1# RECORD a5c3a8b4f02ea9b02009cba2eba334012eb7b2122# TITLE: Economic Impact of a Heritage Policy on Residential Property Values in a Historic District Context: The Case of the Old City of Quebec3# YEAR: 2018.0 VENUE: The Review of Regional Studies DOI: 10.52324/001c.79894# AUTHORS: Nicolas Devaux; É. Berthold; Jean Dubé5# PAGES: 19 CANDIDATE TABLE PAGES (1-based): [12, 13]6# ABSTRACT: Previous studies have attempted to measure the willingness-to-pay to locate inside a historic district. Yet not enough attention has been paid to the implicit value attributed to the impact of heritage policies within the historic district. This paper fills that gap by investigating the impact of such policies on individual condominium properties for the case of the Old City of Quebec (Canada), designated by law as a protected area and included on the World Heritage List (UNESCO). More precisely, this research measures the impacts of the reorganization and landscaping of one particular street located south-west of the protection area in the old part of Quebec City. A difference-in-differences (DID) estimator based on a hedonic repeated sales approach is proposed to isolate such effects based on proximity to the site under study. Estimation results suggest that the reorganization of the street had no significant impact on the closest properties’ prices, but had negative effects for properties located within 150 to 450 meters of the street. These observations outline complex relations between heritage policies and urban landscaping projects.789===== PAGE 1 (score 9, numeric-paren 0, table-words 1, var-words 7) =====1011(2018) 48, 279–297 12 13 14© Southern Regional Science Association 2018. 15ISSN 1553-0892, 0048-749X (online) 16www.srsa.org/rrs 17The Review of Regional Studies 18 19 20The Official Journal of the Southern Regional Science Association 21 22 23 24 25 26 27 28 29 30Economic Impact of a Heritage Policy on Residential Property 31Values in a Historic District Context: The Case of the Old City of 32Quebec* 33Nicolas Devauxa, Etienne Bertholdb, and Jean Dubéc 34a Department of Societies, Territories, and Development, University of Quebec in Rimouski, Canada 35b Department of Geography, Laval University, Canada 36c School of Planning and Development, Laval University, Canada 37 38Abstract: Previous studies have attempted to measure the willingness-to-pay to locate inside a historic district. Yet 39not enough attention has been paid to the implicit value attributed to the impact of heritage policies within the 40historic district. This paper fills that gap by investigating the impact of such policies on individual condominium 41properties for the case of the Old City of Quebec (Canada), designated by law as a protected area and included on 42the World Heritage List (UNESCO). More precisely, this research measures the impacts of the reorganization and 43landscaping of one particular street located south-west of the protection area in the old part of Quebec City. A 44difference-in-differences (DID) estimator based on a hedonic repeated sales approach is proposed to isolate such 45effects based on proximity to the site under study. Estimation results suggest that the reorganization of the street had 46no significant impact on the closest properties’ prices, but had negative effects for properties located within 150 to 47450 meters of the street. These observations outline complex relations between heritage policies and urban 48landscaping projects. 49Keywords: historic districts, landscaping policy, urban policy, hedonic pricing model, urban regeneration 50JEL Codes: O18, R31, R52, R58 511. INTRODUCTION 52Cultural heritage has gained more importance in the field of urban studies (Harrison, 532013). Public policies are an essential part of heritage conservation that protect the history of an 54area (Graham, Ashworth, and Tunbridge, 2000; Saint-Pierre, 2008). As with many cultural 55policies, heritage policies may produce cultural benefits for local communities and nations, 56among which collective identity flourishes (Hobsbawm and Ranger, 1983; Harrison, 2013). 57Urban heritage policies should be distinguished from a standard landscaping policy because they 58include intangible and symbolic goals. 59Such policies can also have important economic effects. Such impacts can be expressed 60through economic benefits related to increased tourism, but also through externalities for 61residents and commercial businesses. For the former, the classical input-output analysis is used 62to evaluate the direct, indirect, and spinoff effects. For the latter, hedonic modeling has proved to 63be an elegant way of measuring the implicit price (or willingness-to-pay) of being close to such 64 65Nicolas Devaux (Department of Societies, Territories, and Development) is Professor at Universtiy of Quebec in Rimouski, 66Rimouski, Qc, Canada. Etienne Berthold (Department of Geography) and Jean Dubé (School of Planning and Development) are 67Professors at Laval University, Quebec City, Qc, Canada. Corresponding Author: N. Devaux E-mail: Nicolas.devaux@uqar.ca 686970===== PAGE 12 (score 54, numeric-paren 42, table-words 1, var-words 1) =====7172290 73 74The Review of Regional Studies 48(3) 75© Southern Regional Science Association 2018. 76 77significant effect is noted. In contrast to the network distance variables, the significant effect is 78limited to the second buffer when Euclidean distance is used and corresponds to a CAD$11,268 79price decrease, a comparable impact on the previous specification. 80 81Table 3: Estimation Results 82Model (1) 83Model (2) 84Model (3) 85Independent Variables 86Coef. 87Sig. 88Coef. 89Sig. 90Coef. 91Sig. 921997-Q2 93reference 94reference 95reference 961997-Q3 97-0.2288 98-0.2385 99-0.2299 1001997-Q4 1010.5699 102*** 1030.5566 104*** 1050.5608 106*** 1071998-Q1 108-0.5747 109** 110-0.5879 111** 112-0.5826 113** 1141998-Q2 115-0.0553 116-0.0752 117-0.0713 1181998-Q3 119-0.0183 120-0.0479 121-0.0453 1221998-Q4 1230.0503 1240.0254 1250.0340 1261999-Q1 1270.0686 1280.0196 1290.0192 1301999-Q2 1310.1000 1320.0627 1330.0690 1341999-Q3 1350.0303 1360.0210 1370.0208 1381999-Q4 1390.1623 1400.1242 1410.1351 1422000-Q1 1430.1597 1440.1397 1450.1463 1462000-Q2 1470.0783 1480.0675 1490.0660 1502000-Q3 1510.1142 1520.1130 1530.1129 1542000-Q4 1550.1507 1560.1292 1570.1434 1582001-Q1 1590.1242 1600.0999 1610.1142 1622001-Q2 1630.1082 1640.0884 1650.0909 1662001-Q3 1670.1863 1680.1611 1690.1826 1702001-Q4 1710.1813 1720.1626 1730.1709 1742002-Q1 1750.2496 1760.2309 1770.2354 1782002-Q2 1790.3019 180* 1810.2969 182* 1830.3000 184* 1852002-Q3 1860.2132 1870.1955 1880.2072 1892002-Q4 1900.3549 191** 1920.2879 193* 1940.3142 195* 1962003-Q1 1970.2500 1980.2431 1990.2505 2002003-Q2 2010.5753 202*** 2030.5585 204*** 2050.5674 206*** 2072003-Q3 2080.3297 209* 2100.2783 211* 2120.2904 213* 2142003-Q4 2150.6495 216*** 2170.6340 218*** 2190.6331 220*** 2212004-Q1 2220.4444 223*** 2240.4320 225*** 2260.4328 227*** 2282004-Q2 2290.5782 230*** 2310.5693 232*** 2330.5823 234*** 2352004-Q3 2360.5748 237*** 2380.5434 239*** 2400.5683 241*** 2422004-Q4 2430.6266 244*** 2450.6094 246*** 2470.6181 248*** 2492005-Q1 2500.6875 251*** 2520.6722 253*** 2540.6814 255*** 2562005-Q2 2570.6989 258*** 2590.6855 260*** 2610.6922 262*** 2632005-Q3 2640.7318 265*** 2660.7406 267*** 2680.7152 269*** 270 271272273===== PAGE 13 (score 86, numeric-paren 75, table-words 1, var-words 1) =====274275DEVAUX, BERTHOLD, & DUBÉ: HERITAGE POLICY AND RESIDENTIAL PROPERTY VALUES 276291 277© Southern Regional Science Association 2018. 278 279Table 3 (Continued) 280 281Model (1) 282Model (2) 283Model (3) 284Independent Variables 285Coef. 286Sig. 287Coef. 288Sig. 289Coef. 290Sig. 2912005-Q4 2920.6736 *** 2930.6771 294*** 2950.6647 296*** 2972006-Q1 2980.6978 *** 2990.7290 300*** 3010.7047 302*** 3032006-Q2 3040.6741 *** 3050.6681 306*** 3070.6591 308*** 3092006-Q3 3100.7554 *** 3110.7540 312*** 3130.7331 314*** 3152006-Q4 3160.7701 *** 3170.7803 318*** 3190.7594 320*** 3212007-Q1 3220.8387 *** 3230.8398 324*** 3250.8070 326*** 3272007-Q2 3280.8567 *** 3290.8792 330*** 3310.8712 332*** 3332007-Q3 3340.8403 *** 3350.8573 336*** 3370.8271 338*** 3392007-Q4 3400.9031 *** 3410.9078 342*** 3430.9005 344*** 3452008-Q1 3460.8385 *** 3470.8540 348*** 3490.8377 350*** 3512008-Q2 3520.9492 *** 3530.9573 354*** 3550.9276 356*** 3572008-Q3 3581.0158 *** 3591.0422 360*** 3611.0145 362*** 3632008-Q4 3640.9313 *** 3650.9123 366*** 3670.8963 368*** 3692009-Q1 3700.7928 *** 3710.7868 372*** 3730.7669 374*** 3752009-Q2 3760.8729 *** 3770.8946 378*** 3790.8788 380*** 3812009-Q3 3820.8376 *** 3830.8351 384*** 3850.8054 386*** 3872009-Q4 3881.0667 *** 3891.0831 390*** 3911.0760 392*** 3932010-Q1 3940.9712 *** 3950.9812 396*** 3970.9726 398*** 3992010-Q2 4001.1202 *** 4011.1241 402*** 4031.1060 404*** 4052010-Q3 4060.9001 *** 4070.9329 408*** 4090.9170 410*** 4112010-Q4 4121.1378 *** 4131.1314 414*** 4151.1238 416*** 4172011-Q1 4181.1329 *** 4191.1350 420*** 4211.1015 422*** 4232011-Q2 4241.0868 *** 4251.0993 426*** 4271.0848 428*** 4292011-Q3 4301.3397 *** 4311.5400 432*** 4331.5564 434*** 435Grant for renovations (dummy) 4360.0386 4370.0231 4380.0202 439Impact - distance to d'Auteuil Street 440Network dist., 0 to 150 m (Buffer) 441-0.0405 442Network dist., 150 to 300 m (Buffer) 443-0.2952 444** 445Network dist., 300 to 450 m (Buffer) 446-0.2376 447* 448Network dist., 450 to 600 m (Buffer) 4490.1353 450Network dist., over 600 m 451reference 452Euclidean dist., 0 to 150 m (Buffer) 4530.0102 454Euclidean dist., 150 to 300 m (Buffer) 455-0.2476 ** 456Euclidean dist., 300 to 450 m (Buffer) 4570.0883 458Euclidean dist., 450 to 600 m (Buffer) 4590.0795 460Euclidean dist., over 600 m 461reference 462 463 464465466===== PAGE 14 (score 21, numeric-paren 0, table-words 2, var-words 17) =====467468292 469 470The Review of Regional Studies 48(3) 471© Southern Regional Science Association 2018. 472 473Table 3 (Continued) 474 475Model (1) 476Model (2) 477Model (3) 478Independent Variables 479Coef. 480Sig. 481Coef. 482Sig. 483Coef. 484Sig. 485N 486744 487 488744 489 490744 491 492R2 4930.575 494 4950.586 496 4970.585 498 499Akaike Information Criteria (AIC) 500692.977 501682.129 502683.867 503Baysian Information Criteria (BIC) 504960.475 505968.075 506969.813 507Legend: * p<0,05; ** p<0,01; *** p<0,001 508 509 510 511 512 513 514Overall, the results point to three main conclusions. First, the assistance programs for 515renovations of properties located in Old Quebec have no impact on the selling price variations. 516This does not mean that condominium renovations are not valued. It is conceivable that 517renovated condominiums are sold at higher prices, meaning that public funds used for private 518renovations would be transformed in a greater profit margin for the seller and to tax revenues for 519the municipality. However, this is not the case here. One assumption would be that such 520renovations remove some “cachet” from the original apartments, even when offering some 521additional and more contemporaneous commodities. Another assumption would be that the effect 522is minimized considering that most of the condominiums in the area had been restored a few 523years before the analysis. In fact, as previously mentioned, two-thirds of the condominiums had 524been restored between 1980 and 1999. A final assumption, that could not be tested here, is that 525renovation may influence time-on-the-market, but not prices, with renovated condominiums 526being sold more rapidly than the others. 527Second, the results suggest a localized and negative effect of the landscaping renovation 528of d’Auteuil Street for condominiums located within 150 to 450 meters network distance and 529within 150 to 300 meters Euclidian distance. As a matter of fact, the reorganization and 530landscaping of d’Auteuil Street, turning from a four-lane street into a two-lane street, has brought 531more road traffic to the adjacent streets of the district. The reorganization of the street into a one-532way road leading south also added high traffic volume in the heart of the historic district (more 533than 400 vehicles every hour from 7−9 am and 3−5 pm on work days). Noise can also be 534generated from the change in the material used to build the road, a result of the pavement of the 535road itself (made of stones, not of asphalt) on which vehicles travel up to 50 km/h (31 m/h).5 536Unlike asphalted roads, a paved road generates an uneven friction between the car wheels and 537the ground, generating more noise. Consequently, the additional crowding effect and noise 538pollution can negatively influence house prices. Several studies have already shown how noise 539can lead to a depreciation of residential values, as such might be the case with airports and 540housing values (Baranzini and Ramirez, 2005; Cohen and Coughlin, 2008). 541Another negative externality could be related to the redesigned location of parking 542spaces. Surrounding streets may experience the drawback of the new street design since parking 543spaces are limited for residents inside the walled section of the Old City. In fact, the new one-544way street may also change parking habits for vehicles heading north. This assumption seems 545plausible considering the scarcity of parking spaces in such dense and winding areas. 546 5475 Sandberg (1987) has investigated the issue of road traffic noise in regard to different surface components, namely stones and 548asphalt. 549