1# RECORD 1aa52b387c00d728ed5f6e7b8aeacbd09246f0d32# TITLE: Property Tax Capitalization within a National Historic District versus Property Tax Capitalization outside that National Historic District: Another Application of the Tiebout Hypothesis3# YEAR: 2010.0 VENUE: nan DOI: 10.5539/ijef.v3n4p144# AUTHORS: Richard J. Cebula; M. Foley; R. Houmes5# PAGES: 8 CANDIDATE TABLE PAGES (1-based): [7]6# 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.789===== PAGE 1 (score 13, numeric-paren 0, table-words 0, var-words 13) =====1011www.ccsenet.org/ijef International Journal of Economics and Finance Vol. 3, No. 4; September 2011 12 ISSN 1916-971X E-ISSN 1916-9728 131414Property Tax Capitalization within a National Historic District versus 15Property Tax Capitalization outside that National Historic District: 16Another Application of the Tiebout Hypothesis 17Richard J. Cebula (Corresponding author) 18Davis College of Business, Jacksonville University 192800 University Blvd. N. , Jacksonville, FL 32211, USA 20Tel: 1-904-256-7904 E-mail: rcebula@ju.edu 21 22Maggie Foley 23Davis College of Business, Jacksonville University 242800 University Blvd. N. , Jacksonville, FL 32211, USA 25Tel: 1-904-256-7772 E-mail: mfoley3@ju.edu 26 27Robert Houmes 28Davis College of Business, Jacksonville University 292800 University Blvd. N., Jacksonville, FL 32211, USA 30Tel: 1-904-256-7921 E-mail: rhoumes@ju.edu 31 32Received: January 31, 2011 Accepted: February 22, 2011 doi:10.5539/ijef.v3n4p14 33 34Abstract 35This study study has two objectives. First, it seeks to apply a hedonic pricing model to determine whether, in the spirit 36of Tiebout (1956), Oates (1969), and Tullock (1971), property taxes have been capitalized into the prices of single 37family homes located within in the Savannah Historic Landmark District in Savannah, Georgia. A total of 593 home 38sales over the 2000-2005 period are considered, with the housing prices and the property tax expressed in 2005 dollars. 39Second,this study seeks to apply that very same model to prices of some 1908 single family homes within the 40metropolitan Savannah area but outside the Savannah Historic Landmark District. Estimating the model in semi-log 41form, after allowing for a variety of housing characteristics, reveals that the natural log of the real sales price of 42single-family houses within the Savannah Historic Landmark District as well as those outside the Savannah Historic 43Landmark District were in fact negatively affected by the city and county property tax level. 44Keywords: Housing prices, Property tax capitalization, Savannah Historic Landmark District 45JEL: R14; R13; R11 461. Introduction 47Hedonic pricing models have been used in a number of studies to assess the impacts of historic district designation and 48a host of other factors on property values (Coffin, 1989; Ford, 1989; Asabere & Huffman, 1994; Asabere, Huffman & 49Mehdian, 1994; Clark & Herrin, 1997; Coulson & Leichenko, 2001; Leichenko, Coulson & Listokin, 2001; Coulson 50& Lahr, 2005; Sirmans, Macpherson & Zeitz, 2005; Cebula, 2009). This study seeks to extend the literature by 51applying the hedonic pricing model to the prices of single-family homes both within and then, separately, outside of, 52the Savannah Historic Landmark District located in Savannah, Georgia, with emphasis on the question of whether, in 53the spirit of Tiebout (1956), Tullock (1971), and Oates (1969), property taxes are capitalized into housing prices. 54This study accounts not only for property taxes but also for a number of other factors influencing the housing market 55within the Savannah Historic Landmark District and outside of that District. For example, housing characteristics such 56as the number of baths, the number of fireplaces, the number of rooms, square footage, brick or stucco exterior, the 57presence of a sprinkler system, the number of garage spaces, the presence of an apartment in a house, and whether a 58house is new are all taken into consideration. 596061===== PAGE 7 (score 53, numeric-paren 0, table-words 14, var-words 12) =====6263www.ccsenet.org/ijef International Journal of Economics and Finance Vol. 3, No. 4; September 2011 64 ISSN 1916-971X E-ISSN 1916-9728 652066Table 1. Semi-log estimates: Housing prices inside the district 67Variable\Column 68(a) 69(b) 70(c) 71(d) 72Coefficient 73t-value 74Coefficient 75t-value 76BATHS 770.146 783.37 790.144 803.37 81FIREPLACES 820.061 834.70 840.062 854.82 86ROOMS 870.0336 882.10 890.0385 902.47 91SQFT 920.000012 932.67 940.000128 952.90 96APT 97-0.152 98-1.97 99-0.155 100-1.96 101BRICK 1020.25 1034.04 1040.254 1054.16 106DECK 1070.144 1083.32 1090.146 1103.36 111CTYD 1120.21 1134.60 1140.23 1155.02 116SPRINKLER 1170.216 1182.99 1190.206 1202.79 121STORIES 1220.195 1233.10 1240.188 1253.17 126STUCCO 1270.35 1285.60 1290.366 1305.82 131GARAGESP 1320.106 1333.26 1340.098 1353.11 136BALCNY 1370.011 1380.21 139 140 141POOLTUB 1420.229 1431.64 144 145 146NEW 1470.296 1484.20 1490.289 1504.09 151PARKSQ 1520.088 1530.76 154 155 156CORNER 1570.127 1581.86 159 160 161PROPTX 162-0.000058 163-3.69 164-0.000061 165-3.90 166R2 = 0.62, adjR2 = 0.61, F = 53.11 167 168 169 170 171 R2 = 0.62, adjR2 = 0.61, F = 67.75 172 173Table 2. Semi-log estimates: Housing prices outside the district 174Variable\Column 175(a) 176(b) 177(c) 178(d) 179Coefficient 180t-value 181Coefficient 182t-value 183BATHS 1840.121 1853.07 1860.122 1873.09 188FIREPLACES 1890.06 1903.82 1910.061 1923.69 193ROOMS 1940.032 1952.14 1960.033 1972.55 198SQFT 1990.000011 2002.65 2010.00012 2022.71 203APT 2040.0002 2050.156 206 207 208BRICK 2090.2 2103.98 2110.21 2124.01 213DECK 2140.11 2152.99 2160.114 2173.01 218CTYD 2190.09 2202.11 2210.11 2222.23 223SPRINKLER 2240.24 2253.15 2260.242 2272.87 228STORIES 2290.18 2302.09 2310.19 2322.19 233STUCCO 2340.28 2353.04 2360.29 2373.12 238GARAGESP 2390.11 2403.05 2410.11 2423.14 243BALCNY 2440.01 2450.56 246 247 248POOLTUB 2490.16 2502.18 2510.17 2522.21 253NEW 2540.302 2553.97 2560.31 2574.01 258PARKSQ 2590.066 2601.81 261 262 263CORNER 2640.09 2651.12 266 267 268PROPTX 269-0.000039 270-3.72 271-0.00004 272-3.77 273R2 = 0.63, adjR2 = 0.61, F = 39.55 274 275 R2 = 0.61, adjR2 = 0.60, F = 45.67 276277278===== PAGE 8 (score 24, numeric-paren 0, table-words 1, var-words 22) =====279280www.ccsenet.org/ijef International Journal of Economics and Finance Vol. 3, No. 4; September 2011 281Published by Canadian Center of Science and Education 28221283Table 3. Variable definitions 284lnRSALESPR = the natural log of the price of house j expressed in 2005 dollars 285BATHS = the total number of baths (full plus half) in house j 286FIREPLACES = the number of fireplaces in house j 287BEDROOMS = the total listed number of rooms in house j 288SQFT = the total number of square feet of finished living space in house j 289APT = a binary variable indicating whether house j had an rental apartment on the premise (=1 if yes) 290 291BRICK = a binary variable indicating whether house j had a primarily or completely brick exterior (= 1 if yes, = 0 otherwise) 292DECK = a binary variable indicating whether house j had an exterior deck (=1 if yes) 293CRTYD = a binary variable indicating whether house j had a private courtyard (=1 if yes) 294SPRINKLER = a binary variable indicating whether house j had an underground sprinkler system (= 1 if yes) 295 296STORIES = the number of stories/floors present in house j 297STUCCO = a binary variable indicating whether house j had a stucco exterior (=1 if yes) 298GARAGESP = the number of garages spaces that are part of house j 299 300BALCNY = a binary variable indicating whether house j had a balcony (=1 if yes) 301POOLTUB = a binary variable indicating whether house j had its own hot-tub and/or swimming pool (=1 if yes) 302NEW = a binary variable indicating whether house j was new at the time of sale (=1 if yes) 303 304HISTDES = a binary variable indicating whether house j was designated as a National Historic Landmark (=1 if yes) 305PARK/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)306 307CORNER = a binary variable to indicate whether house j was located on a corner (=1 if yes) 308PROPTX = annual property tax (county plus city) for house j paid to city and county governments in 2005 dollars 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325