Year of Publication



Martin School of Public Policy and Administration

Executive Summary

Over the past century, downtown regions have seen a great deal of transition, from powerhouse city centers to dilapidated slums. Downtown can be the hub of a city’s entire economic and cultural life, but it can also be the stigma of a city’s problems. It is easily one of the most dynamic regions of a city. But why do these regions fail? I contend there are forces at work, which lead to the failure of a downtown region, but there are also equal, if not more powerful forces that can lead a bring a city center back from the brink.

In this report I agree with the idea that all neighborhoods have a life cycle, whether they are in a downtown area or a suburb. I hypothesize that redevelopment (defined as either completely new building projects or simply renovations of an older structure) is the key to improvement of a downtown region. Additionally, redevelopment acts as a catalyst to move a neighborhood through the cycle. Redevelopment eventually leads to growth within the region, which can be measured through property values. It is property values that reveal to us the current trend of the downtown area. Focusing on Lexington, Kentucky as the city of analysis, and using assessed property values, I looked for trends over a seven-year period between 2001 and 2007, in an attempt to assess the current cycle of different Lexington neighborhoods.

The study begins by focusing on work done by Steven McGovern. He gives us a historical context of why some downtown regions declined over the past century. Downtown was originally industrial, residential and commercial centers. After WWII, beginning in the 1950s, industry began to move from a center city location to a city’s outer fringes. Populations, in turn, moved to stay near their jobs, eventually forming suburbs away from downtown. This resulted in an overall lack of capital investment in downtown, and lead to the eventual pullout of other businesses (i.e. retail, restaurants, entertainment). Near the end of the 20th century (late 1980s and 1990s), downtown began to see a resurgence of capital investment through commercial ventures, including office and public building development, which improved the area and renewed interest in the region.

Lexington shows similar characteristics to the cities cited in McGovern’s study. In the early 1900s, Lexington was a tobacco product manufacturing powerhouse with most industry located downtown. As a result, employees also resided in the downtown vicinity. However, by the latter half of the 20th century, Lexington had been greatly transformed. Tobacco product manufacturing had declined and other notable companies, such as IBM, had moved in, establishing themselves near the outer fringes of the city. This led to a migration of population from downtown to suburbs located further away.

In Daniel Shefer’s study, he contends that all neighborhoods go through a life cycle, consisting of periods of growth, stability, deterioration and decay. He discusses the processes involved in each step of the cycle, including levels of capital investment, infrastructure development, crime, homelessness and city involvement. Shefer’s study is one of the main points of my hypothesis, but while Shefer focuses on each step of the cycle, I am more interested in what causes a neighborhood to move from one step of the cycle to another. Once again, I feel that redevelopment is the key.

For my analysis, I selected 4 “focus properties” to analyze their surrounding property values. Focus properties were defined as properties that have seen redevelopment in the past seven years, but were completed with enough time to have newly assessed property values. I compared the focus properties to four additional control/non-redeveloped properties. Control properties were defined as properties that have not seen any redevelopment in the past seven years, but showed some similar characteristics to the focus property (i.e. location, types of properties surrounding them, size, public/private).

Upon collecting the property values, I compiled the data into spreadsheets. Correcting for inflation, I calculated average value, 7-year change and average percent change for each property. I also calculated total values for the eight neighborhoods and for focus/control properties in general. After removing public properties from the data (they are calculated differently and therefore diluted the data), I compared the figures.

On average, neighborhoods with redeveloped property increased in value by approximately 53 percent, while neighborhoods with non-redeveloped property increased by 43 percent, over the seven-year period. Three out of four focus properties were located in neighborhoods in a state of growth and three out of four control properties were located in neighborhoods in a state of stability.

Correlation does not necessarily mean causation, but the results of this study reveal interesting possibilities. Property values in redeveloped neighborhoods seem to increase more rapidly than in non-redeveloped neighborhoods. Although it does not necessarily prove the hypothesis, more research should be done to see if the results are simply spurious or are actually viable.