Home Building Impact in Lee County, Florida Presented by: David Crowe – Chief Economist October 25, 2013 Lee County, Florida

Why do this? Some say housing doesn’t pay for itself. What are the true costs and benefits? Is there an objective approach?

What Does NAHB Offer? A model-based approach Full look at economic benefits Accurate accounting of fiscal costs In nearly all cases, housing does pay for itself

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

HOUSING = JOBS Typical relationship is that more jobs require more homes But, also true that more homes produce more jobs………

Phase I CONSTRUCTION Value of Construction + Services Provided at Closing Permit / Hook-up / Impact Fees Model of the Local Economy Local Income and Taxes

Phase II RIPPLE from Phase I Spending on Locally Produced Goods and Services Model of the Local Economy Local Income and Taxes from Phase I

Phase III OCCUPANCY Income of Occupant in New Housing Unit + Spending on Locally Produced Goods and Services Model of the Local Economy Local Income and Taxes Income of Occupant in New Housing Unit + Increased Property Taxes

Cape Coral – Fort Myers MSA Lee County, Florida

Assumptions of the Model Inputs To Model Single-family Multifamily Average house price: $326,040 $195,164 Average raw lot cost: $11,826 $9,391 Permits/Infrastructure: $2,492 $1,446 Annual property taxes: $4,314 $2,909

Economic Impact of Single-family & Multifamily Home Building 1st - Construction phase 2nd - Ripple effect from construction phase 3rd - Occupancy phase

FIRST YEAR IMPACT: Single-family Construction - Every 100 Homes INCLUDING: 192 Jobs in Construction 42 Jobs in Wholesale and Retail Trade 22 Jobs in Business and Professional Services * One job represents enough work to keep one worker employed full-time for a year.

FIRST YEAR IMPACT: Multifamily Construction - Every 100 Homes INCLUDING: 113 Jobs in Construction 24 Jobs in Wholesale and Retail Trade 13 Jobs in Business and Professional Services * One job represents enough work to keep one worker employed full-time for a year.

FIRST YEAR IMPACT: Single-family Ripple INCLUDING: 37 Jobs in Wholesale and Retail Trade 19 Jobs in Eating and Drinking Places 17 Jobs in Health, Education and Social Services 14 Jobs in Local Government

FIRST YEAR IMPACT: Multifamily Ripple INCLUDING: 22 Jobs in Wholesale and Retail Trade 11 Jobs in Eating and Drinking Places 10 Jobs in Health, Education and Social Services 8 Jobs in Local Government

Total Single-family Impact: First Year Construction & Ripple

Total Multifamily Impact: First Year Construction & Ripple

ONGOING Single-family ANNUAL EFFECT 42% from real estate tax INCLUDING: 16 Jobs in Wholesale and Retail Trade 8 Jobs in Eating and Drinking Places 8 Jobs in Local Government 7 Jobs in Health, Education and Social Services

ONGOING Multifamily ANNUAL EFFECT 37% from real estate tax INCLUDING: 14 Jobs in Wholesale and Retail Trade 7 Jobs in Eating and Drinking Places 6 Jobs in Local Government 5 Jobs in Health, Education and Social Services

NEW HOMES REQUIRE: INFRASTRUCTURE Fire and police protection Garbage collection Parks and recreational opportunities Roads Correctional facilities Primary and secondary education Etc.

Where’s Data/Facts? Local government budgets Federal government surveys Model estimating relationships

Required Current Expenses per Unit in Lee County

Required Capital per Unit In Lee County

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

Yes it does! For each single-family unit -- By the end of the 1st year economic impacts offset fiscal costs. By the end of the 1st the debt is fully paid off In the 1st year, net is $1,803,800 and is $477,700 thereafter

Over 15 years, every 100 Single-family units generate a cumulative $17 Over 15 years, every 100 Single-family units generate a cumulative $17.7 million in revenue for local governments—but only $9.2 million in costs $8.5 million

Yes it does! For each multifamily unit -- By the end of the 1st year economic impacts offset fiscal costs. By the end of the 1st the debt is fully paid off In the 1st year, net is $1,021,000 and is $383,600 thereafter

Over 15 years, every 100 Multifamily units generate a cumulative $12 Over 15 years, every 100 Multifamily units generate a cumulative $12.9 million in revenue for local governments—but only $6.5 million in costs $6.4 million

The Lee County Impact of Home Building David Crowe