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This is to certify that the
thesis entitled

The Impact of an Urban Stormwater Constructed
Wetland on Residential Property Values: A Case
Study of the Tollgate Wetland

presented by

Eric Arthur Cline

has been accepted towards fulﬁllment
of the requirements for

M.S. Resource Development

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6/01 cJCIRCIDaIeDuepes-ms

 

THE IMPACT OF AN URBAN STORMWATER CONSTRUCTED WETLAND ON
RESIDENTIAL PROPERTY VALUES:
A CASE STUDY OF THE TOLLGATE WETLAND
By

Eric Arthur Cline

A THESIS

Submitted to
Michigan State University
in partial fulﬁllment of the requirements
for the degree of

MASTER OF SCIENCE
Department of Resource Development

2002

ABSTRACT
THE IMPACT OF AN URBAN STORMWATER CONSTRUCTED WETLAND ON
RESIDENTIAL PROPERTY VALUES:
A CASE STUDY OF THE TOLLGATE WETLAND
By

Eric Arthur Cline

With the advent of Phase II of the Clean Water Act many municipalities are faced with
the difficult task of selecting the most appropriate and ﬁscally responsible stormwater
management practices in which to invest. This study evaluates the impact of one type of
stormwater control, a constructed wetland, on residential property values near the
Tollgate Wetland in Lansing, Michigan. Using a case study design, the study included
interviews with local real estate experts, a survey of nearby residents, and development of
a hedonic pricing model. The results of the hedonic analysis indicate that the Tollgate is
not a signiﬁcant inﬂuence of sale price in the neighborhood. However, as shown by the
survey and expert interviews there is little doubt that people in this area value the
wetland. This is especially important considering the neighborhood contains a relatively
large amount of open-Space amenities including the wetland, a local park, school and golf
course. In addition, the wetland may indirectly have a positive impact on property values

as a result of its value as a neighborhood asset and its function as a stormwater control.

TABLE OF CONTENTS

LIST OF FIGURES .................................................................................. v
LIST OF TABLES .................................................................................. vi
LIST OF APPENDICES .......................................................................... viii
CHAPTER 1 - INTRODUCTION ................................................................................... 1
Problem Statement .......................................................................................................... 2
Study Area: The Tollgate Constructed Wetland ............................................................. 4
Organization of Thesis .................................................................................................... 5
CHAPTER 2 - LITERATURE REVIEW ...................................................................... 6
Hedonic Studies in Natural Wetland Valuation .............................................................. 6
Hedonic Studies of Water Resource Valuation .............................................................. 9
Public Parks and Open Space ....................................................................................... 10
Constructed Wetland Valuation .................................................................................... 11
Residential Surveys on Storrnwater Controls ............................................................... 12
CHAPTER 3 - RESEARCH QUESTIONS AND STUDY METHODS .................... 14
Research Questions ....................................................................................................... 14
Hypothesis ..................................................................................................................... 14
Methods ......................................................................................................................... l 5
Real Estate Interviews ................................................................................................... 15
Survey of Residents ...................................................................................................... l6
Hedonic Pricing Model ................................................................................................. 18
Limitations of the Methods ........................................................................................... 20
Survey/Interview Limitations ....................................................................................... 21
Hedonic Limitations ...................................................................................................... 21
Generalizability ............................................................................................................. 22
CHAPTER 4 - RESULTS .............................................................................................. 23
Survey Results .............................................................................................................. 23
Interview Results .......................................................................................................... 30
Hedonic Results ............................................................................................................ 32

iii

CHAPTER 5 - CONCLUSIONS ................................................................................... 36

Future Directions for Research ..................................................................................... 43
Policy Implications ....................................................................................................... 44
REFERENCES ...................................................................................... 45

LIST OF FIGURES

Figure 1. Q18f(within 1000’)” .................................................................... 30

Figure 2. Q1 8f(on 1500’)” ........................................................................... 30

LIST OF TABLES

Table 1. Water resource valuations using hedonics, adapted from Mahan (1997) .......... 9
Table 2. Number of survey respondents, refusals and uncontacted households ........... 23
Table 3. Q1 - How long have you lived in this home? ......................................... 24
Table 4. Q3 - What originally attracted you to live here? ..................................... 25
Table 5. Q4 - What do you now view as the positive characteristics of this area? ......... 25

Table 6. Comparing Q4 - What do you now view as the positive characteristics of this
area? ................................................................................................. 27

Table 7. Within 1000 feet — Q8d. Indicate whether or not, ‘the presence of the Tollgate
Wetland’ has had a positive, negative or no impact on the value of this property ...... 28

Table 8. On 1500 foot radius — Q8d. Indicate whether or not, ‘the presence of the
Tollgate Wetland’ has had a positive, negative or no impact on the value of this

property...” ............................................................................................ 28

Table 9. Within 1000 feet - Q18f. As a possible advantage of a local wetland, do you

think that ‘increased property value’ applies to the Tollgate? ................................. 29
Table 10. On 1500 foot radius - Q18f. As a possible advantage of a local wetland, do

you think that ‘increased property value’ applies to the Tollgate? ........................... 29
Table 11. Variables in basic hedonic model ............................................. .....-33
Table 12. Descriptive statistics of variables .................................................... 33
Table 13. Results from basic hedonic OLS regression ........................................ 34
Table 14. Results from hedonic OLS regression with wetland locational variable ....... .35
Table 15. Hedonic OLS regression with sub-neighborhood designations. .. ............... 40
Table 16. Correlation between sales price and sub-neighborhoods ......................... 40
Table 17. Correlation between distance to the wetland and sub-neighborhoods .......... 41
Table A4-1. Simple correlations between variables ........................................... 56
Table A4-2. Town 1 ................................................................................ 57

vi

Table A4-3. Town 2 ............................................................................... 57

Table A4-4. City 1 ................................................................................. 57
Table A4-5. City 2 ................................................................................. 57
Table A4-6. City 3 ................................................................................. 58
Table A4-7. City 4 ................................................................................. 58
Table A4-8. City 5 ................................................................................. 58
Table A4-9. City 6 ................................................................................. 58
Table A4-10. Stats for complete data set ..................................................... 59
Table A4-11. Stats for homes within the Township ........................................ 63
Table A4-12. Stats for homes with the City .................................................... 63

vii

LIST OF APPENDICES

Appendix 1.
Appendix 2.
Appendix 3.
Appendix 4.
Appendix 5.
Appendix 6.

Appendix 7.

Interview Guide for Real Estate Professionals .................................. 48
Resident Survey ..................................................................... 49
Groesbeck Sub-neighborhoods ................................................... 55
Additional Statistics ................................................................ 56
Transcribed Interviews with Real Estate Agents ............................... 66
Transcribed Interviews with Property Appraisers .............................. 84
Survey Responses ................................................................... 91

viii

CHAPTER 1 - INTRODUCTION

Over the last thirty years public concern regarding water quality and wastewater
pollution has resulted in regulations aimed primarily at point source control. Tremendous
improvements have been made, and control of point sources from industry and sewage
treatment plants has led to cleaner aquatic environments. However, according to the
National Water Quality Inventory conducted in 1996: 13 percent of impaired rivers, 21
percent of impaired lakes and 45 percent of impaired estuaries surveyed are affected by
urban stormwater runoff, a type of non-point source pollution (NPS) (U .S.EPA 2000).
NPS arises when stormwater runoff ﬂows across roof tops, pavement, feedlots and farm
ﬁelds and carries contaminants from these surfaces into nearby surface waters. The
emerging need to address NPS is evidenced in the United States by legislative actions
such as the strengthening of the Resource Conservation Act in 1989 (Peterson 1998) and
the implementation of Phase II of the Clean Water Act.

The Clean Water Act (CWA) requires that certain municipalities and construction
sites utilize practices to address non-point source pollution. The second phase of this
regulation increases the number of municipalities and construction sites that fall within
the scope of regulation (U.S.EPA 2000). The law requires that these newly regulated
municipalities submit a stormwater management plan to the EPA by March of 2003, and
construction sites greater than one acre have a stormwater pollution prevention plan.

Some of these newly regulated municipalities may want to implement plans that
include the costly construction of stormwater control devices such as wet or dry detention
basins. However due to the smaller size of the municipalities regulated under Phase 11

(U .S.EPA 2000), the difﬁcult ﬁscal situation prevailing in many cities and escalating

urban land values; it seems unlikely that systems requiring land area will receive much
consideration.

One such type of land intensive stormwater control is the Constructed Wetland
(CW). CW systems replace the petro-chemical inputs of traditional wastewater treatment
with solar and biological energy, thus providing a more sustainable treatment technique
(Campbell and Ogden 1999). The CW has been successfully put into operation around
the world, with over 650 reported in 1996 in the US. and Canada (Kadlec and Knight
1996). CWs have proven very effective in treating stormwater (Kadlec and Knight 1996)
doing so by means of a variety of physical, biological and chemical processes. As
mimics of natural systems, CWs are inherently attractive to wildlife and can contain a
wide variety of plant species.

This unique combination of water, wildlife and plants (especially in an urban
setting) has the potential to be a strong attraction for people as well. Drawn by the
possibility of viewing aquatic wildlife or the simple calm of a sunset on the water, CWs

are increasingly being viewed as an aesthetic attraction for humans.

Problem Statement

Municipalities and decision makers are often required to make a cost-beneﬁt
analysis of public expenditures. Contemporary conventional wisdom among many
elected ofﬁcials and decision makers is that “open space” in urban areas is a costly
investment from which a community receives little or nothing in economic return
(Crompton 2001). This perception probably holds true for the construction of land

intensive constructed wetlands, regardless of their effectiveness in treating NPS.

Open space advocates believe that this thinking is ﬂawed. They argue that a signiﬁcant
percentage of taxed property value is derived from amenities that are off the tax roll, such
as local schools, parks and other protected areas (Crompton 2001). If this thinking holds
true, would the same apply for properly designed CW3? If so, the complete value of
these systems includes property value impacts in addition to water storage (ﬂood
protection) and improved water quality.

Wetland valuation studies have, in general, shown that natural wetlands have
positive economic, social and biological value. As such, they contribute to human welfare
(Costanza, d'Arge et al. 1997; Woodward and Wui 2001). Most econometric wetland
studies found in the literature have focused on natural wetlands (Mahan 1997; Lupi et al.
1991; Doss and Taff 1996), and the relatively few speciﬁcally addressing the property
value impacts of stormwater controls are primarily anecdotal (U.S.EPA 1995; Partnership
1996). However, all of these studies indicate that proximity to either stormwater controls
or natural wetlands affects proximate property value in a positive manner. There are few
published econometric studies speciﬁcally examining constructed wetlands and their
effect on property values. Knowing the relationship between constructed wetlands and
property values would aid municipalities in evaluating the ﬁscal desirability of CWs as a
means of achieving Phase II compliance.

Another important facet of determining the value of constructed wetlands is the
perceptions of proximate property owners and residents. There have been few analyses
conducted on the societal response to stormwater controls (Debo 1977; Baxter,
Maulamoottil et a1. 1985; Adams, Franklin et a1. 1986; Emmerling-DiNovo 1996) and

none speciﬁc to stormwater CWs. Do proximate property owners value these systems,

and if so what is the relationship between these perceptions and the economic, ecological
and social functions of CWs? An understanding of these relationships will not only allow
an optimization of stormwater CW systems, but may also lend support to decisions made
for or against their use, and the regulations that require them.

This study attempts to answer these questions by coupling an econometric
technique known as hedonic price analysis with a face-to-face survey of property owners
residing in an urban neighborhood containing a stormwater CW, known as the Tollgate

Wetland.

Study Area: The Tollgate Constructed Wetland

As a consequence of a City of Lansing 30-year management plan, the Tollgate
Drainage District was mandated to implement a sewer separation project. This district is
made up of the Groesbeck neighborhood, and the Groesbeck Municipal Golf Course both
within Ingham County, MI. Part of the unique nature of the Groesbeck area is the fact
that both the City of Lansing and the Charter Township of Lansing have jurisdiction over
distinct sections of the neighborhood. This neighborhood, established in the 1950s, has
steadily grown with the addition of minor subdivisions in the 605, 705 and 803 and is now
bounded by major thoroughfares. Traditionally known as a well kept, affordable and
blue collar area, the neighborhood has a good to excellent reputation with Lansing
residents.

The selection of CW technology grew out of the necessity to ﬁnd a cost efﬁcient
solution for neighborhood storm water disposal. Initial estimates in excess of 20 million

dollars were deemed unacceptable, as the full cost of construction would be covered

exclusively by an assessment of the commercial properties, apartment buildings and 554
residential properties within the 225-acre district (Lindemann 1999).

The Tollgate CW’s primary design objective was to store and treat the storm
water runoff from the mixed-use watershed. Construction of the CW began in 1996, and
the system went into operation in September of 1997. A 12 acre pre-existing public park
located in the neighborhood was re-contoured to create ponds, waterfalls, wetland,
spillways and a peat sand ﬁlter. The system was designed to have enough storage for a
100-year, 24-hour storm event (approximately 35.8 acre-feet of water). Other important
design features include: recreational amenities, such as walkways and benches; native
vegetation; a layout and vegetation scheme intended to attract wildlife; a public education

component; and an outlet for an adjacent golf course water hazard.

Organization of Thesis

A literature review is included in Chapter 2. Chapter 3, Research Methods,
explains the study design and methodology. Chapter 4, Data Collection, discusses the
way in which the data used for the study was collected, and includes a description of the
data. The analysis and results of the data are presented in Chapter 5. Chapter 6,
Conclusions and Recommendations, concludes the thesis with a discussion of the results

and their implications for this and future research.

CHAPTER 2 - LITERATURE REVIEW
This chapter reviews three areas of literature pertinent to this study.
1. Hedonic valuation of natural wetlands, and water resources.
2. Property value impacts of open space, public parks and CW.

3. Survey research concerning residential stormwater impoundments.

Hedonic Studies in Natural Wetland Valuation

Three key hedonics studies have been conducted on the impact of wetlands on
property values in the United States. These studies have been situated in Portland,
Oregon (Mahan 1997; Mahan, Polasky et a1. 2000) and Ramsey County (St. Paul),
Minnesota (Lupi, Graham-Tomasi et a1. 1991; Doss and Taff 1996).

The Portland study assessed the value of natural urban wetlands utilizing hedonic
pricing (Mahan 1997; Mahan, Polasky et al. 2000). The study used a data set containing
14,200 observations representing home sales within Multnomah County (Portland),
Oregon for the two year period (1992 — 1994). Real estate data for this study was
provided by assessors’ records, and the distance variables were generated using regional
geographic information systems (GIS) data. Typical neighborhood and structural
independent variables were included in the model. The environmental variables, such as
distance to the nearest wetland and wetland characteristics, were also included. The
authors based the classiﬁcation of wetland types upon a simpliﬁed Cowardin system, a
common wetland classiﬁcation technique (Cowardin 1979). The dependent variable (sale

price) was screened for bias; only data for arms-length or true market, warranted

transactions were included. The prices were adjusted by a price index and expressed in
May 1994 dollars.

Two models (Model I and Model II) were developed, each based upon different
assumptions about the wetland/property value relationship. Model I assumes that it is the
characteristics of the nearest wetland (size, distance, type) that affect property value,
while Model II assumes that it is the distance to the nearest wetland of each type that
inﬂuences property values.

The results of Model I indicated a positive value of proximity to wetlands;
reducing the distance to the nearest wetland of any type by 1000 feet increases home
value by $436.17. Model 11 produced mixed results, leading the authors to conclude that
while distance to and size of nearby wetlands inﬂuenced homebuyers, the type of wetland
did not.

The Doss and Taff (1996) study of Ramsey County (St. Paul), Minnesota utilized
a model similar to Model 11 in the Portland study, in that it estimates the nearest distance
parameters to four wetland types: open water, emergent vegetation, scrub-shrub and
forested. The researchers sought to determine the relative preferences for proximity to
the same broad types of wetlands; however they limited the distances to 0.6 miles.

The data collected for this study included only those wetlands within Ramsey
County. The wetlands were classiﬁed and only properties that were within a 1000 feet of
each type were included, leaving 32,417 single-family residential home sale transactions
out of 106,049 to be used in the model.

The authors assumed that the home values were based upon structural and

location attributes, including distance to wetlands. The results of this study “clearly

(exhibit) a relationship between property value and distance to wetlands” (Doss and Taff
1996, p. 127). The study found that moving an additional 10 meters closer to an open-
water wetland increases a home's value by $99, towards an emergent wetland by $136,
towards a scrub-shrub wetland by $145, and towards a forested wetland by $145. Doss
and Taff (1996) concluded that their estimates provide a lower bound of wetland value,
and suggest the inclusion of public values, such as scenic value or the presence of
wildlife habitat.

In an earlier study, Lupi, Graham-Tomasi and Taff (1991) also used Ramsey
County (St. Paul), Minnesota for their study. This study measured the inﬂuence of the
number of wetland acres in a survey section on housing prices within that section. Unlike
the studies described above, this study did not include location point data or wetland
characteristics. Over 18,000 residential property sales were included in the data set,
representing home sales from 1987 to 1989 in Ramsey County, Minnesota.

The wetland data used was collected from the Minnesota Dept. of Natural
Resources' Protected Water and Wetlands Inventory (PWI). Lupi et a1. (1991) used an
ordinary least squares regression and utilized the LIMDEPTM software program to
estimate and graph the linear hedonic function in all variables except wetlands.

The authors found a signiﬁcant positive relationship between protected wetland
acres per section and property value. Signiﬁcant to the Tollgate research, this study
found that when holding housing density equal, changes in wetland acreage are relatively
more valuable in sections with low wetland acreage as opposed to sections with a higher

acreage.

While inﬂuence of individual wetlands on nearby property values cannot be
determined using the section-wide approach, the authors do infer from the results that

property values diminish as wetland distance increases, suggesting that wetlands have a

“neighborhood effect”.

Hedonic Studies of Water Resource Valuation

Real estate agents and property buyers have long been aware of the “waterfront
effect”. A home situated by a stream, lake or river costs more to buy or rent than a more
distant one (Schueler 2000). There are a number of hedonic property studies on water
resources, with most focusing on estimating the amenity values for lakes. A

comprehensive summary of these studies can be found in Mahan (1997), see Table 1.

Table 15. Water resource valuations using hedonics, adapted from Mahan (1997)

 

 

 

 

 

 

AUTHOR - RELEVANT COMMENT
LOCATION ENVIRONMENTAL
VARIABLE
Frown & Pollakowski Lake view -Distance to water lProperty values increase with closer
1976) Seattle, WA front proximity to lake.
'Arge & Shogren Lakefront footage [Property values greater with increased
1989), Okoboji Lakes, water quality.
A
etsch (1964), Reservoir-front property - [Reservoir-front property has greater
ennessee Valley, TN Distance to reservoir Nalue.
Eulshreshtha & Gillies River view Property values increased by view of
EM) Saskatchewan, river.
Sanada
treiner & Loomis Restoration project -Stream IRestored streams increased property
S1995), Contra Costa, values by $4,500 to $19,000.
anta Cruz, Solano
ounties, CA

 

 

 

 

The information provided by this literature suggests that a properly designed CW

can enhance nearby property values. The Knetsch (1964) study of reservoirs is of

particular importance as it suggests that constructed water bodies share a similar property

price effect with natural water bodies.

Public Parks and Open Space

In general, people are willing to pay a larger amount for a property located close
to a public park (Crompton 2001). This relationship is described as the “proximate
effect” that could apply to most neighborhood amenities. The principle is explained by
Crompton (2001, p.1) as follows:

The premise that parks and open space have a positive impact on property

values derives from the observation that people frequently are willing to

pay a larger amount of money for a home located close to these types of

areas, than they are for a comparable home further away. If this

observation is empirically veriﬁed, then owners of the enhanced property

are likely to pay higher property taxes to governments because of the

increase in the property's appraised value. In effect, this represents a

"capitalization" of park land into increased property values for proximate

land owners. Conceptually, it is argued that the competitive market will

bid up the value of property just equal to the capitalized value of the

beneﬁts that property owners perceive they receive from the presence of

the park or open space.

Compton's contention has been supported by a number of studies. Based upon a
2001 hedonic study conducted in Greenville, South Carolina, Espey and Owusu-Edusei
(2001) concluded that public parks do positively impact proximate property values. The
authors investigated property effects generated by different types of parks. The parks
were typed based upon size and usage. They found that in some cases property within
300 feet was negatively impacted while homes within 300 and 500 feet experienced a

positive value effect. This negative then positive effect may be due to parks experiencing

a very high recreational use. The results indicated that medium sized parks had a

10

signiﬁcant effect on property extending out 1500 feet from the park (Espey and Owusu-
Edusei 2001).

In another hedonic study in Portland, Lutzenhiser and Netusil (2001) found that
homes located within 1500 feet of a natural area park experienced an increase in property
value. Comparing homes in proximity to natural area parks, versus more urbanized
parks, the authors found that the natural area parks had a greater impact (Lutzenhiser and
Netusil 2001).

Reviewing 30 empirical studies which investigated the extent and legitimacy of
the proximate effect, Crompton reported that “a positive impact of 20% on property value
abutting or fronting a passive park area is a reasonable starting point. If it is a heavily
used park catering to large numbers of active recreation users, then the proximate value
may be incremental on abutting properties, but may reach 10% on properties two or three
blocks away” (2000, p. 1)

These studies bring to light an issue that may be important to the Tollgate
research. As a facility that encourages recreational users, could this kind of use inﬂuence
the hedonic model? To address this issue a zonal approach was explored, stratifying

home sales in the Groesbeck neighborhood based upon a distance range to the Tollgate.

Constructed Wetland Valuation

In September 1995, the Ofﬁce of Wetlands, Oceans and Watersheds within the
US. Environmental Protection Agency (EPA) published a study on the beneﬁts of runoff
controls, including detention ponds and constructed wetlands, on nearby property values

(U .S.EPA 1995). By interviewing both real estate experts and experts in the management

11

of urban stormwater control structures and reviewing literature, the authors of the study
estimated a 5% to 30% premium for waterfront properties. Two case studies of
developments utilizing CWs in Kansas and Colorado exhibited premiums of $20,000 and
$35,000 respectively on homes located near the CW. These premiums were attributed to
the scenic value provided by locating homes in close proximity to the constructed
wetlands.

Several factors that contributed to the amount of the premium were noted.
Foremost was the size of the wetland or pond, and secondly the presence of aesthetic or
recreational amenities (Schueler 2000). This unique research suggests that CWs do have
an inﬂuence on proximate property values. However, this study focused solely on new
residential developments, quite unlike the established neighborhood of interest in the

Tollgate study.

Residential Surveys on Stormwater Controls

Using a survey of residents and interviews with local ofﬁcials, Baxter et a1.
(1985) examined the perceptions of residents living around two man-made stormwater
impoundments (4.3 and 10.5 acres) in the city of Mississauga, Canada. Residents
perceived that the lakes positively inﬂuenced their property value (49%), attracted
potential home buyers (1 0-60%) and helped foster a sense of community (Baxter et a1.
1985)

By surveying residents in seven Illinois subdivisions containing stormwater
impoundments, Emmerling-DiNovo (1995) examined perceptions of the image and value

of developments in relation to the impoundments. The results indicated that residents

12

believed wet basins in the neighborhood positively impacted proximate property value,
and signiﬁcantly contributed to the image of a subdivision. When given a locational
choice, that included adjacency to a golf course or park, respondents answered that
adjacency to a wet basin was the most preferred (Emmerling-DiNovo 1996).

In a study examining the attitudes of residents living near four man-made lakes
(6-48 acres in size) in Atlanta, GA, Debo (1977) found that residents felt that the lakes
had a positive impact on the value of their homes (40-100%) and was a positive factor in
their decision to purchase a home (22-93%) (Debo 1977).

As a part of a larger study, the National Institute for Urban Wildlife surveyed 600
homeowners in Columbia, Maryland (Adams, Franklin et a1. 1986). They found that
98% of respondents enjoyed viewing wildlife that made use of the city's stormwater
impoundments, and 75% indicated that permanent water bodies added to real estate
values.

The results of these studies indicate that residents value stormwater
impoundments, particularly those that incorporate an open water feature. Although these
studies did not speciﬁcally examine CWs, the Tollgate system does have several Open
water areas which would indicate that nearby residents may share the perceptions of the
respondents in these studies. Two factors distinguishing the study areas in the above
mentioned research from the Tollgate study area, are the smaller size of the Tollgate CW
open water features (approximately 30 to 50% of the total 12 acre site), and that
recreational access is conﬁned to the periphery of the site. No access is allowed to the
actual open water areas of the CW. These factors may lower residents' expectations of a

positive property value impact.

13

CHAPTER 3 - RESEARCH QUESTIONS AND STUDY METHODS
Research Questions

The study focused on the following research question: Has the Tollgate Wetland
had a positive or negative effect on the value of proximate residential properties? Sub-

components of that question include:

1. What is the magnitude and aerial extent of any impact?

2. Do nearby residents perceive that the constructed wetland has had a positive or
negative impact on their property value?

3. What other impacts do these residents associate with the constructed wetland?

4. Do real estate industry representatives perceive that the constructed wetland has
had a positive or negative impact on property values?

5. Are residents’ perceptions of impact consistent with empirical determination of the

effect on property values?

Hypothesis

H1. The Tollgate Constructed Wetland will have a positive impact on the value of
proximate residential property.

H2. The impact on the value of residential property will be signiﬁcantly correlated with a
property's proximity to the wetland (i.e. the shorter the distance the more positive the
impact on property value).

H3. The residents' perception of the Tollgate’s impact on the value of their property will
be signiﬁcantly correlated with a property's proximity to the wetland (i.e. the shorter the

distance the more positive the impact on property value).

Methods

The study employed a multi-method approach, the main elements of this research

included:

1. Interviews with real estate industry representatives.

2. An attitudinal survey of residents living in proximity to the wetland.
3. A hedonic pricing analysis.

This multi-method study design allows for triangulation or convergence of results.

Real Estate Interviews

In—depth interviews were conducted with real estate agents and property
appraisers familiar with the study area to obtain their perceptions of the impact of the
Tollgate CW on property values. These interviews were also used to gain insight to the
study area’s important characteristics and features to assist in the development of the
hedonic pricing model and delineation of the study area for the survey of residents.

Interviews were conducted with six real estate professionals familiar with the
Groesbeck neighborhood, four real estate agents and two property appraisers. These
semi-structured face to face interviews utilized an interview guide (see Appendix 1) to
ensure consistency in data collection. Realtors were selected by contacting leading real
estate ﬁrms and asking sales managers to recommend agents familiar with the Groesbeck
neighborhood. The appraisers were selected by asking the realtors interviewed to

recommend an appraiser familiar with the Groesbeck neighborhood. The interviews

15

generally lasted one hour, and were taped with the interviewee’s permission. Each of the

recorded interviews was transcribed by the researcher and subjected to content analysis.

Survey of Residents

A face to face questionnaire was administered to residents living in proximity to
the wetland (see Appendix 2). Drawing upon the published research regarding proximity
effects (Crompton 2001; Espey and Owusu-Edusei 2001; Lutzenhiser and Netusil 2001),
which suggested properties within 1500 of a park or open space could reasonably be
expected to receive a property value impact, a sample area was determined. An attempt
was made to contact all residents within 1000 feet of the center mass of the Tollgate
Wetland. A second round of surveying was conducted on all residents lying on a 1500
foot radius from the Tollgate Wetland. This subsequent round of surveying was an
attempt to capture the aerial extent of residents' perceptions of the Tollgate’s property
value impact. The radius approach was utilized due to a limited availability of resources.

This survey was used to determine resident perceptions of the impact of the
constructed wetland on property values and any other perceived positive or negative
impacts of the constructed wetland. The survey results were also used to gain an
appreciation of residents' general feelings about their neighborhood and the
characteristics of that neighborhood that may affect property values in the area. Each
respondent was asked a series of closed and open ended questions concerning both
general neighborhood characteristics that may affect the value of their property as well as

questions speciﬁc to the Tollgate and its property value impact. The questionnaire was

16

pre-tested with 6 residents who live in the general vicinity but outside the study area. All
interviews were conducted by the researcher to ensure consistency in data collection.

As the focus of the survey was to gauge the perceptions of residents that owned
property a visual inspection was made of the study area prior to the sampling. Any
suspect properties (apartment buildings, businesses) were noted and were dropped from
the sample population upon conﬁrmation that they were not residential property. This
conﬁrmation was made via intemet access to Ingham County property tax database

(http://www.ingharn.org/tr/test__connection_to_bs.htmL). To contact potential

 

respondents the researcher went door to door asking residents if they would be willing to
be interviewed. If the residents agreed, they were assured of conﬁdentially and given a
document that contained an explanation of their rights as subjects of human research as
well as contact information for the researcher. Sampling took place over a two month
period (8-15-02 to 10-12-02). A protocol for the time of day and number of attempts at
contacting a potential respondent was adhered to over the sampling period. Sampling
took place on Thursday, Friday and Saturday during the weeks of 8-15-02, 8-22-02, 9-5-
02, 9-19-02, 9-26-02, and 10-10-02. The researcher generally made attempts to contact
potential respondents from 1000hrs to 1200hrs, from l300hrs to 1500hrs, and from
1700hrs to l900hrs.

The completed questionnaires were coded and the data entered into
Statistical Products and Service Solutions, SPSS, for analysis. Frequency tests were run
for each of the questions, percentages and means for of each response were calculated for

the entire set, and both sub-sets of the population (within 1000' and on 1500' radius).

17

Conclusions were drawn from these results and appropriate ﬁgures and tables were

produced to help in explaining the survey results.

Hedonic Pricing Model

Hedonic pricing utilizes a method that estimates the implicit price of
characteristics that differentiate closely related products (Rosen 1974; Perman et al.
1996). An environmental amenity, such as scenic value, provided by a nearby wetland is
not an object that can itself be traded. In other words, “the right to live by a wetland” is
not commonly marketed, but is a valuable attribute to some people (Taff 1992). As a
result, this attribute does not have a market price; therefore we cannot use its price to
reveal preference for living next to a wetland (Kaplowitz 1997). However, this appeal or
preference may be reﬂected in the observable price of properties near the wetland.
Relying on variations in residential property values, the hedonic method reveals the
implicit prices for each of the property attributes, while holding all other attributes
constant. These implicit prices can then be used as a measure of the value of marginal
changes in all of the attributes included in the model. The general price function is
discussed in the following paragraph.

The price of a house reﬂects the value of a bundle of its attributes. The hedonic
equation seeks to track the “true price”, the dollar value that is agreed upon by willing
buyers and sellers, each with ﬁll] information and without coercion (Doss and Taff 1996).
In hedonic models regarding property value and housing prices, attributes are assigned to

three characteristics: structural characteristics, neighborhood characteristics and

18

environmental characteristics. Assuming the housing market is in equilibrium and the
prices are market clearing, the price of a house can then be represented as:

Pi = f (Si, Ni, Ea)
where Pi is the price of the house, Si is a vector of structural characteristics, Ni is a vector
of neighborhood characteristics and Bi is a vector of environmental characteristics.

For this study, a hedonic price model was developed utilizing data made available
by the two local municipalities in the Groesbeck neighborhood. The model was created
to provide a revealed and objective method of determining property value impacts of the
Tollgate CW. The data used in the model was collected from both the City of Lansing
assessor’s ofﬁce and The Charter Township of Lansing's assessor on all of the reported
residential property transactions within the study area. This data set includes home sales
from September of 1997, the Tollgate’s initial month of operation, to the summer of
2002.

The transaction information used for the model was screened for bias, and
included only residential arms-length transactions. Interfamily sales, trades, sheriff sales,
commercial sales, sales without warranty deeds, and sales of less than $10,000 were
ﬁltered from the data set. This left a total of 269 residential sales to be included in the
model. An attempt was made to verify some of the structural characteristics of the
homes. Taking a random sample of the residences, a site visit to the property was made
to conﬁrm characteristics such as garage area, and style of home. This veriﬁcation
process indicated that some of the structural information was incorrect, particularly the

style of home. As such, the data concerning home style was left out of the model. This

19

information is most likely highly correlated to square footage of the home and therefore
is not crucial to the analysis.

Collinearity is often an issue addressed in hedonic studies. If some variables in
the function are correlated, the imprecision of the estimates produced by the model are
increased. On the other hand, in order to clearly delineate the effects of an environmental
characteristic on the dependent variable, the analysis must control for the effects of other
pertinent characteristics. The tradeoff between bias and reliable estimates receives little
help from hedonic theory, and its resolution is left to econometric ﬁne-tuning. As a
general rule of thumb, variables with simple correlations higher than .80 are said to be a
concern (Mahan 1997). No correlations between variables were found to exceed this
value. Correlation statistics between the variables utilized in the basic model are
presented in Table 1 of Appendix 4.

The data was entered into SPSS for analysis. An ordinary least squares regression
using a linear functional form was run on several different models. Each model
speciﬁcation included different sets of independent variables, but the same dependent
variable (sales price of the home). Conclusions were drawn from these results and
appropriate graphs and tables were produced to help in explaining the results of the

regression.

Limitations of the Methods
The combination of these three research methods, while allowing for the
collaboration of results from each of the different techniques, also creates the potential

for multiple sources of error.

20

Survey/Interview Limitations

The response rate and sample size are limiting factors. Despite the survey
protocol described above, only 36% of the surveyed households agreed to be interviewed.
While this is not an unreasonable response rate, the fact that the sample population was
small (127 households) makes the relatively small number of respondents a limiting
factor. The age and gender of the respondents was not officially recorded, however
anecdotally a fairly large percentage of those that answered the survey were of retirement

age, and female. These factors may serve to limit the certainty of the survey results.

Hedonic Limitations

The primary limitation of this technique is that it can only measure a subset of use
values indirectly associated with the market value of related good [F reeman, 1993]. All
the variables that may inﬂuence a homebuyer's and seller's decision can’t be included.

Another possible limitation could be the lack of information that consumers might
have about the qualities of living near a wetland. For example, it was once widely
believed that wetlands were the source of disease (Vileisis 1999). If consumers within a
geographic area contained a number of people who thought this way about wetlands, the
hedonic estimation may be biased. However, recent studies indicate that the services of
wetland such as recreation and ﬂood storage are well recognized by ordinary citizens
(Azevedo, Herriges et a1. 2000).

An issue commonly cited in hedonic literature is separability of consumer
preferences. Many hedonic models assume weak separability of demand, allowing the

consumer demand for living next to a wetland to be estimated independently of other

21

demand equations for other goods purchased (Mahan, Polasky et al. 2000). Standard
demand theory and applied studies of consumer demand cast doubt on the validity of
weak separability (Perman, Ma et al. 1996).

An issue of note, speciﬁc to the model presented here, is the relatively small
sample size used in this research. Although statistical signiﬁcance is possible with a
sample of 269, this sample size is an order of magnitude lower than any of the hedonic
studies presented in the literature review. These studies are also distinct from the
research presented here in that they focus on the effect of many, natural wetlands, as

opposed to this focus on one individual man-made wetland.

Generalizability

Generalizability refers to the how the ﬁndings of one study could be applied
beyond the speciﬁc research objectives and situations of that study. As this study focuses
on one particular constructed wetland with a myriad of unique characteristics, the
application of these results beyond this situation is unwarranted. However, these results
and study design may illuminate the general understanding of the phenomena discussed,

and serve as an entry point for understanding other related situations.

22

CHAPTER 4 - RESULTS
Survey Results

This section presents the results from the survey conducted within the study area.
The questionnaire consisted of both open-ended and categorical questions, and generally
lasted between 10-20 minutes. There were an estimated 91 owner-occupied properties
within 1000 feet of the center mass of the Tollgate system. Of these, a total of 30
questionnaires were completed for a response rate of 33%. A second round of surveying
focused solely on homeowners whose property was situated on a 1500 feet radius of the
center mass of the Tollgate system. Out of the estimated 36 owner-occupied properties,
16 households answered the survey for a response rate of 44% for those at the 1500 ft
radius. The overall survey response rate was 36% (46 out of 127 possible respondents,

see Table 2).

Table 16. Number of survey respondents, refusals and uncontacted households

 

 

 

 

 

EN 1500'
WITHIN 1000' RADIUS TOTAL
ouseholds 91 36 127
Eff of Respondents 30 16 46
l# of Refusals 31 6 37
“#Uncontacted 30 14 44

 

 

 

 

 

The ﬁrst set of results (Tables 3-5) includes all 46 survey respondents. These
tables provide an overview of the perceptions of the survey respondents concerning
general neighborhood characteristics and the Tollgate CW. On average, survey
respondents had lived in their current residence 19.79 years (Table 3).

Residents were asked to identify characteristics that had initially inﬂuenced their

decision to move into their current residence (Q.2). This was an open-ended question and

23

the results are presented in Table 2. The characteristic identiﬁed most often by the
survey respondents was the “neighborhood” (32.6%), followed by “transportation /
accessibility” (23.9%), the affordability of homes in the area (19.6%) and the convenient
location of the neighborhood (17.4%).

When asked what they would now identify as the positive characteristics of this
area (Q.4, open-ended), respondents indicated that the family or neighborhood orientation
of the area (39.1%), as well as the relative quiet and safety of the neighborhood (41.3%)
are important positive characteristics. The quality of home maintenance and the area’s
location were also identiﬁed as positive attributes. Surprisingly local schools were not
deemed an important attractant or positive characteristic of the area. Most of the
respondents indicated the Lansing School District had a poor reputation in comparison to
other neighboring school districts. It is also interesting to note that while quiet and safety
and being a family oriented neighborhood were not originally dominant characteristics in
respondents’ attraction to the area (Table 4), they had subsequently become the dominant
positive characteristics of the area to these same respondents (Table 5).

Residents felt that the amount and speed of neighborhood trafﬁc was the primary
negative characteristic of the neighborhood (17.3%), although many (32%) felt that there

were no negative neighborhood characteristics.

Table 17. Q1 - How long have you lived in this home?

I'm-WW MAXIMUM MEDIAN MEAN
I 716 54.9 0.1 years 55 years 13 years 19.79 years I

 

 

 

 

 

 

 

 

24

Table 18. Q3 - What originally attracted you to live here?*

      

re ers e ue, or y ease o
* * This respondent has lived in his/her current residence for three years.

Table 19. Q4 - What do you now view as the positive characteristics of this area?

 

When asked to address speciﬁc neighborhood amenities which positively impact
property values (Q.7, open-ended), residents most frequently answered ‘the high level of
exterior maintenance of neighborhood homes’ (36.8%). The second most frequent

answer to this question was the neighborhood or family orientation of residents (21.1%).

25

Most residents answered that the Tollgate CW was an overall positive for the
neighborhood (76.2%) and the most frequently noted positive aspect of the CW was
recreational access (58.1%). When prompted speciﬁcally to address the issue of the
Tollgate’s impact on property value, 48.8% reported they felt the Tollgate wetland
increased the value of their property.

The following set of results compares the responses of respondents within 1000
feet of the Tollgate, with those that lie on the 1500 foot radius. This comparison of the
two subsets of the population sampled is meant to test H3. Do residents on the 1500 foot
radius view the Tollgate’s property value impact differently than those within 1000 feet?
First we will compare answers between the two sub-sets regarding the general
neighborhood questions, then move to the questions speciﬁc to the Tollgate CW.

The average length of time respondents had lived at the property was 21.8 years
for the population within 1000 feet, and 16.1 years for those that lived on the 1500 foot
radius. In response to the open-ended Q.3, what originally attracted you to live here?;
residents living within 1000 feet of the wetland most commonly identiﬁed ‘attributes of
the home’ (33.3%) and ‘the neighborhood’ (30%), while residents on the 1500 foot radius
answered ‘the neighborhood’ (43.8%) and ‘location’ (31.3%).

Table 6 compares on the basis of location the answers given to Q4, which asked
respondents to identify what they now view as the positive characteristics of their
neighborhood. Of note, no respondents living 1500 feet from the wetland, regarded the
local wetland as a positive characteristic of their area. However, this was an unprompted

question. When asked if the wetland had been a plus or a minus for the area (Q.16), the

26

results across both groups are very similar with 78% of residents within 1000 feet and

71.4% of residents on the 1500 foot radius answering that the wetland was a ‘plus’.

Table 20. Comparing Q4 - What do you now view as the positive characteristics of
this area?

 

 

 

 

 

 

 

 

mm %W % T
(W/IN 1000') (ON 1500')

OCATION 23.3 3 1 .T

"GOOD EXTERIOR MAmrENANCE 26.7 31.3
NSPORTATION/ACCESSIBILITY 20 125

AMILY-NEIGHBORHOOD

RIENTED 40 37.5

UIET/SAFE 43.3 37.5
FOCAL WETLAND 6.7 0

 

 

 

 

The heart of this survey in regards to residents’ perceptions of the property value
impacts of the Tollgate CW, lies with questions 8d and 18f. In question 8 (a-h)
respondents were asked whether or not they felt speciﬁc neighborhood attributes (e. g.,
presence of nearby schools, parks, the golf course, etc.) impacted the value of their
property. Speciﬁcally, question 8d asked residents to indicate whether or not they felt the
Tollgate Wetland impacted their property value, and if that impact was positive or
negative. The results from each group are presented in Table 7, and Table 8.

From the beginning of the survey administration, the researcher noted that
respondents seemed to be answering the question group Q8a-h, as whether or not they
viewed the speciﬁc items mentioned (presence of nearby schools, parks, etc.) as a general
positive or negative. In an attempt to correct this probable ﬂaw in survey design, the
researcher stressed Q18f, which asks a very similar question to Q8d. Question 18f was
read to every respondent in the following manner, “As a possible advantage of a local
wetland, do you feel that ‘increased property value’ applies to the Tollgate — Do you feel

that the Tollgate increases the value of this property?” Tables 7 - 10 present the

27

responses to both Q8d and Q18f. In responding to both question 8d and question 18f, the
majority of respondents living within 1000 feet of the wetland indicated that the wetland
has a positive impact on property values. Comparing their responses to the two questions,
70% of these respondents indicated the wetland has a positive impact on property values
in question 8d (Table 7) although this dropped to 58.6% when they were asked a similar
question in 18f (Table 9). There was a corresponding 20% increase in respondents who
viewed the Tollgate as having no impact on their property value.

Suggesting a proximity effect, 58.6% of the respondents within 1000 feet of the
Tollgate believed it increases the value of their property (Table 9), while only 28.6% of

respondents living on the 1500 foot radius feel the same way (Table 10).

Table 21. Within 1000 feet - 08d. Indicate whether or not, ‘the presence of the
Tollgate Wetland’ has had a positive, negative or no impact on the value of this

property.

 

Table 22. On 1500 foot radius - Q8d. Indicate whether or not, ‘the presence of the
Tollgate Wetland’ has had a positive, negative or no impact on the value of this

property.

 

28

Table 23. Within 1000 feet - Ql8f. As a possible advantage of a local wetland, do
you think that ‘increased property value’ applies to the Tollgate?“

 

 

 

 

N E FWENCY % ﬁ===PONSE ‘
PPLIES TO TOLLGATE 17 58.6
OES NOT APPLY TO
OLLGATE 8 27.6
DO NOT KNOW 4 13.8

 

 

 

 

 

Table 24. On 1500 foot radius - Ql8f. As a possible advantage of a local wetland,
do you think that ‘increased property value’ applies to the Tollgate?“

 

 

 

 

 

 

 

N FREQUENCY % W
PLIES TO TOLLGATE 4 28.6
OES NOT APPLY TO
OLLGATE 8 57.1
DO NOT KNOW 2 14.3
Some (W the survey respondents dicﬁrot answer this question.

 

Figures 1 and 2 present the data in Tables 9 and 10 as pie charts. Comparing the
difference in responses between the two sub-sets of respondents, the pie-charts represent
the percentage of respondents answering ‘applies’ (meaning the Tollgate increases the
value of their property) or ‘does not apply’ (meaning the Tollgate does not increase the

value of their property) to Q18f.

29

7777 ,7 77,7 77,7 7 [ 7

l
1
Figure 1. out (within 1000') ‘ I ﬁgure 2. lef(on 1500') l
1‘ l
I , 1
applies to ‘ 1 applies to
tollgate ‘ tollgte

     

l
l
I do not i
l L know ‘
l l
l l 1 l
l I do not i ‘ l
1 know does not does not
apply to l ‘ apply to i
tollgate j J tollyte i
l
l

L 77.1,- 7- 77, J

Residents of the neighborhood use the Tollgate for recreation (Q 21). Only 3.3%
of respondents within 1000 feet and 18.8% of those on the 1500 foot radius indicated that
they had never visited the wetland. Residents’ primary recreational use of the wetland
involves walking or jogging along the trails on the periphery of the CW. Of the 91% of
respondents who indicated they visit the wetland, 90.5% replied that they used the
walking trails. Sixty-ﬁve percent of all respondents felt that one advantage of the

Tollgate was its functioning as a neighborhood meeting place.

Interview Results

The opinions of the real estate professionals (referred to as agents) interviewed for
this research were fairly consistent in terms of identifying important characteristics of the
Groesbeck neighborhood. The agents felt that the convenient location of the
neighborhood meaning close to shopping, easy access to major thoroughfares and

proximity to elementary schools was the most prominent driver of property values in the

30

neighborhood. The agents also identiﬁed excellent maintenance of homes and a sense of
community as factors that draw potential homebuyers to the area. All of the agents felt
that neighborhood property values were steadily increasing by 6-10%, a rate consistent
with the general Lansing-area real estate market. The agents afﬁrmed the good
reputation of the neighborhood, and characterized the housing stock as having a wide
range of style and structure. Five out of the six agents concurred that the boundaries of
the neighborhood were correctly identiﬁed in the study. The dissenting agent, an
appraiser who lives in the northern section of neighborhood, identiﬁed several smaller
sub-neighborhoods contained with in Groesbeck. He felt that these neighborhoods,
speciﬁcally those located around the Post-Oak elementary schools, were distinct from
Groesbeck (See Appendix 3). These sub-neighborhoods were also deﬁned in the data set
provided by the City of Lansing.

When asked speciﬁcally about the Tollgate’s impact on property values in the
area, all of the agents agreed that in terms of aesthetic appeal and recreational access the
CW does not impact property values in the area. However, the agents did reply that the
Tollgate is a nice feature of the neighborhood and has an affect on the ‘quality of life’ in
the area, even beyond the boundaries of the neighborhood. Three of the agents also
indicated that when giving presentations to potential home buyers that they would include
the Tollgate as a neighborhood attraction, and would probably do so for homes within 2
or 3 blocks from the wetland. One agent addressed an interesting facet of the Tollgate’s
impact on property values in terms of stormwater drainage. This neighborhood has
historically been affected by groundwater intrusion into the basements of homes. This

agent felt that in the long-term the drainage project (of which the construction of the

31

wetland to hold stormwater is a part), was increasing the value of homes in the
neighborhood by lowering the probability of basement ﬂooding, thus affecting the
property value of the entire area.

While perhaps not inﬂuencing the actual sales price of homes in the
neighborhood, the Tollgate’s enhancement of the residents “quality of life” and the fact
that it is lowering the probability of basement ﬂooding clearly have the potential to
impact the overall value of owning a home in Groesbeck. This suggests an indirect

positive impact on residential property values in the area.

Hedonic Results

The following section begins with an explanation and summary of the variables
incorporated into the hedonic model and is followed by a presentation of the results of the
model and the summary statistics including the adjusted R2 and the F value. The adjusted
R2 is the standard error of the estimate and is a measure of the variance of the predicted
value of the dependent variable, which is sales price in this model. The F statistic is a
measure testing the null hypothesis. The null hypothesis, Ho, states that none of the
explanatory variables are predictors of the dependent variable. The higher the value of
the F statistic, the more evidence against Ho.

Although the hedonic pricing method is an objective and revealed preference
technique, the method requires analytical “ﬁne-tuning” as there is no established
technique for determining the number and type of variables to include in a model. As the
focus of this research was not solely centered on the hedonic analysis, the researcher

chose to use a simple model. Starting with a basic model including the variables in Table

32

11, the independent locational environmental variables where included in many
combinations, while the dependent variable, Sales price, remained the same throughout
the different speciﬁcations of the model. Table 12 provides the descriptive statistics for
the variables included in the basic model, as well as the expected sign for each variable.
Results from the survey and interviews were also taken into account when determining
the inclusion of variables, but more importantly considered in the interpretation of the

results.

Table 25. Variables in basic hedonic model

square e o v1ng space
acreage o
o

ear 0 e — year =
ear 0 e year =
ear 0 e — year =
ear 0 e = year =
ear 0 e e = year =
rs e
** We expect the coefficient on the dummy variables in table 11 to be positive, and
increase in value (i.e. 1998 should have lowest coefﬁcient value, 2002 the highest)

 

  

Table 26. Descriptive statistics of variables

 

Running the OLS regression and including only the variables in Table 11, gave
the expected results (Table 13). The positive sign indicates that a variable has a positive
effect on the dependent variable, Sales price. For example the coefﬁcient of 30.412 on

the FLR_AR variable means that an increase of 1 square foot of living space gives rise to

33

an increase of $30.4l2 in the sale price. This model returns an adjusted R?- = .702, and an

F (8, 260) = 79.947.

Table 27. Results from basic hedonic OLS regression

 

The next regression includes the locational variable DISTWET. This is a distance
measurement in meters of each home sale to the nearest edge of the Tollgate wetland, as
determined by the geographic information systems software, ArcView. According to the
study hypothesis, H2, the expected coefﬁcient for this variable would be negative. This
means that as distance increases from the wetland, the sale price would go up. For
example, if the coefﬁcient from the hedonic regression is a —10.0, this would mean that
for every meter we increase the distance from the wetland the sale price goes down 10
dollars. Table 11 presents the results from this regression. This model returns an

adjusted R2 = .715, and an F (9,259) = 75.835.

34

Table 28. Results from hedonic OLS regression with wetland locational variable

 

The results indicate that the variable DISTWET is signiﬁcant and slightly
positive. Therefore, according to this model, the proximity to the Tollgate has a slight
negative impact on property values. Another model was created using the zonal
approach, stratifying the study area based on a series of concentric circles, centered on
the Tollgate each successively larger in 155 meter increments (Zone 1 radius = 155
meters, Zone 2 radius = 310 meters and so on). This approach yielded insigniﬁcant

results. These unexpected results will be discussed in the following chapter.

35

CHAPTER 5 - CONCLUSIONS

This chapter discusses the results from each phase of the research including the
residential survey, the expert in-depth interviews and the hedonic model. Major points of
discussion will focus on not only where each agree, but also where they disagree. Results
from this study will also be placed in the context of the published research presented in
chapter 2. The researcher then proposes some explanations for why the results either
diverge or converge. The chapter concludes with a discussion of the implications of the
study ﬁndings for public policy and directions for future research.

From the results of the survey it is clear that the Tollgate CW is valued by the
residents within 1500 feet of the system. This appreciation of the system most likely
extends beyond the 1500 foot boundary used in this study. This conclusion is
corroborated by at least three of the real estate agents interviewed, who felt that the
recreational access to the CW improved the quality of life in the area. One agent who
resides within a few blocks of the Tollgate stated that, based upon personal use of the
walking trails, "...many of the recreational users come from outside of the neighborhood."

The survey respondents primarily derive value from the CW because the design of
the system encourages recreation. Residents actively use the Tollgates walking trails, as
can be seen in just one visit to the site. Without that, as one real estate agent put it, “. . .it
would just be a hole in the ground, between the neighborhood and the golf course.”
Recreational use, although probably extending beyond the boundary of the study area,
still exhibited a proximity effect. Survey respondents within 1000 feet replied that if
there was a change in their attitude concerning the Tollgate (open-ended Q. 14), 10%

stated that their now positive attitude towards the project was attributable to recreational

36

access. None of the survey respondents on the 1500 foot radius felt the same way. Also
suggestive of a proximity effect concerning recreation, 67% of respondents within 1000'
answered that they visit the wetland at least once a week (open-ended Q. 21), while only
38% of those on the 1500' radius answered the same. These results, along with those
presented in chapter 4 (Tables 7-10), indicate strong support for Hypothesis #3, although
statistically signiﬁcant correlations could not be made due to the small size of the sample.

Neighborhood residents View the Tollgate some what differently from other open
space in the neighborhood. An assessment of the residents of the Groesbeck
neighborhood was the sole funding mechanism for the entire drainage project. People
value the other open space amenities in the neighborhood, such as the local park and golf
course, but one gets a distinct feeling of interest when the wetland is mentioned. This
feeling was certainly evident as the researcher went from house to house. This attitude
was not always evidenced in a positive manner, as 23.3 % of respondents replied ‘poor
wetland maintenance’ as a negative aspect of the Tollgate (Q.19, open-ended). However,
out of those that answered Q. 19, meaning they felt there was some negatives in having a
local wetland, 85% felt that the wetland was still a ‘plus’ (Q. 16) overall.

The results of the survey clearly indicate that the respondents perceive the
wetland as a valuable attribute to their neighborhood. However in relation to the other
important neighborhood characteristics the Tollgate ranks fairly low. Question 9 of the
survey asked respondents to indicate which of several items (including nearby schools,
access to freeways, amount of local trafﬁc, nearby parks and the Tollgate Wetland) has

the greatest impact on the value of their property. Only 6.5% of all respondents answered

37

the Tollgate, most answered that the general location of the neighborhood had the
greatest impact.

These ﬁndings are consistent with the literature reviewed in chapter 2. As with
those surveyed in Mississauga, Columbia, Atlanta and Illinois (Debo 1977; Adams,
Franklin et a1. 1986; Emmerling-DiNovo 1996; Espey and Owusu-Edusei 2001), the
respondents in this study believe that the wetland is valuable in that it impacts their
property value, and provides recreational opportunities and wildlife habitat.

The results of the interviews with real estate experts were somewhat surprising.
Initially it was believed that these interviews would determine the boundary of survey
sampling. As all agents agreed that the appeal (aesthetic or otherwise) of the Tollgate
would not signiﬁcantly impact the asking price of any home in the area, regardless of
proximity, the sampling boundary for the resident survey was determined by reviewing
pertinent literature.

Real estate professionals familiar with the Groesbeck area do not feel that the CW
directly affects property values. To that extent the agents’ responses did not corroborate
the majority of survey respondents’ perceptions that the CW positively impacts their
property value. However, similar to the residents, the real estate professional did
highlight the value of the wetland to the neighborhood. This was reﬂected by the agents
use of Tollgate in presentations for prospective buyers. This illustrates the important
distinction between price and value. The real estate professional value the wetland as a
neighborhood feature but do not believe it positively impacts on the sales price of a home
in that neighborhood. In comparison, the residents believe that the wetland is a valued

neighborhood features but is also a positive inﬂuence on home sale price. By inﬂuencing

38

the quality of life in the neighborhood, it is the researchers perception that the agents are
indicating an increase in the overall value of living in a neighborhood with a CW
designed with recreational amenities. This value, much like the neighborhood-wide
effect on drainage, could indirectly affect neighborhood-wide property prices. One
example might be that by strengthening the sense of community, which both agents and
survey respondents agreed was a property value driver in Groesbeck, the Tollgate is
positively impacting property values.

The results of the hedonic analysis, while not providing support for hypothesis #1
or #2 that the Tollgate has a positive impact on proximate property value, do shed some
light on the market conditions in the neighborhood.

Running several different regression models with a stepwise inclusion of the other
Open space locational variables, it is the researcher’s perception that the open space
amenities (i.e. the local elementary school, the Tollgate) in the neighborhood have little
effect on the dependent variable (i.e. sales price of homes). Instead, recalling the one
agent’s perception of the sub-neighborhoods contained within Groesbeck, it appears that
it is the sub-neighborhoods that inﬂuence both the locational coefﬁcients and the
dependent variable. When including dummy variables for the sub-neighborhood and the
distance to the Tollgate in the hedonic model, these variables are shown to be inﬂuential.

This model yields an adjusted R2 = .754, and F (16,252) = 48.217.

39

Table 15. Hedonic OLS regression with sub-neighborhood designations

       

I: TOWNl was the ofriitted variable (this geographic designation contains the Tollgate
CW)

However the inclusion of these neighborhood dummy variables creates problems
with the signiﬁcance of the DISTWET variable. This could be the result of too many
variables in the model compared to the relatively small data set.

Analysis of the correlation between sales price and these designations indicates a
statistically signiﬁcant and fairly strong relationship (Table 16). There is also a strong

relationship between the sub-neighborhoods and the DISTWET variable (Table 17). This

was expected due to the position of the wetland within the study area (see Appendix 3).

Table 16. Correlation between sales price and sub-neighborhoods

 

 

 

 

TOWN-TOWN CITYl CITY2 CITY3 CITY4 CITYS ClTY6
1 2
AL_PRI earson -.329 -.258 .292 $43 .166 .277 .138 .040
Correlation
I 1g.(2-tailed) .000 .000 .000 .487 .006 .000 .024 .510

 

 

 

 

 

 

 

 

 

 

 

40

Table 17. Correlation between distance to the wetland and sub-neighborhoods

 

 

 

TOWN T'OWN CITYI CITY2 CITY3 CITY4 CITYS'U'WE‘
1 2
ISTWET earson -.504 -.303 .376 .493 -.209 .197 .086 .282
Correlation
l ig.(2-tailed) .000 .000 .000 .000 .001 .001 .159 .000

 

 

 

 

 

 

 

 

 

 

 

The signiﬁcance of these results relates to the position of the sub-neighborhoods
within the city portion of the Groesbeck neighborhood. The Tollgate is contained within
township sub-neighborhood # 1 (TOWN 1), which is the southernmost sub-neighborhood
(see Appendix 3). TOWN2 is located in the heart of the neighborhood, and the city sub-
neighborhoods are primarily located in the northern half of the neighborhood. The
northern orientation (versus the southern location of the Tollgate) of these more
“afﬂuent” sub-neighborhoods is what could be inﬂuencing the hedonic model, as
opposed to the distance to any of the open spaces in Groesbeck.

The proximity to downtown Lansing was one factor the agents mentioned as an
attraction to potential homebuyers, especially city employees who face monetary
penalties if they do not live within the city limits. Thus city employees who value the
easy access to their place of employment provided by the neighborhood, would most
likely prefer to live in the northern city portion of Groesbeck. This demand is reﬂected in
the hedonic model when a dummy variable is inserted that indicates whether or not the
home sale took place in the Township (TSHIP = 1, if the home is in Lansing Township, 0
otherwise). The price of a home is almost $10,000 less, all else equal, if it is situated in
the township versus the city (see Appendix 4).

Another possibility for the seemingly negative effect of proximity to the Tollgate

could be the relatively large volume of trafﬁc in that area of the neighborhood. The

41

closest intersection to the Tollgate, Saginaw and Wood St., is a source of heavy trafﬁc.
Conﬁrmed by the real estate agent interviews and survey respondents, most of any
through trafﬁc the neighborhood experiences ﬂows through this intersection. This trafﬁc
could be the cause of the slight, negative depression of property values in this comer of
Groesbeck.

One more feasible explanation could be the relatively larger percentage of rentals
in Town 1 (which contains the Tollgate). A large apartment complex is directly across
the road from the CW. Although none of the agents interviewed felt that this was an
issue with the neighborhood, anecdotally most of the survey respondents who felt that
poor exterior maintenance of neighborhood homes (19.6%) was a negative characteristic
of the neighborhood affecting property values (open-ended Q.7), believed that the poor
maintenance was related to amount of rental properties in the area.

The results of each phase of this research provide a confusing image of the
property value impacts of the Tollgate Wetland. Real estate professionals believe the
wetland has no direct effect, disagreeing with a majority of the survey respondents but
receiving support from the hedonic analysis. Clearly there is no deﬁnitive answer, but
there is a potential scenario that could provide and explanation for these inconsistent
results.

There may be a signiﬁcant time lag between resident’s perception and actual
property impacts. Clearly if people are drawn to the wetland, as indicated by two survey
respondents replying that the wetland had an effect on the purchase of their home (Q. 12),
and realtors believe it enhances the quality of life, the Tollgate has the potential to impact

property values. As we are dealing with a relatively short time span, the ﬁve years since

42

the construction of the CW, it is possible that the impact of the Tollgate is not yet
reﬂected by the hedonic analysis. As the number of home sales impacted by residents
and realtors perceptions grows, the more signiﬁcant and prominent the Tollgate’s
property value impact may become. Though this would not provide support for H2, it
would lend evidence to support H1, that the Tollgate is having a positive effect on the

value of property in the Groesbeck neighborhood.

Future Directions for Research

In terms of directions for future CW valuation, this study has provided some
insight into study design and considerations. Certainly the idea of a time lag lends itself
to a follow up study. Although the data gathered for this study was time consuming, it
was relatively inexpensive and readily available. A more focused mail survey would cut
down on time necessary to gather residential perceptions and a randomized sample over a
much larger area could explore the range of the social impact of a properly designed CW.
Hedonic analysis, once the transactions are screened for bias and the data is ﬁltered, is
not a time intensive process when using the correct software. It would also seem highly
likely that in the future more of this data will be digitized and available on-line.
Therefore a follow up study could be relatively easy and inexpensive to conduct,
shedding light on the longer-term social impacts of constructed wetlands like the
Tollgate.

In the short-term, and speciﬁc to the Tollgate, it would be interesting to explore
the idea that the CW is moderating the effect of the “pull” of the northern sub-

neighborhoods in Groesbeck. Comparing data before and after the Tollgate’s

43

construction could reveal the fact that the CW has restrained the depression of property

values in that area.

Policy Implications

The results of the hedonic analysis indicate that the Tollgate is not a signiﬁcant
inﬂuence of sale price in the neighborhood. However, as shown by the survey and expert
interviews there is little doubt that people in this area value the wetland. This is
especially important considering the neighborhood contains a relatively large amount of
open-space amenities including the wetland, a local park, school and golf course. In
addition, the wetland may indirectly have a positive impact on property values as a result
of its value as a neighborhood asset and its ﬁrnction as a stormwater control. The results
of this study show that even in neighborhood with open-space amenities, the construction
of a stormwater system like the Tollgate would be valued by neighborhood residents.
This scenario would likely prove even more beneﬁcial in a area lacking such amenities.

The residents of Groesbeck saved an estimated 14 million dollars (Lindemann and
Wayland 1999) by eschewing the traditional “end of pipe” stormwater management, and
gained a valuable neighborhood asset. By treating stormwater, providing wildlife habitat
and providing a place for neighbors to walk, congregate and view wild creatures and
plants, the Tollgate’s true impact reaches far beyond its boundaries. As shown by this

research, this view is shared by it’s neighbors, and all those familiar with the wetland.

44

REFERENCES

Adams, L. W., T. M. Franklin, et al. (1986). Design Considerations for Wildlife in Urban
Storrnwater Management. Proceedings of the Fifty-First North American Wildlife
and Natural Resources Conference. J. E. Townsend and R. J. Smith: 249-259.

 

 

Azevedo, C., J. A. Herriges, et al. (2000). Iowa Wetlands. Ames, IA, Iowa State
University, Center for Agricultural and Rural Development: 35.

Baxter, E. H., G. Maulamoottil, et al. (1985). "A Study of Residential Storrnwater
Impoundments: Perceptions and Implications." Water Resources Bulletin 21(1):
83-88.

 

Brown, G. and H. Pollakowski (1977). “Economic Valuation of Shoreline.” Review of
Economics and Statistics 59: 272-278.

 

Campbell, C. and M. Ogden (1999). Constructed Wetlands in the Sustainable Landscape.
New York, NY, John Wiley & Sons, Inc.

 

Clean Water Partnership. (1996). Wetlands, Water Quality and Property Values. Chain of
Lakes brochure.

 

 

Costanza, R., R. d'Arge, et al. (1997). "The Value of the World's Ecosystem Services and
Natural Capital." Nature 387(6630): 253-260.

Cowardin, L. M. e. a. (1979). Classiﬁcation of wetlands and deepwater habitats of the
United States, US. Fish and Wildlife Service.

Crompton, J. L. (2001). "The Impact of Parks on Property Values: A Review of the
Empirical Evidence." Journal of Leisure Research 33(1): 1-31.

 

d'Arge, R. C. and J. F. Shogren (1989). Non-Market Asset Prices: A Comparison of
Three Valuation Approaches. Valuation Methods and Policy Making in
Environmental Economics. F. Folmer and E. V. Ierlan.

 

 

Debo, T. N. (1977). "Man-Made Lakes: Attitude Survey of Their Value in Residential
Areas." Water Resources Bulletin 13(4): 665-676.

 

Doss, C. R. and S. J. Taff (1996). "The Inﬂuence of Wetland Type and Wetland
Proximity on Residential Property Values." Journal of Agricultural and Resource
Economics 21(1): 120-29.

 

Emmerling-DiNovo, C. (1996). "Storrnwater Detention Basins and Residential
Locational Decisions." Water Resources Bulletin 31(3): 515-520.

 

45

Espey, M. and K. Owusu-Edusei (2001). "Neighborhood Parks and Residential Property
Values in Greenville, South Carolina." Journal of Agricultural and Applied
Economics 33(3): 487-92.

 

Kadlec, R. H. and R. L. Knight (1996). Treatment Wetlands. Boca Raton, Lewis
Publishers.

 

Kaplowitz, M. D. (1997). Improving Economic Valuation Studies by Using Qualitative
Methods: Lessons from the Mangrove Wetlands of Yucatan, Mexico. Dept. of
Resource Development. East Lansing, Michigan State University: 286.

 

Knetsch, J. (1964). “The Inﬂuence of Reservoir Projects on Land Values.” Journal of
Farm Economics 46: 520-538.

 

Kulshreshtha, S. N. and J. A. Gillies (1993). “Economic Evaluation of Aesthetic
Amenities: A Case Study of River View.” Water Resources Bulletin 29: 257-266.

 

Lindemann, P. E. and K. G. Wayland. (1999). "A Nontraditional Approach to Urban
Storrnwater Managment: The Tollgate Drainage District Project." International
Review of Comparative Public Policy 11: 27-40.

 

 

Lupi, F. J ., T. Graham-Tomasi, et al. (1991). A Hedonic Approach to Urban Wetland
Valuation. St. Paul, Dept. of Agricultural and Applied Economics, University of
Minnesota. Staff Paper P91-8.

Lutzenhiser, M. and N. R. Netusil (2001). "The Effect of Open Spaces on a Home's Sale
Price." Contemporary Economic Policy 19(3): 291-98.

 

Mahan, B. L. (1997). Valuing Urban Wetlands : a property pricing approach. Fort
Belvoir, VA, US. Army Corps of Engineers Water Resources Support Center
Institute for Water Resources.

 

Mahan, B. L., S. Polasky, et al. (2000). "Valuing Urban Wetlands: A Property Price
Approach." Land Economics 76(1): 100-113.

 

Perman, R., Y. Ma, et al. (1996). Natural Resource and Environmental Economics. New
York, Longman Publishing

 

Peterson, H. (1998). "Use of Constructed Wetlands to Process Agricultural Wastewater."
Canadian Journal of Plant Science 78: 199-210.

 

Rosen, S. (1974). "Hedonic Prices and Implicit Markets: Product Differentiation in Pure
Competition." Journal of Political Economy 82(1): 34-55.

 

Schueler, T. R. (2000). The Pond Premium. The Practice of Watershed Protection. T. R.
Schueler and H. K. Holland. Ellicott (ﬁty, MD., CenterTOr Watershed Protection.

 

46

Streiner, C. and J. Loomis (1995). Estimating the Beneﬁts of the Urban Stream
Restoration Program. Fort Collins, CO, Department of Agricultural and Resource
Economics, Colorado State University

Taff, S. J. (1992). What is a Wetland Worth? Concepts and Issues in Economic
Valuation. Minneapolis, MN, Department of Applied Economics, University of
Minnesota. accessed 2002.

U.S.EPA (1995). Economic Beneﬁts Of Runoff Controls. Washington, DC, Ofﬁce of
Wetlands, Oceans and Watersheds: 16.

U.S.EPA (2000). Storm Water Phase II: Fact Sheet 1.0, Ofﬁce of Wastewater
Management.

U.S.EPA (2000). Storm Water Phase II: Fact Sheet 2.1, Ofﬁce of Wastewater
Management.

Vileisis, A. (1999). Discovering the Unknown Landscape :A History of America's
Wetlands. Washington, DC, Island Press.

 

Woodward, R. T. and Y. S. Wui (2001). "The economic value of wetland services: A
Meta Analysis." Ecological Economics 37: 257-270.

 

47

Appendix 1.

Interview Guide for Real Estate Professionals

Interview Guide:

Could you provide me with a brief background regarding your real estate
experience in the Lansing area?

Years of experience
Familiarity with Tollgate area

Tollgate Drainage District

What are the biggest drivers of property value in this area?

What are the important neighborhood characteristics that are found in this area?
How much does each of those characteristics effect the price of property in this
neighborhood?

Does the Tollgate Wetland have an effect on property value in that neighborhood?
What is the areal extent of that effect?

How much of an effect, dollar value?

Do you use the Tollgate Wetland as a selling feature to prospective
homebuyers, in advertisements? If so how far away would you use them?

Does the golf course overshadow the Tollgate Wetland as a prOperty value driver?
Could you separate the effect of the wetland from the golf course?

Without the golf course, would the Tollgate Wetland have the same effect?

If you moved the Tollgate Wetland to different parts of town, would it have the
same effect in each?

What are the features of the wetland that could really effect property value?

Could you suggest a control area that is similar to the Tollgate neighborhood prior
to the construction of the wetland?

Are there any issues that I missed, or we didn’t cover?

48

Appendix 2.

Resident Survey

. How long have you lived in this house? years

 

. Does your household rent or own this house?

[- a. Rent
[- b. Own

r c. Don't know

. What originally attracted you to live here?

 

 

 

 

. As a neighborhood, what do you now view as the positive characteristics of this
area? [Let respondent determine “area”

 

 

 

 

. As a neighborhood, what do you now view as the negative characteristics of this
area? [Let respondent determine “area”

 

 

 

 

. Are there things about this neighborhood that you believe either increase or
decrease the value of the house that you live in?

r a. Yes
[- b. No

[- c. I don't know

49

7. If yes, what are they and how do they impact your property value?

 

 

 

 

8. As I read each of the following items, I would like you to indicate whether or not,
in your opinion, the item has had a positive, negative, or no impact on the value of
this property.

 

ITEM Positive Negative No impact Don’t
kﬁow

 

 

 

The presence of nearby
schools

 

The presence of
Groesbeck Golf Course

 

The presence of nearby
parks

 

The presence of the
Tollgate Wetland

 

Dfstance to work

 

The amount of local
trafﬁc

 

Local Development
(New Mall)

 

 

 

 

 

 

Access toTreeways

 

 

9. Which of these items has had the greatest positive impact on the value of this
property? [If respondent lists more than one ask to rank]

 

 

 

 

50

10. Over the past ﬁve years do you believe that the residential property values in this
area have gone up, down or stayed the same?

r: a. Up
[- b. Down
r c. Stayed the same
[- d. Don't know
11. Are you familiar with the Tollgate Wetland? [If no skip to question 23]
r; a. Yes
[- b. No

[— c. I don't know

12. Did the proximity of this home to the Tollgate Wetland have an inﬂuence on your
purchase of a home in this area?

13. [If the respondent did not answer >5 in question #1, skip to #15] I notice that you
have lived here during the time when the construction of the Tollgate Wetland
was being considered. When you think back to that time, what was your attitude
toward the Tollgate Project when it was ﬁrst proposed?

[- a. Positive
[- b. Neutral
r c. Negative

[‘7 d. I didn't know about it

51

14. If you feel differently about the Tollgate Wetland now, please explain what
caused the change. [3 No change in opinion/attitude.

 

 

 

 

15. Do you know if the Tollgate Wetland is a natural or constructed (i.e. man-made)
wetland?

r a. Natural
[- b. Constructed
r c. I don't know
16. Overall, do you think that the wetland has been a plus or a minus for this area?
['7- a. Plus
r b. Minus

[- c. Neutral

17. In your opinion, what if any are the positive aspects of having the Tollgate
Wetland in this area?

 

 

 

 

52

18. I am going to read out a list of possible advantages of having a local wetland and I
would like you to indicate for each item whether or not, in your opinion, it applies
to the Tollgate wetland.

2{PPIY

1e. SCOI'IIC

 

19. In your opinion, what if any are the negative aspects of having the Tollgate
Wetland in this area?

 

 

 

 

20. I am going to read out a list of possible disadvantages of having a local wetland
and I would like you to indicate for each item whether or not, in your Opinion, it
applies to the Tollgate wetland.

7{PPIY

1118211108

L11 sance

 

53

21. How often do you visit the Tollgate Wetland?

 

 

 

 

22. If you do visit the Tollgate Wetland what kind of activities do you do there? (next
page for expected possible answers)

 

 

 

 

r' 9 Bird .- e. Visitwithfamily
'— b. Jog or walk [- f Enjoythe view
[- c. Visit with neighbors [— g. Sporting events
[— d. Picnic r' b. Other

 

23. That is all the questions that I have. Are there any additional comments you
would like to make?

 

 

 

 

54

3. GROESBECK
NEIGHBORHOODS

 

. Houses.shp
m School.shp N
.’ Roads.shp A
Wetland.shp
[:| City-Township border.shp

  

55

Appendix 4
Additional Statistics

This appendix provides more statistical information regarding the study, with a
particular focus on the hedonic analysis used to determine property value impacts. The
ﬁrst table provide simple correlations between the variables used in the basic model.
Tables 2-10 provides data for the homes sold within each sub-neighborhood designation,
and highlight the average difference in features of the homes located in the township
versus the city. Three additional hedonic models are also included, each with a different
speciﬁcation. Lastly, tables comparing the attributes of homes in the city and township
preface an independent t-test of the means of township sales versus city sales. This test
indicates that the attributes (and sales price) of the homes within the township are
signiﬁcantly different than the homes within the city.

Table A4-1. Simple correlations between variables

TTL AC BA FLR AR DISTWET

1g.

lation

1g. (

lation
1g.

lation
1g.

 

56

Table A4-2. Town 1

V MINIMUM MEAN S .
DEVIATION

 

Table A4-3. Town 2

V STD.
DEVIATION

 

Table A4-4. City 1

VARIABLES N MINIMUM MAXIMUM MEAN STD.
DEVIATION

P 1

 

Table A4-5. City 2

ARIABLES N .
DEVIATION

1

 

57

Table A4-6. City 3

VARIAB N MINIMUM STD.
DEVIATION

1038 222.57

38 1.0 . .
1 . .4
41.17 . . l

 

38

Table A4-7. City 4

LES N MINIMUM STD.
DEVIATION
22 l .

 

Table A4-8. City 5

VARIABLES N MINIMUM MAXIMUM MEAN STD.
DEVIATION

l7 1 .7

2.0 .
1975

 

Table A4-9. City 6

V LES N MINIMUM STD.
DEVIATION

 

58

Table A4-10. Stats for complete data set

VARIABLES N MINIMUM MEAN STD.
DEVIATION
. 5

 

59

Basic hedonic model using zonal approach to measure proximity effects to Tollgate.

 

 

 

 

 

 

 

 

Model Summary
R [R SQUARE ADJUSTED R STD. ERROR OF THE ESTIMATE
SQUARE
[ .855 .723 .713 _ 13119.58 I
a Predictors: (Constant), lDISTlO, YR01, DIST9, TTL_AC, DIST1, DIST3, YR02,

DIST4, DIST8, YR00, DIST6, DIST5, FLR_AR, YR99, DIST2, YR98, BATH

ANOVA

SUM OF SQUARES DF MEAN SQUARE
+ 77 1 .

2 l .
7585.

9

    

      

 

._ ,IS,

    
  
 

    

a CIOI'SI

 

’

DIST4, DIST8, YR00, DIST6, DIST5, FLR_AR, YR99, DIST2, YR98, BATH

Coefﬁcients

UNSTANDARDIZED Tb SIG.
COEFFICIENTS

DIS 2720. 51 .
ST] 06.

a V e: AL_ I 1 rs e
b T values are not reported for dummy variables

 
     

60

Basic hedonic model with natural log transformation of DISTWET variable.

 

 

Model Summary
R R SQUARE ADJUSTED R STD. ERROR OF THE ESTIMATE ll
SQUARE
| .851 .724 .714 13114.98 ||

 

 

 

 

 

 

a Predictors: (Constant), LN_DWET, YR00, YR02, TTL_AC, YR01, FLR_AR, YR99, 7
YR98, BATH

 

 

 

 

ANOVA
SUM OF DF MEAN F SIG.
SQUARES SQUARE
Regression 11633706616057 9 1419806894030 75.152 .000
9
Residual 4437668605318 259 181966025835
Total 16071375221376 267

 

 

 

 

 

 

 

 

 

a Predictors: (Constant), LN_DWET, YR00, YR02, TTL_AC, YR01, FLR_AR, YR99,
YR98, BATH
b Dependent Variable: SAL_PRI

Coefﬁcients

UNSTAND IZED
COEFFICIENTS

A

a V e: _P
b T values are not reported for dummy variables

     

61

Basic hedonic model including DISTWET and TSHIP (a dummy township variable,
1 if home sales took place within Lansing Township, 0 otherwise meaning within

City’)

 

 

Model Summary
R R ADJUSTED R STD. ERROR OF THE
[ SQUARE SQUARE ESTIMATE
|| .862 .742 .732 126733 I]

 

 

 

 

 

a Predictors: (Constant), DIST-WET, YR00, YR02, YR01, TTL_AC, F LR_AR, YR99,
TSHIP, YR98, BATH

ANOVA

 

SUM OF DF MEAN F SIG.
SQUARES SQUARE
Regression 11946906494852 10 1194690649485 74.38 .000

Residual 4143801163728 258 16061244820

Total 16090707658580 268

a Predictors: (Constant), DISTWET, YR00, YR02, YR01, TTL_AC, FLR_AR, YR99,

 

 

 

 

 

 

 

 

 

 

 

 

 

TSHIP, YR98, BATH
b Dependent Variable: SAL_PRI

Coefﬁcients

UNST IZED
COEFFICIENTS

     

a . _
b T values are not reported for dummy variables

62

Table A4—11. Stats for homes within the Township

VARIABLES N MINIMUM MEAN STD.
DEVIATION

AL_P l 1105 .41 1.18

1

 

Table A4-12. Stats for homes within the City

VARIABLES N MINIMUM MAXIMUM MEAN TD.
DEVIATION

1. ll.
.1

 

INDEPENDENT SAMPLES T-TEST: GROUPING VARIABLE IS TSHIP (A
DUMMY TOWNSHIP VARIABLE, 1 IF HOME SALES TOOK PLACE WITHIN
LANSING TOWNSHIP, 0 OTHERWISE MEANING WITHIN CITY)

Group Statistics
. D . ERR R MEAN
. 1.
961.18 1

4.83

 

63

Independent Samples Test T-TEST FOR EQUALITY OF MEANS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

t df Sig. (2- Mean Std. Error 95%
tailed) Diff Diff Conﬁdence
Interval of
the Diff
Lower Upper
SAL_PRI Equal 9.127 267 .000 23973.41 2626.78 18801.57 29145.25
variances
assumed
Equal 8.925 227.210 .000 23973.41 2686.17 18680.42 29266.40
variances
not
assumed
FLR_AR Equal 7.003 267 .000 309.03 44.13 222.15 395.91
variances
assumed
Equal 6.802 216.711 .000 309.03 45.43 219.49 398.57—
variances
not
assumed
TTL_AC Equal SW1 267 .000 5.5891E- 6.4011E- 4.3288E— 6.8494E—
variances 02 03 02 02
assumed
Equal 8.602 238.152 .000 5.5891E- 6.4975E- 4.3091E— 6.8691E-
variances 02 03 02 02
not
assumed
BATH Equal 6.3% 267 .000 .314 4.926E- .217 .411
variances 02
assumed
Equal 6.300 242.015 .000 .314 4.987E- .216 .412
variances 02
not
assumed

 

 

SAL_YR was not signiﬁcant

The results of this test indicate that there is a signiﬁcant difference in these

attributes of homes, comparing the Township versus the City portions of the

neighborhood. However, when we incorporate the TSHIP dummy variable into the

hedonic model the Signiﬁcance of the DISTWET variable becomes insigniﬁcant (see
above model). This could be an indication that other characteristics of the township
section are inﬂuencing price depression, for example the high number of rental property

or heavy trafﬁc (as discussed in Chapter 5), and not proximity to the Tollgate.

65

Appendix 5
Transcribed Interviews with Real Estate Agents
INTER VIEW 1: 07/23/02,1400 HOURS WIT H AGENT 1 AT BRIAR WOOD REALTY.
Q: How many years of experience do you have in the Lansing area ? 22 years
Q: How long have you been familiar with the Groesbeck area? 22 years

Q: What are some of the biggest factors that people consider in this neighborhood when
purchasing a home?

Q: If you had to pick two of the important characteristics that people consider when
buying a home in this area what would they be?

Q: What would say about the Tollgate Wetlands. . .How does it affect the value of
property and the quality of life in this area?

A: The quality of life. One of the things that I tell people.

Q: Putting a value like ﬁve thousand dollars for some of these houses that are really close
to it. Would you put a dollar ﬁgure like that on it.

A: If you are talking about enhancing the quality of life you could put a ﬁgure like a
million dollars on it. Hard to put a dollar value on it.

Q: Could it inﬂuence how long your house could be on the market?

A: Could inﬂuence how long people stay in the neighborhood. Sometimes people move
into a neighborhood and there is no focal point where people can really meet each other.
And they take walks in the neighborhood so they are out amongst their neighbors. People
don’t stay as long in the neighborhood. They transfer more readily. So I think with a
place like the wetlands where people are walking ,people are less inclined to sell quite as
fast. Because they have made friends with their neighbors and there is a focal point-a
place where they can meet and congregate, where they can gather.

Q: You know that’s cool because I’m doing a residential survey of the people here and

that’s one of the things that my advisor thought of to throw in the idea of community, the
wetlands as a place of community gathering. And if that’s valuable to people or not?

A: I think very valuable and I think the closer you are to Groesbeck and the Eastside
neighborhoods to that the more you’ll be able to sell.

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Q: Well we had mentioned before that you liked to drive by the Wetlands when you have
prospective home buyers for people in this area. Do you know, do other real estate agents
do the same thing? And is there-I mean, when you are listing a house would you ever list
a house as having proximity to the Tollgate Wetlands?

A: Absolutely. I mean it’s a selling feature. It doesn’t, I don’t feel, it affects the particular
value of the house. I think people are looking for value in the house, a particular Size of
the house, a particular number of bedrooms, number of bathrooms. You can’t do any of
those things with the wetland. But it provides you with an enhancement for the
neighborhood. So when I’m Showing prospective buyers from other places I mention it.
In fact, right across from the wetlands, kitty-comer, I sold a home to a family from
Montana And the ﬁrst thing I did was said “let’s take a walk through the wetlands” to
show them this focal point of the neighborhood and they ended up buying the home.
Right kitty comer from the wetlands that was available. So I use it as a selling feature and
in listings I use it as an advertising feature. It increases the sense of community.

Q: Do you think the proximity of this neighborhood to the golf course would overshadow
the proximity of the neighborhood to the wetland as a property driver?

A: No The road between the housing and the golf course. It separates the golf course
from the neighborhood. If the golf course were more incorporated into the neighborhood
that would be a different story. In fact, it is a major thoroughfare and it is even going to
be worse because a major shopping center is going in .It has little or no impact.

Q: Without the golf course, do you think the wetland would have the same affect? I guess
you have answered that.

Q: If you could plop Tollgate down in another neighborhood would it have the same
affect?

A: My question is why would you do that? Why not just create a wetland in every
neighborhood. I think it would have the same effect.

Q: Do you think that there are some features of this constructed wetland design that you
feel could have an effect on property values?

A: Trails. Benches. Labels around the wetlands pointing to certain species of bushes and
trees and wildlife. Those types of things are things that people ﬁnd really nice. Again, it’s
an enhancement.

Q: Because you can use it. So it’s just really pretty. People just like to look at it.
A: If it did not have trails and benches I think it would be worthless. I don’t think a soul

would care that it was there. But the fact that it has provided walking space for people has
made all the difference.

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Q: OK. I am thinking about taking this neighborhood and comparing it to another
neighborhood that would be very similar ( census block data, average price of home, )
and compare this neighborhood to another comparable neighborhood and get a trend for
the prices. Are houses selling for more near the Tollgate versus another neighborhood? I
just wondered what you’d think about those two approaches and I was wondering if you
could suggest a comparable neighborhood.

A: l was going to say. It’s a wonderful idea. We don’t have another neighborhood inside
the city of Lansing like Groesbeck. We are not a large enough city that you could ﬁnd
one-you’d have to take into consideration all the other factors about Groesbeck. The fact
that Groesbeck borders East Lansing. That it is near the campus and the stadiums. That it
is near F randor Shopping Center and now another big shopping center. All those factors
are inﬂuential so it would be hard to pull out just one variable and say that it made a big
difference.

Q: OK

A: If we had another neighborhood, that would be similar to it. ...Which we don’t. I’d
have to think about it but I am fairly certain that we don’t. Not comparable to Groesbeck.

Q: OK Well I think that’s all the questions that I had. Is there anything that you can thing
of that we have missed. Any topic or an issue.

A: I can’t think of anything.

Q: Basically in your mind. My thought was I was going to have everybody I talked to
draw a circle and say “within this circle there is a price impact” but you don’t think it
does?

A: Again I don’t think it’s a price issue but a quality of life one. Again, that’s a priceless
factor. This wetland has an impact all the way to Michigan Avenue. Because people on
the B. Side south of Saginaw and Oakland often walk and ride their bikes up there and
they wouldn’t do that if they didn’t have a destination and they didn’t have trails. So it is
impacting way outside of Groesbeck. Everything, all the housing that is connected is
impacted by it.

Notes from interview - Minor difficulty with the tape in the beginning. I tried to run over
ground that we may have missed in that initial part. Agent 1 feels like there is not a set
amount of money that you could place on the value of proximity to Tollgate But it is a
selling point. I should probably re-contact him and ask him a good way to get to the
listings and see how he advertises it. Seemed very knowledgeable. Somewhat hesitant.
He didn’t really seem to understand how his insight would be valuable but I really
believe it was. One more thing I wanted to add, Agent 1 had mentioned that he lived on
Magnolia St. on the other side of Saginaw and Grand River. Part of his idea is that the
Tollgate has a more diversiﬁed affect than just speciﬁcally in the Groesbeck area. Not as
speciﬁc as you might think. Not an inﬂuence on the actual selling price of the house in

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the immediate area. Certainly has a more wider ranging effect on houses beyond that
area. More so than I had thought before talking to him.

From: Agent 1

Sent: Thursday, August 08, 2002 10:05 PM

To: clineeri@msu.edu

Subject: Re: Would you use the Tollgate in a listing for a home, and how far away?

i would use it and the next one i use it in i will make sure you get a copy. keep watching
the papers and homes and lifestyles for other agents using the ads. 1/2 mile

INTER VIEW 2: 07/30/02, 1000HRS WITH AGENT 2 OF TOMMY RAINES REAL TY
Q: You were saying that you don’t think the Tollgate Wetland was a. . ..

A: I don’t think that it is a positive or a negative. I’ve had a few people say they wish it
was kept up a little better. (the Tollgate) But The people that I’ve talked to recently a lot
of them walk their kids around that area. They jog around that area.

We lived just south of there on Francis and I know that I would run thru Groesbeck, that
was one of the areas that we made a point of going thru, after it was developed.

I sold a house on Woodruff and they liked having it there, they would walk their walk
their dog around there. It was a big plus for them.

When you talk about the Groesbeck area-are you from around here?
[interviewer: Yes I grew up in Springport. South of here. South of Lansing]

Oh I do a lot of business around here. I’m born and raised in Lansing. The south side. A
lot of my friends are from the East side. I do a lot of business over here because a lot of
my friends are moving back into the area. One of the big reasons that people move to
Groesbeck is that their families are still there. Their parents are still there, and their
ﬁiends are moving back there to raise their families. This is a bonus (the Tollgate), but it
is not necessarily a draw to Groesbeck though. I think people like the aesthetic value of it
and it (The Tollgate Project) took a piece of property that probably wasn’t very useful
and made a positive aspect out of it, as well as making it aesthetically valuable. But as far
as property values. I don’t think it really hurt or helped it in either way.

Q: Some people have negative perceptions of that area. . .there are mosquitoes. There
could be nuisance people. I’m sure there a lot more people going to that area.

A: Our township patrols that area really heavily and I think that that is what’s so pleasing.

You can walk down there any time of day. You can see older couples walking or sitting
on benches in the evening. I had one client- she sold her house-it was on Groesbeck. She

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would walk over there, around the wetlands so many times, and that was her daily
exercise. It gives them a nice place to go. Someplace besides just walking around her

neighborhood.
Q: Your background in real estate.

A: I’ve been the business for 12 years, but I have two small children so it has really been
closer to 5 years — mostly since they started school. I am really loyal to Groesbeck. Born
and raised in the area. Our ﬁrst house. We tried to get in there. We tried to buy three
different houses there and ended up losing them. WE bought on Francis just South. I have
a really strong tie with the neighborhood. I have a place in my heart for that
neighborhood. And a lot of my friends live over there, and like I said their parents still
live there. The house I sold last year in Groesbeck-she’d been there since the sixties and
she just sold it. Across the street one of the people that I get a lot of leads from, raised her
family in that house and now she has three daughters and her husband all live in that
neighborhood. So it just pulls the Jacobs family there. My tie to Groesbeck is longer
term and more personal.

Q: What are the biggest drivers of property values in the area?

A: Lot of my ﬁiends who live there-they went to Resurrection then Catholic Central, and
now a lot of their kids are going to Catholic Central. Larry Meyers, he is on the city
council, (don’t quote me on this but I believe) he moved from Okemos to Groesbeck so
his kids could go to Catholic central and one of his kids went to Eastern High for band.
He loves it. It’s just one of those neighborhood communities that hold its value. People
care about their houses. Not a high turnover market. And it is convenient to the
expressway too. Nobody’s going to cut through Groesbeck either. Unless you know
you’re way through there. If you go up Wood St. you are going to get lost because there
is no direct way through it. And I think that is what is so appealing. Where I live
Harrison-people ﬂy by my house. Totally a different neighborhood makeup, and I think
why it is so appealing (Groesbeck). If you go to Groesbeck you are always seeing kids
rollerblading or playing street hockey or basketball. They don’t have to worry about
trafﬁc.

Q: Would you see that as a draw for people? (lack of trafﬁc)

A: I think that that is very important but I think that family ties are just as important.

I am selling a house right now to a young couple and She said that “I love that nobody is
going to go down my street unless they are going to visit my neighbors or myself and she
is right. Their street dead ends to the back of the expressway. There is just not a lot of
traffic. So I think that that is appealing.

Q: The schools- does that have an inﬂuence

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A: Post Oak is an incredible elementary school very good school-very convenient right in
the heart of the neighborhood. A lot of kids go there. A lot of kids go to Resurrection too
because it is the one Catholic elementary school in the area. Some of the kids in the front
go to Fairview. F airview has an incredible reputation. So I think that have good schools
in the area. The proximity to Catholic Central is a big pull too. If people’s children are
going to go to Catholic Central, Groesbeck is a great location for them.

Taxes are another thing. Taxes are so reasonable for them.
Q: If you had to rank selling characteristic, what would you put at the top?

A: I think Community is important over there, I would say that that is a big draw for
people-neighborhood camaraderie.

You have got people who have lived there for 40 years - First time home owners - Young
families and Empty nesters, who moved there because of the schools and now there kids
are moving back into the area. So I think that community is very important to them.

Location I think is the second...
Schools, third. But I think Schools and location tie in together.
Q: You said it’s pretty close to expressway and you can get anywhere.

A: People are saying that this new mall going in is going to drive down their property
values but I think they are wrong. I could be wrong. I really do. I think Wood St. has
always been busy and it’s going to get busier and they will have to police it to make it
more trafﬁc conscious. You are not going to cut through Groesbeck unless you know
where you’re going our you are going to get lost. And I think that being close to the
expressway makes Groesbeck desirable, you can go places and Shop, to eat.

Meijer’s is right there. Kroger’s is right there. You have got every thing big. And you
have also got Little Apple Market on the corner where everybody shops. I miss being
able to, if you forget something, put your tennis shoes on, run two blocks to the store, and
then run back home. I think that is a nice thing, it is just a great location. You can’t go
wrong.

Q: I’m glad that you brought that up. I’m doing a survey of the residents. Not sure where
I am going to draw my boundaries. This area is business and apartments. I am wondering
do you think that these houses that are really close here are negatively effected by the
proximity to these businesses and apartments, or positively affected? Would that have an
effect on their property value?

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A: I don’t think that it really does. I think the houses down through here, you know the
Magnolia and Hayford that sort of butt up to the apartments, are owner occupied and they
are very well maintained...

The Apartments have very strict rental rules, as far as your noise which are adhered to. A
lot of older people from the neighborhood mover into those ground level apartments over
there. So you don’t have as many students and that makes a difference.

Same owners (of apartments) for quite a few years. That whole strip there. Chester to
Fairview.

Q: Do you think that the Toll gate Wetland has an effect on property value in that
neighborhood?

A: I really don’t. I think of it as an added bonus after the fact. They appreciate it but
there hasn’t been enough changeover in the market on a regular basis to make that much
of a difference.

Q: If nobody is selling homes there how are you going to know if it is driving up property
values?? (Right, and there again I think that Groesbeck holds its values)

One of the things (Agent 1) talked to me about. He lives over in that area there. He lives
somewhere South. He said he walks to the Tollgate. He talked about how it raises the
quality of life in that area, and maybe that is why you don’t see as much change over in
that area.

A: Yeah, and that might be... I don’t know. Lot of my friends have moved over there.
One has six kids now and they are talking about adding on, you know expanding versus
moving. Staying there. I think it is a community factor, I don’t know if I necessarily
agree with (Agent 1).

I lived on Francis for nine years and I think it was the community sense that was more
appealing. Yeah maybe I think that maybe down the road it will help. It (Tollgate) will
buffer Wood St. It is appealing. They are taking good care of it. I think it will help It can
only help. Itself is not going to increase.

Q: I’m thinking in terms of the wetlands vs. the golf course? Which has the most effect?
On what people think about the area as prospective home buyers.

A: It’s the whole package. You don’t have any access to the golf course from Groesbeck.
You have to go way over —down Grand River back by Bancroft Park. I think it’s family
values. They like going golﬁng on Sunday. We sledded at Bancroft Park in the winter. I
did that. My kids did that. It’s just got that nice community feeling.

Q: It been fairly well proven that proximity to a golf course has an affect on property
values?

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A: But normally a private golf course. Not a public one. I mean nobody lives on the golf
course. Groesbeck is one of the nicest courses in the Mid Michigan area. Ranked Number
one as a public golf course. Nobody lives on the Groesbeck golf course. Not very
integrated into the community. And it had been there so much longer (the golf course). I
think before when people thought about living on a golf course is was a country club,
there is different mentality that we had 20 years ago.

Q: If you took the Tollgate out and stuck it in a comparable area could it have an effect?

A: Trying to think of a comparable area... Possibly-it creates a nice buffer from Wood St.
It is much more aesthetically appealing. You are looking at that instead of bare dirt. If
you put it someplace else that had the same kind of makeup then I think it could make a
difference. Dollar wise I don’t know if it was that big of an expense versus the value that
it brought to the area, as far as appealing not necessarily monetary value as far as the
aesthetics.

Q: Do you think that they incorporated any features into the design, helped with the
quality of life or just that fact that people use it?

A: Instead of j ust having a wetlands, they thought out how they were going to do it, what
plants they were going to put in it and how they were going to maintain it. And I think the
walking trail around it. The walking trail and benches. That was very well thought out.
Any time you have benches in a place like that were people can actually utilize it, you are
going to get more people that are going to use it. Otherwise all you have is a wetland area
between two roads.

Q: Anything you think we missed?

A: I really can’t. I think it’s a nice place for a lot of people to meet your neighbors that
they might not have otherwise met. I see a lot of people walking there dogs over there. It
is a nice conversation starter. You see all ages-little kids and parents, a young couple, or
a single person walking a pet, an elderly couple walking. And I think that that is what iS
very appealing too.

Q: For my survey I’m asking people what are some of the neighborhood characteristics
that might have an impact the value of their property. So I am asking them these
questions (hands interviewee the survey) Am I missing anything? Anything I don’t need?
Already I am going to change this question. Instead of saying The Lansing Schools I will
change it to the presence of nearby schools.

A: That’s deﬁnitely. It is different from the West Side neighborhood. Reword that a little
bit maybe. Schools and churches are important. If they have one they are afﬁliated with
sometimes that is a very appealing factor. Deﬁnitely reword that a little bit. When we
lived over there my husband works in Ionia and he liked to hop on the expressway and go
to work. Very convenient. Parts of the Groesbeck area are also in the city of Lansing and

73

I know that’s very advantageous for taxes. If they work for the city in the city limits.
And I think that that is a big plus too.

Q: Kind of thinking about this. The new mall. I wonder what people think about that and
if they do think it will lower there property value.

A: Everybody over in Groesbeck has an opinion on it. There was some thought of putting
a brick wall up, but people said absolutely not, “it will look like Detroit”. They think it
will increase trafﬁc. I think it it’s done properly it won’t be a problem. A lot of my clients
think they should make a walk way, all my young moms think that they should make a
Skywalk to walk over to spend time at the mall. I’d like to hear what you hear back.
There’s a lot of heated discussion about it.

Q : Should I call it “the new mall” -----

A: I think that that is a great idea. That is your local development right there. I mean that
is the big thing.

Q: I am building an economic model-sales data from Lansing to the Groesbeck area.
Getting at why people buy their house. Basing it on this guy’s study (hand interviewee
the Deaton Study). He included structural variables ( ﬂoor space, number of

bathrooms) Any thing jump out at you that you think I should include, or I don’t need to
include? —Ethnic variables-do they tie in?

A: No not in that neighborhood. You Should probably touch on bi-level, because
Groesbeck has a lot of those. Groesbeck you have everything from two bedrooms one
bath to ﬁve bedrooms three baths. You are going to see everything up there. I don’t think
that you are going to be able to say this is the normal makeup of a home in Groesbeck.

Q: You think these are issues people deﬁnitely think about?

A: Yes. I don’t think that the age of the house is that important in Groesbeck. The whole
neighborhood was built in 1950’s to 1970’s. There is one little section called Irish Hills -
if you live there you say they are all sections of Groesbeck. For people that live in
Groesbeck, the Groesbeck neighborhood is from the expressway to Lake Lansing to
Wood St. to Grand River. On the maps you might have Kimberly Downs, and you might
have Zephyr Downs (??), but if you live there in your mind it is all Groesbeck.

End of interview.

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Message From: Agent 2

Sent: Wednesday, August 07, 2002 4:46 PM
To: Eric Cline

Subject: Re: Groesbeck Research

Hi Eric, Sorry I didn't respond sooner! The Tollgate Wetland area isn't something I
would probably highlight in an ad. But I've mentioned it before in a presentation for a
home in the area because it was in a 2-3 block radius of the walking trail. Hope this
helps.

INTER VIEW 3: 08/30/02, AT 1000HRS WITH AGENT 3 AT BRIAR WOOD REALTY.
Q: Give me just a little bit of background about your experience in real estate in Lansing

A: I have been selling for two different companies for twenty one years. I grew up in the
Groesbeck area. Groesbeck is one of my areas of expertise. East Lansing. I live in
Okemos. Groesbeck to me is kind of a historical site. So I mean I have sold a lot of
homes. About 75 a year for 25 years.

Q: I think I heard your parents live there.

A: They have lived there since 1967.

Q: You know the more people I heard. . .Seems like they come back

A: Oh yeah a lot of people come back . Yeah A lot of the kids come back
Q: So what do you feel is the biggest draw in the Groesbeck area?

A: Well ﬁrst of all I think the park zoning and the location. It’s between both malls. It’s
near Frandor.

Now it’s going to be near the new mall. It’s near MSU. You’ve got East side location but
still your Lansing prices. It’s close to Catholic Central . The location. The convenience.
The Catholic families picking the Catholic school system. Catholic families have kept
this area really strong. I’ve got a lot of mixed opinions about the new mall. Some love it.
Some hate it. When I talk to people a bit about buying homes they want to be close to
schools, shopping, churches, hardware stores, highways and you know they don’t want to
drive too many miles to work. People are not going to cut through the Groesbeck area to
get to the malls. If you lived on the main thoroughfares, like Lake Lansing Road, then
people are going to cut through but not Groesbeck to get to the mall anyway. In the
Groesbeck area itself, I think the mall is just a positive.

Q: We talked about the next question a little . About neighborhood characteristics.
Anything else that you want to throw in there.

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A: It sounds a little bit corny but there are just a lot of real nice friendly people in the
Groesbeck area. My parents are getting up in age but they live in a two story house and
they just don’t want to move. They like their neighbors. They like the location. They can
walk around there. They feel relatively safe. There is a lot of longevity there. Longevity
brings a strong neighborhood element to it. There is not a lot of transience. The
elementary schools. . .the Post Oak school and the Fairview schools are one of the best
Lansing Elementary School system. Family type atmosphere in the neighborhood. I go up
and down the streets and the same people are still in the houses- playing with their kids.
A lot of them pass away and then the houses come up for sale. So a lot of them go from a
two story but they want to stay in the area and then they go to a ranch. Groesbeck people
are good folks.

Q: How much do you feel that those kinds of factors you are talking about affect the price
of homes in the area?

A: Well you know the Groesbeck prices are not that far off of, let’s say E. Lansing.
Because of the square footage you can get and because of how sought after the
neighborhood is let’s say a 1500 sq ft ranch in Pinecrest here in E. Lansing and a 1500 It
ranch here in Groesbeck. .. you are still getting about the same price. What used to be a
20 % differential paying more for the suburbs. Groesbeck is still getting the same value
for square foot. The values have really gone up say in the last ﬁve years. Especially. The
prices have jumped in the last ﬁve years a lot.

Q: Well one of the things I had originally thought. Nobody has done this so far. I was
going to say take a look at this map. And I was going to ask. . .take a look at this
wetland. . .What properties would be affected by the wetland an increased price because
of proximity to the wetland...

A: You mean that walking area. . is that the wetland you mean? How does that have an
affect on property price?

Q: This is like 1996. Where they got the walking trails and all that.

A: How does that affect property values? I don’t think it affects price. I think it’s nice to
have that area to go in walk in. They can walk and exercise. Have a nice little area. But if
you mean do these two blocks have a greater value because they are closer to the

wetland. I don’t think it’s going to happen that way. I don’t see it that way. I see the
wetland as a feature, like a park, to the whole neighborhood. Not just part of it. My
parents live right in here somewhere and anyway. I think it’s just a feature to the
neighborhood and not to any speciﬁc part to the neighborhood.

Q: I am basing my research on this study done off a couple of different study. One is this

EPA study in 1995. They said a home 300 ft or less ( when all else is equal ) from a body
of water increases in value up to 27.8%

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A: I don’t agree with that. I think the whole neighborhood has just gone up in value
because of building costs. And because of what you can build. And because of what it
costs in the suburbs. They have just gone up in value because of the neighborhood.
Tollgate has not changed the values. I don’t agree with that statement.

Q: Do you ever use the Tollgate in a presentation?

A: I don’t. It is very visible. People can see it. It is a lot like a park. It is nice. Nice
characteristics. The water. You can see the birds, people walking around. Not a feature
like a school system or close to the highways.

Q: What are some of the things you use?

A: Convenience, location, stability, ﬁiendliness, the two elementary schools, the new
mall, the Catholic school system. . I don’t see that (the Tollgate ) as a big feature.

Q: What about the golf course? Effect on property values?

A: Yeah. that has been there so long since the 20’s or 30’s. Anytime you are near an open
green space there is a kind of an aura. To the whole area. Being near recreation. Nice
beauty. Even if you are not a golfer. A very affordable 18 hole golf course. I grew up on
that golf course and it is very special to me. Fairview just backs up to it so we used to just
jump the fence and play. Much more than the Tollgate. Opens up the land. Even if you’re
not a golfer. A place where people know you’re not going to have 15 condos. Fabulous
skiing and sledding for free. In winter. So really it’s year round. Great. CC Skiing is free.

Q: Is there a neighborhood in Lansing that you could compare to Groesbeck?

A: I think the Sycamore Park area by Lindberg and Mt. Hope and Pennsylvania. Much
smaller. A lot of stability. The Lansing CC area is very strong. Another area very strong
is the Colonial Village area. Tecumseh River Drive and Delta River Drive is nice. Hilly.
Up and down. Brings topography to the neighborhood.

Q: I’ve got a lot of data from the city and township. I wanted to compare this
neighborhood to other neighborhoods.

A: I think that, in a general feeling as a realtor, is that the Groesbeck area has appreciated
more than the other areas.

Q: Lansing area rise in property values. Do you think the Groesbeck area has gone up
more than others?

A: I would say that everybody has been doing 4 to 7 percent but Groesbeck area has

been doing 6 to 10 per cent. Greater Lansing has been a fabulous, very affordable, 4 to 5
per cent values going up every year. Steadily they go up every year. They have never

77

remained stagnant. They go up every year. Groesbeck and Lansing has gone up every
year - even during recession area times.

Q: Would you say that the property market is still strong in this area ?

A: It’s been a tremendous year. One of the best years ever. Every year gets better. Interest
rates and affordability makes a great impact. Tremendous year. Tremendous year. One of
the best years ever.

Q: I can tell trying to get a hold of you guys. You are all so busy all the time.

A: I look at our sales, too. It’s the last day of the month. All our August sales are on the
board now. There’s probably 80. And that is just this office. We have 3 other ofﬁces.
There’s 150 offices in the Greater Lansing Area Realtors.

Q: What is causing this?

A: Low interest rates. Affordability. Renters who are paying 750 a month for rent. They
ﬁnd out that they can go buy a house on a low down payment and have a 750 payment.
So why not go buy? When you only need ﬁve hundred to a thousand dollars. Not major
relocation from the big sources-GM, MSU, etc. General business staying here. People
are moving in to Lansing and buying a house. So somebody buys your house and you
need another house. Tenants buying homes starts the whole domino effect. If the tenant
does not buy the market doesn’t go. Lot of neighborhoods that used to be rental. Makes
the neighborhood stronger. There are homes I wouldn’t even have shown a few years
ago. They were just too rough. Major changes on that low end.

Q: One thing, the EPA is talking about new development and talking about building
around a pond. Incorporating a pond into the neighborhood. Making them a feature. Do
you feel like that might increase the value of a property?

A: Where could they build? Usually the pond was there and somebody built around it.
Wetland was already there. Somebody bought a plot of land around it. 1 don’t see the
Tollgate being a big beneﬁt. I see it being a nice feature of the area. Because if you can
exercise and walk and have a pleasant view of the golf course and the birds and that is
just a feature of the neighborhood.

Well, they are talking about building now over there by the old BTS School, by Catholic
Central, a couple of hundred homes. I guess we can see when you have some green space
and you build what it will be. I think $150,000 brand new homes would be very popular.
I think they would go over very well. People want to be close to MSU, Frandor, the new
mall. . .The East side has got a lot of history and people believe in it and want to be close
to it. People who went to school there and want to go back and teach there. That kind of
thing brings strength to an area. Lansing is a good school system which sometimes gets a
bad rap.

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Q: Something I’ve got from talking to people in the neighborhood. Some people say the
school system is bad and they will move.

A: I move a lot of families in and out. They might move in when the kids are3 and they
move out when kids are 12 and 10 they move out. That’s typical. The Catholic school
system has been a huge beneﬁt and a stabilizing factor. I love to sell homes in Groesbeck.
They usually don’t last more than two to four weeks.

End of Interview.

INTER VIEW 4: 09/12/02, A T I 900HRS WITH AGENT 4 A T C OLDWELL H UBBELL
BANK AND REAL ESTA TE.

Q: Your background in Real Estate?

A: Well obviously I have been a realtor for about Six years now. We do sell in the
Groesbeck area. We primarily specialize in residential property. I am pretty familiar with
the area. We are from Dimondale-a suburb of Lansing.

Q: What do you feel are the biggest drivers of property values in that area.

A: First, the proximity to E. Lansing and to MSU. The value of the property compared to
the closeness to E. Lansing and to MSU. It’s very affordable. Second, a best buy situation
for a number of reasons. Property taxes are Lansing Township and so they are lower than
they would be in E. Lansing or even in Lansing city limits. . The houses are well
maintained. They are not huge. 1000 to 1400 sq. ft. Tend to be built from 1940’s to
1970s. They have been well maintained. It’s safe . You see people walking. Kids and
dogs. That’s very important.

What doesn’t drive it so much is the Lansing school district. They are happy with
elementary. What happens quite often we have noticed is that at High school age it
happens quite a bit that they go to private or parochial schools. Not unusual.

There are clearly some prime factors. The houses are affordable. The taxes are relatively
low. Proximity to Lansing and MSU are important. Of course you are focusing on the
drainage project. That’s helped a lot . I would estimate that 90 per cent of the homes have
basements. What’s happened with the project. That has dried them up and made a
tremendous distance on resale. Two things that kill us in our business are location and
wet basements. That has helped them a lot. It’s made a tremendous difference. There’s no
doubt about it.

Q: I am doing a survey in that neighborhood. I have interviewed a lot of people and they

are kind of on the fence. Of course you know there’s that lawsuit. I don’t know if they
necessarily. . .

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A: Some of those individuals have paid. There is an assessment for that. What they got
back for that in a period often years is remarkable. . .It makes a tremendous difference —
there is no doubt about it.

Q: Do you feel that the Tollgate Wetland has an effect on property values in the area?

A: I don’t think there is any question about it. That’s just an absolute yes. I know that
you’ve talked to other realtors. If any realtor told you no, it doesn’t have an effect, 1 am
surprised. No question that it has a positive effect It has a negative effect for the
immediate home owner who paid for it in the assessment. But in the long haul , the wet
basement doesn’t sell or it sells for less money.

Q: That’s interesting. That’s an opposite response that I have gotten from other realtors.
A: I am surprised. Just really surprised.

Q: Well, they have said that it is a positive asset to the neighborhood. But as to whether it
has an impact, an effect on property value, no one has told me yes so far.

A: Well to say to someone did you buy this house because it does not have a wet
basement. That doesn’t happen. But what you run into is someone doesn’t buy a house
because it does have a wet basement. It does not matter where the home is a wet
basement is the next thing to death in the sale of a home. People just don’t want that. No
question it has a positive effect.

Q: You are coming at it from a different angle than they are. They were looking at it as a
quality of life thing-there is a walking path there, it is pretty. As a way to attract people
into the neighborhood.

A: And that’s all true. A walking path there. Something to look at. It’s really nice. Birds.
Somewhere to walk. I don’t think that is a main feature. It’s an attractive feature. People
walk all over in that neighborhood. But I don’t think that everyone in that neighborhood
walks on it. People on the perimeter - the immediate vicinity - might. It’s just another
place to walk. Not everyone that beneﬁts from the project walks around it. The beneﬁt is
the drainage-no question.

Q: I wrote this question thinking about aesthetic amenities and not the drainage. My
question is about the aerial extent of the effect it would have on property value. I am
guessing you would say all the homes that were in that assessed area that beneﬁted from
the sewer separation.

A: Deﬁnitely, not from the aesthetic standpoint but rather from the practical standpoint.
The beneﬁt. If you are talking the catchments pond itself. The value to the homeowner in
terms of just walking around and seeing that is probably not going to radiate much more
than two or three blocks back into the various developments. . . .they just don’t use it. It’s

80

like a park. If you are six blocks from the park you don’t use it. If you are two blocks
away, you do. It’s that kind of thing. Aesthetic-it’s pretty to drive by for others.

Q: So could you put a dollar amount on the kind of value that you are talking about? I
know that is a hard question.

A: That is a hard question. In terms of resale value on a home at this point in time. Our
market’s going through the roof. Homes are selling for far more than they have. These
are good times in greater Lansing. Homes are selling for more than they have. Homes
with wet basements will sell for two to ﬁve thousand dollars less than those with a dry
basement. It’s hard to quantify that. Maybe even more. We sold one recently and it’s had
a wet basement - not landscaped properly and that was a factor in the buyer’s mind and it
meant a lower price.

Q: When you are selling a home in that area, do you use the wetland as something that
you would point out for them?

A: We have not. Certainly we would if it would be one block from it. Or two.

Q: I’m kind of drinking you would not want to point it out to them. Thinking about this
drainage point of view. That might plant a bad seed in the buyer’s mind.

A: Absolutely. For example there has been construction in the streets. That is bad news
ﬁ'om a realty point. They are ﬁxing something wrong. It gives a negative impression.

Q: One of the things I am grappling with. I am building an economic model. I am looking
at the aesthetic value of the wetland and the value of the golf course. Do you feel like
those are two separate entities?

A: Yes. I have never viewed the golf course as being a major plus in that neighborhood.
Individuals that live in that area use it some. I suspect there are far more individuals who
use the golf course that are coming from somewhere else. I have not gone over there and
quizzed anybody. There’s a mix of individuals living in that neighborhood-lots of
professional folks-lots of folks work in Lansing and MSU. Their focus is not the golf
course. Wood St. separates it. It’s harder to get to from that side. Originally it was a
bigger draw than it is now. It’s not a modern golf course that people drive to. They go to
it because it is close. No great features.

Q: So if you moved the Tollgate around to another neighborhood would you say that it
would be an advantage? Would it have the same effect?

A: Depends on the neighborhood. Not every neighborhood needs sewer separation. Some
do. Some don’t. In the Lansing area. It probably would have the same effect. . .If you had
the same need. Aesthetic standpoint not that great an effect. Practical effect, You bet.

Q: Would there be any types of neighborhood that would value the wetland more?

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A: Sure it would have to be a neighborhood like Groesbeck. People walking. Kids and
dogs. People who would value the wetland. A safe neighborhood. People get out in the
nice weather. To value something like that. It’s real hard to place a catchment area, what
you call a wetland area in the middle of downtown Lansing. You don’t really need it
anyway. But it would very little value there. It also has some value in older established
areas where they are having a problem with wet basements.

Q: What attracted me to this neighborhood was the idea. ...they thought we could pipe it
all to the river or we could do this , build this catchment basin, and make it something
more. Do you feel the neighborhood values from this alternative plan? You said it’s
limited.

A: It’s enhanced the neighborhood. There’s water where there wasn’t. A lot of the newer
developments have a pond or water of some kind. That is a selling point for us. To sell a
house on a pond enhances its values.

Houses with pond frontage are clearly more. With this project if some of the homes have
actual frontage, if you will, it would make a tremendous difference. This is set up more
like a park. With that neighborhood, it was a good choice. If homes had a back yard that
backed up to that, it’s a whole different ball game, in terms of price.

Q: Yeah you know I didn’t really think about that. If someone retroﬁt a storm water
system. If you could have it abut certain properties it would have a big effect.

A: Tremendous effect. Absolutely tremendous effect.
Q: In dealing with the Tollgate’s value outside of drainage - What features of the wetland
really affect property values?

A: Walking trails are a nice feature. People are always walking there. Good weather.
Morning. Evening.

Q: What about open water?

A: Sure. It’s pleasant. It’s nice to see the water. A few cattails out there. A little reprieve
from the city.

Q: Do you feel like there’s any comparable neighborhoods to Groesbeck?
A: No not in terms of price and value. There are a number of places like the same ﬁt and
feel and style of neighborhood. But price. Just an example. ...the govemor’s residence in

Mt. Hope area-houses all built same period of time. Basically 40’s through 60’s Much
larger homes. More expensive. 175 to 300 thousand. Lots of wet basements. Same type.

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Lots of people walking. Professional folks. Kids and dogs. Clearly an area where a
project like this would be an enhancement.

Q: Earlier you said greater Lansing real estate is going through the roof. How does
Groesbeck compare to that?

A: Clearly it’s in the middle of the pack. 130 to 180, The vast majority sell for less than
145.

Q: I am thinking of increasing in value from year to year

A: It is still in the middle of the pack. Okemos 10 % a year. Wonderful investment. Some
areas are 3 to 4 %. Groesbeck is probably doing 4 to 6 % a year.

End of Interview:

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Appendix 6
Transcribed Interviews with Property Appraisers

INTER VIEW 1: 09/23/02, 0830 HRS WITH AGENT 5 AN APPRAISER A TLAZAR AND
ASSOCIA T ES.

[problems with tape in the beginning of interview]

Q: Do you feel that people are drawn to the Township, or City sections of the Groesbeck
neighborhood?

A: This is another discussion that my partner and I have had.

There are some people, even though it’s in the Lansing School District, who moved to
this area, to be in the township because the taxes are lower.

The other thing is, right where this wetland is mostly not single - family property except
over here on - uh what’s the name of this street. [Hopkins] [interviewee is referring to a
map of area]

Here is Wood Street and here is the opening, whatever, research thing MSU has.

Here is F airview and between F airview and Hopkins that’s either multi-families, those
townhouses, or it’s those duplexes. Those are the ones fronting essentially on the
wetland. Not the neighborhood over here, that’s farther north.

There’s some beneﬁt as you go up Wood St. Those single family homes that front on the
golf course are nice and I think some people like that because of the view. Um, and then I
know that a lot of people are very upset right now because the trafﬁc has been so high. I
have driven by there and seen the police station themselves trying to slow down the
trafﬁc. I think that will partially go away once the construction trafﬁc is less. Once they
fmish all their work on uh. . ...People are cutting around. They don’t have much of a
choice. I think there are some things that the city or the road commission could do to
slow this trafﬁc on Wood Street. There is really not that much trafﬁc in comparison with
other city street.

The other thing is — you’ve got the golf course that keeps going north. And you’ve got
that other neighborhood and I don’t see anything improving in that neighborhood at all.
Very blue color. Old stock. I don’t see that the golf course did a thing for that.

Q: Well that’s deﬁnitely something I could talk to realtors about. If they feel like maybe
the golf course is more integrated into the community.

A: Yeah if it was like a golf course style community but it’s part of their parks system.
The good thing about Lansing is they’ve got a wonderful park system. I don’t think

84

people realize how good their parks system is and this is a great golf course. It’s a good
buy. It’s fairly challenging. Golf .....they’ve done a wonderful job on it. I still don’t see
that being something that people use to market that area. So. . .I think the thing about
Groesbeck area is that housing stock is in good condition. You can tell that the owners
are -— it’s important for them to take care of their homes. It’s newer than other housing
stock in the city. It has easy access to the expressways which I think makes it more
desirable. People can send their kids to the elementary school there and feel pretty
comfortable about getting a good education in the Lansing District. That school is right in
the middle. It’s not as though it’s on the fringe. Like Fairview Schools, it’s kind of on
that comer and is somewhat exposed. And I think that, um, quite honestly, that shopping
center being there is going to draw people to Groesbeck more than the golf course will.
Over time, you are going to get a real Spike in trafﬁc because it’s new and everyone
wants to see it and that will ameliorate over time. Now a colleague of mine —we went
away this week and I asked him because he has a lot of real estate —mostly commercial-in
and around the Lansing area and he made a real interesting observation. He said he didn’t
think that people were going to be drawn to the shopping center because of the new shops
as much as they were going to be drawn there because of the new restaurants.

The restaurants will then be what will - when you get the people going to the restaurants,
the secondary part will be let’s go to that store or this store. There may be some credence
to that. Lansing is not known for its upscale dining opportunities . This is a real meat and
potatoes kind of a town. So it will be interesting to see if that plays itself out. I’m having
a hard time understanding how we can have all of these huge sporting goods stores. Dix
is going to be there. They Opened up this huge store in the Meridian Mall and then we
have MC Sporting Goods on the west side and then Gander Mountain and I just think the
market’s saturated and I don’t know. On the upside, there are some stores going in there
and I don’t have to go to Detroit now. I would go to Novi or Troy and now I can shop
here.

The other thing about the Groesbeck neighborhood and the Lansing market in general.
It’s kind of a boring market. It’s kind of steady. You don’t see these huge spikes. Supply
and demand seems to be over time, in my opinion relatively steady. There are some hot
areas in the suburban east and west and south sides. Even there right now like the Dewitt
area, there was a lot of stuff for sale. Meridian Township there’s not quite as much stuff
for sale right now and I don’t know. . .this is sort of kind of. ...because of the economy. I
think there’s been some slowing in those upper level luxury housing right now.

Q: You feel like the Groesbeck area is a stable area? Property values will be steadily
going up because of these features we are talking about.

A: Yes, I think when people make the decision. I have to live in Lansing either because I
can’t afford to live in an outlying area. Or I have to live here because of my job. I have to
live in Lansing because of money they will pick certain areas that will be driven by the
quality of the homes and the school. They would be younger families with elementary
school children or people that don’t have children yet or don’t have children period and
they are not concerned about the schools. I think the two negatives for the city of Lansing

85

are the school district. And the quality of the housing stock. You’ve got a city where 50
per cent of the housing stock is rental. You have very old housing stock. You have to get
over those two hurdles for Lansing to be competitive with the outlying areas.

The Boys’ Training Center. It is interesting there was an editorial in the LS] today about
how Lansing should stop trying to compete with the outlying areas because they’re never
going to be able to do that. Something that is more-ah- helps Lansing . I don’t know. It’ll
be interesting to see what happens. That property is Sitting there for a goodly long time.
They’ve studied and studied that. They really do need to make a big investment in that
whole area around Eastern HS. There are a couple of developers redoing houses across
Pennsylvania and trying to convert them to single family residences.

Q: Could you really quickly give me your background?

A: I am a real estate appraiser in Lansing. My partner and I have a real small — I only do
it part time. Used to be his full time.

Q: So you’ve known about the Groesbeck Area?
A: I’ve lived in the Greater Lansing area for over 20 years.

Yes, I am familiar with it. I know people who made the decision that, if they were going
to live in Lansing, that’s the area they were going to live in.

I am real familiar with the golf course because one of my former partners worked as the
Director or Real Estate and the Dept of Budget and that was a property that the city of
Lansing didn’t own. It was on a long term lease for one dollar with the DNR. That piece
of property and the Boys’ Training Center was part of a transaction to give those
properties to the city of Lansing so that they would have full access. So and I kind of
know what is going on in that area. I have seen the study for the Boy’s Training Center.
There has been a lot of talk about that property by the Arrnory- that Should be developed-
1 am pretty familiar with that.

Q: You feel that Lansing is pretty stable and you feel that Groesbeck is going to increase
in value?

A: I would say that within the city of Lansing that is probably true. The only way we’re
going to know is to see some sales. But on the average you are seeing, according to the
market, 6 per cent or better increase in the market on a per year basis.

Q: What would you say about the Groesbeck area?

A: I would say it was probably about six per cent. Again, until we pulled some sales and
looked to see what was happening over time.

Q: I am curious as to how neighborhood characteristics factor into appraising a property?

86

A: What would happen. You are probably going to talk to the assessor’s ofﬁce because
they are dealing with large numbers of sales. They may take the city and divide it into
neighborhoods and look at just what is happening in this particular area. For example, it I
was doing assessments, I would be looking at the area that would be bounded by
Saginaw, 127 and probably back to Cooper St. or whatever that other street is. That’s a
distinct neighborhood.

Q: How do you factor in that stuff?

A: We have to factor in what are the deﬁned boundaries of the neighborhood. That is a
question I do when doing an appraisal. Groesbeck is a deﬁned neighborhood and has
deﬁned boundaries and so I want to ﬁnd other sales in Groesbeck that are close to my
subject. So let’s say my assignment is a two story, center entry, colonial, partial brick,
three to four bedrooms, maybe two to two and a half baths, full basement, two car garage.
That would be typical. I am going to be looking for other homes that have sold in that
neighborhood that are similar in terms of Size and appeal, lot size, to compare against my
subject. Then I am making adds or subtracts as I do that. I might be making a deduction
or an addition according to superior or inferior. Usually I make an adjustment on a per
square foot basis.

Q: Do you do an average per square foot.

A: I would say the average contributory value on a gross square foot basis would be
25.00 per sq foot. I look at a house that has 2500 sq. foot and the subject only has 2400
sq. It then I come up with a deduction of 2500.00 It gives you a leveling out. Typically
you will want to use three possibly four other pieces of property to compare to the
subject. Then you are using judgment to arrive at your value. You are not supposed to
average or weight. Sometimes people use bracketed sales. If it went a little higher or a
little lower. You are getting a good sense of what is going on.

It would be inappropriate if I was appraising a ranch style home to use as a comparable a
two story home or a Bi-level home. You want to get something as close to the subject as
possible. Sometimes you can’t do that. You have to go into a competing neighborhood.
What would be a competing neighborhood to Groesbeck. It would be something that is
still in the Lansing School District. That has housing stock still similar. I might go across
127 and go into the neighborhood that is bounded by Saginaw and Coolidge and backs up
the expressway. It’s still in the Lansing School Dist. The housing stock is about the same
age. I might make an adjustment that it is now in the township and not in the city.
Because there is a difference in taxes and that has to be accounted for.

Q: The more people I talk to in that area. ...it is a draw. ....to move into the township.
A: My personal opinion about that is that is false. Yes your taxes are lower. You don’t

get all the services. Lansing Township is very weird because it is Split. Half is on the
East. Half is on the West. How do you get good police service in that situation. Or good

87

ﬁre service. I would think it would be a challenge. Versus Meridian Township where it is
all contiguous and it’s within a 36 mile radius. You are still not getting the quality of
service that you are getting in the city.

Q: That’s kind of touching on what you mentioned earlier about the structural features of
the house. Those are the ones you are primarily considering when you are evaluating a
house?

A: Yes the location. Do I have comparables? Are the overall features of these other sales
similar to the property I am assessing. You go through a thought process to say yes these
things are all displayed or pretty similar to arrive at a conclusion. Lots of times they are
going to ask for a cost approach but with older housing stock it is not particularly reliable
because you are making some subjective decisions about how you are going to depreciate
the property. Some of those may be just because of physical depreciation and others are
like functional depreciation, where having one car attached garage is really not as
desirable as having a two car attached garage. So you have something that is a functional
problem.

You also sometimes have to do the income approach. Not particularly reliable when you
are dealing with single family residential because in theory there are not going to be a lot
of rentals in the area. Doesn’t really give you a true picture. What gives you the best
picture is what have other houses sold for?

Q: Using the sales comparison approach you are incorporating some neighborhood
variables in there.

A: Right that’s important for underwriting. They want to know. What kind of ﬁre
protection. Police. Is there private ownership. Schools. In comparison to other houses,
how would you rate the condition of this house. You are comparing this house to other
houses in the neighborhood. Not for example this house to White Woods. Not a fair
comparison to what’s going on.

If I’m just curious as to how the neighborhood actually affects the house in terms of
property appraisal. Well if I go across to the property just across from Sparrow Hospital
on Mi Ave. That neighborhood, I don’t know what it is called. You have, in my opinion,
a fair number of rentals. You can see that private ownership is not as evident as it is in
Groesbeck. More deferred maintenance. You may even see orange stickers-where the city
has condemned them. Much older housing stock. A lot of the housing stock is so old that
it doesn’t have the modern conveniences that you would expect. It might not have
garages. The lots are smaller. You probably wouldn’t have more than one and a half
baths if that. Those types of things. So you could start making comparisons to other
neighborhoods. But, again, the sales will tell you something about what is going on in
that neighborhood. You may see a house in Groesbeck selling for 150 or 175 thousand
dollars. If you moved into the other neighborhood you might see houses selling for 75 or
80 thousand dollars so the market is telling you that this is not as desirable for a lot of
reasons.

88

Q: Do natural resources ever ﬁgure into appraisals? Can peOple be drawn to natural
features, something like the Tollgate?

A: I think that people would consider the Tollgate. Whether it’s the driving factor I don’t
know.

Q: Well one of my ideas initially. I was going to have everybody draw a circle around the
Tollgate where they might think they might be a premium. I got this idea from other
studies — one of the things is 1000 feet. So they can draw a circle and say that these
houses within a thousand feet have a certain property value impact.

A: I don’t think you can draw that conclusion for Groesbeck. You can’t draw it for inner
city properties. In some ways you may be able to draw an opposite conclusion if you
have a combo of school and city park together. In some instances it iS less desirable.
There is more trafﬁc. There are other people coming into their neighborhood that they
don’t know. It can be a disadvantage too.

Q: One thing that you hit on - you talked about - the Tollgate Area and the golf course are
not integrated into the neighborhood. They butt up to the neighborhood. Each stands
distinct on its own. Not like little ﬁngers going into the neighborhood. Do you feel Wood
St. really separates the neighborhood from the golf course and that is one of the reasons
why it might not have an effect?

A: Yes that is the dividing line. It is pretty evident.

Q: Do you feel that if the Tollgate was more integrated into the neighborhood it would
have a property value impact?

A: For instance I can talk about my neighborhood. Mark Abood and I have had this
discussion and I have had it with other people. We have some natural areas in our
neighborhood that were kept out of building because they were there. What the
developer did is he sort of butted up the houses to these natural areas and I think if you
went and did extraction of the sales you would probably ﬁnd that, for those houses that
back up to these areas-they have created walkways and we have some small lakes. The
ones that are backed up to the lakes that there is a bit of a premium for those versus the
ones that are not enjoying not having another house sharing common back yards.

Q: So you feel like that is the driver. Because there is open space or because of the scenic
value.

A: I think the developer used it to his advantage and I think people liked it. Personally I
don’t like it. One reason is it’s buggy and it’s wet. Some people think it’s slick. Creates
more privacy for them. The developer integrated it into the neighborhood as they also
integrated-«tennis courts, common areas. They made a real effort. Here there is no

89

integration. It is just there. It’s not like there is an exclusive golf course community.
Something like Florida. Where they put the houses all around the golf course. That’s not
what this is.

Q: There is a study. In 1995. A development. And they had tried to incorporate some of
these. A lot of the developers felt they could charge more for these homes. And I’m
wondering if that holds true to the Tollgate. And if eventually that would factor into the
Tollgate.

A: Have you interviewed the assessing ofﬁce yet? I bet you they will tell you no.

Now an interesting thing to compare would be. You know the county recently opened up
a brand new park in the middle of the city of Lansing in the area of very average housing
stock. That’s right off of Cavanaugh. It’s called Hawk something. Hawk Island. It was a
sandpit. A barrow pit for mining. They made it into a place to go swimming, a little bit of
boating and ﬁshing. When I talked to people in the zoning ofﬁce, she was telling me t hat
she thinks that whole area is going to take off. Partly because of the park.

End of Interview:

INTER VIEW 2: 09/30/02, 1030 HRS WITH AGENT 6 AN APPRAISER A TLAZAR AND
ASSOCIATES.

[This interview was not taped at interviewee’s request]
Notes:

The interviewee is a semi-retired appraiser with over 20 years experience in the ﬁeld. He
was in the International Association of Appraisers and chair of the Education committee.
Agent 6 reaffirmed many of the same important neighborhood characteristics identiﬁed
by the previous interviewees, including the elementary schools in the area, proximity to
freeways and shopping. The agent felt that proximity to the wetland would provide some
property value increase, but would not elaborate. And felt that the fact that the wetland
was separated from the nearby properties by roadways would signiﬁcantly lessen any
impact. Of note, the agent identiﬁed several smaller pocket or sub-neighborhoods within
the northern half of the study area, mentioning that he resides there and some people in
that area do not consider themselves part of Groesbeck. When asked why they did not
consider themselves part of the neighborhood, he replied that some elitism was involved.

90

Appendix 7
Survey Responses

have you

house? N
46 54.9

Mean Std. Dev.
19.7865 17.8943

your household rent or own
= requency %

rent
0WD

attraction
requency

ocatlon

ty

transportatr accessr
or1
qur e

am 0

responses

.0

g exterior maintenance

accessr
01']

go course
mm 0

responses

91

inimum
0.1
Variance
320.206

 

Nega char. 0

requency %

c l .
poor exterior marntenance
poor maintenance
0 properties

stormwater
new
government concerns
none

responses

Are there things about
eighborhood that you believe either
or decrease the value of the
that you live in?
requency
yes
no

.0

requency

g exterior maintenance

accessr ty
on

go course

responses

 

92

 

78 negative char. of n.hood, impact

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

.v.?
Frequency %
trafﬁc 1 2.2
poor exterior maintenance 9 19.6
number of rental properties 1 2.2
stormwater drainage/ﬂooding 1 2.2
new mall 7 15.2
NA 3 6.5
none 19 41.3
school district 4 8.7
tollgate tax/assessment 1 2.2
other 4 8.7
Total responses 50
08a. How does the presence of nearby
pchools impact the value of this
property?
(N = 46) Frequency %
positive impact 29 63
negative impact 3 6.5
no impact 10 21.7
I do not know 4 8.7
8b. How does the presence of the golf
course impact the value of this
property?
(N = 46) Frequency %
positive impact 31 67.4
negative impact 0 0
no impact 11 23.9
I do not know 4 8.7
Q8c. How does the presence of nearby
parks impact the value of this
property?
(N = 46) Frequency %
positive impact 38 82.6
negative impact 0 0
no impact 7 15.2
I do not know 1 2.2

 

 

 

 

 

 

 

 

 

93

 

 

 

 

8d. How does the presence of the
ocal wetland impact the value of this

property?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(N = 46) Frequency %
positive impact 29 63
negative impact 5 10.9
no impact 11 23.9
I do not know 1 2.2
Q8e. How does the distance to work
impact the value of this property?
(N = 46) Frequency %
positive impact 35 76.1
negative impact 1 2.2
no impact 6 13
I do not know 4 8.7
Q8f. How does the amount of local
trafﬁc impact the value of this
roperty?
(N = 46) Frequency %
positive impact 13 28.3
negative impact 1 2 26. 1
no impact 20 43 .5
I do not know 1 2.2
Q8g. How does the new mall impact
the value of this property?
(N = 46) Frequency %
positive impact 24 52.2
negative impact 10 21 .7
no impact 3 6.5
I do not know 9 19.6
Q8h. How does the access to freeways
impact the value of this property?
(N = 46) Frequency %
positive impact 41 89. 1
negative impact 2 4.3
no impact 0 0
I do not know 3 6.5

 

 

 

 

 

 

 

 

94

 

 

 

reatest pact on p.v.
requency
l

to
amount 0
new
access to
none

responses

er the past years do you
that the residential p.v. in this
have gone up, down or stayed the
O)
(N = requency
UP

I

. Are you
ollgate Wetland?
Frequency
yes
no 4

1 Did pro 0 me
Tollgate Wetland have an
on your purchase of a home
this area?

NA
no
yes

1 was your toward

Tollgate Project when it was ﬁrst
6,

posrtive

negative
not

 

95

 

Q14. Change in attitude towards
Tollgate?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frequency %
no change 17 37.8
NA 17 37.8
poor maintenance(-) 3 6.7
recreational access(+) 3 6.7
local government concern(+) l 2.2
now positive 9 20
scenic value(+) 1 2.2
neighborhood attraction(+) l 2.2
now negative 1 2.2
Total responses 53
Q16. Overall, do you think that the
tetland has been a plus or a minus for
his area?
(N = 43) Frequency %
plus 32 76.2
minus 3 7.1
neutral 7 16.7
Q17. Positive aspects of Tollgate
lwetland?
Frequency %
none 6 l4
recreational amenities 25 58.1
green/open Space 9 20.9
scenic value 7 16.3
wildlife habitat 11 25.6
ﬂood storage 4 9.3
environmental resource 4 9.3
neighborhood/community center 5 11.6
other 6 14
Total responses 77
Ql8a. As a possible advantage of a
ilocal wetland, do you think that access
to walking trails applies to the
Tollgate?
(N = 43) Frequency %
applies to tollgate 41 95.3
does not apply to tollgate l 2.3
I do not know 1 2.3

 

 

 

 

 

96

 

 

 

 

ocal wetland, do you think that bird

E181). As a possible advantage of a
atching applies to the Tollgate?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(N = 43) Frequency %
applies to tollgate 38 88.4
does not apply to tollgate 2 4.7
I do not know 3 7
Q18c. As a possible advantage of a
ilocal wetland, do you think that scenic
Walue applies to the Tollgate?
(N = 43) Frequency %
applies to tollgate 34 79.1
does not apply to tollgate 9 20.9
I do not know 0 0
Q18d. As a possible advantage of a
ocal wetland, do you think that
ildlife habitat applies to the
Tollgate?
(N = 43) Frequency %
applies to tollgate 34 79.1
does not apply to tollgate 6 14
I do not know 3 7
Q18c. As a possible advantage of a
local wetland, do you think that
tormwater treatment applies to the
Tollgate?
(N = 43) Frequency %
applies to tollgate 22 51.2
does not apply to tollgate 6 14
I do not know 15 34.9
Ql8f. As a possible advantage of a
llocal wetland, do you think that
increased property value applies to the
Tollgate?
(N = 43) Frequency %
applies to tollgate 21 48.8
does not apply to tollgate 16 37.2
I do not know 6 14

 

 

 

 

 

 

 

97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18g. As a possible advantage of a
Erica] wetland, do you think that
eighborhood meeting place applies to
the Tollgate?
(N = 43) Frequency %
applies to tollgate 28 65.1
does not apply to tollgate 12 27.9
I do not know 3 7
18h. As a possible advantage of a
Ema] wetland, do you think that open
pace applies to the Tollgate?
(N = 43) Frequency %
applies to tollgate 35 81.4
does not apply to tollgate 5 11.6
I do not know 3 7
Group $Ql9 negative aspects of
Itollgate wetland
Frequency %
none 22 5 1 .2
tax/assessment 3 7
poor maintenance of wetland-weeds 10 23.3
drought - effect on wildlife 4 9.3
mosquitoes 5 1 1.6
security - safety 3 7
open water hazard 2 4.7
increased ﬂooding 1 2.3
other 3 7
Total responses 56
Q20a. As a possible disadvantage of a
Eocal wetland, do you think that
'ncreased taxes applies to the
Tollgate?
(N = 42) Frequency %
applies to tollgate 12 28.6
does not apply to tollgate 16 38.1
I do not know 14 33.3

 

 

 

 

 

 

 

 

 

 

98

 

 

 

 

cal wetland, do you think that child

EZOb. As a possible disadvantage of a
o
afety applies to the Tollgate?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(N = 42) Frequency %
applies to tollgate 11 26.2
does not apply to tollgate 28 66.7
I do not know 3 7.1
20c. As a possible disadvantage of a
Ecal wetland, do you think that
uisance animals applies to the
Tollgate?
(N = 42) Frequency %
applies to tollgate 4 9.5
does not apply to tollgate 34 81
I do not know 4 9.5
Q20d. As a possible disadvantage of a
local wetland, do you think that
nuisance people applies to the
Tollgate?
(N = 42) Frequency %
applies to tollgate 1 2.4
does not apply to tollgate 39 92.9
I do not know 2 4.8
Q20e. As a possible disadvantage of a
local wetland, do you think that
increased traffic applies to the
Tollgate?
(N = 42) Frequency %
applies to tollgate 3 7.1
does not apply to tollgate 39 92.9
I do not know 0 0
Q20f. As a possible disadvantage of a
local wetland, do you think that
basement flooding applies to the
Tollgate?
(N = 42) Frequency %
applies to tollgate 3 7.1
does not apply to tollgate 32 76.2
I do not know 7 16.7

 

 

 

 

 

 

 

99

 

 

 

As a tage o a
wetland, do you think that noise
pplies to the Tollgate?
= 4 Frequency
es to gate
not app y to to gate 4
I not

la. ow 0 do you the
ollgate Wetland in the summer?
= requency

y 7
+ per 7

per

per

+ per

- times per year
never
NA

1 How do you the
ollgate Wetland in the winter?

Frequency %

l .
1+ per . 1
1 per
1 - times per year
y

Percent

(N=38

never
A
responses
missrng
in 0 survey,
’t ask people to break down their
use

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

indicated

22a. When visitin th w tl nd d
Lilo bird watch? g e e a , 0 Frequency %
no 32 76.2
yes 10 23.8
Total responses 42
22b. When visiting the wetland, do Frequency %
you jog or walk around the trails?
no 4 9.5
yes 38 90.5
Total responses 42
Q22c. When visitin the wetland, do
you visit with neighgbors? Frequency %
no 37 88.1
yes 5 11.9
Total responses 42
Q22f. When visiting the wetland, do Frequency %
you enjoy the View?
no 39 92.9
yes 3 7.1
Total responses 42
TThese are unprompted questions see
Appendix 1
* % = the percentage of respondents that answered the question with the response

 

 

 

101

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