THE METRO AREA IMPACT OF HOME BUILDING IN BRYAN & COLLEGE STATION, TX
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Transcript of THE METRO AREA IMPACT OF HOME BUILDING IN BRYAN & COLLEGE STATION, TX
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Presented by: Elliot F. Eisenberg, Ph.D.
October 26, 2010College Station, TX
THE METRO AREA IMPACT OF HOME BUILDING IN
BRYAN & COLLEGE STATION, TX
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LOCAL ECONOMIC IMPACTConstruction 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
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The model does not say build housing to stimulate the local economy
Rather, it is job creation that results in increased demand for housing, but remember that…..
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CONSTRUCTION PHASE
INPUTS:
OUTPUTS:
MODEL OF THE LOCAL
ECONOMY
INCOME FOR LOCAL RESIDENTS &
TAX/FEE REVENUEFOR LOCAL GOVERNMENTS
VALUE OF CONSTRUCTIONSERVICES PROVIDED AT CLOSING
PERMIT/HOOK-UP FEES$ $ $ $ $
(Obtained from Local Sources)
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RIPPLE PHASE
INPUTS:
OUTPUTS: LOCAL INCOME & TAXES
MODEL OF THE LOCAL ECONOMY
LOCAL INCOME & TAXESFROM PHASE 1
SPENDING ONLOCAL GOODS & SERVICESConsumer Expenditure Survey
(U.S. Bureau of Labor Statistics)
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OCCUPANCY PHASE
INPUTS:
OUTPUTS:
MODEL OF THE LOCAL ECONOMY
LOCAL INCOME & TAXES
SPENDING ONLOCAL GOODS & SERVICES
PROPERTY TAX PAYMENTS
INCOME OF HOUSEHOLDOCCUPYING NEW HOUSING UNIT
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Bryan-College Station, TX MSA
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The Bryan-College Station, TX MSA Multiplier
Only CapturesSpending that Stays in the Area
Includes:Banking, Car Repair, Dry Cleaning, Day Care Services, Dental Services, Electricity, Landscaping, Legal Services, Manicures, Medical Services, Newspaper Delivery, Restaurants and Psychiatric Care.
But Not:Auto Manufacturing, Beer Bottling, Mattress Manufacturing, Meat Packing, Movie Production, and Travel Agency Services
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History of the ModelOver 650 Economic 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
University of Florida
University of Massachusetts
University of Montana
West Virginia Housing Development Fund…
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Assumptions of the Model
Inputs To Model Single Family
Average house price: $263,201 Average raw lot cost: $26,171
Permits/Infrastructure: $5,071
Annual property taxes: $5,508
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Economic Impact of Single Family Home Building
1st - Construction phase
2nd - Ripple effect from construction phase
3rd - Occupancy phase
4th - Ten year total
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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
Local Income Local Taxes Local Jobs$99,639,000 $11,921,000 2,390
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Local Income Local Taxes Local Jobs$48,433,000 $6,553,000 1,232
FIRST YEAR IMPACT: SF Ripple
INCLUDING:
266 Jobs in Wholesale and Retail Trade253 Jobs in Local Government140 Jobs in Health, Education & Social Services
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ONGOING SF ANNUAL EFFECT
Local Income Local Taxes Local Jobs$30,947,000 $11,066,000 839
INCLUDING:
184 Jobs in Wholesale and Retail Trade170 Jobs in Local Government 94 Jobs in Health, Education & Social Services
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Total SF Impact: First Ten Years
Local Income Local Taxes
$442,069,000 $123,601,000
Along with 3,622 temporary jobs
And 839 permanent ones!
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Largest Local Employers
Employer # of FT Jobs Texas A&M University System 16,000
New SF Residential Construction 2,390
St. Joseph Regional Hospital 2,197
Bryan Independent School District 2,070
Sanderson Farms 1,574
College Station Independent School District 1,530
Reynolds & Reynolds 1,059
City of College Station 1,027
Brazos County 900
Wal-Mart Stores, Inc. 850
City of Bryan 789
Alenco Windows 611
H.E.B. Grocery 590
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BUTNEW HOMES REQUIRE:
•Fire and police protection•Garbage collection•Parks and recreational opportunities•Roads•Correctional facilities•Primary and secondary education •Etc…
INFRASTRUCTURE
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Required Current Expenses per SF Unit
Function Single Family State Aid
Education $1,710 51%
Police Protection $375 0%
Fire Protection $187 0%
Corrections $191 0%
Streets and Highw ays $170 8%
Water Supply $162 1%
Sew erage $90 0%
Health Services $92 61%
Recreation and Culture $190 0%
Other General Government $832 4%
Electric Utilities $1,658 0%
Total $5,656
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Required Capital per SF Unit
Function Single Family
Schools $12,158
Hospitals $542
Other Buildings $3,621
Highw ays and Streets $3,882
Conservation & Dev. $226
Sew er Systems $2,290
Water Supply $1,175
Other Structures $2,733
Equipment $20
Total $26,917
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Does new construction pay for itself?
The benefits of construction
&
The costs of construction
Now that we know:
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• 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
Yes it does! For every 952 SF units--
Current Operating Investment Debt at Interest Net Year Expenses Revenue Surplus Start of Year Year End On Debt Income
1 2,692,500 24,007,151 21,314,651 25,625,000 5,438,062 1,127,713 -5,438,062 2 5,385,000 11,065,775 5,680,775 0 0 239,320 5,441,465 3 5,385,000 11,065,775 5,680,775 0 0 0 5,680,775 4 5,385,000 11,065,775 5,680,775 0 0 0 5,680,775 5 5,385,000 11,065,775 5,680,775 0 0 0 5,680,775 6 5,385,000 11,065,775 5,680,775 0 0 0 5,680,775 7 5,385,000 11,065,775 5,680,775 0 0 0 5,680,775 8 5,385,000 11,065,775 5,680,775 0 0 0 5,680,775 9 5,385,000 11,065,775 5,680,775 0 0 0 5,680,775
10 5,385,000 11,065,775 5,680,775 0 0 0 5,680,775
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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
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New Assumptions of the Model
Inputs To Model Single Family
Average house price: (was $263,201)
$197,401 Average raw lot cost: $26,171
Permits/Infrastructure: $5,071
Annual property taxes: $4,131
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• 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
Yes it still does! For every 952 SF units--
Current Operating Investment Debt at Interest Net Year Expenses Revenue Surplus Start of Year Year End On Debt Income
1 2,692,500 18,005,363 15,312,863 25,625,000 11,439,850 1,127,713 -11,439,850
2 5,385,000 8,299,331 2,914,331 0 9,028,967 503,448 2,410,883 3 5,385,000 8,299,331 2,914,331 0 6,512,661 398,025 2,516,306 4 5,385,000 8,299,331 2,914,331 0 3,884,942 286,611 2,627,720 5 5,385,000 8,299,331 2,914,331 0 1,141,580 170,970 2,743,361 6 5,385,000 8,299,331 2,914,331 0 0 50,239 2,864,092 7 5,385,000 8,299,331 2,914,331 0 0 0 2,914,331 8 5,385,000 8,299,331 2,914,331 0 0 0 2,914,331 9 5,385,000 8,299,331 2,914,331 0 0 0 2,914,331
10 5,385,000 8,299,331 2,914,331 0 0 0 2,914,331
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What does 2 years mean?• That is, should it be done faster, or is it O.K.?
• 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?
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Almost done, just a bit more
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How Large Are Non Property Tax Revenues
Single family property taxes are $5,508/unit per year but, yearly revenue is $11,624/unit per year, which is 111% more.
Clearly, property taxes are not the whole story!
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A Closer Look at Primary and Secondary
Education 12.6% attend private schools nationally
1.7% are Home schooled nationally
0.4 school age children/MF unit nationally
0.6 school age children/SF unit nationally
TX school aid is $92 million or 51% of budget
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Elliot F. Eisenberg, Ph.D.
Call: 202.266.8398Fax: 202.266.8426
1201 15th Street NWWashington, DC 20005-2800
Thank you very much!
ANY QUESTIONS?