East St. Louis Action Research Project
Sutanu Bhattacharyya
Arun Pant
August 1996
Introduction
In order to sustain a basic level
of services in any municipal area, a complex fabric of infrastructure
needs to be maintained by the municipality or the city, that serves
all the units lying within its jurisdiction. While a part of
the cost of the services are borne by the property owners in the
form of municipal charges such as those for sewer and water, a
significant proportion of the cost is shared by the city, out
of money received through taxes. This cost is primarily incurred
in the process of maintenance of existing infrastructure lines
within the city area. The primary services that constitute the
basic level of infrastructure for regular functioning of the city
are water, sewer, police, fire and health facilities. While thumb
rules exist for estimating the cost of establishing new infrastructure
facilities, those for estimating the cost of maintaining existing
facilities are not easily available.
The question of cost assessment of
maintaining existing infrastructure becomes even more significant
in the case of communities such as East St. Louis that are either
on the decline or in need of economic support. For these communities,
the cost of provision of necessary services may constitute a considerable
financial burden, both on the residents as well as the tax base
of the city. A common feature of such communities is the increase
in the decline of housing stock, leading to growing pockets of
vacant land between occupied dwellings or businesses. As a result,
the infrastructure lines servicing occupied parcels are underutilized
when they pass across these vacant lots. This might lead to either
of two possibilities. The first could be that in order to maintain
the same level of service provision within the community, the
city would now levy increased taxes on the remaining occupied
units. The second possibility might be a decline in the level
and quality of services provided by the city. Either alternative
might lead to a further decrease in occupancy rates within the
city.
This research tries to analyze the
issue of infrastructure costs for a city, with a view to understanding
the overall economic impact it may have on the tax base. At this
point there can be two alternative means of assessing the actual
and perceived impact. The first would be to obtain data from
the city to calculate the increase in both taxes and city expenditures
on infrastructure due to the spread of vacant land. The second
would be to simulate different scenarios with varying arrangement
of the existing parcel layout leading to curtailment of underutilized
infrastructure lines. The second alternative would help us know
if there is a high positive correlation between infrastructure
cost and the total span of the service area and consequently the
significance of the potential savings that may be achieved through
such rearrangements.
In order to arrive at some standard
level of assessment of the cost of city services, attempts have
been made here to model the maintenance cost of infrastructure
as a function of distance between parcel units and service centers
of the city, at various levels of aggregation. This model would
help us evaluate the impact of the existing vacant land towards
increasing the infrastructure cost for the city, and analyze the
importance of this impact. In economic terms we would be able
to assess the approximate annual burden to both the city and its
residents in terms of increased tax, which would allow us to gauge
the financial significance or lack thereof of the problem of vacant
land for the city.
Costs of municipal services with
relation to parcel location.
Municipalities incur certain costs for providing basic services and utilities to the parcels within the city. Though the cost per unit is usually broken down to some fixed rate for all the parcels, it can be allowed that each parcel incurs a differential cost per unit due to location factors. These factors include the distance variable - i.e. the differential cost due to the distance from service centers and can be expressed as function:
DC1 = f (distance) .............(1)
where the differential cost (DC1
) is some function of distance.
The above function however takes
into account the linear distance variations and gives no indication
of the spatial arrangement of a set of parcels being serviced.
However, if the network distance is used, the effects of this
spatial arrangement would be accounted for in the process. Therefore,
the two main assumptions relating costs to spatial location of
the parcels are:
This methodology is followed for
all the services taken into account. A service specific distance
function is to be formulated for each service based on the way
that the service is provided. The various services are:
It can be seen from the above list that the distance functions will be of two general nature. For items 1 to 5, the parcels are served through linear network distances from various service centers. For items 6 through 8, the radial distances from the service centers would be used to limit the extent of the various service areas. Some ideas about existing costs could be obtained from city records or through contractor estimates especially for costs relating to repair and construction of roads, maintenance of sewer lines and installation of pump stations and water supply mains.
Various approaches in formulating
a viable modeling procedure.
A number of different approaches
were considered for the purpose of formulating the model due to
the lack of any existing standard procedure. These approaches
had their own set of advantages and disadvantages. However, the
crucial factor in all cases would be the availability of data
for empirical analyses. It was useful to consider the different
alternatives due to the fact that the exact extent of available
data was not known. In addition, the possibility of an improvement
of the data base for the area could lead to the use of some of
the alternative models in near future. Two of the main approaches
considered are given below:
1) Regression approach
If data on the cost incurred by individual
parcels for certain services are available, then regression analysis
could be used for a sample set of parcels to determine the distance
coefficients with the dependent variable being the cost incurred
by the parcel. The independent variables would be the distances
to the various service centers as well as other variables that
characterize the parcels. The regression equation would build
upon equation 1 and would be in the following format:
C = f (distance to various service centers, physical and structural parcel attributes)…….. (2)
where C is the cost incurred by
the parcel.
The total costs would be the sum
of all costs incurred by all the parcels. The advantage of this
method would be in the fact that other factors such as parcel
size, household incomes, plan designations, etc. could be used
as parameters for cost estimation. However, the major drawback
is the lack of parcel based cost data. Municipal service costs
are measured by the type of service provided in a locality and
not by the cost per parcel. This model then can only be used
if a methodology is devised to transfer these costs to the parcels.
One way of transferring the costs
so as to estimate the coefficients of the independent variables
would be to identify the different localities to which a particular
service is provided. If the localities are made up of a fairly
homogeneous parcel mix (i.e. a residential subdivision) then a
sample parcel with the characteristics that is representative
of the rest of the parcels would be used as one observation for
the regression. It would be necessary to obtain a number of localities
that would constitute an adequate sample size. In addition, these
localities would have to be representative of the various areas
within the city. The size of these localities would depend on
the availability of data - the more disaggregated the localities,
the greater the precision of which the distance effects are measured.
The availability of data from geographical information systems
would enable the generation of a number of variables that may
affect the cost of services. For example, multi-family zoning
would probably mean that there is greater road maintenance activity
in the area than in places zoned single family residential. The
proposed methodology is summarized below:
It must be noted that the above approach would not be able to differentiate the costs incurred by parcels within a given locality. The size of the locality therefore plays an important role and is determined by the available cost data. In a city wide scenario, this model would be an useful indicator of the service costs and could be used in considering various alternatives for development. However, within a particular locality, the model would not be able to differentiate between the characteristics of the various adjoining parcels.
2) Weighted distance approach
This approach assumes that the variation
of the cost between different parcels depends on the distances
from the services to the parcels. The distance functions could
vary depending upon the type of service. One way of estimating
the effect of the distances is by assuming some functional
relationship (inverse, inverse square, decay etc.) between the
cost and distances. Another way of establishing this relationship
is by assigning a set of 'weights' to the distances and using
these weighted distances to estimate the cost. An exercise was
carried out using a sample parcel arrangement and the location
of one particular service center within this arrangement. A number
of different weights were applied to the distance measures and
used in calculating the cost per distance based on a given total
cost figure. These were then used to estimate the change in total
cost and these estimates depended on the set of weights utilized.
This exercise could be replicated for larger parcel arrangements
within the city. One limitation of this method is the current
lack of data that would make it difficult to calibrate and check
this model at the city wide level.
Conclusion
The usefulness of the model derived
from the above methodology would largely depend on the availability
of the data. However, with the current increase in the use of
digital information systems, it can be expected that it would
be less of a problem in future. Therefore, the current emphasis
should be in formulating a methodology that would allow the relationship
between parcel location and infrastructure costs to be modeled
explicitly. This would enable construction of alternatives in
determining development and evaluating them by their relative
efficiencies regarding the provision of infrastructure.
Document author(s) : Sutanu Bhattacharyya
HTML by : Abhijeet Chavan
Last modified: August 16, 1996
Planning
East St. Louis Action Research Project
