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Proposed by The Group for Home and Infrastructure Finance, Inc. Sponsored by

Create a Dynamic Econometric Model of Home Construction in Developed and Top Tier Developing Countries to Demonstrate Direct and Multiplier Impacts on Host Economies. Proposed by The Group for Home and Infrastructure Finance, Inc. Sponsored by IDOC/NA, Inc., a NY State [501(c )(3)] non-profit

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Proposed by The Group for Home and Infrastructure Finance, Inc. Sponsored by

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  1. Create a Dynamic Econometric Model of Home Construction in Developed and Top Tier Developing Countries to Demonstrate Direct and Multiplier Impacts on Host Economies Proposed by The Group for Home and Infrastructure Finance, Inc. Sponsored by IDOC/NA, Inc., a NY State [501(c )(3)] non-profit April 2000 Confidential & Proprietary

  2. Why such a model? • Measure the direct and multiplier economic effects of home building on all concerned sectors, going beyond regional and local to the National level, and THUS: • Enable government, communities, NGOs, the financial, and industrial sectors to forecast and plan. • Determine the fiscal benefits to all levels of government from public policies favoring new housing construction. • Implement public policy and good governance based on the outcomes. GHIF – The Group for Home and Infrastructure Finance, Inc.

  3. Not Least of All … To create incentives necessary to attract affordable home ownership financefor lower income populations currently excluded or underserved. GHIF – The Group for Home and Infrastructure Finance, Inc.

  4. Who Benefits? • Policy makers at all levels of civil society • Builders • Construction industry suppliers • Civil engineering and infrastructure providers • Community, Financial, and Corporate Entities • Civil Society – leading to socially and economically integrated development GHIF – The Group for Home and Infrastructure Finance, Inc.

  5. Who Benefits? • People – being able to afford homes of their own • People – employed and improving their lives in an expanding economy GHIF – The Group for Home and Infrastructure Finance, Inc.

  6. There’s a (Short-Term) View Property Taxes + Economic Activity (Less: Costs of producing new housing units and the required infrastructure expenditures) = Housing Not Worth the Returns GHIF – The Group for Home and Infrastructure Finance, Inc.

  7. We believe this (Short Term) View • Is STATIC • Produces distorted and inflated estimatesof the net fiscal costs of expanding the housing stock • Understates the benefits, both fiscal and social GHIF – The Group for Home and Infrastructure Finance, Inc.

  8. We believe this (Short Term) View • Fails to include • Revenues generated by construction and development • Wages and salaries spent by construction workers • Expenditures by workers in other industries that provide goods and services to the construction industry, and from furnishing of new units • Revenuesfrom small (and larger) businesses implanted in development zones. GHIF – The Group for Home and Infrastructure Finance, Inc.

  9. Conventional Wisdom: • short-term results are sharply positive, residual results can be long lasting. • direct and indirect (multiplier) impacts of housing are substantial. GHIF – The Group for Home and Infrastructure Finance, Inc.

  10. Informed intuition tell us: Conventional Wisdom is right – but needs substantiation. The Econometric Model will deliver the answers.

  11. Multi-Source Tax and Revenue Generators Materials Multi-Source Tax and Revenue Generators Workers Utilities Food Transportation School Health Care Recreation Others The Dynamic Housing Model Multi-Source Tax and Revenue Generators GHIF – The Group for Home and Infrastructure Finance, Inc.

  12. Conventional Wisdom into Measurable Results If home building is a major economic fuel, The question remains, Fuel of what Octane? GHIF – The Group for Home and Infrastructure Finance, Inc.

  13. …and is it the right fuel… • …even if other investments produce higher yields? • ANSWER: The combination of positive economic impact that will be measured by the proposed dynamic model, plus the social need and utility of home construction, argue strongly in favor of substantial National commitments to build that place of which citizens can be “mighty proud” -- the home of their own. GHIF – The Group for Home and Infrastructure Finance, Inc.

  14. Building the Model in the Age of Globalized Capital Markets

  15. Experts in Housing Economics GHIF Econometric Model Local/ Regional Impacts National/ International Impacts GHIF, Inc. IDOC/NA, Inc.

  16. The Builders’ Approach: • Straightforward but Complex, built by experts. • Uses known data bases from developed countries – the United States and one other European nation – to construct a model whose structure can be adapted to targeted top-tier developing countries. • The objective: through knowledge, skill, and speed -- a powerful, convincing model. GHIF – The Group for Home and Infrastructure Finance, Inc.

  17. Data Sources/Building Blocks • National Income Accounts • Consumer Expenditure Surveys • National, Provincial and Local Budgets • National Input/Output Matrices • Labor Surveys GHIF – The Group for Home and Infrastructure Finance, Inc.

  18. NAHB’s U.S. Regional and Local Impact Model: a foundation for Policy Makers… • The National Association of Home Builders’ local economic housing construction impact model (developed by Drs. Emrath and Dubin) is often used locally and nationally to demonstrate to policy makers: New home construction does not drain their treasury GHIF – The Group for Home and Infrastructure Finance, Inc.

  19. ..generating treasury surpluses.. While local policy makers sometimes see certain data tending to show that new multifamily and low-income housing units cause additional public deficits despite new property tax revenues… • …NAHB’s local impact model demonstrates thatthe difference between revenues generated and public sector costs narrow dramatically. In fact,added local spending by new housing residents often generates local treasury surpluses. GHIF – The Group for Home and Infrastructure Finance, Inc.

  20. U. S. Federal Impact: Low Income Housing Tax Credit Program, 1997 Tax Relief Act Extension • Impact model results demonstrated that outcomes of construction and substantial rehabilitation of low-income units generated positive Federal tax revenues, covering almost the entire program cost. Federal policy makers were convinced of program worthiness. The Tax Relief Act was extended. GHIF – The Group for Home and Infrastructure Finance, Inc.

  21. The Builders of… • Dr. Elliott Dubin(Project Leader), Research Director, Multi-State Tax Commission; earlier, was co-author of highly regarded regional and local econometric housing model for NAHB. • Dr. Mark Zandi, RFA, discussion engaged, head of economic analysis firm; worked with Nobel Laureate Kline on modeling. • Prof. Booi Themeli(Labor cost issues; South African), Adjunct Professor of Economics, Fordham University. GHIF – The Group for Home and Infrastructure Finance, Inc.

  22. …cities on the hills… • Prof. Andrew Caplin(Peer Reviewer), Professor of Economics, New York University; author, “Housing Partnerships” – a new means to deliver housing finance – for lower incomes or larger homes. • Rutgers University Center for Urban Policy Research(Participant), accepted in principle. GHIF – The Group for Home and Infrastructure Finance, Inc.

  23. IDOC/NA, INC. • International Documentation/North America, Inc.is a [501(c)(3)] nonprofit educational institution incorporated in 1969 under the laws of New York State specializing in institutional programming, information exchange and publishing related to human renewal. Co-sponsor of study. GHIF – The Group for Home and Infrastructure Finance, Inc.

  24. IDOC/NA, INC. • IDOC/NA, Inc., has sponsored and co–sponsored a series of conferences with the United Nations and NGOs on Third World Development, Technology Transfer and Women’s Political Rights, with funding from the New World, Ford and Lilly Foundations. GHIF – The Group for Home and Infrastructure Finance, Inc.

  25. Support for the Model “…With only a USA focus, such a model would have absolute value within our borders -- for policy makers, builders, mortgage companies, construction suppliers, and others. “However, if the method used to construct the USA model could be applied to/for other countries using similar data sets, thenits use on a comparative basis is dramatically increased. …” GHIF – The Group for Home and Infrastructure Finance, Inc.

  26. Support for the Model “…A housing and construction model would set a credible international standard for discourse and cooperation between public and private sectors, with the ultimate beneficiaries being families and the communities.” - Donald R. Holton Secretary General International Union of Housing Finance GHIF – The Group for Home and Infrastructure Finance, Inc.

  27. Further Support for the Model “… In the mortgage finance arena, it is often difficult to demonstrate to policy-makers in developing markets how to perform the cost/benefit analysis of making changes to current tax structures, etc in order to implement modern mortgage finance systems. If such a model existed, I think that the decision-making process for governments will be easier.” - Debra L. Erb President Societas, Inc. (the international advisory non-profit of the Mortgage Bankers Association of America) GHIF – The Group for Home and Infrastructure Finance, Inc.

  28. The Enterprise Foundation • “The Enterprise Foundation wholeheartedly supports your efforts to develop an econometric model on direct and multiplier impacts of affordable home construction in the United States and top tier developing countries. In fact, provision of affordable housing is not only a platform for stability and growth in a family’s life, but an economic driver for employment, tax base and other economic activity. We would be most interested in having such a model developed and used for this country.” F. Barton Harvey III Chairman of the Board and Chief Executive Officer GHIF – The Group for Home and Infrastructure Finance, Inc.

  29. “It was the very opposite of grand, but it was my first true home of my own and I was mighty proud.” - Nelson MandelaLong Walk to Freedom

  30. Housing Econometric Model Contact Point: For information on how to support creation of the Housing Model and any additional details, please contact: The Housing Model Program IDOC/NA, Inc. and GHIF 34 East 64th Street, New York, NY 10021-7351 Tel 212-888-3273 Fax 212-223-4997 Email : pell@moveworld.compe@moveworld.com Confidential & Proprietarype@moveworld.com

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