An Assessment of Urban Neighborhood Dynamics: South Worcester, Worcester, Massachusetts

Urban dynamics are occurring in the neighborhood of South Worcester, Worcester, Massachusetts which are bringing changes to the residential environment of this neighborhood. Historically, South Worcester has been a working-class to lower-class stable residential ne~ghborhood. It has had a significant industrial presence within its boundaries. Two developments during the 1960's, the 1963 zoning ordinance and the construction of Route 290, evoked changes in its residential environment, thereby threatening its residential stability. These external factors have impacted the housing values and the dynamics of change. They have promoted a shift from the residential land uses to the non-residential land uees permitted under the manufacturing zoning classifications. As these land uses expand, there bas been a decrease in the quality of the environmental characteristics resulting in a weakened desirability of this neighborhood as considered in locational decisions. Several theories offer interpretations of urban neighborhood change dynamics. The application of key concepts from the "Arbitrage Model of Neighborhood Transition" completes the assessment of the d~uamics in this South Worcester neighborhood. Considerations of the arbitrage process,

ii iii future expectations of households and ite understanding of filtering demonstrate the process by which the residential ambience of the neighborhood has been weakened as the environment has been enhanced for expanding non-residential land uses. Neighborhoods need to provide safety for residents and !or strangers in the vicinity. They are also instrumental to social contact in everyday life and the assimilation of children to city life and newcomers to the neighborhood and its way of life. This is possible with localized selfmanagement which is achieved through a system of yery intricate, unconscious network of controls and standards in existence among residents which is enforced by these same people. 5 City neighbors may have nothing more in common than the sharing of this geographical area; however, if they fail to manage this area, the neighborhood will fail to provide them with the safety, social contact, and assimilation necessary to urban liviug. 6

TABLE OF CONTENTS
A neighborhood which lacks this type of management is more apt to. develop problems or have its existing problems 4 Ibid., p. 117.

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Ibid., p. 32. 6 Ibid., p. 30. accentuated to the point of being detrimental to the city as a whole. The city is influenced by the condition of the neighborhood since the various neighborhoods in a city are parts of the whole urban system. Taken together, they are the building blocks of which the city is composed. Since a city consists of many neighborhoods, the quality of these determines the quality of the city. If a neighborhood is experiencing difficulties, be they economic or social, this affects the city. A city which consists of neighborhoods that only draw from it and do not give something in return is unable to be a healthy city. 7 Therefore, the welfare of a neighborhood is o! great importance to a city.
The quality of neighborhoods and the kind of life afforded in these neighborhoods is ever fluctuating. There are dynamics at work which lead to very subtle changes over long periods of time or very drastic changes in a relatively short time. Throughout modern times, neighborhoods have undergone these changes. A process of succession takes place and is always in progress in cities. With time, the homes in fashionable areas age. As their value decreases, they change hands falling to a lower income level. This is a pattern of slow decline with one time mansions becoming rooming-houses leading to eventual abandonment and demolition as they become unsafe. 7 James Peterson, "Revenues as Indicators of Neighborhood Stability," in Neighborhood in the Urban Economy, ed.
by Benjamin Goldstein and Ross Davis (Lexington, MA: Lexington Books, 1977), p. 40. This succession process when followed through to the end (demolition of the structures) in Europe takes close to one hundred years. However, in the United States, the process is much quicker, taking half that time due to the available land at the outer limits of the cities. Advances in transportation technology making the workplace and economic centers more accessible, put additional stress on the quickness of this process. 8 While this process has always been present, the transition was orderly and slow enough for urban housing markets to adjust. However, since the 1950's, there bas been such an increase in the depletion of population in urban neighborhoods and the abandonment of property, that cities are lacking the time to make the necessary adjustments to assimilate to the process.9 By the time a change is made to absorb one change in a neighborhood, it is too late to accomplish any benefit.
The inability to adjust to change leads to many problems which cities are now facing in their neighborhoods.
The 1950's accelerated the pace of a movement from the cities to the suburbs where more space is ayailable for new home building. With this movement, cities are losing many families from their neighborhoods. These families have stable incomes with which they are able to buy new homes 8 charles L. Leven, et al., Neighborhood Change: Lessons in the D namics of Urban Deca (New York: Praeger Pu is ere, Inc., 9 Ibid., p. xiii. and commute to the workplace. The cities, therefore, are losing this income to the suburbs, outside of their taxing jurisdiction. Who is staying in the urban neighborhoods?
Very o!ten, they are the poor who cannot a!ford the cost of moving and the older persons who have strong emotional ties to their homes in the cities. This leaves the cities with a population which is weighted to the old and the poor. 10 There is a rising need for serYices and a decreasing ability to provide them. The result is a rise in social and fiscal problems which the city administrators must meet. In the short-range, the pattern of change was characterized by an increasing racial presence, a decr~asing income level of the neighborhood, and depreciating values of the housing stock. Cases of extreme changes demonstrated that a rapid depreciation of the structures resulted in abandonment.
While some of the units were not yet physically obsolete, the lack of maintenance due to the neighborhood change quickly rendered them so. 2 Leven, Little, Nourse and Read concluded that the out-migration of the households and a weakening housing market had possible connections to changes in the income and race of new residents.3 To determine why there was such an out-migration of households and a weakening housing market, it was necessary to consider housing needs as more than the physical characteristics and condition of the unit itself. Human ecology is one means of explaining the long-term "spatial organization and growth dynamics of urban communities." 6 A limited amount of land is available for the location of the many businesses, institutions, and households within a city. As components of the urban system, these groups are interdependent, one sector as producers of goods and services and the other as consumers of the goods and services. Therefore, all of these groups must be accomodated.
Competition between the land uses for space and among households for residential sites becomes the determinant of the spatial organization of cities. 7 Each use has varying locational needs. When the needs of these uses overlap, competition occurs. According to the principle of dominance, the most economically powerful groups and institutions "win" the better land. Generally the industrial and large commercial concerns are the most powerful.
They also have more specific land needs which increase their determination. Therefore, they are usually located in the 6 nennis E. Poplin The remaining land is allocated among residential users. Using the same principle of dominance, the allocation of land among residential users becomes a competition between the various socioeconomic groups. As a result, the most economically powerful groups reside in the less congested, more preferable land at the outer limits of the city.
The least economically powerful gr oups reside in the least desirable land, that closest to th e industrially-congested areas. Other groups compete for the land between these extremes.
The more immediate factors of spatial organization and growth dynamics are the locational decisions of the households and businesses as they search for space in the urban community. The decision-making process is an exercise in maximizing satisfaction or utility while minimizing costs.
Households and businesses se ek to maximize the quality of the unit and its location. The quality of the structure, its environment, access to employment opportunities and those people and activities with which contact is frequent are considered. 9 The greater the time, energy and money attributed to travel costs, the lower demand is for the site. Prestige and environmental damages, while more 8 Ibid. The character of a neighborhood is reflective of its residents. Any change that occurs in the neighborhood's social, economic or racial composition alters the housing bundle that the neighborhood offers. This also changes the preference rank of the units in the neighborhood as well.
Due to this, there is a change in occupancy and in prices of the units. However, the future locational attributes are not as predic-  Rent levels are set according to the market equilibrium at the intersection of supply and demand. Since the rental unit is a service provided by the landlord, the rent is set at a level to cover the fixed and variable costs of providing the unit and to provide a profit margin. This is the theoretical point where marginal costs equal marginal revenues. In other words, if the landlord set the rent at a higher level, he would not benefit from any additional rental income or revenue. Demand for the unit would decrease and the costs for providing the unit would increase due to fixed costs incurred while the unit is vacant.
When the landlord chooses a tenant, the decision is based on the ability of the potential renter to pay. He also considers the wear and tear expected from the tenant.
Other characteristics are not as important and often are not pa.rt of the decision. This rationale is consistent with the motivation of the owner to maximize his profit.
Considering the wear and tear a unit receives when occupied, upkeep is necessary to maintain standards. The extent of rehabilitation is dependent on the contribution of the work to future revenues. The landlord will rehabilitate as long as the marginal revenue from the work is expected to increase over the marginal costs of the work.
Such a purely economical rationale is the basis of decisions regarding the improvements of property.
Financing f or property either to purchas e or to rehabilitate is from perfectly mobile capital. The owner searches out monies with the lowest costs attached to them, that is low-interest and leveraging factors. Loans of this kind are ta~en only when the marginal revenue expected is greater than the marginal costs attached to them.
The owner considers his property as an investment on which to make a profit. Investments in property return in three ways: 1) capital appreciation in the property, 2) tax shelters through deductions, and 3) a profit in cash flows.
The process of decline begins when there is a lower expectation of returns. With the decline, the returns are shifted to the cash flow. The structure no longer appreciates in value and tax shelters are no longer available. Cash flows also decrease which brings further decline. This reduction is due to either a decreasing demand or to increasing costs of supplying the housing. An increase in vacancies is a usual sign of demand softening. To counter this, rents are often lowered to attract more income. Renter delinquencies are also encountered more often in this market decline. This reduces the cash flow further which initiates another downward spiral.
A decrease in demand can be due to more positive conditions outside of the area than in the neighborhood. Negative internal conditions can be as detrimental to the demand for housing in a neighborhood. These are considered to be "push factors" which send residents looking for housing elsewhere. They include an increase in crime which diminishes the feeling of safety and well-being that may have once existed. Increases in air-pollution, an increase in non-conforming uses and other environmental degeneration can develop into such nuisances that residents feel their well-being is in jeopardy. This would be an additional reason for people to move to an area without such nuisances. Changes in the composition of the population to lower-income households or in the racial or ethnic make-up may influence an out-movement of the population as a reflection of whom is willing to live next to whom. Disinvestment in the neighborhood on the part of the city administration is also harmful, especially if residents believe the cuts in services in their neighborhood to be more severe than in other areas of the city. The resultant cut in services, such as schools, police, fire, or garbage collection may find households looking for better services elsewhere.
Reduced demand in a neighborhood due to any of the above factors results in a filtering process. This is a market response in hopes of increasing demand. Rents and unit prices decline making them affordable to a lower-inc~me population and expanding the market.
An increase in the costs of supplying the housing service incurred by the landlords is another reason for a reduced cash flow. These increases in supply costs can be in any combination of areas. Maintenance and repair costs are some variable costs related to the aging of the unit, physical obsolescence, vandalism, a more rapid turn-over which requires more frequent refurbishing, and an increase in thefts and assaults. With today's high fuel prices, costs to heat an older house with its high ceilings and limited insulation are higher. Fire and theft insurance are fixed costs which are also more costly for an older structure with its higher risk factor. In a nonappreciating market, property taxes can also be a high cost. These taxes may be higher than should be due to a lag in reassessment or an assessment which is based on what is considered to be the "highest and best use" for the property and not based on its actua~ use. This leads to a downward cycle which eventually reaches a necessary cut in fixed costs such as insurance and taxes.
If this continues, it leads to foreclosure, abandonment and eventually a demolishing of the structure.

Interaction of the supply and demand is very involved;
it is very difficult, almost impossible to identify the initial cause of a decline once it is in progress. The result oftentimes is a policy intervention that attempts to be all encompassing. This spreads resources so thin that the effectiveness of the policy is hindered. :Equally ineffective resources and programs may be so narrow in scope as to be directed at symptoms and not causes or only one aspect of the decline leaving others to operate.

DUAL ("S OCIAL CALCULUS 11 )
Neighborhoods which can be classified according to this theory se e a great duality in the landlord and tenant relationships. Motivation is more for pride in ownership and in one's surroundings in the neighborhood than for economic benefit. Therefore, the relationships tend to be interpersonal. This occurs since the landlord is usually a resident and is looking for compatibility with his tenants.
Social contact in this arena develops more reciprocity.
Instead of a formal lease, there is a negotiation of respective responsibilities. There are very few rent delinquencies.
Since the property is treated well by tenants, there are also relatively few evictions.
It is possible for rent levels in these neighborhoods to be below the market level. The reciprocity of responsibilities allows for the lower rent levels. They are also possible since the landlord does not quantify the values for his time and efforts in upkeep. Opportunity costs do not receive consideration by the landlords in continuance with their concern for satisfaction and pride and homogenity with the residence and the neighborhood.
The concern for homogenity with the community is especially evident in the selection of tenants for the unit.
The landlord and the renter seek out the other with similar backgrounde--parties who they feel are friendly and compatible. The compatibility which the landlord considers extends to a potential social concord with the neighborhood.
Tenant length of residence tends to be longer in these circumstances. The tenants consider the personal bond shared with the landlord and the community as an additional cost in the decision to move. The process of decline in these communities is usually precipitated by a breakdown in the reciprocity between landlord and tenant. This may happen in several circumstances, for instance, when attempts by the landlord to find tenants or buyers who are desirable are met with failure. There may not be enough households potentially compatible with the neighborhood. This forces the landlord to rent or to sell to those who are lees desirable. On the other hand, landlords who operate in this personal manner may leave to be replaced by those whose actions are governed by a more economic rationale. There also may be strong external forces such as cheap external capital available or regulations imposed which force the landlords to alter their behavior and require the landlords to enter into the orthodox economic milieu. With these changes, the personal friendliness is replaced by more impersonal relations. As the reciprocity in relations dwindle, one notices that the resident landlords become replaced with absentee landlords. Rent levels also increase as dual market landlords, with exposure to the economic market, realize the responsibility for maintenance and repairs and the opportunity costs of their labor. The landlords' considerations change to purely economic returns.
Tenants no longer have the emotional bonds or commitments to the property or the neighborhood. Renter turnover is more rapid with their desire for better housing or through evictions due to the lac k of cons i deration for the property.
With all of these changes, an instability in relationships and understanding replaces the once stable dual reciprocity in the neighborhood.

RADIC AL THEORY
Underlying the behavior in the neighborhood according to this theory are the power relationships which exploit those who have n either economic nor political power. The relationship between the landlords and tenants is charac- In these neighborhoods, there is little motivation or need to refurbish the structures. Property owners capitalize on existing competition for housing among the low-income population. In efforts to continue this trend, maintenance and repairs on the housing is minimal. Housing is kept in short supply and rents are driven higher while costs are lowered. Property owners are able to utilize renovations to maximize their profits. Rehabilition allows for higher rents in efforts to displace old tenants as higher income tenants are sought for t h e property.
Capital is the key to housing market dynamics in the neighborhood. The landlords and the financial institutions, who have control of the capital, cooperate in their attempts to exploit t h e low-income market. Rules in the economic marketplace are created by the distribution of political power. Real political power is in t h e possession of those with the economic means to instruct others to act for them.
The primary force in a decline of a neighborhood is a drive by the owners to "maximize their share of productive 21 surplus" by maintaining a status quo in the power relationships. Jne example of techniques used to achieve this is a spreading of rumors in white neighborhoods of minority buying. Such "blockbusting" efforts take advantage of social fears to create massive selling. Banks and other financial institutions cooperate in these efforts by utilizing red-lining techniques. Ow. ners sell for low prices to middle men who in turn sell to minority buyers for high prices.
City government affects the decline of a neighborhood 21 solomon and Vandell, "Alternative Perspectives," p. 87.
through the various policies it undertakes. Higher property taxes, strict code enforcement, lower service levels, and rezoning to allow for mixed and undesirable uses are detrimental to an owner-occupant and other small owners.
These policies can enhance the cause of the wealthy owners by putting economic constraints on these small owners.
These constraints eventually force the small owner to sell.
In these scenarios, land use succession is not determined by market forces but largely by political action. Additional displacement occurs as the values of the properties increase as they are renovated. The lower-income residents find it difficult to afford the higher rents. As the neighborhood becomes more desirable, rents increase to attract higher-income households. Tenants who cannot afford the higher prices are forced to move out of the neighborhood. Households renting single-family homes are especially susceptible to this displacement. 30 When revitalization is at its peak, so is the level of displacement.

REVITALIZATION
Dennis Gale has monitored resettlement in several urban areas and found several implications for the existing theories explaining the increase in the number of households moving back to the cities. 31 According to existing theory, the expensive suburban home prices have forced many to stay in the cities. However, Gale found that most households remain in the cities for lifestyle concerns, not due to economic reasons. Since most of these households are childless, they do not feel compelled to look for better public education. Moreover, with no children and often with two incomes, these households are better able to afford life 3 oibid., p. 27. Each neighborhood is different with its own set of norms and rules of accepted behavior. Being a neighbor in one community may mean borrowing and lending while in another it may be keeping to oneself. As a new resident, one has to learn what is an appropriate behavior. This localized selfmanagement is a means of defining the behavior of "neighbor" to newcomers. The social network as localized self-management is also a means of keeping the public peace. This network has imbedded within it controls and standards which must be abided by as well as enforced by the residents. 32 The residents know the routine of the occurrences in the neighborhood.
If any deviations occur, they are recognized as unusual. In this way, the network works as a public surveillance system to protect themselves and strangers in the neighborhood from harm. 33 A trust in one's neighbors is developed.
The growth of such an intricate unconscious network takes time. 34 Cross-links must grow from one cluster of neighbors to the next to encompass the larger neighborhood. Turnover in a neighborhood with such a network can be absorbed. As new residents move in replacing neighbors, they are absorbed into the mainstream and go through an initiation process of learning the norms. However, there is a limit to the degree of turnover which can be absorbed by the network. The increments of change have to be small and gradual to maintain an element of continuity in the process.
In a city neighborhood, if the displacement is too rapid, too many of the relationships are disrupted at the same time.
This wreaks havoc in a once stable neighborhood. With rapid turnover, the element of continuity is broken; instability is soon to follow. The means of control and maintaining the standards is dismantled. Social problems increase. The mechanism for surveillance and maintaining the peace is dissolved.
This disruption of the self-management network can occur in a neighborhood that is declining or in one which is revitalizing. Once the social fabric is disrupted, the stable neighborhood is short-lived. Until a new network can be developed, an element of instability will be present due to the absence of an institutionalization mechanism. This can be due to a decrease in demand or to an increase in the costs of supplying the housing. According to their "Dual Theory," the motivation in landlord-tenant relationships is pride in the neighborhood and reciprocity between the parties.
A breakdown in this reciprocity begins the process of change in these neighborhoods: either desirable tenants cannot be found or landlords are replaced by those with a more economic rationale. Finally, their "Radical Theory" contends that underlying the motivation and behavior in the neighborhood are the power relationships which exploit those without economic or political power. A decline is spurred by a drive by owners to maximize their share of the profit.
Revitalization is a process of change resulting in the recovery of a deteriorated neighborhood. Worn-down, older homes are refurbished and appreciate in value. Therefore, in neighborhoods experiencing revitalization, the process of change is in the increase in value of housing structures.
In this type of housing market, speculation and displacement occur as this transition takes place.
The final theory discussed in this chapter is not as concerned with the changes in the physical neighborhood as it is concerned with the social dynamics of the same. As a point of study in urban neighborhood dynamics, the neighborhood of South Worcester in Worcester, Massachusetts was chosen. This urban neighborhood is considered in detail drawing on the theories discussed in the previous chapter in an effort to determine its neighborhood dynamics.
South Worcester was perceived as being a stable residential neighborhood during the first half of this century. In terms of its housing market, as a dimension of residential health, there was a balance between households moving into, staying in, and leaving the neighborhood. 1 In essence, there was a balance between the supply of housing units and the demand for them. As time passed, this neighborhood stability began to falter. Today, city residents consider South  The age distribution can be seen in Figure II-  The neighborhood lost acreage with the construction of the Expressway which took approximately sixty-seven acres. The land use mix has altered to some extent (see Figure II-3).
There was an increase in the proportion of residential and commercial uses and a decrease in the industrial use. This would be considered an advantage for the residential neigh-   In terms of the population breakdown (see Table II   Sixty-two per cent of the residents have lived in the same house for these five years or more. One indicator of a "quality neighborhood" is fifty per cent or more of its population in residence for ten years or more.

SOCIOECONOMIC CHARACTERISTICS
The quality of a neighborhood bas been linked to low-turnover and low vacancy rates. 3 3 Households who stay in the neighborhood are satisfied that their preferences are being met. As long as they are confident that this will continue to be so, they will stay. Finsterbusch and Greisman in their study of "quality neighborhoods" found that these neighborhoods demonstrated stability in other areas as well.
They are in family orientation, income and wealth, and As can be seen in Table II-6, there are no large differences between the city averages and those in the neighborhood. Yet, with the exception of the female beaded households, South Worcester does have an overall slightly higher degree of family stability.

Income and Wealth
When considering income and wealth, the neighborhood is below average. The median family income is $4600 less than the city's and 10.8 per cent of the families have incomes below poverty level. This is only three-tenths of a per cent higher than the city's average. The median house value and the median contract rent per month are both South Worcester is slightly above average in its segregation. There is a very small minority population.
There is also a low percentage of foreign born persons, 3.7 per cent of the population. Both of these are close to five per cent lower than the city's average.

Summary of and Community
that there is a population which is "trapped."3 8 The low rents in South Worcester represented by the low median rent is the level they can afford. A similar housing bundle to serve their preferences is not available for less. Forty per cent of the households who are renting (for whom this was computed) spend over twenty-five per cent of their income for gross rent (see Table II South Worcester, with its many multi-family housing structures, serves as a renter neighborhood in the city.
While some renter neighborhoods are stepping-stones to other areas, this neighborhood does not seem to serve this purpose.
Most stepping-stone neighborhoods have little continuity as households are constantly moving in and out. In South Worcester, there is a high degree of persistence. Nearly sixty per cent of the householders have lived in the same 79 unit for six years or more and forty-two per cent for eleven years or more. This demonstrates a high degree of continuity in the neighborhood.
As was mentioned in Chapter Two, a "quality" neighborhood would have low vacancy rates together with a high degree of persistence. These do not exist together in South Worcester. This neighborhood has a vacancy rate higher than the city as a whole. Whi~e many households are staying in the neighoorhooa, there are units staying vacant. The rents of these vacant units are lower than those units which are occupied. As has been noted in the previous chapter, these circumstances indicate a decrease in the demand for housing in the neighborhood.
According to the "Orthodox Economic Theory," rent levels are set according to the market equilibrium at the intersection of supply and demand. If the rents are too high, demand for the unit decreases. An increase in vacancies is usually a sign of demand softening. Rents are then lowered to counter this and to attract more income. A decrease in demand can be due to either more positive conditions outside of the area pulling households out of the neighborhood, or due to negative internal conditions pushing households to other areas.
The "Arbitrage Model" states that households consider a housing unit in terms of their tastes and preferences within the parameters of their income. A unit's desirability then depends on the " Rreferenc~ of households for its collective physical and neighborhood characteristics. A household places a value on a unit in terms of its preferences for these particular characteristics. As a unit becomes less desirable, its value decreases in the eyes of the households, thus its monetary value decreases as well.
Considering the high vacancy rate and the lower rents South Worcester had only one small area zoned Residential 11 0 11 where high density residential uses were permitted. An equal area was set aside for business and the rest was zoned industrial. In Figure  The effect in South Worcester was to limit heavy industrial land uses to certain areas. The existing residential area was expanded to include most of the former commercial area. Two additional residential areas were created, one of which is larger than the 1951 district.
Commercial areas were created in three major traffic areas within the neighborhood. Light manufacturing zones were put in place as buffer zones between the heavy industry areas and the residential districts (see Figure  If zoning has a negative effect on an area's stability, the MG-2.0 and 4.0 district would be experiencing more negative effects than the RG-5 district. Zoning's initial purpose was to eliminate negative external effects by separating incompatible land uses. 2 "The separation of residential zones ••• from industrial and commercial activities is justified on the grounds that traffic and visual externalities associated and generated by these non-residential activities will detract from the residential The average house value in the MG district is $16,000. This is much lower than the mean of ~20,000 !or the RG district and is six per cent lower than the average $17,000 for South Worcester. The mean contract rent is also much lower than the RG district ($116) and South Worcester ($ 118).
Its mean contract rent is $101 per month. These housing values in the ~G district combined with the eight per cent vacancy rate suggest a low demand for housing in this area.
According to the "Arbitrage Model," the price of a unit is determined by the desirability of its housing bundle. This suggests that the units in the MG district have less desirable housing and environmental characteristics than the RG district. Realty ownership in the MG district has also increased by 178 per cent. Such a large increase in these owners further indicates a decline in the MG district. While the increase in realty owners in the RG district was sixtyfive per cent and also indicates decline in that district, the percentage change in the MG district is more than double that in the RG district. In this process of decline, according to the "Orthodox Economic Theory," homeowners sell in an attempt to get its present value before the return on investment goes lower.
Some may move and keep the property !or investment and become landlords themselves. This is part of a rise in absentee owners. If they encounter problems with tenant delinquencies or with finding tenants, the property may become more of a burden than an investment. They may try to sell and are unable to get a buyer. Often they sell to real estate companies. The absentee owners and the realty companies are in a better position to take the risks, and absorb the costs of low return on their investment in such property while waiting for a future profit.
The MG zoning classification has had some ramifications in the redevelopment of some of the parcels whose structures were torn down. One cluster on the corner of Cambridge The residences in the MG district are experiencing a filtering down process which is indirectly due to the zoning classification. Zoning of residential areas for more intensive uses (that is non-residential uses) may not be harmful to the area at first. However, over the long term it can prove to be detrimental to the residential environment.
As the more intense uses spread, the property values of the residences decrease due to the diseconomies of being located next to a non-residential use. According to the nArbitrage Model," the structural characteristics of a dwelling unit are considered by households in terms of soundness and modernity. A higher preference rank is given to those units with higher degrees of soundness and modernity; a lower ranking given to those with less. Older units require more repairs for upkeep. This maintenance is expensive, but is necessary to extend the life of the unit. If it is not done, the structure continues to deteriorate with age, thereby losing more soundness. In addition to losing soundness, aging structures have less to offer for housing services; thus, their modernity depreciates with age.
The Yalue of these aging structures, which are losing soundness and modernity, decreases as the households rank them lower on their preference scale. The units become desirable only to a lower-income clientele whose tastes they satisfy within the bounds of their income level. As the cycle continues, the maintenance which is required is left undone causing the structure to deteriorate and depreciate further, fulfilling the needs of ever lower-income level households. Eventually they lose value completely and are torn down to make room for another structure or another land use. This is the theoretical understanding of the impact which aging structures have on a residential environment. The purpose of zoning is to eliminate negative external effects by separating incompatible land uses, such as the residential and manufacturing land uses. A manufacturing classification allows uses which have negative effects on residential land uses. It permits heavy manufacturing which is a visual nuisance and has such negative externalities as noise and air pollution, higher volume of traffic and the use of heavier vehicles through area streets. These factors are not conducive to the quiet, clean, safe environment which are sought after qualities in a residential area. Over the long term, zoning for more intensive uses is detrimental to the residential environment. As the more intense use spreads, the property values of the residences decrease due to the diseconomies of being located near a non-residential land use.
The "Arbitrage Model" would contend that the negative externalities of the manufacturing land use alters the housing bundle considered by households in a locational decision. Households consider them to be diseconomies and subsequently place a lower preference rank on a unit. The value of the unit is discounted for being near the negative uses.

Route 290 affords the manufacturing interests in South
Worcester locations which are near main transportation routes for easy accessibility for market capacity and transportation needs. The MG zoning classification permits their existence and expansion in this residential area. In addition to this impact on the residential uses within the MG zone, as the industrial use spreads so does its field of negative impact. The residential ambience is affected as the structures age and the negative environmental factors of noise and air pollution and visual diseconomies spill over to affect the housing bundles of units in South Worcester. As the housing bundle changes in this manner, the arbitrage process of the "Arbitrage Model" is taking place in South Worcester. The housing bundle is changing to serve a new and different clientele. According to the "Arbitrage Model," as long as future estimates satisfy households in terms of tastes and income parameters they stay; however, households that are dissatisfied consider a move or experience a decrease in property values.

FILTERING
The focus of the . filteri~g process, ae d~acribed in the "Arbitrage Model," is the household, not the dwelling unit.
In this theory, the welfare of a household is based on their pre!erences. As long as the households feel they have improved their situation, without a change in income and tastes, they have effectively "filtered up." Conversely, if they feel they have a less desirable housing bundle, they have "filtered down." Hence, it is the household, not the dwelling unit which is the participant in the filtering process. Key to this concept is the implication that this process can occur even if the household does not move. A household making a locational change to a different housing bundle is involved in an active filtering process while a household experiencing a change in its housing bundle without a move experiences passive filtering.
The filtering process experienced by households in South Worcester is due to changes in the neighborhood environment. The loss of soundness and modernity as the aging structures are not maintained adequately and the impact of the negative externalities from the expressway and the expanding non-residential uses change the housing bundle for the households. As they perceive these changes taking place, they lower the preference rank for their housing bundle.
Without a change in income or tastes, the households experience a filtering down to a less desirable bundle. In a locational decision, households may elect to move to ".filter up" to a more preferred housing bundle. However, some households as described in Chapter III are unable to move for economic or emotional reasons. They stay and become a "trapped population" as they "filter down" on their preference scale.
The three concepts discussed above are interrelated and work together to explain the neighborhood change dynamics in South Worcester. The interplay of the factors at work are also tenuous since they rely on the tastes and preferences of the households. Integral to the dynamics of change in South Worcester is the perceptions of households regarding the impact of the external events and their influence on the housing bundle.
The arbitrage process in South Worcester occurs as the housing bundle is altered by the changes in the residential environment to be used by a new clientele. The process takes place as households have future expectations of changes and estimate a lower preference rank and discount their property value based on perceived negative externalities. Their locational .. decisions are made in this arena to avoid a lower ranking on their preferance scale. As they experience these discounts in the property value, they "filter down" to a less desirable housing bundle. As households move to "filter up" to a more preferred housing bundle, they are making room for a new clientele whose preferences and lower income level the new housing bundle satisfies. According to the "Arbitrage Model," the characteristics of these new residents are also .taken into consideration as part of the housing bundle in the reassessment process of future ex~ectations.
Househ olds continue to filter up or down as they perceive a more or less deeirable housing bundle and make the subsequent locational decision.
The neighborhood change dynamics in South Worcester, as understood with the "Arbitrage Model," can become cyclical in nature if no changes are made. The structures in South Worcester will continue to age and fall into disrepair without the necessary maintenance for upkeep. The preference rank of these units will become ever lower on the preference scale as they are discounted for losses in soundness and modernity. In addition, the construction of Route 290 and the manufacturing zoning classifications created a benevolent atmosphere for non-residential land uses. Easy access to Route 290 provides excellent accessibility to markets along major transportation routes for the industries which are permitted land uses in areas within the neighborhood. As tbese non-residential land uses expand so does their field of influence. Housing bundles in residentially zoned areas are also impacted as described in Chapter III. The area zoned RG-5 was impacted by the externalities from the land uses nearby and the expressway.
Together, the negative structural characteristics and the diseconomies from the non-residential land uses and the expressway make these housing bundles less desirable to households. Consequently, the units are ranked lower on their preference scale and are given lower property values.
The lower values satisfy the preferences and income levels of the lower-income households. This lower available income limits the amount of repairs and upkeep on a unit continuing the loss of soundness and modernity. As these units fall into disrepair and are left vacant, non-residential land uses may move to areas once utilized by residential land uses. This enlarges their field of influence and the cycle continues until the residential land use is non-existent in the non-residentially zoned areas. The impact of the negative externalities associated with these uses and the aging process with limited maintenance will be witnessed in the housing bundles further into the residentially zoned areas as well.

SUMMARY
This study of the dynamics of neighborhood change provides a theoretical understanding of events in the neighborhood of South Worcester. The application of key concepts of the "Arbitrage Model" assesses the effects of the aging structures, the construction of Route 290 and the revised zoning plan. The residential environment of South Worcester as it is considered by households making locational decisions has been altered. The residential ambience of the neighborhood has been weakened by these events and the diseconomies associated with and generated by them. While detracting from the residential environment, the dynamics of change have also enhanced the desirability of certain areas in the neighborhood for non-residential land uses. Areas in South