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					The Local Impact of
 Home Building in
  Volusia County,
      Florida
 Income, Jobs, and
 Taxes generated


                    =

  Prepared by the Housing Policy Department


                 May 2006


    National Association of Home Builders
            1201 15th Street, NW
           Washington, DC 20005
                202-266-8398
    The Local Impact of
     Home Building in
      Volusia County,
          Florida
       Income, Jobs, and
       Taxes generated


                                =

                         Contents


                        Executive Summary

           Detailed Tables on Single Family Construction

            Detailed Tables on Multifamily Construction

Background and a Brief Description of the Model Used to Estimate the
                        Economic Benefits

                     Technical Documentation
                          Executive Summary


Home building generates substantial local economic activity, including new income and jobs for
residents, and additional revenue for local governments. The National Association of Home
Builders has developed a model to estimate the economic benefits. The model captures the
effect of the construction activity itself, the ripple impact that occurs when income earned from
construction activity is spent and recycles in the local economy, and the ongoing impact that
results from new homes becoming occupied by residents who pay taxes and buy locally
produced goods and services. In order to fully appreciate the positive impact residential
construction has on a community, it’s important to include the ripple effects and the ongoing
benefits. Since the NAHB model was initially developed in 1996, it has been successfully applied
to construction in over 350 projects, local jurisdictions, metropolitan areas, non-metropolitan
counties, and states across the country.

This report presents estimates of the metro area impacts of home building in Volusia County,
Florida. The comprehensive nature of the NAHB model means that the local area over which
the benefits are spread must be large enough to include the places where construction workers
live and spend their money, as well as the places where the new home occupants are likely to
work, shop, and go for recreation. In practice, this usually means a Metropolitan Statistical Area
(MSA), as defined by the U.S. Office of Management and Budget (OMB). Based on local
commuting patterns, OMB has identified the Deltona-Daytona Beach-Ormond Beach MSA as a
metro area consisting of a single county (Volusia) in Florida (see map below).

                        Deltona-Daytona Beach-Ormond Beach MSA




                                                1
In this report, wherever the term local is used, it refers to the entire metro area—that is, Volusia
County. The report presents estimates of the impacts of building 5,197 single family and 1,786
multifamily housing units, based on the number of permits issued in 2005.

The NAHB model produces impacts on income and employment in 16 industries and local
government, as well as detailed information about taxes and other types of local government
revenue. The key results are summarized below. Additional details are contained in
subsequent sections.




                                Single Family Construction

       The estimated one-year metro area impacts of building 5,197 single family homes in
       Volusia County include
                   $693.4 million in local income,
                   $99.7 million in taxes and other revenue for local governments, and
                   18,454 local jobs.
       These are local impacts, representing income and jobs for residents of Volusia County
       and taxes (and other sources of revenue, including permit fees) for all local jurisdictions
       within the county. They are also one-year impacts that include both the direct and
       indirect impact of the construction activity itself, and the impact of local residents who
       earn money from the construction activity spending part of it within the local area.

       The additional, annually recurring impacts of building 5,197 single family homes in
       Volusia County include
                  $149.1 million in local income,
                  $40.8 million in taxes and other revenue for local governments, and
                  4,301 local jobs.
       These are ongoing, annual local impacts that result from the new homes being
       occupied, and the occupants paying taxes and otherwise participating in the local
       economy year after year. In order to fully understand the impact residential
       construction has on a community, it’s important to consider the ongoing benefits as well
       as the one-time effects.

       These impacts were calculated assuming that new single family homes built in Volusia
       County have an average price of $250,600; are built on a lot for which the average value
       of the raw land is $52,740; require the builder and developer to pay an average of
       $10,718 in impact, permit, and other fees to local governments; and incur an average
       property tax of $4,239 per year (which takes into account at $25,000 homestead
       exemption). House price and raw land data were obtained from a survey of builders in
       Volusia County. Other data were provided by the Volusia County Property Appraiser’s
       Office, the Volusia County Permit Department, and the Volusia County Finance Office.




                                                 2
                          Multifamily Construction


The estimated one-year local impacts of building 1,786 multifamily units in Volusia
County include
            $421.7 million in local income,
            $44.1 million in taxes and other revenue for local governments, and
            12,051 local jobs.
These are local impacts, representing income and jobs for residents of Volusia County,
and taxes (and other sources of revenue, including permit fees) for all local jurisdictions
within the county. They are also one-year impacts that include both the direct and
indirect impact of the construction activity itself, and the impact of local residents who
earn money from the construction activity spending part of it within the local area.

The additional, annually recurring impacts of building 1,786 multifamily units in Volusia
County include
           $79.5 million in local income,
           $23.1 million in taxes and other revenue for local governments, and
           2,192 local jobs.
These are ongoing, annual local impacts that result from the new homes being
occupied, and the occupants paying taxes and otherwise participating in the county’s
economy year after year.

These impacts were calculated assuming that new multifamily units built in Volusia
County each have an average market value of $350,000; embody an average raw land
value of $23,000; require the builder and developer to pay an average of $9,810 in
impact, permit, and other fees per unit to local governments; and incur an average
annual property tax of $6,545 per unit. The property tax assumes that, although 80
percent of the multifamily units are condominiums, only 29 percent qualify for the
homestead exemption. In the NAHB model, the primary difference between rental
apartments and multifamily condiminiums is the way incomes and spending tendencies
of the occupants are estimated. As with the assumptions underlying the single family
impact estimates, these numbers were obtained from a survey of builders in Volusia
County, the Volusia County Property Appraiser’s Office, the Volusia County Permit
Department, and the Volusia County Finance Office.




                                         3
The Local Impact of
 Home Building in
  Volusia County,
      Florida
 Income, Jobs, and
 Taxes generated



        =

     Detailed
    tables on
  Single Family
  Construction

         4
       Impact of Building 5,197 Single Family
         Homes in Volusia County, Florida


                                         Summary



Total One-Year Impact: Sum of Phase I and Phase II:

                         Local Business        Local Wages                                  Local Jobs
    Local Income                                                     Local Taxes1
                        Owners’ Income         and Salaries                                 Supported

    $693,376,000         $201,477,000          $491,899,000          $99,671,000              18,454




                        Phase I: Direct and Indirect Impact of Construction Activity:

                                            Business
                                                           Local Wages                        Local Jobs
                          Local Income      Owners’                         Local Taxes 1
                                                           and Salaries                       Supported
                                            Income
                          $454,903,000    $128,444,000    $326,459,000      $78,390,000        11,893


                        Phase II: Induced (Ripple) Effect of Spending the Income and Taxes from Phase I:

                                             Business
                                                           Local Wages                        Local Jobs
                          Local Income       Owners’                        Local Taxes1
                                                           and Salaries                       Supported
                                             Income
                          $238,473,000     $73,033,000     $165,440,000     $21,281,000         6,561




Phase III: Ongoing, Annual Effect that Occurs When New Homes are Occupied:

                        Local Business         Local Wages                                  Local Jobs
    Local Income                                                    Local Taxes1
                       Owners’ Income          and Salaries                                 Supported

    $149,059,000          $43,846,000         $105,214,000          $40,764,000               4,301




        1
          The term local taxes is used as a shorthand for local government revenue from all sources: taxes,
fees, fines, revenue from government-owned enterprises, etc...




                                                     1
Impact of Building 5,197 single family Homes in Volusia County, FL
  Phase I --Direct and Indirect Impact of Construction Activity
                                       A. Local Income and Jobs by Industry

                                                                                                      Wages &
                                                              Local Business                                          Number of
                                                                                   Local Wages       Salaries per
                Industry                   Local Income          Owners’                                              Local Jobs
                                                                                   and Salaries       Full-time
                                                                 Income                                               Supported
                                                                                                         Job

 Construction                               $316,684,000          $81,848,000      $234,836,000            $28,000         8,416

 Manufacturing                                  $894,000            $108,000            $786,000           $27,000            29

 Transportation                               $2,432,000            $278,000          $2,154,000           $18,000           123

 Communications                               $4,489,000           $1,583,000         $2,906,000           $41,000            71

 Utilities                                    $2,576,000           $1,834,000           $742,000           $47,000            16

 Wholesale and Retail Trade                  $47,830,000           $7,313,000        $40,517,000           $22,000         1,808

 Finance and Insurance                        $8,713,000            $993,000          $7,720,000           $47,000           165

 Real Estate                                  $7,786,000           $6,788,000           $998,000           $27,000            37

 Personal & Repair Services                   $4,045,000           $3,622,000           $423,000           $33,000            13

 Services to Dwellings / Buildings            $2,077,000            $695,000          $1,382,000           $19,000            73

 Business & Professional Services            $52,352,000          $20,150,000        $32,202,000           $31,000         1,054

 Eating and Drinking Places                     $935,000            $344,000            $591,000           $12,000            51

 Automobile Repair & Service                  $1,224,000           $1,027,000           $197,000           $30,000                 7

 Entertainment Services                         $303,000            $103,000            $200,000           $27,000                 7

 Health, Educ. & Social Services                  $35,000            $13,000             $22,000           $23,000                 1

 Local Government                                       $0                 $0                  $0          $30,000                 0

 Other                                        $2,528,000           $1,745,000           $784,000           $32,000            24


 Total                                      $454,903,000       $128,444,000        $326,459,000            $27,000        11,893

  Note: Business & professional services include architectural and engineering services. The “other” category consists mostly of
  landscaping services, and the production of greenhouse and nursery products.

                                   B. Local Government General Revenue by Type

 TAXES:                                                              USER FEES & CHARGES:

 Business Property Taxes                             $1,349,000      Residential Permit / Impact Fees                $55,703,000

 Residential Property Taxes                                   $0     Utilities & Other Govt. Enterprises              $2,914,000

 General Sales Taxes                                 $1,849,000      Hospital Charges                                $11,503,000

 Specific Excise Taxes                                 $473,000      Transportation Charges                            $475,000

 Income Taxes                                                 $0     Education Charges                                $1,590,000

 License Taxes                                                $0     Other Fees and Charges                           $2,481,000


 Other Taxes                                            $55,000      TOTAL FEES & CHARGES                            $74,665,000


  TOTAL TAXES                                        $3,726,000      TOTAL GENERAL REVENUE                           $78,390,000



                                                              2
Impact of Building 5,197 single family Homes in Volusia County, FL
Phase II--Induced Effect of Spending Income and Tax Revenue from Phase I
                                       A. Local Income and Jobs by Industry

                                                                                                      Wages &
                                                              Local Business                                          Number of
                                                                                   Local Wages       Salaries per
                Industry                   Local Income          Owners’                                              Local Jobs
                                                                                   and Salaries       Full-time
                                                                 Income                                               Supported
                                                                                                         Job

 Construction                                 $3,547,000            $587,000          $2,961,000           $28,000           106

 Manufacturing                                  $791,000             $97,000            $693,000           $27,000            26

 Transportation                               $2,060,000            $242,000          $1,818,000           $17,000           104

 Communications                              $12,739,000           $4,968,000         $7,771,000           $41,000           189

 Utilities                                    $6,996,000           $3,227,000         $3,769,000           $48,000            79

 Wholesale and Retail Trade                  $31,444,000           $5,141,000        $26,303,000           $19,000         1,368

 Finance and Insurance                        $9,816,000           $1,286,000         $8,529,000           $40,000           211

 Real Estate                                 $34,632,000          $30,193,000         $4,439,000           $27,000           163

 Personal & Repair Services                  $13,790,000           $7,260,000         $6,530,000           $21,000           317

 Services to Dwellings / Buildings            $3,169,000           $1,060,000         $2,109,000           $19,000           111

 Business & Professional Services            $20,056,000           $8,170,000        $11,886,000           $27,000           432

 Eating and Drinking Places                   $8,884,000           $1,761,000         $7,123,000           $12,000           609

 Automobile Repair & Service                  $6,431,000           $3,138,000         $3,293,000           $39,000            85

 Entertainment Services                       $4,019,000           $1,451,000         $2,569,000           $22,000           115

 Health, Educ. & Social Services             $15,860,000           $4,072,000        $11,788,000           $30,000           395

 Local Government                            $56,470,000                   $0        $56,470,000           $30,000         1,857

 Other                                        $7,769,000            $380,000          $7,389,000           $19,000           392


 Total                                      $238,473,000          $73,033,000      $165,440,000            $25,000         6,561

  Note: Business & professional services include architectural and engineering services. The “other” category consists mostly of
  landscaping services, and the production of greenhouse and nursery products.

                                   B. Local Government General Revenue by Type

 TAXES:                                                              USER FEES & CHARGES:

 Business Property Taxes                             $6,901,000      Residential Permit / Impact Fees                          $0

 Residential Property Taxes                                   $0     Utilities & Other Govt. Enterprises              $1,457,000

 General Sales Taxes                                    $83,000      Hospital Charges                                 $6,030,000

 Specific Excise Taxes                               $2,421,000      Transportation Charges                            $253,000

 Income Taxes                                                 $0     Education Charges                                 $848,000

 License Taxes                                                $0     Other Fees and Charges                           $3,005,000


 Other Taxes                                           $282,000      TOTAL FEES & CHARGES                            $11,594,000


  TOTAL TAXES                                        $9,687,000      TOTAL GENERAL REVENUE                           $21,281,000



                                                              3
Impact of Building 5,197 single family Homes in Volusia County, FL
Phase III--Ongoing, Annual Effect That Occurs Because Units Are Occupied
                                       A. Local Income and Jobs by Industry

                                                                                                      Wages &
                                                              Local Business                                          Number of
                                                                                   Local Wages       Salaries per
                Industry                   Local Income          Owners’                                              Local Jobs
                                                                                   and Salaries       Full-time
                                                                 Income                                               Supported
                                                                                                         Job

 Construction                                 $3,023,000            $521,000          $2,502,000           $28,000            90

 Manufacturing                                  $580,000             $72,000            $508,000           $27,000            19

 Transportation                               $1,209,000            $138,000          $1,072,000           $18,000            60

 Communications                               $9,344,000           $3,653,000         $5,692,000           $41,000           139

 Utilities                                    $5,599,000           $2,612,000         $2,987,000           $48,000            63

 Wholesale and Retail Trade                  $23,757,000           $3,885,000        $19,872,000           $19,000         1,034

 Finance and Insurance                        $8,384,000           $1,062,000         $7,322,000           $40,000           183

 Real Estate                                 $13,835,000          $12,061,000         $1,773,000           $27,000            65

 Personal & Repair Services                   $7,796,000           $4,275,000         $3,521,000           $21,000           166

 Services to Dwellings / Buildings            $2,566,000            $858,000          $1,708,000           $19,000            90

 Business & Professional Services            $14,585,000           $6,001,000         $8,585,000           $28,000           305

 Eating and Drinking Places                   $6,531,000           $1,295,000         $5,237,000           $12,000           448

 Automobile Repair & Service                  $5,308,000           $2,643,000         $2,665,000           $37,000            72

 Entertainment Services                       $2,977,000           $1,051,000         $1,926,000           $22,000            89

 Health, Educ. & Social Services             $12,456,000           $3,220,000         $9,236,000           $29,000           315

 Local Government                            $22,834,000                   $0        $22,834,000           $30,000           751

 Other                                        $8,274,000            $498,000          $7,775,000           $19,000           412


 Total                                      $149,059,000          $43,846,000      $105,214,000            $24,000         4,301

  Note: Business & professional services include architectural and engineering services. The “other” category consists mostly of
  landscaping services, and the production of greenhouse and nursery products.

                                   B. Local Government General Revenue by Type

 TAXES:                                                              USER FEES & CHARGES:

 Business Property Taxes                             $4,519,000      Residential Permit / Impact Fees                          $0

 Residential Property Taxes                         $16,779,000      Utilities & Other Govt. Enterprises              $3,552,000

 General Sales Taxes                                    $54,000      Hospital Charges                                $11,466,000

 Specific Excise Taxes                               $1,585,000      Transportation Charges                            $158,000

 Income Taxes                                                 $0     Education Charges                                 $530,000

 License Taxes                                                $0     Other Fees and Charges                           $1,934,000


 Other Taxes                                           $185,000      TOTAL FEES & CHARGES                            $17,642,000


  TOTAL TAXES                                       $23,123,000      TOTAL GENERAL REVENUE                           $40,764,000



                                                              4
The Local Impact of
 Home Building in
  Volusia County,
      Florida
 Income, Jobs, and
 Taxes generated



        =

     Detailed
    Tables on
   Multifamily
  Construction



         1
  Impact of Building 1,786 Multifamily Units
         in Volusia County, Florida


                                          Summary



Total One-Year Impact: Sum of Phase I and Phase II:

                         Local Business        Local Wages                                  Local Jobs
    Local Income                                                     Local Taxes1
                        Owners’ Income         and Salaries                                 Supported
    $421,715,000          $98,801,000          $322,913,000          $44,133,000              12,051




                        Phase I: Direct and Indirect Impact of Construction Activity:

                                            Business
                                                           Local Wages                        Local Jobs
                          Local Income      Owners’                         Local Taxes 1
                                                           and Salaries                       Supported
                                            Income

                          $287,837,000     $54,382,000    $233,455,000      $31,644,000         8,428


                        Phase II: Induced (Ripple) Effect of Spending the Income and Taxes from Phase I:

                                             Business
                                                           Local Wages                        Local Jobs
                          Local Income       Owners’                        Local Taxes1
                                                           and Salaries                       Supported
                                             Income

                          $133,878,000     $44,419,000     $89,458,000      $12,489,000         3,623




Phase III: Ongoing, Annual Effect that Occurs When New Homes are Occupied:

                        Local Business         Local Wages                                  Local Jobs
    Local Income                                                    Local Taxes1
                       Owners’ Income          and Salaries                                 Supported
    $79,539,000           $25,753,000          $53,786,000          $23,076,000               2,192




        1
          The term local taxes is used as a shorthand for local government revenue from all sources: taxes,
fees, fines, revenue from government-owned enterprises, etc...




                                                     1
Impact of Building 1,786 Multifamily Units in Volusia County, FL
 Phase I --Direct and Indirect Impact of Construction Activity
                                     A. Local Income and Jobs by Industry

                                                                                                     Wages &
                                                             Local Business                                          Number of
                                                                                  Local Wages       Salaries per
               Industry                   Local Income          Owners’                                              Local Jobs
                                                                                  and Salaries       Full-time
                                                                Income                                               Supported
                                                                                                        Job

Construction                               $206,296,000         $25,216,000       $181,080,000            $28,000         6,490

Manufacturing                                  $407,000             $49,000            $359,000           $27,000            13

Transportation                                 $878,000             $98,000            $779,000           $18,000            44

Communications                               $2,630,000            $969,000          $1,661,000           $41,000            41

Utilities                                    $1,335,000            $913,000            $422,000           $47,000                 9

Wholesale and Retail Trade                  $19,864,000           $3,022,000        $16,843,000           $23,000           742

Finance and Insurance                        $3,833,000            $412,000          $3,421,000           $44,000            79

Real Estate                                  $4,516,000           $3,937,000           $579,000           $27,000            21

Personal & Repair Services                   $2,323,000           $2,058,000           $265,000           $34,000                 8

Services to Dwellings / Buildings            $1,495,000            $500,000            $995,000           $19,000            53

Business & Professional Services            $42,273,000         $15,813,000         $26,460,000           $30,000           893

Eating and Drinking Places                     $349,000             $82,000            $268,000           $12,000            23

Automobile Repair & Service                    $821,000            $660,000            $161,000           $30,000                 5

Entertainment Services                         $132,000             $49,000             $83,000           $24,000                 3

Health, Educ. & Social Services                  $14,000             $5,000               $9,000          $24,000                 0

Local Government                                       $0                 $0                  $0          $30,000                 0

Other                                          $670,000            $600,000             $70,000           $21,000                 3


Total                                      $287,837,000         $54,382,000       $233,455,000            $28,000         8,428

 Note: Business & professional services include architectural and engineering services. The “other” category consists mostly of
 landscaping services, and the production of greenhouse and nursery products.

                               B. Local Government General Revenue by Type

TAXES:                                                              USER FEES & CHARGES:

Business Property Taxes                               $806,000      Residential Permit / Impact Fees                $17,520,000

Residential Property Taxes                                   $0     Utilities & Other Govt. Enterprises              $1,802,000

General Sales Taxes                                 $1,050,000      Hospital Charges                                 $7,278,000

Specific Excise Taxes                                 $283,000      Transportation Charges                            $301,000

Income Taxes                                                 $0     Education Charges                                $1,009,000

License Taxes                                                $0     Other Fees and Charges                           $1,561,000


Other Taxes                                            $33,000      TOTAL FEES & CHARGES                            $29,471,000


 TOTAL TAXES                                        $2,173,000      TOTAL GENERAL REVENUE                           $31,644,000



                                                            2
 Impact of Building 1,786 Multifamily Units in Volusia County, FL
Phase II--Induced Effect of Spending Income and Tax Revenue from Phase I
                                       A. Local Income and Jobs by Industry

                                                                                                       Wages &
                                                               Local Business                                          Number of
                                                                                    Local Wages       Salaries per
                 Industry                   Local Income          Owners’                                              Local Jobs
                                                                                    and Salaries       Full-time
                                                                  Income                                               Supported
                                                                                                          Job

  Construction                                 $2,157,000            $357,000          $1,801,000           $28,000            65

  Manufacturing                                  $481,000             $59,000            $422,000           $27,000            16

  Transportation                               $1,253,000            $147,000          $1,105,000           $17,000            63

  Communications                               $7,748,000           $3,021,000         $4,727,000           $41,000           115

  Utilities                                    $4,255,000           $1,963,000         $2,292,000           $48,000            48

  Wholesale and Retail Trade                  $19,124,000           $3,127,000        $15,998,000           $19,000           832

  Finance and Insurance                        $5,970,000            $782,000          $5,187,000           $40,000           129

  Real Estate                                 $21,063,000         $18,364,000          $2,700,000           $27,000            99

  Personal & Repair Services                   $8,387,000           $4,416,000         $3,971,000           $21,000           193

  Services to Dwellings / Buildings            $1,928,000            $645,000          $1,283,000           $19,000            68

  Business & Professional Services            $12,198,000           $4,969,000         $7,229,000           $27,000           263

  Eating and Drinking Places                   $5,404,000           $1,071,000         $4,332,000           $12,000           370

  Automobile Repair & Service                  $3,911,000           $1,909,000         $2,003,000           $39,000            52

  Entertainment Services                       $2,445,000            $882,000          $1,562,000           $22,000            70

  Health, Educ. & Social Services              $9,646,000           $2,476,000         $7,169,000           $30,000           240

  Local Government                            $23,182,000                   $0        $23,182,000           $30,000           763

  Other                                        $4,725,000            $231,000          $4,494,000           $19,000           238

  Total                                      $133,878,000         $44,419,000         $89,458,000           $25,000         3,623

   Note: Business & professional services include architectural and engineering services. The “other” category consists mostly of
   landscaping services, and the production of greenhouse and nursery products.

                                 B. Local Government General Revenue by Type

  TAXES:                                                              USER FEES & CHARGES:

  Business Property Taxes                             $4,198,000      Residential Permit / Impact Fees                          $0

  Residential Property Taxes                                   $0     Utilities & Other Govt. Enterprises               $818,000

  General Sales Taxes                                    $50,000      Hospital Charges                                 $3,385,000

  Specific Excise Taxes                               $1,472,000      Transportation Charges                            $142,000

  Income Taxes                                                 $0     Education Charges                                 $476,000

  License Taxes                                                $0     Other Fees and Charges                           $1,775,000


  Other Taxes                                           $172,000      TOTAL FEES & CHARGES                             $6,597,000


   TOTAL TAXES                                        $5,892,000      TOTAL GENERAL REVENUE                           $12,489,000




                                                              3
 Impact of Building 1,786 Multifamily Units in Volusia County, FL
Phase III--Ongoing, Annual Effect That Occurs Because Units Are Occupied
                                        A. Local Income and Jobs by Industry

                                                                                                       Wages &
                                                               Local Business                                          Number of
                                                                                    Local Wages       Salaries per
                 Industry                   Local Income          Owners’                                              Local Jobs
                                                                                    and Salaries       Full-time
                                                                  Income                                               Supported
                                                                                                          Job

  Construction                                 $1,348,000            $223,000          $1,125,000           $28,000            40

  Manufacturing                                  $287,000             $36,000            $251,000           $27,000                 9

  Transportation                                 $684,000             $79,000            $604,000           $18,000            34

  Communications                               $4,326,000           $1,676,000         $2,650,000           $41,000            65

  Utilities                                    $2,470,000           $1,147,000         $1,323,000           $48,000            28

  Wholesale and Retail Trade                  $11,335,000           $1,853,000         $9,482,000           $19,000           493

  Finance and Insurance                        $3,904,000            $492,000          $3,411,000           $40,000            85

  Real Estate                                 $11,495,000         $10,022,000          $1,473,000           $27,000            54

  Personal & Repair Services                   $4,562,000           $2,457,000         $2,105,000           $21,000           102

  Services to Dwellings / Buildings            $1,231,000            $412,000            $819,000           $19,000            43

  Business & Professional Services             $7,332,000           $2,991,000         $4,341,000           $28,000           157

  Eating and Drinking Places                   $3,336,000            $661,000          $2,675,000           $12,000           229

  Automobile Repair & Service                  $2,760,000           $1,377,000         $1,383,000           $37,000            38

  Entertainment Services                       $1,646,000            $584,000          $1,062,000           $22,000            49

  Health, Educ. & Social Services              $6,014,000           $1,546,000         $4,468,000           $30,000           151

  Local Government                            $13,143,000                   $0        $13,143,000           $30,000           432

  Other                                        $3,667,000            $198,000          $3,469,000           $19,000           184

  Total                                       $79,539,000         $25,753,000         $53,786,000           $25,000         2,192

   Note: Business & professional services include architectural and engineering services. The “other” category consists mostly of
   landscaping services, and the production of greenhouse and nursery products.

                                 B. Local Government General Revenue by Type

  TAXES:                                                              USER FEES & CHARGES:

  Business Property Taxes                             $2,445,000      Residential Permit / Impact Fees                          $0

  Residential Property Taxes                         $10,902,000      Utilities & Other Govt. Enterprises              $1,433,000

  General Sales Taxes                                    $29,000      Hospital Charges                                 $5,901,000

  Specific Excise Taxes                                 $857,000      Transportation Charges                              $84,000

  Income Taxes                                                 $0     Education Charges                                 $283,000

  License Taxes                                                $0     Other Fees and Charges                           $1,041,000


  Other Taxes                                           $100,000      TOTAL FEES & CHARGES                             $8,742,000


   TOTAL TAXES                                       $14,333,000      TOTAL GENERAL REVENUE                           $23,076,000



                                                              4
The Local Impact of
 Home Building in
  Volusia County,
      Florida
 Income, Jobs, and
 Taxes generated


        =

  Background
   and a Brief
 Description of
 The Model Used
 to estimate the
    economic
     Benefits

         1
The Housing Policy Department of the National Association of Home Builders (NAHB) maintains
an economic model that it uses to estimate the local economic benefits of home building.
Originally developed in 1996, the model was at first calibrated to a typical metropolitan area
using national averages, but from the beginning was capable of being adapted to a specific local
economy by replacing key housing market variables. The initial version of the model could be
applied to single family construction, multifamily construction, or a combination of the two.

In March of 1997, NAHB began customizing the model to various areas around the country on a
routine basis, primarily at the request of its local affiliated associations. By February of 2006,
the Housing Policy Department had produced over 350 of these customized reports analyzing
residential construction in various metropolitan areas, non-metropolitan counties, and states
across the country (darker shaded areas in the map below).

                  Areas Covered by Previous NAHB Local Impact Studies




The reports have analyzed the impacts of specific housing projects, as well as total home
building in areas as large as entire states. In 2002, NAHB developed new versions of the model
to analyze active adult housing projects and multifamily development financed with the Low-
Income Housing Tax Credit. In 2005 a version of the model that analyzes residential
remodeling was added to the mix.




                                                1
Results from NAHB’s local impact model have been used by outside organizations such as
universities, state housing authorities and affordable housing agencies:

       The Shimburg Center for Affordable Housing at the University of Florida used results
       from the NAHB model to establish that “the real estate taxes paid year after year are the
       most obvious long-term economic benefit to the community. Probably the second most
       obvious long-term economic benefit is the purchases made by the family occupying the
       completed home.” www.shimberg.ufl.edu/pdfs/Newslett-June02.pdf

       The Center for Applied Economic Research at Montana State University used “results
       from an input-output model developed by the National Association of Home Builders to
       assess the impacts to local areas from new home construction.” The results show that
       “the construction industry contributes substantially to Montana’s economy accounting for
       5.5 percent of Gross State Product.”
       www.msubillings.edu/caer/The%20Impact%20of%20Home%20Construction%20in%20
       Montana.pdf

       The Housing Education and Research Center at Michigan State University also adopted
       the NAHB approach: “The underlying basis for supporting the implementation of this
       [NAHB] model on Michigan communities is that it provides quantifiable results that link
       new residential development with commercial and other forms of development therefore
       illustrating the overall economic effects of residential growth.”
       www.canr.msu.edu/cm/herc/h5over.html

       The Center for Economic Development at the University of Massachusetts found that
       “Home building generates substantial local economic activity, including income, jobs, and
       revenue for state and local governments. These far exceed the school costs-to-property-
       tax ratios. …these factors were evaluated by means of a quantitative assessment of
       data from the National Association of Home Builder’s Local Impact of Home Building
       model” www.donahue.umassp.edu/publications/housing/7-economicco.html

       Similarly, the Association of Oregon Community Development Organizations decided to
       base its analysis of affordable housing on the NAHB model, stating that “This model is
       widely respected and utilized in analyzing the economic impact of market rate housing
       development,” and that, compared to alternatives, it “is considered the most
       comprehensive and is considered an improvement on most previous models.”
       www.aocdo.org/docs/EcoDevoStudyFinal.pdf

       The Boone County Kentucky Planning Commission included results from the NAHB model
       in its 2005 Comprehensive Report. The Planning Commission used values from the
       impact model to quantify the increase in local income, taxes, revenue, jobs, and overall
       local economic impacts in the Metro Area as a result of new home construction.
       http://www.boonecountyky.org/pc/2005CompPlan.aspxv




                                               2
                            A Brief Description of the Model


The NAHB model is divided into three phases. Phases I and II are one-time effects. Phase I
captures the effects that result directly from the construction activity itself and the local
industries that contribute to it. Phase II captures the effects that occur as a result of the wages
and profits from Phase I being spent in the local economy. Phase III is an ongoing, annual
effect that includes property tax payments and the result of the completed unit being occupied.




                       The jobs, wages, and local taxes (including permit, utility
Phase I:
                       connection, and impact fees) generated by the actual
Local Industries
                       development, construction, and sale of the home. These jobs
Involved in
                       include on-site and off-site construction work as well as jobs
Home Building
                       generated in retail and wholesale sales of components,
                       transportation to the site, and the professional services required to
                       build a home and deliver it to its final customer.




                       The wages and profits for local area residents earned during
                       the construction period are spent on other locally produced
Phase II:              goods and services. This generates additional income for local
Ripple Effect          residents, which is spent on still more locally produced goods and
                       services, and so on. This continuing recycling of income back into
                       the community is usually called a multiplier or ripple effect.



                       The local jobs, income, and taxes generated as a result of
                       the home being occupied. A household moving into a new home
                       generally spends about three-fifths of its income on goods and
Phase III:             services sold in the local economy. A fraction of this will become
Ongoing,               income for local workers and local businesses proprietors. In a
Annual Effect          typical local area, the household will also pay 1.25 percent of its
                       income to local governments in the form of taxes and user fees, and
                       a fraction of this will become income for local government
                       employees. This is the first step in another set of economic ripples
                       that cause a permanent increase in the level of economic activity,
                       jobs, wages, and local tax receipts.




                                                 3
                                Modeling a Local Economy


The model defines a local economy as a collection of industries and commodities. These are
selected from the detailed benchmark input-output tables produced by the U.S. Bureau of
Economic Analysis. The idea is to choose goods and services that would typically be produced,
sold, and consumed within a local market area. Laundry services would qualify, for example,
while automobile manufacturing would not. Both business-to-business and business-to-
consumer transactions are considered. In general the model takes a conservative approach and
retains a relatively small number of the available industries and commodities. Of the roughly
600 industries and commodities provided in the input-output files, the model uses only 93
commodities and 95 industries.

The design of the model implies that a local economy should include not only the places people
live, but also the places where they work, shop, typically go for entertainment, etc. This
corresponds reasonably well to the concepts of Metropolitan Statistical Areas and Primary
Metropolitan Statistical Areas. These are areas defined by the U.S. Office of Management and
Budget, based on local commuting patterns, and outside of the New England area are
aggregations of counties. Outside of these officially defined metropolitan areas, NAHB has
determined that a county will usually satisfy the model’s requirements.

For a particular local area, the model adjusts the indirect business tax section of the national
input-output accounts to account for the fiscal structure of local governments in the area. The
information used to do this comes primarily from the U.S. Census Bureau’s Census of
Governments. Wages and salaries are extracted from the employee compensation section of
the input-output accounts on an industry-by-industry basis. In order to relate wages and
salaries to employment, the model incorporates data on local wages per job published by the
Bureau of Economic Analysis.




                                   Phase I: Construction


In order to estimate the local impacts generated by home building, it is necessary to know the
sales price of the homes being built, how much raw land contributes to the final price, and how
much the builder and developer pay to local area governments in the form of permit, utility
connection, impact, and other fees. This information is not generally available from national
sources and in most cases must be provided by representatives from the area in question who
have specialized knowledge of local conditions.




                                                4
                                      SUMMARY OF PHASE I
                                VALUE OF CONSTRUCTION
                                                 ♦

              INPUTS:         SERVICES PROVIDED AT CLOSING
                                                 ♦

                              PERMIT/HOOK-UP/IMPACT FEES
                                 (Info Obtained From Local Sources)




                             MODEL OF THE LOCAL ECONOMY



                             INCOME FOR LOCAL RESIDENTS
             OUTPUTS:
                                                 ♦

                                    TAX/FEE REVENUE
                                FOR LOCAL GOVERNMENTS


The model subtracts raw land value from the price of new construction and converts the
difference into local wages, salaries, business owners’ income, and taxes. This is done
separately for all 95 local industries. In addition, the taxes and fees collected by local
governments during the construction phase generate wages and salaries for local government
employees. Finally the number of full time jobs supported by the wages and salaries generated
in each private local industry and the local government sector is estimated.




                           Phase II: The Construction Ripple


Clearly, the local residents who earn income in Phase I will spend a share of it. Some of this
will escape the local economy. A portion of the money used to buy a new car, for example, will
become wages for autoworkers who are likely to live in another city, and increased profits for
stockholders of an automobile manufacturing company who are also likely to live elsewhere. A
portion of the spending, however, will remain within, and have an impact on, the local economy.
 The car is likely to be purchased from a local dealer and generate income for a salesperson
who lives in the area, as well for local workers who provide cleaning, maintenance, and other
services to the dealership. Consumers also are likely to purchase many services locally, as well
as to pay taxes and fees to local governments.

This implies that the income and taxes generated in Phase I become the input for additional
economic impacts analyzed in what we call Phase II of the model. Phase II begins by
estimating how much of the added income households spend on each of the local commodities.
 This requires detailed analysis of data from the Consumer Expenditure Survey (CES), which is
conducted by the U.S. Bureau of Labor Statistics primarily for the purpose of determining the
weights for the Consumer Price Index. The analysis produces household spending estimates for
56 local commodities (the remainder of the 93 local commodities entering the model exclusively
through business-to-business transactions).

                                                 5
                                        SUMMARY OF PHASE II
                                     LOCAL INCOME & TAXES
               INPUTS:
                                         FROM PHASE I



                                           SPENDING ON
                                  LOCAL GOODS AND SERVICES
                                    Consumer Expenditure Survey
                                   (U.S. Bureau of Labor Statistics)



                                 MODEL OF THE LOCAL ECONOMY



               OUTPUTS:              LOCAL INCOME & TAXES


The model then translates the estimated local spending into local business owners’ income,
wages and salaries, jobs, and taxes. This is essentially the same procedure applied to the
homes sold to consumers in Phase I. In Phase II, however, the procedure is applied
simultaneously to 56 locally produced and sold commodities.

In other words, the model converts the local income earned in Phase I into local spending,
which then generates additional local income. But this in turn will lead to additional spending,
which will generate more local income, leading to another round of spending, and so on.
Calculating the end result of these economic is a straightforward exercise in mathematics.




                            Phase III: The Ongoing Impacts

Like Phase II, Phase III involves computing the sum of successive ripples of economic activity.
In Phase III, however, the first ripple is generated by the income and spending of a new
household (along with the additional property taxes local governments collect as a result of the
new structure). This does not necessarily imply that all new homes must be occupied by
households moving in from outside the local area. It may be that an average new-home
household moves into the newly constructed unit from elsewhere in the same local area, while
average existing-home household moves in from outside to occupy the unit vacated by the first
household. Alternatively, it may be that the new home allows the local area to retain a
household that would otherwise move out of the area for lack of suitable housing.

In any of these cases, it is appropriate to treat a new, occupied housing unit as a net gain to
the local economy of one household with average characteristics for a household that occupies
a new home. This reasoning is often used, even if unconsciously, when it is assumed that a

                                                 6
new home will be occupied by a household with average characteristics—for instance, an
average number of children who will consume public education.

To estimate the impact of the net additional households, Phase III of the model requires an
estimate of the income of the households occupying the new homes. The information used to
compute this estimate comes from several sources, but primarily from an NAHB statistical model
based on decennial census data. Phase III of the local impact model then estimates the fraction
of income these households spend on various local commodities. This is done with CES data
and is similar to the procedure described under Phase II. The model also calculates the amount
of local taxes the households pay each year. This is done with Census of Governments data
except in the case of residential property taxes, which are treated separately, and for which
specific information must usually be obtained from a local source. Finally, a total ripple effect is
computed, using essentially the same procedure outlined above under Phase II.


                                       SUMMARY OF PHASE III

               INPUTS:           INCOME OF HOUSEHOLD
                              OCCUPYING NEW HOUSING UNIT



                                      SPENDING ON
                               LOCAL GOODS AND SERVICES
                                                ♦

                                  PROPERTY TAX PAYMENTS



                              MODEL OF THE LOCAL ECONOMY



              OUTPUTS:             LOCAL INCOME & TAXES



The details covered here provide only a brief description of the model NAHB uses to estimate
the local economic benefits of home building. For a more complete description, see the
technical documentation at the end of the report. For additional information about the model,
or questions about applying it to a particular local area, contact one of the following in NAHB’s
Housing Policy Department:

                   David Crowe, Senior Staff Vice President          (202) 266-8383
                   Paul Emrath, Assistant Staff Vice President       (202) 266-8449
                   Elliot Eisenberg, Senior Economist                (202) 266-8398




                                                 7
        NAHB's Local
A Copy of the Technical Documentation Will Be
     Impact of Home
     Building Model




                     =


        Technical
      Documentation
A Copy of the Technical Documentation Will Be
Included in a Copy of the Report Sent by Mail.




                      2

				
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