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THE METRO AREA IMPACT OF HOME BUILDING IN FIVE KENTUCKY COUNTIES IN THE CINCINNATI METRO AREA

THE METRO AREA IMPACT OF HOME BUILDING IN FIVE KENTUCKY COUNTIES IN THE CINCINNATI METRO AREA. Presented by Elliot F. Eisenberg, Ph.D. National Association of Home Builders June 13, 2007 Erlanger, KY. LOCAL ECONOMIC IMPACT. Construction phase Jobs Materials

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THE METRO AREA IMPACT OF HOME BUILDING IN FIVE KENTUCKY COUNTIES IN THE CINCINNATI METRO AREA

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  1. THE METRO AREA IMPACT OF HOME BUILDING IN FIVE KENTUCKY COUNTIES IN THE CINCINNATI METRO AREA Presented by Elliot F. Eisenberg, Ph.D. National Association of Home Builders June 13, 2007 Erlanger, KY

  2. LOCAL ECONOMIC IMPACT • Construction phase • Jobs • Materials • Local fees, taxes, contributions • Ripple or feed-back from construction • Wages spent in local economy • Occupancy phase • Earnings spent in local economy

  3. Conventional Wisdom is that more jobs produce homes • But, new homes produce more jobs too! HOUSING => JOBS

  4. CONSTRUCTION PHASE VALUE OF CONSTRUCTION INPUTS: ¨ SERVICESPROVIDED AT CLOSING ¨ PERMIT/HOOK-UP/IMPACT FEES (Info Obtained From Local Sources) MODEL OF THE LOCAL ECONOMY OUTPUTS: INCOME FOR LOCAL RESIDENTS ¨ TAX/FEE REVENUE FOR LOCAL GOVERNMENTS

  5. MODEL OF THE LOCAL ECONOMY RIPPLE PHASE INPUTS: LOCAL INCOME & TAXES FROM PHASE I SPENDING ON LOCAL GOODS AND SERVICES Consumer Expenditure Survey (U.S. Bureau of Labor Statistics) OUTPUTS: LOCAL INCOME & TAXES

  6. OCCUPANCY PHASE 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

  7. The Cincinnati-Middletown MSA

  8. The Cincinnati-Middletown MSA Multiplier Only Captures Spending that Stays in the MSA Includes: Banking, Car Repair, Dry Cleaning Day Care Services, Legal Services Newspaper Delivery, and Restaurants But not: Auto Manufacturing, Mattress Manufacturing, Movie Production, and Travel Agency Services

  9. History of the Model • Over 450 eco. impact analyses performed Users of the model include: Boone County Kentucky Habitat for Humanity, International MI State Housing Development Authority Michigan State University Missouri Housing Development Commission Montana State Univesity Univ. of Florida Univ. of Massachusetts West Virginia Housing Development Fund…

  10. Assumptions of the Model Single FamilyMultifamily Average house price: $268,710 $125,999 Average raw lot cost:$17,333$7,420 Permit/Impact fees:$2,887 $1,250 Annual prop. taxes:$2,950 $1,358 • Average house price

  11. Economic Impact of Single Family Home Building • Construction phase • Ripple effect from construction phase • Occupancy phase • Ten year total

  12. FIRST YEAR IMPACT: SF Construction 2,349 SF Homes INCLUDING: 3,589 Jobs in Construction 771 Jobs in Wholesale & Retail Trade 447 Jobs in Business and Professional Services

  13. FIRST YEAR IMPACT: SF Ripple INCLUDING: 557 Jobs in Wholesale and Retail Trade 374 Jobs in Local Government 289 Jobs in Health, Education & Social Services

  14. ONGOING SF ANNUAL EFFECT INCLUDING: 395 Jobs in Wholesale and Retail Trade 267 Jobs in Local Government 199Jobs in Health, Education & Social Services

  15. TOTAL SF IMPACT: FIRST TEN YEARS Along with 7,483 temporary jobs and 2,421 permanent ones!

  16. FIRST YEAR IMPACT: MF Construction 452 MF Homes INCLUDING: 442 Jobs in Construction 61 Jobs in Business and Professional Services 51 Jobs in Wholesale & Retail Trade

  17. FIRST YEAR IMPACT: MF Ripple INCLUDING: 56 Jobs in Wholesale and Retail Trade 35 Jobs in Local Government 29 Jobs in Health, Education & Social Services

  18. ONGOING MF ANNUAL EFFECT INCLUDING: 68 Jobs in Wholesale and Retail Trade 39 Jobs in Local Government 39Jobs in Health, Education & Social Services

  19. TOTAL MF IMPACT: FIRST TEN YEARS Along with 815 temporary jobs and 323 permanent ones!

  20. BUT NEW HOMES REQUIRE: INFRASTRUCTURE • Fire and police protection • Garbage collection • Parks and recreational opportunities • Roads • Primary and secondary education • Etc…

  21. Required Current Expenses per SF Unit

  22. Required Current Expenses per MF Unit

  23. Required Capital per SF Unit

  24. Required Capital per MF Unit

  25. Now that we know: The benefits of construction & The costs of construction Does new construction pay for itself?

  26. Yes it does! For all 2,349 SF and 452 MF units-- • By the 2nd year economic impacts offset fiscal costs • By the end of the 13th year the debt is fully paid off • In the 13th year, net is $4,388,256 and is $4,526,406 thereafter

  27. Over 15 years, every 2,349 SF and 452 MF units generate a cumulative $262.4 million in revenue for local governments—but only $252.1 million in costs

  28. Almost done, just a bit more

  29. What does 13 years really mean? • Is it OK, or should it be done faster? • Big purchases take time to pay off. • Car loans now last 5 years, and many lease! • How fast did you pay off your student loans? • How fast are your kids paying off theirs? • Did you pay off your home in 13 years?

  30. A Closer Look at Primary and Secondary Ed. • 12.6% attend Private Schools • 1.7% are Home schooled • 0.4 school age children / MF unit • 0.6 school age children / SF unit • State aid is $1.3 billion or 53% of budget

  31. How Large Are Non Property Tax Revenues • SF property taxes are$2,950/year But, yearly revenue is $5,943/unit per year, which is 101% more. • MF property taxes are$1,358/year But, yearly revenue is $4,865/unit per year, which is 258% more. • Clearly, property taxes are not the whole story!

  32. QUESTIONS? • Elliot F. Eisenberg, Ph.D. • Call: 202.266.8398 • Fax: 202.266.8426 • eeisenberg@nahb.com • 1201 15th Street NW • Washington, DC 20005-2800

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