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DEMAND OtherSize of Materials# of BuildersLaborOther Public PolicyParcelizationOTHER FACTOR DEMAND This exposition substantially oversimplifies the National Changes Rate of ZoningService <br />/ tax policyPublic servicesPhysical Constaints: SUPPLY OF <br />COST OF LANDCONSTRUCTION COSTS <br />PRICE OF BUILT SPACE <br />FOR LANDBuildersSTRUCTURECOSTSFOR SPACE complexity of the land market. A model would economic in real household and e.g., Topography <br />0F EXISTING <br />(e.g., Housing, Offices) <br />LAND have to be disaggregated by types of uses (e.g., incomeformationemployment e.g., Wetlands <br />HOUSING <br />growth residential, industrial) and types of products <br />within those uses (e.g., SF, MF) and types of <br />households with effective demand for those uses <br />(e.g., by size of HH, age of head, income). <br />ECLA: Baseline Assumptions ECONorthwest July 2009 Page 38 <br />In addition to estimating the amount of redevelopment that will occur over the <br />planning period, the administrative rule requires the city to estimate what land has a <br />“strong likelihood” for redevelopment. One commonly used method to estimate <br />25 <br />capacity for infill and redevelopment is by arraying residential tax lots on the basis of <br />the ratio of their improvement value to their land value ratios. In this methodology, <br />26 <br />“strong likelihood” can then be defined by the value of that ratio. A ratio of less than <br />1::1 (i.e., where the improvement is worth less than the land) is a typical threshold. <br />While that method is reasonable, convenient, and relatively inexpensive, people <br />familiar with the process of redevelopment correctly point out that the redevelopment <br />decision is affected by many other factors (see Figure C-1), and that many parcels with <br />ratios less than 1::1 will redevelop during the 20-year forecast period, and many <br />not <br />parcels with ratios greater than 1::1 redevelop. The ratio is hardly a definitive <br />will <br />measure of “strong likelihood.” <br />Figure C-1: Some of the factors that fact the price of built <br />space and, by implication, the rate of redevelopment <br /> <br /> <br /> <br /> There is no guidance on what “strong” is or how it might be measured. <br />25 <br /> An improvement to land value ratio compares the assessed value of the improvements with the assessed value <br />26 <br />of the land. For example, an improvement to land value ratio of 0.75:1 shows that the improvement is worth the less <br />than the land (75% as much as the land). A ratio of 2:1 shows that the improvement is worth twice the value of the <br />land. <br /> <br /> <br />