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Filing # 71718440 E-Filed 05/04/2018 04:14:02 PM
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(b}) PURCHASER: ‘The address set forth at the top of
the first page hereof,
18. DEFAULT.
{a) DEPAULT BY THE PURCHASER. if the PURCHASER
fails to perform any covenants of this Agreement or comply with
the terms of this Agreement within the time specified, or is
either adjudicated bankrupt under. state or federal laws, or
voluntarily declares bankruptcy or enters into an arrangement
with creditors, stich events shall constitute default under this
Agreement. In such event, all sums paid by the PURCHASER in
accordance with Paragraph 4 or Paragraph 7, shall be kept by the
SELLER as full liquidated damages in consideration for the
execution of this Agreetient. ‘The parties hereto acknowledge that
actual damages would be difficult, if not impossible, to
determine. Thereafter, all parties shall be relieved of all
obligations under this Agreement and the PURCHASER shall have no
right to purchase any additional Lots. The foregoing shali be the -
sole remédy of the SELLER under this Agreement.
(b) DEFAI ¥ THE SELLER. ‘The SELLER shall be ~
in default hereunder upon the occurrence of any one or more of
the following events: o
(1) any of the SELLER'S warranties or
representations set forth herein are untrue or inaccurate in any -
material respect;
(2) the SELLER shall fail to meet, comply
. with or perform any material covenant, agreement or obligation on
its part required, within the time limits and -in the manner
reguired in this Agreement.
In the event of a default by the SELLER hereunder, the
PURCHASER may, at the PURCBASER'S option, do any of the following:
(which shall be PURCHASER'S sole remedies):
{A) terminate this Agreement by written
notice delivered to the SELLER at or prior to each Closing and be
entitied to the immediate return of any and ali sume paid by the
PURCHASER in accordance with Paragraphs 3, 4 and Paragraph 7
which have not applied against the Purchase Price of a Lot at a
previous Closing; .
(B) enforce specific performance cE
this Agreement against the SELLER; or. -. :
(C) seek damages for SELLER'S breach in
jaw or eguity, but such damages shall not exceed Five Thousand
Dollars per Lot 4&& to which a BELLER default applies. “TH\> “LIMsTATIOS a
LIABRATY SH. Dey APPLY IAA CASE FEUER Retises To Cuode OW A
SPEAR LAT TO PUREHAGIA. Killen RIECRASKE, HAY FRRiRNOCT PReMartee SD
SOLER BAY AtkiQVLEDGED A VALID CovTeAcT FOR CONoTEEcTION MID GALE
OF A HOON on Ship SPEUFIC. LOT BeTiteey PORCHANEE Mp A wee
BFK
APP 8 - 211it be necessary for either party to © aK
redresa by Court proceedings agdinst the or: wt
hereunder, or to demand same, then, in that event, the prevailing
party shall be entitied to recover ail costs of such proceedings,
neluding reasonable attorneys' fees, from the nonprevailing
party, including reasonable attorneys’ fees and costs incurred on
appeal of any lower court decision and attorneys’ fees and costs
inourred in any bankruptcy proceedings. .
19. BROKER AND BROKER'S COMMISSION.
(a) The SPLLER shall pay to the BROKER a
commission in the amounts and on the terms as agreed to between .
the SELLER and the BROKER $n a separate agreement. ‘The PURCHASER
@hall have no responsibility For payment of any portion of such -
commission. No real estate commission shall be due or payable if
the -transaction contemplated herein does not close for any ~
reason.
{b) ‘The PURCHASER and the SELLER each verrant and
represent to thé other that, with the exception of the BROKER,
neither party has employed a real estate broker or agent in con-
nection with the transaction contemplated hereby. The SELLER
hereby covenants and agrees, to indemnify the PURCHASER. against
any loss, liability, cost, claim, demand, damages, ackion, pause
Pa <0£ action, and suit arising out of or in any manner relating to
the alleged employment or use by the SELLER of any other real
estate broker or agent in connection with thia transaction. The
PURCHASER hereby covenants and agrees to indemnify the SELLER
against any loss, liability, cost, glaim, demand, damages,
action; cause of action and suit arising out of or in any manner
relating to the alleged employment or use by the PURCHASER of any
real estate broker or agent in connection with this transaction
other than the BROKER. . .
20. REAL ESTATE COMMISSION-HOMES.
(a) @he PURCHASER Kereby agrees that the BROKER
ghall have an exclusive rigtit of sale for each Lot and the house
constructed by the PURCHASER on each Lot. This exclusive Listing
shall terminate as to a specific Lot upon (i) sale to a third
party of that Lot and completed house built on that Lot by the
PURCHASER; or (ii) twenty-four (24) months after completion of
‘construction of the hoase on that Lot, A reai estate commission
baped on the total sales price, including the Ldt, compléted
--house, landscaping, irrigation, fee or compensation to the
builder in cases of "costs-plus contracts", etc., shall be due
. €n@ payable to the BROKER at the time of closing of the sale of
2 the Lot by the PURCHASER. ‘The commission shall be six percent
. “(68) Of the tctal sales price as defined above. se
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APP 8 - 212{b) In the event the commission ds: not: pai
the BROKER as set forth herein, the PURCHASER hereby ‘agrees that
the BROKER shall have fthe right to immediately commence
administrative or legal action against the PURCHASER to collect
such amount, plus interest thereon at the highest rate allowed by
law from the date the commission was due, together with
reasonable attorney's fees and court costs, including attorney's
fees and costs incurred on appeal of any lower court decision.
{e) If the agreement between the SELLER and the
BROKER is terminated prior to the sale of any Lot and completed
house by the PURCHASER, the PURCHASER rees to enter into an
exclusive right of sale agreement with any other broker
designated by the SELLER, so long as such agreement is on the
same terms and conditions as set forth above and so long as the
BROKER ‘has released PURCHASER from any cléim BROKER may have or
make against PURCHASER.
(d) Should anyone move into a house built on any
Lot the above described commission shall be due and payable
immediately upon ogeapancy. The value of the house and the Lot
for such purpdses shall be determined by an MAI Appraisal of the
houge and the Lot. SELLER, PURCHASER and BROKER agree that. if
BROKER is unable, after reasonable ‘effort, to sell any house
completed on a Lot after a period of eighteen (18) months, then
PURCHASER may lease said house, so long as the lease is
terminable upon sale and no commission for the icy or lease
shall be due to BROKER. The appraiser shall be designated by the
SELLER but the cost shall be borne by the PURCHASER. In the
event that the comission is not paid as set forth in this
ragraph, the SELLER and the BROKER shal] have the right to
mmediately commence legal action against the PURCHASER to
collect such amount, plus interest thereon at the highest rate
allowed by law from the date the commission was due, ether
with reasonable attorney's fees and court costs, including
attorney's fees and costs incurred on appeal of any lower court
cision,
(e) he BROKER hereby executes this Agreement to
‘acknowledge its agreement to the terma of this commission
‘@rrangement and agrees to use ita beet efforts as a real estate
broker to market the completed house on each Lot in accordance
with standards adopted in the community.
(£) This Section 20 is enforceable between BROKER
and PURCHASER. SELLER is not in any way responsible for any
Commissions payable under this Section 20 or any other liability
under this Section 20.
-14-
Crm”
aed
APP 8 - 213e 8
21, jINSPECTION OF THE PROPERTY, The PO)
acknowledges and certifies fo € ER that- 2
inspection of the Property has heen conducted by the -PURCHAS:
{er a representative of the PURCHASER) prior to the execution of
this Agreement end the payment of any earnest money deposit, but
such inspection shall not relieve SELLER from any obligations or
conditions in this Agreement.
22. BINDING AGREEMENT. This Agreement, when duly
executed by all the parties hereto, shall be binding upon the
parties hereto, and their successors in interest. .
23, ASSIGNABILITY. This Agreement may not be assigned
by the PURCHASER without the prior written consent of the SELLER.
24. TIME OF THE ESSENCE, Time is of the essence of
this Agreement and the covenants and provisions hereof.
25. ENTIRE DETR This Agreement embodies and
constitutes the entire understandings of the parties with respect
to the transactions contemplated herein, and all prior or
contemporaneous agreements, understandings, representations, and
statements, oral or written, are merged into this Agreement.
Neither this Agreement nor any provisions hereof may be waived,
modified, amerdad, discharged or terminated except by an
instrument in writing signed by the party against whom the
enforcement of such waiver, modification, amendment, discharge or
termination is sought, and then only to the extent set forth in
such instrument.
26. DATE OF AGREEMENT. ‘The date of this Agreement for
all purposes shall be the date the last one of the SELLER and the
PURCHASER executes this Agreement and such date shall be entered
at the top of the first page hereof.
27. EXECUTION OF AGREEMENT BY THE SELLER. Por this
Agreement to bé valid and binding against the SELLER it must be
executed ‘by the President or a Vice President and the Secretary -
or. Assistant Secretary of the SELLER with the corporate seal of
the SELLER affixed. The PURCHASER acknowledges that if net so
executed this Agreement cannot be enforceable against the SELLER.
28, AGREEMENT NOT TO BE RECORDED, This Agreement
shall not be record tf the Public Records of Orange County,
Florida. Should the PURCHASER, either directly or indirectly,
cause or allow this Agreement to be record in the Public
-15-
Cm”
APP 8 - 214R ores of Orange “ county. Florida, such adtion shall be
considered, at the option of the SELLER, a default hereunder by
the PORCHASER.
IN WITNESS WHEREOF, the parties hereto have hereunto
set their hands and seals or have caused this Agreement to be
executed by their duly authorized officers or agents, all as of
the day a :
year Eirst above written.
_ (CORPORATE SEAL)
Date executed by the SELLER:.
o-5 38
PURCHASER:
is to ‘the *
Date executed the
PURCHASE apna’ BB
BROKER:
EMERSON REALTY GROUP, IRC.
is to the on we ~ ~ P-
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APP 8 - 215-,
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APP 8 - 216EXHIBIT A
Lots 4-8, 18-94, 101-122 of Butler Bay Unit Three,
according to the Plat thereof, recorded in Plat Book 18
at Pages 4 through 9 of the Public Records of Orange
county, Florida.
APP 8 - 217EXHIBIT "BY
lor Lor CLASS PRICE or CLASS _ PRICE
2 43 B-GC = §72,500 @5 A-LF $230,900
2 44 BGC 72,500 86 A-LF $130,900
3 45 BGC 72,500 87 A-LF $130,900
4 46 BGC $72,800 8B A-IF $130,900
5 47 A-GC 2774900 89 B-LF $125,900
6 48 AvGC 27; 90 C-LF $119,900
7 49 A-GC $7 91 C-LF $119,900
8 so a-GC 776 92 A-LF $130,900
9 51 «=A-GC $77,900 93 A-LF $130,900
0 52 A-GC $77,900 94 A-LP $130,900
a 53 A-GC $77,900 95
12 54 = AeGC 7 e900 96
13 55 A-GC . $77,900 97
14 56 B~GC 725500
as 57 B-GC §72,500 99
16 58 BGC = $72, 500 100
37 59 BGC $72,500 102
18 60). B-cc $72,500 102
( 19 61 B-GC §72,500 203
20 62 BGC 72,500 104
2 63 B-GC 72,500 105
22 64 B-EC 72,500 106
23 65 D-INT §59,900 207
24 66 B-GC 72,500 208
25 67 A-GC 77 ,900 109
26 $B B-Gc g7e 220
27 9 DINE 859,900 221
28 70 D-INT $59,900 112
29 71° D-INT $59,900 123
30 72° «DeINT «$59,900 114
az 73° CeLF 118,900 225
32 74 CeLF §115,900 216
33 75 C-LF §119,900 217
ua 76 A-LF 6130,900 128
35 77 ALF 130,900 129
36 78 ALE §130,900 220
37 79 AeLF $230,900 222
3B 80 A-LF §130,900 222
39 81 ALF §130,900
40 82 A-LF $130,900
4 83 A-LF $130,900
42 B& A-LP $130,900
La pr feckN Ts $64,926 = oo
fac= ste a € 119,400 |
uk
BAL= #7) O06 A-LE > 6/3400 Gun”
APP 8 - 218EXHIBIT C
(a) Taxes for 1988 and subsequent years.
(b) Declaration of Covenants, Conditions and Restrictions
xecorded in Official Records Book 3182 at Page 2532,
assigned by 3278 at Page 2302, supplemented by 3325 at Page
2260, ahd as amendéd in Official Records Book 3360 at Page
1772, and Official Records Book 3454 at Page 1086, which
covenants, Gonditions and Restrictions if violated that fact
doez not appear of xecoxd, and further violation thereof
will not result in a forfeiture or reversion of title.
(ce) Deolaration of Covenants, - Conditions and Restrictions
recorded in Official Records Book 3474 at Page 798, and as
anended in Official Racords Book 3664 at Page 1467, which
Covenants, Conditions and Restrictions it violated that fact
does not appear of reoord, and further Violation theraof
will not result in a forfeiture or reversion of title.
(8) Declaration of Covenants, Conditions and Restrictions
recorded in Official Records Book 3808 at Page 1475, which
covenants, Conditions and Restrictions ir - ‘violated that fact
. Goes not appear of record, and further violation thereof
4 will not result in as forfeiture or reversion of title, as
{e) Easement to Florida Public Service Company as set forth in
Deed Bock 572 at Page 523, filed on July 17, 1941.
(£)° American Telephone & Telegraph Company as set
Forth th i Cerloiat Records Book 1598 at tahe 687, filed on
December 29, 1966. ’
(g@) Developers Agreement as set forth in Official Records Book
3510 at Page 1986, filed September 15, 1982.
(hb) Dévelopers Agreement as set forth in Official Records Book
3470 at. rege 655, filed February 6, 1984.
(1) Developers Agreement as set forth in Official Records Book
3757 at Page 1536, filed March 6, 1986.
@) Developers: Agresnent as set forth in Official Records Book
3808 at Page 1466, filed duly 26, 1986.
(x) Use Agreement as set forth in Official Records Book 3572 at
Page 20, ‘filed November 1, 1984,
(1) Use Agreement as cet forth in Official Recordéaé Book 3755 at
Page 1063, filed March 3, 1986.
Cn
DEK
APP 8 - 219é 6
Lot 84, 11 foot drainage easement on South side.
Lot 85, 11 foot drainage easenent on North side.
Lot 106, 11 foot drainige easement on North side
and 28 foot on West side.
Lot 107, 11 foot drainage easement on South side
and 29 foot on West.
. let 118, 13 foot drainage easement on South side.
Lot 119, 13 foot drainage ensament on North side.
All Lots 10 foot utility easement on front and rear 5 foot
utility easement on sides. —
(t) Other matters as shown on said Plat Book 18, Pages 4, 5, 6,
7, 8 and 9.
(a) Other matters as shown on unrecorded plat, by Dyer, Riddle,
uille & Brecourt, Ino., dated February 22, 1988, as Project
1D. 00. :
APP 8 - 220PUBLISHED OPEN SPACE STUDIES
APP 8 - 221THE EFFECT OF OPEN SPACE ON RESIDENTIAL
PROPERTY VALUES IN WAKE COUNTY, NC
KATHERINE KENYON HENDERSON
A Masters Project submitted tn the faculty
of the University of North Carolina at Chapel Hill
io partial fulfillment of the requirements
for the degree of Master of Regional Planaing
in the Department of City and Regional Planning,
Chapel Hil!
200¢
Approved by:
ADVISOR
APP 8 - 222TABLE OF CONTENTS
Chapter 1: Introduction.
1.1 Study Motivation...
1.2. Research Timeline...
13 Summary of Findings
1.4 Report Structure.......
Chapter 2: Literature Review.
2.1 Binary Variables.
2.2 Continuous Distance
2.3 Landscape Patten Variabies..........
2.4 Summary end Conclusions
Chapter 3: Methods—Hedonic Modcl
3.1. Variables.
3.1.1 Control Variables.
3.1.2 Open Space Variables.
32
3.2.1
3.2.2
3.2.3
3.2.4
3.2.5 Descriptive Statistics ...ecessssssssses
Chapter 4; Results......
4.1 Ordinary Least Squarcs
4.2 Identification Problem.
Chapter 5: Instrumental Variables ..
5.1 Potential Endogencily Issuc....
5.2 Insirumental Variables Approach.
5.3. Instrumental Variables Results 33
Chapter 6; Public Finance Implicatio 35
6.1 Tax Value Calculations ........... 35
6.2 Local Government Financing of Open Space Protection
62,1 Rationale for Local Government Financing of Open
6.2.2 Choice of Local Government Financing Mechanism
6.2.3 Conclusion: Pay-as-you-go vs. Pay-as-you-usc.
Chapter 7: Conclusions and Policy Recommendations.
Acknowledgements .........
References
APP 8 - 223LIST OF TABLES
Table 1: Summary of Hedanic Studies (from McConnell and Walls, 2005)
Table 2: Control Variables by Catego:
Table 3: Open Space Variables .......
Table 4; Summary of Datascts and Sources
Table 5: Descriptive Statistics
Table 6: Ordinary Least Square:
Table 7: Instrumental Variables Regreasion Results.
Table 8: Interpretation of Instrumental Variables Results.
Table 9: Summary of Conservation Finance Referenda, Southeast States, 2004
Table 10: Assessment of Financing Strategics for Open Space Protection by Local Governments
in North Carolina. AB
Table 11: Regression Results,
t Speci
LIST OF FIGURES
Figure 1: Population Growth 1950-2000......
Figure 2: State of North Carolina County Index Maj
Figure 3: Wake County Map......... povnngensen
Figure 4: Final Set of Houses Used in Study.
Figure 5: Distribution of Wake County Open Space by Type.
APP 8 - 224Katherine K. Henderson
CHAPTER 1: INTRODUCTION
1.1 __Study Motivation
Rigare 1: Population Growth
il acros: 1980-2000 (Courtesy of Joan
Like many places 8 the country, Hades Oona Ibo
‘Wake County, North Carolina is rapidly
losing open space to urbanization. This was
3333
the fastest-growing county in North Carolina yp,
aud the 17th fastest-growing in the nation ad ‘Triangle Region arth Carolina = Unlieet Sintes
during the 1990s (WC, 2000). This county is located in the Raleigh-Durham Metropolitan Area,
which is often referred to as the Research Triangle. Figure 1 shows that the population growth in
the Triangle over the past 15 years has continucd to outpace the rest of the state and the rest of the
country. The U.S. Census projects that North Caroline will become the 7th most populous state
‘by 2030, with over 12.2 million residents.
Past population growth has translated into stecp land conversion rales throughout the
Triangle. Between 1950 and 2000, the number of urbanized acres in the Triangle regian increased
1,670%, while the population grew by 480% (TICOG, 2006). This indicates a land-consumptive,
low-density pattern of growth, As of 2003, over 41% of Wake County had been develaped, while
only 9% of the total land mass had been protected as open space (WC, 2003). According ta the
Wake County Department of Parks, Recreation & Open Space, “Given the current rate of growth
and development, if the County docs no! begin to cmphasize land conservation policies and
programs, an estimated 78 percent of the county land arca will be developed by the year 2020"
(WC, 2003). This estimate was based on fact that in 2003, Wake County was developing land at
the rate af 27 acres per day (WC, 2003).
Open space provides numerous benefits lo Wake County which will be lost or
compromised if current development patterns continue unaltered. These benefits include water
purification and protection of drinking water supplies, provision of wildlife habitat, and human
APP 8 - 225Katherine K. Henderson
health and recreation benefits. But the significanc of Wake County's open apace problem is
more than the Joss of these benefits; it is also the nancial, environmental, and aesthetic costs
associated with the sprawling development rapidly 1 lacing these open spaces.
Wake County’s shrinking stock of open si :e can be altsibuted to a number of inter-
related factors, including the combination of pid population growth and low-density
development pancm described above. Also at issue (he fact that many of the benefits provided
by open spaces, such as wildlife habitat, scenic vis s, and water purification, are public goods
which do nat provide a return to the landowner. ‘hese types of public good benefits are by
definition non-excludable (impossible or very cos y to exclude anyone from use) and non-
consumptive (one person's enjoyment of the good +28 nol diminish ils availability for others)
{Fausold and Liliholm, 1999). Not afl open space attributes are public goods. For example,
private landowners can control access to (and charze for) enjoyment of private trails on their
property. However, these landowners cannot effectively stop people from enjoying the view over
their property as they pass by, for cxample, or sequester all water purified by the site for private
gain. Without the ability to profit from the public good aspects af open space, landowners will
value if at leas than its “true” econoinic value. As # resull, the privatc sccior will supply an
amount of open space that is less than lhe socially-optimal amount.
The underprodnction of open space by the private sector is the main reason for public
open space programs. Presumably, government would like to retain open space land when the
total benefits of doing so exceed the costs, Estimates of preferences and dollar values associated
with public good benefits are thus essential to making importan! policy and planning decisions
about zoning, restrictions an land use, and government provision of public parks (McConnell and
‘Walls. 2005). Estimates of the relutionship between private property values and proximity to
privatc open space could also belp to increase dic quantity of open space provided by developers.
Developers might choose to incorporate a Jarge community open space (as in a conservation
APP 8 - 226Katherine K. Henderson
subdivision) if they determine that their customers would pay significantly more for a home with
access to that open space, even considering tradeoffs in lot size.
The two major approaches for estimating the value of open space fram the econamics
literature are revealed preference methods and stated preference methods. In ihe first category arc
hedonic property value studies (such as this Masters Project). Hedonic price studies infer open
space value by estimating ihe sales price of residential property as a function of mimerous
attributes, including measures of proximity to open space. Stated preference methods include
contingent valuation. These studies use carcfully-designed surveys to elicit respondents’
willingness io pay for various open space amenities. Both the revealed and stated preference
studies gencrally show that there is value fo preserving most types of open space, but the values
tend to vary widely with the size of the area, the proximity of the open space to residences, the
type of open space, and the method of analysis (McConnell and Walls, 2005).
This Masters Project emplays hedonic price analysis, a revealed preference method, to
estimate a component of the economic value of open space in Wake County, NC. Specifically, 1
seck to quantify the portion of economic value that is reflected in increased sale prices of single-
family residential properties. If significant, these results can be used to calculate the incremental
property tax revenue associated with open spaces, demonstrating thal open spaces actnally do
provide a modest return to local government in the form of increased property taxes. As
mentioned above, this research could also be used to encourage additional private provision of
‘open space, by showing & positive relationship between proximity to private open spaces and
house sale price,
12__Research Timeline
The concept for this research took shape in January, 2005, in consultation with Dr. Yan
Song of the Department of City & Regional Planning at UNC and David Carter of the Wake
APP 8 - 227Katherine K. Henderson
County Department of Parks, Recreation, and Open Space. § approached Mr. Carter about a
sumuner job, proposing thal we work together to find a research topic that would be af interest ta
him and could form the basis for my Masters Project. With the help of my research advisor, Dr.
Yan Song, | prepared an internship proposal describing this hedonic study and presenting a rough
timeline. This proposal met with David Carter's approval.
In late February, 2005, | applied for the Moore Fellowship, a research grant from NC
Beautiful. This non-profit promotes environmental education and stewardship across the state
through a variety of programs, including research support to graduate students. After a
campetitive applicalion process, | was named UNC-Chape) Hill’s Moore Fellow for 2005-2006.
This grant has helped to facilitate my research in a varicty of ways, mast notably the provision of
a computer capable of supporting Arcinfo and other memory-intensive software applications.
My rescarch began in camest in May, 2005 when I began working full-time at Wake
County. My first task was an in-depth litcratre review of previaus studies on the relationship
between open space and residential property values. This literature review helped to identify and
refine the list of variables to be included in this analysis, Ovor the summer, | collected the
necessary data and used Microsoft Access and Geographic Information Systems (GIS) software
to prepare a gcodatabase thal includes values for all variables for cach of the single-family homes
in my data sct. Toward the end of the summer T began canducting Ordinary Least Squares (OLS)
regressions on this dataset using a statistical soflware package (SPSS).
During the fall of 2005, in collaboration with Dr. Song, | used the instrumental variables
technique to remove endogeneity bias in the variable for the distance from each house to the
nearest public open space. Also during this period, i added a new variable 10 account far the
diluting effect of large backyards on the need for nearby public open spacc. My work with Dr.
Song in the fall of 2005 confirmed and clarified ends suggested by my initial OLS regressions.
In January, 2006, I earned a 2006 UNC-CH Graduate School’s Graduate Education
Advancement Board (GEAB) Recagnitioa Award for this research. The Recognition Award,
APP 8 - 228Katherine K. fenderson
sponsored by The Graduate School's external advancement buard of private citizens, recognizes
outstanding graduate student research determined to be of particular benefit to North Carolina.
1.3___Summary of Findings
My Masters Project demonstrates that homes in Wake County have higher properly
values if they are located closer to open spaces. For example, | estimate that an average home in
Raleigh would be worth $4,221 more if it were within 1500 feet of a public open space than it
would if it were located farther than 1500 feet from a public open space, This difference in
property valuc would generate an additional $42 annually in county and city property taxes per
house. My results also indicate that larger open spaces have a greater impact on properly value,
and that public open spaces are a greater amenity in dense areas where homes have small yards.
These results will help conservationists in Wake County and across the state to make convincing.
cconamic arguments for open space preservation. My research will also help convince developers
of the potential profitability of incorporating significant open spaces into their residential
developments.
14 __ Report Structure
Chapter 2 of this Masters Project presents an in-depth literature review of hedonic studies
‘on open space. Chapter 3 devails my methods, explaining the theoretical mode} underpinning this
work and introducing the study area, date sources, and variables used. Chapter 4 presents the
results of my initial Ordinary Least Squares regressions and introduces the identification problem
(endogeneity), which I discuss in more detail in Chapter 5, Chapter 6 treats the public finance
implications of this research, considering in detail the open space financing mechanisms available
ta focal govermments in North Carolina. Chapter ? concludes this Masters Project with a summary
of findings, policy recommendations, and caveats associated with the hedonic method in general
and this rescarch in particular.
APP 8 - 229Katherine K. Henderson
CHAPTER 2: LITERATURE REVIEW
The hedonic price method has been used extensively by researchers to estimate the valuc
of open spaces. This section summarizes the results of 27 studies chosen from over 40 hedonic
price analyses revicwed. These papers represent a wide range of geographies end densities, and
the authors attempt to measure amenities from a range of open space types using a variety of
different variable specifications. For the purposes of this literature review, sludies are grouped
into categories accanding to the author's choice of open space vatiable(s), These calegories arc:
binary variables, continuous distance variables, and landscape pattern variables.
This literature review does not incorporate hedonic studies focusing exclusively on water
features such as lakes (¢.g. Boyle and Taylor, 2001), wetlands (Mahan et al, 2000), and streams
(Mooney and Eisgruber, 2001 and Sueiner and Loamis, 1995). Similarly, 1 excluded hedonic
studies of other specific environmental attributes such as waler quality (Leggett and Bockstacl,
2000) and proximity to hazardous waste landfills (Michacls and Smith, 1990).
1 if Vari
Seven of the studies reviewed use binary variables exclusively to examine the amenity
effects of open spaces. Some of these studies measure only dircet adjacency, while others use
binary variables (o test the effect of certain distance ranges or “zones.” Results vary among these.
studies, but appear to depend largely an the type of apen space under consideration.
One of the easliest hedonic studies was completed by Weicher and Zerbst (1973), who
examine scven parks in Columbus, OH using binary adjacency variables. These authors find that
adjacency to neighborhood parks can have either a positive or negative effect on home value
depending on whether the home faces or backs onto the park. For properties facing open spaccs,
Weicher and Zerbst observe positive externalities of 7-23% of property values (p. 105). The
6
APP 8 - 230Katherine K. Henderson
authors note that these benefits represent a substantial fraction of the opportunity cost of the park.
A negative extemality exists, however, where houses back anto a park or are located acroas from
heavily-used facilities. This finding is echoed by Shultz and King (2001) (summarized in
“continuous distance” section) and Fspey and Owusu-Edusci (2001).
Espey and Owusu-Edusei (2001) study the effect of proximity to parks in Greenville, SC.
The authors divide the city's parks into four groups according to size, attractiveness, and park
amenities. They use dummy variables to indicate whether a house is within a certain distance
range of each park type (¢.g. } = within 300 fect of a Type | park, 0 = farther than 300 feet from a
Type | park). In general, the authors find that parks have a positive inypact on property values in
Greenville, though they find disamenity effects associated with close proximily to "snvall basic
neighborhood parks" and “medium basic” parks (p. 490-491).
Earnhart (2001) uses a series of dummy variables to determine the effect of adjacency to
various water and land open space features in Fairfax, CT. The author's results show positive
effects from water adjacency, but no significant effect from the land features relative to a baseline
of "backyard". These findings suggest the importance of controlling for a home's own private
open space (backyard) in hedonic studies on the potential amenily valuc of other nearby open
spaces. As discussed in subscquent chapters, Dr. Song and | corroborate Bamhart’s (2001)
conclusion, finding that the size ofa home's backyard is significantly related to the amenity value
associated with public open space proximity.
Anderson (2000) explores ihe relationship between adjacency 1o open space and the sale
prices of homes in Hennepin County, MN (Minneapolis and suburbs). In this study, “open space”
includes parks, undeveloped areas, and golf courses. Anderson concludes that adjacency to open.
space increases home sulc price by approximately $40,000, or 20% of the mean-valued home.
Galf courses are generally found to be a statistically significant amenity in hedonic price studies,
which may contribute to Anderson’s very strong results. Quang Do and Grudinski (1995) confirm
APP 8 - 231Katherine K, Henderson.
the amenity value of golf courses, finding that homebuyers in a suburb of San Diego pay a
premium of approximately 7.6% for properties directly abutting a golf course (p. 268).
Boliwer and Neinsil (2000) use three different models to cxaminc the relationship
‘between open space and housing sale prices in Portland, OR. The first model uses a dummy
variable to cxamine the effect of any type of open space within 1500 feet of a home. The second
distinguishes between four open-space types: public, private, cemetery, and golf course. The third
model focuses on distance effects using six dummy variables representing distance ranges
(“zones”) from the nearest open space of any type, The authors find that size and distance from
public parks and golf courses has a significant effect on housing price. Their third model shows
that the estimated amenity impact decreases with distance; within 100 feet of an open space,
house sale price was expected lo increase by $3,523 (1990 dollars), whereas houses in the 130)-
1500 fi distance zone were expected to gee a price impact of $1,004 (p. 192).
Also in 2000, Netusil published n hedonic price study on Portland, OR which focuses on
the effects of proximity to publicly-owned open spaces and private open spaces grealer than ten
acres. The author restricts the neighborhood under consideration to within 1500 feel of eacl
home. Netusil also includes dummy interaction variables representing the house’s neighborhood
within Portland. The author concludes that the open space amenity effect varies with the valuc of
"homes in the neighborhood, and that open space proximity only increases sale price in high
median value neighborhoods. Assuming a properly tax rate of 1.5 percent, Netusil concludes that
“a home located within 1500 fect of open space in a high value neighborhood will gencrate
approximately $150 in additional property tax revenues per year" (Netusil, 2000; p. 2).
Netusi! and Lutzenhiscr (2001) completed another hedonic study on open spaces in
Portland, OR which includes the following open space types: urban park, natural area park,
specialty park/facility (types defined by usc and percentage native vegetation), golf and cemetery.
‘They find significantly positive effects on sale price from being within 1500 feet of all open space
types, except the cemetery variable, which is not significant. Newsil and Lutzenhiser calculate
APP 8 - 232Katherine K, Henderson
estimated dollar effects by distance range and open space type. Ti .¢ effecis range from $1,926-
$342 for urban parks, $1 1,210-59,980 for natural area parks, $13,9 84.336 for golf courses, and
$10,283-$3,839 for specialty parks/facilities (p. 297).
2.2___Continuous Distance Variables
This section covers eight hedonic studies that usc con: iwously varying sirsight-line.
distance measures to evaluate the effect of open space proximity - « housing value. Though it is
difficult to summarize results across these studies, the following Un nes cmerge:
1) Results for continuous distance variables, like binary vat ibles, often vary according to
the type of open space considered;
2) Different housing submarkets (and associated amenity effects) may exist in close
proximity; and
3) Different studies within the same geographic area may prduce conirasting results,
Schultz and King (2001) and Anderson and West (2003) demonstrate the first theme
Jisied above. They use 1990 U.S. Census data to construct a hedonic model for the Tuscon,
Arizona area. The authors measure the straight-line distance to the nearest open space of the
following types: large resource area, undeveloped park, inedium/regional park, small
neighborhood park, public golf course, private golf course, Class 1/1) wildlife habitat. They find
that proximity to lange protected areas, golf courses, and Class H wildlife habitats raises values,
but proximity to undeveloped/neighborhood parks and Class | habitats lowers values.
Similarly, Anderson and West (2003) find thal open space amenity effects differ by open
space type in the vicinity of Minneapolis and St. Paul, MN. They consider the following types of
open apace: parks (generally more developed), special parks (national, statc, and regional parks,
artoretums, nature centers, natural areas, and wildlife refuges), golf courses, and cemeteries.
Anderson and West add a layer of complexity, constructing separate models for city and suburban
homes in their study area. For cily homes, they find that distances from regular parks, special
APP 8 - 233Katherine K. Henderson
parks, lakes and rivers has a negative impact on sale price {i.c. these features function as
amenities). In the suburbs, proximity to golf courses, lakes and rivers is an amenity. Their
size/distance interactive term is negative and significant in cities, suggesting that effect of
proximity is stronger for larger parks. The difference in Anderson and West's (2003) results for
city and suburban arcas suggest thal these constitute different housing submarkets,
Studies by Correll et al (1978) and Cheshire and Sheppard (1995) provide further
evidence that open space amenity effects can differ within the same geographic area. Correll et al
(1978) analyze the effects of a greenbell in Boulder, CO on housing prices in three nearby
neighborhoods, The authors find a “quasi-public good benefit...associated with the increased
properly values adjacent to greenbelts" which “could provide additional tax revenue to support
such purposes” (p. 208). Specifically, Corre!) et al report a statistically significant decrease of
$4.20 in the price of residential property for every fool farther away from the greenbelt (Correll at
al, p. 211). Their results are not consistent, however, when each neighborhood is examined
separately. The authors thearize that this is due to the timing and planning of greenbelt purchases
in relationship to residential construction. Ridell (2001) supports the idea of a lag in amenity
value, suggesting that “Failure to take account of systemic markel changes may be one possible
explanation for the mixed findings of (Correll ct al 1978)... Price effects may not have lad ume
to fully realize their impact...resulting in inconclusive results” (p. 511).
Similarly, Cheshire and Sheppard (1995) report different results for the two British towns
in their study. They find that nearness to public (open access”) land is positively correlated with
house price in both towns, though private open spaces (“closed land,” such as intensively
farmland and woodland) is highly valued only in one town and had a negligibly positive effect in
the other, The authors hypothesize thai the difference in observed effects for private open spaces
has to do with the differing amounts and types of open space present in cach community (p. 258).
Researchers conducting hedonic studies in the same region may reach different
conclusions ebaut the amenity valuc of open space in their study area. For example, Li and
APP 8 - 234Katherine K, Henderson
Brown (1980) find no statistically significant relationship between proximity to
conservation/recreation areas and house price in their sample of 781 homes ftom 15 suburbs of
Boston, MA. In contrast, a recent (unpublished) hedonic study of 2!0 homes in Lynnfield, MA,
located 15 miles north of Boston, finds a significant negative correlation with distance from
permanently protected conservation and historic areas (Donnelly, 2005).
A similar contrast is found between Smith et al (2002) and other studics on open space in
Wake County, NC. Smith et al employ both continuously varying and binary variables to
investigate the differential impact of “fixcd" vs. “adjustable” open space in an area af north
Raleigh, NC. They incorporate adjacency dummy variables and straight-line distance measures
for cach of the following open space types: golf courses, public lands, vecant lots, agriculiural
land, and forestland. The authors find that golf courses and vacant land function as amenities in
this submarket. However, they find that public open space functions as a disamenity in their sardy
area, which consists of a three-mile wide sirip afong 29 miles of the new 1-540 loop. Their public
open space category includes open-access parks, greenways, and private eased fand.
McConnell and Walls (2005) suggest that perhaps Smith ct al (2002) should have split
the public category into scveral sub-categorics, noting the mixed results of studies on various
types of public parks (as described above). However, Smith et al’s (2002) findings contrast other
hedonic work on open space in Wake County in which the apen space variables were sirnilarly
defined or even more aggregatcd. Palmquist and Fulcher (2003), Walsh (2003), and this Masters
Project afl repori a positive externality associated with parks in Wake County. Each of these
studies considers the emire county, as opposed to an area of North Raloigh. Palmquist and
Fulcher (2003) include two park proximity variables in their hedonic study of lake acccss:
distance ta the nearest park (<70 acres) and distance to nearest large park (70 acres). They find
that greater distance to parks reduces the sale price of homes in Wake Caunty.
Results from a non-hedonic price study by Walsh (2003) also confirm the positive
findings of Palmguist and Fulcher (2003) and this Masters Project. Walsh (2003) uses a structural
APP 8 - 235Katherine K. Henderson,
equilibrium model of an urhan land market, calibrated to data fram Wake County. Based on this
tnodel, the author calculates that the average household, currently living one-half mile from open
space, would be willing to pay a onc-time amount of $4,104 (in 1992 dollars) to reduce its
distance from open space by one-quarter mile.
23___Landscape Pattern Variables
This section summarizes the results of ten hedonic studies that use landscape pattem
variables to examine the impact of apen space on property value. These variahlcs measure the
percentage of a particular land use surrounding each house. Each study defines the relevant
neighborhood differently, though several measure percentages based on a '4-tnile neighborhood
radius, Several studies sununarized toward the end of this section also employ the instrumental
variables technique tv correct for endogencity.
Bockstael (1996) considers the effect on home sale price of several neighborhood
percentage veriables including the percentages of surrounding forest, agricultural cropland,
agricultural pasture. land, and preserved open spacc. The author defines “neighborhood” to
include the 250 acres surrounding cach house. Bookstacl finds that a large pronortion of
surrounding open space is a significant amenity in this seven counly region of Maryland.
Goughegan, Wainger asd Bockstacl (1997) examine the reiationship between sale price
of homes in the Patuxent Watershed of Maryland and the percentage of open space in forestry and
agricultural use in the vicinity of each home. The authors use two neighborhood sizes: within 0,1
km and within | km. Geoghegan ct al (1997) find that the percentage of forest and farmland
within a 0.! km radius has a significantly positive effect on home sale price, whereas the
percentage of forest and farmland within | km is a significant disamenity.
Acharya and Bennett (200!) study the effect of numerous landscap: variables on the
effect of sale prices in New Haven County, CT. Their open space variables consist of the
percentage of the nearby landscape in open space within 4 mile (‘visual zone") and | mile
APP 8 - 236Katherine K. Henderson
(“neighborhood”) radii. The suthors find the percentage of open space to be a significantly
positive neighborhood feature. The magnicude of the open space coefficient is similar for both the
1/4 and | mile radii (p. 233).
A 2002 article by Gcoghegan uses similar landscape (percentage-bazed) variables,
choosing a [600 meter neighbochood radius to examine the difference in amenity effect between
“permanent” and “developable” open spaces in Howard County, MD. The author defines
developable Jand to include agricultural cropland, pasture, and forest land. Permanent land
includes parks and publicly-eased land, including eased farms. Geoghegan estimates positive
regression coefficients for both permanent and developable open space. The permanent
coefficient is over three times the developable coefficient, but the developable resulf is not
Statistically significant.
Burton and Hicks (2003) examine the effect of park presence and various park attributes
on house sale price in Charleston and Huntington, WV, using census tracts as the neighborhood.
They find that the addition of a park to any given census track adds $2,535 dollars to the median
vaiue of homes within that wack. Burlon and Hicks also find that the addition of a jogging or
fitness trail contributes 511,059 to the median home valuc (p. 7). Based on their findings, the
authors suggest using tax-increment financing for recreational projects.
Netusil (DRAFT 2005) continues exploring the impacts of open space proximity on the
housing market in Portland, OR during the ycars 1999-2001, using variables based on the
percentage of cach open space type within % mile. The author employs the following ten
categories of open space: private natural area, public natural area, private specialty park, public
Specialty park, trail, urban park, private golf course, public golf course, private cemetery, and
public cemetery, Netusil defines “natural areas” as parks where 50% or more of the land is in
native or natural vegetation (Netusil, 2005; p. 11). Netusi finds that proximity to public golf
courses, public specialty parks, private specially parks, and private natural areas is significantly
APP 8 - 237Katherine K. Henderson
correlated with increased property valves, whereas proximity to private cemeteries significantly
decreases property values.
Ready and Abdalla (2003) conduct a hedonic price analysis for 8,090 single family
houses sold between 1998 and 2002 in Berks County, PA. The authors measnre land use within
400 meters and within 1600 meters of cach house using GIS. They consider the following open
space land uses: cased open space; government-owned; agricultural security areas; and grass,
pasture, and cropland. The authors use the instrumental variables technique to reduce possible
bias due wo endogeneity between land use and house prices. They chose the following
instruments: average slope; average elevation; average septic suitabilily index; average building
suitability index; average agricultural productivity index; and proportion of open space
surrounding the house in an agricultural security area. Ready and Abdalla calculate cach of these
variables for the area within 400 meters of the house and for the area between 400 meters and
1600 meters from the house.
Ready and Abdalla (2003) find that open space is the most desirable land use within 400
meters af a home. Privately-owned open space wilh easements has a larger amenity value then
land without easements. Between 400-1600 meters, commercial land is the most attractive,
follawed by large-lot residential, end then open space. Within this distance range, grass, crops
and pastnre are preferred ta forested open space, and eased open space is preferred to uncased
open space. Outside of 400 meters, government open spacc is a greater amenity than privately-
owned, uneased open spacc,
Irwin and Bockstacl (2001) study the effect of several neighborhood percentage variables
on the saic of nearly 56,000 homes in four Maryland counties from January 1995 to December
1999, They define three open space variables: 1) privately-owned, developable (crop, pasturc,
and forest land); 2) privately-owned, protected by easement/conservation arca; and 3) publicly-
owned, The authors focus particularly on problems of endogeneity and spatial correlation. They
use the instrumental variables (IV) technique to correct for biased cocflicients associated with
APP 8 - 238Katherine K. Henderson
their private open space variables. Invin and Bockstael employ the following instrumental
variables: parcel slope, soil drainage ability, and soil quality. They find that publicly-owned open
space has a significantly positive impact on housing price, as does the privaicly-owned protected
variable, when treated as exogenous. The privately-owned developable variable has a negative
effect in the OLS model, but a significantly positive cffect in the IV model.
Irwin (2002) conducted # hedonic price study on the same four-county region siudicd by
Invin and Bocksisel (2001). Irwin specifics all open space variabics as the percentage of the
surrounding neighborhood, defined by a 400m radius around the center point of cach residential
parcel in the study. The author incorporates percentage variables for the following private land
uses: cropland, pastureland, forestland, and casement land. She algo uses percentage variables for
publicly-owned military and non-military land. Irwin chooses four instrumental variables: a slope
dummy (f = slape greater than 15 percent, 0 = lesser slope), a drainage dummy (1 = poor
drainage, 0 = otherwise); a soil quality duramy (1 = current farm with prime agricultural soils, 0 =
otherwise); and straight-line distance to Washi
Preview
Filing # 71718440 E-Filed 05/04/2018 04:14:02 PM . @ @ (b}) PURCHASER: ‘The address set forth at the top of the first page hereof, 18. DEFAULT. {a) DEPAULT BY THE PURCHASER. if the PURCHASER fails to perform any covenants of this Agreement or comply with the terms of this Agreement within the time specified, or is either adjudicated bankrupt under. state or federal laws, or voluntarily declares bankruptcy or enters into an arrangement with creditors, stich events shall constitute default under this Agreement. In such event, all sums paid by the PURCHASER in accordance with Paragraph 4 or Paragraph 7, shall be kept by the SELLER as full liquidated damages in consideration for the execution of this Agreetient. ‘The parties hereto acknowledge that actual damages would be difficult, if not impossible, to determine. Thereafter, all parties shall be relieved of all obligations under this Agreement and the PURCHASER shall have no right to purchase any additional Lots. The foregoing shali be the - sole remédy of the SELLER under this Agreement. (b) DEFAI ¥ THE SELLER. ‘The SELLER shall be ~ in default hereunder upon the occurrence of any one or more of the following events: o (1) any of the SELLER'S warranties or representations set forth herein are untrue or inaccurate in any - material respect; (2) the SELLER shall fail to meet, comply . with or perform any material covenant, agreement or obligation on its part required, within the time limits and -in the manner reguired in this Agreement. In the event of a default by the SELLER hereunder, the PURCHASER may, at the PURCBASER'S option, do any of the following: (which shall be PURCHASER'S sole remedies): {A) terminate this Agreement by written notice delivered to the SELLER at or prior to each Closing and be entitied to the immediate return of any and ali sume paid by the PURCHASER in accordance with Paragraphs 3, 4 and Paragraph 7 which have not applied against the Purchase Price of a Lot at a previous Closing; . (B) enforce specific performance cE this Agreement against the SELLER; or. -. : (C) seek damages for SELLER'S breach in jaw or eguity, but such damages shall not exceed Five Thousand Dollars per Lot 4&& to which a BELLER default applies. “TH\> “LIMsTATIOS a LIABRATY SH. Dey APPLY IAA CASE FEUER Retises To Cuode OW A SPEAR LAT TO PUREHAGIA. Killen RIECRASKE, HAY FRRiRNOCT PReMartee SD SOLER BAY AtkiQVLEDGED A VALID CovTeAcT FOR CONoTEEcTION MID GALE OF A HOON on Ship SPEUFIC. LOT BeTiteey PORCHANEE Mp A wee BFK APP 8 - 211it be necessary for either party to © aK redresa by Court proceedings agdinst the or: wt hereunder, or to demand same, then, in that event, the prevailing party shall be entitied to recover ail costs of such proceedings, neluding reasonable attorneys' fees, from the nonprevailing party, including reasonable attorneys’ fees and costs incurred on appeal of any lower court decision and attorneys’ fees and costs inourred in any bankruptcy proceedings. . 19. BROKER AND BROKER'S COMMISSION. (a) The SPLLER shall pay to the BROKER a commission in the amounts and on the terms as agreed to between . the SELLER and the BROKER $n a separate agreement. ‘The PURCHASER @hall have no responsibility For payment of any portion of such - commission. No real estate commission shall be due or payable if the -transaction contemplated herein does not close for any ~ reason. {b) ‘The PURCHASER and the SELLER each verrant and represent to thé other that, with the exception of the BROKER, neither party has employed a real estate broker or agent in con- nection with the transaction contemplated hereby. The SELLER hereby covenants and agrees, to indemnify the PURCHASER. against any loss, liability, cost, claim, demand, damages, ackion, pause Pa <0£ action, and suit arising out of or in any manner relating to the alleged employment or use by the SELLER of any other real estate broker or agent in connection with thia transaction. The PURCHASER hereby covenants and agrees to indemnify the SELLER against any loss, liability, cost, glaim, demand, damages, action; cause of action and suit arising out of or in any manner relating to the alleged employment or use by the PURCHASER of any real estate broker or agent in connection with this transaction other than the BROKER. . . 20. REAL ESTATE COMMISSION-HOMES. (a) @he PURCHASER Kereby agrees that the BROKER ghall have an exclusive rigtit of sale for each Lot and the house constructed by the PURCHASER on each Lot. This exclusive Listing shall terminate as to a specific Lot upon (i) sale to a third party of that Lot and completed house built on that Lot by the PURCHASER; or (ii) twenty-four (24) months after completion of ‘construction of the hoase on that Lot, A reai estate commission baped on the total sales price, including the Ldt, compléted --house, landscaping, irrigation, fee or compensation to the builder in cases of "costs-plus contracts", etc., shall be due . €n@ payable to the BROKER at the time of closing of the sale of 2 the Lot by the PURCHASER. ‘The commission shall be six percent . “(68) Of the tctal sales price as defined above. se -13- APP 8 - 212{b) In the event the commission ds: not: pai the BROKER as set forth herein, the PURCHASER hereby ‘agrees that the BROKER shall have fthe right to immediately commence administrative or legal action against the PURCHASER to collect such amount, plus interest thereon at the highest rate allowed by law from the date the commission was due, together with reasonable attorney's fees and court costs, including attorney's fees and costs incurred on appeal of any lower court decision. {e) If the agreement between the SELLER and the BROKER is terminated prior to the sale of any Lot and completed house by the PURCHASER, the PURCHASER rees to enter into an exclusive right of sale agreement with any other broker designated by the SELLER, so long as such agreement is on the same terms and conditions as set forth above and so long as the BROKER ‘has released PURCHASER from any cléim BROKER may have or make against PURCHASER. (d) Should anyone move into a house built on any Lot the above described commission shall be due and payable immediately upon ogeapancy. The value of the house and the Lot for such purpdses shall be determined by an MAI Appraisal of the houge and the Lot. SELLER, PURCHASER and BROKER agree that. if BROKER is unable, after reasonable ‘effort, to sell any house completed on a Lot after a period of eighteen (18) months, then PURCHASER may lease said house, so long as the lease is terminable upon sale and no commission for the icy or lease shall be due to BROKER. The appraiser shall be designated by the SELLER but the cost shall be borne by the PURCHASER. In the event that the comission is not paid as set forth in this ragraph, the SELLER and the BROKER shal] have the right to mmediately commence legal action against the PURCHASER to collect such amount, plus interest thereon at the highest rate allowed by law from the date the commission was due, ether with reasonable attorney's fees and court costs, including attorney's fees and costs incurred on appeal of any lower court cision, (e) he BROKER hereby executes this Agreement to ‘acknowledge its agreement to the terma of this commission ‘@rrangement and agrees to use ita beet efforts as a real estate broker to market the completed house on each Lot in accordance with standards adopted in the community. (£) This Section 20 is enforceable between BROKER and PURCHASER. SELLER is not in any way responsible for any Commissions payable under this Section 20 or any other liability under this Section 20. -14- Crm” aed APP 8 - 213e 8 21, jINSPECTION OF THE PROPERTY, The PO) acknowledges and certifies fo € ER that- 2 inspection of the Property has heen conducted by the -PURCHAS: {er a representative of the PURCHASER) prior to the execution of this Agreement end the payment of any earnest money deposit, but such inspection shall not relieve SELLER from any obligations or conditions in this Agreement. 22. BINDING AGREEMENT. This Agreement, when duly executed by all the parties hereto, shall be binding upon the parties hereto, and their successors in interest. . 23, ASSIGNABILITY. This Agreement may not be assigned by the PURCHASER without the prior written consent of the SELLER. 24. TIME OF THE ESSENCE, Time is of the essence of this Agreement and the covenants and provisions hereof. 25. ENTIRE DETR This Agreement embodies and constitutes the entire understandings of the parties with respect to the transactions contemplated herein, and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged into this Agreement. Neither this Agreement nor any provisions hereof may be waived, modified, amerdad, discharged or terminated except by an instrument in writing signed by the party against whom the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument. 26. DATE OF AGREEMENT. ‘The date of this Agreement for all purposes shall be the date the last one of the SELLER and the PURCHASER executes this Agreement and such date shall be entered at the top of the first page hereof. 27. EXECUTION OF AGREEMENT BY THE SELLER. Por this Agreement to bé valid and binding against the SELLER it must be executed ‘by the President or a Vice President and the Secretary - or. Assistant Secretary of the SELLER with the corporate seal of the SELLER affixed. The PURCHASER acknowledges that if net so executed this Agreement cannot be enforceable against the SELLER. 28, AGREEMENT NOT TO BE RECORDED, This Agreement shall not be record tf the Public Records of Orange County, Florida. Should the PURCHASER, either directly or indirectly, cause or allow this Agreement to be record in the Public -15- Cm” APP 8 - 214R ores of Orange “ county. Florida, such adtion shall be considered, at the option of the SELLER, a default hereunder by the PORCHASER. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals or have caused this Agreement to be executed by their duly authorized officers or agents, all as of the day a : year Eirst above written. _ (CORPORATE SEAL) Date executed by the SELLER:. o-5 38 PURCHASER: is to ‘the * Date executed the PURCHASE apna’ BB BROKER: EMERSON REALTY GROUP, IRC. is to the on we ~ ~ P- pe u fe BROK ‘ CDRO365 ~16-+ vote ete as eeee eine sp cena epee ee nett Ae Me eee cee ne meee APP 8 - 215-, =f unres = wilolra|n|re) aw] Mie 7% ee He ay LAKE BOSNIA ary CREEGENT “ Nhe w ‘ a APP 8 - 216EXHIBIT A Lots 4-8, 18-94, 101-122 of Butler Bay Unit Three, according to the Plat thereof, recorded in Plat Book 18 at Pages 4 through 9 of the Public Records of Orange county, Florida. APP 8 - 217EXHIBIT "BY lor Lor CLASS PRICE or CLASS _ PRICE 2 43 B-GC = §72,500 @5 A-LF $230,900 2 44 BGC 72,500 86 A-LF $130,900 3 45 BGC 72,500 87 A-LF $130,900 4 46 BGC $72,800 8B A-IF $130,900 5 47 A-GC 2774900 89 B-LF $125,900 6 48 AvGC 27; 90 C-LF $119,900 7 49 A-GC $7 91 C-LF $119,900 8 so a-GC 776 92 A-LF $130,900 9 51 «=A-GC $77,900 93 A-LF $130,900 0 52 A-GC $77,900 94 A-LP $130,900 a 53 A-GC $77,900 95 12 54 = AeGC 7 e900 96 13 55 A-GC . $77,900 97 14 56 B~GC 725500 as 57 B-GC §72,500 99 16 58 BGC = $72, 500 100 37 59 BGC $72,500 102 18 60). B-cc $72,500 102 ( 19 61 B-GC §72,500 203 20 62 BGC 72,500 104 2 63 B-GC 72,500 105 22 64 B-EC 72,500 106 23 65 D-INT §59,900 207 24 66 B-GC 72,500 208 25 67 A-GC 77 ,900 109 26 $B B-Gc g7e 220 27 9 DINE 859,900 221 28 70 D-INT $59,900 112 29 71° D-INT $59,900 123 30 72° «DeINT «$59,900 114 az 73° CeLF 118,900 225 32 74 CeLF §115,900 216 33 75 C-LF §119,900 217 ua 76 A-LF 6130,900 128 35 77 ALF 130,900 129 36 78 ALE §130,900 220 37 79 AeLF $230,900 222 3B 80 A-LF §130,900 222 39 81 ALF §130,900 40 82 A-LF $130,900 4 83 A-LF $130,900 42 B& A-LP $130,900 La pr feckN Ts $64,926 = oo fac= ste a € 119,400 | uk BAL= #7) O06 A-LE > 6/3400 Gun” APP 8 - 218EXHIBIT C (a) Taxes for 1988 and subsequent years. (b) Declaration of Covenants, Conditions and Restrictions xecorded in Official Records Book 3182 at Page 2532, assigned by 3278 at Page 2302, supplemented by 3325 at Page 2260, ahd as amendéd in Official Records Book 3360 at Page 1772, and Official Records Book 3454 at Page 1086, which covenants, Gonditions and Restrictions if violated that fact doez not appear of xecoxd, and further violation thereof will not result in a forfeiture or reversion of title. (ce) Deolaration of Covenants, - Conditions and Restrictions recorded in Official Records Book 3474 at Page 798, and as anended in Official Racords Book 3664 at Page 1467, which Covenants, Conditions and Restrictions it violated that fact does not appear of reoord, and further Violation theraof will not result in a forfeiture or reversion of title. (8) Declaration of Covenants, Conditions and Restrictions recorded in Official Records Book 3808 at Page 1475, which covenants, Conditions and Restrictions ir - ‘violated that fact . Goes not appear of record, and further violation thereof 4 will not result in as forfeiture or reversion of title, as {e) Easement to Florida Public Service Company as set forth in Deed Bock 572 at Page 523, filed on July 17, 1941. (£)° American Telephone & Telegraph Company as set Forth th i Cerloiat Records Book 1598 at tahe 687, filed on December 29, 1966. ’ (g@) Developers Agreement as set forth in Official Records Book 3510 at Page 1986, filed September 15, 1982. (hb) Dévelopers Agreement as set forth in Official Records Book 3470 at. rege 655, filed February 6, 1984. (1) Developers Agreement as set forth in Official Records Book 3757 at Page 1536, filed March 6, 1986. @) Developers: Agresnent as set forth in Official Records Book 3808 at Page 1466, filed duly 26, 1986. (x) Use Agreement as set forth in Official Records Book 3572 at Page 20, ‘filed November 1, 1984, (1) Use Agreement as cet forth in Official Recordéaé Book 3755 at Page 1063, filed March 3, 1986. Cn DEK APP 8 - 219é 6 Lot 84, 11 foot drainage easement on South side. Lot 85, 11 foot drainage easenent on North side. Lot 106, 11 foot drainige easement on North side and 28 foot on West side. Lot 107, 11 foot drainage easement on South side and 29 foot on West. . let 118, 13 foot drainage easement on South side. Lot 119, 13 foot drainage ensament on North side. All Lots 10 foot utility easement on front and rear 5 foot utility easement on sides. — (t) Other matters as shown on said Plat Book 18, Pages 4, 5, 6, 7, 8 and 9. (a) Other matters as shown on unrecorded plat, by Dyer, Riddle, uille & Brecourt, Ino., dated February 22, 1988, as Project 1D. 00. : APP 8 - 220PUBLISHED OPEN SPACE STUDIES APP 8 - 221THE EFFECT OF OPEN SPACE ON RESIDENTIAL PROPERTY VALUES IN WAKE COUNTY, NC KATHERINE KENYON HENDERSON A Masters Project submitted tn the faculty of the University of North Carolina at Chapel Hill io partial fulfillment of the requirements for the degree of Master of Regional Planaing in the Department of City and Regional Planning, Chapel Hil! 200¢ Approved by: ADVISOR APP 8 - 222TABLE OF CONTENTS Chapter 1: Introduction. 1.1 Study Motivation... 1.2. Research Timeline... 13 Summary of Findings 1.4 Report Structure....... Chapter 2: Literature Review. 2.1 Binary Variables. 2.2 Continuous Distance 2.3 Landscape Patten Variabies.......... 2.4 Summary end Conclusions Chapter 3: Methods—Hedonic Modcl 3.1. Variables. 3.1.1 Control Variables. 3.1.2 Open Space Variables. 32 3.2.1 3.2.2 3.2.3 3.2.4 3.2.5 Descriptive Statistics ...ecessssssssses Chapter 4; Results...... 4.1 Ordinary Least Squarcs 4.2 Identification Problem. Chapter 5: Instrumental Variables .. 5.1 Potential Endogencily Issuc.... 5.2 Insirumental Variables Approach. 5.3. Instrumental Variables Results 33 Chapter 6; Public Finance Implicatio 35 6.1 Tax Value Calculations ........... 35 6.2 Local Government Financing of Open Space Protection 62,1 Rationale for Local Government Financing of Open 6.2.2 Choice of Local Government Financing Mechanism 6.2.3 Conclusion: Pay-as-you-go vs. Pay-as-you-usc. Chapter 7: Conclusions and Policy Recommendations. Acknowledgements ......... References APP 8 - 223LIST OF TABLES Table 1: Summary of Hedanic Studies (from McConnell and Walls, 2005) Table 2: Control Variables by Catego: Table 3: Open Space Variables ....... Table 4; Summary of Datascts and Sources Table 5: Descriptive Statistics Table 6: Ordinary Least Square: Table 7: Instrumental Variables Regreasion Results. Table 8: Interpretation of Instrumental Variables Results. Table 9: Summary of Conservation Finance Referenda, Southeast States, 2004 Table 10: Assessment of Financing Strategics for Open Space Protection by Local Governments in North Carolina. AB Table 11: Regression Results, t Speci LIST OF FIGURES Figure 1: Population Growth 1950-2000...... Figure 2: State of North Carolina County Index Maj Figure 3: Wake County Map......... povnngensen Figure 4: Final Set of Houses Used in Study. Figure 5: Distribution of Wake County Open Space by Type. APP 8 - 224Katherine K. Henderson CHAPTER 1: INTRODUCTION 1.1 __Study Motivation Rigare 1: Population Growth il acros: 1980-2000 (Courtesy of Joan Like many places 8 the country, Hades Oona Ibo ‘Wake County, North Carolina is rapidly losing open space to urbanization. This was 3333 the fastest-growing county in North Carolina yp, aud the 17th fastest-growing in the nation ad ‘Triangle Region arth Carolina = Unlieet Sintes during the 1990s (WC, 2000). This county is located in the Raleigh-Durham Metropolitan Area, which is often referred to as the Research Triangle. Figure 1 shows that the population growth in the Triangle over the past 15 years has continucd to outpace the rest of the state and the rest of the country. The U.S. Census projects that North Caroline will become the 7th most populous state ‘by 2030, with over 12.2 million residents. Past population growth has translated into stecp land conversion rales throughout the Triangle. Between 1950 and 2000, the number of urbanized acres in the Triangle regian increased 1,670%, while the population grew by 480% (TICOG, 2006). This indicates a land-consumptive, low-density pattern of growth, As of 2003, over 41% of Wake County had been develaped, while only 9% of the total land mass had been protected as open space (WC, 2003). According ta the Wake County Department of Parks, Recreation & Open Space, “Given the current rate of growth and development, if the County docs no! begin to cmphasize land conservation policies and programs, an estimated 78 percent of the county land arca will be developed by the year 2020" (WC, 2003). This estimate was based on fact that in 2003, Wake County was developing land at the rate af 27 acres per day (WC, 2003). Open space provides numerous benefits lo Wake County which will be lost or compromised if current development patterns continue unaltered. These benefits include water purification and protection of drinking water supplies, provision of wildlife habitat, and human APP 8 - 225Katherine K. Henderson health and recreation benefits. But the significanc of Wake County's open apace problem is more than the Joss of these benefits; it is also the nancial, environmental, and aesthetic costs associated with the sprawling development rapidly 1 lacing these open spaces. Wake County’s shrinking stock of open si :e can be altsibuted to a number of inter- related factors, including the combination of pid population growth and low-density development pancm described above. Also at issue (he fact that many of the benefits provided by open spaces, such as wildlife habitat, scenic vis s, and water purification, are public goods which do nat provide a return to the landowner. ‘hese types of public good benefits are by definition non-excludable (impossible or very cos y to exclude anyone from use) and non- consumptive (one person's enjoyment of the good +28 nol diminish ils availability for others) {Fausold and Liliholm, 1999). Not afl open space attributes are public goods. For example, private landowners can control access to (and charze for) enjoyment of private trails on their property. However, these landowners cannot effectively stop people from enjoying the view over their property as they pass by, for cxample, or sequester all water purified by the site for private gain. Without the ability to profit from the public good aspects af open space, landowners will value if at leas than its “true” econoinic value. As # resull, the privatc sccior will supply an amount of open space that is less than lhe socially-optimal amount. The underprodnction of open space by the private sector is the main reason for public open space programs. Presumably, government would like to retain open space land when the total benefits of doing so exceed the costs, Estimates of preferences and dollar values associated with public good benefits are thus essential to making importan! policy and planning decisions about zoning, restrictions an land use, and government provision of public parks (McConnell and ‘Walls. 2005). Estimates of the relutionship between private property values and proximity to privatc open space could also belp to increase dic quantity of open space provided by developers. Developers might choose to incorporate a Jarge community open space (as in a conservation APP 8 - 226Katherine K. Henderson subdivision) if they determine that their customers would pay significantly more for a home with access to that open space, even considering tradeoffs in lot size. The two major approaches for estimating the value of open space fram the econamics literature are revealed preference methods and stated preference methods. In ihe first category arc hedonic property value studies (such as this Masters Project). Hedonic price studies infer open space value by estimating ihe sales price of residential property as a function of mimerous attributes, including measures of proximity to open space. Stated preference methods include contingent valuation. These studies use carcfully-designed surveys to elicit respondents’ willingness io pay for various open space amenities. Both the revealed and stated preference studies gencrally show that there is value fo preserving most types of open space, but the values tend to vary widely with the size of the area, the proximity of the open space to residences, the type of open space, and the method of analysis (McConnell and Walls, 2005). This Masters Project emplays hedonic price analysis, a revealed preference method, to estimate a component of the economic value of open space in Wake County, NC. Specifically, 1 seck to quantify the portion of economic value that is reflected in increased sale prices of single- family residential properties. If significant, these results can be used to calculate the incremental property tax revenue associated with open spaces, demonstrating thal open spaces actnally do provide a modest return to local government in the form of increased property taxes. As mentioned above, this research could also be used to encourage additional private provision of ‘open space, by showing & positive relationship between proximity to private open spaces and house sale price, 12__Research Timeline The concept for this research took shape in January, 2005, in consultation with Dr. Yan Song of the Department of City & Regional Planning at UNC and David Carter of the Wake APP 8 - 227Katherine K. Henderson County Department of Parks, Recreation, and Open Space. § approached Mr. Carter about a sumuner job, proposing thal we work together to find a research topic that would be af interest ta him and could form the basis for my Masters Project. With the help of my research advisor, Dr. Yan Song, | prepared an internship proposal describing this hedonic study and presenting a rough timeline. This proposal met with David Carter's approval. In late February, 2005, | applied for the Moore Fellowship, a research grant from NC Beautiful. This non-profit promotes environmental education and stewardship across the state through a variety of programs, including research support to graduate students. After a campetitive applicalion process, | was named UNC-Chape) Hill’s Moore Fellow for 2005-2006. This grant has helped to facilitate my research in a varicty of ways, mast notably the provision of a computer capable of supporting Arcinfo and other memory-intensive software applications. My rescarch began in camest in May, 2005 when I began working full-time at Wake County. My first task was an in-depth litcratre review of previaus studies on the relationship between open space and residential property values. This literature review helped to identify and refine the list of variables to be included in this analysis, Ovor the summer, | collected the necessary data and used Microsoft Access and Geographic Information Systems (GIS) software to prepare a gcodatabase thal includes values for all variables for cach of the single-family homes in my data sct. Toward the end of the summer T began canducting Ordinary Least Squares (OLS) regressions on this dataset using a statistical soflware package (SPSS). During the fall of 2005, in collaboration with Dr. Song, | used the instrumental variables technique to remove endogeneity bias in the variable for the distance from each house to the nearest public open space. Also during this period, i added a new variable 10 account far the diluting effect of large backyards on the need for nearby public open spacc. My work with Dr. Song in the fall of 2005 confirmed and clarified ends suggested by my initial OLS regressions. In January, 2006, I earned a 2006 UNC-CH Graduate School’s Graduate Education Advancement Board (GEAB) Recagnitioa Award for this research. The Recognition Award, APP 8 - 228Katherine K. fenderson sponsored by The Graduate School's external advancement buard of private citizens, recognizes outstanding graduate student research determined to be of particular benefit to North Carolina. 1.3___Summary of Findings My Masters Project demonstrates that homes in Wake County have higher properly values if they are located closer to open spaces. For example, | estimate that an average home in Raleigh would be worth $4,221 more if it were within 1500 feet of a public open space than it would if it were located farther than 1500 feet from a public open space, This difference in property valuc would generate an additional $42 annually in county and city property taxes per house. My results also indicate that larger open spaces have a greater impact on properly value, and that public open spaces are a greater amenity in dense areas where homes have small yards. These results will help conservationists in Wake County and across the state to make convincing. cconamic arguments for open space preservation. My research will also help convince developers of the potential profitability of incorporating significant open spaces into their residential developments. 14 __ Report Structure Chapter 2 of this Masters Project presents an in-depth literature review of hedonic studies ‘on open space. Chapter 3 devails my methods, explaining the theoretical mode} underpinning this work and introducing the study area, date sources, and variables used. Chapter 4 presents the results of my initial Ordinary Least Squares regressions and introduces the identification problem (endogeneity), which I discuss in more detail in Chapter 5, Chapter 6 treats the public finance implications of this research, considering in detail the open space financing mechanisms available ta focal govermments in North Carolina. Chapter ? concludes this Masters Project with a summary of findings, policy recommendations, and caveats associated with the hedonic method in general and this rescarch in particular. APP 8 - 229Katherine K. Henderson CHAPTER 2: LITERATURE REVIEW The hedonic price method has been used extensively by researchers to estimate the valuc of open spaces. This section summarizes the results of 27 studies chosen from over 40 hedonic price analyses revicwed. These papers represent a wide range of geographies end densities, and the authors attempt to measure amenities from a range of open space types using a variety of different variable specifications. For the purposes of this literature review, sludies are grouped into categories accanding to the author's choice of open space vatiable(s), These calegories arc: binary variables, continuous distance variables, and landscape pattern variables. This literature review does not incorporate hedonic studies focusing exclusively on water features such as lakes (¢.g. Boyle and Taylor, 2001), wetlands (Mahan et al, 2000), and streams (Mooney and Eisgruber, 2001 and Sueiner and Loamis, 1995). Similarly, 1 excluded hedonic studies of other specific environmental attributes such as waler quality (Leggett and Bockstacl, 2000) and proximity to hazardous waste landfills (Michacls and Smith, 1990). 1 if Vari Seven of the studies reviewed use binary variables exclusively to examine the amenity effects of open spaces. Some of these studies measure only dircet adjacency, while others use binary variables (o test the effect of certain distance ranges or “zones.” Results vary among these. studies, but appear to depend largely an the type of apen space under consideration. One of the easliest hedonic studies was completed by Weicher and Zerbst (1973), who examine scven parks in Columbus, OH using binary adjacency variables. These authors find that adjacency to neighborhood parks can have either a positive or negative effect on home value depending on whether the home faces or backs onto the park. For properties facing open spaccs, Weicher and Zerbst observe positive externalities of 7-23% of property values (p. 105). The 6 APP 8 - 230Katherine K. Henderson authors note that these benefits represent a substantial fraction of the opportunity cost of the park. A negative extemality exists, however, where houses back anto a park or are located acroas from heavily-used facilities. This finding is echoed by Shultz and King (2001) (summarized in “continuous distance” section) and Fspey and Owusu-Edusci (2001). Espey and Owusu-Edusei (2001) study the effect of proximity to parks in Greenville, SC. The authors divide the city's parks into four groups according to size, attractiveness, and park amenities. They use dummy variables to indicate whether a house is within a certain distance range of each park type (¢.g. } = within 300 fect of a Type | park, 0 = farther than 300 feet from a Type | park). In general, the authors find that parks have a positive inypact on property values in Greenville, though they find disamenity effects associated with close proximily to "snvall basic neighborhood parks" and “medium basic” parks (p. 490-491). Earnhart (2001) uses a series of dummy variables to determine the effect of adjacency to various water and land open space features in Fairfax, CT. The author's results show positive effects from water adjacency, but no significant effect from the land features relative to a baseline of "backyard". These findings suggest the importance of controlling for a home's own private open space (backyard) in hedonic studies on the potential amenily valuc of other nearby open spaces. As discussed in subscquent chapters, Dr. Song and | corroborate Bamhart’s (2001) conclusion, finding that the size ofa home's backyard is significantly related to the amenity value associated with public open space proximity. Anderson (2000) explores ihe relationship between adjacency 1o open space and the sale prices of homes in Hennepin County, MN (Minneapolis and suburbs). In this study, “open space” includes parks, undeveloped areas, and golf courses. Anderson concludes that adjacency to open. space increases home sulc price by approximately $40,000, or 20% of the mean-valued home. Galf courses are generally found to be a statistically significant amenity in hedonic price studies, which may contribute to Anderson’s very strong results. Quang Do and Grudinski (1995) confirm APP 8 - 231Katherine K, Henderson. the amenity value of golf courses, finding that homebuyers in a suburb of San Diego pay a premium of approximately 7.6% for properties directly abutting a golf course (p. 268). Boliwer and Neinsil (2000) use three different models to cxaminc the relationship ‘between open space and housing sale prices in Portland, OR. The first model uses a dummy variable to cxamine the effect of any type of open space within 1500 feet of a home. The second distinguishes between four open-space types: public, private, cemetery, and golf course. The third model focuses on distance effects using six dummy variables representing distance ranges (“zones”) from the nearest open space of any type, The authors find that size and distance from public parks and golf courses has a significant effect on housing price. Their third model shows that the estimated amenity impact decreases with distance; within 100 feet of an open space, house sale price was expected lo increase by $3,523 (1990 dollars), whereas houses in the 130)- 1500 fi distance zone were expected to gee a price impact of $1,004 (p. 192). Also in 2000, Netusil published n hedonic price study on Portland, OR which focuses on the effects of proximity to publicly-owned open spaces and private open spaces grealer than ten acres. The author restricts the neighborhood under consideration to within 1500 feel of eacl home. Netusil also includes dummy interaction variables representing the house’s neighborhood within Portland. The author concludes that the open space amenity effect varies with the valuc of "homes in the neighborhood, and that open space proximity only increases sale price in high median value neighborhoods. Assuming a properly tax rate of 1.5 percent, Netusil concludes that “a home located within 1500 fect of open space in a high value neighborhood will gencrate approximately $150 in additional property tax revenues per year" (Netusil, 2000; p. 2). Netusi! and Lutzenhiscr (2001) completed another hedonic study on open spaces in Portland, OR which includes the following open space types: urban park, natural area park, specialty park/facility (types defined by usc and percentage native vegetation), golf and cemetery. ‘They find significantly positive effects on sale price from being within 1500 feet of all open space types, except the cemetery variable, which is not significant. Newsil and Lutzenhiser calculate APP 8 - 232Katherine K, Henderson estimated dollar effects by distance range and open space type. Ti .¢ effecis range from $1,926- $342 for urban parks, $1 1,210-59,980 for natural area parks, $13,9 84.336 for golf courses, and $10,283-$3,839 for specialty parks/facilities (p. 297). 2.2___Continuous Distance Variables This section covers eight hedonic studies that usc con: iwously varying sirsight-line. distance measures to evaluate the effect of open space proximity - « housing value. Though it is difficult to summarize results across these studies, the following Un nes cmerge: 1) Results for continuous distance variables, like binary vat ibles, often vary according to the type of open space considered; 2) Different housing submarkets (and associated amenity effects) may exist in close proximity; and 3) Different studies within the same geographic area may prduce conirasting results, Schultz and King (2001) and Anderson and West (2003) demonstrate the first theme Jisied above. They use 1990 U.S. Census data to construct a hedonic model for the Tuscon, Arizona area. The authors measure the straight-line distance to the nearest open space of the following types: large resource area, undeveloped park, inedium/regional park, small neighborhood park, public golf course, private golf course, Class 1/1) wildlife habitat. They find that proximity to lange protected areas, golf courses, and Class H wildlife habitats raises values, but proximity to undeveloped/neighborhood parks and Class | habitats lowers values. Similarly, Anderson and West (2003) find thal open space amenity effects differ by open space type in the vicinity of Minneapolis and St. Paul, MN. They consider the following types of open apace: parks (generally more developed), special parks (national, statc, and regional parks, artoretums, nature centers, natural areas, and wildlife refuges), golf courses, and cemeteries. Anderson and West add a layer of complexity, constructing separate models for city and suburban homes in their study area. For cily homes, they find that distances from regular parks, special APP 8 - 233Katherine K. Henderson parks, lakes and rivers has a negative impact on sale price {i.c. these features function as amenities). In the suburbs, proximity to golf courses, lakes and rivers is an amenity. Their size/distance interactive term is negative and significant in cities, suggesting that effect of proximity is stronger for larger parks. The difference in Anderson and West's (2003) results for city and suburban arcas suggest thal these constitute different housing submarkets, Studies by Correll et al (1978) and Cheshire and Sheppard (1995) provide further evidence that open space amenity effects can differ within the same geographic area. Correll et al (1978) analyze the effects of a greenbell in Boulder, CO on housing prices in three nearby neighborhoods, The authors find a “quasi-public good benefit...associated with the increased properly values adjacent to greenbelts" which “could provide additional tax revenue to support such purposes” (p. 208). Specifically, Corre!) et al report a statistically significant decrease of $4.20 in the price of residential property for every fool farther away from the greenbelt (Correll at al, p. 211). Their results are not consistent, however, when each neighborhood is examined separately. The authors thearize that this is due to the timing and planning of greenbelt purchases in relationship to residential construction. Ridell (2001) supports the idea of a lag in amenity value, suggesting that “Failure to take account of systemic markel changes may be one possible explanation for the mixed findings of (Correll ct al 1978)... Price effects may not have lad ume to fully realize their impact...resulting in inconclusive results” (p. 511). Similarly, Cheshire and Sheppard (1995) report different results for the two British towns in their study. They find that nearness to public (open access”) land is positively correlated with house price in both towns, though private open spaces (“closed land,” such as intensively farmland and woodland) is highly valued only in one town and had a negligibly positive effect in the other, The authors hypothesize thai the difference in observed effects for private open spaces has to do with the differing amounts and types of open space present in cach community (p. 258). Researchers conducting hedonic studies in the same region may reach different conclusions ebaut the amenity valuc of open space in their study area. For example, Li and APP 8 - 234Katherine K, Henderson Brown (1980) find no statistically significant relationship between proximity to conservation/recreation areas and house price in their sample of 781 homes ftom 15 suburbs of Boston, MA. In contrast, a recent (unpublished) hedonic study of 2!0 homes in Lynnfield, MA, located 15 miles north of Boston, finds a significant negative correlation with distance from permanently protected conservation and historic areas (Donnelly, 2005). A similar contrast is found between Smith et al (2002) and other studics on open space in Wake County, NC. Smith et al employ both continuously varying and binary variables to investigate the differential impact of “fixcd" vs. “adjustable” open space in an area af north Raleigh, NC. They incorporate adjacency dummy variables and straight-line distance measures for cach of the following open space types: golf courses, public lands, vecant lots, agriculiural land, and forestland. The authors find that golf courses and vacant land function as amenities in this submarket. However, they find that public open space functions as a disamenity in their sardy area, which consists of a three-mile wide sirip afong 29 miles of the new 1-540 loop. Their public open space category includes open-access parks, greenways, and private eased fand. McConnell and Walls (2005) suggest that perhaps Smith ct al (2002) should have split the public category into scveral sub-categorics, noting the mixed results of studies on various types of public parks (as described above). However, Smith et al’s (2002) findings contrast other hedonic work on open space in Wake County in which the apen space variables were sirnilarly defined or even more aggregatcd. Palmquist and Fulcher (2003), Walsh (2003), and this Masters Project afl repori a positive externality associated with parks in Wake County. Each of these studies considers the emire county, as opposed to an area of North Raloigh. Palmquist and Fulcher (2003) include two park proximity variables in their hedonic study of lake acccss: distance ta the nearest park (<70 acres) and distance to nearest large park (70 acres). They find that greater distance to parks reduces the sale price of homes in Wake Caunty. Results from a non-hedonic price study by Walsh (2003) also confirm the positive findings of Palmguist and Fulcher (2003) and this Masters Project. Walsh (2003) uses a structural APP 8 - 235Katherine K. Henderson, equilibrium model of an urhan land market, calibrated to data fram Wake County. Based on this tnodel, the author calculates that the average household, currently living one-half mile from open space, would be willing to pay a onc-time amount of $4,104 (in 1992 dollars) to reduce its distance from open space by one-quarter mile. 23___Landscape Pattern Variables This section summarizes the results of ten hedonic studies that use landscape pattem variables to examine the impact of apen space on property value. These variahlcs measure the percentage of a particular land use surrounding each house. Each study defines the relevant neighborhood differently, though several measure percentages based on a '4-tnile neighborhood radius, Several studies sununarized toward the end of this section also employ the instrumental variables technique tv correct for endogencity. Bockstael (1996) considers the effect on home sale price of several neighborhood percentage veriables including the percentages of surrounding forest, agricultural cropland, agricultural pasture. land, and preserved open spacc. The author defines “neighborhood” to include the 250 acres surrounding cach house. Bookstacl finds that a large pronortion of surrounding open space is a significant amenity in this seven counly region of Maryland. Goughegan, Wainger asd Bockstacl (1997) examine the reiationship between sale price of homes in the Patuxent Watershed of Maryland and the percentage of open space in forestry and agricultural use in the vicinity of each home. The authors use two neighborhood sizes: within 0,1 km and within | km. Geoghegan ct al (1997) find that the percentage of forest and farmland within a 0.! km radius has a significantly positive effect on home sale price, whereas the percentage of forest and farmland within | km is a significant disamenity. Acharya and Bennett (200!) study the effect of numerous landscap: variables on the effect of sale prices in New Haven County, CT. Their open space variables consist of the percentage of the nearby landscape in open space within 4 mile (‘visual zone") and | mile APP 8 - 236Katherine K. Henderson (“neighborhood”) radii. The suthors find the percentage of open space to be a significantly positive neighborhood feature. The magnicude of the open space coefficient is similar for both the 1/4 and | mile radii (p. 233). A 2002 article by Gcoghegan uses similar landscape (percentage-bazed) variables, choosing a [600 meter neighbochood radius to examine the difference in amenity effect between “permanent” and “developable” open spaces in Howard County, MD. The author defines developable Jand to include agricultural cropland, pasture, and forest land. Permanent land includes parks and publicly-eased land, including eased farms. Geoghegan estimates positive regression coefficients for both permanent and developable open space. The permanent coefficient is over three times the developable coefficient, but the developable resulf is not Statistically significant. Burton and Hicks (2003) examine the effect of park presence and various park attributes on house sale price in Charleston and Huntington, WV, using census tracts as the neighborhood. They find that the addition of a park to any given census track adds $2,535 dollars to the median vaiue of homes within that wack. Burlon and Hicks also find that the addition of a jogging or fitness trail contributes 511,059 to the median home valuc (p. 7). Based on their findings, the authors suggest using tax-increment financing for recreational projects. Netusil (DRAFT 2005) continues exploring the impacts of open space proximity on the housing market in Portland, OR during the ycars 1999-2001, using variables based on the percentage of cach open space type within % mile. The author employs the following ten categories of open space: private natural area, public natural area, private specialty park, public Specialty park, trail, urban park, private golf course, public golf course, private cemetery, and public cemetery, Netusil defines “natural areas” as parks where 50% or more of the land is in native or natural vegetation (Netusil, 2005; p. 11). Netusi finds that proximity to public golf courses, public specialty parks, private specially parks, and private natural areas is significantly APP 8 - 237Katherine K. Henderson correlated with increased property valves, whereas proximity to private cemeteries significantly decreases property values. Ready and Abdalla (2003) conduct a hedonic price analysis for 8,090 single family houses sold between 1998 and 2002 in Berks County, PA. The authors measnre land use within 400 meters and within 1600 meters of cach house using GIS. They consider the following open space land uses: cased open space; government-owned; agricultural security areas; and grass, pasture, and cropland. The authors use the instrumental variables technique to reduce possible bias due wo endogeneity between land use and house prices. They chose the following instruments: average slope; average elevation; average septic suitabilily index; average building suitability index; average agricultural productivity index; and proportion of open space surrounding the house in an agricultural security area. Ready and Abdalla calculate cach of these variables for the area within 400 meters of the house and for the area between 400 meters and 1600 meters from the house. Ready and Abdalla (2003) find that open space is the most desirable land use within 400 meters af a home. Privately-owned open space wilh easements has a larger amenity value then land without easements. Between 400-1600 meters, commercial land is the most attractive, follawed by large-lot residential, end then open space. Within this distance range, grass, crops and pastnre are preferred ta forested open space, and eased open space is preferred to uncased open space. Outside of 400 meters, government open spacc is a greater amenity than privately- owned, uneased open spacc, Irwin and Bockstacl (2001) study the effect of several neighborhood percentage variables on the saic of nearly 56,000 homes in four Maryland counties from January 1995 to December 1999, They define three open space variables: 1) privately-owned, developable (crop, pasturc, and forest land); 2) privately-owned, protected by easement/conservation arca; and 3) publicly- owned, The authors focus particularly on problems of endogeneity and spatial correlation. They use the instrumental variables (IV) technique to correct for biased cocflicients associated with APP 8 - 238Katherine K. Henderson their private open space variables. Invin and Bockstael employ the following instrumental variables: parcel slope, soil drainage ability, and soil quality. They find that publicly-owned open space has a significantly positive impact on housing price, as does the privaicly-owned protected variable, when treated as exogenous. The privately-owned developable variable has a negative effect in the OLS model, but a significantly positive cffect in the IV model. Irwin (2002) conducted # hedonic price study on the same four-county region siudicd by Invin and Bocksisel (2001). Irwin specifics all open space variabics as the percentage of the surrounding neighborhood, defined by a 400m radius around the center point of cach residential parcel in the study. The author incorporates percentage variables for the following private land uses: cropland, pastureland, forestland, and casement land. She algo uses percentage variables for publicly-owned military and non-military land. Irwin chooses four instrumental variables: a slope dummy (f = slape greater than 15 percent, 0 = lesser slope), a drainage dummy (1 = poor drainage, 0 = otherwise); a soil quality duramy (1 = current farm with prime agricultural soils, 0 = otherwise); and straight-line distance to Washi