The effect of a new employment center on private residential development decisions

Many studies have noted that the occurrence of certain events at the urban fringe can result in an increased rate of residential development in the surrounding area. I Few, however, have examined the process by which this occurs. This thesis investigates the decisions and interactions which link these "priming events" to subsequent development. The residential land developer is considered to play a central role in this process. The effect of a priming event on his choice of development locations, and the influence of public policy decisions on this choice, are emphasized.

Following an overview and discussion of the literature concerning priming factors for development, the residential development decision-making process and the developer's role in this process are reviewed. Kaiser's microeconomic model of residential developers' locational behavior is presented. According to this model, which serves as a conceptual framework for the remainder of the thesis, a developer attempts to maximize his profits by selecting the best combination of input and output characteristics per residential package.

A hypothesis is developed which synthesizes the microeconomic theory of developers' locational behavior with the iv

concept of priming factors. This hypothesis states that an event will act as a priming action for private residential development if and only if it significantly raises the existing profit function for residential development at locations within the surrounding area. This hypothesis is used to examine the way in which the location of a new employment center can act as a priming factor for residential development. s Several propositions are offered regarding the potential effects of a new employment center on developers' decisions.

The relocation of the Magnavox Consumer Electronics Corporation headquarters to the outskirts of Knoxville, Tennessee, is used in an empirical study of the hypothesis and propositions. Seven residential developers and eight public officials were interviewed to determine their reactions to this event. The results of these interviews are presented and, along with other information that was collected, are used to propose a scenario for residential growth in east Knox County, Tennessee. The empirical study is found to generally support the hypothesis and propositions.

Conclusions are drawn regarding the validity and usefulness of the hypothesis and propositions. It is concluded that examining the effect of a potential priming action on residential developers' decisions is a useful tool in predicting future urban growth. In particular, this

vi could be useful in impact assessment and in growth management. Public policymakers should be encouraged to consider the effects of their decisions, and of their reactions to potential priming events, in terms of the influence that these decisions may have on private development actions.