Efficiency in Public Urban Renewal Expenditures Through Benefit-Cost Analysis

This article is based on the belief that despite the presence of intangible factors in public urban renewal decisions, cost-benefit analysis is a used tool for measuring the efficiency of such decisions. The first part of this paper presents a theoretical framework for measuring the costs and benefits to society of an urban renewal project. Later parts of the paper bring out the practical problems of measurement through a case study of the East Stockton (California) Urban Renewal Project. In this residential slum clearance project, four factors were found to be critical in determining the efficiency of public urban renewal expenditures: (1) the savings in local government expenditures, (2) the value of prerenewal structures demolished, (3) the value assigned to net intangible benefits, and (4) the social cost of capital. Recognizing the specific nature of the conclusions, the article concludes by stressing the need for extending the analysis to types of urban renewal projects other than residential slum clearance.