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THE METRO AREA IMPACT OF HOME BUILDING IN BRYAN & COLLEGE STATION, TX

THE METRO AREA IMPACT OF HOME BUILDING IN BRYAN & COLLEGE STATION, TX. Presented by Elliot F. Eisenberg, Ph.D. National Association of Home Builders July 23, 2008 Bryan, TX. LOCAL ECONOMIC IMPACT. Construction phase Jobs Materials Local fees, taxes, contributions

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THE METRO AREA IMPACT OF HOME BUILDING IN BRYAN & COLLEGE STATION, TX

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  1. THE METRO AREA IMPACT OF HOME BUILDING INBRYAN & COLLEGE STATION, TX Presented by Elliot F. Eisenberg, Ph.D. National Association of Home Builders July 23, 2008 Bryan, TX

  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 says new jobs produce new homes • But, new home construction is a key source of employment! 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. Bryan-College Station, TX MSA

  8. The Bryan-College Station, TX 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 520 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 Univ. of Florida Univ. of Massachusetts Univ. of Montana West Virginia Housing Development Fund…

  10. Assumptions of the Model Single Family Average house price: $263,201 Average raw lot cost:$26,171 Permits/Infrastructure:$5,071 Annual property taxes:$5,508 • 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 Every 952 SF Homes INCLUDING: 1,680 Jobs in Construction 361 Jobs in Wholesale & Retail Trade 210 Jobs in Business and Professional Services

  13. FIRST YEAR IMPACT: SF Ripple INCLUDING: 266 Jobs in Wholesale and Retail Trade 253 Jobs in Local Government 140 Jobs in Health, Education and Social Services

  14. ONGOING SF ANNUAL EFFECT INCLUDING: 184 Jobs in Wholesale and Retail Trade 170 Jobs in Local Government 94 Jobs in Health, Education and Social Services

  15. TOTAL SF IMPACT: FIRST TEN YEARS 952 HOMES Along with 3,622 temporary jobs and 839 permanent ones!

  16. BIGGEST LOCAL EMPLOYERS EMPLOYER# of FT JOBS Texas A&M University 12,000 Texas A&M University System8,000 New Residential Construction 2,390 Bryan I.S.D. 2,090 Sanderson Farms, Inc. 1,850 St. Joseph Regional Health Center 1,560 Universal Comupting Services, Inc. 1,400 • Average house price

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

  18. Required Current Expenses per SF Unit

  19. Required Capital per SF Unit

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

  21. Yes it does! For every 952 single family units-- • By the 2nd year economic impacts offset fiscal costs • By the end of the 2nd year the debt is fully paid off • In the 2nd year, net is $5,441,455 and is $5,680,775 thereafter

  22. Over 15 years, every 952 SF units generate a cumulative $178.9 million in revenue for local governments—but only $105.3 million in costs

  23. What does 2 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 2 years?

  24. Almost done, just a bit more

  25. 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 $92 million or 51% of budget

  26. How Large Are Non Property Tax Revenues • Single family property taxes are $5,508/year. But, yearly revenue is $11,624/unit per year, which is 111% more. • Clearly, property taxes are not the whole story!

  27. 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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