No Free Lunch: How State Map Acts Inadvertently Damage Property Values as They Aim to Lower Road Expenditures | PEC – Vol 1
No Free Lunch: How State Map Acts Inadvertently Damage Property Values as They Aim to Lower Road Expenditures
Craig J. Richardson, Russell M. Smith, Joseph Sloop
Pages: 20 – 43 | First Published: August 2018
Using legislation known as “map acts,” a number of states plan for highway construction by announcing without warning that certain properties fall within “designated highway corridors.” Map acts save money for the state because they freeze affected property owners’ right to upgrade their property for a given length of time, which lowers the state’s acquisition costs. Until mid-2016, North Carolina had no legislative deadlines for future road completion, leaving thousands of homeowners in limbo for long lengths of time in dozens of projects around the state. This study uses a natural experiment to measure the effect of legislative uncertainty on property values. Evidence was gathered in Forsyth County, NC, using a dataset of 16,817 homes. Our cross-sectional study compares property values of those homes that lie within a long-delayed road corridor with the values of those directly adjacent to it. The regression results indicate that homes within the Forsyth County road corridor suffer the unintended consequences of map acts, with statistically significant and large drops in their assessed property values. Adjacent homes suffer smaller losses. In total, Forsyth County has lost an estimated $57 million in assessed property value as a result of this one road corridor, having repercussions on the local tax base. Other factors such as proximity to nearby amenities and state ownership of affected corridor properties were also found to be statistically significant.