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Boundaries
GerritJ. Knaap
INTRODUCTION
27
Knaap:UrbanGrowthBoundaries
Suppose there exist two types of residential land, urbanand nonurban,wherethe differenceis enforcedby zoningregulationsand
defined by housing density, minimum-lot
size, or some other allowable-usecriteria.
Supposefurtherthat as a resultof zoning,urban rents, Ru, are highervaluedthan nonurban rents, Rn, for some radialdistancefrom
the urbancore. For ease of graphicalexposition, urbanrents are assumedto decline linearlywith distance,t, andnonurbanrentsare
assumedspatiallyinvariantunderpermanent
zoning.The marketvaluesof urbanandnonurbanlandequalthe presentvalueof theirrespectiverentalstreams.Thatis,
R + Rn/(l
+ Rn/(l
[Ib]
+ r)?
+ r) +
+ r)x ...
+ R,(t)/(l
Rn/(l
+ r)x-
Ru(t)/(l
+ r)?
. . .
[2a]
...
R.(t)/(l
+ r)I
+ r)?
[2b]
#0
0
-o
)
a
0
O
__a
Pu(t)
FIGURE 1
+r)
+ r)2+
+ * * * R(t)/(l
A PARTIALEQUILIBRIUMMODEL
P=
.. Rn//(
+r))
[la]
28
Land Economics
+ r)+
*--R*
+ r)x ...
/(l + r)x-l
R(t)/(l
+ r)?o
[3a]
where, e.g.,
P'
P?(t) = R, + R/(l
+ r)+
. .
* + Rn/(l
+ r)x
+ R//(I + r)y-'
+ R,(t)/(l
+ r) ...
R,(t)/(l
+ r)?
where, e.g.,
(1
-j
t"
FIGURE 2
Distance(t)
P(t)=
[(t)
+ [R,(t)
R, ]/(1 + r)X
- R]/(1
+ r)+l
...
+ r)?
R,(t)/(l
+ r)
P(t) - po(t) = o
[3b]
+ r)l
+ r)??
[4b]
In sum, the model above describes the effects of an UGB-a demarcation of where
zoning changes and future urban development may take place-on urban and nonurban land values. As the model is specified, urban land may exist outside the UGB; urban
development may have been allowed in the
past where additional urban development is
Knaap:UrbanGrowthBoundaries
29
NONURBAN = a dummyvariableindicating
UGB = a dummyvariableindicatinglocation
withrespectto the UGB (outside= 1); and,
w = a stochastic disturbance.
t'" Distance(t)
FIGURE 3
LAND VALUESWITHDISTANCE
ANDAN UGB
where,
PL= the marketprice per acre of the homesite;
Ej= a vectorof extraneousvariables;
URBAN = a dummyvariableindicatingzoning (urban = 1);
30
Land Economics
Table 1 presentsordinary-least-squares
estimatesof the hedonicvaluations.The model
of the price effects of the UGB suggeststhat
the impact of the UGB should be proportional to the value of land, hence the regression is specifiedin the log form.5Further,the
equation is specified in double-logform to
overcome multicollinearity problems between the noncategoricalindependentvariables.
Washington County
4TheIGB was createdto correctwhat LCDC perceived as an excess amountof land insidethe Portland
metropolitanUGB. To preserverichagriculturalfarmlandfor as long as possiblefromurbanencroachment,a
"line within a line" approachwas adopted. All land
withinthe UGB is designatedfor urbanuse beforethe
year 2000;but land withinthe IGB mustbe developed
first-preserving for a time those lands best suited for
agriculturaluse. The concept of the IGB was drawn
fromthe UGB; henceits effecton landvaluesshouldbe
similar, but with a different time dimension.A map
showingthe IGB andUGB is providedin AppendixB.
5Iam indebtedto an anonymousreviewerfor pointing this out.
31
Clackamas County
Washington
County
Clackamas
County
URBAN
.267
(1.80)*
- 407
(1.74)
NONURBAN*UGB
-.980
- .258
(4.10)**
NONURBAN*IGB
-.944
(5.57)**
URBAN*IGB
-.005
ACCESS
-.404
-.064
(.28)
(.03)
(2.36)**
ACRES
-.186
SEWER
(2.85)**
.148
(1.71)*
PLAT
0.662)**
.470
(279)**
.084
-.140
(l.11)
(.12)
.506
-.374
(3.61)**
.255
(.48)
.414
ClackamasCounty.Urbanlandvaluescould
-.019
(.44)
(4.23)**
NOCITY
the IGB.
03=
32
Land Economics
33
Knaap:UrbanGrowthBoundaries
nonresidentialstructures,etc.-will be made
insideUGBs unlessthe costs of the improvements can be recoveredbefore the expected
date of conversionto urbanuse. As a result,
nonurbanland insideUGBs will be prepared
for conversionto urbanuse, while nonurban
landoutsideUGBs will remainfree of speculative influence. These are the exact effects
UGBs were intendedto have in Oregon.But
additionalresearchis necessarybefore these
or otherconclusionscan safelybe drawn.
References
Diamond, Douglass B. 1980. "The Relationship
Between Amenities and UrbanLand Prices."
LandEconomics56 (Feb.):21-32.
Gleeson, MichaelE. 1979. "Effectsof an Urban
Growth ManagementSystem on Land Values." LandEconomics55 (Aug.):350-65.
Grieson, Ronald E., and White, JamesR. 1981.
"TheEffectsof Zoningon Structureand Land
Markets." Journal of Urban Economics 19
(Jan.):271-85.
Johnson, J. 1972. EconometricMethods. New
York, NY: McGraw-Hill.
Jud, G. Donald. 1980."TheEffectsof Zoningon
Single-Family Residential Property Values,
North Carolina." Land Economics 56
(May):144-54.
Maser,StevenM.; Riker,WilliamH.; andRosett,
RichardN. 1974. "The Effects of Zoningand
Externalitieson the Pricesof Landin Monroe
County,New York."Journalof Lawand Economics20 (April):111-32.
Metropolitan Service District. 1979. Urban
GrowthBoundaryFindings.Portland,Oregon.
Ohls,JamesC.; Wiesberg,RichardC.; andWhite,
Michelle J. 1974. "The Effects of Zoning on
Land Value." Journalof UrbanEconomics1
(Oct.):428-44.
Peterson,GeorgeE. 1974a.TheInfluenceof Zoning Regulationson Land and HousingPrices.
WorkingPaper#1207-24. Washington,D.C.:
The UrbanInstitute.
. 1974b. Land Pricesand FactorSubstitution in the Metropolitan Housing Market.
WorkingPaper#0875-01. Washington,D.C.:
The UrbanInstitute.
34
Land Economics
APPENDIX A
DESCRIPTION
OFVARIABLES
VARIABLES
DependentVariable:
1. Price
Independent
Variables:
1. Access
2. Acres
3. Sewer
4. Slope
5. Income
6. Race
7. URBAN
8. NONURBAN*UGB
9. NONURBAN*IGB
10. URBAN*IGB
11. Tax
12. Date
13. Portland
14. Nocity
15. Plat
EXPECTEDSIGN
DEFINITIC
)N
SOURCE
the countysales-ratioreports
peak-hourtraveltimein minutes
to downtownPortland
the numberof acresin the sale
matrix
Metro*transportation
negative
the countyassessor'smapsand
files
Metrooverlaymaps
negative
dummyvariable;1 if within300
feet of a sewerline
Metrooverlaymaps
dummyvariable;1 if sloped
morethan25 percent
medianincomeof the census
1970census
tract
1970census
percentageof the censustract
thatis white
Metrogeneralizationof local
dummyvariable;1 if zonedfor
single-familyuse greaterthan
zoningcodes
4.4 unitsper acre
Metrogeneralizationof local
dummyvariable;1 if zonedfor
single-familyuse less than4.4
zoningcodesandmetromaps
unitsper acreandlocatedoutside the UGB
Metrogeneralizationof local
dummyvariable;1 if zonedfor
single-familyuse less than4.4
zoningcodesandmetromaps
unitsper acreandlocatedoutside the IGB butinsidethe UGB
Metrogeneralizationof local
dummyvariable;1 if zonedfor
single-familyuse greaterthan
zoningcodesandmetromaps
4.4 unitsper acreandlocated
outsidethe IGB butinsidethe
UGB
propertytax rateper $1,000of
countyassessor'soffice
assessedvalue
Discreteindexof salesdate;
sales-ratioreports
1 = Sept. 1979,12= Aug. 1980
dummyvariable;1 if in the City
countytaxcodes
of Portland
dummyvariable;1 if unincorpo- countytaxcodes
ratedin a localmunicipality
dummyvariable;1 if locatedin a countyrecords
recordedplat
positive
negative
positive
positive
positive
negative
negative
zero
negative
positive
negative
negative
positive
Knaap:UrbanGrowthBoundaries
35
DESCRIPTIVE
STATISTICS
WashingtonCo.
mean
std. dev.
URBAN
NONURBAN*UGB
NONURBAN*IGB
URBAN*IGB
ACCESS
ACRES
SEWER
PLAT
NOCITY
PORTLAND
TAX
INCOME
RACE
SLOPE
DATE
.599
.082
.255
.045
28.899
.748
.427
.790
.618
.004
1998.528
11363.974
95.562
.026
7.281
.491
.275
.437
.207
9.726
.195
.496
.408
.487
.061
156.935
1616.535
1.422
.160
3.532
ClackamasCo.
mean
std. dev.
.718
.228
.021
.032
29.617
.577
.681
.773
.394
.000
1989.064
11738.989
97.612
.165
6.505
APPENDIX B
.451
.421
.145
.176
8.017
.663
.467
.449
.490
.000
221.630
2017.018
.797
.372
3.387