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Purpose of Research and Methodology . Maxfield Research I conducted this research to determine whether there is evidence to support the claim that tax-credit rental developments for families erode property values in the areas surrounding them. The Family Housing Fund, a Minneapolis-based non-profit agency that supports the development of affordable housing throughout the Twin Cities, funded the research. tf:,_::~.r We examined 12 n~ighborhoods in the Twin Cities in which a tax-credit rental ho%ing development for families (built between 1993 and mid year 1997) was located withiD a dense district of owner-occupied homes, termed a "subject area." The subject areas generally contained between 150 and 300 owner housing units within one to three blocks. . . We presumed that negative impact by a tax-credit development could be detennined by analyzing three measures of market perfonnance among homes sold in the subject area: sales prices per square foot; the percentages of sales to asking (list) price and; time on the market. Comparing homes sold in each subject area before and after construction of a tax-credit development (a ''pre/post' analysis), as well as comparing'homes sold in each subject area to homes sold in areas without a similar tax-credit development (a "subject/controf' analysis), would reveal the presence of negative ~pact. . . In the pre- and post-construction analysis, we compared market perfonnance in the three years before and after construction start of the tax-credit developments under study " We focused on homes sales that were part of a continuous data set, representing a homogeneous submarket of properties that sold in all or most of the six years under study. In this manner, we analyzed roughly 600 records across 16 submarkets in 11 subject areas. . In the pre- and post-construction analysis, we also addressed the claim that the overall Twin Cities housing market was becoming stronger, and that the subject areas around tax-credit housing simply did not increase in strength as much as they should have. . In the subject versus control analysis, we compared subject area sales in the post- construction years to sales of similar homes (age and size) from the same community and school district, located in areas where there were no tax-credit developments for families built between 1993-1997. We completed 68 subject-control comparisons in this manner, involving roughly 470 subject area records. I Market Research Partners completed the report under contract with Maxfield Research. MAXFIELD RESEARCH INC. I