(University of Oregon, 2012) Rasmussen, Ethan; Yang, Famery; Blonigen, Bruce A.
The City of Springfield faces deteriorating street conditions due to a steady
decline in transportation funding. The City believes a possible solution to this
problem is to improve its local streets with funding from residential property
assessments. However, to encourage property owners to bear the costs of
improving roads, the City would like to better understand the value of local street
improvements. This paper surveys the existing literature on amenity valuation
and infrastructure investment and proposes a hedonic price regression to
estimate the impact local street conditions have on residential house prices. Our
results suggest better street conditions have a positive effect on Springfield
house prices when property values exceed a minimum sales price threshold.
Based on these findings, we conduct a cost-benefit analysis of local street
improvements and suggest additional considerations for the City of Springfield.
