This year’s Lusk Research Awards support research projects by USC faculty and PhD candidates. These research projects help support the mission of the Lusk Center, which is to advance real estate knowledge, inform business practice, and address timely issues that affect the real estate industry, the urban economy, and public policy.
Ann Owens, Associate Professor, Department of Sociology, USC Dornsife College of Letters, Arts and Sciences
Housing Unit Segregation and its Impacts on Racial and Income Segregation between Neighborhoods and Places
Where are housing units accessible to lower-income families located? Are they evenly distributed across neighborhoods and municipalities, or are they highly segregated by cost and type? How does the location of housing units of different types and cost affect residential segregation by income and race/ethnicity? In this study, I will draw on Census and American Community Survey from 1970 to the present to first document trends in the segregation of types (i.e., single versus multifamily units and renter- versus owner-occupied units) and cost of housing units between census tracts and between and within places (municipalities) in metropolitan areas. Second, I will model whether housing segregation predicts income and racial/ethnic segregation between neighborhoods and places. Past research has mainly considered housing’s role in shaping residential segregation in terms of density zoning (typically measured at the metropolitan area or municipality, rather than neighborhood, level) or in terms of subsidized housing, which houses a small proportion of the low-income population. This study provides the first comprehensive accounting of segregation of housing units and documents its impact on racial/ethnic and income segregation, with implications for urban policymakers and planners concerned with affordable housing provision and location.
Scott Joslin, Associate Professor of Finance and Business Economics, USC Marshall School of Business
Firms' Profits, Real Estate Valuation, and Stock Prices
We posit that proﬁtability changes of ﬁrms headquartered within a geographic region can manifest in changes to housing demand from ﬁrms’ current (through proﬁt-sharing/wealth eﬀects) and/or new employees (through marginal hiring) in that region. Such demand changes result in regional real estate valuation implications, as local supply of housing available for sale across U.S. regions is potentially small relative to the substantial marginal housing demand from local corporate employees. Indeed, regional proﬁtability indices constructed from real-time quarterly ﬁnancial statements of ﬁrms located within same geographic regions provide timely information about future real estate values. However, the proﬁtabilityhousing implications are only gradually processed in REITs exposed to regional real estate values, resulting in predictable return patterns for investment in REITs. It also identiﬁes regional accounting proﬁtability as relevant for timely understanding of local real estate markets and their consequences and, thus, as a primitive factor assessing the macroeconomy. While ﬁnancial statement analysis has been usually conducted at the ﬁrm level, this study introduces a new approach of analyzing ﬁrms’ ﬁnancial statements at the geographic level, bringing to the forefront the value added of the accounting system for macroeconomic analyses.
Juliet Musso, Associate Professor, Price School of Public Policy
Fiscal Resilience: The Great Recession and California Municipal Finance
The proposed research project uses the Great Recession as a natural experiment to consider the factors that explain fiscal resilience in California municipalities. The goal is to draw inferences regarding the capacity of local government finance to sustain catastrophic fiscal events, and to analyze the coping strategies used by municipalities in the face of fiscal stress. This research integrates the theoretical frameworks of resiliency and portfolio analysis in assessing fiscal choices of cities during a period characterized by strained revenues, increased volatility, and educated service levels (Martin, Levey, & Cawley, 2012). Resiliency is defined as the ability of systems to reassemble resources and activities (to) continue to work despite disruptions. However, resilient systems may not necessarily be stable, efficient or socially equitable (MacKinnon & Derickson, 2012). The study uses interrupted time series analysis to estimate how fiscal composition and service arrangements affected municipal fiscal resiliency in the aftermath of the Great Recession. We employ detailed longitudinal data on financial arrangements and services from the California State Controller for 480 cities from 2003 through 2016, inclusive. These data support a nuanced analysis of the impact of the economic shock on city fiscal strength, and the mitigating effects of municipal financing and service arrangements.
Gary Dean Painter, Director, USC Sol Price Center for Social Innovation, Price School of Public Policy
Brian An, PhD Candidate, Sol Price School of Public Policy
Capitalizing on Collective Action: Community Standards Districts and Property Values in Los Angeles County's Unincorporated Areas
Property value changes induced by the creation of private and quasi-private governments have received much attention in the economics literature. For example, scholars have found that the establishment of business improvement districts, home owner associations, and special districts generates positive amenities that are capitalized into home values (Ellen et al., 2007; Billings & Thibodeau, 2011; Meltzer & Cheung, 2014). However, this class of studies generally focuses on cities and downtowns (Glaser & Kahn, 2004), not on unincorporated communities (cf. Patrick & Mothorpe, 2017). Researchers therefore have a limited understanding of housing and community development in unincorporated communities. Community standards districts are an institutional instrument that counties use to control land use, housing, and commercial development in the unincorporated areas against urban sprawl and negative spillovers from adjacent jurisdictions. In this paper, we examine how the formations of community standards districts affect the residential and commercial property values in the unincorporated communities in Los Angeles County from 1988 to 2016. The paper contributes to a growing empirical literature on special districts and other forms of private governments and urban and regional studies in the context of housing and community development in unincorporated areas.
Jovana Rosen, Assistant Research Professor, Sol Price School of Public Policy
Is CEQA Litigation an Obstacle to Development in California?
The California Environmental Quality Act (CEQA), established in 1970, remains a hotly contested issue for urban development in the state. Designed to democratize development by requiring developers to disclose and mitigate potentially significant environmental impacts prior to project initiation, CEQA also opens development up to potential litigation. Many argue that the potential for litigation deters development by increasing project costs and enhancing risk. They blame CEQA, in part, for high development costs across California (Barbour & Teitz, 2005). While litigation is expensive, and anecdotal evidence of high costs exists, no research to date has assessed the incremental costs associated with litigation. For this reason, we lack a rigorous, nuanced understanding of the impacts of this influential law on development—a critical area of inquiry to assess the barriers to development in California.
This research remedies this literature gap by investigating the impacts of CEQA litigation on development. We propose to expand a unique dataset matching development projects to CEQA litigation, geocoding the projects, and tracking the time to project completion. This analysis enables us to identify (1) what projects get litigated; (2) whether and how litigation delays projects; and (3) differences in litigation and timeliness across geographies and project type.