# RECORD 1aa52b387c00d728ed5f6e7b8aeacbd09246f0d3
# TITLE: Property Tax Capitalization within a National Historic District versus Property Tax Capitalization outside that National Historic District: Another Application of the Tiebout Hypothesis
# YEAR: 2010.0  VENUE: nan  DOI: 10.5539/ijef.v3n4p14
# AUTHORS: Richard J. Cebula; M. Foley; R. Houmes
# PAGES: 8  CANDIDATE TABLE PAGES (1-based): [7]
# ABSTRACT: This study has two objectives. First, it seeks to apply a hedonic pricing model to determine whether property taxes have been capitalized into the prices of single family homes located within in the Savannah Historic Landmark District in Savannah, Georgia. A total of 593 home sales over the 2000-2005 period are considered, with the housing prices and the property tax expressed in 2005 dollars. Second, this study seeks to apply that very same model to prices of some 1908 single family homes within the metropolitan Savannah area but outside the Savannah Historic Landmark District. Estimating the model in semi-log form, after allowing for a variety of housing characteristics, reveals that the natural log of the real sales price of single-family houses within the Savannah Historic Landmark District as well as those outside the Savannah Historic Landmark District were in fact negatively affected by the city and county property tax level.


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www.ccsenet.org/ijef             International Journal of Economics and Finance           Vol. 3, No. 4; September 2011 
                                                          ISSN 1916-971X   E-ISSN 1916-9728 
14
Property Tax Capitalization within a National Historic District versus 
Property Tax Capitalization outside that National Historic District: 
Another Application of the Tiebout Hypothesis 
Richard J. Cebula (Corresponding author) 
Davis College of Business, Jacksonville University 
2800 University Blvd. N. , Jacksonville, FL 32211, USA 
Tel: 1-904-256-7904   E-mail: rcebula@ju.edu 
 
Maggie Foley 
Davis College of Business, Jacksonville University 
2800 University Blvd. N. , Jacksonville, FL 32211, USA 
Tel: 1-904-256-7772   E-mail: mfoley3@ju.edu 
 
Robert Houmes 
Davis College of Business, Jacksonville University 
2800 University Blvd. N., Jacksonville, FL 32211, USA 
Tel: 1-904-256-7921   E-mail: rhoumes@ju.edu 
 
Received: January 31, 2011         Accepted: February 22, 2011         doi:10.5539/ijef.v3n4p14 
 
Abstract  
This study study has two objectives. First, it seeks to apply a hedonic pricing model to determine whether, in the spirit 
of Tiebout (1956), Oates (1969), and Tullock (1971), property taxes have been capitalized into the prices of single 
family homes located within in the Savannah Historic Landmark District in Savannah, Georgia. A total of 593 home 
sales over the 2000-2005 period are considered, with the housing prices and the property tax expressed in 2005 dollars. 
Second,this study seeks to apply that very same model to prices of some 1908 single family homes within the 
metropolitan Savannah area but outside the Savannah Historic Landmark District. Estimating the model in semi-log 
form, after allowing for a variety of housing characteristics, reveals that the natural log of the real sales price of 
single-family houses within the Savannah Historic Landmark District as well as those outside the Savannah Historic 
Landmark District were in fact negatively affected by the city and county property tax level. 
Keywords: Housing prices, Property tax capitalization, Savannah Historic Landmark District 
JEL: R14; R13; R11 
1. Introduction 
Hedonic pricing models have been used in a number of studies to assess the impacts of historic district designation and 
a host of other factors on property values (Coffin, 1989; Ford, 1989; Asabere & Huffman, 1994; Asabere, Huffman & 
Mehdian, 1994; Clark & Herrin, 1997; Coulson & Leichenko, 2001; Leichenko, Coulson & Listokin, 2001; Coulson 
& Lahr, 2005; Sirmans, Macpherson & Zeitz, 2005; Cebula, 2009). This study seeks to extend the literature by 
applying the hedonic pricing model to the prices of single-family homes both within and then, separately, outside of, 
the Savannah Historic Landmark District located in Savannah, Georgia, with emphasis on the question of whether, in 
the spirit of Tiebout (1956), Tullock (1971), and Oates (1969), property taxes are capitalized into housing prices.  
This study accounts not only for property taxes but also for a number of other factors influencing the housing market 
within the Savannah Historic Landmark District and outside of that District. For example, housing characteristics such 
as the number of baths, the number of fireplaces, the number of rooms, square footage, brick or stucco exterior, the 
presence of a sprinkler system, the number of garage spaces, the presence of an apartment in a house, and whether a 
house is new are all taken into consideration.  


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www.ccsenet.org/ijef             International Journal of Economics and Finance           Vol. 3, No. 4; September 2011 
                                                          ISSN 1916-971X   E-ISSN 1916-9728 
20
Table 1. Semi-log estimates: Housing prices inside the district 
Variable\Column 
(a) 
(b) 
(c) 
(d) 
Coefficient 
t-value 
Coefficient 
t-value 
BATHS 
0.146 
3.37 
0.144 
3.37 
FIREPLACES 
0.061 
4.70 
0.062 
4.82 
ROOMS 
0.0336 
2.10 
0.0385 
2.47 
SQFT 
0.000012 
2.67 
0.000128 
2.90 
APT 
-0.152 
-1.97 
-0.155 
-1.96 
BRICK 
0.25 
4.04 
0.254 
4.16 
DECK 
0.144 
3.32 
0.146 
3.36 
CTYD 
0.21 
4.60 
0.23 
5.02 
SPRINKLER 
0.216 
2.99 
0.206 
2.79 
STORIES 
0.195 
3.10 
0.188 
3.17 
STUCCO 
0.35 
5.60 
0.366 
5.82 
GARAGESP 
0.106 
3.26 
0.098 
3.11 
BALCNY 
0.011 
0.21 
  
  
POOLTUB 
0.229 
1.64 
  
  
NEW 
0.296 
4.20 
0.289 
4.09 
PARKSQ 
0.088 
0.76 
  
  
CORNER 
0.127 
1.86 
  
  
PROPTX 
-0.000058 
-3.69 
-0.000061 
-3.90 
R2 = 0.62, adjR2 = 0.61, F = 53.11 
 
 
 
 
  R2 = 0.62, adjR2 = 0.61, F = 67.75 
 
Table 2. Semi-log estimates: Housing prices outside the district 
Variable\Column 
(a) 
(b) 
(c) 
(d) 
Coefficient 
t-value 
Coefficient 
t-value 
BATHS 
0.121 
3.07 
0.122 
3.09 
FIREPLACES 
0.06 
3.82 
0.061 
3.69 
ROOMS 
0.032 
2.14 
0.033 
2.55 
SQFT 
0.000011 
2.65 
0.00012 
2.71 
APT 
0.0002 
0.156 
  
  
BRICK 
0.2 
3.98 
0.21 
4.01 
DECK 
0.11 
2.99 
0.114 
3.01 
CTYD 
0.09 
2.11 
0.11 
2.23 
SPRINKLER 
0.24 
3.15 
0.242 
2.87 
STORIES 
0.18 
2.09 
0.19 
2.19 
STUCCO 
0.28 
3.04 
0.29 
3.12 
GARAGESP 
0.11 
3.05 
0.11 
3.14 
BALCNY 
0.01 
0.56 
  
  
POOLTUB 
0.16 
2.18 
0.17 
2.21 
NEW 
0.302 
3.97 
0.31 
4.01 
PARKSQ 
0.066 
1.81 
  
  
CORNER 
0.09 
1.12 
  
  
PROPTX 
-0.000039 
-3.72 
-0.00004 
-3.77 
R2 = 0.63, adjR2 = 0.61, F = 39.55 
 
                                              R2 = 0.61, adjR2 = 0.60, F = 45.67 


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www.ccsenet.org/ijef            International Journal of Economics and Finance           Vol. 3, No. 4; September 2011 
Published by Canadian Center of Science and Education 
21
Table 3. Variable definitions 
lnRSALESPR = the natural log of the price of house j expressed in 2005 dollars 
BATHS = the total number of baths (full plus half) in house j 
FIREPLACES = the number of fireplaces in house j 
BEDROOMS = the total listed number of rooms in house j 
SQFT = the total number of square feet of finished living space in house j 
APT = a binary variable indicating whether house j had an rental apartment on the premise (=1 if yes) 
 
BRICK = a binary variable indicating whether house j had a primarily or completely brick exterior (= 1 if yes, = 0 otherwise) 
DECK = a binary variable indicating whether house j had an exterior deck (=1 if yes) 
CRTYD = a binary variable indicating whether house j had a private courtyard (=1 if yes) 
SPRINKLER = a binary variable indicating whether house j had an underground sprinkler system (= 1 if yes) 
 
STORIES = the number of stories/floors present in house j 
STUCCO = a binary variable indicating whether house j had a stucco exterior (=1 if yes) 
GARAGESP = the number of garages spaces that are part of house j 
 
BALCNY = a binary variable indicating whether house j had a balcony (=1 if yes) 
POOLTUB = a binary variable indicating whether house j had its own hot-tub and/or swimming pool (=1 if yes) 
NEW = a binary variable indicating whether house j was new at the time of sale (=1 if yes) 
 
HISTDES = a binary variable indicating whether house j was designated as a National Historic Landmark (=1 if yes) 
PARK/SQ = a binary variable indicating whether house j was located across from or adjacent to a park or square, i.e., a small park (=1 if yes)
 
CORNER = a binary variable to indicate whether house j was located on a corner (=1 if yes) 
PROPTX = annual property tax (county plus city) for house j paid to city and county governments  in 2005 dollars