SEA-TAC INTERNATIONAL AIRPORT IMPACT MITIGATION STUDY

9.01 - EXPECTED CHANGES IN LAND VALUES, LAND USES, HOME OWNERSHIP TENURE, LOCAL GOVERNMENT REVENUE AND SOCIAL SERVICE NEEDS RESULTING FROM CONSTRUCTION OF THE THIRD RUNWAY AND RELATED FACILITIES

Aircraft operations at Sea-Tac International Airport impact the value of close-by properties in two ways.

First, the Airports operations depress property values below the level that real estate markets would produce if the Airport did not exist If a single-family residential house located in, for example, Burien could be physically transported to an identical location on an identical lot in another part of King County, its value would be increased, and the amount of its increase is the depression in value caused by proximity to the Airport. Section 9.02 estimates the average loss in value of real estate locate in close proximity to Sea-Tac International Airport by comparing a large sample of comparable single-family housing units in Northwest and Southwest King County holding constant the non-Airport factors that also influence real estate values.

A second way in which Sea-Tac International Airport operations impact the value of real estate is in the variation in value among properties caused by their proximity to the flight paths of arriving and departing aircraft. Such changes are the "shadow" effects (noise pollution, visual pollution, possible air quality pollution, and a generally degraded environment for human habitat) caused by living under low-flying aircraft Section 9.03 uses a statistical technique known as regression analysis to estimate Sea-Tac international Airport's shadow affects by measuring the difference in value of a property, holding other things the same, when it is located at different distances from directly under one of Sea-Tac International Airport's arrival/departure flight paths.

The remaining subsections provide information on the changes in land use produced by Airport-induced depressions in adjacent land values, and the alteration in the demographic profile of persons living in jurisdictions where depressed land values result in altered land uses.

It is important to remember that the following analysis addresses the issue of depressed but not declining land values. All parts of the Puget Sound Region have experienced population growth in the recent past, and the entire Puget Sound Region is expected to experience rates of population growth above the national average in the foreseeable future. This means that the Puget Sound Region is expected to have significant net in-migration. As a result, average real estate values in the region will undoubtedly rise. Real estate located in close proximity to the Airport will participate in these growth trends and will also experience rising land values.

Because of the Airport, however, the rate of appreciation in the value of close-by real estate is expected to be less than it otherwise would have been. The correct measure of the Airport induced depression in land values, consequently, is the price difference between comparable properties located close too and distant from the Airport. Neither a simple calculation of whether or not property values have increased nor a comparison of properties inside or outside any specific LDN contour line provides an appropriate basis for comparison.

9.02 - AIRPORT IMPACTS ON AVERAGE PROPERTY VALUES

The impact of proximity to the Airport was evaluated using average property values for comparable housing units in ten Census Tracts in Southwest King County immediately around Sea-Tac International Airport and ten Census Tracts in Northwest King County - the area that generally conforms to the City of Shoreline.

Northwest King County was chosen for comparison based on the following criteria:

The Census Tracts are all located in King County and are equally affected by County and State land use and development policies.

The Census Tracts are all bordered by Puget Sound to the west and Lake Washington to the east.

Both clusters of Census Tracts contain commercial areas bordering Highway 99, and both have a mix of residential areas ranging from low/moderate income to high/ upper income.

Both clusters of Census Tracts contain racially and ethnically diverse populations.

The following parameters were used to screen housing units in the two clusters of Census Tracts for comparability:

Only units rated as being in "Very Good" condition by the King County Assessors office were included.

All units with a "View" were excluded.

All units were in "Single-Family" zoned areas and were classified as single-family land uses.

All units had an above ground structure of 1,000 square feet or more.

All units were located on lots of between 10,000 and 14,999 square feet.

All units had three or more bedrooms.

All units had two or more bathrooms.

These screening criteria excluded the top and the bottom of the distribution of housing units in both areas and resulted in a total of 739 of the 11, 526 single-family properties (6.4%) in the ten Census Tracts around the Airport (Southwest King County) and 760 of the 12,683 single-family properties (6.0%) in ten Census Tracts in Northwest King County being used for comparison of real estate values. Summary statistics from the King County Assessors Office for these units are contained in Table 9.01.

The two groups of properties compared closely in terms of their physical attributes. The difference in average lot size between the Southwest and Northwest King County properties was 3.3 %. The difference in size of structure was 2.0%, in number of bedrooms 1.4%, and in number of baths 0.6%. In terms of property values however the differences were more pronounced. Average assessed value of land was 14.1% higher in Northwest King County than it was in areas immediately surrounding the Airport, and assessed value of structures was 7.7% higher. The assessed value of land and structures combined was 10.1 % higher.

Standardized for view, condition of structure, size of structure, lot size, number of bedrooms, number of baths, zoning, land use, county/state development policies, and similarity of neighborhoods, a housing unit selling for $141,400 in the. immediate vicinity of the Airport would sell for $155,700, or $14,300 (10.1%) more, if it were located elsewhere.

The average difference of 10.1% in the assessed value of real estate (property plus structure) when all other factors are adjusted for is attributable to the impact of low flying aircraft in the immediate vicinity of Sea-Tac International Airport. The resulting depression of property values as of 1993, taking account of community differences is shown in Table 9.02.

Between 1993 and the Year 2000, operations at Sea-Tac international Airport are forecast to increase by 39,700, or 11.7%. Between the Years 2000 and 2020, operations are forecast to increase by an additional 62,400, or 16.5%. Applying these same rates of change to the estimated 1993 difference in single-family residential property values caused by aircraft operation at Sea-Tac International Airport produces the depressed values shown in Table 9.03. The next to the last column of Table 9.03 contains the expected reduction of value for the average single-family residential housing unit between the Years 2000 and 2020. The last column shows the average difference in value experienced over the entire 20-year period 2000 through 2020.

There will be no reduction in property value attributable to the Sea-Tac lnternational Airport expansion until the Year 2000. The decline will be small the first year since there will be few operations over the Airport's annual service volume (AS). As operations over the ASV threshold increase, the relative decline in property value will increase, reaching, in the case of Burien, $36,356 in the Year 2020. Averaged over the entire 20-year period, the yearly decline is $13,179, as shown in the last column of Table 9.03.

This loss of value occurs after Sea-Tac lnternational Airport would have reached its ASV capacity limit had the Third Runway and related facility improvements not been built.

9.03 - FLIGHT TRACK IMPACTS ON AVERAGE PROPERTY VALUES

The impact on a parcel's value of its location under, or in close proximity to, the approach/departure flight track of aircraft operating at Sea-Tac International Airport was estimated using the linear regression model:

where:

Y = assessed value of land and structures
X1 = lot size (sq. ft.)
X2 = structure size (sq. ft.)
X3 = number of bedrooms
X4 = number of baths
X5 = distance from center of a jet flight track (east of runway 16/34R or west of runway 16/34L), measured in tenths of a mile
X6 = a binary variable representing the City of Des Moines
X7 = a binary variable representing the City of Normandy Park
X8 = a binary variable representing the City of SeaTac
X9 = a binary variable representing Unincorporated King County
X10 = a binary variable representing the City of Tukwila

The model's parameters were estimated from Assessor's data on 3,026 properties in ten Census Tracts in the immediate vicinity of the Airport. The regression coefficient (adjusted R²) was 0.65.

The model initially contained variables for the Cities of Federal Way and Kent, but these places had too few cases to be meaningful and were dropped from the final model. The distance from each parcel to the center of the Airport was also initially used as a variable but its coefficient was not statistically significant and it was also dropped from the final model. The following housing units were excluded in estimating the regression model - units with fewer than three bedrooms; units whose condition was less than "good" or "very good"; units with a view; and units not in single-family residential zoned areas. The ratio of the regression's standard error to the standard deviation of the dependent variable was 0.59. The log likelihood ratio was 35,379, and the F-statistic was 566. The Durbin-Watson statistic was 1.44.

All of the independent variables in the model were statistically significant at the 90% level and seven were statistically significant at the 99% level. The variable measuring a property's distance from a flight track was significant at the 99% level.

The coefficient on the variable for distance from a jet aircraft flight track was 17,784, meaning that, all other things remaining equal, the value of a house and lot increases by about 3.4% ($4,450 on the average valued house of $129,900) for every quarter of a mile the house is farther away from being directly underneath the flight track of departing/approaching jet aircraft. This relationship is shown in Table 9.04 and illustrated in Figure 9.01.

9.04 - OPERATIONS IMPACTS ON RESIDENTIAL PROPERTY TAX REVENUES

The Sea-Tac Master Plan Update Final EIS's estimate of reduced residential property tax revenues caused by construction of the Third Runway and related facility improvements is shown in Table 9.05.

The only cause of reduced revenues identified in the Final EIS is the acquisition of property now on the tax tolls of the Cities of Burien and SeaTac. The EIS assumes there will be no impact on land located in the immediate vicinity of the Airport or under the flight track of the Airports increased traffic volumes. In other words, the Final EIS assumes that unless land is acquired it will not be affected.

As discussed earlier, construction of the Third Runway and related facilities improvements will allow aircraft operations at the Airport to increase after the Year 2000 - when it reaches its ASV capacity limit - by 62,400, or over 16%. A statistical analysis of comparable properties in King County demonstrates that these increased operations will:

On average, depress all property values around the Airport below levels they would have had if the aircraft didn't expand; and,

Specifically, cause a depression of value for properties directly under, and up to two miles on either side of, jet aircraft approach/departures tracks.

The depression of property values below the market levels that would otherwise occur also depresses the flow of property tax revenues to local, county, special purpose, and state governments.

The methodology used to estimate the reduction in single-family residential property tax revenues resulting from Airport impacts that depress property values is as follows. The number of single-family residential housing units in each impacted community was multiplied by the average loss (depression) of value per unit for each community between the Years 2000 and 2020 to estimate the aggregate loss of property value. Each city's total levy rate (regular and ire) was multiplied by its aggregate loss of property value to estimate the loss of single family residential property taxes. The number of single-family housing units in each city was obtained from the Office of Financial Management's Forecasting Division. The average yearly increase in each city's single-family residential housing units between 1990 and 1995 was used to trend forward its stock of single-family housing.

Levy rates for each city were obtained from the King County Assessors Office's Accounting Division. The estimated property value loss by community for the Years 2000, 2010 and 2020 and the cumulative property losses between 2000 and 2020 are shown in Table 9.06.

In the Year 2000, after which the increase in aircraft operations at Sea-Tac lnternational Airport will be the result of construction of the Third Runway and related facilities improvements, the five impacted cities will experience depressed property values for single family residential housing units estimated of approximately $1.7 million. As Sea-Tac International Airport operations increase, the depression of property values in the impacted communities will grow each year, reaching $2.2 million in the Year 2020. Over the 20-year period, 2000 through 2020, the cumulative loss of property tax revenues in the five impacted cities is estimated at approximately $38.8 million (expressed in constant value 1995 dollars), distributed among the cities as follows:

Burien - $14.2 million
Des Moines - $6.4 million
Federal Way - $11.6 million
Normandy Park - $2.8 million
Tukwila - $3.7 million

9.05 - FLIGHT TRACK IMPACTS ON RESIDENTIAL PROPERTY TAX REVENUES

In addition to the loss of value resulting from aircraft operations that will affect all single housing units in immediate proximity to the Airport, single-family housing units that will be under the flight tack of approaching/departing aircraft using the proposed Third Runway will suffer additional value losses from having low flying aircraft pass directly overhead. The magnitude of these types of impacts were described and analyzed in Section 9.03 above. The methodology used to estimate the flight track impacts on the property tax revenues of the affected cities was as follows.

Approaches/departures using the Third Runway will create a flight track approximately half a mile to the west of the flight track on existing runway 16/34L. A new set of single-family housing units will lie directly under the flight track (defined as 1/8th of a mile on either side) and a new set of units will fall within the quarter mile and half mile bands to the west of the Third Runway s new flight track. To the south, the affected single-family housing units will be in Des Moines Federal Way and Normandy Park (only the half mile band will impact Normandy Park). To the North, the new Third Runway flight track will pass over the City of Burien. The City of Tukwila lies entirely to the east of the Airport and will not be impacted by the flight track generated by the Third Runway.

The linear north-south distance of the new flight track for the Third Runway was calculated for each of the impacted cities. Each flight track "impact band" used in the regression model (Section 9.03) was a quarter-mile wide.

The linear distance of the Third Runway's flight track over each impacted city multiplied by a quarter mile therefore generated an estimate of the area of each impact band within each city. The average lot size of single-family residential housing units used to calibrate the regression model was 12,950 square feet. Using this average lot size produces an estimate of 538 single family housing units for each linear mile of the new flight track.

Multiplying this estimate by the dollar value of the average annual depression in single-family housing units for each city produced the estimated total value reduction in single-family residential housing units as a result of the Third Runway's value loss gradient. Multiplying the loss of value by each city's property tax levy mte produced the estimate of annual property tax revenue loss for each city. The results are summarized in Table 9.07

In the five impacted cities combined, tax collections from single-family residential units lying directly under or close to the Third Runway's jet flight tracks will be reduced by $294,260 a year, or $5.89 million (expressed in constant value 1995 dollars) over the 20-year period 2000 to 2020 as a result of depressed property values'. The distribution of these cumulative 20-year revenue losses by city are as follows:

Burien - $0.97 million
Des Moines - $2.73 million
Federal Way - $1.78 million
Normandy Park - $0.41 million
Tukwila - $0.00 million

9.06 - SUMMARY OF IMPACTS ON SINGLE FAMILY RESIDENTIAL PROPERTY TAX REVENUES

The total cumulative reduction in single-family property tax revenues during the Years 2000 through 2020 caused by construction and operation of the proposed Third Runway and related Airport facilities in the five impacted cities is shown in Table 9.08. In this table, the flight track induced relative land value losses are deducted from the operations-induced relative land value losses to prevent double-counting.

Over the 20-year period 2000 through 2020, the five impacted communities will suffer a reduction in property tax revenues from single-family residential units of $39.9 million (expressed in constant value 1995 dollars) as a result of construction of the Third Runway and related Airport improvements. The average annual revenue reduction will be almost $2.0 million.

The largest source of property tax losses (82.3%) will be depressions in property values caused by the increase in Sea-Tac International Airport's aircraft operations after the Year 2000, and made possible by construction of the Third Runway and related Airport improvements. A loss of $32.9 million in local government revenues (expressed in constant value 1995 dollars) over the 20-year period will result. The second largest source of property tax losses (14.8 %) will come from the decline in single-family residential property values of units beneath the flight track of aircraft using the proposed Third Runway. These property value reductions will cause a loss of an additional $5.9 million in local government revenues over the 20-year period (again expressed in constant value 1995 dollars).

The smallest cause of local government property tax revenue losses will result from the acquisition of properties required for expansion of the Airport These reduction (which are the only ones discussed in the Final EIS) will cause a cumulative loss of $1.1 million. The acquisition of properties as part of the Airport's Third Runway related expansion will begin in 1996. Cumulative revenue losses are for a 25-year period 1996 through 2020, inclusive. Looked at in terms of the impacted communities, Table 9.09 contains the percentage distribution of total property tax revenue losses among the impacted cities.

9.07 - IMPACTS ON OWNERSHIP OF SINGLE-FAMILY RESIDENTIAL HOUSING UNITS

Economic theory argues that the relative change (reduction) in single-family residential land values discussed above will lead to tenure changes in the affected single-family housing units. The major expected tenure change is a shift from owner occupied to renter occupied housing as relative housing prices fall. Table 9.10 compares housing tenure in the Sea-Tac lnternational Airport impacted communities with housing tenure in the comparison Census Tracts in Northwest King County.

As the data show, the expectations from economic theory hold true. Renter occupied units in areas immediately surrounding the Airport were 16.6% of total single-family housing. In the comparison areas in Northwest King County, they were only 3.4%. If past trends continue, the percent of single-family housing units in the impacted communities occupied by renters will rise to 20.6% in the Year 2020. About two-thirds of the increase in renter's housing tenure percentage will occur after the Year 2000, and is attributable to construction of the proposed Third Runway and related facilities improvements at Sea-Tac International Airport.