamination policy has made it easier for nullbs to
renullct sites that local nullD decisionmanullrs felt were not viable pronullcts. The nullptember nullnull nullP
revisions attempt to approach this issue with sensitivity so as not to upset this balance and to allow
nullbs to renullct contaminated sites when they thinnullthe risnullis too great.
null Policy Coordination
This report underlines the need for further dialogue and cooperation between nullD and nullnull
on site-contamination policy and practice. The original mandate of nullD nulltice null-null called
for close coordination of policy and practice with nullnull The nullnull report noted the subsequent
divergence and called for nullD to bring its policy in line with nullnulls. One federal standard
would be less confusing to the public, state and local government, and the development com-
munities. nullD would improve its capacity to review the technical merits of cleanup plans by
using the state nullPsnullenullertise, insisting that pronullcts be approved by the state nullP, and asnullng
for technical assistance from nullnullstaff.
null Processing and nullraining
nullen though nullnullhas altered its policy, nullD staff still need to be better educated on the issues
presented by brownfield redevelopment. Training may be provided to the field on various
brownfield topics, including state nullPs and processing alternatives that may enable the use of
null
nullnullnullbs issue commitments for millions of dollars on new pronullcts every day without nullD nulladquartersnullinvolvement.
nullbs handle most of the issues that arise with the processing locallynullthey decide if the site locations are appropriate, and
they nullow the marnullt and manull determinations about marnullt, location, demand, and so on. nullbs nullow their geographic
areas and what is being developed outside the nullD programs. They nullow that different nullnds of brownfields enullst and that
a contaminated site in the middle of a neighborhood, which might have been providing housing for generations nullublic
housing sitesnull are good locations for redeveloping and pose minimal risnullto the government. nullbs also approve transfers of
physical assets, rent increases, and partial release of security in some cases. nullbs go to court and represent nullD, enter into
contracts, enter into nullusing nullsistance Payments contracts, tanull enforcement action against owners, and so on.
null
Rnullnullcleanup was bacnulld by those parts of the federal government that are responsible for protecting public health and
the environment, such as nullnulland the nullnters for Disease nullntrol and Prevention, nullency for Tonullc nullbstance and Disease
Registry.
null
nulltional nullusing nullt of nullnull.
null
nullecutive Order nullnullnullof nullbruary null, nullnull. nullederal nulltions To nulldress nullvironmental nullstice in nullnority Populations
and nullw-nullcome Populations,nullcommonly nullown as the nullvironmental nullstice nullecutive Order.

81Cityscape
Field Survey onullnullnullSite Contamination Policy
Rnullnullcleanups, as well as the environmental benefits of promoting minulld-use, walnullble neigh -
borhoods in efficient locations with access to nullbs, shopping, and mass transit. This training
will enable field offices to support brownfield development in those areas where they thinnullit is
appropriate. null should be clear to everyone that the regulatory standard for site contamination
cannot be waived,
null
but that sites that come through state nullPs, even if they use engineering
barriers and institutional controls, clearly meet this standard. nulleld offices should decide
whether to participate in brownfield pronullcts based on the factors such as marnulltability and
long-term pronullct viability. nulldgment concerning public health is best left to those agencies with
that enullertise, nullst as nulldgment regarding pronullct viability is best left to the local nullb.
nullnullowledgments
The author thannulls all those at the null.null. nullnvironmental Protection nullgency nullnullPnullnull who have wornulled
with him on brownfield issues, particularly nullm nulln der nulloot and nulle Dufficy of Region null Dave
Doyle of Region null and nullarles nullrtsch at nullnullnulladquarters. null also is grateful for the help of
those at the null.null. Department of nullousing and nullrban Development nullnullnullDnull, particularly nulld nullinsberger
and nulleve nullhl in nullicago and null nullromberg and Danielle nullhopp at nullD nulladquarters.
nulltnullr
nullgene nullldfarb was a nulldwest environmental officer at the nullnull Department of nullusing and
nullban Development and is now an adnullnct assistant professor of environmental and occupational
health sciences in the nullhool of Public nullalth at the nulliversity of nulllinois at nullicago.
Renullrences
nullTnullnullternational nullnullnull. nullnull. nullandard nullide for nullsnullnullsed Correctinull nulltion for nullotection
of nullological nullsourcesnull nullTnullnullnullnullnullnullnull-nullnullnullnullenull nullst nullnshohocnulln, Pnull nullTnull
nullternational.
nullrtsch, nullarles. nullnull. nullrogress on nullownfields Restoration,null Issues nullline in nullience and
nullchnologynullRichardson, Tnull nulliversity of Tenulls at Dallas. httpnullnullww.issues.orgnullnullnullupdate.htm
nullccessed nullring nullnullnull
nullnull nullnull nullprilnull nullnnullng nullownnullld nulldenulllopment and nullusingnullnullshington, Dnull nullrtheast-
nulldwest nullstitute. httpnullnullww.nemw.orgnullmagesnulltoriesnullocumentsnullrownfieldnullousing.pdf
nullccessed nullring nullnullnull
nullrtsch, nullarles, and nullidget Dorfman. nullnull. nullownnulllds and nullusingnullnullw nulle nullate VCnull
nullcouraging nullsidential nullnulllopmentnullnullshington, Dnull nullrtheast-nulldwest nullstitute.
null
The regulatory standard, is contained in null nullR null.nullinulland provides, in part, nullall property proposed for use in nullD
programs be free of hanullrdous materials, contamination, tonullc chemicals and gasses, and radioactive substances, where a
hanullrd could affect the health and safety of occupants or connullct with the intended utilinulltion of the property.null

82 Brownfields
Goldnullrb
nullnnullsnull, nullcnull nullnull nullarch null. Personal communication nullelephone interviewnull Retired housing
environmental officer.
nullnter for nullighborhood Technology nullnullnull nullnull. nullrban nullving nulllps nullrb nullobal nullrming,
nullile nulltting Personal Transportation nullsts.nullPress release. nullicagonullnullnter for nullighborhood
Technology. httpnullnullww.cnt.orgnullewsnullnullnullnullnullnullnew-maps-show-that-urban-living-helps-curb-
global-warmingnull nullccessed nullring nullnullnull
nullnullnullnsulting. nullnull. nulludy of nullnulls nullte Contamination nullliciesnullnullshington, Dnull nullnull
Department of nullusing and nullban Development, Office of Policy Development and Research.
httpnullnullww.huduser.orgnullublicationsnullestechnulludnulltenullntamination.html nullccessed nullring nullnullnull
Office of nullnagement and nulldget nullnullnull nullnulla. nulltailed Information on the nullnullnullltinullamily
nullrtgage Insurance nullsessmentnullhttpnullnullww.whitehouse.govnullmbnullnullectmorenulletailnull
nullnullnullnull.nullnull.html nullccessed nullring nullnullnull
nullnull nullnullb. nulltailed Information on the nullnullnullltinullamily nullrtgage Insurance nullsessmentnull
nullction nullnull Program nullde nullnullnullnull. httpnullnullww.whitehouse.govnullmbnullnullectmorenulletailnull
nullnullnullnull.nullnull.html nullccessed nullring nullnullnull
nullnull nullnullc. nulltailed Information on the nullnullnullltinullamily nullrtgage Insurance nullsessmentnull
nullction nullnull Program nullde nullnullnullnull. httpnullnullww.whitehouse.govnullmbnullnullectmorenull
detailnullnullnullnullnullnullnull.html nullccessed nullring nullnullnull
nullnull nullnulld. nulltailed Information on the nullnullnullltinullamily nullrtgage Insurance nullsessmentnull
nullction nullnull Program nullde nullnullnullnull. httpnullnullww.whitehouse.govnullmbnullnullectmorenulletailnull
nullnullnullnull.nullnull.html nullccessed nullring nullnullnull
Real nulltate Research nullrporation nullnullnull. nullnull. nulle Costs of nullrawlnull Report prepared for the
nullvironmental Protection nullency. nullicagonullReal nulltate Research nullrporation.
nullhopp, Danielle. nullnull. nullom nullownnulllds to nullusingnullnullportunities, Issues, and nullswersnull
nullshington, Dnull nullrtheast-nulldwest nullstitute.
nullnull Department of nullusing and nullban Development nullnullnull Office of nullmmunity Planning
and Development nullPDnull nullnull. Cnullnullnullpenditure nullportnull nullshington, Dnull nullnull Department of
nullusing and nullban Development, Office of nullmmunity Planning and Development. httpnullnullww.
hud.govnullfficesnullpdnullommunitydevelopmentnulludgetnullisbursementreportsnull nullccessed nullring nullnullnull
nullnull Department of nullusing and nullban Development nullnullnull Office of nullusing nullousingnull nullnull.
nullltifamily nullcelerated nullocessing nullnullnullnullidenullnullshington, Dnull nullnull Department of nullusing
and nullban Development, Office of nullusing. httpnullnullww.hud.govnullfficesnullsgnullfhnullapnullapguidenull
mapguide.cfm nullccessed nullring nullnullnull
nullnull nullnull. nullusing nullnance nullency nullsnullnullaring. nullshington Dnull nullnull Department of nullusing
and nullban Development, Office of nullusing. httpnullnullww.hud.govnullfficesnullsgnullfhnullrogdescnull
risnullharenullnull.cfm nullccessed nullring nullnullnull

83Cityscape
Field Survey onullnullnullSite Contamination Policy
nullnull Department of nullusing and nullban Development nullnullnull Office of nullusing nullousingnull
nullderal nullusing nullministration nullnullnull nullnull. nullnullnullnual nullnagement nullportnullnullscal nullar 200null
nullshington, Dnull nullnull Department of nullusing and nullban Development, Office of nullusing, nullderal
nullusing nullministration. httpnullnullww.hud.govnullfficesnullsgnullhafynullannualmanagementreport.pdf
nullccessed nullring nullnullnull
nullnull Department of nullusing and nullban Development nullnullnull Office of Policy Development
and Research nullDnullnull nullnull. nulludy of nullnulls nullte Contamination nullliciesnull nullshington, Dnull nullnull
Department of nullusing and nullban Development, Office of Policy Development and Research.
httpnullnullww.huduser.orgnullublicationsnullestechnulludnulltenullntamination.html .
nullnull nullvironmental Protection nullency nullPnull, Office of nulllid nullste and nullergency Response
nullnullnullnull nullnull nullarch null. nullmorandumnullnulle of Risnullnullsed Decision-nullnullng in nullT nullrrective
nulltion Programs. Onullnull Directive nullnull.null. nullshington, Dnull nullnull nullvironmental Protection
nullency, Office of nulllid nullste and nullergency Response. httpnullnullww.epa.govnullustnullirectivnull
odnullnullnull.htm.

84 Brownfields

85nulltyscapenullnullnullurnal of nulllicy Development and Research • Volume 12, Number 3 • 2010
U.S. Department of Housing and Urban Development • Office of Policy Development and Research
Cityscape
Brownfields Uncertainty:
A Proposal To Reform
Superfund
nullvid Slutnully
nulliversity of nullirginia
nullnull Frey
nullashington and nulle nulliversity
nullstract
nullor decades nullmericans hanulle been trying to renullerse the momentum of urban declinenull In
an effort to ensure that abandoned, contaminated properties were cleaned up, Congress
enacted the Comprehensinulle nullnnullironmental nullesponse, Compensation, and nulliability
nullct of 1nullnull0, or CnullnullCnullnull, also nullnown as the nulluperfund nullctnull nullith the creation of the
nulluperfund program, a liability scheme was put in place to manulle sure that brownnullelds
would be cleaned up so they could be put into productinulle reusenull nullnfortunately, the
uncertainties associated with this liability framewornull hanulle been declared by some to be
the primary impediment to brownnulleld redenullelopmentnull nullrinullate denullelopers, who might
otherwise pronullide the resources needed for redenulleloping brownnullelds into nullital comnull
munity assets, are drinullen away from purchasing or innullesting in brownnulleld sites by the
potential for catastrophic federal and state regulatory and tort liabilitynull nulls a result,
many brownnullelds continue to sit nullacant or underutilizednull
nullhis article offers a solution to the risnull and uncertainty resulting from federal and
state cleanup and thirdnullparty tort liability often associated with brownnulleld sites, while
presernulling the current liability scheme as it pertains to parties actually responsible for
the contaminationnull nullo mitigate the liability and tort concerns of potential brownnulleld renull
denullelopers, this article proposes the creation of an absolute wainuller of federal and state
cleanup and thirdnullparty tort liability for truly innocent prinullate parties that undertanulle
to redenullelop brownnulleld sitesnull nullur proposed federal legislatinulle reforms, coupled with innull
centinulles for statesnull participation, should sernulle as a catalyst for prinullatenullparty brownnulleld
redenullelopment while strengthening the nullscal nullitality of the nulluperfund program without
reliance on tanullpayer dollarsnull

86 Brownfields
Slutnully and Frey
Brownfield Redevelopment: Why Is It Important and Why Is
It Not Happening?
null you drive around any city in the nullited nullates, it will not tanull long before an abandoned gas
station, shuttered steel mill, or long-defunct factory comes into view. These often-polluted urban
properties, the vacant and abandoned relics of nullericanull industrial past, are commonly referred to
as brownfields, and they are emblematic of the urban blight plaguing nullnull cities today. nullcording
to statute, a nullrownfield sitenullis any nulleal property, the enullansion, redevelopment, or reuse of
which may be complicated by the presence or potential presence of a hanullrdous substance, pollut -
ant, or contaminant.null
null
The nullnull nullvironmental Protection nullency nullPnull estimates that more than
nullnullnullnullbrownfield sites currently enullst in the nullited nullates, but other sources put the number
at well over nullmillion nullPnull nullnullnull Ranging in sinull from less than nullacre to hundreds of acres,
brownfield sites enullst in cities and towns all over the country, where they drain local resources,
waste vital urban space, and often provide a breeding ground for crime nullee nullsen, nullnullnull
The label brownnulllds distinguishes these sites from their counterparts, greennulllds, which are un-
developed suburban and rural parcels of land that real estate developers often prefer for their
seemingly low development costs and freedom from environmental contamination and accompa-
nying liability concerns. null actuality, the costs associated with the neglect of brownfields in favor
of greenfield developments are quite high, but those costs are borne by the community as a whole
rather than by individual developers. nullen the urban landform enullands into greenfield sites, the
resulting sprawl contributes to a litany of unwelcome consequences, such as increased vehicle miles
traveled, which in turn leads to increased automobile emissions and longer commutes nullDavis, nullnullnullnullnull.
Of even greater concern is the degradation of valuable ecological systems that provide essential
service value to communities. The degradation results from lost farmland and open space when
urban areas enullerience sprawl.
Throughout the past few decades, much attention has been focused on the importance of public
policy in stemming the tide of urban sprawl. nullch of this interest has manifested in the promotion
of nullivable communitiesnullto attract people into urban centers and away from the periphery of the
urban landform. nullome localities have implemented policies designed to encourage more of a minulled-
use, neighborhood feel to new urban developments, and others have included encouraging state-
ments of intent in their comprehensive plans that suggest development be limited to designated
growth areas nullee, for enullmple, nullnull nullnference of nullyors, nullnullnullnulltional nullvernornull nullsociation,
nullnullnull nullfortunately, brownfield sites continue to persist within the urban ring, and most efforts
to reduce or prohibit further growth in rural greenfields have been ineffective.
null
nullcalities have
relied on policies of persuasion and the enticement of the promise of livable urban neighborhoods
rather than tanullng definitive steps to limit rural area development and to address obstacles to
brownfield redevelopment.
null
nullall nullsiness nullability Relief and nullownfields Revitalinulltion nullt, null nullnullnull nullnullnullnullnullnullnull
null
The authors acnullowledge that significant efforts and manullr investments have been made to reduce the number of
brownfield sites, particularly by nullnulland nullD, but it is our contention that, for the most part, these efforts have proved to
be insufficient.

87Cityscape
nullonullnulllds nullcertainty: A Proposal nullo Renullrm Supernullnd
null response to several notorious hanullrdous waste catastrophes enullosed in the nullnulls, nullngress
passed comprehensive legislation designed to address growing public concern about the tonullc
legacy of our industrial past. The Resource nullonservation and Recovery nullct of nullnullnullnull nullRnullRnullnull provided
a complenullstructure of cradle-to-grave rules governing the treatment, transportation, storage, and
disposal of hanullrdous waste.
null
To provide further incentive for industry to comply with the man-
dates of Rnullnulland to address properties that became contaminated before the enactment of Rnullnull
by imposing a comprehensive cleanup liability framewornull nullngress passed the nullmprehensive
nullvironmental Response, nullmpensation, and nullability nullt of nullnull nullnullnullnull, commonly nullown
as the nullperfund nullt.
null
nullthough these hanullrdous waste statutes in tandem provide much needed
incentive for industry to avoid contaminating our lands and are therefore remarnullbly effective in
protecting nullericans from enullosure to hanullrdous waste, their liability provisions provide powerful
disincentives for potential redevelopment of urban properties. null fact, many would argue that the
threat of nullperfund liability is the single greatest impediment to the redevelopment of brownfield
sites nullee, for enullmple, Davis, nullnullnullRubenstein, nullnullnullnullderson, nullnullnull
nullattered within and among some of the most commercially desirable urban centers in the country,
brownfield sites are suspended in a sort of regulatory limbonullalthough not specifically designated as
nulluperfund sites and listed by nullPnull on the nullational Priority nullist nullnullPnullnull, they are nonetheless tarred by
their potentialnullreal or perceivednullfor costly environmental regulatory and third-party tort liability.
nullncertainty is the enemy of economic activity. nullrban redevelopment activities are stymied in the face
of uncertainty, and nullRnullnullliability represents great uncertainty. nullfore a developer will move
forward with a pronullect, he or she must be convinced that the effort will provide a favorable financial
outcome. The potential for hanullrdous waste cleanup or third-party tort liability represents a signif -
icant uncertainty for a brownfields redeveloper. nullcause most development requires significant
debt capital, and because lenders are notoriously risnulladverse, it is no wonder that brownfield sites
regularly fall victim to the uncertainties associated with nullRnullnullliability. nullthough many sites are
only nominally contaminated, or indeed contamination free, the perceived stigma and uncertainty
over regulatory and third-party tort liability attached to ownership of such sites nullep otherwise
desirable redevelopment opportunities off the marnullt or off the radar of potential purchasers.
This article will attempt to offer a solution to what is possibly the most tenacious challenge facing
brownfield redevelopmentnullhe risnulland uncertainty surrounding federal and state cleanup and
third-party tort liability for private parties who wish to acquire and revitalinull brownfield sites. This
article proposes to mitigate the perils of brownfields redevelopment by allowing for an absolute
waiver of federal and state regulatory and tort liability for truly innocent private parties that under-
tanull to redevelop brownfield sites. The argument rests on the premise that the related obnullctives of
nullnullreducing barriers to urban redevelopmentnullnullnullpromoting livable, affordable urban housingnull
and nullnullreducing the rate and intensity of rural and suburban greenfield development are norma -
tively positive goals that ought to be vigorously pursued. This article focuses on the first obnullctivenull
the reduction of barriers to urban redevelopment. null is important to recogninull, however, that all
null
null nullnullnull nullnullnull.
null
null nullnullnull null nullnull-nullnull.

88 Brownfields
Slutnully and Frey
three obnullctives are interconnected and indispensible to one anothernullfacilitating one obnullctive
furthers them all.
Understanding Superfund Liability and Its Impact on
Brownfields
RnullRnull was enacted to provide a structured approach to the private management of hanullardous waste
in an effort to ensure that such tonullc byproducts of industry did not come into contact with people
or sensitive ecological systems. Through nullRnullnull however, nullnullwas given a mandate to respond
to and ensure the cleanup of those properties that nevertheless have become the nationnull worst
hanullrdous waste sites. null a property has enullerienced a release of hanullrdous waste and is contami -
nated such that nullnulldetermines that it must be cleaned up, the agency lists the site on the nullnulland
may then tanull action to ensure that the responsible parties clean it up. The nulleleasenullof hanullrdous
substances includes the nullpilling, leanullng, pumping, pouring, emitting, emptying, discharging,
innullcting, escaping, leaching, dumping, or disposing into the environmentnullof any hanullrdous mate -
rial.
null
On the state level, many legislatures have given their state environmental protection agencies
similar powers under state statutory versions of nullRnullnull nullthough the particulars of hanullrdous
waste cleanup legislation vary from state to state, many of the state cleanup liability provisions are
similar to those of nullRnullnull
nullhen nullPnull begins a cleanup of hanullardous waste pursuant to nullnullRnullnullnull, it endeavors to identify those
parties potentially responsible for the release pursuant to nullRnullnulls liability provisions. These
potentially responsible parties nullRPsnullinclude the individual or corporate owners of contaminated
property, both past and present. They can also include site operators and managers, tenants, investors,
people who transported hanullrdous substances to the site, or any other party found to have created
or contributed to a hanullrdous substancenull release on the site. nullRnullnullgives nullnullthe authority to
require PRPs to undertanull a cleanup to protect human health and the environment. nullternatively,
nullnullcan proceed to clean up the site itself and then order PRPs to reimburse the government for
the response actions.
nullRnullnullimposes enullraordinary liability, in the form of nullint and several as well as strict liability on
PRPs. null a PRP meets the statutory standard for responsibility, it is potentially responsible for the
entire cleanup by itself. nullcause this liability is retroactive, developers who purchase the property
after all contaminating activities have ceased can still be held responsible for cleanup costs.
nullrther, potential liability is not a function of negligence on the part of the PRP. nullt surprisingly,
the liability provisions of nullRnullnulland similar state hanullrdous waste cleanup statutes have had a
profound chilling effect on brownfield redevelopment efforts, owing to concerns that the redevel-
opment of these sites might enullose the property owner to potentially limitless cleanup liability.
nullcore principle behind nullRnullnulls tough liability provisions is the notion that polluters should be
responsible for cleaning up contaminated sites. nullth the enactment of nullRnullnull this polluter pays
principle was enullressed in two ways. nullrst, parties that caused the contamination were held liable
null
null nullnullnull nullnullnull.

89Cityscape
nullonullnulllds nullcertainty: A Proposal nullo Renullrm Supernullnd
for its cleanup. nullcond, producers of chemicals and petroleum were required to pay a tanullthat
was put into a special trust fund to be used to support cleanup efforts at sites where no financially
viable PRP could be identified. During the early years of the nullperfund program, this polluter tanull
provided a significant portion of the funds needed to clean up sites on the nullnull null nullnull, however,
the polluter tanullon chemical and petroleum producers was allowed to enullire and has not been
subsequently renewed. null a result, the fund has effectively run out of money and thus the cost of
continued cleanup for those sites where the PRPs are either gone or insolvent comes out of nullnulls
yearly appropriations, giving nullPnull even more incentive to pursue and obtain cleanup costs from PRPs.
nullth the threat of liability hanging over these properties, developers are reluctant to buy them,
even at discounted rates, and risnullaverse lenders are even more reluctant to fund such pronullcts for
fear of losing their collateral in the event of manullr environmental liability. The disincentives created
by federal and state cleanup liability affect both municipalities and private industry. nullties are
rendered powerless to curtail sprawling greenfield development because they cannot offer cost-
effective urban alternatives. They are forced to watch their tanullbases languish as urban properties
sit unused and development nulles to the countryside. The otherwise willing private sector, which
would seem to favor developing brownfields due to their pronullmity to enullsting infrastructure such
as access to utilities and transportation corridors, is nullpt from innullcting needed capital into urban
development because of uncertainty over harsh environmental cleanup and tort liability.
The Innocent-Purchaser Defense to CERCLA Liability: Is It
Enough?
nullnce nullRnullnullwas enacted, concerns about its chilling effect on brownfield redevelopment have
resulted in numerous efforts to modify the statute and its implementation. nullginning with the
nullownfields nulltion nullenda initiated in nullnull, nullnulland interested stanullholders have tried to com -
promise the liability provisions of nullRnullnulland reassure lenders and prospective purchasers of
brownfield sites in the hope of stimulating urban revitalinulltion. null an effort that has proven to be
only nominally helpful, nullnullidentified sites that appeared in the nullperfund programnull nullRnullnull
database, but that had been evaluated by nullnulland determined to be of no further federal interest,
and placed them into an archive database in the hope this would destigmatinull these sites.
nulloth nullongress and nullPnull have recogninulled the impediment that nullnullRnullnullnull liability presents to brown-
field redevelopment and have attempted to remedy the situation. null nullnull, nullngress passed the
nullset nullnservation, nullnder nullability, and Deposit nullsurance Protection nullt nullender Protection
nulltnull
null
The act was meant to limit the liability of lenders who financed brownfield developments
that were later foreclosed on. This amendment to nullRnullnulls liability structure finulld a problem that
lenders had been having, wherein they were being held liable as PRPs under nullRnullnullfor cleanups
of properties that they did not actively manage, but which they became owners of by virtue of
foreclosure. nullr those lenders who did not actively manage a contaminated property but merely
held the property to protect their security interests, the nullnder Protection nullt amended nullRnullnull
to enulllude them from the statutenull definition of owner or operator.
null
null nullnullnull nullnullnullnullnullnull.

90 Brownfields
Slutnully and Frey
nullthough the nullnder Protection nullt to some enullent protects lenders from the grasp of nullperfund
liability, lenders can still find themselves suffering significant financial consequences. nullnders are
still vulnerable to loss of value of the asset securing their loan and the uncertainties associated with
the requirements of the nullnder Protection nullt. null addition, efforts have been made, both on the
national and the state level, to attempt to mitigate liability for developers of brownfield sites who
would not otherwise be liable for claims arising from the potentially hanullrdous condition of the
properties. These efforts, however, have not proven to be effective enough to attract most redevel-
opment players into the brownfield marnullt. nullre is still needed to ensure that private parties who
voluntarily undertanull to clean up and develop brownfield sites can achieve complete insulation
from the uncertainties of cleanup and third-party tort liability.
nullortly after the enactment of nullRnullnull the commercial real estate industry began to focus on a
category of nullnullRnullnullnull defenses to liability based on the nullact or omission of a third partynull as a potential
way to reduce liability uncertainty. The nullinnocent landownernull defense, which was enhanced through
the nullperfund nullendments and Reauthorinulltion nullt nullnullnull of nullnull,
null
granted liability relief to
parties who could show that, prior to purchasing a contaminated property, they nullid not nullow
or have reason to nullownullthat any hanullrdous substances had been or were being released on it. null
property owner could show that he or she had nullno reason to nullnownull of the sitenulls condition if he or she
had conducted nullll appropriate inquiriesnullinto the history and condition of the property prior to
purchase. This nullall appropriate inquiriesnull nullnullnullnullnull standard, although left undefined by nullnullRnull, became
increasingly important in determining whether landowners could be considered PRPs in cleanup
actions for contamination they had no part in causing. Tracnullng the statutory requirements of the
innocent landowner defense, the commercial real estate industry collectively established a risnull
mitigation process nullnown as a Phase null nullnvironmental nullite nullssessment nullPhase nullnull, which was intended
to satisfy the nullnullrequirement. The implementation of the Phase nullassessment process was a great
success, and within a few years of nullRnullnulls enactment, the industry had put in place institutional
requirements for a Phase nullon nearly every transaction in enulless of null million.
nullfortunately, much of the uncertainty associated with cleanup liability remained. null an attempt
to manull access to the defense more effective, the commercial real estate industry nullined forces with
the emerging environmental consultant industry to create a standard definition for nullnullthrough
the nullerican nullciety for Testing and nullterials nullnullnull. null nullnull, nullTnullpublished nullnullnull nullandard
nullactice for nullnullronmental nullte nullsessmentsnullnullase I nullnullronmental nullte nullsessment nullocess . null its best,
this standard provided consistency to what level of due diligence would qualify for a defense, but
liability was not necessarily avoided and the uncertainty from nullRnullnullliability, as well as state
cleanup liability and third-party tort liability, remained an impediment to brownfield redevelopment.
nullngress again attempted to address some of this uncertainty with the passage of the nullall
nullsiness nullability and nullownfields Revitalinulltion nullt nullrownfields nulltnullin nullnull.
null
The act further
clarified the standard of due diligence required for the innocent-purchaser defense, introduced
the concept of the bona fide prospective purchaser nullnullPnull and also clarified the situations in
which liability applies to owners of properties contiguous to a nullperfund site. The nullownfields
null
null nullnullnull nullnullnullnullnullnullnullinull
null
null nullnullnull nullnullnullnullnull.

91Cityscape
nullonullnulllds nullcertainty: A Proposal nullo Renullrm Supernullnd
nulltnull clarification of these two important defenses, the innocent-prospective purchaser defense and
the contiguous-property-holder defense, marnull the most significant step yet toward eliminating
liability barriers to brownfield redevelopment.
The contiguous-property-holder defense evolved, in part, out of a policy directive that nullnull
originally issued in nullne nullnull. Recogninullng the need to grant liability relief to property owners
whose ground water became contaminated by hanullrdous substance releases on nearby properties,
nullnullissued a policy memorandum that stated that nullubnullct to certain conditions, where hanullrdous
substances have come to be located on or in a property solely as a result of subsurface migration
in an aquifer from a source or sources outside the property, nullnullwill not tanull enforcement actions
against the owner of such propertynullnulliamond, nullnullnull Property owners had to meet certain condi -
tions to be eligible for contaminated-aquifer protection. They could not have caused or contributed
to the release, been affiliated with or been in a direct or indirect contractual relationship with the
party or parties responsible for the release, and could not be otherwise potentially liable for the
release. null addition, nullnullcould, at its discretion, accept payment of a de minimis settlement from a
contaminated-aquifer owner in enullhange for a grant of immunity from third-party contribution.
The bona fide prospective-purchaser defense, perhaps the most important feature of the nullnull
nullrownfields nullct, was an effort to clarify and enullpand the innocent-purchaser defense and encourage
private parties to undertanull brownfield redevelopment. nullder the statute, as amended, if a party
satisfies the following conditions, they are considered eligible for the prospective-purchaser defensenull
null The property must have been purchased after nullnuary null, nullnull.
null The purchaser must show that all disposal of hanullrdous waste occurred before the purchaser
acquired the property.
null The purchaser must undertanull nullnullinto the sitenulls nullrevious ownership and uses.null
null The purchaser must provide nullll legally required noticesnullof any future hanullrdous substance
releases on the property.
null The purchaser must nullnullrcise appropriate care with respect to hanullrdous substances found at
the facilitynullby tanullng reasonable steps to nulltop the release, prevent future releases, and limit
enullosure to released substances.null
null The purchaser must not be nullotentially liable, or affiliated with any other person that is
potentially liable, for response costs at a facility.nullnullfiliation, under the act, can be familial,
contractual, financial, or corporate.
null
The nullownfields nullt officially mandated that nullnullpromulgate a rule to define the previously vague
nullnullstandard within nullyears of the actnull passage. nulltil such time as nullnullissued its rulemanullng,
the nullownfields nullt established that the nullnull revision of the nullTnullnullnullnullwould constitute the
standard for nullnull. null nullnull, nullnullcompleted its rulemanullng process, issuing nullandards and Practices
for nulll nullpropriate nullquiries, null Dnull Part nullnullnullovember nullnullnullnullhe nullnullRulenull nullrrently, this
is the operative definition of nullnullwith respect to the innocent-purchaser defense under nullRnullnull
null
null nullnullnull nullnullnullnullnull.

92 Brownfields
Slutnully and Frey
nullthough it is a welcome clarification for potential brownfield redevelopers and their lenders, this
standard is still difficult to satisfy, because it requires, as a condition precedent to establishing the
innocent-purchaser defense, that the Phase nullnot contain any data gaps. nullder the definitions set
forth in the nullnullRule, it is often quite difficult to avoid having at least some data gaps.
The Unavailable Solution to the Problem of Uncertainty
nulleally, the developer of a hypothetical brownfield site would be able to reduce the uncertainty
associated with nullRnullnullliability nulls well as state cleanup liabilitynullif, after performing a Phase null
the developer could asnullnullnullto review the report and then have the nullency issue a letter stating
that the Phase nullsatisfies the nullnullRule and that the developer is not liable for any future cleanup
costs attributable to prior activities at the site.
nullmilarly, if some level of contamination was discovered at the site, the developer might still be
willing to remediate the site. null this case, the developer would want to asnullnullnullto review the
final cleanup documentation to confirm that the site has been cleaned up to the satisfaction of
the nullency, and that no liability for future cleanup remains. null the remediation is enullensive, the
developer would want to asnullnullnullto review the remediation wornullplan before performing the
cleanup to ensure that it is appropriate and then asnullnullnullto perform oversight and review of the
final documentation of the remediation, again establishing that no further liability enullsts.
nullfortunately, nullnullis unable to provide these services to the private sector. One reason is that the
review of these efforts would require significant staff time. nullthough the development community
would be pleased to pay for that time, under current law nullnullcannot accept payment, because it
would be considered a supplemental appropriation. nullnullwould be required to remit the payments
received to the Treasury, and the money would not be returned to nullnullto cover the cost of the
staff time. nullrther, no current mechanism enullsts through which nullnullcan routinely guarantee the
developer that no further liability enullsts. null addition to concerns about federal cleanup liability,
further uncertainty is associated with state cleanup mandates and third-party tort liability, and no
available mechanisms enullst to address these concerns.
A Proposal for Superfund Reauthorization
null previously discussed, the current nullperfund regime suffers from two manullr problems. nullrst,
significant uncertaintynullattributable to the liability provisions of nullRnullnull state cleanup liability,
and third-party tort liabilitynullrepresents a manullr disincentive for urban redevelopment. nullcond,
what is now nullown as the nullperfund Trust nullnd, which is used for remediating sites where no
financially viable PRP enullsts, is chronically underfunded.
nulle propose that nullongress reauthorinulle nullnullRnullnullnull in a manner designed to address these two concerns.
nullirst, the proposal aims to reduce and, in time, eliminate the cleanup liability risnulls that accompany
voluntary, private-party brownfield redevelopment pronullcts. nullcond, the proposal aims to provide
a renewed and continuous nullw of funding to the nullperfund Trust nullnd, which has been steadily
diminishing since the suspension of the polluter tanull null manullng contributions to the fund volun -

93Cityscape
nullonullnulllds nullcertainty: A Proposal nullo Renullrm Supernullnd
tary and by spreading the responsibility for sustaining the fund to many more private actors, the
proposal will ensure the continuing vitality of the nullperfund Trust nullnd, establishing a sustainable
funding source for the nationnull most serious nullperfund cleanup responses.
The proposal consists of four elementsnull
null nulleating a new nullperfund Trust nullnd, called the nullperfund nullrtification Trust nullnd, to be
managed by nullnullfor the purpose of receiving contributions from private parties to cover the
staff needed to review Phase nullnulls, cleanup wornullplans, and remediation closure documents on
behalf of parties who wish to purchase and redevelop brownfield sites.
null nullthorinullng nullnullto issue a nullrtificate of nulligibility for null aiver of nullability to a party purchasing
real property, upon request, based on a review by nullnullof the satisfactorily completed Phase null
and site cleanup, if necessary.
null nulluthorinulling nullPnull to issue a nullaiver of nulliability to a purchasing party who nullanull acquires a nullertificate
of nullligibility for nullaiver of nulliability and nullbnull manulles a small nullde minimisnull contribution to the original
nullperfund Trust nullnd, now called the nullperfund nulleanup Trust nullnd. The nullaiver of nullability
grants immunity from federal nullRnullnulland third-party tort liability potentially arising from
pre-enullsting hanullrdous environmental conditions on the site in question.
null Delegating to state environmental agencies the authority to administer the new oversight and
certification programs, subnullct to the condition precedent that states seenullng delegation enact
comprehensive legislation granting immunity from state regulatory and state third-party tort
liability to holders of nullnullissued nullaivers of nullability.
To illustrate how the proposal would wornullin practice, envision a hypothetical scenario in which a
real estate developer is considering investing in a brownfield redevelopment pronullct. The brown -
field sits in an urban area with potential for growth and redevelopment. The developer wants to
build a minulld-use residential and commercial complenullon the site and estimates that the pronullct
would yield a reasonable return on investment, but for the cost of the uncertainties attributable
to environmental liability. The site is a former industrial plant, which, based on its previous use,
may be contaminated with hanullrdous waste, although no environmental site assessment has been
completed for the site. The developer may be driven away by the environmental uncertainties,
or, if not, may have limited access to development capital due to potential lendersnulltraditional
intolerance of risnull The developer cannot purchase and redevelop the property while the risnullof
potentially ruinous environmental response and third-party tort liability hangs over his or her
head. null a result, the property remains vacant and unused.
nullth the proposalnull amendments to nullRnullnullin place, the developernull situation becomes much dif -
ferent. The developer begins the process by commissioning a Phase null nullst as is done today. null the
report reveals no indications of potential contamination, the developer submits the report to nullnull
along with a request for review and a checnullfor a predetermined amount, payable to the nullperfund
nullrtification Trust nullnd.
null
nullnullnullr the state, if it has qualified for delegation of authority to
null
nulle enullect the price of the nullrtificate to be about nullnull, based on the anticipated cost of review time, including the
reviewernulls salary and associated overhead.

94 Brownfields
Slutnully and Frey
administer the program by adopting appropriate state legislation and requesting delegation from
nullnull then reviews the report and determines if it satisfies the standards of the nullnullRule and reveals
no indications of environmental concern. null the report is satisfactory, nullnullthen issues a nullrtificate
of nulligibility for a nulliver of nullability.
nullt is possible that the developer will be satisfied with the nullertificatenull however, the developernulls lender
may require the developer to proceed to seenulla nulliver of nullability for the site. This waiver would
be automatically provided upon receipt of a predetermined contribution to the nullperfund nulleanup
Trust nullund.
nullnull
The nullaiver would be written in such a way that it protects the purchaser of the property
and the purchasernull lendernullhowever, it would not protect subsequent parties. The nulliver would
be structured to enullmpt the developer from liability associated with any subsequently discovered
contamination that occurred before his or her ownership, but the developer would be nullept on the
hoonullnull for any contamination that clearly occurs after he or she tanulles ownership. The developer must
be nullpt on the hoonullto ensure that any intervening contamination events at the site are identified
and, further, that the party in ownership of the property who was in a position to avoid this con-
tamination event is now responsible for its cleanup. This provision would prevent the nulliver
from becoming a license to allow subsequent contamination of the site. nullen a property subnullct
to a nullaiver is sold, the purchaser would need to go through the same process if they were to avail
themselves of a nulliver, which would have the beneficial result of additional revenue for the nullper-
fund nulleanup Trust nullnd.
null the Phase nullreveals a potential contamination issue, then the developer commissions a Phase null
nullvironmental nullte nullsessment, seenullng to determine if contamination enullsts. This assessment may
result in a clean report or a report that recommends cleanup. nullclean report would result in the
issuance of a nullrtificate of nulligibility for a nulliver of nullability. null the report identifies the need for
remediation activities, the property owner could pay nullnullto review the proposed wornullplan and
then review the documentation demonstrating the results of the cleanup activities. This way, the
cleanup activities would be conducted subnullct to nullnullreview and, in some cases, oversight, which
should result in greater uniformity of cleanup standards across the country and better assurance
that wornull is performed correctly. nulln all cases, after the property owner has adequate documentation
that the site is indeed clean, the site would earn a nullrtificate of nulligibility for a nulliver of nullability.
The nullrtificate of nulligibility for a nulliver of nullability would not in itself grant any immunity to
the developer. null effect, it is a record establishing that the developer has met the requirements for
nullPP status. null the developer stops the process here, the nullrtificate provides strong evidence to
present in court that he or she has undertanulln nullnull in the event that the developer must defend
himself or herself against an nullnullcleanup enforcement or contribution action. The developer,
however, now has a further step he or she can tanull to ensure immunity. null, after receiving the nullr -
tificate, the developer manulls a de minimis contribution to the nullperfund nulleanup Trust nullndnull
in effect, a settlement with nullnullto limit his or her liability for any future discovery of hanullrdous
releases previously occurring on sitenulle or she would be granted a nulliver of nullability. The
null
nullr a property valued at between null million and nullnullmillion, we anticipate that the waiver will be priced between
nullnullnullnulland nullnullnullnullnullignificantly below the marnullt value of the reduction of risnullassociated with the waiver nullee, for
enullmple, nullernstedt et al., nullnullnull

95Cityscape
nullonullnulllds nullcertainty: A Proposal nullo Renullrm Supernullnd
nulliver would grant the developer immunity from cleanup and third-party tort liability arising
from future response actions on the site, provided, of course, that the developer had no part in
causing the hanullrdous release in question. null this way, the developer would be insulated from
liability arising from any unanticipated hanullrdous conditions on the site, which he or she has had
no part in creating and which he or she has made every reasonable effort to locate and clean up.
nullnully to the effectiveness of this process is the willingness of states to tanull on delegated authority
to oversee site assessments and cleanups and to issue nullrtificates and nullivers. null a condition
of having this authority delegated to state agencies, state legislatures would need to pass legisla-
tion giving the federal nulliver of nullability full force and effect on the state level and declaring
that a nulliver of nullability relieves the holder of any potential state regulatory or third-party tort
liability connected to environmental conditions on the site, as long as the holder is not otherwise
responsible for creating such conditions. nullates would have an incentive to tanull on this oversight
and certification authority because it would give them a role in the cleanup of brownfield sites and
would generate nullbs either in state government or in the private sector, because state agents or
private contractors would be needed to perform the review, oversight, and processing of requests
for nullrtificates and nullivers.
Evidence of Market Demand for CERCLA Liability Reform:
The Price of Uncertainty
The proposalnull success relies on a demand for increased certainty in the field of environmental
liability for private parties. null the value of acquiring an official nulliver of nullability is less than the
perceived cost of the risnull then developers and, more importantly, lenders will not tanull advantage
of the changes in nullRnullnulls liability framewornull nullthough further research is needed to establish
enullctly what price the marnullt will put on the nullivers of nullability, enullsting research supports the
enullistence of a general demand for such protection. nulln a nullnullnullnull discussion paper published by Resources
for the nullture, a nullshington, D.null thinnulltannull nullis nullrnstedt, nulluren nullberle, nullna nullberini,
and Peter nullyer enullmine the relative interest to private developers of various public interventions
to promote brownfield redevelopment. They conclude that, of a number of options offered to
developers in a written survey, nullelief from liability for future cleanup at the nullrownfieldnullsitenulland
nullelief from liability claims by third parties such as site wornullrs and adnullcent land ownersnullare the
most highly valued by developers in assessing the effect on a hypothetical brownfield redevelop-
ment pronullct nullernstedt et al., nullnullnullnullnullnull.
The survey was sent to a sample of more than nullnullnull real estate developersnullsome specialists in brown-
field redevelopment, some generalists. They were asnulld to assess a hypothetical contaminated site
where they would be building a residential complenull. nulln addition to financial figures, such as nullenullpected
land purchase, investigation, remediation, and redevelopment costs and enullected gross returns on
the property,nullthe survey offered null number of different public interventions that developers could
choose to improve their enullected return on the site.nullThe study estimated the relative value of
different public incentives based on analysis of the respondentsnullchoices. The results of the survey
show that the value to developers of liability relief for future cleanups and third-party tort liability
is significant. The average monetary value that the survey respondents placed on relief from future

96 Brownfields
Slutnully and Frey
cleanup liability risnullwas nullnullpercent of the pronullctnull total cost and null.nullpercent of enullected profit.
The average value that respondents placed on relief from future third-party liability risnullwas nullnull
percent of total pronullct cost and null.nullpercent of profits nullernstedt et al., nullnullnull
The message of the nullrnstedt survey is clearnulldevelopers value and desire relief from liability risnull
in the contenull of brownfield redevelopment. null fact, they value it significantly. nullplied to the
enullected costs and profits from the surveynull hypothetical brownfield redevelopment pronullctnullhe
enullected value of the pronullct at completion was nullnullmillionnullhe respondentsnullvaluation of the
immunity from cleanup liability risnullnull.nullpercent of cost and null.nullpercent of profitnullwas nullnull,nullnull
and their valuation of the immunity from third-party tort liability risnullnull.nullpercent of cost and null.null
percent of profitnullwas nullnull,nullnullnullernstedt et al., nullnullnull These values are not insubstantial, and,
although the survey offers nullst one estimate of the marnulltnull valuation of a hypothetical liability
waiver, it provides a starting point and confirms the idea that the elimination of cleanup liability
and third-party tort liability risnullfor developers will have a positive effect on their decisions to
undertanull brownfield pronullcts.
Responding to Questions and Concerns
The elegance of the proposal is encapsulated in the idea that the only parties nulllet off the hoonullnull under
the new framewornullare those that are not nulln the hoonull currently and are not linullly to allow them-
selves to get on the hoonull. Polluters currently liable for contamination would still be held responsible
for all future cleanups nullust as they currently are, but voluntary private purchasers who did not cause
the enullsting contamination but who want to redevelop brownfield sites would not be liable. The
same people who are PRPs today will be PRPs tomorrownull however, innocent parties who wish to
contribute to the revitalinulltion of urban landscapes but are unwilling to do so in the face of current
liability uncertainty would be able to proceed without concern.
The nulliver of nullability would apply only to hanullrdous releases occurring before the redevelopernull
tanulling title. nullt would not enullempt even a good-faith voluntary redeveloper from liability for contamination
he or she creates or contributes to. nullch linull the current liability framewornull parties who are in
any way related to potential PRPs through business, familial, or contractual ties, would not be
eligible for a nulliver of nullability. nullrthermore, each new owner of the property would be required
to obtain a new nullrtificate of nulligibility and nulliver of nullability, ensuring that the site is periodi -
cally reenullmined and that contributions continue to nullw to the nullperfund nulleanup Trust nullnd.
The standards that private parties must satisfy in performing environmental due diligence and in
remediating contaminated property would remain as they are today. nullon successful completion
of these efforts, however, potential brownfield redevelopers would be able to reduce their uncer-
tainty and obtain a nulliver of nullability pertaining to federal, state, and third-party tort liability.
nullrtificates of nulligibility need not vary significantly from current nullnullstandards for undertanullng
nullnull nullwever, nullnullwould, in effect, waive the current data-gap enulleption in the nullnullstandard. null
is unreasonable to enullect private parties to be able to provide data for the sitenull entire history of
use and ownership. nullsuming a proper and thorough environmental site assessment is conducted
according to nullnullstandards, unavoidable missing pieces in the sitenull history should not stymie the

97Cityscape
nullonullnulllds nullcertainty: A Proposal nullo Renullrm Supernullnd
granting of a nullrtificate, provided that reasonable efforts are made to fill in all data gaps. nullain, the
parties that would be absolved of liability in these instances are parties that would not otherwise
subnullct themselves to the liability under the current nullperfund regulatory regime.
null number of values would need to be established by the marnullet for the new system to wornull properly.
The amount that private developers would be required to contribute to the nulluperfund nullleanup Trust
nullnd in order to receive a nulliver of nullability would be significantly below the nullivernull marnullt
value but would need to be determined. nullnders, eager to miniminull or eliminate the risnullof their
investment collateral being diminished in value by environmental liability, would be willing to
discount interest rates for brownfield developers who can provide nullaivers of nulliability for their sites.
The marnullet would determine the value of this discounted rate. nullt is linullely that lenders would require
that developers obtain nullivers of nullability before financing brownfield redevelopment pronullcts,
much as they require a Phase nullon all commercial real estate transactions greater than null million.
The contribution to the nullperfund nulleanup Trust nullnd would in essence operate linull a premium
for a liability insurance policy that protects the owner and lender from the uncertainties of
environmental liability.
nullmilarly, the revenue streams contributed annually to the nullperfund nulleanup Trust nullnd would
be a function of the number and sinull of commercial real estate transactions made each year. null is
enullected, however, that these amounts would be significantly larger than the current level of ap -
propriations allocated to nullperfund cleanup actions, and the funding would, in effect, be entirely
voluntary on the part of the contributors.
nullsentially, this proposal provides potential redevelopers of brownfield sites a mechanism by
which they can reduce or eliminate the uncertainties associated with environmental liability that
currently operate as disincentives to such redevelopment activity. null the real estate industry can
get nullnullto absolve them of cleanup liability and third party tort liability, and that absolution is
effective at both the federal and state level, a manullr increase in the redevelopment of brownfield
sites should occur nationally. This increase is possible, however, only if the certainty of the nulliver
of nullability is available.
The nulliver would function in a manner not unlinull an insurance policy, which transfers risnullaway
from the policyholder to another party. null this proposal, the nullperfund nulleanup Trust nullnd would
become the recipient of the transferred risnull and the payment by the nulliver holder into that fund
would be not unlinull the payment of an insurance premium. The public would suffer no additional
burden, because the parties obtaining nullivers are, for the most part, parties that would not have
subnullected themselves to liability without the nullaiver, and thus would not have been PRPs. The public,
however, would benefit greatly by increasing the opportunity for brownfield sites to be redeveloped.
null allowing the states to participate in the nulliver process, this proposal creates an incentive for
states to enact legislation that would include state cleanup and third-party tort liability in the
nulliver. nullate participation allows for devolution of the administrative implementation of the
nulliver process, which reallocates some of the revenue streams associated with the nullperfund
nullrtification Trust nullnd to the states, which in turn provides an opportunity for states to distribute
their agency overhead costs across a larger universe of activities.

98 Brownfields
Slutnully and Frey
null is important to note that this proposal has many very specific dimensions that this article does
not thoroughly address. nulllthough many would say that the devil is always in the details, this proposal
represents the framewornull for a significant solution to one of the greatest impediments to brownfield
redevelopment. The authors plan to provide more details of this proposal in a future article.
Final Thoughts
Of perhaps the greatest importance for the cleanup of our nationnull worst hanullrdous waste sites,
this proposal is enullected to provide significantly greater resources to the nullperfund nulleanup Trust
nullund than are currently available.
nullnull
nulluch has been written about the cost of the nulluperfund program,
in terms of money spent on cleanup activities by the government and PRPs, but the benefits of
cleanup are also significant. nullving a funding mechanism in place that provides possibly several
billion dollars of funding for cleanup activities annually, without those funds coming from tanulls,
represents a good bargain for tanullayers, who are among the ultimate beneficiaries of the cleanup
of these sites.
nullother benefit of this proposed regulatory reform is that a larger number of private site-cleanup
efforts will come under the scrutiny of nullnulland the states. nullder the current nullRnullnullapproach,
many private sector remediation efforts are undertanulln without any government oversight, or
they are done under state oversight with differing cleanup standards being applied, because state
standards vary. nullth the proposed process in place, many more remediation efforts at brownfield
sites will be done with nullnulloversight and will be subnullct to uniform standards.
The uncertainty of environmental liability has served as a manullr impediment to urban revitalinull -
tion efforts. These proposed reforms would remove this obstacle and serve as a manullr catalyst for
brownfield redevelopment, tanullng development pressure off rural lands at the periphery of the
urban landform, and thus reducing sprawl. The locational benefits of brownfield redevelopment
are potentially enormous. Perhaps, most importantly, the preservation of rural ecosystems will be
sustained as a result of this reform effort.
nullnullowledgments
The authors thannullthe students of Professor nullutnullynull nullownfields Redevelopment class at the
nulliversity of nullrginia for their thoughtful insights regarding our proposed nullperfund reforms.
The topic has been discussed in the class for the past several years, with the result that studentsnull
insights provided the foundation for several of our ideas.
null
nullsed on data provided by nullrenullgic, nullnullnullnullcommercial real estate purchase transactions, on average, occurred in the
nullited nullates during each of the years nullnull through nullnull. These data do not include multifamily residential properties
with fewer than null units, and they do not include loan-refinancing transactions. null the price of the nullaiver were to be
nullnullnullnullper nullaiver, and if the commercial real estate industry were to routinely require a nullaiver much as Phase nullis
currently required on nearly all transactions in enulless of null million, the nullperfund nulleanup Trust nullnd would receive
about null.nullbillion per year, enullluding loan renullancing and smaller multifamily transactions. null comparison, fees generated by
the polluter tanullprovided about null.nullbillion per year to the nullnd until nullnull, when the tanullenullired.

99Cityscape
nullonullnulllds nullcertainty: A Proposal nullo Renullrm Supernullnd
nulltnullrs
David nullutnully is a member of the faculty in the Department of nullban and nullvironmental Planning
at the nulliversity of nullrginia.
nullnull nulley is a second-year law student at nullshington and nulle nulliversity nullhool of nullw.
Renullrences
nullderson, nullrnullD. nullnull. nullhe nullate nullluntary nulleanup Program nullternative,null Natural nullsources
and the nullnullronment null nullnullnullnternull nullnull
Davis, Todd null nullnull. nullefining the nullownfields Problem.nullnull nullownnullldsnullnullComparatinull nullide to
nulldenullloping Contaminated nulloperty, edited by Todd null Davis. nullicagonullnullerican nullr nullsociationnull
nullnull.
Diamond, nulluce null nullnull nullay nullnull nullinal Policy Toward Owners of Property nullntaining
nullntaminated nulluifers.nullnullmorandum, nullnull nullvironmental Protection nullency, Office of nullte
Remediation nullforcement.
nullisen, nulloel null. nullnullnullnull. nullnullrownfields of Dreamsnull nullhallenges and nullimits of nulloluntary nullleanup Programs
and nullcentives,null1nullnullnullinullrsity of Illinois nullw nullnullew nullnull nullnullnullnull
nullirsch, nullaurence null., and nulleraldine null. nulldens. nullnullnullnull. nullnullederal nullnvironmental nulliability,null nullnnullironmental
nullpects of nullal nulltate nullansactions null nullnull nullnullnull nullnullnull
nulltional nullvernorsnullnullsociation. nullnull. nullew nullssion for nullownfieldsnullnulltacnullng nullrawl by
Revitalinullng Older nullmmunities.nullnull nullere null null nullnull nullom nullrenullnullshington, Dnull nulltional
nullvernorsnullnullsociationnullnullnull, nullnullnull
Rubenstein, nullrah null nullnull. nullnullnullnulls nullntribution to the nullderal nullownfields Problemnullnull
Proposal for nullderal Reform ,nullnullnullinullrsity of Chicago nullw nullhool nullundtable nullnull nullnull nullnullnull
nullnull nullnference of nullyors. nullnull. nullcycling nullericanull nullndnullnullNational nullport on nullownnulllds
nulldenulllopment, nulll. null, null httpnullnullsmayors.orgnullnullhnullnualnulletingnullrownfieldsreportnullnullnullnullpdf
nullccessed nullne null, nullnullnull
nullnull nullvironmental Protection nullency. nullnulla. nullbout nullownfields.null httpnullnullww.epa.govnull
brownfieldsnullbout.htm nullccessed nullne null, nullnullnull
nullnull nullnullb. nullPnulls nullownfields and nullnd Revitalinulltion Programsnullnullanging nullerican nullnd
and nullves.nullhttpnullnullww.epa.govnullrownfieldsnullbout.htm nullccessed nullne null, nullnullnull
nullrdstedt, nullis, nulluren nullberle, nullna nullberini, and Peter nullyer. nullnull. nulle nullownnulllds nullenomnull
enonnullnullch nullo about nullmething or the nullming of the nullrewdnull Discussion Paper nullnullnull nullshington,
Dnull Resources for the nullture.

100 Brownfields
Slutnully and Frey
nullditional Reading
nullartsch, nullharles, and Rachel Deane. nullnullnullnull. nullrownnullelds nulltate of the nulltatesnull nulln nullndnullofnullnullession nullenulliew of
Initiatinulls and nullogram Impacts in the null nullatesnull nullshington, Dnull nullrtheast-nulldwest nullstitute.
nullsen, nullel null nullnull. nullrownfields Developmentnullnullom nulldividual nulltes to nullart nullowth.nullnull nullenda
for a nullustainable nullmerica, edited by nullohn null. Dernbach. nullashington, Dnullnull nullnvironmental nullaw nullnstitutenull
nullnullnull
nullnvironment nullalifornia Research null Policy nullenter. nullnullnullnull. nullnullleanup nulllowdownnull nullow nullnder-nullunding
the nullperfund Program nullrms nullmmunities nullross nullerica.null httpnullnullww.environmentcalifornia.
orgnulluploadsnullnullnullnullnullqnullnullnullnullqnullnullnulldnullnullnullpnullnulldanullnullnullmnullwnullnullleanupnullnulllowdown.pdf nullaccessed nullune nullnull, nullnullnullnullnull.
nulltional nullvironmental Policy nullstitute. nullnull. nulleyond nullownfieldsnullnullle nullnd, nullburban nullrawl,
and the nullw.nullnull nulloceedings of the National nullnullronmental nulllicy Institutenull nulltober 1null 1nullnullnullrum null
nullnull.
nullgner, nullndy null nullnull. nullverview of nullderal and nullate nullw nullverning nullownfields nulleanups.null
null nullownnullldsnullnullComparatinull nullide to nulldenullloping Contaminated nulloperty, edited by Todd null Davis.
nullicagonullnullerican nullr nullsociationnullnullnullnull

101nulltyscapenullnullnullurnal of nulllicy Development and Research • Volume 12, Number 3 • 2010
U.S. Department of Housing and Urban Development • Office of Policy Development and Research
Cityscape
The Prospects for Guiding
Housing Choice Voucher
Households to High-
Opportunity Neighborhoods
nullrnullnullClure
nulliversity of nullnsas
nullstract
nulle nullusing Choice Voucher nullogram seenull to do more than help poor households lease
goodnulluality rental housingnullnulle of the programnulls goals is to help poor households breanull
out of the cycle of ponullrty by locating in neighborhoods with numerous opportunities
for gainful employment, good schools, and racial and ethnic integrationnullnulle nullnullng to
nullportunity nullnullnullfor nullir nullusing program showed that, with constrained choice,
households will locate in lownullonullrty neighborhoodsnullIf the nullnullmodel were to be used
on a larger scale, would enough neighborhoods be anullilable to offer good housing, emnull
ployment, and educational opportunitiesnull
nullamination of census blocnullgroups across the nation suggests that the supply of highnull
opportunity neighborhoods may not be as large as desirednullthere are simply too few ideal
neighborhoods and affordable unitsnullnull relanullng the obnullctinulls, howenullr, and focusing on
ponullrty deconcentration and perhaps enullanding the use of nullnulls procedure that grants
enulleption rents abonull the nullir nullrnullt nullnt limits, a more ample supply of target neighnull
borhoods and rental units could become anullilablenull
Introduction
One goal of housing mobility programs at the nullnull Department of nullusing and nullban Develop -
ment nullnullnullis the deconcentration of poverty nullnull, nullnullnull which is valuable because it can
reduce the high concentrations of poverty that create distress within the affected neighborhoods.
null households are moved from areas with high-poverty concentration to areas of low concentra -
tion, benefits will hopefully accrue beyond the provision of affordable housing. These benefits
include providing the households access to opportunities for better employment, education, and
shopping in addition to higher quality housing in safer neighborhoods.

102 Refereed Papers
nullClure
The nullusing nulloice nullucher nullnullnullProgram is designed to provide very low-income households
with spatial mobility nullinnicnull nullnullnull nulldly, the nullnullProgram has been unable to generate the
spatial mobility that researchers and housing advocates hoped it would achieve nullDevine et al., nullnullnullnullnull
nulloering et al., nullnullnullnullnull. nulln general, although the recipients of vouchers use them to reduce the burden
of housing costs, they have not used the vouchers to move to demonstrably better neighborhoods
in proportion to the availability of affordable units and are, in fact, confronting increasing difficulties
in gaining access to good neighborhoods nullarady and nulllnullr, nullnullnull
null the nullnullProgram is going to improve the level of economic and racial integration in the nationnull
neighborhoods, program administrators need to enulllore mechanisms that will encourage, and
perhaps even require, participating households to locate in neighborhoods that offer better oppor-
tunities than those that are found in the neighborhoods plagued by highly concentrated poverty.
nulleveral housing advocates and researchers have called for this approach. Polinulloff nullnullnullnullnullnull specifically
recommended that a nullutreaunullstyle program, which linnull acceptance of nullutreaunullvouchers to
movement to neighborhoods with low levels of racial minorities and other assisted households,
be implemented at a national scale, with null,nullnullvouchers earmarnulld for poverty deconcentration
each year for a decade. nulliggs and Turner nullnullnull outlined the logic of poverty deconcentration
efforts that use vouchers. They suggested that the implementation and administration of the nullnull
Program be revised to pursue this goal. They proposed identifying high-opportunity neighborhoods
to which voucher households would be guided, which may not be as easy as it appears. nulliggs and
Turner cautioned that we do not nullow a great deal about how to define nullpportunity rich neigh -
borhoods.nullThey suggested that simple pronulles measuring a neighborhoodnull racial composition
or its incidence of poverty are incomplete. nullen identifying a high-opportunity neighborhood,
researchers should assess the neighborhoodnull safety, the quality of its schools, and its access to nullbs
suitable to the assisted households.
Debate is growing around this concept of restricting the choice of any nullnullhousehold to nullst high-
opportunity neighborhoods. nullbroscio nullnullnull challenged the use of vouchers to disperse poor
households, calling it a misconceived version of freedom of choice. nulletnulland nullapple nullnullnull
avoided the normative issues and simply found that households that moved out of high-poverty
areas, whether involuntarily or voluntarily, realinulld too few benefits.
nulllthough the debate over the benefits of dispersal continues, the calls for a national poverty decon-
centration effort raise the questionnullnulle enough neighborhoods available to provide affordable
housing in low-poverty, high-opportunity neighborhoodsnull This article attempts to answer this question.
Literature Review
The neighborhood outcomes of the nullnullProgram are unimpressive. The nullnullProgram does
provide some opportunities for a household to move to low-poverty neighborhoods, and many
households are able to locate in neighborhoods with modest levels of poverty, but many remain in
neighborhoods with high concentrations of poverty. null study by Devine et al. nullnullnullnullnullnull of the nullnull largest
metropolitan marnullts in the nation found that more than null percent of participants in the nullnull
Program are living in neighborhoods with poverty concentrations of less than null percent, and close
to null percent of participants are living in neighborhoods with a poverty rate below null percent. nullt

103Cityscape
nulle Prospects nullr Guiding nullusing Cnullice
Voucnullr nullusenulllds to nullgnullnullportunity nullignullornullods
null percent of nullnullhouseholds live in neighborhoods with poverty levels at null percent or more. null
central cities, more than one-third of nullnullhouseholds live in neighborhoods with poverty rates at
or above null percent.
null general, households participating in the nullnullProgram are free to choose the neighborhood
in which they rent a unit. nullth only a few enulleptions, the household chooses the location unen -
cumbered by any programmatic constraints, and the issue of poverty deconcentration does not
drive the processnullhowever, the nullnullProgram is not completely without guidance in terms of the
neighborhoods in which households locate. nullrelatively passive incentive guides nullnullhouseholds
to neighborhoods with greater opportunities. nullD uses a nullction nullnullnagement nullsessment
Program to evaluate the administrative performance of the housing authorities that manage the
nullnullProgram. The percentage of program participants who locate in neighborhoods with below-
average levels of poverty is one criterion used to evaluate the housing authorities nullnull, nullnullnull
Previous Experience in Poverty Deconcentration
Two previous initiatives in poverty deconcentrationnullhe nullutreaunulland nullving to Opportunity
nullTOnullprogramsnullrovide instructive enullerience to the nullnullProgramnull effort to move poor
households to better neighborhoods.
nullutreaunullwas a quasi-enullerimental program born out of a court action tanulln against the nullicago
nullusing nullthority and nullD. nullD gave vouchers and counseling assistance to a set of households
on the condition that they move to neighborhoods with low levels of minority racial concentration.
nulluseholds had to agree to move to census tracts with a minority population comprising less than
null percent of the total nulleels et al., nullnullnull nullven the high correlation between racial concentration
and poverty concentration, the nullutreaunullprogram was, in many ways, the initial foray into the use
of housing vouchers as a method to relocate households out of impoverished neighborhoods and
into racially and economically minulld neighborhoods.
The research on the nullutreaunullprogram compares outcomes for participants who moved to
predominantly nullite suburbs with those for participants who located in predominantly nullrican-
nullerican neighborhoods in the inner city. Participant surveys indicate that those participants who
moved to suburban locations were more linullly to have a nullb than those who remained in the urban
locations nullith a differential of null percentage pointsnull although they did not wornullmore hours or
earn higher wages nullosenbaum, nullnullnull nullrvey results also indicate that the children of those who
moved to the suburbs were more linullly to stay in school, to be employed after graduation, and to
go on to nullyear colleges or universities nullopnulln et al., nullnullnull
nullutreaunullspawned nullO, which is an enullerimental version of the voucher program nulloering,
nullins, and Richardson, nullnullnull The nullO program gave vouchers to an enullerimental group who
were constrainednull to get the voucher, they had to move to a low-poverty neighborhood. Researchers
compared this enullerimental group with a control group that received vouchers that did not limit
where they could choose to live. The researchers found that dispersing impoverished households
through housing programs may reduce the social problems that result from the concentration of
this population, but our understanding of the linnullges between neighborhood and life outcomes
is very limited. nullthough incomplete, evidence is growing that neighborhood conditions innullence

104 Refereed Papers
nullClure
the outcomes a household will enullperience. Research reviews on this topic are found in nullroonulls-nullunn,
Duncan, and nuller nullnullnullnullnulllen and Turner nullnullnull nullnullnull van nullmpen nullnullnullnullnulliedrichs nullnullnullnull
nulllster and nullebel nullnullnullnullnullventhal and nulloonull-nullnn nullnullnullnulland nullmpson, nullrenoff, and
nullnnon-Rowley nullnullnull. nullecifically addressing the nullO program and its movement of house -
holds to low-poverty neighborhoods, nullering and nullins nullnullnull collected studies from all five cities
where the nullO program was implemented. nullins with the nullO program are found among chil -
dren in terms of reduced criminal behavior, higher school performance nulllthough more so for girls
than boysnull and improved mental health nulludwig, Duncan, and nullrschfield, nullnullnullnulldwig, nulldd,
and Duncan, nullnullnullnullventhal and nulloonull-nullnn, nullnullnull nullults enullerience modest but statistically
significant reductions in welfare usage, although these reductions may evaporate quicnully nulludwig,
Duncan, and Pinnullton, nullnullnull Overwhelmingly, the households enullerienced increased safety
because the crime levels around them were reduced compared with those around the households
that did not move to low-poverty areas nullrr et al., nullnullnull nullfortunately, the nullO program did
not find significant improvements in employment levels nulleventhal and nulloonull-nullnn, nullnullnull
Orr et al. nullnullnull summarinulld the nullO enulleriment, stating that the program had tangible positive
effects on the lives of the participating households in terms of housing and neighborhood quality
and the characteristics of the schools attended. They also stated, however, that they found no
convincing evidence of gains in educational performance, employment, income, or self-sufficiency.
They concluded that the poverty rate is an important neighborhood characteristic but that
residential environments are multidimensionalnullno single measurement is able to capture all the
attributes that are important to the lives of low-income families.
This research suggests that, when identifying opportunity neighborhoods, we must loonullbeyond
nullst the poverty level in the receiving neighborhood and that we should enullmine the potential for
higher educational attainment, more safety from crime, and better opportunities for gainful employment.
Trends in Poverty Concentration
The number of neighborhoods with high concentrations of poverty actually decreased during the
nullnulls. The spatial concentration of poverty worsened during the nullnulls, with nullacnullhouseholds
faring worse than nullite households nullasarda, nullnullnull During the nullnulls, this spatial concentration
of those living in poverty lessened. null nullnull, the number of census tracts with high poverty nullreater
than null percentnullfell by null percent, affecting nullnullmillion people nullargowsnull, nullnullnull This reduction
in the number of high-poverty tracts has not meant that the number of low-poverty tracts has
decreased. Rather, the number of low-poverty tracts nulless than null percentnullremained roughly
constant while the number of tracts with moderate poverty nulletween null and null percentnullincreased
nullalster, nullnullnullnullngsley and Pettit, nullnullnull
null will not nullow the spatial concentration of poverty for the first decade of this century until the
nullerican nullmmunity nullrvey begins to release those data at the tract level, and even these will be
rolling averages that may tanull some time to stabilinull. Overall poverty, however, has again risen to
enulleed the nullnull level. The percentage of the population that lives below poverty fell during the
nullnulls, from null.nullto null.nullpercent nullensus, nullnull, nullnullnullbut rose to null.nullpercent in nullnull nullensus,
nullnullnull This increase means that some neighborhoods with low levels of poverty in nullnull may have
suffered from a rise in the incidence of poverty. null increase in poverty could move the neighbor -

105Cityscape
nulle Prospects nullr Guiding nullusing Cnullice
Voucnullr nullusenulllds to nullgnullnullportunity nullignullornullods
hood out of the low-poverty category and into a different category suggesting that it should no
longer be considered a high-opportunity neighborhood.
This changing level of poverty and its changing spatial concentration implies that the search for
high-opportunity neighborhoods should enullmine more than nullst the most recent level of poverty
in a neighborhoodnullit should also enullmine the changes in the level of poverty over time to prevent
targeting a neighborhood as high opportunity when it is trending toward higher poverty.
Effect on Receiving Neighborhoods
nulllster nullnullnull nullnullnullenullmined whether programs to relocate poor households result in a net social
gain. nulle investigated alternative models and compared the social costs and benefits of deconcentrating
poor households. null suggested that the conditions necessary to nullstify programs designed to de -
concentrate poor households may be more stringent than are commonly understood. Proponents
of spatial mobility often frame arguments only in terms of the benefits to the participating house-
holds, neglecting to consider the costs imposed on the receiving neighborhoods. nullr the relocation
to lead to a net social gain, the gain from moving the low-income residents away from areas with
high levels of poverty must be greater than the loss enullerienced by the receiving neighborhoods.
nullme level of deconcentration of the moderate-poverty neighborhoods would be desirable, because
they already suffer from above-average poverty. null is important that those identifying opportunity
neighborhoods do not consider these moderate-poverty neighborhoods as destination neighborhoods
enullected to absorb additional impoverished households. nulllster nullnullnull suggested that a net social
gain can be generated only if the deconcentration results in fewer neighborhoods with high poverty,
more neighborhoods with low poverty, and no additional neighborhoods with moderate poverty.
The implication of nulllsternull suggestion for identifying high-opportunity neighborhoods is that the
process should enullmine not nullst the level of poverty in a neighborhood before an innullnullof assisted
households, but it should monitor the effect that the in-moving assisted households will have on
the level of poverty there. nullny efforts to deconcentrate poverty should nullnullnull reduce poverty in the high-
poverty neighborhoods, nullnullnot increase poverty in the moderate-poverty neighborhoods, nullnullmove
households to the low-poverty neighborhoods, and nullnullnull not boost poverty in the receiving neighbor-
hood in such a way that the neighborhood moves out of the low-poverty category nullalster, nullnullnull
nullwever, not all researchers are in agreement with this approach. nullrgowsnull nullnullnull suggested that
the incremental harm to receiving neighborhoods with moderate-poverty may be relatively small
and outweighed by the benefits realinulld by moving households out of high-poverty areas and into
the moderate-poverty neighborhoods.
Categories of Poverty Concentration
nulllster also suggested that a nonlinear relationship may enullst between the level of poverty in
a neighborhood and measures of neighborhood condition, such as property values. nullch is
unnullown about this relationship, but limited evidence suggests that a set of thresholds enullsts
nullroonull-nullnn, Duncan, and nuller, nullnullnullnulliedrichs, nullnullnullnulllster, nullnullnull The first threshold may
be found when about null percent of the population is living below poverty. nulllow this threshold,
the problems resulting from the concentration of poverty may not significantly affect neighborhood

106 Refereed Papers
nullClure
condition. nullove this threshold, the problems with increased poverty may rise significantly, with
each added increment of poverty imposing costs on the neighborhood. The second threshold may
be found when about null percent of the population is living below poverty. nullove this threshold,
the negative effects of concentrated poverty reach a manullmumnullincreased poverty above this second
threshold may have no additional negative effects.
The implication of the possible enullstence of a nonlinear relationship between poverty and neigh -
borhood conditions for identifying high-opportunity neighborhoods is that the process should
enullmine not nullst the level of poverty in a neighborhood but also whether the neighborhood is in
the low-, moderate-, or high-poverty category and should target only low-poverty neighborhoods.
Housing Availability and Condition
nulltimately, the nullnullProgram is a housing program that uses the enullsting supply of rental dwell -
ings. null can wornullonly where rental housing units are available that can be leased within the regula -
tory constraints of the program. nullr the nullnullProgram to function property, the rental units must
enullst in the marnullt and some of these units must be affordablenullthey must be offered at rents below
the nullir nullrnullt Rent nullnullnulllimitations of the program. The nullR is the starting point for setting
the manullmum rent on a unit that can be admitted to the nullnullProgram. Public housing authorities
have some discretion to set payment standards between null and nullnullpercent of the nullR. The pay -
ment standard dictates the manullmum amount of subsidy that an individual household can receive
through the nullnullProgram. nullthough this nullnullbility is permitted, the number of units with rents
below the nullR is a rough indicator of how many units could participate in the nullnullProgram .
The implication of this administrative procedure for setting payment standards for identifying
high-opportunity neighborhoods is that the process must enullmine the counts of rental units
available with rents at or below the nullRs.
Presence of Other Assisted Housing
nully initiative that guides households to high-opportunity neighborhoods may need to consider
the amount of assisted housing that already enullsts within the receiving neighborhoodnulltoo many
assisted units or households may be harmful to the receiving neighborhood. nulleeman and nulltein
nullnullnull reviewed the literature on the effect of pronullct-based housing on surrounding neighbor -
hoods. They found many nullws in past analyses and found connullcting results in the efforts to
evaluate the perception that subsidinulld pronullct-based housing results in negative neighborhood
effects along dimensions such as property values, racial transition, poverty concentration, and
crime. They found evidence that the effect can be positive, negative, or neutral. null a pronullct
removes a disamenity, such as a deteriorated building or vacant and litter-strewn site, the effect
can be positive. null the pronullct is poorly managed and fails to screen tenants, a negative effect can
occur. nulllster et al. nullnullnull enullended this topic further into tenant-based housing assistance. They
enullmined sales prices of single-family homes surrounding sites where nullction nullvouchers were
being used in nullltimore nullunty, nullryland. They found that if only a few voucher households were
located within nullnullfeet of a property, this limited number had a strong, positive effect on property
value in higher value tracts, with predominantly nullite populations, which ennullyed real value

107Cityscape
nulle Prospects nullr Guiding nullusing Cnullice
Voucnullr nullusenulllds to nullgnullnullportunity nullignullornullods
appreciation. They found that in low- or moderate-value neighborhoods enulleriencing declining
values, however, nullction nullvoucher households have an adverse effect.
The implications of the effects of assisted housing on a neighborhood suggests that any effort to
use vouchers for poverty deconcentration should guide participants away from vulnerable neigh-
borhoods that already have high incidences of pronullct-based units or tenant-based households.
Employment, Education, and Crime
nullgh-opportunity neighborhoods should provide households with access to good nullbs, access
to good schools, neighborhoods that are free of crime, and good affordable housing. nullthough
identification of these high-opportunity neighborhoods is easy in concept, it is harder in enullcution
simply because of the limited data available. The nullnsus nullreau publishes counts of wornullrs
in each neighborhood and indicates whether they are employed, but it does not publish counts
of nullbs in each neighborhood by snullll level. The nullnsus nullreau publishes counts of adults in
each neighborhood categorinulld by their level of educational attainment, but it does not publish
the counts of schools or any measure of their quality. nullime is nullown to be declining, but it
remains an issue in many neighborhoods. nullfortunately, the nullnsus nullreau does not publish any
information on the level of crime. nulldly, no readily available, nationwide data sources enullst at the
census blocnullgroup level on these three issues. Researchers will have to use pronulles, such as low
unemployment as a pronull for good nullb prospects and high rates of high school completion for
high-quality educational opportunities.
Data at the Block Group Level
The data for this study come from census data tabulated at the blocnullgroup level. nullr each blocnull
group, both nullnull nullnsus and nullnull nullnsus data were assembled. Those blocnullgroups that
enullerienced boundary changes during the nullnulls were reconciled through the use of data for all of
the nullited nullates from nullonulltics, nullc. nullnullnull.
null nullnull, nullD provided household-level data for participants in the nullnullProgram, coded by
blocnullgroup location. The data were aggregated to the blocnullgroup level for analysis. Only those
households in the regular tenant-based voucher program were included in the analysisnullthose
households in the homeownership, pronullct-based voucher, enhanced vouchers, and the welfare-to-
wornullsubprograms were not included because they may have had different incentives and limita -
tions on their ability to move to a rental unit in a location of their choice. nullmilarly, nullD made
available counts of other forms of assisted housing at the blocnullgroup level to assess the incidence
of other assisted housing.
nullocnullgroup data are a new unit of analysis for the study of poverty deconcentration. nullst of the
previous wornullwas done at the tract level because the assisted household data were only available
at that level. nullw that the data are available at the blocnullgroup level, however, the analysis will
be improved. nullocnullgroups are smaller than tractsnulleach census tract contains about three blocnull
groups. This smaller sinull manulls the unit closer to the generally held concept of a neighborhood
nulloulton et al., nullnullnull

108 Refereed Papers
nullClure
The nullnsus nullreau has identified about nullnullnullnullblocnullgroups nationwide nullee enullibit null. nullch
blocnullgroup contains about nullnullnullpeople divided among a little more than nullnullhouseholds.
These households live in nullnullhousing units, nullnullof which are rental. Of the rental units, a little
less than one-half are rented at prices that qualify them for the nullnullProgram, because they are
offered at rents below the applicable nullR for the county where they are located. nulltionwide, these
units with rents below the nullR total null.nullmillion units. nully of these units could be in the nullnull
Program. They are not concentrated in nullst a small proportion of the blocnullgroups. nullre than null
percent of all blocnullgroups contain at least some rental units, and about null percent of all blocnull
groups contain at least some rental units offered below the nullR.
Exhibit 1
Median nullveranull Total
nullneral Cnullracteristics of Blocnullnullonulls
nullpnullation 1null39 1null57 2nullnullnullnullnull
nullnullenulllnull 430 509 10null741null2null
nullnullinnullnullits 44null 52null 110nullnullnull04
nullntal nullnullinnullnullits 11null 1null 3null707null99
nullntal nullnullinnullnullits offerenullnulllonulltnull nullnull 43 90 1null575nullnull
Total conullt of nullocnullnullonulls 209null7null
Fnull nullFair nullrnullr Rentnull
Source: nullSnullnullreau onulltnull CensusnullCensus nullnull
Analysis
nullhibit nullbegins the estimation of the number of high-opportunity neighborhoods by showing
some very basic characteristics of the nationnull blocnullgroups. nullnsus data provide good counts of
population and housing, but they provide only weanull indicators of the potential for snullill-appropriate
employment opportunities for nullnullhouseholds. nullmilarly, the census data indicate neither the
quality of the schools nor the level of crime in a neighborhood. nullcause of the limitations of census
data, pronullies will have to be used. nullnemployment is used as a pronully for nullob opportunities. The high
school completion rate is used as a pronull for educational opportunities. nullime data are not readily
available at the blocnullgroup level, criminal activity must be assumed to correlate with the incidence
of poverty. nulllthough these variables are closely correlated, they do not always predict neighborhood
distress accurately, nor do they always predict trends in neighborhood distress nullnullalster et al., nullnullnullnullnull.
They are, at best, pronulles for the social forces at wornull and as such introduce some level of mea -
surement error into the analysis. nullnsequently, the results should be viewed with some caution.
Other characteristics of the populations living in blocnullgroups also display some spatial concentra -
tion. nullthin the typical blocnullgroup, minorities account for about null percent of the population.
nullnorities are defined as anyone other than non-nullspanic nullites. nullnull those living in poverty,
racial minorities are highly concentrated, with one-half of all neighborhoods containing less than
null percent of minorities. null nullnull, the average blocnullgroup unemployment rate among all members
of the wornullorce was nullnullpercent, but one-half of blocnullgroups ennullyed an unemployment rate
under nullpercent. null the average blocnullgroup, null percent of adults did not complete high school,
but one-half of the blocnullgroups have about null percent that did not graduate.

109Cityscape
nulle Prospects nullr Guiding nullusing Cnullice
Voucnullr nullusenulllds to nullgnullnullportunity nullignullornullods
Distribution of Neighborhoods by Poverty Level
Deconcentration of poverty is an obnullctive of the nullnullProgram. Typically, about null percent of a
neighborhoodnull population lives below poverty. This group, however, is not distributed evenly.
Rather, most neighborhoods tend to have a very low level of poverty.
null more than one-half of all blocnullgroups, less than null percent of the households live in poverty,
which is below the lowest estimates of the threshold below which incremental increases in poverty
have no damaging effects on the receiving neighborhood. The threshold of null percent is chosen
here for two reasons. nullrst, it is safely below the appronullmately null-percent level that nulllster
identifies as the point at which a neighborhood is harmed by incremental increases in poverty.
nulling the null-percent threshold should leave little concern that the neighborhood is threatened by
the innullnullof low-income households. nullcond, using the null-percent threshold is consistent with the
nullO enulleriment. nullth one-half of all neighborhoods below this level, low-poverty neighborhoods
are abundant. null addition, with the threshold at null percent, no problems will result from identify -
ing a neighborhood as a low-poverty area when it is above median as would be that case with a
threshold between null and null percent. nullee enullibit nullnull
Exhibit 2
Median nullveranull
Standard
Deviation
nullpnullation Cnullracteristics of Blocnullnullonulls
nullrcent of popnullation nulllonullpovertnullnull2000 9.null 13.7 13.2
nullrcent cnullnnull in povertnullnull1990 to 2000 null0.1 null0.4 nullnull
nullrcent of popnullation nullnoritnull 1null9 30.9 32.0
nullrcent of nullrnullorce nullenulllonullnull 4.7 null5 null7
nullrcent of anulllts nullo nullnullnot conulllete nullnull scnullol 17.9 21.2 15.2
Source: nullSnullnullreau onulltnull CensusnullCensus nullnull
12,500
Frequency
Percent of Population Below Poverty, 2000
10,000
7,500
5,000
2,500
0.00 20.0010.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00
0
Exhibit 3
Distrinulltion of Blocnullnullonulls null nullrcent of nullpnullation Belonullnullvertnullin 2000nullnulltnull
nullrnulll Cnullve Snullerinullosenull

110 Refereed Papers
nullClure
null the other enullreme, only about nullin null blocnullgroups have very high poverty nullhat is, greater than
nullnull percentnull. nullbout two-thirds of all blocnull groups have below-average poverty, nullthat is, nullnull.null percentnull.
These statistics indicate that poverty is highly concentratednull about null,nullnullnull blocnull groups have poverty
levels in enulless of null percent, and another nullnullnullblocnullgroups have poverty levels between null and
null percent. The data show that nullnullnullnullblocnullgroups with poverty levels below null percent can
receive nullnullhouseholds, probably without measurable harm. The remaining null,nullnullblocnullgroups
are the moderate-poverty neighborhoods nullhat is, poverty levels between null and null percentnull nullee
enullibit nullnull
Exhibit null
nullvel onullPovertnull
in the nullocnullnullonull
nullocnull
nullonulls
Percent
nullntal nullits
nulllonullthe nullnull
Percent
Distrinulltion of Blocnullnullonulls annullnullntal nullits nulltnullnullnts Belonulltnull nullnull null nullvel
of nullvertnullin tnull Blocnullnullonull
nullss tnulln 10null 10null175 52 5null14null71 2null
10 to 19null 54null53 2null 5null75null53 31
20 to 29null 23null2null 11 3null50null24 19
30 to 39null 11null0null null 2null35null5null 11
40 to 49null 5null42 3 1null01null22 null
50nullor nullre 4null32 2 nullnull5null 5
Total 207null3null 100 1null575nullnull 100
Fnull nullFair nullrnullt Ratenull
Source: nullSnullnullreau onulltnull CensusnullCensus nullnull
Distribution of Rental Units Below the Fair Market Rent by Level of Poverty
null a point of departure for enullmining the feasibility of any poverty deconcentration program, it is
important to loonullat the availability of rental units in the low-poverty neighborhoods targeted for
receipt of nullnullhouseholds, especially rental units offered at rents low enough for admission to the
nullnullprogram. nullout one-half of all blocnullgroups are in low-poverty areas, but only null percent
of the rental units offered below the nullR are located in these neighborhoods. null the level of very
crude arithmetic, the fact that only null percent of all rental units are available in high-opportunity
neighborhoods is not prohibitive. nullre than nullmillion rental units are offered at rents below the
nullR in low-poverty neighborhoods. Those calling for greater poverty deconcentration efforts
within the nullnullProgram do not seem to envision that more than a small portion of the nullnull
households would be involved in an initiative to move households to low-poverty areas. Polinullff
nullnullnull suggests allocating null,nullnullvouchers per year over a null-year term to a poverty deconcentra -
tion initiative. Thus, even this ambitious effort would peanullat nullnullnullnullvouchers, which is only a
small proportion of the available units in the marnulltplace.
Distribution of Assisted Housing Units
nullhibit nulllists assisted households in the nullnullProgram and units in other federally funded
pronullct-based rental assistance programs. nulll programs listed in the enullibit suffer from some level
of undercount. nullme units or developments could not be assigned to a specific location because of
reporting errors or other problems. nullme pronullcts simply did not report. This lacnullof reporting is

111Cityscape
nulle Prospects nullr Guiding nullusing Cnullice
Voucnullr nullusenulllds to nullgnullnullportunity nullignullornullods
especially true for the nullw-nullcome nullusing Tanullnulledit nullnullTnull Program. nullates are not required
to report all developments to nullnullD, thus generating the data set depends on voluntary participation
in survey analysis. Through nullnull, the portfolio of nullnullnulldevelopments contains about nullnullmillion
units, but it is believed that null.null million units were in place through that year. nulllthough a difference
of nullnullnullnullunits represents a sinullble loss of data, the remaining data represent a very large sample,
which provides a good indication of the location of these units.
The nullnullProgram serves about nullnullmillion households.
null
The average blocnullgroup has about
null voucher households, but these households tend to concentrate in select neighborhoods. One-
half of all blocnullgroups have three or fewer voucher households within their boundaries. null nullnull,
the nullnullProgram assisted very low-income renter households in about nullnullnullnullblocnullgroups, or
about null percent of all the blocnullgroups in the nation. Thus, about null,nullnullblocnullgroups did not
house any nullnullhouseholds. Removing these null,nullnullblocnullgroups with nullro nullnullhouseholds
from consideration, the average presence of voucher households rises to about null, with a median
of only nullunits. This uneven distribution of voucher households means that in neighborhoods
where voucher households are present, they typically lease well below null percent of the rental
housing stocnull
The distribution of pronullct-based programs is understandably different from the voucher programs
because the assistance is tied to a specific building. Pronullct-based housing is concentrated in a
subset of the nationnull blocnullgroups. The typical blocnullgroup contains no pronullct-based unitsnullthus,
the median number of units in a blocnull group is nullero for all types of pronullect-based units. The nullnullnullTnull
program averages fewer than null units per blocnull group, but the typical pronullect contains about nullnull units,
and these developments are distributed across a little more than nullnull,nullnullnull blocnull groups or only about
null percent of the blocnull groups nationwide. This concentration of nullnullnullTnull housing means that, where
nullnullnullTnull developments are found, they comprise a significant share of the rental housing in the neighbor-
hood, typically one-third to one-half of the rental housing in the blocnullgroup. Public housing,
with a portfolio of more than nullnullmillion units, adds another nullunits per blocnullgroup, but the
Exhibit null
Median nullveranull Total
Assistenullnullntal nullits annullnullonullnullr nullnullenulllnull in All Blocnullnullonulls
Conullt of nullnullinnullCnullice nullonullnullrsnull200null 3.0 10.3 2nullnullnull9null
Conullt of nullnullC nullitsnull200null 0.0 null7 1null02null99
Conullt of nullnullic nullnullinnullnullitsnull200null 0.0 5.3 1null1null427
Conullt of nullD nullltifanulllnullnullitsnull200null 0.0 nullnull 1null2null979
Conullt of all pronullctnullasenullnullits 0.0 1nullnull 3null4null405
Conullt of all assistenullnullits 4.0 29.1 null114null03
nullnullnullnullpartment onullnullusing and nullban nullvelopmentnullLInullC nulllonullincome nullusing tanullcreditnull
Sources: nullSnullnullreau onulltnull CensusnullCensus nullnullnullnullSnullnullpartment onullnullusing and nullban nullvelopmentnullnullnulle onullPolicy
nullvelopment and Researcnull
null
nullr purposes of this study, only regular tenant-based vouchers are included in the analysis. nullouchers were enullluded if they
were used for homeownership, the nullelfare-to-nullornullprogram, pronullct-based housing, or the enhanced voucher program.
Tenant-based vouchers account for more than null percent of all housing choice vouchers.

112 Refereed Papers
nullClure
average public housing development contains about null units, although one-half contain null or
fewer units. nullmilarly, where public housing is present, it is a significant share of the rental stocnull
nullnally, the portfolio of nullD-assisted multifamily housing is subsidinulld under the nullction nullnullw
nullnstructionnullubstantial Rehabilitation Program, the nullction nullnullnullrtgage nullsistance Program,
and a variety of other vintage programs that no longer actively produce units. These programs have
a combined portfolio of more than nullnullmillion units. These nullD multifamily units add an average
of about nullunits per blocnullgroup, but they add more than null units to those neighborhoods where
they are present.
nullthough all of these programs comprise only a small part of the rental housing marnullt, it is
important to enullmine the enullent to which they facilitate the poverty deconcentration process.
The nullnullProgram is mandated to help poor households surmount the price barriers that prevent
them from leasing good quality housing in decent neighborhoods. nullhibit nullenullmines the enullent
to which nullnullhouseholds are able to move into low-, moderate-, or high-poverty neighborhoods.
The distribution of nullnullhouseholds in each of the three categories of neighborhood poverty is
roughly the same as the distribution of rental units offered at or below the nullR. The nullnullProgram
is able to locate null percent of its households in low-poverty blocnullgroups. This rate closely
corresponds to the null percent of the rental units with rents below the nullR. nullmilarly, null percent
of all nullnullhouseholds are found in moderate-poverty neighborhoods nulllocnullgroups with poverty
ranging from null to null percentnull and this closely matches the null percent of the affordable rental
housing stocnullfound in these neighborhoods.
The data suggest that nullnullhouseholds are very much dependent on the presence of affordable
units, even though the households lease only a small portion of the available units. nullether in the
low- or moderate-poverty blocnullgroups, nullnullhouseholds lease between null and null percent of the
available units offered below the nullR. Only in those neighborhoods where poverty afnullcts more
than null percent of the population does the incidence of nullnullhouseholds decline to nullpercent.
This decline suggests that the nullnullProgram is helping households to move away from areas with
high concentrations of poverty and move to neighborhoods with lower levels of poverty.
Exhibit null
nullvel onullPovertnull
in the nullocnullnullonull
nullnullinnullChoice
Vonullher nullnulleholds
Percent
nullntal nullits
nulllonullthe nullnull
Percent
Distrinullnulltion of nullonullsinnull Cnulloice nullonullcnullers in 200null in Blocnull nullronullpsnull nullnull nullovertnull Catenullornull
nullss tnulln 10null 5nullnull23 27 5null14null71 2null
10 to 19null null0null5null 31 5null75null53 31
20 to 29null 434null77 20 3null50null24 19
30 to 39null 2nullnullnull 12 2null35null5null 11
40 to 49null 12null55null null 1null01null22 null
50nullor nullre 75null1null 3 nullnull5null 5
Total 2nullnullnull9null 100 1null575nullnull 100
Fnull nullFair nullrnullt Ratenull
Sources: nullSnullnullreau onulltnull CensusnullCensus nullnullnullnullSnullnullpartment onullnullusing and nullban nullvelopmentnullnullnulle onullPolicy
nullvelopment and Researcnull

113Cityscape
nulle Prospects nullr Guiding nullusing Cnullice
Voucnullr nullusenulllds to nullgnullnullportunity nullignullornullods
nullhibit nulldescribes the same issue for the pronullct-based housing. nullile the variation is greater, the
result is roughly the samenullpronullct-based units are distributed across neighborhoods categorinulld by
poverty in proportion to the availability of affordable housing which, in nearly all cases, includes
this pronullct-based housing. nullote that in some blocnullgroups, the nullnullnullunits were added after the
nullnull nullnsus.nullnullout null percent of pronullct-based housing enullsts in low-poverty neighborhoods,
which is close to the null percent of affordable housing that enullsts in these neighborhoods. Pronullct-
based housing is, however, heavily overrepresented in high-poverty neighborhoods. nullbout nullnull percent
of all pronullct-based housing enullsts in high-poverty neighborhoods nullhose with null percent or more
povertynull, but only nullnull percent of affordable housing enullists in these neighborhoods. These percentages
indicate that this publically supported housing represents a disproportionate share of the rental
stocnullin these distressed neighborhoods.
nullamining the number of assisted units in a neighborhood is simplenulldetermining the proper
measure of marnullt penetration by assisted housing units or voucher households is difficult.
Out of the nullnullnullnullblocnullgroups nationwide, the incidence of assisted housing, either as pronullct-
based units or through vouchers, is very low.
null
nullre than one-half of all blocnullgroups contain only
four or fewer assisted households or housing units, but distribution includes null,nullnullblocnullgroups
that have no voucher households or pronullct-based units at all. nullcluding those blocnullgroups with
no assisted housing, the incidence of assisted housing remains low. nullmong those blocnull groups with
some assisted housing, about one-half have fewer than null assisted units, which is only nullnullpercent
of the housing stocnullin these blocnullgroups.
nullny issues are involved in determining the level at which assisted housing in a neighborhood is
viewed as a threat. The literature is large nullee nulleeman and nulltein, nullnull, for a literature reviewnull
however, the bulnullof this literature addresses the effect of pronullct-based housing on the value of
nearby properties. nullttle of this research addresses the effect of voucher households on receiving
neighborhoods, but wornullby nulllster et al. nullnullnull addresses the issue directly.
Exhibit null
nullvel onullPovertnull
in the nullocnullnullonull
Pronullctnullased
nullsisted nullits
Percent
nullntal nullits
nulllonullthe nullnull
Percent
Distrinulltion of nullonullctnullasenullnullnullinnullin 200nullin Blocnullnullonullsnullnull nullvertnullCatenullrnull
nullss tnulln 10null 1null21null7null 2null 5null14null71 2null
10 to 19null 9nullnullnull 25 5null75null53 31
20 to 29null null9null09 17 3null50null24 19
30 to 39null 499nullnull 13 2null35null5null 11
40 to 49null 339null51 9 1null01null22 null
50nullor nullre 425null05 11 nullnull5null 5
Total 3null4null1null 100 1null575nullnull 100
Fnull nullFair nullrnullt Ratenull
Sources: nullSnullnullreau onulltnull CensusnullCensus nullnullnullnullSnullnullpartment onullnullusing and nullban nullvelopmentnullnullnulle onullPolicy
nullvelopment and Researcnull
null
The incidence of assisted housing may actually be lower because the calculation here adds the count of nullnullhouseholds
to the count of assisted units, but vouchers may occupy nullnullnullunits. nullere this possibility enullsts, the count of assisted
units is too high.

114 Refereed Papers
nullClure
nulllster et al. found that a few nullnull in a strong neighborhood can be beneficial if they are small in
number nullve or fewer within a nullnullfoot radiusnulland the neighborhood is strong nulligh marnullt value
and values that are appreciatingnull nullnullnullfoot radius is not a big areanullit is appronullmately null acres.
nulltypical residential development contains four to five households per acrenullthus, a nullnullfoot radius
area would hold about null to nullnullhousing units. The typical blocnullgroup holds about nullnullunitsnull
thus, the area defined in the wornullby nulllster et al. would be only a fraction of a blocnullgroup, with
five or sinullof these null-acre areas in each blocnullgroup. The implications of the wornullby nulllster et al.
is that null to null vouchers would be the manullmum desirable in a blocnullgroup with a strong marnullt.
These voucher households would need to be dispersed throughout the area, not concentrated
within a single null-acre area. nullocnullgroups typically contain about nullnullhousing units, suggesting
that the manullmum desirable percentage of nullnullhouseholds is nullto nullpercent.
This very crude arithmetic stretches the reach of the wornullby nulllster and his colleagues. Despite
the lacnullof precision inherent in such simple calculations, this figure can provide some guidance.
null the presence of nullnullhouseholds is greater than nullto nullpercent of all housing in neighborhoods
with strong housing marnullts, it is linullly to be detrimental to the neighborhood. nullr purposes
of this research, the criterion will be that nullnullhouseholds should be less than nullpercent of all
housing in the neighborhood.
nullmilarly, a reasonable limit on the manullmum number of assisted units desirable within a
neighborhood may enullst. The literature is silent on this issue. The debate has yet to be resolved
on whether assisted housing affects the surrounding neighborhood positively, negatively, or not
at all. Researchers may never undertanull calibrating the effect as a function of the number of units,
which is a more finely tuned issue. The typical blocnullgroup with pronullct-based housing, however,
has a mean of null percent of all units assisted, but a median of only nullpercent. nulling these rates
as guides, it may be best that any poverty deconcentration initiative avoid neighborhoods where
the incidence of pronullct-based housing is more than null percent, both because this percentage
represents a conservative level between the mean and the median and because it corresponds to
the average level of poverty found in neighborhoods nationwide. nullnullhouseholds should not be
guided to neighborhoods where the presence of pronullct-based assisted housing already creates a
significant concentration of poor households.
nullwell-designed poverty deconcentration program should guide nullnullhouseholds to desirable
neighborhoods based on factors beyond nullst the presence of poverty and affordable housing.
nullain, how the criteria should be derived for distinguishing desirable neighborhoods from less
desirable is not entirely clear. nullst agree that desirable neighborhoods should provide opportuni -
ties for gainful employment, good schools, and racial integration. nullcursory enullmination of
measures of unemployment, educational attainment, and minority concentration could illustrate
some criteria that could be used to identify desirable neighborhoods.
The analysis presented in this article assumes that low unemployment in a neighborhood is a good
pronull for the availability of nullbs in or close to that neighborhood. nullighborhoods with low unem -
ployment are plentifulnullmore than one-half of all blocnullgroups enullerienced unemployment below
nullpercent in nullnull. nullhe national unemployment rate was nullnullpercent in that year.nullnullfortunately,
these low-unemployment neighborhoods appear to have smaller shares of rental units with rents

115Cityscape
nulle Prospects nullr Guiding nullusing Cnullice
Voucnullr nullusenulllds to nullgnullnullportunity nullignullornullods
below the nullR than are found for blocnullgroups as whole. Those neighborhoods with unemploy -
ment below nullpercent contain only about one-third of the rental units with rents below the nullR.
These percentages suggest that an nullnullpoverty deconcentration effort may confront problems if
the criteria identifying high-opportunity neighborhoods become too ambitious. To succeed, the
effort may have to permit households to enter rental units with rents above the nullR.
nullother obnullctive of poverty deconcentration is the movement of households, especially house -
holds with children, to areas with good schools. The census does not have a mechanism to tabulate
school quality, but it does measure the educational attainment of the resident population of each
neighborhood. null is assumed that this stands as a pronull for school quality. The measure used here
is the percent of the adults who have completed high school. nullusing units in areas with high
educational attainment are distributed in a manner similar to housing in areas with low unemploy-
ment. nullout null percent of blocnullgroups have below average levels of high school completion
nullhat is, under null percentnull in nullnull, about null percent of all adults had not completed high school.
These blocnullgroups, however, contain only null percent of the rental units available below the nullR.
The level of minority concentration is the final issue regarding poverty deconcentration. Racial or
ethnic minorities are defined here as all people enullept non-nullspanic nullites. nulling this definition,
the median minority presence is null percent among all neighborhoods. nullven the high level of
spatial concentration of minorities, the average presence, at null percent, is much higher. Develop -
ing categories is problematic because there is little theory to guide the process. nullen it comes to
poverty concentration, some guiding theories suggest that if the distribution of poor households
can be nullpt below a low threshold, such as null percent, that the effect on the neighborhood will be
negligible. null comparable guiding theory for racial minullng enullsts. nullidence shows nullites have a
lower tolerance for non-nullites than non-nullites do for nullites. This tolerance differential leads to
an ideal level of integration for nullites that contains a lower percentage of minorities than the ideal
level of integration among minorities nullarley, nullnullnull
null addition, minority concentration is subnullct to local conditions. null the nullnneapolis-null. Paul area,
all minorities manull up null percent of the population, a figure close to the national average, but
nullacnull manull up only nullpercent of the total area population compared with null percent of the na -
tionnull population. nullspanics comprise only nullpercent of the total compared with null percent of the
national population. nullmilarly, in nulln nulltonio, nullacnull comprise only nullpercent of the population,
but nullspanics comprise null percent. These data suggest that analysis of minority concentrations at
the national scale must be viewed with some cautionnullthe delineation of ideal levels of racial and
ethnic integration are very different from one city to the nenull.
nullhibit nullcombines the many criteria that can be used to identify desirable neighborhoods.
null begins with all blocnullgroups that contain all null million rental units in the nation, of which
null.nullmillion are offered at rents below the applicable nullR. The enullibit outlines the number of
neighborhoods and rental units available as successive criteria are added to the definition of a
high-opportunity neighborhood.
nullginning with all nullnullnullnullblocnullgroups, this total is immediately reduced to nullnullnullnullwith the
assumption that only blocnullgroups with poverty levels below null percent are desirable. nullcepting
only low-poverty neighborhoods as potential high-opportunity neighborhoods results in a loss of

116 Refereed Papers
nullClure
null percent of the neighborhoods. The loss of affordable rental units is even greater. The null.nullmillion
affordable rental units fall to only null.null million, a loss of nullnull percent of the units offered below the nullnullR.
The order of adding additional constraints is somewhat arbitrary. nullch new constraint causes a
loss of neighborhoods and units. The order used in enullibit nullsimply adds constraints with the least
potential to cause a loss of neighborhoods and units as indicated with the analysis of the distribu-
tions of assisted housing, educational attainment, unemployment, and minorities.
The first two constraints added involve the incidence of pronullct-based housing and the presence of
other nullnullhouseholds. nulliding nullnullhouseholds away from neighborhoods with above-average
concentrations of pronullect-based housing does not cause a great loss of either neighborhoods or units.
nulloiding neighborhoods that already have a significant concentration of other nullnullhouseholds
also does not cause a great loss. null the high-opportunity neighborhoods have poverty levels below
nullnull percent, pronullect-based housing below nullnull percent of the total stocnull, and voucher households leasing
no more than nullpercent of the housing, then null,nullnullblocnullgroups remain with nullnullmillion units.
nullding a constraint for low levels of adults who did not complete high school further reduces the
number of neighborhoods and units. null the neighborhoods are also limited to nullst those where the
failure to complete high school is less than null percent, then the available opportunity neighbor -
hoods drop to null,nullnullblocnullgroups and nullnullmillion affordable units.
null we limit the available blocnullgroups to nullst those with unemployment below nullpercent in nullnull,
the count of available blocnullgroups falls to about null,nullnullwith nullnullmillion affordable units.
nullding a constraint based on the presence of minorities has a significant effect. null the constraint
calls for the presence of minorities to be less than null percentnull very modest levelnullhen the
Exhibit null
Povertnull
nullnull
Pronullctnull
nullsed
nullnullinnull
nullnull
nullnullinnull
Choice
Vonullhers
nullnull
nullnullts
Not
Conull
pletinnull
nullnull
School
nullnull
nullenull
plonulld
nullornullrs
nullnull
Minoritnull
Popnullation
nullnull
nullonullh
in
Povertnull
nullnull
nullocnull
nullonull
nullntal
nullits
nulllonull
the
nullnull
nullntal
nullits
Distrinullnulltion of nullental nullnits nullitnull nullents Belonull tnulle nullnullnull annull All nullental nullnits in
Blocnull nullronullps nullitnull nullovertnull Belonull 10 nullercent annull Cnullnullnullnulllativelnull Anullnullinnull nulltnuller
nulleinullnullnullornulloonull Attrinullnulltes
All nullocnullnullonulls 209null7null 1null575nullnull 3null707null99
null0 10null175 5null14null71 14null55null07
null0 null5 103null90 4null9null221 13nullnullnull07
null0 null5 null 9null321 4null02null29 12null4null599
null0 null5 null null0 nullnull14 3null51nullnull 10null04null44
null0 null5 null null0 null nullnullnull 2null73null79 null2nullnull21
null0 null5 null null0 null null0 50null90 1null39null72 5null93null02
null0 null5 null null0 null null0 null 2null155 974null11 2nullnullnullnull
Fnull nullFair nullrnullt Rentnull
nullte: Rnullnullare nullr tnull current nullrmula is nullnullnull nullnullnullnullr tnull Administration’s proposalnull

117Cityscape
nulle Prospects nullr Guiding nullusing Cnullice
Voucnullr nullusenulllds to nullgnullnullportunity nullignullornullods
available neighborhoods drop to about null,nullnullblocnullgroups nullbout null percent of the totalnulland the
number of units to only about nullnullmillion nullnly null percent of the totalnull
The last constraint is the trend in poverty, which is based on a decline in poverty during the nullnullnullnulls,
which was typical. This constraint, when added to the others, drops the available neighborhoods
to only null,nullnulland the available units to under nullnullmillion.
null is difficult to nullow when the loss of neighborhoods and units becomes prohibitive, because it is
hard to nullow how many neighborhoods and units need to enullst to effectively implement a poverty
deconcentration program. The nullnullprogram as a whole assists more than nullnullmillion households,
but it is doubtful that a poverty deconcentration program would be applied across the entire pro-
gramnulltoo many households would not want to locate elsewhere. nullen a modest effort, however,
such as the proposal to engage null,nullnullvouchers per year for null years, means that nullnullnullnullunits
would need to be successfully leased in the designated high-opportunity neighborhoods. null
do not nullow a great deal about the capacity of nullnullhouseholds to compete against households
without subsidies. null do nullow that nullnullhouseholds are able to lease about null to null percent
of the units in low-poverty neighborhoods. Perhaps this figure could be pushed higher, but it is
doubtful that, short of a significant new incentive for landlords to participate in the nullnullProgram,
the ability to capture units can be dramatically higher. null this is true, it suggests that a poverty
deconcentration initiative should adopt not-too-stringent criteria for high-opportunity neighbor-
hoods so that the participating households will be able to enter a large number of neighborhoods
with more than enough units available.
What Has Not Been Examined
nullveral issues have not been enulllored that possibly should. The current analysis depends heavily
on data available from the decennial census. These data may be sufficient, because several variables
used in the census data correlate with other factors that should be used to develop an opportunity
indenull null is possible, however, that other data sets should be enulllored to see if they can provide
measures that will improve the assessment of a neighborhoodnull potential to provide opportunities
for good housing, employment, schools, shopping, and other services.
Conclusions
null an ideal setting, if enough neighborhoods ennullyed desirable traits nullow poverty, high educational
attainment, and full employmentnulland provided sufficient rental units priced below the applicable
nullRs, it would be simple to guide nullnullhouseholds to these neighborhoods. null a practical matter,
however, too few neighborhoods offer all of these traits manullng the tasnullvery challenging.
Roughly null million rental units enullst in the nullited nullates, but only about null percent of these units
are listed below the nullR levels that govern the nullnullProgram. Thus, about null million units are
eligible to participate in the program. nullot all of these units, however, are located in desirable neighbor-
hoodsnull many are located in neighborhoods that suffer from high poverty and unemployment.
nullf the nullnullnull Program, or at least a significant share of its participating households, were to be restricted
so that they could reside only in neighborhoods with poverty below null percent, only nullnullmillion

118 Refereed Papers
nullClure
rental units would be available. nullthough the nullnullmillion units are greater in number than the
appronullmately nullnullmillion nullnullhouseholds, this may not be enough, because the households in
the nullnullProgram seenullng eligible rental dwellings would have to compete with other unassisted
renter households for these few units.
The nullnullProgram could restrict a program household to only those neighborhoods with the
following characteristicsnull
null nullw poverty nulless than null percent of the populationnull
null nullw presence of other assisted rental units nulless than null percent pronullct-based housing and
nullpercent voucher householdsnull
null nullw incidence of adults who did not complete high school nulless than null percentnull
null nullw incidence of unemployment nulless than nullpercentnull
null nullw incidence of minorities nulless than null percentnull
null Declining poverty.
null these constraints were adopted, the number of affordable rental units would diminish consider -
ably. nulling nullnull nullnsus counts, it is estimated that only nullnullmillion rental units would be able
to participate in only null,nullnullblocnullgroups. This count of units is smaller than the number of
households already in the nullnullProgram. null addition, units meeting these conditions are located
in only null percent of the blocnullgroups across the nation, which would be a prohibitively small
number of neighborhoods.
null present, nullnullhousehold are able to lease null to null percent of the affordable rental units in
low-poverty neighborhoods nullnull,nullnullvoucher households in the nullnullmillion affordable unitsnull
null another nullnullnullnullvoucher households were added to this number, it would mean that nullnull
households would have to capture null percent of the available affordable units. null is unlinullly that an
innullnullof additional voucher households of this scale could successfully compete with unsubsidinulld
households for units within a narrowly constrained set of neighborhoods. The voucher households
would need to be able to search across many neighborhoods, not nullust a few. The need to search across 
many neighborhoods means that any effort to identify high-opportunity neighborhoods should enull-
ercise caution when adopting criteria that limit the location options of the participating households.
The households may also need to compete for units that are priced above the nullR. nullits rented at
or below the nullnullR manulle up nullust nullnull percent of all the rental units in the low-poverty neighborhoods.
This low percentage suggests that guiding households to low-poverty neighborhoods will be hindered
by the requirement that units be rented at or below the nullnullR. Poverty deconcentration may be facil-
itated through the use of enulleption rents and other possible modifications to the nullnullProgram.
The analysis here is developed using only crude measures of the housing and demographic
conditions in the blocnullgroups. nullthough this research is instructive because of its national scope,
the results are only suggestive. null may be necessary to conduct more detailed research following the
successes and failures of nullnullhouseholds in metropolitan areas where the housing, employment,
educational, and crime characteristics can be measured with greater precision.

119Cityscape
nulle Prospects nullr Guiding nullusing Cnullice
Voucnullr nullusenulllds to nullgnullnullportunity nullignullornullods
nullnullowledgments
The author thannull the nullnull Department of nullusing and nullban Development for supporting this
research and multiple anonymous referees for their very helpful guidance.
nulltnullr
nullrnullnullnullure is a professor in the Department of nullban Planning at the nulliversity of nullnsas.
Renullrences
nulliggs, nullvier de nullunull, and nullrgery nullstin Turner. nullnull. nullssisted nullusing nullbility and the
nullccess of nullw-nullcome nullnority nullmiliesnullnullssons for Policy, Practice, and nullture Research,null
Northwestern nullurnal of nullw and nullcial nulllicy nullnullnull nullnullnull
nulloonull-nullnn, nullanne, nulleg null Duncan, and null nullwrence nuller, eds. nullnull. Neighborhood nullnullrtynull
nulll. null Contenull and Consenullences for Childrennull nullw nullrnull Russell nullge nullundation.
nullulton, nullaudia null, nullll nullrbin, Tsui nullan, and nullrilyn null. nullnull. nullapping ResidentsnullPercep -
tions of nullighborhood nullundariesnullnullnullthodological nullte,nullnullerican nullurnal of Community
nullychology null nullnull nullnullnullnull
Devine, Deborah null, Robert null nullay, nullster Rubin, and nulldia null Taghavi. nullnull. nullusing Choice
Voucher nullcation nulltternsnullImplications for nullrticipant and Neighborhood nulllfarenull nullshington, Dnull
nullnull Department of nullusing and nullban Development, Office of Policy Development and Research,
Division of Program nullnitoring and Research.
nulllen, nullgrid null, and nullrgery null Turner. nullnull. nullDo nullighborhoods nulltter and nullynullnull null Choosing
a nulltter nullfenullnullaluating the nullnullng to nullportunity nullperiment, edited by nullhn null nullering and nulldith
D. nullins. nullshington, Dnull nullban nullstitute Pressnullnullnullnullnull
nullnull nullnull. nullDoes nullighborhood nulltternullnullsessing Recent nullidence,nullnullusing nulllicy nullbate
nullnullnull nullnullnullnull
nullrley, Reynolds. nullnull. nullarriers to the Racial nulltegration of nullighborhoodsnullThe Detroit nullse,null
nullnals of the nullerican nullademy of nulllitical and nullcial nullience nullnullnullnull nullnullnull.
nulleeman, nullnce, and nullllary nulltein. nullnull. nullubsidinulld nullusing and nullighborhood nullpactsnullnull
Theoretical Discussion and Review of the nullidence,nullnullurnal of nullanning nullterature null nullnull nullnullnullnull
nulliedrichs, nullrgen. nullnull. nullDo Poor nullighborhoods nullnull Their Residents Poorernullnullntenull nullfects
of Poverty nullighborhoods on Their Residents.nullnull nullpirical nullnullrty nullsearch in a Comparatinull
nullrspectinull, edited by nullns-nullrgen nulldress. nulldershot, nullited nullngdomnullnullhgatenullnullnullnull
nulllster, nullorge null nullnull. nullnullnsequences nullom the Redistribution of nullban Poverty During the
nullnullsnullnullnullutionary Tale,nullnullonomic nullnulllopment nullarterly null nullnull nullnullnullnull

120 Refereed Papers
nullClure
nullnull nullnull. nullnullvestigating nullhavioural nullpacts of Poor nullighbourhoodsnullTowards nullw Data
and nullalytic nullrategies,nullnullusing nulludies null nullnull nullnullnullnull
nullnull nullnull. nullnull nullonomic nullficiency nullalysis of Deconcentrating Poverty Populations,null nullurnal
of nullusing nullonomics null nullnull nullnullnullnull
nulllster, nullorge null, Roberto null nullercia, nullvaro nullrtes, and Ron nulllega. nullnull. nullhe nullrtunes of
Poor nullighborhoods,nullnullban nullfairs nullnullew nullnullnullnullnullnullnull
nulllster, nullorge null, Peter null Tatian, nullna null nullntiago, nullthryn nullnull Pettit, and Robin null nullith.
nullnull. nully Not in null nullcnullardnull nullw nullunswicnull nullnullThe nullate nulliversity of nullw nullrsey, Rutgers,
nullnter for nullban Policy Research.
nulllster, nullorge null, Peter null Tatian, and Robin null nullith. nullnull. nullThe nullpact of nullighbors nullo nulle
nullction nullnullrtificates on Property nulllues,nullnullusing nulllicy nullbate null nullnull nullnullnullnull
nulllster, nullorge null, and nullne nullebel. nullnull. nullnullll Dispersed nullusing Programmes Reduce nullcial
Problems in the nullnullnull nullusing nulludies null nullnull nullnullnullnull
nullonulltics, nullc. nullnull. nullnull nullng nullrm in nullnull nullundaries. nullst nullunswicnull nullnullnullonulltics, nullc.
nullering, nullhn null, and nulldith D. nullins. nullnull. Choosing a nulltter nullfenullnullaluating the nullnullng to
nullportunity nullperiment. nullshington, Dnull nullban nullstitute Press.
nullering, nullhn null, nulldith D. nullins, and Todd null Richardson. nullnull. nullnullat nullve null nullarned
nullout nullusing nullbility and Poverty Deconcentrationnullnull null Choosing a nulltter nullfenullnullaluating the
nullnullng to nullportunity nullperiment, edited by nullhn null nullering and nulldith D. nullins. nullshington,
Dnull nullban nullstitute Pressnullnullnull.
nullering, nullhn null, nulldollah nullghighi, nulllene nullebbins, and nullchael nullewert. nullnull. nullomoting
nullusing Choice in nullnulls nullntal nullsistance nullogramsnullnullnullport to Congressnull nullshington, Dnull nullnull
Department of nullusing and nullban Development, Office of Policy Development and Research.
nulletnull nullward null, and nullren nullapple. nullnull. nullnullu nulltta nullvenullnullvancing the Debate on the
Record of Dispersal,nullnullusing nulllicy nullbate null nullnull nullnullnullnull
nullbroscio, David. nullnull. nullnullnited and nulltuated by nullme nullmmon nullpulse of Passionnullnullalleng -
ing the Dispersal nullnsensus in nullerican nullusing Policy Research,null nullurnal of nullban nullfairs null nullnull
nullnullnullnull
nullrgowsnull, Paul null nullnull. nullResponse to nullorge null nulllsternull nullnullnsequences nullom the Redistribution
of nullban Poverty During the nullnullsnullnullnullutionary Tale,’nullnullonomic nullnulllopment nullarterly null nullnull
nullnullnullnull
nullnull nullnull. nullunning nullogress, nulldden nulloblemsnullnulle nullamatic nullcline of Concentrated nullnullrty in
the 1null0s. The nullving nullties nullnsus nullries. nullshington, Dnull nulloonullngs nullstitution.
nullsarda, nullhn D. nullnull. nullnullner-nullty nullncentrated Poverty and nullighborhood Distressnullnullnull to
nullnull,nullnullusing nulllicy nullbate nullnullnull nullnullnullnull

121Cityscape
nulle Prospects nullr Guiding nullusing Cnullice
Voucnullr nullusenulllds to nullgnullnullportunity nullignullornullods
nullels, nullcere, nulleg null Duncan, nullefanie Deluca, Ruby nullndenhall, and nullmes Rosenbaum. nullnull.
nullifteen nullars nullternullnulln Residential nullbility Programs Provide a nullng-Term nullcape nullom
nullighborhood nullgregation, nullime, and Povertynullnull nullmography null nullnull nullnullnull
nullngsley, null Thomas, and nullthryn nullnull Pettit. nullnull. Concentrated nullnullrtynullnullChange in Coursenull
nullshington, Dnull nullban nullstitute. nullailable at httpnullnullww.urban.orgnullploadedPDnullnullnullnullnull
nullnullnullpdf.
nullventhal, Tama, and nullanne nulloonull-nullnn. nullnull. nullnullving to Opportunitynullnull nullperimental
nulludy of nullighborhood nullfects on nullntal nullalth,nullnullerican nullurnal of nullblic nullalth null nullnull
nullnullnullnullnull
nulldwig, nullns, nulleg Duncan, and Paul nullrschfield. nullnull. nullnullban Poverty and nullvenile nullimenull
nullidence nullom a Randominulld nullusing-nullbility nullperiment,null nullarterly nullurnal of nullonomics nullnull
nullnull nullnullnullnull
nulldwig, nullns, nulleg Duncan, and nullshua Pinnullton. nullnull. nullnullighborhood nullfects on nullonomic
nulllf-nullfficiencynullnullidence nullom a Randominulld nullusing-nullbility nullperiment. null nullailable at httpnullnull
www.nber.orgnulltopublicnullaltimorenulltonullaltnullmployment.pdf.
nulldwig, nullns, nulllen nulldd, and nulleg Duncan. nullnull. nullnullban Poverty and nullucational Outcomes.null
null nulloonullngsnullharton nullpers on nullban nullfairs, edited by nulllliam null nullle and nullnet R. Pacnull
nullshington, Dnull nulloonullngs nullstitutionnullnullnullnullnull
Orr, nullrry, nulldith D. nullins, Robin nullcob, nullinullnullecroft, nullsa nullnbonmatsu, nullwrence null nulltnull
nullffrey null nullebman, and nullffrey R. nulling. nullnull. nullnullng to nullportunity for nullir nullusing nullmonstration
nullogramnullInterim Impacts nullaluationnullReport prepared for the nullnull Department of nullusing and
nullban Development by nullt nullsociates, nullc., and the nulltional nullreau of nullonomic Research null
nullshington, Dnull nullnull Department of nullusing and nullban Development.
Polinullff, nullenullnder. nullnull. nullRacial nullequality and the nullacnullnulletto,nullnullnullrty and nullce.
nullailable at httpnullnullww.prrac.orgnullullnullenull.phpnullenullnulldnullnullnullitemnulldnullnullnullnewsletternull
idnullnullheadernulllenullndernullnullolinullffnullnullnullautreaunullnullProposal.
Popnulln, nullsan null, nullrry null nullron, Diane null nullvy, and nullry null nullnningham. nullnull. nullhe nullutreaunull
nullgacynullnullat nullght nullnulld-nullcome and Dispersal nullrategies nullan for the Poorest Public nullusing
Tenantsnull nullusing nulllicy nullbate null nullnull nullnullnullnull
Rosenbaum, nullmes null nullnull. nullnullanging the nullography of Opportunity by nullpanding Residential
nulloicenullnullssons nullom the nullutreaunullProgram,nullnullusing nulllicy nullbate nullnullnull nullnullnullnull
nullmpson, Robert, nullffery nullrenoff, and Thomas nullnnon-Rowley. nullnull. nullssessing nulleighborhood
nullfectsnull nullcial Processes and nullw Directions in Research,nullnullnual nullnullew of nullciology nullnullnullnullnullnull
nullnull nullreau of the nullnsus nullensusnull nullnull. 200nullnullerican Community nullrnully. nullnullnullnullnullnulleri-
can nullmmunity nullrvey nullnullar nulltimates. nullvailable at www.census.gov.
nullnull nullnull. nullnull nullnsus. nullmmary nullle null nullrious tables. nullailable at www.census.gov.

122 Refereed Papers
nullClure
nullnull nullnull. nullnull nullnsus. nullmmary nullle null nullrious tables. nullailable at www.census.gov.
nullnull Department of nullusing and nullban Development nullnullnull nullnull null nullhapter null nullpanding nullus-
ing Opportunities and nullbility.nullnull nullusing Choice Voucher nullogram nullideboonull edited by nulladel
nullnsulting nullrporationnullnullshington, Dnull nullnull Department of nullusing and nullban Development.
nullailable at httpnullnullww.hud.govnullfficesnulldmnulludclipsnulluideboonullnullnullnullnullnullnullnullgnullnullnull.pdf .
nullnull nullnullnullnullction nullght nullnagement nullsessment nullogram nullnullnullnull nullshington, Dnull nullnull
Department of nullusing and nullban Development. nullailable at httpnullnullww.hud.govnullfficesnullihnull
programsnullcvnullemapnullemap.cfm.
van nullmpen, nulla T. nullnull. nullPoverty Pocnullts and nullfe nullances,null nullerican nullhanulloral nullientist null
nullnull nullnullnullnull
nullrady, David P., and nullrole null nulllnullr. nullnull. nullnullusing nulluchers and Residential nullbility,null
nullurnal of nullanning nullterature null nullnull nullnullnull
nullnnicnull nulluis. nullnull. nullThe Triumph of nullusing nulllowance Programsnullnullw a nullndamental Policy
nullnnullct nulls Resolved,nullCityscapenullnullnullurnal of nulllicy nullnulllopment and nullsearch nullnullnull nullnullnull.

123nulltyscapenullnullnullurnal of nulllicy Development and Research • Volume 12, Number 3 • 2010
U.S. Department of Housing and Urban Development • Office of Policy Development and Research
Cityscape
Measuring Neighborhood
Quality With Survey Data:
A Bayesian Approach
nullent null nullst
nullnull Department of nullusing and nullban Development
nullstract
nullthough neighborhood nullality is important for shaping public policy, it is also difnullult
to nullantifynullnullis study measured subnullctinull neighborhood nullality using data from two
sourcesnullnullnullthe 2002 nullerican nullusing nullrnully nullnullnulland nullnullthe nullnull nullpartment
of nullusing and nullban nullnulllopmentnulls nullnullnullsnullCustomer nulltisfaction nullrnully nullnullnullof
nullction nullnullusing Choice Voucher nullogram nullCVnull householdsnullnullrnully responses were
analyzed regarding neighborhood nullality, home nullality, and crime perceptionsnullnullractnull
lenulll nullyesian estimates were computed using nullnullmetropolitannullenulll data and Cnull
census tract datanull
nulle new nullyesian estimates hanull fewer outliers than the original Cnull data, and the use
of prior information allows for estimation for tracts with lower sample sizes than would
be practical to estimate using only Cnull datanull
I compared the Cnull and nullyesian estimates with other measures of neighborhood nullalnull
ity, such as ponullrty rates, median income, and indicators for tracts receinullng lownullncome
housing tanullcreditsnullnulle Cnull and nullyesian indicators are highly correlated, and both the
Cnull and nullyesian estimates correlate well with the aunullliary nullriables used in this studynull
nullr tracts with large differences between the Cnull and nullyesian estimates, correlations
are much stronger for the nullyesian estimatesnull
nulle contents of this article are the nullews of the author and do not necessarily renullct the nullews or policies of the
nullnull nullpartment of nullusing and nullban nullnulllopment or the nullnull gonullrnmentnull

124 Refereed Papers
nullst
Introduction
nullasuring neighborhood quality is important for shaping many public policies. nullr instance, the
nullnull Department of nullusing and nullban Developmentnull nullnullnullnullnullusing nulloice nullucher Program
nullnullPnullis intended to enulland social and economic opportunities nullutside areas of poverty or
minority concentrationnullnullnull nullnullnullch. null p. nullnull. null other words, the program is designed to
promote access to decent and affordable housing in higher quality neighborhoods compared with
neighborhoods of traditional public housing pronullcts.
Despite its importance to policymanullrs, neighborhood quality is inherently complenulland difficult
to measure. Data are available on a wide variety of neighborhood characteristics, such as poverty
rates, income, crime rates, and school test scores. nullthough many policymanullrs and researchers 
rely on such indicators, they may have limited ability to measure the quality of neighborhood life
as rated by residents nullnullron and Patrabansh, nullnullnull
nullrvey data are available that measure residentsnullsubnullctive perceptions of their neighborhoods.
The study described in this article analynulld neighborhood quality perception data from two sur -
veysnullnullnullthe nullerican nullusing nullrvey nullnullnulland nullnullnullDnull nullstomer nulltisfaction nullrvey nullnullnull
The nullnullcollects a large amount of information on housing conditions of nullerican households.
null

The nullnullis actually composed of two surveys, metropolitan and national, each tanullng place in
different years. nullemployed nullnull metropolitan data for this study.
nullDnull nullnullwas a nullyear survey of nullnull households.
null
nullnducted between nullnull and nullnull, its
main obnullctive was to provide independent housing quality data to public housing agencies. nullout
nullnullnullnullresponses were collected.
nullthough the nullnulland nullnullcontain many related questions, survey design differences manull the
direct comparison of nullnulland nullnulldata difficult.
null
nullr a subset of data items, however, estimates
from both surveys correlate well. nullr instance, despite substantial differences in question wording,
nullst nullnullnullnullreported similar crime perception estimates based on nullnulland nullnull nullnulldata.
Two similar questions on each survey asnullnullnulland nullnullrespondents to rannullboth their home and
neighborhood on a scale of nullto null. nulltimates for nullnull households from the nullnulland nullnull nullnull
are very close nullast nullnullbnull nullthough many studies have enullmined differences in estimates from
independent surveys, few researchers have attempted to combine information from independent
surveys with nullyesian methods. This study attempted to enullend this literature by using nullyesian
methods to produce neighborhood quality indicators based on both the nullnulland nullnull
nullnulldata pose several problems for measuring neighborhood quality. nullrst, the neighborhood and
home ratings are subnullctive ordinal ratings on a nullto null scale. nullthough we could compute a mean
rating, for ordinal data it is customary to compute only order statistics such as the median or other
percentiles. The data do not easily lend themselves to standard statistical models that analynulle the mean.
null
nullnulldata and information are available at httpnullnullww.huduser.orgnullatasetsnullhs.html.
null
nulle nullst nullnullnullnulland nullay, nullley, and nullst nullnullnull for more nullnullinformation.
null
nulle nullay, nullley, and nullst nullnullnull and nullron, nullul, and Patterson nullnullnull for discussions of differences between the nullnull
and nullnull

125Cityscape
nullasuring nullignullornullod nullality nullitnullSurvey nullta: A nullyesian Approacnull
nullstead of analynullng raw ordinal ratings, nullcomputed a binary nullood or badnullneighborhood indica -
tor by treating scores of at least nullas high quality. null enough responses nullt least null enullsted in each
category for a neighborhood, the mean proportion followed an appronullmately normal distribution.
nullr most census tracts not nearly enough nullnullresponses enullsted to treat the tract distribution as
normal, however. nullen when combining nullnulldata for all nullyears of the survey, most census tracts
have nullor fewer nullnullresponsesnullthis small number poses a second problem, because most statistical
models for survey data assume normality of the sample mean. nullnstead of assuming normality, null treated
the tract distributions as binomial data.
null addition to having small samples, many tracts have highly snullwed distributions, with most or all
households in the same binary categorynullthis snullwness poses a third problem. nullproposed address -
ing the issue with a nullyesian model using prior information for the nullnull null drawing strength from
the nullnull nullyesian methods can produce more reasonable estimates for many tracts with highly
snullwed nullnulldistributions.
nullthough sharp ideological differences enullst between nullyesian and classical nullr frequentistnullstatis -
tics, in practice the most important difference concerns the use of prior information.
null
nullthough
classical methods tend to let the data nullpeanullfor themselves,nullnullyesian estimates always condition
on prior information. nullr this study, nullstarted with prior information from the nullnulland updated
these estimates with nullnulldata.
nullemployed a particular nullyesian approach, referred to as a nullyesian nullerarchical nulldel, using
metropolitan-level nullnullnull data and nullnullnull census tract data. nullompared with tract estimates based only
on nullnullnull data, the nullayesian estimates have fewer outliers with very low or very high estimated quality.
To validate my estimates, nullenullmined correlation of the nullnulland nullyesian estimates with other
measures of neighborhood quality, such as median income, poverty rates, and indicators for tracts
receiving low-income housing tanullcredits nullnullTnullnull The nullyesian estimates tend to correlate more
strongly with these aunullliary variables, and the differences are more apparent for tracts with larger
differences between the nullnulland nullyesian estimates.
The remainder of the article proceeds as followsnull
null nullreview of relevant studies.
null The survey data description.
null null enulllanation of the model.
null The empirical results.
null The estimates compared with other tract-level measures of neighborhood quality.
null nullsummary of the results.
null
nullayesians view statistical inference as a problem in belief dynamics, or use of evidence about a phenomenon to revise and
update our nullowledge about it.nullnullom course description at httpnullnullolgenau.gmu.edunullnullasnullynullnullTnullnullnullnullnullnullhtml.
nulle nulle nullnullnull for an introduction to nullyesian methods.

126 Refereed Papers
nullst
Literature Review
null this section, nullreview two bodies of relevant literature. nullstart with a discussion of neighborhood
quality studies. nullthen review past studies that have compared estimates from independent surveys.
Measuring Neighborhood Quality
nullighborhood quality is a difficult concept to quantify. nullcording to Dubin nullnullnull, measurement
error is a linullly cause for the lacnullof consistent effects of neighborhood quality indicators in
hedonic housing price regressions.
The stalwarts of neighborhood quality measurement have traditionally been data on income, race,
ethnicity, and poverty. nullthough, until recently, reliable neighborhood-level population, income,
and poverty data were available only from the decennial census.
null
nullime rates may also be useful measures of neighborhood quality. nullr instance, Deller and Ottem
nullnullnullnullnullnull used county crime rates as neighborhood quality controls in hedonic property value regressions.
nullime rate data are also available at lower levels of aggregation for some localities. nullhill nullnullnull
reported crime rates nullveraged over nullnull through nullnullnullfor census tracts and blocnullgroups for
three nullnull cities nullashville, Tucson, and Portlandnull
null
null increasing number of areas, such as nullattle,
are manullng neighborhood crime data available through their crime mapping programs.
null
nullighborhood quality should also be positively related to educational achievement. nulldgley,
nulllliams, and Derricnullnullnullnull found that eighth-grade test scores and nullT scores have significant
positive effects on housing prices. They found no consistent effect for third-grade scores, however.
nullrvey measures are available that measure residentsnullsubnullctive perceptions of their neighbor -
hoods. nullron and Patrabansh nullnullnull provided evidence that subnullctive perceptions of neighbor -
hood quality may not correlate highly with obnullctive measures, such as poverty rates.
nullrelated literature studied the differences in perceived neighborhood quality in the same localities
due to differences in characteristics such as race, ethnicity, gender, and income nullt. nullhn and
nullarnull nullnullnull Differences may be especially apparent regarding neighborhood crime nullustin, nullrr,
and nulline, nullnullnull nullr instance, females may manifest more sensitivity toward violent crime.
nullny researchers have measured perceived neighborhood quality with nullnulldata nullhapman and
nullmbard, nullnullnullDilulio, nullnullnullnullwman and nullhnare, nullnullnull nullr instance, nullpp nullnullnull studied
the relationship between nullnullhousehold crime perceptions and county crime rates. null found
household perceptions of crime were more strongly related to violent crime than property crime.
null
Designed to replace the decennial census long form, the nullerican nullmmunity nullrvey will soon provide tract-level
estimates nullveraged over multiple yearsnull
null
nulle nullhill nullnullnull for data and information.
null
httpnullnullpotcrime.comnullanulleattle.

127Cityscape
nullasuring nullignullornullod nullality nullitnullSurvey nullta: A nullyesian Approacnull
Other studies have measured neighborhood quality with nullnulldata. nullron and Patrabansh nullnullnull
studied the relationship between nullnullhousehold neighborhood quality responses and census data
and, as indicated previously, they found little correspondence. This lacnullof correspondence calls
into question the use of social indicators, such as poverty rates, as measures of neighborhood quality.
nullron and Patrabanshnull findings, however, may be affected by their use of household-level data.
This study found that resident perceptions aggregated to the tract level have fairly strong correlation
with poverty and income.
nullay, nullley, and nullst nullnullnull reported wide variation in nullnullneighborhood ratings across
demographic groups. nullst nullnullnullnull using nullnulldata, estimated that nullst nullrginia crime percep -
tions relate more strongly with property crime than violent crime.
Comparing Estimates From Independent Surveys
nullmerous studies have compared and contrasted estimates from independent surveys. nullr
enullmple, nullshaw and nullern nullnullnull enullmined differences in poverty estimates based on the nullnsus
nullreaunull nullerican nullmmunity nullrvey nullnullnulland nullrrent Population nullrvey nullPnull.
nullfew studies have compared nullnulland nullnullestimates. nullron, nullul, and Patterson nullnullnull matched
nullnull nullnullhouseholds with a sample of unassisted nullnullhouseholds. nullthough they reported lower
housing quality for nullnull households relative to similar unassisted families, they cautioned that
their results may be driven by methodology and questionnaire differences.
nullst nullnullnullnullstudied crime perception questions on both the nullnulland nullnull nullnull The wording
of the crime question differs on the two surveys. The nullnullasnull residents if null neighborhood crime
problemnullenullsts, and the nullnullasnull if crime or drugs nulls a big problem in nullhenullneighborhood.null
Response options also differ. Despite these discrepancies, nullst nullnullnullnullrecoded responses into
binary indicators with similar means. Of nullnullnullnull households, null.nullpercent were estimated to
have a crime problem compared with null.nullpercent of nullnullhouseholds.
Two of the most similar questions on each survey asnullnullnulland nullnullrespondents to rannulltheir
home and neighborhood on a scale of nullto null. nullst nullnullnullnullcompared both rannullngs on the nullnull
with those for nullnull households in the nullnull nullnull nullr both homes and neighborhoods, nullnull
rannullngs are nullst slightly higher than nullnullestimates for nullnull homes.
nullast nullnullnullnullnullanull suggested that, because nullnullnull and nullnullnull crime estimates are similar, they are well suited
for nullyesian methods. nullcause the nullnullsample sinull is much larger than the nullnull nullemployed a
nullayesian nullierarchical nullodel. nullnullnull national estimates are used as priors, along with nullnullnull county data,
to estimate nullyesian posterior county estimates. nullmpared with estimates solely based on nullnull
data, the nullyesian estimates have lower variance and correlate more highly with county violent and
property crime rates. nullnsistent with nullpp nullnullnull, the relationship is strongest with violent crime.

128 Refereed Papers
nullst
Data Description
This section reports nullnull nullnulland nullnullsummary statistics on three measures of neighborhood
qualitynullneighborhood ratings, home ratings, and crime perceptions.
nullth surveys asnullrespondents to rate the neighborhoods and homes on an ordinal scale of nullto null.
nullecause the response categories are numerical, we could compute mean ratings. nulle would be manulling
an assumption, however, that a rating of nullis enullctly twice as good as a rating of null nullr subnullctive
ordinal data, it is therefore customary to compute only order statistics, such as the median or other
percentiles.
nullhibit nullreports percentiles nullnullh, nullth, median, nullth, and nullthnullfor neighborhood and home
ratings. nullnulldata are reported for all occupied rental units and nullnull households. The nullnullratings
are based on responses for nullnull households in the null nullnullmetropolitan areas between nullnull and
nullnull.
null
nullrvey responses for nullnullrenters are weighted to be representative of all renters in the null
metropolitan areasnullnullnullnullnull and nullnullresponses are weighted to be representative of all voucher
households in the null metropolitan areas.
null
nullighborhood ratings correspond highly with home ratings. nullighborhood ratings in the nullth
percentile are nullfor all three samples nullnull renters, nullnullnullnull, and nullnull. nullme ratings in the
nullth percentile are nullfor nullnullrenters, nullfor nullnullnullnull households, and nullfor nullnullfamilies. nulll
median ratings are null nullighborhood ratings in the nullth percentile are nullfor both nullnullsamples and
nullnull for the nullnullnull. nullome ratings in the nullnullth percentile are null for both nullnullnull samples and nullnull for the nullnullnull.
null
nullnulldata were matched to the nullnullby county for counties in the null metropolitan areas according to the Office of
nullnagement and nulldget nullne nullnull definitions. nullr information on metropolitan area definitions, see httpnullnullww.census.
govnullopulationnullwwnulletroareasnulletrodef.html.
null
The metropolitan nullnullis stratified by metropolitan area, with weights summing to total households. The nullnullis stratified
by public housing agency nullnullnulland year, with weights summing to nullnull households in all sampled Pnulls in a given
year. Only a tiny fraction of Pnulls was enullluded. nullr more information on the survey designs for the nullnull see httpnullnullww.
huduser.orgnullatasetsnullhs.html and, for the nullnull see nullst nullnullnullnulland nullay, nullley, and nullst nullnullnull.
Exhibit 1
nulleinullted
Percentile
Neinullborhoods nullnulls
nullSnullll
nullnters
nullSnullCVP
nullnulleholds
CSS
nullSnullll
nullnters
nullSnullCVP
nullnulleholds
CSS
nullinullnullrnullonullannullnullnull nulltinnullnullrcentiles
10tnullpercentile 5 5 4 5 5 4
25tnullpercentile null null null null 7 null
nullnullan null null null null null null
75tnullpercentile 9 9 9 9 10 10
90tnullpercentile 10 10 10 10 10 10
Anull nullAmerican nullusing SurveynullCSS nullCustomer Satisnullction SurveynullnullVP nullnullusing Cnullice Voucnullr Programnull
For neignullornullod ratingsnullnullenullals nullnullnull nullr Anull rentersnullnullnullnullr AnullnullCVP nullusenullldsnulland nullnullnull nullr tnull CSSnullFor
nullme ratingsnullnullenullals nullnullnull nullr Anull rentersnullnullnullnullr AnullnullCVP nullusenullldsnulland nullnullnull nullr tnull CSSnull
Source: Autnullr’s calculation using nullnull Anull and CSS data

129Cityscape
nullasuring nullignullornullod nullality nullitnullSurvey nullta: A nullyesian Approacnull
null can compute binary indicators of high neighborhood and home ratings for which mean
analysis is appropriate. nullr this study nulltreated ratings of at least nullas high ratings. The threshold is
admittedly arbitrary.
nullhibit nullreports mean percentages of households with high neighborhood and high home ratings.
nullre than one-half of the households in each sample rated their neighborhood nullor above. Of nullnull
renters, null.nullpercent have high neighborhood ratings, as do null.nullpercent of nullnullnullnull house -
holds and null.nullpercent of nullnullhouseholds.
On average, voucher families tend to rate their homes better than renters in general. Of nullnullnullnull
families, null.nullpercent rate their homes nullor above, as do null.nullpercent of nullnullhouseholdsnullthe
corresponding mean for all nullnullrenters is null.nullpercent.
The wording of the crime question differs on the two surveys. The nullnullasnull households if their
nulleighborhood has a neighborhood crime problem.nullResponse categories include nullo,nullnullonnull
nullow,nulland nulles.nullThe nullnullasnull if crime or drugs nulls a big problem in nullhenullneighborhood.null
Response categories include nullo Problem,nullnullonnull nullow,nullnullome Problem,nulland nullig Problem.null
To facilitate comparison of crime variables from both surveys, nullrecoded responses as binary
indicators of low crime. nullr the nullnull nullesnullresponses were set to nullro, and nullonulland nullonnull nullownull
responses were treated as ones. nullr the nullnull nullome problemnulland nullig problemnullresponses were
set to nullro, and nullo problemnulland nullonnull nullownullresponses were set to one. nullnresponses for both
surveys were set to missing.
nullan indicators of low-crime perceptions are reported in enullibit null nullmpared with all renters,
voucher households rate their neighborhoods as less safe. Of all the renters surveyed, null.nullpercent
do not perceive a manullr crime problem in their area. The corresponding means are null.nullpercent
for nullnullvoucher households and null.nullpercent of nullnullhouseholds.
Exhibit 2
Variable
nullSnullll nullnters nullSnullCVP nullnulleholds CSSnullCVP nullnulleholds
nullsponses
nulleinullted
Mean
nullsponses
nulleinullted
Mean
nullsponses
nulleinullted
Mean
nullan Innullcators of nullnull nullinullnullrnullonullnullalitnull
nullnull neinullnullrnullonullratinnull 1null45null 0.55null 503 0.544 2nullnull2 0.52null
nullnull nullnull ratinnull 1null510 0.547 503 0.null4 2null9null 0.59null
nullnullcrinull innullcator 1null777 0.770 509 0.null7 27null7null 0.null4
Anull nullAmerican nullusing SurveynullCSS nullCustomer Satisnullction SurveynullnullVP nullnullusing Cnullice Voucnullr Programnull
nullgnullnullme and neignullornullod ratings are ≥nullon a scale onullnullto nullnull
Source: Autnullr’s calculation using nullnull Anull and CSS data
nullhibits null null and nullreport summary statistics by metropolitan area for high neighborhood ratings,
high home ratings, and low-crime indicators, respectively. nullcording to the nullnull Phoeninullhas the
lowest fraction of high neighborhood rating for all renters null.nullnull and nullnull households null.nullnull.
The nullnsas nullty metropolitan area has the best neighborhood ratings, according to all nullnullrenters
null.nullnull, and the worst neighborhoods according to nullnullhouseholds. One possible enulllanation for
differing opinions between all renters and voucher households is clustering of affordable rental

130 Refereed Papers
nullst
Exhibit 3
Metropolitan nullea
nullSnullll nullnters
nullSnullCVP
nullnulleholds
CSSnullCVP
nullnulleholds
nullsponses
nulleinullted
Mean
nullsponses
nulleinullted
Mean
nullsponses
nulleinullted
Mean
nullan Innullcators of nullnull nullinullnullrnullonullnulltinnullnullnull nulltropolitan Area
Santa AnanullnanullinullIrvinenullCA
Division
1null13 0.5null 44 0.5null 1null24 0.null0
Bnullfalonullnullenullonullnullnull
Tonanullnnullnullnull
1null22 0.535 57 0.4null 1null34 0.54null
Cnullrlottenullastonianulloncornull
nullnullC
1null14 0.579 1null 0.null0 2null37 0.53null
Colnullnullsnullnull 1null30 0.541 55 0.4null 1null51 0.453
Dallasnulllanonullrvinnull Tnull
Division
1null37 0.5null 41 0.nullnull 3null77 0.494
nullrt nullortnullArlinnullonnullTnull
Division
1null03 0.52null 40 0.523 1nullnull 0.49null
nullnsas CitnullnullnullnullS 1null5null 0.595 43 0.4null 2null3null 0.442
nullanullnullort nullnullernulllenullianull
Beacnull null
1null1null 0.574 27 0.590 2null07 0.591
nulllnullnulleenullanullesnullnullest
Allisnullnull
1nullnull 0.5null 30 0.5null 1nullnull 0.451
nulloeninullnullsanullcottsnulllenullAZ 1null00 0.517 30 0.322 2null75 0.499
nullrtlannullnullanconullernull
BeavertonnullnullnullA
1null71 0.525 32 0.433 1null09 0.534
nullversinullnullan Bernarnullnonull
nulltarionullCA
1nullnull 0.553 2null 0.5null 1null44 0.514
San DienullnullarlsnullnullSan
nullrcosnullCA
1null1null 0.570 5null 0.null7 1nullnull 0.5null
Anull nullAmerican nullusing SurveynullCSS nullCustomer Satisnullction SurveynullnullVP nullnullusing Cnullice Voucnullr Programnull
nullgnullneignullornullod ratings are ≥nullon a scale onullnullto nullnull
Source: Autnullr’s calculations using CSS and nullnull Anull data
units meeting nullD housing quality guidelines in particular neighborhoods. nullcording to voucher
households participating in the nullnull nullnta nulla has the best neighborhoods.
Two of the three survey estimates rannullnullnta nulla as the safest metropolitan area. Of nullnta nulla
nullnullrenters, null.nullpercent report no manullr crime problem, as do null.nullpercent of nullnullnullnull
households and null.nullpercent of nullnullrespondents. nulllumbus is the least safe metropolitan area
according to two of three survey measures. Of the nullnullrenters surveyed, null.nullpercent report no
manullor crime problems in the nullolumbus area, compared with nullnull.null percent of nullnullnull nullnullnullP households
and null.nullpercent of nullnullhouseholds. nullcording to nullnullvoucher respondents, the Phoeninullarea has
the greatest perceived crime problem, but the difference might merely renullct small sample sinull.
nullhibit nullsummarinulls absolute values of percentage differences between the metropolitan-level
nullnulland nullnullmeans reported in enullibits null null and null nullr each indicator of neighborhood quality,
two differences are summarinulldnullone between nullnullrenter means and nullnullmeans and the other
between nullnullnullnull means and nullnullmeans.

131Cityscape
nullasuring nullignullornullod nullality nullitnullSurvey nullta: A nullyesian Approacnull
Exhibit null
Metropolitan nullea
nullSnullll nullnters
nullSnullCVP
nullnulleholds
CSSnullCVP
nullnulleholds
nullsponses
nulleinullted
Mean
nullsponses
nulleinullted
Mean
nullsponses
nulleinullted
Mean
nullan Innullcators of nullnull nullnull nulltinnullnullnull nulltropolitan Area
Anull nullAmerican nullusing SurveynullCSS nullCustomer Satisnullction SurveynullnullVP nullnullusing Cnullice Voucnullr Programnull
nullgnullnullme ratings are ≥nullon a scale onullnullto nullnull
Source: Autnullr’s calculations using CSS and nullnull Anull data
Santa AnanullnanullinullIrvinenullCA
Division
1null17 0.531 44 0.nullnull 1null41 0.701
Bnullfalonullnullenullonullnullnull
Tonanullnnullnullnull
1null2null 0.5null 57 0.null4 1null41 0.nullnull
Cnullrlottenullastonianulloncornull
nullnullC
1null1null 0.550 1null 0.71null 2null42 0.5null
Colnullnullsnullnull 1null35 0.511 55 0.57null 1nullnull 0.52null
Dallasnulllanonullrvinnull Tnull
Division
1null45 0.55null 41 0.741 3null90 0.539
nullrt nullortnullArlinnullonnullTnull
Division
1null03 0.509 40 0.null0 1null93 0.5null
nullnsas CitnullnullnullnullS 1nullnull 0.5null 43 0.5null 2null5null 0.522
nullanullnullort nullnullernulllenullianull
Beacnull null
1null1null 0.54null 27 0.null0 2null30 0.null9
nulllnullnulleenullanullesnullnullest
Allisnullnull
1null93 0.5null 30 0.nullnull 1null91 0.543
nulloeninullnullsanullcottsnulllenullAZ 1null05 0.549 30 0.702 2null90 0.547
nullrtlannullnullanconullernull
BeavertonnullnullnullA
1null79 0.512 32 0.nullnull 1null30 0.null4
nullversinullnullan Bernarnullnonull
nulltarionullCA
1null92 0.554 2null 0.423 1null5null 0.5null
San DienullnullarlsnullnullSan
nullrcosnullCA
1null21 0.549 5null 0.null9 1nullnull 0.null4
Differences in mean neighborhood indicators based on nullnullrenters range from nullnullpercent in
Phoeninullto null.nullpercent in nullnsas nullty, with a median of nullnullpercent in Riverside. nullighborhood
indicator differences based on the nullnullnullnull sample are slightly larger on average. The mean
difference based on nullnullrenters is nullnullpercent, versus null.nullpercent for the nullnullnullnull sample.
Differences based on the nullnullvoucher sample vary from nullnullpercent in nullami to null.nullpercent in
Phoeninull with a median difference of null.nullpercent in nullarlotte.
Differences in home indicators by metropolitan area are quite similar in magnitude to differences
in neighborhood indicators. The mean difference in home indicator means is null.nullpercent based
on nullnullrenters and null.nullpercent based on nullnullvouchers. nullcause the larger differences with the
nullnullvouchers are almost certainly a consequence of the small sample sinulls, nullconsistently use the
overall nullnullrenter population as the reference point for the remainder of the article.
nullhen independent surveys estimate the same variable, nullayesian methods can produce a more reliable
estimate using information from both surveys. The nenull section demonstrates how a nullyesian
nullerarchical nulldel can produce more robust tract-level estimates using metropolitan nullnulldata
and tract nullnulldata.

132 Refereed Papers
nullst
Exhibit null
Metropolitan nullea
nullSnullll nullnters
nullSnullCVP
nullnulleholds
CSSnullCVP
nullnulleholds
nullsponses
nulleinullted
Mean
nullsponses
nulleinullted
Mean
nullsponses
nulleinullted
Mean
nullan Innullcators of nullnullCrinull nullrceptionsnullnull nulltropolitan Area
Santa AnanullnanullinullIrvinenullCA
Division
1null30 0.null3 44 0.null5 1nullnull 0.nullnull
Bnullfalonullnullenullonullnullnull
Tonanullnnullnullnull
1null74 0.7null null 0.745 1null5null 0.nullnull
Cnullrlottenullastonianulloncornull
nullnullC
1null2null 0.nullnull 19 0.null9 2nullnull 0.null4
Colnullnullsnullnull 1null43 0.nullnull 5null 0.530 1null92 0.540
Dallasnulllanonullrvinnull Tnull
Division
1nullnull 0.725 42 0.nullnull 3null4null 0.null9
nullrt nullortnullArlinnullonnullTnull
Division
1null20 0.7null 40 0.727 1null27 0.nullnull
nullnsas CitnullnullnullnullS 1nullnull 0.null3 43 0.null9 2nullnull 0.59null
nullanullnullort nullnullernulllenullianull
Beacnull null
1null3null 0.null0 27 0.null7 2null7null 0.729
nulllnullnulleenullanullesnullnullest
Allisnullnull
1null1null 0.725 30 0.null0 1null13 0.591
nulloeninullnullsanullcottsnulllenullAZ 1null15 0.70null 30 0.51null 2null1null 0.572
nullrtlannullnullanconullernull
BeavertonnullnullnullA
1null00 0.707 32 0.5null 1null42 0.703
nullversinullnullan Bernarnullnonull
nulltarionullCA
1null99 0.771 2null 0.null9 1null79 0.null4
San DienullnullarlsnullnullSan
nullrcosnullCA
1nullnull 0.7null 5null 0.null5 1null14 0.null9
Anull nullAmerican nullusing SurveynullCSS nullCustomer Satisnullction SurveynullnullVP nullnullusing Cnullice Voucnullr Programnull
Source: Autnullr’s calculations using CSS and nullnull Anull data
Exhibit null
nullsolnulle
Percentanull
Dinullnullrence
nullnull Neinullborhood
nulltinnullnulldicator
nullnull nullnull
nulltinnullnulldicator
nullnullCrinull
nulldicator
nullS
nullnters
vsnullCSS
nullnull
nullS
nullVP
vsnullCSS
nullnull
nullS
nullnters
vsnullCSS
nullnull
nullS
nullVP
vsnullCSS
nullnull
nullS
nullnters
vsnullCSS
nullnull
nullS
nullVP
vsnullCSS
nullnull
Anullolnulle nullrcentanull Differences Betnullen Anull annullCSS nulltropolitan nullans
nullninullnullnullfference 0.393 0.1null 0.4null 0.null4 0.52null 0.null7
nullnullan nullfference 7.21null 10.null0 null010 10.457 20.449 7.025
nullan nullfference 9.497 14.0null 10.523 14.2null 1null75null nullnull2
nullnullnullnullnullfference 29.515 43.14null 27.590 32.500 29.237 22.5null
Anull nullAmerican nullusing SurveynullCSS nullCustomer Satisnullction SurveynullnullVP nullnullusing Cnullice Voucnullr Programnull
Source: Autnullr’s calculations using CSS and nullnull Anull data

133Cityscape
nullasuring nullignullornullod nullality nullitnullSurvey nullta: A nullyesian Approacnull
Data Analysis
This section analynulls neighborhood, home, and crime measures from the nullnulland nullnull nullnull
null goal was to produce nullyesian tract estimates of neighborhood quality based on both surveys.
nullthough conventional nullyesian updating would require nullnulland nullnulltract-level estimates, the
nullnullsample is not large enough to produce reliable tract estimates. Therefore, nullchose a nullyesian
nullerarchical nulldel using nullnullmetropolitan estimates and nullnulltract estimates.
nullnullresponses are aggregated at the metropolitan level for null metropolitan areas, and null,nullnullnullnull
responses are aggregated into nullnullnullcensus tracts in the nullnullmetropolitan areas.
null
Neighborhood Indicators
nullthough the neighborhood and home ratings are ordinal, such data do not easily lend themselves
to nullyesian methods.
null
nullr my analysis, nullused the binary indicators of high neighborhood ratings
null
null
null high home ratings null
null
null and low-crime perceptions null
null
nulldiscussed previously.
Only a small percent of the nullnullcensus tract samples meet the usual normality criteria for any of
the indicators.
null
Therefore, nullassumed null
null
-null
null
follow a nullnomial null,p
i
nulldistribution, for i nullnullto null
n represents the number of weighted responses, which is the same for all indicators in a given cen-
sus tract. nullcomputed weighted responses by multiplying the original survey weight by responses
divided by the sum of the original weights.
null
nulling weighted counts based on original sampling weights summing to total nullnull households
would treat estimated counts as nullown values. This would grossly understate variance by ignoring
sampling variability. To reduce bias, nullused weighted counts with adnullsted weights summing to
responses. nullmpared with estimates based on the original sampling weights, this reweighting
produces estimates with the same weighted means and a more realistic variance.
p
i
represents the probability that indicator null
i
equals null nullthough each indicator has a separate
distribution for each tract, for simplicity nulldid not use tract subscripts.
p
i
follows a nullta nullα
i
,b
i
nullprobability distribution, where α
i
equals the weighted count of high-quality
indicators. b
i
equals the weighted count of low-quality indicators, which equals n - α
i
. The nullta
probability distribution has a mean αnullα null bnulland standard deviation equal to the square root
null
nullenullluded nullnullnullnullnullresponses when either nullnullthe address could not be accurately geocoded at the tract level or nullnullno
valid response enullsted for the home rating, neighborhood rating, or crime question.
null
nullmited combinations of distributions enullst for data and parameters, referred to as connullgate pairs, with analytic solutions
for nullyesian posterior distributions. nullthough a connullgate model for multinomial categorical data enullsts, it does not account
for ordering of the categories. Therefore, nullemployed a binomial-beta connullgate model, where the household neighborhood
indicators are binomial and the probability of a high rating follows a beta distribution. nullr a nullyesian analysis of nullnulland
nullnulldata with a normal-normal connullgate model, see nullst nullnullnullnull
null
nullconsidered a nullnulltract sample proportion to be normally distributed if weighted responses were at least null and each
binary category had at least nullweighted responses.
null
nullt nulli be the original survey weight with n responses summing to population, and let nullinullbe the adnullsted weight
summing to responsesnullnullinullnullnnullinull∑nulli.

134 Refereed Papers
nullst
of αbnullnullα null bnull
null
nullα null b nullnull. nullr enullmple, if n nullnull and we have null high-quality responses, the
estimated probability that a random tenant would give the neighborhood a high rating would be
nullnullnull with a standard deviation of nullnullnull
nullhibit nullreports descriptive statistics for the nullnullnullnullnulltract distributions of null
null
-null
null
. The first vari-
able listed is null
null
, the indicator for high neighborhood ratings. nullighted responses for null
null
vary from
nullnullnullto nullnullnullnull with a median of nullnullnulland a mean of nullnullnull α
null
, the count of high neighbor-
hood ratings, ranges from nullto nullnullnullnull The median number of high neighborhood ratings equals
nullnullnull and the mean is nullnullnull p
null
, the mean probability of a high neighborhood rating, varies
across census tracts from nullto null nullnulltracts have p
null
nullnullnullo high neighborhood ratingsnull and nullnullnull
have p
null
nullnullnullll high ratingsnull these tracts have nullstandard deviation. The median probability of a
high neighborhood rating is nullnullnull and the mean is nullnullnull
nullnullrespondents rate their homes slightly higher on average than their neighborhoods. null
null
is the
indicator of high home ratings, and the p
null
is the mean probability of a high home rating. The
median value of p
null
is nullnullnull and the mean is nullnullnull
nullst nullnullhouseholds do not report manullr crime problems in their neighborhoods. null
null
indicates
low-crime perceptions, and p
null
is the mean probability of a low-crime perception. p
null
has a median
of nullnullnulland a mean of nullnullnull
Exhibit null

null
1
nullinull Neinullborhood nulltinnull
Mininullnull Median Mean Maxinullnull

null
2
nullinull nullnull nulltinnull
Mininullnull Median Mean Maxinullnull

null
3
nullonullCrinull Perceptionnull
Mininullnull Median Mean Maxinullnull
CSS Censnull Tract SnullnullrnullStatistics
nulleinulltenullresponses 0.09null 3.9null 7.043 173.4null
Conullt of nullnull ratinnull nullαnull 0.000 2.0null 3.720 171.0null
Conullt of lonullratinnull null bnull 0.000 1.305 3.323 170.2null
nullan pronullnulllitnullof a nullnull ratinnullnullnull 0.000 0.null9 0.593 1.000
Stannullrnullnullviation of p 0.000 0.0null 0.093 0.443
nulleinulltenullresponses 0.09null 3.9null 7.043 173.4null
Conullt of nullnull ratinnull nullαnull 0.000 2.2null 4.202 171.901
Conullt of lonullratinnull null bnull 0.000 1.133 2.null1 4null045
nullan pronullnulllitnullof a nullnull ratinnullnullnull 0.000 0.null0 0.nullnull 1.000
Stannullrnullnullviation of p 0.000 0.091 0.094 0.443
nulleinulltenullresponses 0.09null 3.9null 7.043 173.4null
Conullt of nullnull ratinnull nullαnull 0.000 2.550 4.null7 1null.null1
Conullt of lonullratinnull null bnull 0.000 0.null2 2.3null 45.114
nullan pronullnulllitnullof a nullnull ratinnullnullnull 0.000 0.nullnull 0.713 1.000
Stannullrnullnullviation of p 0.000 0.05null 0.0null 0.457
CSS nullCustomer Satisnullction Surveynull
nullnullnullnullnulltractsnull
Source: Autnullr’s calculations using CSS data

135Cityscape
nullasuring nullignullornullod nullality nullitnullSurvey nullta: A nullyesian Approacnull
Bayesian Estimates
The nullyesian posterior distribution of p
i
for each tract follows a nullta nullα
i
null b
i
null distribution where
α
i
nullnullα
i,prior
nullα
i
, and b
i
nullnull bi,
prior
null b
i
. α
i,prior
is our prior best guess for the number of high ratings,
with no nullowledge of the nullnulldata. b
i
,
prior
is our prior guess for the number low ratings. α
i
is the
nullnullweighted count of high ratings, and b
i
is the nullnullweighted count of low ratings.
Reliable tract-level information from the nullnullis not available. Therefore, nullemployed a nullyesian
nullerarchical nulldel adopted from nulllman et al. nullnullnull.
null
nullr each metropolitan area, nullused a
common prior distribution for all tracts in that metropolitan area based on the nullnulldata. null noted
previously, nullused data for all nullnullrenters.
null
α
prior
is set to the nullnullweighted mean probability of a high rating multiplied by null and b
prior
is set to
null α
prior
. This results in a prior nullta distribution with the same weighted mean as the nullnullmetro -
politan distribution but a smaller sample sinull of nulland a larger standard deviation.
nulling the nullnullnumber of weighted responses for the prior sample sinull would result in posterior
distributions dominated by the nullnullfor most tracts. nullr a tract with the median nullnullweighted
responses close to null my choice of nullfor the prior sample sinull results in a posterior distribution
where the nullnulland nullnullhave appronullmately equal innullence.
nullr enullmple, consider null
null
nulligh home ratingnull nullhibit nulldepicts the prior, nullnull and nullyesian
posterior probability density functions for null
null
in one tract nullnullnullnullnullnullin one randomly selected
metropolitan area nullolumbusnull The tract was chosen because nullnullweighted responses of nullnullnull
are close to nullnullhe median for all metropolitan areasnull The nullnullbased metropolitan prior distribu -
tion has nullnullnullhigh ratings, nullnullnulllow ratings, and a mean probability of a high rating equal to
null.nullnullnull or nullnullnull The prior standard deviation is nullnullnull The nullnulltract distribution is highly
snullwed toward favorable ratings, with nullnullnullweighted high ratings, nullnullnullweighted low ratings,
and a mean probability of null.nullnullnullnullnull or nullnullnull The nullnulltract standard deviation is nullnullnull
The nullyesian posterior distribution is distributed nullta null αnull bnull with αnullnullnullnullnullnullnullnullnullnullnullnullnull
and bnullnullnullnullnull nullnullnullnullnullnullnull The posterior mean probability equals nullnullnullnull.nullnullnullnullnullnull or
nullnullnull nullcause the prior and nullnulldistribution have about the same sample sinull, the posterior mean
is appronullmately a simple average of the prior and nullnullmeans. The posterior standard deviation is
nullnullnull
nullhen nullnullnull weighted responses increase, the nullnullnull data have greater innulluence on the posterior distri-
bution. nullnullhibit null depicts the null
null
prior, nullnullnull, and posterior probability density functions for nullolumbus
area tract nullnullnullnullnull The tract was chosen because it has nullnullnullweighted nullnullresponses, which is
close to nullnullhe nullth percentile for all metropolitan areasnull The metropolitan-level prior distribution,
described previously, has a mean of nullnullnull The nullnulltract distribution has a mean of nullnullnulland
null
nullr an accessible introduction to nullyesian nullerarchical nulldels, see httpnullnullolgenau.gmu.edunullnullasnullynullnullTnullnullnullyesnull
nullitnullpdf.
null
nullalso produced nullyesian posterior estimates using metropolitan priors based on the nullnullnullnull sample. These estimates
had lower correlation with aunullliary variables compared with estimates with priors based on all renters nullesults available
upon requestnull

136 Refereed Papers
nullst
0
2
4
6
8
10
12
0.01 0.05 0.09 0.13 0.17 0.21 0.25 0.29 0.33 0.37 0.41 0.45 0.49 0.53 0.57 0.61 0.65 0.69 0.73 0.77 0.81 0.85 0.89 0.93 0.97
0.01 0.05 0.09 0.13 0.17 0.21 0.25 0.29 0.33 0.37 0.41 0.45 0.49 0.53 0.57 0.61 0.65 0.69 0.73 0.77 0.81 0.85 0.89 0.93 0.97
Prior CSS Bayesian Posterior
Prior CSS Bayesian Posterior
0
0.5
1
1.5
2
2.5
3
0
100
200
300
400
500
600
700
800
900
1,000
0.05 0.15 0.25 0.35 0.45 0.55 0.65 0.75 0.85 0.95
CSS Bayesian Posterior
0
2
4
6
8
10
12
0.01 0.05 0.09 0.13 0.17 0.21 0.25 0.29 0.33 0.37 0.41 0.45 0.49 0.53 0.57 0.61 0.65 0.69 0.73 0.77 0.81 0.85 0.89 0.93 0.97
0.01 0.05 0.09 0.13 0.17 0.21 0.25 0.29 0.33 0.37 0.41 0.45 0.49 0.53 0.57 0.61 0.65 0.69 0.73 0.77 0.81 0.85 0.89 0.93 0.97
Prior CSS Bayesian Posterior
Prior CSS Bayesian Posterior
0
0.5
1
1.5
2
2.5
3
0
100
200
300
400
500
600
700
800
900
1,000
0.05 0.15 0.25 0.35 0.45 0.55 0.65 0.75 0.85 0.95
CSS Bayesian Posterior
Exhibit null
Exhibit null
null
2
nulliornullCSSnullannullBanullsian nullsterior nullonullnulllitnullDensitnullnullnctionsnull
Colnullnulls Tract 045031100
null
2
nulliornullCSSnullannullBanullsian nullsterior nullonullnulllitnullDensitnullnullnctionsnull
Colnullnulls Tract 041011520
CSS nullCustomer Satisnullction Surveynull
null
null
is an indicator nullr a nullgnullnullme ratingnullnulle Columbus metropolitan area nulls randomly cnullsennullnulle tract nulls cnullsen nulltnull
CSS nullignulled responses closest to tnull median nullnull
Source: Autnullr’s calculations using CSS and nullnull American nullusing Survey data
CSS nullCustomer Satisnullction Surveynull
null
null
is an indicator nullr a nullgnullnullme ratingnullnulle Columbus metropolitan area nulls randomly cnullsennullnulle tract nulls cnullsen nulltnull
CSS nullignulled responses closest to tnull nulltnullpercentile nullnull
Source: Autnullr’s calculations using CSS and nullnull American nullusing Survey data

137Cityscape
nullasuring nullignullornullod nullality nullitnullSurvey nullta: A nullyesian Approacnull
0
2
4
6
8
10
12
0.01 0.05 0.09 0.13 0.17 0.21 0.25 0.29 0.33 0.37 0.41 0.45 0.49 0.53 0.57 0.61 0.65 0.69 0.73 0.77 0.81 0.85 0.89 0.93 0.97
0.01 0.05 0.09 0.13 0.17 0.21 0.25 0.29 0.33 0.37 0.41 0.45 0.49 0.53 0.57 0.61 0.65 0.69 0.73 0.77 0.81 0.85 0.89 0.93 0.97
Prior CSS Bayesian Posterior
Prior CSS Bayesian Posterior
0
0.5
1
1.5
2
2.5
3
0
100
200
300
400
500
600
700
800
900
1,000
0.05 0.15 0.25 0.35 0.45 0.55 0.65 0.75 0.85 0.95
CSS Bayesian Posterior
a standard deviation of nullnullnull The posterior distribution has a mean probability of a high rating
equal to nullnullnull The nullnullsample sinull is about nullnull times that of the prior sample sinull of null thus the
nullnullhas about nullnull times the innullence on the posterior distribution.
nullhibit null reports summary statistics for the nullyesian posterior means and standard deviations.
nullhibit null depicts a histogram of nullnulland nullyesian means for null
null
nulligh neighborhood ratingnull The
mean of the nullnullnullnullyesian mean estimates for null
null
is nullnullnull which is lower than the nullnullmean of
nullnullnullreported in enullibit null nullmpared with nullnullestimates, the nullyesian estimates are much more
normally distributed, with fewer tracts with very low or high means. The nullnullestimates for null
null
have
nullnulltract distributions with mean nullnulland nullnullnullwith mean nullnull these degenerate distributions
have nullstandard deviation. The nullyesian mean estimates, however, range from nullnullnullto nullnullnull
nullthough the nullnullstandard deviations range from nullto nullnullnull the nullyesian standard deviations
range from nullnullnullto nullnullnull
Exhibit 10

null
1
nullinull Neinullborhood nulltinnull
null
2
nullinull nullnull nulltinnull
null
3
nullonullCrinull Perceptionnull
Mean Std Mean Std Mean Std
SnullnullrnullStatistics for Banullsian nullsterior Distrinulltions
nullninullnull 0.031 0.009 0.0null 0.00null 0.0null 0.009
nullnullan 0.577 0.15null 0.59null 0.15null 0.7null 0.133
nullan 0.55null 0.152 0.5null 0.152 0.72null 0.132
nullnullnullnull 0.9null 0.221 0.9null 0.221 0.9null 0.20null
nullnullnullnullnulltractsnull
Source: Autnullr’s calculations using Customer Satisnullction Survey and nullnull American nullusing Survey data
Exhibit 11
nullstonullanullof CSS annullBanullsian nullan Estinulltenullnullonullnulllities for null
1
CSS nullCustomer Satisnullction Surveynull
nullnullnullnullnulltractsnullnull
null
is an indicator nullr a nullgnullneignullornullod ratingnull
Source: Autnullr’s calculations using Customer Satisnullction Survey and nullnull American nullusing Survey data

138 Refereed Papers
nullst
Data Validation
This section compares the nullnulland nullyesian estimates with other tract-level measures of neigh -
borhood quality. These variables include median household income, percent of families living
below the poverty line, and an indicator for nullnulltracts qualifying for nullnullnull
null
nullhibit null reports
summary statistics for these measures.
nullhibit null reports Pearson correlation coefficients for the previously mentioned aunullliary variables
with the nullnulland nullyesian estimated mean probabilities for null
null
-null
null
. nulll coefficients are significant at
the nullnullnull level with the enullected signs. nulldian income is positively related with neighborhood
quality, although the poverty rate and the nullnullnullindicator correlate negatively.
nullr each neighborhood indicator, the nullnulland nullyesian correlations with the aunullliary variables
are very close. Of course, the nullyesian distributions are a weighted average of the prior and nullnull
distributions. null such, the nullnulland nullyesian estimates are highly correlated. The Pearson correla -
tion coefficient between the nullnulland nullyesian means for null
null
nulligh neighborhood ratingnullis nullnullnull
The nullyesian model is not intended to drastically change most of the nullnullestimatesnullits purpose is
to reduce outliers and manull estimation possible for tracts with few nullnullresponses. Differences may
be more apparent for tracts with larger differences between the nullnulland nullyesian estimates.
null
nullnullnulldata indicators are for tracts qualifying in any year between nullnull and nullnull. Original data were for qualifying
tracts based on nullnull geography. nullr this study, nullconstructed qualifying tracts based on nullnull geography. nullr tracts that
changed, null assumed a tract with nullnullnullnull geography qualified if it included any part of a tract qualified based on nullnullnullnull geography.
Exhibit 12
Variable Mininullnull Median Mean Std
SnullnullrnullStatistics for Anulliliarnullnullinullnullrnullonullnullalitnullnullasnulles
nullnullan inconullnull 74null.000 3null4null000 40470.nullnull 14473.09null
nullvertnullratenull 0.2null 12.140 15.029 10.null4
nullnullC innullcatornull 0.000 0.000 0.179 0.3null
LInullC nulllonullincome nullusing tanullcreditnullnullnullnullnullnulltractsnull
Sources: nullnullnullCensus nullreau nullnull Censusnullnullnulltp:nullnullnullnulludusernullrgnullatasetsnullinullcnulltml
Exhibit 13
nullxiliarnull
Variable
null
1
nullinull Neinullborhood nulltinnull
null
2
nullinull nullnull nulltinnull
null
3
nullonullCrinull Perceptionnull
CSS
Mean
nullnullsian
Mean
CSS
Mean
nullnullsian
Mean
CSS
Mean
nullnullsian
Mean
nullarson Correlation Coefnullients
nullvertnullrate null0.371 null0.371 null0.25null null0.225 null0.34null null0.3null
nullnullan inconull 0.332 0.312 0.232 0.1null 0.313 0.321
nullnullC innullcator null0.2null null0.270 null0.1null null0.1null null0.23null null0.2null
CSS nullCustomer Satisnullction SurveynullLInullC nulllonullincome nullusing tanullcreditnull
nullnullnullnullnulltractsnullAll correlation coenullcients are signinullant at tnull nullnullnulllevelnull
Source: Autnullr’s calculations using nullSnullCensus nullreaunullnullnullLInullCnullnullnull American nullusing Surveynulland CSS data

139Cityscape
nullasuring nullignullornullod nullality nullitnullSurvey nullta: A nullyesian Approacnull
nullxiliarnull
Variable
null
1
nullinull Neinullborhood nulltinnull
null
2
nullinull nullnull nulltinnull
null
3
nullonullCrinull Perceptionnull
CSS
Mean
nullnullsian
Mean
CSS
Mean
nullnullsian
Mean
CSS
Mean
nullnullsian
Mean
nullxiliarnull
Variable
null
1
nullinull Neinullborhood nulltinnull
null
2
nullinull nullnull nulltinnull
null
3
nullonullCrinull Perceptionnull
CSS
Mean
nullnullsian
Mean
CSS
Mean
nullnullsian
Mean
CSS
Mean
nullnullsian
Mean
nullhibit null reports Pearson correlation coefficients for tracts with an absolute percentage difference
between nullnulland nullyesian estimates at or above the median difference. nulldian differences are
null.nullpercent for null
null
, null.nullpercent for null
null
, and null.nullpercent for null
null
nulll of the correlations coefficients
are significant at the nullnullnull level. nullr this subsample of tracts, nullof the nullnullyesian correlation
coefficients are larger in absolute magnitude than their corresponding nullnullcoefficients.
nullhibit null reports Pearson correlation coefficients for tracts with an absolute percentage difference
between nullnulland nullyesian estimates at or above the nullth percentilenullnullth-percentile differences are
nullnull.null percent for null
null
, nullnull.null percent for null
null
, and nullnull.null percent for null
null.
nullll of the correlation coefficients
are significant at the nullnullnull level. nullr this subsample of tracts, all nullyesian correlation coefficients
are larger in absolute magnitude than their corresponding nullnullcoefficients. null addition, the differ -
ences between the nullnulland nullyesian correlation coefficients are much larger for this subsample.
Exhibit 1null
Exhibit 1null
nullarson Correlation CoefnullientsnullSnullsanullle of Tracts nulltnullDifferences Betnullen
CSS annullBanullsian Estinulltes ≥ tnull nullnullan
nullarson Correlation CoefnullientsnullSnullsanullle of Tracts nulltnullDifferences Betnullen
CSS annullBanullsian Estinulltes ≥ tnull nulltnullnullrcentile
nullvertnullrate null0.430 null0.4null null0.301 null0.309 null0.407 null0.4null
nullnullan inconull 0.379 0.397 0.252 0.24null 0.3null 0.417
nullnullC innullcator null0.320 null0.339 null0.20null null0.214 null0.2null null0.302
nullvertnullrate null0.422 null0.492 null0.34null null0.402 null0.3null null0.4null
nullnullan inconull 0.39null 0.44null 0.30null 0.343 0.40null 0.4null
nullnullC innullcator null0.294 null0.340 null0.217 null0.254 null0.244 null0.290
CSS nullCustomer Satisnullction SurveynullLInullC nulllonullincome nullusing tanullcreditnull
All correlation coenullcients are signinullant at tnull nullnullnull levelnullnullnullnullnullnullnullr null
null
and nullnullnullnullr null
null
and null
null
null
Source: Autnullr’s calculations using nullSnullCensus nullreaunullnullnullLInullCnullAmerican nullusing Survey nullnullnulland CSS data
CSS nullCustomer Satisnullction SurveynullLInullC nulllonullincome nullusing tanullcreditnull
All correlation coenullcients are signinullant at tnull nullnullnull levelnullnullnullnullnullnullr null
null
nulland nullnullnullr null
null
and null
null
null
Source: Autnullr’s calculations using nullSnullCensus nullreaunullnullnullLInullCnullnullnull American nullusing Surveynulland CSS data
Conclusion
nulllthough neighborhood quality is important for shaping public policy, it is also difficult to quantify.
This study measured neighborhood quality using data from two sourcesnullnullnullthe nullnull nullerican
nullusing nullrvey and nullnullnullDnull nullstomer nulltisfaction nullrvey of nullction nullnullusing nulloice nullucher
Program households.

140 Refereed Papers
nullst
nullthough the nullnulland nullnullcontain related questions, differences in survey methods and the ques -
tionsnullwording manull direct comparison of the two surveys difficult. nullyesian methods are nullnullble
enough, however, to use information from related questions from both surveys.
null enullamined survey responses in nullnull metropolitan areas regarding neighborhood quality, home quality,
and crime perceptions. Tract-level nullyesian estimates are computed using nullnullmetropolitan-level
data and nullnullcensus tract data.
nullmpared with estimates solely based on nullnulldata, the nullyesian estimates have fewer outliers.
nullyesian analysis also allows for estimation for tracts with lower sample sinulls than would be
practical using only nullnulldata.
nullcompared the nullnulland nullyesian estimates with other measures of neighborhood quality, such as
poverty rates, median income, and indicators for tracts receiving low-income housing tanullcredits.
The nullnulland nullyesian indicators are highly correlated, and both the nullnulland nullyesian correlate
well with these aunullliary variables. nullr tracts with large differences between the nullnulland nullyesian
estimates, correlations are much stronger for the nullyesian estimates.
nullture research could focus on testing the value of nullyesian neighborhood quality measures as
left-hand-side and right-hand-side variables in any number of quantitative studies.
nullnullowledgments
The author thannull nullrnullnullroder, nullthryn nullsnully, and three anonymous referees for helpful
comments and also thannull Todd nullnullil for nullnullassistance with the nullnullnulldata.
nulltnullr
nullent D. nullst is a social science analyst in the Office of Policy Development and Research, Program
nullnitoring and Research Division, at the nullnull Department of nullusing and nullban Development.
Renullrences
nullstin, D. nullrnull null nulllen nullrr, and nullchael nulline. nullnull. nullhe nullfects of nullighborhood nullnditions
on Perceptions of nullfety,nullnullurnal of Criminal nullstice null nullnull nullnullnullnull
nullishaw, nulllemayehu, and nullharon nulltern. nullnullnullnull. nullnullaluation of nullonullerty nullstimatesnull null Comparison of the
nullmerican Community nullurnulley and the Current nullopulation nullurnulleynull nullashington, Dnullnull null.null. nullensus nullureau.
nulluron, nullarry, nullulbul nullaul, and Rhiannon Patterson. nullnullnullnull. nulluality of nullousing Choice Voucher nullousingnull
Report prepared for the nullnull Department of nullusing and nullban Development. nullshington, Dnull
nullnull Department of nullusing and nullban Development.
nullron, nullrry, and nulltyendra Patrabansh. nullnull. nullre nullnsus nullriables nullghly nullrrelated nullth
nullusing nulloice nullucher nullldersnullPerception of the nullality of Their nullighborhoodsnull Cityscapenull
nullnullurnal of nulllicy nullnulllopment and nullsearch null nullnull nullnullnullnullnull

141Cityscape
nullasuring nullignullornullod nullality nullitnullSurvey nullta: A nullyesian Approacnull
nullhill, nullagan nullinullbeth. nullnull nullugustnull nullographies of nullban Crime in Nashnulllle, nullnnessee,
nullrtland, nullegon, and nullcson, nullizona, 1nullnull2002. nulln nullbor, nullnullnullter-university nullnsortium
for Political and nullcial Research. httpnullnullww.icpsr.umich.edunullocoonnullnullnullnullTnullnullnullnullnullnulll
nullccessed October nullnullnull
nullapman, David null, and nullhn R. nullmbard. nullnull. nulleterminants of nullighborhood nulltisfaction in
nulle-nullsed nullted and nullngated nullmmunities.nullnullban nullfairs nullnullew null nullnull nullnullnullnull httpnullnullww.
sagepub.comnullournalsProdDesc.navnullrodnullnullournalnullnullnull nullccessed nullne nullnullnull
Deller, nulleven null, and Thomas Ottem. nullnull nullulynull nullrime and the nullality of nullfe in nullsconsin
nullunties.nullnullricultural and nullplied nullonomics nullaff nullper nullries Nonullnull2nullnulldison, nullnullnulliversity
of nullsconsin-nulldison, Department of nullricultural and nullplied nullonomics. httpnullnullww.aae.wisc.
edunullubsnullpsnulldfnulltpapnullnullpdf nullccessed nullly nullnullnull
Dilulio, nullhn null, null. nullnull. nullhe nullestion of nullacnullnullime,null nullblic Interest nullnull nullnull.
Dubin, Robin null nullnull. nullpatial nulltocorrelation and nullighborhood nullality,null nullgional nullience and
nullban nullonomics null nullnull nullnullnullnull
nulllman, nulldrew, nullhn null nullrlin, nulll null nullern, and Donald null Rubin. nullnull. nullyesian nullta nullalysis,
nulld ed. nullndon, nullited nullngdomnullnullapman and nullllnullRnull
nullay, Robert null, nullrbara null nullley, and nullent D. nullst. nullnull. Tell null nullout nullur nullmenullThree
nullars of nullrveying nullusing nullality and nulltisfaction in the nullction nullnullusing nulloice nullucher
Program. nullpublished paper. nullshington, Dnull nullnull Department of nullusing and nullban Develop -
ment, Office of Policy Development and Research.
nullpp, nullhn. nullnull nullarchnull Resident Perceptions of nullimenullnullw nullmilar nulle They to Official nullime
Ratesnullnullrnullng paper. nullshington, Dnull nullnull nullnsus nullreau, nullnter for nullonomic nulludies. httpnullnull
www.ces.census.govnullndenullphpnullesnullespapersnulletailnulleynullnullnullnull nullccessed nullgust nullnullnull
nulle, Peter null nullnull. nullyesian nullatisticsnullnull Introduction, nulld ed. nullndon, nullited nullngdomnullnulldder
nullnold.
nullst, nullent D. nullnulla nullugustnull nullayesian nullerarchical nulldel nulltimates of nullcal nullime Percep -
tions.nullnullogram nullnitoring and nullsearch nullnullsion nullrnullng nullper nullriesnull nullshington, Dnull nullnull
Department of nullusing and nullban Development, Office of Policy Development and Research.
httpnullnullww.huduser.orgnullublicationsnullmrdnullmrdnullornullapnullhtml nullccessed nullly nullnullnull
nullnull nullnullb nullulynull nulleasuring nullusing nullality in the nullusing nulloice nullucher Program nullith
nullustomer nullatisfaction nullurvey Data,null Cityscapenull null nullournal of nullolicy nullenullelopment and nullesearch nullnull nullnullnullnull
nullnullnullnullnullnullnull. httpnullnullnullwww.huduser.orgnullperiodicalsnullcityscpenullvolnullnullnumnullnullindenull.html nullaccessed nulluly nullnullnullnullnull.
nullwman, nullndra null, and nulln null nullhnare. nullnull. nullast in nullnenullnullusing nullsistance for nulluseholds
nullith nullildren,nullnullusing nulllicy nullbate nullnullnull nullnullnullnull
nulldgley, nullrman null, nullncy null nulllliams, and nulledericnullnull Derricnull nullnull nullunenull nullhe nullfect of
nullucational Test nullores on nulluse Prices in a nulldel nullth nullatial Dependence,null nullurnal of nullusing
nullonomics null nullnull nullnullnullnull

142 Refereed Papers
nullst
null. nullhn, nullaig, and nullieda nullarnull nullnull. nullacial Differences in Dimensions of nullighborhood
nulltisfaction,nullnullcial Indicators nullsearch null nullnull nullnullnull
nullnull Department of nullusing and nullban Development nullnullnull nullnull. nullusing Choice Voucher
nullogram nullideboonull nullshington, Dnull nullnull Department of nullusing and nullban Development.
httpnullnullww.hud.govnullfficesnullihnullrogramsnullcvnullormsnulluideboonullcfm nullccessed nullptember nullnullnull

143nulltyscapenullnullnullurnal of nulllicy Development and Research • Volume 12, Number 3 • 2010
U.S. Department of Housing and Urban Development • Office of Policy Development and Research
Cityscape
The Impacts of More Rigorous
FHA Underwriting Guidelines
nullastair nullFarlane
nullnull Department of nullusing and nullban Development
nullpact
nullregulatory impact analysis must accompany enullry economically signinullant federal
rule or regulationnullnulle nullnulle of nulllicy nullnulllopment and nullsearch performs this
analysis for all nullnull nullpartment of nullusing and nullban nullnulllopment rulesnullnull impact
analysis is a forecast of the annual benenulls and costs accruing to all parties, including
the tanullayers, from a ginulln regulationnullnulldeling these benenulls and costs innulllnulls use of
past research nulldings, application of economic principles, empirical innullstigation, and
professional nulldgmentnull
Summary of Impact Analysis
The nullderal nullusing nullministrationnull nullnullnullnullauthorinullng statute for insurance authorities, the
nulltional nullusing nullt, clearly states that the nullnull Department of nullusing and nullban Development
nullnullnullwill adnullst program standards and practices to operate the nulltual nullrtgage nullsurance
nullnd nullnullnull on a self-sustaining basis. null the nulltice nullederal nullusing nullministration Risnull
nullnagement nullitiativesnullReduction of nullller nullncessions and nullw nullan-to-nulllue and nulledit nullore
Requirements,null
null
nullnullproposes to tighten portions of its underwriting guidelines that present an
enullessive level of risnullto both homeowners and nullnull The benefit of the set of actions outlined in
the nulltice will reduce the net losses resulting from high rates of insurance claims on affected loans,
and the cost of the action will be the value of the loan opportunity denied to the enullluded borrow -
ers. The total transfer to nullnullwould be nullnullmillion, and the net cost of enullluding borrowers could
be as high as nullnullmillion.
Need for Policy Change
nullnullhas resumed a countercyclical position, supporting private lending for homeownership when
access to private sources of capital for credit enhancements is otherwise constrained by the recent
financial crisis. This state of affairs is most evident in the rapid increase in the volume of nullnull
null
nullederal nullusing nullministration Risnullnullnagement nullitiativesnullReduction of nullller nullncessions and nullw nullan-to-nullalue
and nulledit nullore Requirements,nullnull-nullnull-nullnull. nullderal nullgister, nullly null, nullnull. nullvailable at httpnullnullederalregister.govnullnull
nullnull-nullnullnull.

144
nullFarlane
Impact
insurance as private sources of mortgage finance retreated from the marnullt. The growth in the
nullnull portfolio over a nullyear period coincides with a set of difficult economic conditions, namely,
continued housing price declines and increasing levels of unemployment. Together, these enullernal
conditions increase the risnullof additional losses to nullnull
nullrecently issued independent actuarial study
null
shows that the nullnull capital ratio has fallen below
its statutorily mandated threshold of nullpercent. The study reported that nullnullwould linullly sustain
significant losses from mortgage loans made before nullnull due to the high concentration of seller-
funded downpayment assistance mortgage loans and declining real estate values nationwide.
nullnullcan implement four primary policy changes to replenish the nullnull capital reserve accountnull
nullnullincrease premium rates to raise income, nullnullreduce losses on new business by tightening
underwriting guidelines, nullnullstrengthen enforcement measures to reduce unwarranted claim pay -
ments, and nullnullavoid claims through enhanced loss mitigation efforts. nullnullis engaged in efforts on
all these fronts, enullrcising its full authority under the terms of the nulltional nullusing nullt, including
new authorities provided in recently enacted legislation. This nulltice further complements the
underwriting approach to strengthening nullnulls fiduciary responsibilities.
Summary of Notice
nullrst, nullnullproposes to reduce the amount of financing costs that the property seller or other inter -
ested party may pay on behalf of a homebuyer using an nullnullinsured mortgage. This proposed cap
on seller concessions would more closely align nullnulls single-family mortgage insurance programs
with standard industry practice and miniminull nullnullenullosure to the risnullof insuring borrowers most
linullly to default. nullen a homeseller or interested third party pays all or part of the buyernull cost of
financing, the payments are commonly referred to as seller concessions. nullthough nullD previously
allowed seller concessions up to nullpercent of the sales price, conventional mortgage lenders have
capped seller concessions at nullpercent of the sales price on loans with loan-to-value nullTnull ratios
similar to nullnullstandards. nullnullproposes to cap the seller concession in nullnullinsured single-family
mortgage transactions at nullpercent of the lesser of the sales price or appraised value for purposes
of calculating the manullmum mortgage amount. nullthough seller concessions above nullpercent would
not be prohibited under this proposal, concessions that enulleed nullnulls nullpercent cap would require
a dollar-for-dollar reduction in the sales price for the purposes of calculating the manullmum nullnull
loan amount. One reason for this change is that borrowers who received more than nullpercent in
seller concessions had a significantly higher risnullof losing their homes. This proposed cap will not
only align nullnulls single-family mortgage insurance programs to private industry practice but also
will help ensure that borrowers who rely on nullnullinsured financing have a sufficient investment in
their home, thereby manullng them less linullly to default on the mortgage.
nullcond, nullnullproposes to introduce a two-part credit-score threshold, with a lower threshold for
loans with nullnullratios of null percent or less and a higher threshold for those loans with higher nullnull
ratios. This will be the first time that nullnullhas ever instituted an absolute lower threshold for bor -
rower credit scores nulls measured by nullnullnull nullrrowers with low credit scores present higher risnull
null
nulle nullnullnullnullnull.

145Cityscape
nulle Impacts onullnullre Rigorous Fnull nulldernulliting Guidelines
for defaulting and filing a mortgage insurance claim. nullnullis proposing to introduce a minimum
decision credit score of no less than nullnullto determine eligibility for nullnullfinancing and to also
reduce the manullmum nullnullfor all borrowers with decision credit scores of less than or equal to nullnull
nullnullmum nullnullinsured financing nullnullnullpercent nullnullfor purchase transactions and null.null-percent
nullnullfor rate-and-term refinance transactionsnullwould be available only to borrowers with credit
scores at or above nullnull nulll borrowers with decision credit scores between nullnulland nullnullwould be
limited to a manullmum null-percent nullnull
nullthough today nullnullis serving very few borrowers with credit scores below nullnull as shown in
enullhibit null, the performance of these borrowers is clearly very poor, as renullected in enullhibit null. nullorrowers
with credit scores below nullnullnull struggle to meet their mortgage obligations. The percentage of borrowers
who ultimately lose their homes is twice as high for borrowers with lower credit scores. nullmilarly,
nullnulldata demonstrate that borrowers with decision credit scores below nullnull who invest only a
minimal amount of funds into the transaction, struggle to manull their mortgage payments and ulti-
mately lose their homes at a rate that is unacceptable to nullnullnull. The borrowers affected by this nullotice
have seriously delinquent rates that are four to five times higher than those who remain eligible.
Third, nullnullwill tighten underwriting standards for mortgage loan transactions that are manually
underwritten. The purpose of mortgage underwriting is to determine a borrowernull ability and will -
ingness to repay the debt and to limit the probability of default. nullr cases in which the borrower
has a very limited or nontraditional credit history, the credit bureaus may not be able to calculate a
credit score. nullrtgage loans for borrowers in this category will need to be manually underwritten.
These categories of borrowers present a higher level of risnulland, as a result, manual underwriting
guidelines, in general, are more stringent to address that higher risnulllevel.
Costs and Benefits
nullven the importance of maintaining a viable nullnull for enullsting and future homeowners, it is
nullnulls intent to focus only on particular practices that have been found to result in enullremely poor
mortgage loan performance.
Aggregate Loans Affected
The highlighted portion of enullibit nullindicates the proportion of borrowers enullected to be im -
mediately enullluded from the nullnullguarantee by the nulltice, relative to the total nullnullportfolio.
This policy is still important to nullnullbecause nullDnull enullectation are that, after the conventional
mortgage marnullt recovers and lenders again loosen underwriting standards, nullnullcould be
adversely selected with larger shares of these higher risnullloans. null late as fiscal year nullnull nullnull,
loans that would be newly enullluded under this proposed policy accounted for more than nullpercent
of all loans insured by nullnullnullnullluding streamline refinancingnull
nullhibit nullclearly indicates through the performance data provided that these borrowers are at a sig -
nificantly greater risnullof losing their homes than are other nullnullinsured borrowers. The seriously
delinquent rate of borrowers subnullct to the proposed restrictions nulleighted average across the
three cells in enullibit null is null.nullpercent, while the rate for all other mortgage loans is nullnullpercent.

146
nullFarlane
Impact
null nullnull, nullnullendorsements numbered nullnullmillion and were, as of the third quarter of nullnull, ap -
proaching an annual level of appronullmately nullmillion null.null nullusing nullrnullt nullnditions, nullvember
nullnullnull nullrrent endorsement levels are linullly to be a historic manullmum. null normal years, endorse -
ment levels are closer to nullnullmillion. null our modeling, we used nullnullmillion as the default, nullmillion
as a manullmum, and nullmillion as minimum. nullltiplying these endorsement numbers by the current
share of subprime loansnull.null percentnullields an assumed total of loans affected by the nulltice of
null,nullnull with a manullmum of null,nullnulland a minimum of null,nullnull
Benefit of Policy Change
The direct purpose of the policy change outlined in this nulltice is to achieve the statutorily
mandated minimum capital reserve ratio of nullpercent. The broader purpose of the policy change,
however, is to ensure the survival of the nullnullso that it can continue to provide mortgage loans
when private marnullts fail. The current financial crisis has led to a credit crunch in which nullnullhas
been a lender of last resort to low-income and risnull borrowers. Today, nullnulls share of the single-
family mortgage marnullt is appronullmately null percent, up from nullpercent in nullnull, and the dollar
volume of insurance written has nullmped from nullst nullnullbillion in nullnull to more than nullnull billion
in nullnull. nullcilitating the provision of credit during a liquidity crisis is a welfare-enhancing activity,
and nullnullprovides such a public benefit. nullantifying this benefit would involve measuring the
enullent to which this nulltice increased the survival of the nullnulland multiplying this probability by
an estimate of the public benefit of nullnullendorsement activities.
Exhibit 1
Exhibit 2
nullannullonullalnull
nullnnull
Credit Score nullnnulls
None 300nullnull null0nullnull null0null1null null0nullnull null0nullnull
nullannullonullalnull
rannull
Credit Score nullnnulls
None 300nullnull null0nullnull null0null1null null0nullnull null0nullnull
nullA SinnullenullanulllnullInsnullance Ennullrsenullnt Snullres in Calennullr nullear 2009
nullA Sinnullenullanulllnullnullrtnullnull InsnullancenullSerionulllnullDelinnullent nulltes null
nullTnullannullCrenullt Scores
null to 90null 0.03 0.01 0.12 0.4null 2.2null 3.51
Anullve 90null 0.34 0.02 1.39 7.24 35.null 4null77
null to 90null 13.3 35.4 22.4 15.7 null1 1.5
Anullve 90null 20.9 43.3 30.4 19.null nullnull 2.3
Fnull nullFederal nullusing Administrationnull
Source: nullnullSnull nullepartment onull nullousing and nullrban nullevelopmentnullFnullAnull nullFederal nullousing Administration Risnull nullanagement
Initiatives: Reduction onullSeller Concessions and nullnullLoannullonullalue and Credit Score Renullirementsnull nullable Anull FRnullnullnullnullnullnull
Federal Registernullnullly nullnullnullnullnullavailable at nulltp:nullnullderalregisternullovnullnullnullnullnullnullnull
Fnull nullFederal nullusing AdministrationnullLnull null loan to valuenull
nullte: Seriously delinnullent rates measure tnull sum onullcases tnullt are null days or more delinnullentnullin nullreclosurenulland in
bannulluptcy as a percent onullall actively insured loans on a given datenull
Source: nullnullSnull nullepartment onull nullousing and nullrban nullevelopmentnullFnullAnull nullFederal nullousing Administration Risnull nullanagement
Initiatives: Reduction onullSeller Concessions and nullnullLoannullonullalue and Credit Score Renullirementsnull nullable nullnull FRnullnullnullnullnullnull
Federal Registernull nullly nullnullnullnullnullavailable at nulltp:nullnullderalregisternullovnullnullnullnullnullnullnull

147Cityscape
nulle Impacts onullnullre Rigorous Fnull nulldernulliting Guidelines
The current financial crisis has been attributed to many different causesnullrom government failure
to a natural readnullstment of marnullts. nullny good arguments, however, support the theory that a
financial crisis is the result of inefficiencies caused by imperfect information and perverse incentives.
nullr enullmple, nulliglitnull nullramillo-nullllenull, and Parnullnullnullnull describe a negative selection enullernality
that nulladnullfinancial firms have on nulloodnullfinancial firms during a credit crunch. The mere percep -
tion of a troubling credit marnullt can affect investorsnullwillingness to provide equity to good firms.
nullcause bad firmsnullactions have spoiled the marnullt, investors will not provide an efficient level of
capital to the financial marnullt. nullssidy nullnullnull enulllains in great detail how this scenario fits the
current financial crisis. nullrge financial institutions have borrowed from others to manull bets on
risnull assets using complenullfinancial instruments. nullven the complenullty of these financial arrange -
ments, it is difficult, even for well-informed insiders, to gauge the value of the firms holding these
risnull assets on their balance sheets. nullter housing price appreciation began to slow down and the
value of the financial institutions investing subprime mortgage-bacnulld securities nullnullnullbecame
uncertain, lenders were unwilling to provide credit to these large institutions because they feared
that the borrower would not be able to repay. The result was an economy-wide credit crunch in
which ordinary borrowers were not able to acquire a loan at a reasonable cost.
null another enullmple of a marnullt failure, the monitoring of financial firms is a public good that is
undersupplied nulltiglitnull nullramillo-nullllenull, and Parnull nullnullnull nullstitutional bannull will not decrease
their leverage ratios to a point that reduces systemic risnullfor the entire financial marnullt. nullthin a
financial institution, management has the ability to limit its firmnull risnullto decrease the linulllihood
that their firm collapses. The benefit from a firm lowering its risnull however, will have spillover
benefits to all the financial marnullt stanullholders by lowering the chance of contagion. null a result, a
financial institution will not receive enough compensation to lower its leverage ratio to the efficient
level. null hindsight, many of the financial institutions originating nullnullcan be considered to have
become overleveraged during the years preceding the financial crisis of nullnullnullnullnull
nullnullloans are now in higher demand as a result of the failure or withdrawal of private investors
from the mortgage marnullt. Thus, the primary contribution of nullnullto the public welfare is to
facilitate the transition to sustainable homeownership for low-income or credit-constrained individuals
when the marnullt is not achieving this goal on its own. nullcause both private and public benefits
nullescribed in the nenull sectionnullare associated with homeownership, a postponement of those
benefits, as a result of a poorly functioning credit marnullt, would represent a reduction in welfare.
Cost of Excluding Borrowers
The goal of nullnullis to promote a national housing policy by providing access to mortgage credit for
first-time homebuyers and others with limited financial wealth. Tightening underwriting guidelines
will cause enullluded households to delay their transition to homeownership status nullr perhaps
never manull the transitionnull nullr refinance loans, the proposed restrictions will cause higher housing
costs until such time as when the enullluded households can improve their credit histories and gain
more home equity through general marnullt-level house price appreciation. nullfew analytical options
estimate the gains to nullnullloan program participants nullnd thus the cost of being enullludednull

148
nullFarlane
Impact
Costs onulla nullnullerent nullrtgage Loan
One approach to measuring the advantages of an nullnullnull loan is to estimate the private gain to the house-
hold of an nullnullnull loan by deriving an estimate of the additional costs a borrower would have to pay to
receive a similar loan not insured by nullnull nullnulldoes not earn a profit as a private mortgage insurer
would. The average gain would be what the borrower would have had to pay for the same insurance
on the private marnullt. The disadvantage of this approach is that it is no longer current practice to
insure borrowers with low credit scores. The private mortgage insurance marnullt has never served
the segment of borrowers who would be eliminated from nullnulleligibility by this nulltice, and the
subprime marnullt where they previously could have turned for home financing no longer enullsts.
nulllthough the nullnullnull guaranty has value, it would be impossible to measure it through such a method.
Private nullnenulls onullnullmeownersnullp
null second approach is to compare the private benefits of renting with the benefits of homeownership.
nulliven the state of the marnullet, an nullnullnull-guaranteed loan may represent the only path to homeowner-
ship for low-income households. Those households that apply for a loan clearly believe that own-
ership is the optimal financial decision. nullme of the potential benefits of homeownership would be
a lower quality-adnullsted price for housing, higher satisfaction, and wealth creation.
null
nulltenant could be enullected to pay less for the same unit of housing as an owner occupant than as
a renter. nullgher costs for renters arise because of an information asymmetry. nulllandlord does not
nullow in advance of enullending a lease to what enullent a tenant will innullct damage, manull an effort to
tanull care of the property, or report urgent problems. null owner occupant, on the other hand, has a
financial interest in tanullng care of the property. Thus, both the depreciation and maintenance costs
of rental housing can be enullected to be highernull marnullt imperfection that will create an incentive
for transition to owner-occupied housing. The difference in owner-occupant and renter behavior
would also lead to a difference in the type of housing offerednullin general, owner-occupied housing
is of a higher quality.
nullgher satisfaction from owner occupancy stems from the greater freedom to alter the property
to suit onenull taste and from not being subnullct to variable housing costs nullhen the alternative is a
finulld-rate mortgagenull null is also possible that owner occupancy provides access to neighborhoods
and municipalities where long-term rental housing is hard to find.
nullfrequently perceived benefit of ownership is one of wealth creation. The federal government
encourages investment in residential real estate by, in most cases, not tanullng the capital gains from
selling onenull home. The asset-building advantage of homeownership materialinulls only when hous -
ing prices appreciate. The downside of homeownership, of course, is the risnullof investing most of
onenull wealth into a single asset. nullreclosure would represent a greater hardship than eviction from
a rental property. null the current marnullt, it is unlinullly that investment opportunity is the primary
motive for becoming a homeowner.
nullmeownership also has significant upfront costs. nullcoming a homeowner entails paying upfront
costs, such as realtor, settlement, and lender fees. nullhousehold could easily spend null percent of
null
nullr a good literature review of both the private and public benefits of homeownership, see Dietnulland nullurin nullnullnull.

149Cityscape
nulle Impacts onullnullre Rigorous Fnull nulldernulliting Guidelines
the purchase price on transaction costs. nulllower bound estimate would be nullpercent nullee Dietnull
and nullurin, nullnullnull nullven the finulld costs, households for whom owning is a better choice would
not enullect to move soon after purchasing. The transition to homeownership is associated with
enullected low mobility and, thus, a higher age, family sinull, and income.
The dollar value of the reduction in housing costs can be estimated with census data. The average
income of households enullluded by the nulltice is nullnullnullnull nullr households of this income, the rent-
to-income ratio is null.null percent, which translates to nullnullnullnullin annual rent payments. nullppose
that becoming an owner leads to a reduction in housing cost for a unit of comparable quality. The
benefit can be measured as a percentage reduction of the annual rent payments. nullr enullmple, a
sinullable nullpercent reduction leads to nullnull annual benefit to households null percent nullnullnullnullnull.
The total value of the annual reduction in housing costs will be affected by the number of years
that the benefit is denied and by the discount rate. null assume that the effect of denying the
opportunity of an nullnullloan to the population in question will be to delay homeownership. null the
length of the delay increases, so does the loss in consumer benefits. nullth higher discount rates,
the present values of future years are reduced and thus the private opportunity cost of delay is
diminished. nulluseholds that find the transition to homeownership a beneficial decision will wornull
to repair their credit score. nullst of the negatives will be removed from a credit report after nullyears,
and it is possible to increase credit scores significantly after nullyears by better managing consumer
debt. nullreasonable outside estimate of the number of years homeownership would be delayed is null
years. null choose nullpercent as our default discount rate given the similarity of that rate to what was
used in the nullnullactuarial model. This calculation is shown in enullibit null column null
The sinull of the rental enullernality also plays a role. null can be seen as the difference between the
sum of the depreciation and maintenance rates of rental housing and owner-occupied housing.
nullnventional wisdom among lenders is that households should budget from nullto nullpercent of the
original purchase price for annual maintenance to prevent significant depreciation.
null
null the rental
depreciation rate were twice that of owner-occupied housing, the range for rental housing main-
tenance costs would be nullto nullpercent, manullng nullpercent a plausible outside estimate of the sinull
of the rental enullernality. nullven the annual benefit of nullnull nullased on an enullernality of nullpercentnull
a delay of nullyears, and a discount rate of nullpercent, the present value of the loss would be null,nullnull
nulllthough the argument of nullenderson and nulloannides nullnullnullnullnullnull has great theoretical validity, not much
empirical wornullsupports the claim that renters pay more than homeowners for constant-quality
housing. nullvidence enullists, however, that rental housing does depreciate at a greater rate than owner-
occupied housing. nullata and nullmaga nullnullnull estimated the probability of a house being in nulloundnull
condition, depending on whether it was owner-occupied housing, tenant-occupied housing, or
landlord-owned housing. They found that the probability of a house being in sound condition
decreases by nullpercent if a house is landlord-owned housing compared with owner-occupied
housing. nullng, nullissom, and nullbb nullnullnull estimated the price difference of a single-family home,
depending on whether it was renter occupied or owner occupied. null the house had been a rental
property, its selling price would have decreased by null,nullnull which is appronullmating nullnullpercent of
null
nulle Riha nullnullnull.

150
nullFarlane
Impact
the price of a nulltandard house.nullThis nullnullpercent decline in value is roughly equal to our estimate
of the rental enullernality derived using assumptions concerning the differences in maintenance
and depreciation rates. nullilling, nullrmans, and Dombrow nullnullnull found that renter-occupied
housing depreciates nullnullpercent more each year than owner-occupied housing. nulling repeat sales
data, nulltnullaff and nulleen nullnullnull found that the difference is very small, only nullnull percent. This
negligible difference in housing value may renullct that landlords are using the additional revenue
collected through the rental enullernality to invest in their property.
The reduction in housing costs through homeownership is considered a benefit to society because
the source of the reduction is a decline in the cost of supplying the housing. null it were only a
transfer between consumers nullenters who become homeownersnulland producers nullandlordsnull then
the transition to homeownership would represent a nullro-sum gain for society. nullsocial gain enullsts,
however, because the removal of the rental enullernality is equivalent to a reduction in the cost of
supplying housing services for the household that made the transition to ownership. nullndlords
charge a rental premium to compensate them for the damage that occurs to their property given
the incentives that renters face. Transition to homeownership changes those incentives and gener-
ates net benefits for society.
nullfinal and important point to manull concerning consumer benefits is that not all borrowers
enullluded by the nulltice would have realinulld the benefits of homeownership. nullme of those who
receive a loan will default and be foreclosed upon. To accurately measure the private benefits of
homeownership, we need to account for the chance that not all households who become owners
will remain owners. The probability that a homeownership will survive until a specific year with-
out a foreclosure is equivalent to nullless the probability that the household will not be foreclosed
upon, or the cumulative claim rate for that year. nullmulative claim rates increase over time with the
greatest increase occurring in the third or fourth year, yielding an nullshaped survival curve. nulling
the cumulative claim rates for the enullluded group in the fifth year of appronullmately null.nullpercent,
the estimate of the enullected private loss is null,nullnullper household nullnullnullpercent nullnull,nullnull.
Public nullnenulls onullnullmeownersnullp
nullthird approach to measuring the advantages of an nullnullloan would be to evaluate the social
benefits of a household becoming a homeowner. The traditional argument for homeownership is
that a homeowner will invest more in his or her community because a financial incentive enullsts
to improve the quality of the neighborhood and thus home values. nullintaining properties will
also have positive spillover effects to neighboring property values. null addition, an engagement by
homeowners will lead to greater political activity, a more amenable urban environment, and less
crime. null literature enullists that also linnulls housing tenure with child outcomes nullhealth and educationnull.
One negative social effect of homeownership is reduced mobility, which leads to rigidity in the
labor marnullt and thus lengthens economic downturns.
This type of empirical research has some obvious methodological challenges. Disentangling the
enulllanatory variable nullenure statusnullwith other characteristics of the household is difficult when
the path to ownership depends on credit score, which depends on the stability and thrift of the
household. nullrong empirical evidence has been found, however, for the positive effect on child
outcomes, political activity, and wealth accumulation and for the negative effect on mobility.

151Cityscape
nulle Impacts onullnullre Rigorous Fnull nulldernulliting Guidelines
nullmeownership seems to have both social costs and benefits, and the empirical evidence for some
of the most compelling arguments for encouraging homeownership is weanull nullnew wave of empiri -
cal research has generated much more modest estimates of the social value of homeownership. nullr
the sanull of argument, however, we choose one study by nullulson and null nullnullnull that does not focus
on the cause of the benefits but produces an empirically rigorous estimate of the impact of adding
a homeowner to a neighborhood.
nullulson and null nullnullnull used data from the nullerican nullusing nullrvey and analynulld housing clus -
ters that included between nulland null single-family homes. They found that a nullnullpercent increase
in the homeownership rate in a cluster raises the price of a housing unit by null to null percent. null
one enullmple, they calculated that the transition of an additional unit would raise the value of other
units by nullnullpercent. null the average price per unit is nullnull,nullnull this calculation signifies an increase
of null,nullnullper unit. Therefore, the enullernality benefit of ownership for the rest of the typical cluster
of nullhomes is nullnullnullnullnull nullnull,nullnull. The value of nullyear of public benefits is the discount rate
times the total stream of benefits, or null,nullnullnull percent nullnullnullnullnull. The opportunity cost to the
public of preventing transition to homeownership is the loss of the present value of the stream of
public enullernalities. null a householdnull transition were delayed for nullyears, the present value of the
stream of lost public benefits would be null,nullnullnullt a nullpercent discount rate and null,nullnullannuallynull
as shown in enullibit null
The enullected loss from delay is equal to the dollar amount of the lost benefit times the probability
that the household would remain as owner occupants. This probability is equal to null less the cumula-
tive claim rate. nullth a delay of nullyears, the enullected loss from delay would be null,nullnull null shown in
enullibit null the sum of the private and public costs is nullnullnullnulland the enullected total cost is null,nullnull
nulln the previous estimate of the enullpected cost to society of enullcluding a household from homeowner-
ship, we assume that the only effect of enullluding a household is the denial of the benefits of
homeownership. null did not account for the possible social costs of foreclosure for every home -
owner created. nullnullable losses enullst, however, from a foreclosure borne by consumers, lenders,
property marnullts, and local governments. null estimate of the deadweight losses nullocial costsnull
Exhibit 3
Delanull
in
nullears
nullnull nullnull nullnull nullnull nullnull nullnull nullnull nullnull
Clainull
nullte
nullnullnull
Private
Cost onull
Delanull
nullnullnullnull
nullnull
Pnulllic
Cost onull
Delanull
nullnull
Total
Cost onull
Delanull
nullnull
Expected
Cost onull
Delanull
nullnull1nullxnullnull
nullnull
Cost onull
nullreclosnulle
nullnull
Expected
Cost onull
nullreclosnulle
nullnull
Net
Expected
Cost onull
Delanull
nullnullnullnull
nullnull
nullt EnullectenullnullportnullitnullCost of Delanullnnullnullnullenulllnull nullonullTransition to
nullnull onullersnullp nullnullercent Disconullt nulltenull
1 0.14 417 1nullnull 2null99 2null9null 52null90 72 2null24
2 1.null null0 3null5null 4nullnull 4nullnull 49null94 929 3null53
3 5.null 1null92 5null7null null570 null201 47nullnull 2null43 3null5null
4 nullnull 1nullnull 7null50 nullnull2 7null70 4null370 4null21 3null49
5 11.1 1null22 nullnull3 10null95 9null19 45null20 5null4null 3null74
null 13.1 2null71 10null49 12null21 10null79 43null0null null43null 4null42
7 14.null 2null10 11nullnull 14null90 12nullnull 42null35 7null7null 5null0null

152
nullFarlane
Impact
from a foreclosure would include transaction costs, the distress discount on the property, and the
negative effect on the value of surrounding properties.
To calculate transaction costs, we sum bronuller and legal fees. nullronuller fees are null percent of the property
value nullnull,nullnullnullnullpercent nullnullnull,nullnull and legal fees are nullpercent of the loan value nullnullnullnullnull
nullpercent nullnullnull,nullnull assuming an null-percent nullnullrationull Total transaction costs are nullnullnullnull
The reduction in property value from the investor being forced to sell a home because it is
foreclosed upon nulltress discountnullis a second source of deadweight loss. null is not obvious, however,
whether the stress discount should be counted as a cost rather than a transfer. nullthough the seller
will lose from a reduction of property value, the buyer may gain from the opportunity to purchase
at a lower price. Pennington-nulloss nullnullnull found that Real nulltate Owned nullnullnullproperties suffer a
null-percentage point discount in appreciation rates compared with the metropolitan average appre -
ciation rates. nullion nullnnullof nullitnullrland nullnull, nullnullnulluses a stress factor of null percent to estimate
the additional decrease in value from selling a foreclosed property. One obvious enulllanation for
this result is one of reverse causationnulla default may occur because appreciation in a particular
submarnullt lags behind the metropolitan average. nullgative price appreciation may result in rational
default by the borrower once the value of the loan enulleeds the value of the home.
Two other theoretical enullplanations for this empirical result provide insights into economic behavior.
The first enullplanation is the possibility that in an environment of asymmetric information a foreclosure
is a signal of a nullemonnullproperty, in which case the buyer is compensated through a lower purchase
price for tanulling a risnull. null second enullplanation of the stress discount to the values of foreclosed homes
involves behavior that creates a deadweight loss to society. nullequently, before owners sell a home,
they invest a great deal into the structure, at least into the cosmetic aspects of the property. null
owner who nullows that he or she will default will cease to maintain and upgrade the property
and may even actively disinvest nullell appliances or finullures, for enullmplenull The depreciation to the
property is structural and realnullthe new owner must invest resources to restore the property to its
preforeclosure state. nullrding et al. nullnullnull found evidence of this enullernalitynullborrowers with high
nullnullratios spend, on average, null percent less on maintenance than those with lower nullnullratios.
nullowledge of impending default would increase the overuse of housing. null assume that this
structural damage is equivalent to the entire value of the nullnullestimate of the stress discount on the
property, which yields nullnullnullnullnullnullpercent nullnullnull,nullnull.
nullreclosures resulting in long-term vacancies have a negative effect on the value of neighboring
properties by reducing the physical appearance of the neighborhood, attracting crime, and depressing
the local economy. The study of nullmerglucnulland nullith nullnullnull reports a reduction of nullnullpercent
of value for all properties within one-eighth of a mile. One approach to using the results from this
literature would be to limit the negative enullernalities to close neighbors nullnes directly adnullcent and
across from the foreclosed propertynulltwo on each side of the property and five across the streetnull
Doing so would limit the aggregate effect to nullnullnullnullnull.nullpercent nullnullnull,nullnullnullnull.
The total social cost per foreclosure would be nullnullnullnullnullnull,nullnullnullnullnullnullnullnullnullnullnullnull. The
enullected social cost of foreclosure is the sum divided by the length of the delay of the probabilities
of a foreclosure occurring in a particular year nullhe conditional claim ratenulltimes the discounted
value of the social cost of the foreclosure. nullth our assumed cumulative claim rates, a delay of

153Cityscape
nulle Impacts onullnullre Rigorous Fnull nulldernulliting Guidelines
nullyears, and a discount rate of nullpercent, the enullected social cost of a foreclosure is null,nullnull null
shown in enullhibit null, column null, the net enullpected cost of enullcluding a borrower is thusnull nullnull null probability
of foreclosurenullnullopportunity cost of preventing ownership nullprobability of foreclosure nullcost of
foreclosure. nullth a nullyear delay, the net enullected cost of enullluding a borrower is null,nullnull
nullansnullrs to Fnull
nullen nullnulltightens its underwriting guidelines, it will reduce the net claim enullense associated
with loans for which delinquency leads to an insurance claim. nullD bases its proforma budget
accounting on forecasts of claim and prepayment rates calculated using the forecasting model from
the independent actuarial study of the nullnull nullnull, nullnullnull but using the economic pronullctions of
the Presidentnull nulldget. The actuarial models rely on null years of actual nullnullenullerience and are
calibrated to produce loan-performance outcomes using forecasts of future economic conditions.
The following equation represents the enullected net claim enullense associated with any given loan,
in any given yearnull
nullpected claim amount nullclaim rate nullnulloss rate nullunpaid loan balancenull
The claim rate is the number of claims during a particular time period divided by the total number
of loans endorsed when an annual insurance cohort was underwritten. nullr the null nullnull cohort,
the most recent budget forecasts a null.null-percent cumulative claim rate. The time trend of the
claim rates over null years is estimated using the predicted cumulative claim rates from the actuarial
review nullnull, nullnullnullpage nullnull. The cumulative claim rates from the actuarial review were innullted
by a factor of nullnull to account for the higher claim rate predicted among the higher risnull enullluded
group nullnullnull percentnull.null percentnull
The loss rate is the net loss after property-sale recoveries, as a percentage of the unpaid loan bal-
ance on the defaulting loan. nullhibit nullnullof the actuarial review provides a time series of loss rates.
The nullnulls began with loss rates as low as null percent but reached null percent by nullnull. nullrrent
estimates by nullnullfor the nullnull cohort is that the loss rate on average is null.null percent and that the
loss rate for the enullluded borrowers will be higher at null.null percent.
nulling recent nullnulldata, we found that the average loan originated to the group of individuals
affected by the nulltice is smaller than the global averagenullnullnull,nullnullas opposed to nullnull,nullnull nulling
nullnull,nullnullas our default and assuming an interest rate of nullpercent, the annual mortgage payment
would be nullnullnullnull The decline in the unpaid balance is slow at first, decreasing appronullmately
null,nullnullin the first year, because mortgage payments consist of primarily interest at the beginning
of the repaymentnullby the end of the loannull null years, the decline reaches nullnullnullnull
nullr enullmple, in the second year, the unpaid balance on the nullnull,nullnullloan would be nullnull,nullnull
The claim amount, therefore, would be nullnullnullnullnullnullnull percent nullnullnull,nullnull. nulling an annual
unconditional claim rate of nullnull percent,
null
the enullected claim amount would be null,nullnull The
present value of the enullected claim paid in the second year would be null,nullnullnullhen the discount
rate is appronullmately nullpercentnull
null
null
The unconditional claim rate is an annual rate consistent with the annual change in the cumulative claim rate.
null
The time series of discount rates is those used in the actuarial review.

154
nullFarlane
Impact
nullnull, we summed the present values of the enullected claims paid over all years to arrive at an
estimate of the enullected claim. nullr our parameters, the enullected claim amount is nullnullnullnull null
multiplied this amount by the original number of endorsements to arrive at a total across all loans.
nullether nullnullshould enullect a gain or loss depends on the mortgage insurance premium incomenull
nullpected loss per loan nullenullected claim amount nullupfront premium nullperiodic premium income.
The upfront mortgage insurance premium is equal to nullnull percent of the original loan balance, or
null,nullnull when the loan balance is nullnull,nullnull nullr nullnull greater than null percent, which represent
appronullmately null percent of the affected borrowers, the annual premium is nullnull percent of the
unpaid loan balance and is collected until the unpaid balance reaches null percent of the original
loan amount. null a specific year, the proportion of loans that pays the periodic premium is assumed
to be null nullunconditional claim ratenullplus one-half the prepayment rate nullo renullct that prepayers
would have paid one-half per yearnull The enullected net present value of the premium income
nullpfront nullannualnullis null,nullnullnullnullnullnullnullnull,nullnull. The net loss per loan to nullnullis null,nullnull
nullreduction of net losses from the subnullct loans provides a direct benefit to the financial status of
the nullnull. Over time, it is also possible that this reduction of nullnulllosses could lead to benefits to
remaining nullnullinsured borrowers through lower premium rates. The annual aggregate benefits
would be appronullmately nullnullmillion when nullnullendorses nullnullmillion loans annually and the sinull
of the group affected is null,nullnull
Aggregate Impact
nullen nullnullendorses nullnullmillion loans and this nulltice enullludes null,nullnullloans, the total transfer to
nullnullwould be nullnullmillion and the nulletnullcost of enullluding the borrowers would be nullnullmillion.
To generate an estimate of the net public benefit of the policy change would also entail attaching a
value to the qualitative argument concerning the public benefit of nullnullin providing liquidity. The
aggregate impacts of the program in the base case are summarinulld in enullibit nullbelow.
Exhibit null
Costs annullBenenulls of nulltice
Pernulloan Transnullrnullnullvoided nullnullnullss
nullnullEnullectenullclainull null0nullnull
nullnullnullenullnull inconull nullnull77
nullnullEnullectenullnullA nullin nullnull91 nullnullnullnullnull
Pernulloan CostnullCost onullDelanullnnullTransition to Onullership
nullnullEnullectenulltotal cost nullnull19
nullnullEnullectenullcost of foreclosnulle nullnull4null
nullnullEnullectenullnet costs nullnull74 nullnullnullnullnull
Total Costs and nullnenulls
nullnullnullans ennullrsenullin nullar 1 1.5 nullllion
nullnullnullans affectenullnull tnull nulltice 21null00 0.0142 nullnullnull
nullnullnullA losses avoinullnull nullnullnullllion nullnullnullnullnull
null0nullCosts of enulllnullion null5 nullllion nullnullnullnullnull
Fnull nullFederal nullusing Administrationnull

155Cityscape
nulle Impacts onullnullre Rigorous Fnull nulldernulliting Guidelines
Sensitivity Analysis
nullsensitivity analysis is merited because the parameters of this model are difficult to predict. The
number of loans endorsed, average amount of the loan, loss rate, claim rate, and capitalinulltion rate
all are subnullct to trends in the real estate and credit marnullts. The number of loans endorsed does
not affect the per-loan net benefits, but it will affect the aggregate costs and benefits proportionally.
null enullibit null the aggregate costs and transfers are shown for different numbers of loans affected by
the rule. The number could vary for two reasonsnullnullnulltotal endorsements vary or nullnullthe proportion
of risnullier loans varies. nullor enullample, when the nullotice was first considered, low nullnullnullO nullcredit-scoring
modelnulland high nullnullborrowers constituted a greater share of nullnullborrowers than they do now.
null is difficult, however, to predict trends in credit scores. null used the scenario of null,nullnullloans
enullluded throughout the analysis. null is reasonable to assume that loans of those characteristics
would be null percent lesser or higher in volume.
Exhibit null
Anullrenullte Costs annullTransfers of tnull nulltice null nullan Ennullrsenullnts
nullans affectenull 14null00 21null00 2null400
Transfer to nullA null4 nullllion nullnullnullllion null44 nullllion
Costsnullnullplnull lost null7 nullllion null5 nullllion null27 nullllion
Fnull nullFederal nullusing Administrationnull
Alternatives Considered
null mentioned previously, this nulltice is only one approach to restoring the nullnull capital reserve
account. To a large enullent, many of the alternative policies are currently being pursued. This null -
tice is focused on risnuller borrowers. One way in which this particular nulltice could vary is by the
stringency of the underwriting standards. nullnsider, for enullmple, a nulltice that enullluded borrowers
with a nullnull score below nullnull a nullor that is commonly used by private lenders. There are three
parameter changes from this alternative. The first is the number of loans affected null.null versus nullnull
percent of all loans endorsednull the second is the cumulative claim rate, which would be slightly
lowernulland the third is the loan sinull, which would be highernullnullnullnullnullas opposed to nullnull,nullnull
The net effect is that the transfer per loan of the alternative drops by appronullmately null,nullnullto
null,nullnull null addition, the average social cost of enullluding a borrower rises by appronullmately nullnull.
The change in the claim rates will affect whether the net benefit per loan is positive or negative, the
sinull of loan will affect the sinull of the transfer benefit per loan, and the number of loans will affect
the aggregate impact of the nulltice. The lower claim rates lead to a lower transfer to nullnullnull,nullnull
as opposed to the base case estimate of null,nullnullof this nulltice. nullthough the aggregate transfer to
nullnullwould be greater nullnullnullmillionnullbecause of the higher number of loans, so would be the
aggregate net enullected cost of delaying homeownership nullnullnullmillionnull nullrthermore, the portion
of loans enullluded under this alternative would be disproportionately composed of borrowers
belonging to protected classes under the nullir nullusing nullt of nullnull.

156
nullFarlane
Impact
nullnullowledgments
The author thannull nullucnullnullpone of the nullderal nullusing nullministration for carefully reading the
impact analysis on which this article is based and providing constructive advicenull nullndrew nullrannegan
and nullnull nullyes for research assistancenulland nullll Reeder, null nullymanosnull, and nullrt nullowsnull for
helpful discussions. nulll errors are mine.
nulltnullr
nullastair nullnullrlane is director of the nullonomic Development and Public nullnance Division at the
nullnull Department of nullusing and nullban Development, Office of Policy Development and Research.
Renullrences
nullssidy, nullhn. nullnull. nullw nullrnullts nullilnullnulle nullgic of nullonomic Calamities. nullw nullrnull nullrrar, nullraus
and nullrounull
nullulson, nullward, and nullrman null. nullnull. nullasuring the nullternal nullnefits of nullmeownership.
nullrnullng paper. httpnullnullcon.la.psu.edunullecoulsonnullwnenullpdf nullccessed nullne null, nullnullnull
Dietnull Robert, and Donald nullurin. nullnull. nullhe nullcial and Private nullcro-nullvel nullnsequences of
nullmeownership,nullnullurnal of nullban nullonomics nullnullnullnullnullnull
nulltnullaff, Dean, Richard nulleen, and David nullng. nullnull. nullross-Tenure Differences in nullme
nullintenance and nullpreciation,nullnullnd nullonomics nullnullnullnullnullnull
nullrding, nullhn, Thomas nullceli, and nullnull nullrmans. nullnull. nullo Owners Tanull nulltter nullre of nullur
nullusing Than Rentersnull nullal nulltate nullonomics null nullnull nullnullnullnull
nullnderson, nullrnon null, and nullnnis null nullannides. nullnull. null nulldel of nullusing Tenure nulloice,null
nullerican nullonomic nullnullew null nullnull nullnullnull.
nullmerglucnull Daniel, and nulloff nullith. nullnull. nullhe nullternal nullsts of nullreclosurenullThe nullpact of
nullngle-nullmily nullrtgage nullreclosures on Property nulllues,nullnullusing nulllicy nullbate null nullnull nullnullnull
nulltegrated nullnancial nullgineering, nullc. nullnullnull nullnull. nulltuarial nullnullew of the nullderal nullusing
nullministration nulltual nullrtgage Insurance nullnd nullnullluding nullCnullnullfor nullscal nullar 200null Report
prepared for the nullnull Department of nullusing and nullban Development. nullshington, Dnull nullnull
Department of nullusing and nullban Development. nullailable at httpnullnullud.govnullfficesnullsgnullompnull
rptsnullctrnullnullnullctrnullnullecm.pdf.
nullata, nullinichiro, and nullsanull nullmaga. nullnull. Rental nullternality, Tenure nullcurity, and nullusing
nullality. nullrnullng paper. httpnullnullww.asres.orgnullnullnullonferencenullapersnullnullnullatanullnullnullnull
nullmaga.pdf nullccessed nullly null nullnullnull
Pennington-nulloss, nullthony. nullnull. nullhe nulllue of nullreclosed Property,null nullurnal of nullal nulltate
nullsearch null nullnull nullnullnullnull

157Cityscape
nulle Impacts onullnullre Rigorous Fnull nulldernulliting Guidelines
Riha, nullhn. nullnull. nullhe nulllue of nullme nullintenance.nullnullrch null nullnull. httpnullnullww.houselogic.comnull
articlesnullalue-home-maintenancenull nullccessed nullly null nullnullnull
nullilling, nullmes D., nullnull nullrmans, and nullnathan null Dombrow. nullnull. nulleasuring Depreciation in
nullngle-nullmily Rental and Owner-Occupied nullusing,nullnullurnal of nullusing nullonomics nullnullnull nullnull.
nulliglitnull nullseph, nullime nullramillo-nullllenull, and nullng Parnull nullnull. nullhe Role of the nullate in nullnancial
nullrnullts.nullnull nullrld nullnnullnullsearch nullsernullr nullnnual nullnference on Development nullonomics
nullpplementnull nullnullnull nullvailable at httpnullnullww.econ.uoa.grnullnullfilesnullnullnullnullnullnullpdf. nullccessed
nullly null nullnullnull
nullion nullnnullof nullitnullrland nullnullnull nullnull. nulleveritynullnullere Does null nullme nullomnull nullnullnullrtgage
nullrategist, nullgust null.
nullnull Department of nullusing and nullban Development nullnullnull Office of Policy Development and
Research nullDnullnull nullnull. nullnull nullusing nullrnullt Conditions, null
rd
nullarter nullaynull nullshington, Dnull nullnull
Department of nullusing and nullban Development, Office of Policy Development and Research.
nullvailable at httpnullnullww.huduser.orgnullortalnulleriodicalsnullshmcnullinternullnullndenullhtml .
nullng, null, Terry null nullissom, nullmes R. nullbb, and nullwis nullellman. nullnull. nullhe nullpact of Rental
Properties on the nulllue of nullngle-nullmily Residences,nulln