Why Don't Enterprise Zones Work? Estimates of the Extent that EZ Benefits are Capitalized into Property Values
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The study examines the impact of local Enterprise Zones (EZs) on commercial and industrial
property values. Currently, 43 states have established EZ programs to target development
incentives to economically distressed areas. While there is a substantial body of literature
analyzing the effectiveness of EZ programs, the research has yielded varied findings. The
varied results of EZ programs could potentially arise as EZ property values are bid up by businesses
seeking to expand or locate operations in the EZs. This would reduce amounts that
these businesses would otherwise spend on capital assets or labor. A hedonic price model is
estimated to determine the effect of EZ status and nearby EZ activity on property values. The
empirical results imply that EZ status may, in some instances, have a positive impact on EZ
property values. However, the empirical results also suggest that these potential price effects
may diminish as EZs are designated in other nearby locations.