THE PENNSYLVANIA STATE UNIVERSITY SCHREYER HONORS COLLEGE DEPARTMENT OF FINANCE THE EFFECT OF HOPE VI REVITALIZATION ON SURROUNDING NEIGHBORHOOD REAL ESTATE MARKETS: A PHILADELPHIA CASE STUDY LAURA HILDEBRANDT SPRING 2015 A thesis submitted in partial fulfillment of the requirements for a baccalaureate degree in Finance with honors in Finance Reviewed and approved* by the following: Brent Ambrose Professor of Risk Management, Director of the Institute for Real Estate Studies Thesis Supervisor Brian Davis Professor of Finance Honors Advisor * Signatures are on file in the Schreyer Honors College. i ABSTRACT The federal housing program known as HOPE VI lasted nearly two decades and had significant impact on public housing throughout the United States. HOPE VI provided federal grant funds to public housing authorities throughout the county to revitalize severely distressed public housing stock. The mixed finance and mixed income principles, along with New Urbanism design implemented in the HOPE VI program reshaped the physical, social, and economic structures of public housing. Philadelphia received five HOPE VI revitalization grants between 1993 and 2004, allowing the Philadelphia Housing Authority to redevelop the city’s most distressed public housing. Previous studies have attempted to quantify the effects of HOPE VI revitalization efforts on surrounding neighborhoods and have found dramatic appreciation of home values in areas of HOPE VI redevelopment. This study provides an updated analysis of available census data to assess the effects of HOPE VI revitalization of five Philadelphia public housing sites. Factors examined in this study include median home values, median contract rental rates, vacancy rates, and median household income. This study concluded that HOPE VI redevelopment positively impacted local real estate markets surrounding revitalized sites, most notably in dramatic appreciation of home values. ii TABLE OF CONTENTS LIST OF FIGURES .................................................................................................... iii LIST OF TABLES ....................................................................................................... iv ACKNOWLEDGEMENTS ......................................................................................... V Chapter 1 History of Federal Housing Programs in the United States ........................ 1 Chapter 2 HOPE VI ..................................................................................................... 4 History of HOPE VI ......................................................................................................... 4 New Urbanism Design ..................................................................................................... 6 Mixed Finance / Mixed Income ....................................................................................... 7 Chapter 3 Public Housing in Philadelphia ................................................................... 10 Chapter 4 HOPE VI Redevelopment of Philadelphia Public Housing Sites ............... 11 Richard Allen Homes ....................................................................................................... 11 Schuylkill Falls ................................................................................................................ 14 Martin Luther King Plaza ................................................................................................. 16 Mill Creek ........................................................................................................................ 19 Ludlow Scattered Sites ..................................................................................................... 23 Chapter 5 Applied Real Estate Analysis Study............................................................ 26 Chapter 6 HOPE VI Revitalizations Effects on Surrounding Neighborhoods ............ 29 Richard Allen Homes – Poplar ........................................................................................ 29 Median Home Values ............................................................................................... 30 Median Contract Rent .............................................................................................. 31 Vacancy Rate............................................................................................................ 33 Median Household Income ...................................................................................... 34 Additional Development .......................................................................................... 35 Falls Ridge – East Falls .................................................................................................... 37 Median Home Values ............................................................................................... 38 Median Contract Rent .............................................................................................. 38 Vacancy Rate............................................................................................................ 39 Median Household Income ...................................................................................... 40 Additional Development .......................................................................................... 40 Martin Luther King Plaza – Hawthorne ........................................................................... 42 Median Home Values ............................................................................................... 43 Median Contract Rent .............................................................................................. 44 Vacancy Rate............................................................................................................ 45 Median Household Income ...................................................................................... 46 iii Additional Development .......................................................................................... 47 Lucien E. Blackwell Homes – Mill Creek ....................................................................... 49 Median Home Values ............................................................................................... 50 Median Contract Rent .............................................................................................. 51 Vacancy Rate............................................................................................................ 51 Median Household Income ...................................................................................... 52 Additional Development .......................................................................................... 53 Ludlow Scattered Sites – Ludlow .................................................................................... 54 Median Home Values ............................................................................................... 55 Median Contract Rent .............................................................................................. 56 Vacancy Rate............................................................................................................ 57 Median Household Income ...................................................................................... 58 Additional Development .......................................................................................... 59 Conclusion ....................................................................................................................... 60 Median Home Value ................................................................................................ 60 Median Contract Rent .............................................................................................. 62 Vacancy Rate............................................................................................................ 63 Median Household Income ...................................................................................... 64 Summary .................................................................................................................. 66 Critique of HOPE VI ................................................................................................ 67 APPENDIX .................................................................................................................. 69 BIBLIOGRPAHY ........................................................................................................ 84 iv LIST OF FIGURES Figure 1. Average Median Home Values ................................................................................. 61 Figure 2. Average Median Contract Rental Rates ................................................................... 62 Figure 3. Average Vacancy Rates ............................................................................................ 63 Figure 4. Average Median Household Incomes ....................................................................... 65 v LIST OF TABLES Table 1. HOPE VI Revitalization Grants – Philadelphia Housing Authority .......................... 69 Table 2. HOPE VI Demolition Grants – Philadelphia Housing Authority .............................. 69 Table 3. Richard Allen Budget & Use ..................................................................................... 70 Table 4. Schuylkill Falls Budget & Use .................................................................................. 70 Table 5.