Calculating the Economic Impact of Your Housing

ProjectRachel Bates

Governor’s Housing ConferenceNovember 19th, 2015

Quick Facts

• The major housing impacts that economists typically quantify are: jobs, spending, and tax revenue

• Jobs include: construction workers building the structure as well as workers in the firms that support them (such as office managers, cost estimators, and accountants)

Quick Facts

• Ripple effects are comprised of building material suppliers and manufacturers as well as businesses providing services (like architectural firms and trucking companies)

• Induced impact occurs when workers involved in the project spend their income in the region

There Are 2 Calculators

• Economic Impact Calculator for New Construction

• Economic Impact Calculator for Residential Renovation

The Calculator

How to Use the Calculator for New ConstructionMethod 1: Entire Development•Enter the type of building and total number of units and average square feet per unit for an entire development•The calculator will produce a rough estimate of the short term and long term economic impact of a proposed project.

How to Use the Calculator

Method 2: Separately by building•Enter type of building, total units per building, and average square feet per unit for each building in the development.•Sum the estimates of economic impact for each building•This method will significantly improve the accuracy of the results!

How to Use the Calculator

Method 3: Anticipated Development•Enter the anticipated construction cost of your proposed development (if you know it)•This will provide a better estimate of short term economic impact.

How Does it Work?

• Long- term economic growth and job creation estimates use RIMS forecasting methodology

• The data that the calculator uses is updated quarterly

• Currently: 2015 Q1

Interpreting the Results

Economic Impact

• The Residential New Construction Economic Impact Calculator measures:– Job creation– Gross fiscal revenues– Economic growth

Short Term v. Long Term

• Short term results: occurs while construction is actually taking place

• Long term results: economic growth and jobs supported over the long term occurs while the development is in operation

Gross Fiscal Revenues

• Fiscal revenues are collected by state and local government

• Short term: fees collected before the development is completed (permitting fees, recording fees, utility hookup fees, etc)

• Long term: real estate taxes collected each year

Economic Growth/ The Housing Multiplier

The Housing Multiplier• Direct Construction Jobs Construction Spending

Accountants Estimators Office Managers…

• Indirect Supplier Jobs Manufacturing Jobs Accountants Sales Managers Office

Managers Tradespersons Truck Drivers Etc…

Induced Jobs created from the spending by all the above jobs

Retailers Restaurants Doctors…

Where Can I Find This Data?

• Housing Virginia Sourcebook

How Can You Use This Information?

Who wants/ needs to know this information?

Economic Impact of LIHTC Units: District 1

Economic Impact of LIHTC Units: District 1

Economic Impact of New Construction and Rehab Units*

Short Term Long Term

Estimated Job Creation 15,946 Estimated Jobs Supported

867

Estimated Gross Fiscal Revenues

$27,244,001 Estimated Gross Fiscal Revenues**

$15,352,527

Estimated Local Economic Growth

$1,043,628,026 Estimated Local Economic Growth

$85,155,590

*Estimates of economic impact are based on new construction and acquisition rehab cost, local median rents, local median home values, local tax rates, and RIMS II input-output multipliers. Estimated Fiscal Revenues are based on fees and taxes in the city of Fredericksburg. Job Creation and Local Economic Growth are regional estimates. These factors are integrated into the Residential New Construction and Renovation Economic Impact Calculators developed by Housing Virginia and the Virginia Center for Housing Research at Virginia Tech.** Estimated Fiscal Revenues in the long term is an estimation of annual real property taxes (real estate taxes). Therefore, the long term fiscal revenue shown above is an estimate of taxes to be collected on the development in a single year at 2012 local tax rate.

Economic Impact of LIHTC Units: District 2

Economic Impact of LIHTC Units: District 2

Economic Impact of New Construction and Rehab Units*Short Term Long Term

Estimated Job Creation 19,284 Estimated Jobs Supported 865

Estimated Gross Fiscal Revenues

$7,601,065 Estimated Gross Fiscal Revenues**

$18,817,058

Estimated Local Economic Growth

$1,121,118,339 Estimated Local Economic Growth

$75,816,607

*Estimates of economic impact are based on new construction and acquisition rehab cost, local median rents, local median home values, local tax rates, and RIMS II input-output multipliers. Estimated Fiscal Revenues are based on fees and taxes in the city of Virginia Beach. Job Creation and Local Economic Growth are regional estimates. These factors are integrated into the Residential New Construction and Renovation Economic Impact Calculators developed by Housing Virginia and the Virginia Center for Housing Research at Virginia Tech.** Estimated Fiscal Revenues in the long term is an estimation of annual real property taxes (real estate taxes). Therefore, the long term fiscal revenue shown above is an estimate of taxes to be collected on the development in a single year at 2012 local tax rate.

Economic Impact of LIHTC Units in Virginia

Economic Impact of LIHTC Units in Virginia

Economic Impact of New Construction and Rehab Units*

Short Term Long Term

Estimated Job Creation 239,508 Estimated Jobs Supported

8,903

Estimated Gross Fiscal Revenues

$329,744,322 Estimated Gross Fiscal Revenues**

$310,335,212

Estimated Local Economic Growth

$15,297,249,844 Estimated Local Economic Growth

$962,056,091

*Estimates of economic impact are based on new construction and acquisition rehab cost, local median rents, local median home values, local tax rates, and RIMS II input-output multipliers. Estimated Fiscal Revenues are based on fees and taxes per county. Job Creation and Local Economic Growth are regional estimates. These factors are integrated into the Residential New Construction and Renovation Economic Impact Calculators developed by Housing Virginia and the Virginia Center for Housing Research at Virginia Tech.** Estimated Fiscal Revenues in the long term is an estimation of annual real property taxes (real estate taxes). Therefore, the long term fiscal revenue shown above is an estimate of taxes to be collected on the development in a single year at 2012 local tax rate.

Economic Impact of a HTF Project

Langston Park Apartments Senate District 16- Dance (D) House District 63- Preston (D) Organization Name Community Housing Partners Project Location Hopewell, VA Funding Use(s) Rental New Construction HTF Amount Awarded $673,000 Total Development Cost $9,850,000 Leveraged Funds from Other Sources $9,177,000

Economic Impact Calculation* Estimated Construction Cost= $6,960,000

Short Term Impacts Long Term Impacts Estimated Jobs Supported

128 Estimated Jobs Supported

5

Estimated Fiscal Revenues

$388,856 Estimated Annual Property Taxes

$117,794

Estimated Local Economic Impact

$8,211,408 Estimated Local Economic Impact

$573,586

Economic Impact of a HTF Project

Commerce Village Senate District 26- Obenshain (R) House District 26- Wilt (R) Organization Name Harrisonburg Redevelopment and Housing Authority Project Location Harrisonburg, VA Funding Use(s) Rental New Construction HTF Amount Awarded $750,000 Total Development Cost $4,079,147 Leveraged Funds from Other Sources $3,329,147

Economic Impact Calculation* Estimated Construction Cost= $2,631,272

Short Term Impacts Long Term Impacts Estimated Jobs Supported

43 Estimated Jobs Supported

1

Estimated Fiscal Revenues

$43,741 Estimated Annual Property Taxes

$19,248

Estimated Local Economic Impact

$2,566,806 Estimated Local Economic Impact

$177,082