The following Research Summary is presented by the Taubman College of Architecture and Urban Planning at the University of Michigan for the Brick Industry Association
Increasingly, communities are considering passing or amending a zoning ordinance to include architectural standards as a method of ensuring quality design. The purpose of legislated standards is to create a level playing field for developers and builders, while providing an enforceable method of ensuring that development supports the long-term interests of the community. Municipalities across the country are exploring a variety of approaches including overlay districts, design and/or corridor guidelines, planned unit developments and masonry ordinances. Masonry ordinances require or recommend a fixed percentage of brick and masonry materials on commercial and residential structures within a given community.
In November 2004, the Brick Industry Association commissioned the Taubman College of Architecture and Urban Planning at the University of Michigan to conduct a research study of masonry ordinances, with the purpose being to determine if masonry ordinances result in long-term benefits for a given municipality, while addressing the interests of both its citizens and members of its business community.
Dr. Lan Deng, Assistant Urban Planning Professor, and Dr. Fernando Lara, Assistant Professor of Architecture conducted the research. Both are faculty members at the Taubman College of Architecture and Urban Planning at the University of Michigan. They examined four Chicago suburban communities to identify the impacts that the adoption of a masonry ordinance has on housing price and fiscal health of a community. They examined two municipalities in which masonry ordinances were in effect – Orland Park and Tinley Park – and two comparable communities without ordinances that are similar in both size and population – Hoffman Estates and Streamwood.
Research Findings: Affordability
Mortgages in Orland Park and Tinley Park are similar to other suburban Cook County communities. For comparison, the owner cost for a home mortgage in an average suburb in Cook County is about 22.8% of their income – in Orland Park and Tinley Park, the owner cost of a home mortgage is about 22.2% of their income.
In addition, the median rental cost in Orland Park and Tinley Park was found to be comparable with communities that do not have masonry ordinances. The research found that residents in an average suburban Cook County community spend about 24.4% of their income on rent, while in Orland Park and Tinley Park the percentage is approximately the same, with residents spending 23.40% and 24.10% respectively.
Conclusion: The adoption of masonry ordinance does not result in a significant increase in housing costs compared to neighboring communities. Masonry ordinances do not affect the owner cost burden for a home mortgage or the rental burden for residents.
Property Values
The research examined property values in each of the communities, with a focus on how property values were impacted after a brick and masonry ordinance was legislated. Specifically, researchers examined constant-quality property sales from 1990 through 2004.
Researchers found that homes sold in Orland Park received a price that was 95% higher than comparable homes sold in Streamwood, Illinois, a community without a masonry ordinance. Homes located in Tinley Park received a price 128% higher than comparable properties in Streamwood. Researchers also examined the neighboring suburban community of Hoffman Estates and found that Orland Park homes received a price that was 79% higher. In Tinley Park, homes received a price that was 112% higher than Hoffman Estates.
Conclusion: Masonry ordinances can increase the value of property in a community. Masonry ordinances have resulted in significantly higher property values than those in communities without a masonry ordinance.
Growth
Having examined the impact on affordability and home resale values, researchers next examined growth rates with a focus on whether masonry ordinances had any impact on reducing growth.
Researchers found that the communities of Orland Park and Tinley Park continue to grow at a faster rate than the comparable communities studied that do not have masonry ordinances in effect. Orland Park and Tinley Park had a population growth rate of 43% and 34% from 1990 to 2000 respectively. The two comparable communities identified for the study, Hoffman Estates and Streamwood, had growth rates of 6% and 17% respectively from 1990 to 2000.
Conclusion: The adoption of masonry ordinances results in continued quality growth, and does not restrict growth. In fact, researchers found that Orland Park and Tinley Park grow faster than most other suburbs in Cook County.
Taxes
The final issue examined by researchers was the effect of masonry ordinances on the community tax base. Orland Park consistently outperforms other communities in Cook County in terms of sales receipts, while Tinley Park continues to experience a rapid increase in the amount of sales receipts. Comparable communities without masonry ordinances have experienced relatively slow growth in sales receipts.
Researchers found that Orland Park and Tinley Park also have larger tax bases than over half of the other suburbs in Cook County based on equalized assessment value data. Because Orland Park and Tinley Park have a relatively large property and sales tax base, they are able to charge their residents lower municipal taxes and fees in order to pay for public services and community improvements.
Conclusion: The adoption of masonry ordinances results in an increase in tax revenue for communities both through property taxes and sales tax receipts. This results in lessening the property tax burden for residents of the community.
Research Methodology Overview
To evaluate the economic benefits (or costs) of a masonry ordinance on communities the researchers investigated four primary issues that are of primary importance for communities. Each of the four issues follows along with an overview of the research methodology used to understand the resulting implications.
Issue 1: Housing price effects – to what extent might the adoption of a masonry ordinance increase property value in the community?
To address the issue concerning housing price effects, a hedonic price model based on over 20,000 housing transaction records has been created. The model examines not only how the value of a housing property is affected by the quality of its own construction material, but also the externality effects generated by the proximity to other high-quality properties as a result of the masonry ordinance.
Issue 2: Local community impacts – to what extent might the adoption of a masonry ordinance expand the local fiscal revenue base and improve the quality of life for existing residents while also inhibiting new growth and “pricing out” low-income or minority households?
To address local community impacts, the research compared social and economic changes in communities with masonry ordinances versus the non-masonry ordinance communities. The comparison was made based on four aspects:
1) differences in new housing construction and population growth rate;
2) differences in the community’s income and racial distribution;
3) differences in local fiscal revenue and expenditure; and
4) differences in crime rates and fire incidences.
Issue 3: Local business impacts – to what extent might the adoption of a masonry ordinance increase the patronage of local retail stores and expand local sales revenue? To what extent might the adoption of a masonry ordinance promote a pleasant working and living environment for office workers and improve the lease likelihood and rental income of local office properties?
To address and understand business impacts, researchers developed a multiple sorting interview to assess consumer preference for brick over other finishing materials. In addition, sales receipts generated by local retail stores were also compared communities with and without masonry ordinances.
Method of MSA and Case Study Community Selection
In order to choose the right Metropolitan Statistical Area (MSA) that could offer national relevance with minimal regional influence, the research team developed a “dissimilarity index” for all MSAs that are known to contain masonry communities based on 1990 and 2000 census data. To create this index, a series of social and economic variables, including population growth rate, distance away from the central city of Chicago, income growth rate, new housing construction rate, and employment growth rate, were evaluated against the national average trend. This led to the selection of the Chicago metropolitan area as the primary case study region given the finding that the development trend in Chicago is closest to the national average, which ensures national relevance for the study.
Within the Chicago metropolitan area, a similar method was applied to identify case study communities. Orland Park and Tinley Park were chosen because they have had a masonry ordinance in effect for more than 10 years, while Hoffman Estates and Streamwood, two communities without a masonry ordinance, were chosen as the control group. Both Hoffman Estates and Streamwood are similar to Orland Park and Tinley Park in their demographic, economic, and housing profiles. This resulted in ensuring that the primary variable was the masonry ordinance, not other external factors.
The research examined more than 25 years of data from the four identified case study communities, examining real estate transactions, tax records, census data, and sales receipts. The primary focus was placed on examining the community changes during the period of 1990 to present.
