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HomeMy WebLinkAboutMinutes - April 21, 2009 SSLODI CITY COUNCIL SHIRTSLEEVE SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, APRIL 21, 2009 A. Roll Call by City Clerk An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, April 21, 2009, commencing at 7:13 a.m. Present: Council Member Hitchcock, Council Member Mounce, and Mayor Hansen Absent: Council Member Johnson, and Mayor Pro Tempore Katzakian Also Present: City Manager King, City Attorney Schwabauer, and City Clerk Johl B. Topic(s) B-1 Presentation by Elliot Eisenberg, Ph.D., Chief Economist, National Association of Home Builders, Presented at the Request of the Building Industry Association of the Delta (CM) City Manager King and Building Industry Association Executive Director John Beckman briefly introduced the subject matter of homebuilding in San Joaquin County and also introduced Elliot Eisenberg, Ph.D. Elliot Eisenberg of the National Association of Home Builders provided a PowerPoint presentation regarding the metro area impact of home building in San Joaquin County. Specific topics of discussion included local economic impact, relationship between housing and jobs, construction phase, ripple phase, occupancy phase, Stockton MSA, history of the model, assumptions of the model, economic impact of single-family home building, first-year impact for construction and ripple, ongoing annual effect, ten-year impact with 800 homes, largest local employers, new home requirements including infrastructure, required current expenses for services, new construction paying for itself, large revenues other than property tax, and primary and secondary education. In response to Council Member Mounce, Mr. Eisenberg stated the charts assume no inflation, housing prices generally go up, the quality of services continue to go up, older homes go off the charts, middle aged homes get repairs and improvements, and new homes come online. He stated if all three are happening at the same time the services provided will remain in good condition. In response to Mayor Hansen, Mr. Eisenberg stated the numbers listed on the current expenses chart come from the Census of Government Statistics and the agencies directly provide those numbers. He stated the numbers represent all local agencies in San Joaquin County divided by the number of houses. Mr. Eisenberg stated that, while specific line item numbers may be off, he is confident in the bottom line number of approximately $5,000. In response to Mayor Hansen, Mr. Eisenberg stated the $14,100,000 covers all governmental agencies in San Joaquin County including but not limited to special districts, fire districts, school districts, and cities. In response to Council Member Hitchcock, Mr. Eisenberg stated the reason that cities in the County are struggling is because it costs approximately $5,000 per year to provide services to a single household, and in the case of newer homes that cost is covered by the property tax amount. He stated that cost is not covered by the older homes, which do not generate enough taxes to cover the cost of services provided to them. Discussion ensued between Council Continued April 21, 2009 Member Hitchcock and Mr. Eisenberg regarding the ability of cities to control some aspect of new home and business construction to cover the costs of providing services. C. Comments by Public on Non -Agenda Items None. D. Adjournment No action was taken by the City Council. The meeting was adjourned at 7:58 a.m. ATTEST: Randi Johl City Clerk N AGENDA ITEM 90 t ANOM CITY OF LODI COUNCIL COMMUNICATION TM AGENDA TITLE: Presentation by Elliot Eisenberg, Ph.D., Chief Economist, National Association of Home Builders, Presented at the Request of the Building Industry Association of the Delta MEETING DATE: April 21,2009 PREPARED BY: City Manager RECOMMENDED ACTION: Receive presentation by Elliot Eisenberg, Ph,D,, Chief Economist, National Association of Home Builders, presented at the request of the Building Industry Association of the Delta. BACKGROUND INFORMATION: The Building Industry of the Delta has requested that time be provided to Elliot Eisenberg, Ph.D, Chief Economist for the National Association of Home Builders to address the City Council. This is a request made to the cities in the county and several cities have responded. Dr. Eisenberg will present building industry sponsored data on residential construction cost and revenue. Attached are several reports provided by the BIA. Blair King City Manager APPROVED: Q BW ftfg, City Manager k A kmI THE LOCAL IMMPACCCT OF HOME BUILDING IN BAN JOA©CUCICNC COUNTY, CALIFORNIA COMPARING COSTS TO REVENUE FOR LOCAL OR LOCCCAL GOVCCECCRCCNMMCECNTS Introduction Home building generates local economic impacts such as income and jobs for local residents, and revenue for local governments. It also typically imposes costs on local governments—such as the costs of providing primary and secondary education, police and fire protection, and water and sewer service. Not only do these services require annual expenditures for items such as teacher salaries, they typically also require capital investment in buildings, other structures, and equipment that local governments own and maintain. This report presents estimates of the local impacts of home building in San Joaquin County, California (Figure 1). Figure 1. San Joaquin County, California The report presents estimates of the impacts of building 800 single family and 200 multifamily housing units, based on construction activity in San Joaquin County in 2008. The local economic benefits generated by this level of home construction activity are reported in a separate NAHB document.' This report presents estimates of the costs—including current and capital expenses—that new homes impose on jurisdictions in the area and compares those costs to the revenue generated. The results are intended to answer the question of whether or not, from the standpoint of local governments in the area, residential development pays for itself. 1 "The Local Impact of Home Building in San Joaquin County, California: Income, Jobs and Taxes Generated," completed by NAHB in April 2009. The comprehensive nature of the NAHB model requires a local area large enough to include the labor and housing market in which the homes are built. The local benefits captured by the model, including revenue generated for local governments, include the ripple impacts of spending and taxes paid by construction workers and new residents, which occur in an economic market area. For a valid comparison, costs should be calculated for the same area. A local labor and housing market generally corresponds to a Metropolitan Statistical Area (MSA) as defined by the U.S. Office of Management and Budget (OMB). Based on local commuting patterns, OMB has identified the Stockton MSA as a metro area consisting of a single county (San Joaquin) in California (see Figure 1). In this report, wherever the term local is used, it refers to the Stockton metro area—that is, all of San Joaquin County. Costs Compared to Revenue; Tota/ This section summarizes results for both single family and multifamily construction. Detail by structure type follows, but for many purposes a combined analysis of both types may be most appropriate. Market areas generally require a mix of housing types to accommodate residents of different income levels, different occupations, and who are at different stages in their professional careers. Although it's possible to analyze single family and multifamily construction separately, such an approach does not reflect the typically integrated character of residential development. In the first year, the 800 single family and 200 multifamily housing units built in San Joaquin County result in an estimated $83.2 million in tax and other revenue for local governments,z $2.3 million in current expenditures by local government to provide public services to the net new households at current levels, and $14.1 million in capital investment for new structures and equipment undertaken by local governments The analysis assumes that local governments finance the capital investment by borrowing at the current municipal bond rate of 4.40 percent.' In a typical year after the first, the single family and multifamily units result in $7.7 million in tax and other revenue for local governments, and $4.6 million in local government expenditures to continue providing services at current levels Z This assumes that homes are occupied at a constant rate during the year, so that the year captures one-half of the ongoing, annual revenue generated as the result of increased property taxes and the new residents participating in the local economy. 3 The analysis assumes that there is currently no excess capacity, that local governments invest in capital before the homes are built, and that no fees or other revenue generated by construction activity are available to finance the investment, so that all capital investment at the beginning of the first year is financed by debt. This is a conservative assumption that results in an upper bound estimate on the costs incurred by local governments. For information about the particular interest rate on municipal bonds used, see page 2 of the technical appendix. 2 The difference between government revenue and current expenditures is defined as an Aloperating surplus." In the case of San Joaquin County, the first-year operating surplus is large enough to pay down all debt incurred by investing in structures and equipment at the start of the first year by the end of the first year. After that, future operating surpluses will be available to finance other projects or reduce taxes. After 15 years, the homes will generate a cumulative $190.4 million in revenue compared to only $82.3 million in costs, including annual current expenses, capital investment, and interest on debt (Figure 2). Figure 2. $Million Costs Compared to Revenue: SF & MF Combined 200 180 Cumulative Cost 160 Cumulative Revenue 140 120 100 80 60 40 20 4 5 6 7 8 9 10 11 12 13 14 15 Year Costs Compared to Revenue; Single Family Construction $108.1 million This section summarizes results for single family construction only. The relevant assumptions about the single family homes built (including their average price, property tax payments, and construction -related fees incurred) are described in the NAHB report, TheLoca/Impact of Home Building in San Joaquin County, California: Income, Jobs and Taxes Generated. In the first year, the 800 single family homes built in San Joaquin County result in an estimated �D $70.7 million in tax and other revenue for local governments, * $2.0 million in current expenditures by local government to provide public services to the net new households at current levels, and $12.2 million in capital investment for new structures and equipment undertaken by local governments The analysis assumes that local governments finance the capital investment by borrowing at the current municipal bond rate. In a typical year after the first, the 800 single family homes result in �D $6.6 million in tax and other revenue for local governments, and $4.0 million in local government expenditures needed to continue providing services at current levels. The difference between government revenue and current expenditures is defined as an Aloperating surplus." The first-year single-family operating surplus is large enough so that all debt incurred by investing in structures and equipment at the beginning of the first year can be entirely paid off by the end of the first year. After that, the operating surpluses will be available to finance other projects or reduce taxes. After 15 years, the homes will generate a cumulative $163.8 million in revenue compared to only $70.4 million in costs, including annual current expenses, capital investment, and interest on debt (Figure 3). Figure 3. $Million Costs Compared to Revenue: Single Family 180 160 Cumulative Cost 140 Cumulative Revenue 120 100 80 60 40 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Year Costs Compared to Revenue; Multifamily Construction $93.4 million This section summarizes results for multifamily construction only. As with the section on single family construction, relevant assumptions about the type units built can be found in The Local Impact of Home Building in San Joaquin County, California: Income, Jobs and Taxes Generated. In the first year, the 200 multifamily housing units built in San Joaquin County result in an estimated �D $12.4 million in tax and other revenue for local governments, * $340,000 in current expenditures by local government to provide public services to the net new households at current levels, and $1.9 million in capital investment for new structures and equipment undertaken by local governments The analysis assumes that local governments finance the capital investment by borrowing at the current municipal bond rate. In a typical year after the first, the 200 multifamily units generate �D $1.0 million in tax and other revenue for local governments, and $679,000 in local government expenditures needed to continue providing services at current levels. The difference between government revenue and current expenditures is defined as an Aloperating surplus." As was the case with single family construction, the first-year multifamily operating surplus is large enough to pay down the debt incurred by investing in structures and equipment at the beginning of the first year by the end of the first year. After that, future operating surpluses will be available to finance other projects or reduce taxes. After 15 years, the units will generate a cumulative $26.6 million in revenue compared to only $11.9 million in costs, including annual current expenses, capital investment, and interest on debt (Figure 4). Method Used to Estimate Costs $14.7 million The method for estimating local government revenue generated by home building is explained in the NAHB documents, The Loca/Impact of Home Building in San Joaquin County, California: Income, Jobs and Taxes Generated a n d NAHS s Local Impact of Home Building Model., Technical Documentation. This section describes how costs are estimated. The general approach is to assume local jurisdictions supply residents of new homes with the same services that they currently provide, on average, to occupants of existing structures. The amount that any jurisdiction spends is available from the Census of Governments, where all units of government in the U.S. report line item expenses, revenues, and intergovernmental transfers once every five years to the Governments Division of the U.S. Census Bureau. Census of Governments accounts can be aggregated for every local government in San Joaquin County and then used to produce total annual expenses per single family and multifamily housing unit (Table 1). Not surprisingly, cost per housing unit varies substantially across the major service categories. Education accounts for the largest share of annual expenses, but the shares for police protection and miscellaneous general government functions are nearly as large. 5 Table 1. Total Annual Local Government Expenses per Housing Unit in 2008 Dollars In deriving the above estimates, water supply and sewerage expenses are allocated based on gallons of water consumed per day by single family and multifamily households. Streets and highway expenses are allocated based on average number of vehicle trips generated on weekdays. Education is allocated based on average number of children age 5 through 18. The other government services listed in Table 1 are assumed to be proportional to population, so costs associated with those services are allocated based on household size.4 There are several factors present in most parts of the country that tend to reduce education expenses per housing unit. The first is the average number of school -aged children present in the units. According to the American Housing Survey, there is, on average, only a little over one school -aged child for every two households in the U.S. The number is about 0.6 per household for single family and under 0.4 per household for multifamily. So education costs per housing unit are lower than costs per pupil, simply because there is less than one pupil per household. Beyond that, a share of households typically send their children to private schools. According to the National Center for Education Statistics (NCES), the share is 12.6 percent of all school -aged children nationally. As public monies are very rarely used to pay for private instruction, this tends to further reduce K-12 public school expenses, although the extent to which that occurs 4 Information about vehicle trips comes from Trip Generation, published by the Institute of Transportation Engineers. Information about water consumption comes from Analysis of Summer Peak Water Demands, a study undertaken by the City of Westminster, Colorado Department of Water Resources and Aquacraft, Inc. Water Engineering and Management. Information about household size and number of children comes from the American Housing Survey, conducted by the U.S. Census Bureau for the Department of Housing and Urban Development. IN Single Family Multifamily Education $1,331 $775 Police Protection $881 $656 Fire Protection $466 $347 Corrections $397 $295 Streets and Highways $106 $74 Water Supply $180 $94 Sewerage $143 $75 Recreation and Culture $312 $232 Other General Government $913 $679 Electric Utilities $224 $167 Public Transit $3 $3 Total $4,957 $3,396 In deriving the above estimates, water supply and sewerage expenses are allocated based on gallons of water consumed per day by single family and multifamily households. Streets and highway expenses are allocated based on average number of vehicle trips generated on weekdays. Education is allocated based on average number of children age 5 through 18. The other government services listed in Table 1 are assumed to be proportional to population, so costs associated with those services are allocated based on household size.4 There are several factors present in most parts of the country that tend to reduce education expenses per housing unit. The first is the average number of school -aged children present in the units. According to the American Housing Survey, there is, on average, only a little over one school -aged child for every two households in the U.S. The number is about 0.6 per household for single family and under 0.4 per household for multifamily. So education costs per housing unit are lower than costs per pupil, simply because there is less than one pupil per household. Beyond that, a share of households typically send their children to private schools. According to the National Center for Education Statistics (NCES), the share is 12.6 percent of all school -aged children nationally. As public monies are very rarely used to pay for private instruction, this tends to further reduce K-12 public school expenses, although the extent to which that occurs 4 Information about vehicle trips comes from Trip Generation, published by the Institute of Transportation Engineers. Information about water consumption comes from Analysis of Summer Peak Water Demands, a study undertaken by the City of Westminster, Colorado Department of Water Resources and Aquacraft, Inc. Water Engineering and Management. Information about household size and number of children comes from the American Housing Survey, conducted by the U.S. Census Bureau for the Department of Housing and Urban Development. IN varies from place to place. Moreover, according to the NCES another 1.7 percent of students nationwide, ages 5 to 17, with a grade equivalent of kindergarten through grade 12, are homeschooled, which further acts to reduce the cost of public education. Finally, state governments typically pay for some public school expenses in the form of intergovernmental transfers. In the latest Census of Governments, local governments in aggregate across San Joaquin County spent about $991 million in current expenses on education. However, more than four-fifths of this was offset by $809 million in state -to -local intergovernmental transfers for education. In addition to current expenses, providing services to residents requires that local governments make capital expenditures for items such as schools and other buildings, equipment, roads, and other structures. Estimating capital costs is in general a more difficult and complicated problem than estimating current expenses. The approach used here is to estimate a conventional economic model, where costs are expressed as a function of labor and capital, with state level data. (Information about state and local government capital in each state can be estimated through a procedure that has been established over several decades in the technical literature on public finance; see the technical appendix for details.) The results are then applied to a local area, where information is available for every variable except capital. The local capital stock then emerges as a residual in the calculation. Consistent with the approach used to estimate current expenses, the amount of capital in each category is expressed as the amount necessary to accommodate an average single family or average multifamily housing unit (Table 2): Table 2. Local Government Capital per Housing Unit in 2008 Dollars To implement these numbers, several conservative assumptions are made to avoid understating the costs. In contrast to the way current expenses were handled, intergovernmental transfers are generally not taken into account here—it is assumed that local governments undertake all capital investment without any help from the states. The exception is highways and streets, for which the amount of current expenditures per dollar of capital is typically quite low. It is 7 Single Family Multifamily Schools $6,811 $3,962 Hospitals $2,256 $1,679 Other Buildings $1,338 $996 Highways and streets $1,169 $810 Conservation & development $98 $73 Sewer systems $2,121 $1,110 Water supply $419 $219 Other structures $784 $583 Equipment $228 $170 Total $15,224 $9,602 To implement these numbers, several conservative assumptions are made to avoid understating the costs. In contrast to the way current expenses were handled, intergovernmental transfers are generally not taken into account here—it is assumed that local governments undertake all capital investment without any help from the states. The exception is highways and streets, for which the amount of current expenditures per dollar of capital is typically quite low. It is 7 further assumed that none of this demand for capital can be met through current excess capacity. Instead, local governments invest in new structures and equipment at the start of the first year, before any homes are built. To the extent that this is not true—that, for instance, some revenue from impact or other fees is available to fund part of the capital expenditures— interest costs would be somewhat lower than reported here. To compare the streams of costs and revenues over time, the analysis assumes that half of the current expenses and half of the ongoing, annual revenues are realized in the first year. This would be the case if construction and occupancy took place at an even rate throughout the year. Revenues in the first year also include all of the one-time construction impacts such as impact and permit fees. The difference between revenues and current expenses in a given year is an operating surplus. At the start of the first year, capital investment is financed through debt by borrowing at the current municipal bond interest rate,5 and the interest accrues throughout the year. Each year after that, the operating surplus is used first to pay the interest on the debt, if any exists, then to pay off the debt at the end of the year. The results are shown for the 800 single family homes in Table 3, for the 200 multifamily units in Table 4, and for single family and multifamily combined in Table 5. The difference between revenues (the third column) and all costs, including interest on the debt, is shown in the last column. For either single family or multifamily construction considered separately—as well as for the combined case that analyzes single family and multifamily construction together—revenue net of costs and interest is positive every year beginning with the first. In fact, revenue net of costs and interest is sufficient to pay off all debt by the end of year one. After that, revenue net of costs generated by the 800 single family and 200 multifamily units is roughly $3.0 million per year. Net revenue for both structure types falls slightly in year 11, due to a cost increase that occurs because capital equipment purchased at the start of the first year becomes fully depreciated and needs to be replaced at that time. All other capital investment consists of structures of various types, and these tend to have considerably longer service lives. 5The interest rate on municipal bonds is the monthly Bond Buyer 20 -year General Obligation Municipal Bond Index available on the Federal Reserve Board's Web site: http://www.federaireserve.gov/releases/hl5/data/Monthly/H15 SL Y20.txt. N. Table 3. Results for 800 Single Family Homes Table 4. Results for 200 Multifamily Housing Units Current Operating Capital Debt Interest Revenue Net Year Expenses Revenue Surplus Investment Outstanding t the Debt of Costs and Start of Year End of Year Interest 1 1,983,500 70,714,508 68,731,008 12,179,000 0 535,977 56,016,031 2 3,967,000 6,649,397 2,682,397 0 0 0 2,682,397 3 3,967,000 6,649,397 2,682,397 0 0 0 2,682,397 4 3,967,000 6,649,397 2,682,397 0 0 0 2,682,397 5 3,967,000 6649 397 2,682,397 0 0 0 2,682,397 6 3,967,000 6,649,397 2,682,397 0 0 0 2,682,397 7 3,967,000 6,649,397 2,682,397 0 0 0 2,682,397 8 3,967,000 6,649,397 2,682,397 0 0 0 2,682,397 9 3,967,000 6,649,397 2,682,397 0 0 0 2,682,397 10 3,967,000 6649 397 2,682,397 0 0 0 2,682,397 11 3,967,000 6,649,397 2,682,397 182,000 0 0 2,500,397 12 3,967,000 6,649,397 2,682,397 0 0 0 2,682,397 13 3,967,000 6,649,397 2,682,397 0 0 0 2,682,397 14 3,967,000 6,649,397 2,682,397 0 0 0 2,682,397 15 3,967,000 6 649 397 2,682,397 0 0 0 2,682,397 Table 4. Results for 200 Multifamily Housing Units Table 5. Combined Results for 800 Single Family and 200 Multifamily Units Current Operating Capital Debt Interest Revenue Net Year Expenses Revenue Surplus Investment Outstanding the Debt t of Costs and Start of Year End of Year Interest 11 1 339,500 12,438,671 12,099,171 1,921,000 0 84,540 10,093,631 2 679,000 1,011,360 332,360 0 0 0 332,360 3 679,000 1,011,360 332,360 0 0 0 332,360 4 679,000 1,011,360 332,360 0 0 0 332,360 5 679,000 1,011,360 332 360 0 0 0 332,360 6 679,000 1,011,360 332,360 0 0 0 332,360 7 679,000 1,011,360 332,360 0 0 0 332,360 8 679,000 1,011,360 332,360 0 0 0 332,360 9 679,000 1,011,360 332,360 0 0 0 332,360 10 679,000 1,011,360 332 360 0 0 0 332,360 11 679,000 1,011,360 332,360 34,000 0 0 298,360 12 679,000 1,011,360 332,360 0 0 0 332,360 13 679,000 1,011,360 332,360 0 0 0 332,360 14 679,000 1,011,360 332,360 0 0 0 332,360 15 679,000 1,011,360 332 360 0 0 0 332 360 Table 5. Combined Results for 800 Single Family and 200 Multifamily Units 2 Current Operating Capital Debt Interest Revenue Net Year Expenses Revenue Surplus Investment Outstanding t the Debt of Costs and Start of Year End of Year Interest 1 2,323,000 83,153,179 80,830,179 14,100,000 0 620,517 66,109,662 2 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 3 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 4 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 5 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 6 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 7 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 8 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 9 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 10 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 11 4,646,000 7,660,757 3,014,757 216,000 0 0 2,798,757 12 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 13 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 14 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 15 4,646,000 7,660,757 3,014,757 0 0 0 3,014,757 2 COMPARING COSTS TO REVENUE FOR LOCAL GOVERNMENTS TECH OVCERCNCMCCESCNTSS- TTCECCCHH- NNICCAL AP PCECCN OIX OCN ESTIMATING `MATTIINNG CAPITAL OCWNNE ACNO MAINTAINED Y LOCAL GOVERNMENTS Technical Appendix on Estimating Local Capita/ This appendix explains the method used to estimate the age and dollar value of local government capital by function (education, water and sewer services, etc.). The general approach is to estimate economic relationships using state -level data and then apply parameters from the state -level estimates to local data. First, a cost share equation based on conventional production theory is described for the structures associated with each function of government. In the equations age of capital is used as a proxy for technologic change. Age of capital, in turn, is estimated as a function of population growth. The following derivations apply to any one of the ten categories of state and local government capital—e.g., highways or school buildings—tracked in the Bureau of Economic Analysis (BEA) wealth data files. For simplicity, the notation suppresses an explicit reference to capital type. In cases where some detail of the model pertains to a particular type of capital or function of local governments, the text will make that clear. Let y= output; L= labor, w= the price of labor, and r= the price of capital, and consider a general translog cost function :6 (1) cit = flo + F'w In wt + ,6r In rt + ,6y In yt +/tea ait+ 1/2 ,6ww (In wit)2+ '8w, In wit In rt + 1/2 8r, (In rt)2 + 8wy In wt In yt+ /3ry In rit In yit+'6wa ait In wit+ 8,a ait In rt + 6yy (In Yt)2 + ,6ya ait I n Yt+ ,6aa ait In the case where the firm is a government, yt is essentially unmeasurable, so it seems reasonable to assume linear homogeneity in output. This simplifies the translog specification considerably: (2) cit= flo+ 8wln wt+ 8rin rt+ In yt+,6a ait+ 1/2 8ww(In w&)2+,6wrIn wt In rt + 1/2 8rr (In rt)2 + ,6wa at In wt+ ,bra at In rt+ baa ait Specification (2) still requires an estimate of In yn However, application of Shephard's Lemma generates the following two -equation system: (3) SL, it = wit L it /c it = a In cit /a In wit= 6w+ 6ww In wit + 6wr l n rt + ,6wa ait (4) skit = rt kt l c it = a In c it l a In rt = 6r+ ,6wr l n wit + 6,r l n rt + j6ra ait By estimating cost shares rather than the cost function itself, the ability to estimate ,60, ,6a, and ,baa (essentially nuisance parameters) is lost. Also lost is some precision, in the sense that a lower -order approximation is being estimated.' The advantage is relief from the need to supply values for the unobservable yn 6 See, for example, Walter Diewert and Terry Wales (1987), "Flexible Functional Forms and Global Curvature Conditions," Econometrica, 55, 43-68. See Henri Theil, The System -Wide Approach to Microeconomics, University of Chicago Press, 1980, page 151. Economic theory implies several restrictions. Symmetry: ,6,, is the same in both equations Linear homogeneity in input prices: ,6,+ ,6, = 1; 1/2 6,, + 6,,+ 1/2 8,, = 0; 8,, + bra = 0. The restrictions are imposed in the usual way. One of the factor prices (wit) is used as a numeraire; and only one share equation (SL, it) is estimated, leaving parameters of the second, if needed, to be recovered by simple algebra. The resulting estimating equation is (5) sL, /r= Flit L it /(wt Lir + rir kr) _ /3w+ 8w, I n (rir/ wit) + 6w, air + .87 where Ir is a vector of indicator variables that may be added to equations for some government functions to account for outliers among specific states and time periods. More detail is provided when the regression results are discussed. Model (5) can be estimated with any standard regression package, provided state -level annual data for L, w, and rcan be specified. Series beginning in 1987 for the first two are available from the Government Division of the U.S. Census Bureau. For r, standard practice is followed by assuming cost of capital is the sum of three terms: maintenance (meaning, in this case, all non -labor operating costs), interest, and depreciation. (6) rr= Xrlkr+ Dir+ �r where xr is the difference between total current expenditures and labor costs, Oiris an interest rate for appropriate types of tax-exempt public -purpose government bonds, and ft is the national depreciation rate from BEA's wealth accounts. To estimate the cost share equations, the same annual interest rate series Ot is used for all states. Because the preferred series not available until 1990, two different sources are used to construct the 1987-2001 annual interest rate series Ot. From 1987 through to the end of 1989, the JP Morgan Revenue Bond Index (RBI) is used. The JP Morgan RBI data are monthly. An annual interest rate is constructed by taking the average of the 12 monthly observations for each calendar year. From 1990 to the present the Merrill Lynch 20 Year AAA GO series is used. The Merrill Lynch data are provided weekly. An annual interest rate is constructed by taking the average of the 52 observations in each calendar year. To insure that there is no discontinuity in the series, the annual interest rate from the JP Morgan RBI index for the years 1987 1988 and 1989 is multiplied by the average of the annual ratio of the Merrill Lynch 20 Year AAA GO series divided by the JP Morgan RBI index the for the years 1990 to the present. That ratio turned out to be 0.93. The reason the ratio is less than one is largely because the Merrill Lynch index has a duration that is on average 5 years shorter than the JP Morgan RBI Index. The final index was chosen following consultation with bonds specialists at both JP Morgan and Merrill Lynch. Although there are hundreds of thousands of unique muni -bonds, and most are rarely if ever traded, the experts felt that a 20 year maturity seemed appropriate and that the ML GO AAA series was probably best for this purpose. 2 In order to make the cost share equations operational, it's necessary to apportion equipment among the other nine types of capital for which it's possible to approximately match capital with expense and employment data by function of government. In general, a year -zero approach is employed, basing the analysis on the ratio of structures to equipment when both are brand new. Suppressing the cross-sectional (state) subscript, capital krequired for a specific local government function is the sum of structures ks and equipment ke: (7) kt = kt + kt where kt = ks0(1-,fs)ai kt = ke0(1-,fe)a, or, equivalently, (8) kso = kst(1-'P_a,I keo = ket(1-'P_a, Brand new equipment is allocated to brand new structures based on the relative total year -zero values of structures. From this, a ratio z can be derived, which will be the same for all local government functions (or structure types): (9) z = k of kso = ket(1-,f,)ae k 1(1- S)as The average z ratio for 50 states plus the District of Columbia in the most recent year for which we can compute it (1998) is .11642. This number is used below to help derive estimates of government-owned equipment and structures for a particular local area. The blended ages and depreciation rates for total capital (structures and equipment) were used to compute the independent variables in the estimating equations. The nine equations (one for each function of government) were estimated, using data for the period where complete state -level government employment and finance data were available -1987 through 1998. The procedure converged quickly (in four iterations). Results are shown in Table 3. Fit of the model was improved by including a number of indicator variables, up to three per equation. These are identified as I1, I2, and I3 in Table Al and defined in Table A2. Not all of the cost equations contain an indicator variable, and each indicator captures only a small number of states. Several variables simply indicate that an observation is for the state of Alaska, and it seems reasonable to suppose that the technology of providing some government services in Alaska would be different than in many other states. In the case of housing, New York appears to be an isolated outlier, and again that is not especially surprising. Other indicators capture a small number of states in New England or the Rocky Mountain area. The conservation series showed a clear break between 1991 and 1992 in Arizona. The Census Bureau instituted some procedural changes involving the collection and reporting of government finance data beginning in 1992. Table Al. Regression Results: Cost Share Equations Table A2: Indicator Variables for Cost Share Equations J6 w '8 wr J6 wa 11 I2 I3 Ad j R Residential -0.5454 -0.1082 0.0051 0.1531 0.2150 .453 I1 (.0001) (.0001) (.0158) (.0001) (.0001) I2 Education -0.3801 -0.1391 0.0156 Other Structures I1 .545 (.0001) (.0001) (.0001) Hospital 0.5682 -0.1413 -0.0247 -0.1793 .506 (.0001) (.0001) (.0001) (.0001) Other Buildings 0.3970 -0.1655 -0.0368 .784 (.0001) (.0001) (.0001) Streets & Highways -0.0345 -0.0723 -0.0110 0.2072 .598 (.4529) (.0001) (.0001) (.0001) Conservation 0.1846 -0.0524 -0.0017 0.3443 -0.2017 0.1210 .483 (.0165) (.0001) (.6021) (.0001) (.0001) (.0001) Sewer -0.4148 -0.0861 0.0018 .522 (.0001) (.0001) (.1985) Water -0.0336 -0.1077 -0.0169 .413 (.5780) (.0001) (.0001) Other Structures -0.2342 -0.1112 -0.0111 0.39629 .566 (.0021) (.0001) (.0004) (.0001) Table A2: Indicator Variables for Cost Share Equations Capital type Variable Condition for 1=1 Residential I1 state=AK I2 state= NY Hospital I1 state=AZ, NH, or VT Streets & Highways I1 state=AK Conservation I1 state=AK I2 state =NY or CT; or state=AZ and year < 1992 I3 state=ID, MT, ND, or WY Other Structures I1 state= NE, NY, or WA In the equations above, age of the capital stock appears as an explanatory variable. This is not readily available, even at the state level. A commonly used approach employs perpetual accounting, investment, and depreciation rates to base -year estimates.$ The procedure used here begins with that approach, but then relates the investment rates to population growth rates, one of the few items for which consistent time series are available for individual U.S. counties. From BEA national wealth data, the following are available or can easily be computed: �= real annual rate of depreciation (defined broadly, as BEA does, to include a normal rate of obsolescence and retirement of assets) > = monthly depreciation rate, a simple algebraic transformation of Nt= real, net (of depreciation) rate of investment in year t, t=1946,...,2000. 8 As in Douglas Holtz -Eakin, "State -Specific Estimates of State and Local Government Capital," Regional Science and Urban Economics, Vol. 23, No. 2, April 1993, pp. 185-210. From data compiled by the Governments Division of the Census Bureau, and ratios employed by BEA to analyze this data, the following can be computed for state iand t=1977,...,1999: vnit = real investment in new assets state i in year t. veit = real investment in existing assets state i in year t. ut = real investment in state i in year t= vnit+ vein xit = current expenditures associated with the relevant type of capital state i in year t. From standard Census Bureau data it is possible to compute 17t = population growth in the state relative to the national rate; i.e., OP;t OPi: T Hit = Pit -1 1 Pit -1 The starting point consists of initial end -of -year estimates of the real capital stock, K X76 , determined by allocating capital to each state according to its share of current expenditure, X77. This procedure, the one employed for example by Holtz -Eakin (1993), is used here only for the purpose of supplying initial values to be modified in subsequent iterations. Perpetual inventory accounting can be used to calculate the following recursively for t=1977,...,1999: (10) �it+l = �it(1- + Vt+1(1->)6 This assumes that investment made during period t+1 depreciates an average of 6 months by the end of the period. Then relative (to the national rate) net real rates of investment can also be computed: 0 �yit - cS kit -1 1 o IJNt kit -1 The goal is to obtain estimates of parameters dj and 29 in the following regression relationship: Q (12) ajPt-j+LjgDq j=1 q=1 where Jis the longest lag considered and the DQ are indicator (dummy) variables. The hypothesis underlying this specification is that a state's rate of investment (relative to the national rate) is a function of past rates of its population growth (also relative to the national rate), with indicator variables to account for anomalies in some states due to peculiarities that are difficult to observe and quantify. Inspection of the pair wise correlations between —= it and 17itj reveal that they begin to decline at or before the lag reaches eight years, depending on the type of capital. Thus, model specification for each type of capital began by tentatively considering population growth effects up to .7---8. The final specification varies from case to case. 5 As a practical matter, the final specifications employ averages of population growth rates lagged over several years. Over the course of several experiments, the sum of the coefficients on the population variables never changed substantially when an average was substituted for a series of individual lags. Coefficients on individual lags tended to fluctuate widely and lack statistical significance, due to collinearity. The use of averages thus aids interpretation without impacting the marginal impacts predicted by the equations in a meaningful way. Three indicator variables were used in all but the hospital capital equation, which employed four. In most cases, indicator variables flag relatively few states (Table A3). Table A3: Indicator Variables for Relative Investment Rate Equations Capital Category DVERYHI=1 DHIGH=1 DLOW=1 DVERYLOW=1 1 Equipment DC, WY AZ, CO, MT, AR, NH, RI UT DC, HI, MA, CO, FL, ID, CT, DE, RI NM, TX, UT, VT. WY 3 Educational Buildings WY HI, NM, TX CA, VT, WI AL, FL, GA, AR, CT, DE, 4 Hospital Buildings WY H I, IA, ID, IL, KY, ME, AZ, VT KS, NY, OH, WA OR, UT, WI, wy 5 Other Buildings DC, WY HI, MD AR 6 Highways and Streets WY DC, IA, MN, AR, ME, NH, MT ND NE SC VT 7 Conservation &Development HI, WY AZ, LA, MT AL, NY, OK, VA 8 Sewer Systems &Structures DC, NY, WA MA, MDNJ , , AR, NC OH RL WI 9 Water Supply Facilities CO, WY SD, FL, NV DE, NH 10 Other Structures DC NE NH Given initial estimates, it's possible to begin the perpetual inventory accounting process at an earlier date. If we assume that the World War II period was atypical and restrict ourselves to post-war population data, an 8 -year lag in (12) implies that 1954 is the first year for which we can obtain state investment estimates. Hence, state capital stocks in 1953 are estimated by allocating the national capital stock in that year according to its share of the U.S. population, then estimating state investment in the years from 1954 through 1976 recursively according to (13) �';t = kit -1 (�+ Nt =°;t) where —=Pit is estimated from (12). In words, (13) says that investment is enough to cover depreciation, plus another term which is the net national rate of investment multiplied by a relative factor specific to state i. It is then possible to combine (13) with (10) to derive estimates of the capital stock for the years 1954 through 1976 in most states. (Lack of complete data for in earlier years pushes the first estimate for Alaska forward to 1962.) IN In this way revised estimates !C X76 are derived, and these can be used to restart the process by repeating steps (10) through (13). This results in successively revised estimates /fit and =lit for t=1977,...,1999; parameters bl, and 219; fit for t=54,...,76; and A2i76. This ends the first iteration. This process can be repeated until either a convergence criterion is satisfied. The particular criterion used was an average absolute percentage change in the ki76 no greater than 10-10 between iterations. The procedure was carried out for all 10 BEA categories of state and local government capital. Each of the ten equations converged in fewer than 10 iterations. The final estimates are shown in Table A4. Table A4. Final Regression Results: Dependent Variable= Relative Investment Rate Equipment Residential Education Hospital Buildings nec Iterations to Convergence 8 6 6 6 6 Final Regression Coefficients (p -values): Constant -0.2590 0.5460 -0.0227 0.3663 0.5439 (.0003) (.0001) (.8295) (.0001) (.0001) Lagged relative population growth rates: Population lag 1 0.4337 0.3852 0.1336 (.0001) (.0001) (.0001) Population lag 2-5 0.1707 0.0662 0.0212 (.1225) Population lag 2-8 0.6865 0.0961 (.0001) (.0002) Population lag 6-8 0.0805 0.1270 (.0532) (.0009) State indicator variables: DVeryhi 5.6639 2.9842 7.2485 4.1282 1.7082 (.0001) (.0001) (.0001) (.0001) (.0001) DHigh 1.2733 0.7862 1.6538 1.4240 1.3839 (.0002) (.0001) (.0001) (.0001) (.0001) DLow -1.3392 -0.8119 -1.2254 -0.8407 -0.6383 (.0001) (.0001) (.0003) (.0001) (.0001) DVerylow -1.7778 (.0001) Adjusted R2 .432 .426 .311 .323 .402 7 Table A4. Continued The estimated pre -1977 investment series can be spliced onto the 1977-1999 data and the results used to estimate the average age of capital, by type, in each state. The procedure is as follows. First, set the average age of capital in state equal to the national average for 1953. Then, use perpetual accounting to recursively calculate the average age in subsequent years: (14) ait+1 _ [(air+1) kit(1-4) + 112vnit+1(1->)6+ apL Veit+,(1->)6]/k°it+l where apt is the average age of the relevant type of private capital, in accord with the method used by BEA which assumes that existing assets purchased by governments are "typical". The process of deriving estimating capital stock estimates for a particular local area begins by adapting the average age equation (14) to location m: amt= ( a mt l +1) kmtl (1' + gt vmt(1->)6]/[kmrl _4) + V'n41->)6] .51 vnit + pay vett where gt= , that is, the average end -of -the year age of total assets Vit t (including both new and used) purchased by all states in the country during the period. N. Streets C&D Sewer Water Other Iterations to Convergence 6 6 6 6 8 Final Regression Coefficients (p -values): Constant 0.8370 0.0938 0.4386 0.2036 0.2754 (.0001) (.0617) (.0001) (.0001) (.0016) Lagged relative population growth rates: Population lag 1 0.1967 0.2253 (.0001) (.0030) Population lag 2 0.0950 (.0371) Population lag 2-5 0.2462 (.0001) Population lag 5 0.0516 (.1461) Population lag 2-8 0.4270 0.5368 (.0001) (.0001) Population lag 3-8 0.2653 (.0001) Population lag 6-8 0.0770 0.0701 (.0318) (.0594) State indicator variables: DVeryhi 4.955 2.387 1.348 2.270 13.405 (.0001) (.0001) (.0001) (.0001) (.0001) DHigh 1.340 1.223 1.025 0.396 5.981 (.0001) (.0001) (.0001) (.0206) (.0001) DLow -0.684 -0.785 -0.745 -0.126 -2.172 (.0006) (.0001) (.0001) (.0001) (.0001) Adjusted R .502 .338 .268 .496 .528 The estimated pre -1977 investment series can be spliced onto the 1977-1999 data and the results used to estimate the average age of capital, by type, in each state. The procedure is as follows. First, set the average age of capital in state equal to the national average for 1953. Then, use perpetual accounting to recursively calculate the average age in subsequent years: (14) ait+1 _ [(air+1) kit(1-4) + 112vnit+1(1->)6+ apL Veit+,(1->)6]/k°it+l where apt is the average age of the relevant type of private capital, in accord with the method used by BEA which assumes that existing assets purchased by governments are "typical". The process of deriving estimating capital stock estimates for a particular local area begins by adapting the average age equation (14) to location m: amt= ( a mt l +1) kmtl (1' + gt vmt(1->)6]/[kmrl _4) + V'n41->)6] .51 vnit + pay vett where gt= , that is, the average end -of -the year age of total assets Vit t (including both new and used) purchased by all states in the country during the period. N. Then (13) is substituted into the average age formula and the capital factor is eliminated in order to obtain (15) amt= amt-, + 1) (1– 9)+ gt (B + Ntq.t )(I – E) 6 1-8+(g+Nt)7.,)(1—E)6 Equation (13) can be used to estimate =mt from local relative population growth factors ilmt• Starting with the national average age for 1954 as initial estimate of the average age of the capital stock in m, (15) can be applied to calculate amt recursively for subsequent years. The result is a recipe for estimating the age of the capital stock for a particular local area. To be implemented, the recipe requires only data on local population growth. Given the age estimate—along with estimates of the parameters ,6w, ,6w„ and ,6wa from the cost share equations, capital depreciation rates & from BEA, a current rate on tax-exempt bonds %mt , and values for wmt, Lmr, and xmtthat can be obtained for any unit of government from data bases maintained by the U.S. Census Bureau—capital kmt is the only unknown in the local cost share equation (16) [ wmt L mt + xmt + (0mt+f %mt]. [, w+ f6wr In ((xmdkmt+ 0,,t+,ft)1 wmt ) + /Bwa amt + 7Imt = wmt L mt However, it's necessary to account for the fact that capital in (16) consists of both structures and equipment. Equations (7), (8), and (9) imply that (17) knits = Ymtkmt and kmt e = (1-Ymt) kmt where (18) Ymt = [1 + Z(1-,Fe)amte(1- s) -amt 1-1 By using the 1998 state average value (.11642) for z, it's possible to compute ymt from BEA's depreciation rates and the estimated ages of structures and equipment. In turn, ymtcan be used to compute (19) amt = amt, s kmts / kmt + amt, a kmte / kmt = Ymt amt, s + (1-7m) amt, e and (20) Ifmt = Ymt Ift, s + (1 -7m)Ift, e for the blended age and depreciation rate of capital, respectively. Substitution into (16) yields a formula that can be applied in practice: (21) [ wmt L mt + xmt + (Omt+ YmtIft, s + (1-7mt) Ift, e) kmt]. [/3w+ 6w, I n((xmW kmt+ Omt+ YmtIft, s+ (1-Ymt)t, e)lwmt)]+,6wa(Ymt amt, s+ (1-Ymt) amt, e) + .87jmt] = wmt L nit This is the formula used to estimate kmt, the dollar value of a particular type of government capital in a particular local area. Because capital appears twice in the nonlinear expression, a closed form solution for it does not exist. Finding the solution is a one-dimensional problem, however, so knit can be recovered through elementary numerical methods. X THE LOCAL OI MI PACTT OF HOME BUILDING IN CSACNC JOAOCUCICNC COUNTY, CALIFORNIA IN OCMEEQ CJ- O SSQ AN TAXES GENERATED 8..8 NAHB NATIONAL ASSOCIATION of HOME BUILDERS THE LOCAL IMPACT OF HOME BUILDING IN BA CJ DA©U- IICNC] COUNTY, CALIFORNIA ICNCC DCMCCEQ JD B SQ AND TAXES GENERATED Executive Summary Detailed Tables on Single Family Construction Detailed Tables on Multifamily Construction Background and a Brief Description of the Model Used to Estimate the Economic Benefits Technical Documentation Home building generates substantial local economic activity, including new income and jobs for residents, and additional revenue for local governments. The National Association of Home Builders has developed a model to estimate the economic benefits. The model captures the effect of the construction activity itself, the ripple impact that occurs when income earned from construction activity is spent and recycles in the local economy, and the ongoing impact that results from new homes becoming occupied by residents who pay taxes and buy locally produced goods and services. In order to fully appreciate the positive impact residential construction has on a community, it's important to include the ripple effects and the ongoing benefits. Since the NAHB model was initially developed in 1996, it has been successfully applied to construction in over 500 projects, local jurisdictions, metropolitan areas, non -metropolitan counties, and states across the country. This report presents estimates of the local impacts of home building in San Joaquin County, California (see map below). San Joaquin County, California The comprehensive nature of the NAHB model requires that the local area over which the benefits are spread be large enough to include the places where construction workers live and spend their money, as well as the places where the new home occupants are likely to work, shop, and go for recreation. In practice, this usually means a Metropolitan Statistical Area (MSA), as defined by the U.S. Office of Management and Budget (OMB). Based on local commuting patterns, OMB has identified the Stockton MSA as a metro area consisting of a single county (San Joaquin) in California. In this report, wherever the term local is used, it refers to the metro area—that is, all of San Joaquin County. The report presents estimates of the impacts of building 800 single family and 200 multifamily housing units, based on construction activity taking place in San Joaquin County in 2008. The NAHB model produces impacts on income and employment in 16 industries and local government, as well as detailed information about taxes and other types of local government revenue. The key results are summarized below. Additional details are contained in subsequent sections. The estimated one-year local impacts of building 800 single family homes in San Joaquin County include �Z $199.3 million in local income, $62.4 million in taxes and other revenue for local governments, and 3,217 local jobs. These are local impacts, representing income and jobs for residents of San Joaquin County, and taxes (and other sources of revenue, including permit fees) for all local jurisdictions within the county. They are also one-year impacts that include both the direct and indirect impact of the construction activity itself, and the impact of local residents who earn money from the construction activity spending part of it within the local area. The additional, annually recurring impacts of building 800 single family homes in San Joaquin County include �Z $25.4 million in local income, �Z $6.6 million in taxes and other revenue for local governments, and �Z 451 local jobs. These are ongoing, annual local impacts that result from the new homes being occupied, and the occupants paying taxes and otherwise participating in the local economy year after year. In order to fully capture the impact residential construction has on a community, it is important to account for the ongoing benefits as well as the one-time effects. The above impacts were calculated assuming that new single family homes built in San Joaquin County have an average price of $300,000; are built on a lot for which the average value of the raw land is $15,000; require the builder and developer to pay an average of $65,000 in impact, permit, and other fees to local governments; and incur an average property tax of $3,750 per year. This information was obtained from the Building and Industry Association of the Delta, the California Building and Industry Association, the National Association of Realtors, and the U.S. Census Bureau. 061 The estimated one-year local impacts of building 200 multifamily units in San Joaquin County include �Z $25.5 million in local income, �Z $12.0 million in taxes and other revenue for local governments, and :) 419 local jobs. These are local impacts, representing income and jobs for residents of San Joaquin County, and taxes (and other sources of revenue, including permit fees) for all local jurisdictions within the county. They are also one-year impacts that include both the direct and indirect impact of the construction activity itself, and the impact of local residents who earn money from the construction activity spending part of it within San Joaquin County. The additional, annually recurring impacts of building 200 multifamily units in San Joaquin County include �Z $5.4 million in local income, $1.0 million in taxes and other revenue for local governments, and 80 local jobs. These are ongoing, annual local impacts that result from the new homes being occupied, and the occupants paying taxes and otherwise participating in the local economy year after year. These impacts were calculated assuming that new multifamily units built in San Joaquin County each have an average market value of $141,820; embody an average raw land value of $6,000; require the builder and developer to pay an average of $50,000 in impact, permit, and other fees per unit to local governments; and incur an average annual property tax of $1,773 per unit. As with the assumptions underlying the single family impact estimates, this information was obtained from the Building and Industry Association of the Delta, the California Building and Industry Association, the National Association of Realtors, and the U.S. Census Bureau. THE LOCAL IM ACCCCT OF HOME BUILDING IN CSACNC JOAOCUCIN COUNTY, CALIFORNIA INCOME. JOBS. AN TAXES GENERATED DETAILED TABLES ON SINGLE FAMILY CONSTRUCTION F ilI7;'L�1; :i-li �l.i I I Tota/One-Year Impact.- Sum of Phase I and Phase II: Local Income Local Business Local Wages Local Taxes' Local Jobs $25,448,000 Owners' Income and Salaries $6,649,000 Supported $199,300,000 $54,915,000 $144,385,000 $67,389,000 3,217 Phase I.- Direct and Indirect Impact of Construction Activity: Local Income Business Owners' Local Wages1 Local Taxes Local Jobs $25,448,000 Income and Salaries $6,649,000 Supported $114,983,000 $32,162,000 $82,822,000 $58,487,000 1,768 Phase II.• Induced (Ripple) Effect of Spending the Income and Taxes from Phase I: Local Income Business Owners' Local Wages1 Local Taxes Local Jobs $25,448,000 Income and Salaries $6,649,000 Supported $84,317,000 $22,753,000 $61,563,000 $8,902,000 1,449 Phase III.- Ongoing, Annual Effect that Occurs When New Homes are Occupied: Local Income Local Business Owners' Income Local Wages and Salaries Local Taxes' Local Jobs Supported $25,448,000 $7,383,000 $18,064,000 $6,649,000 451 ' The term local taxes is used as a shorthand for local government revenue from all sources: taxes, fees, fines, revenue from government-owned enterprises, etc... IMPACT OF EIUIL®INM BOO SIMMILE FAMILY HOMES IN BAN JO OUIN CO.. C PF14AA °E/--®IRECT ANO INDIRECT IMPACT OF CONSTRUCTION ACTIVITY A. Local Income and Jobs by Industry Industry Local Income Local Business Owners' Income Local Wages and Salaries Wag Wages & Salaries per Full-time Job Number of Local Jobs Supported Construction $79,102,000 $20,401,000 $58,701,000 $48,000 1,223 Manufacturing $12,000 $1,000 $11,000 $50,000 0 Transportation $202,000 $28,000 $174,000 $39,000 4 Communications $1,181,000 $361,000 $820,000 $73,000 11 Utilities $348,000 $135,000 $213,000 $82,000 3 Wholesale and Retail Trade $11,597,000 $2,123,000 $9,474,000 $36,000 267 Finance and Insurance $2,531,000 $205,000 $2,325,000 $81,000 29 Real Estate $4,994,000 $4,396,000 $598,000 $50,000 12 Personal & Repair Services $805,000 $304,000 $502,000 $32,000 16 Services to Dwellings / Buildings $460,000 $91,000 $368,000 $32,000 11 Business & Professional Services $11,101,000 $3,309,000 $7,793,000 $56,000 139 Eating and Drinking Places $381,000 $51,000 $330,000 $20,000 17 Automobile Repair & Service $381,000 $118,000 $263,000 $32,000 8 Entertainment Services $66,000 $14,000 $53,000 $44,000 1 Health, Educ. & Social Services $15,000 $4,000 $11,000 $37,000 0 Local Government $86,000 $0 $86,000 $52,000 2 Other $1,721,000 $621,000 $1,100,000 $43,000 26 [Total $114,983,000 $32,162,000 $82,822,000 $47,000 1,768 Note. Business & professional services include architectural and engineering services The 'other"category consists mostly of landscaping services, and the production of greenhouse and nursery products. B. Local Government General Revenue by TVDe TAXES: 11 USER FEES & CHARGES: Business Property Taxes $328,000 Residential Permit / Impact Fees $52,000,000 Residential Property Taxes $0 Utilities & Other Govt. Enterprises $1,051,000 General Sales Taxes $2,185,000 Hospital Charges $689,000 Specific Excise Taxes $89,000 Transportation Charges $205,000 Income Taxes $0 Education Charges $231,000 License Taxes $0 Other Fees and Charges $1,653,000 Other Taxes $57,000 TOTAL FEES & CHARGES $55,828,000 TOTAL TAXES $2,659,000 TOTAL GENERAL REVENUE $58,487,000 IMPACT OF BUILOING BOO SIMMLE FAMILY HOMES IN BAN .IO ®UIN CO.. CA PNASE/t•INOUCEO EFFECT OF SPENOING INCOME ANO TAX REVENUE FROM PHASE 1 A. Local Income and Jobs by Industry Industry Local Income Local Business Owners' Income Local Wages and Salaries Wag Wages & Salaries per Full-time Number of Local Jobs Supported Construction $3,226,000 $1,212,000 $2,013,000 $48,000 42 Manufacturing $15,000 $1,000 $14,000 $50,000 0 Transportation $356,000 $50,000 $306,000 $33,000 9 Communications $4,304,000 $1,436,000 $2,867,000 $72,000 40 Utilities $2,004,000 $791,000 $1,213,000 $82,000 15 Wholesale and Retail Trade $11,104,000 $2,084,000 $9,020,000 $32,000 284 Finance and Insurance $2,814,000 $254,000 $2,560,000 $72,000 35 Real Estate $11,578,000 $10,192,000 $1,386,000 $50,000 28 Personal & Repair Services $2,598,000 $1,166,000 $1,432,000 $32,000 45 Services to Dwellings / Buildings $583,000 $116,000 $467,000 $32,000 14 Business & Professional Services $9,126,000 $2,569,000 $6,558,000 $51,000 128 Eating and Drinking Places $3,261,000 $439,000 $2,823,000 $20,000 144 Automobile Repair & Service $1,580,000 $481,000 $1,098,000 $32,000 34 Entertainment Services $769,000 $212,000 $557,000 $36,000 16 Health, Educ. & Social Services $8,664,000 $1,103,000 $7,561,000 $47,000 160 Local Government $20,559,000 $0 $20,559,000 $49,000 423 Other $1,776,000 $647,000 $1,129,000 $34,000 33 Total $84,317,000 $22,753,000 $61,563,000 $42,000 1,449 Note. Business & professional services include architectural and engineering services The 'other -category consists mostly of landscaping services, and the production of greenhouse and nursery products. B. Local Government General Revenue by TVDe TAXES: 11 USER FEES & CHARGES: Business Property Taxes $1,573,000 Residential Permit / Impact Fees $0 Residential Property Taxes $0 Utilities & Other Govt. Enterprises $2,344,000 General Sales Taxes $738,000 Hospital Charges $997,000 Specific Excise Taxes $426,000 Transportation Charges $150,000 Income Taxes $0 Education Charges $170,000 License Taxes $0 [Other Fees and Charges $2,232,000 Other Taxes $274,000 11 TOTAL FEES & CHARGES $5,892,000 TOTAL TAXES $3,010,000 TOTAL GENERAL REVENUE $8,902,000 IMPBACT OF BUILOIING BOO SIMMLE FAMILY HOMES IN BAN .IO OUIN CO.. CA PHASEIA6-ONGOING. ANNUAL EFFECT THAT OCCURS BECAUSE UNITS ARE OCCUFIEO A. Local Income and Jobs by Industry Industry Local Income Local Business Owners' Income Local Wages and Salaries Wag Wages & Salaries per Full-time Number of Local Jobs Supported Construction $1,373,000 $526,000 $847,000 $48,000 18 Manufacturing $6,000 $0 $5,000 $50,000 0 Transportation $103,000 $14,000 $89,000 $36,000 2 Communications $1,538,000 $522,000 $1,016,000 $72,000 14 Utilities $886,000 $349,000 $537,000 $82,000 7 Wholesale and Retail Trade $4,638,000 $873,000 $3,765,000 $32,000 119 Finance and Insurance $1,494,000 $136,000 $1,358,000 $71,000 19 Real Estate $2,783,000 $2,450,000 $333,000 $50,000 7 Personal & Repair Services $778,000 $358,000 $420,000 $32,000 13 Services to Dwellings / Buildings $251,000 $50,000 $201,000 $32,000 6 Business & Professional Services $2,497,000 $749,000 $1,748,000 $50,000 35 Eating and Drinking Places $1,365,000 $184,000 $1,182,000 $20,000 60 Automobile Repair & Service $640,000 $195,000 $445,000 $32,000 14 Entertainment Services $400,000 $110,000 $290,000 $33,000 9 Health, Educ. & Social Services $3,316,000 $435,000 $2,881,000 $47,000 62 Local Government $2,251,000 $0 $2,251,000 $49,000 46 Other $1,129,000 $432,000 $696,000 $34,000 21 Total $25,448,000 $7,383,000 $18,064,000 $40,000 451 Note. Business & professional services include architectural and engineering services The 'other"category consists mostly of landscaping services, and the production of greenhouse and nursery products. B. Local Government General Revenue by TVDe TAXES: 11 USER FEES & CHARGES: Business Property Taxes $595,000 Residential Permit / Impact Fees $0 Residential Property Taxes $2,850,000 Utilities & Other Govt. Enterprises $1,087,000 General Sales Taxes $279,000 Hospital Charges $713,000 Specific Excise Taxes $161,000 Transportation Charges $45,000 Income Taxes $0 Education Charges $51,000 License Taxes $0 [Other Fees and Charges $766,000 Other Taxes $103,000 11 TOTAL FEES & CHARGES $2,661,000 TOTAL TAXES $3,988,000 TOTAL GENERAL REVENUE $6,649,000 THE LOCAL IM ACCCCT OF HOME BUILDING IN CSACNC JOAOCUCIN COUNTY, CALIFORNIA INCOME. JOBS. AN TAXES GENERATED DETAILED TABLES ON MULTIFAMILY CONSTRUCTION '':� IBJ 11 t IN] 1 / 1--irp l i 1110) (0 1 [.111011 LL V Tota/One-Yearlmpact.- Sum of Phase I and Phase II: Local Income Local Business Local Wages Local Taxes' Local Jobs $5,428,000 Owners' Income and Salaries $1,011,000 Supported $25,528,000 $6,640,000 $18,886,000 $11,933,000 419 Phase I.• Direct and Indirect Impact of Construction Activity: Local Income Business Owners' Local Wages1 Local Taxes Local Jobs $5,428,000 Income and Salaries $1,011,000 Supported $13,352,000 $3,637,000 $9,712,000 $10,744,000 207 Phase II: Induced (Ripple) Effect of Spending the Income and Taxes from Phase I: Local Income Business Owners' Local Wages1 Local Taxes Local Jobs $5,428,000 Income and Salaries $1,011,000 Supported $12,176,000 $3,003,000 $9,174,000 $1,189,000 212 Phase III.- Ongoing, Annual Effect that Occurs When New Homes are Occupied: Local Income Local Business Owners' Income Local Wages and Salaries Local Taxes' Local Jobs Supported $5,428,000 $2,299,000 $3,130,000 $1,011,000 80 ' The term local taxes is used as a shorthand for local government revenue from all sources: taxes, fees, fines, revenue from government-owned enterprises, etc... IMPACT OF BUILOING BOO MULTIFAMILY UNITS IN BAN JOAOUIN CO-® CA PFiAAFE/--OIRECT ANO INOIRECT IMPACT OF CONSTRUCTION ACTIVITY A. Local Income and Jobs by Industry Industry Local Income Local Business Owners' Income Local Wages and Salaries Wag Wages & Salaries per Full-time Job Number of Local Jobs Supported Construction $9,324,000 $2,405,000 $6,919,000 $48,000 144 Manufacturing $1,000 $0 $1,000 $50,000 0 Transportation $24,000 $3,000 $20,000 $39,000 1 Communications $138,000 $42,000 $96,000 $73,000 1 Utilities $40,000 $15,000 $24,000 $82,000 0 Wholesale and Retail Trade $1,350,000 $247,000 $1,103,000 $36,000 31 Finance and Insurance $295,000 $24,000 $271,000 $81,000 3 Real Estate $424,000 $373,000 $51,000 $50,000 1 Personal & Repair Services $94,000 $36,000 $59,000 $32,000 2 Services to Dwellings / Buildings $53,000 $10,000 $42,000 $32,000 1 Business & Professional Services $1,299,000 $387,000 $912,000 $56,000 16 Eating and Drinking Places $44,000 $6,000 $38,000 $20,000 2 Automobile Repair & Service $45,000 $14,000 $31,000 $32,000 1 Entertainment Services $8,000 $2,000 $6,000 $44,000 0 Health, Educ. & Social Services $2,000 $0 $1,000 $37,000 0 Local Government $9,000 $0 $9,000 $52,000 0 Other $202,000 $73,000 $129,000 $43,000 3 [Total $13,352,000 $3,637,000 $9,712,000 $47,000 207 Note. Business & professional services include architectural and engineering services The 'other"category consists mostly of landscaping services, and the production of greenhouse and nursery products B. Local Government General Revenue by TVDe TAXES: 11 USER FEES & CHARGES: Business Property Taxes $32,000 Residential Permit / Impact Fees $10,000,000 Residential Property Taxes $0 Utilities & Other Govt. Enterprises $122,000 General Sales Taxes $257,000 Hospital Charges $80,000 Specific Excise Taxes $9,000 Transportation Charges $24,000 Income Taxes $0 Education Charges $27,000 License Taxes $0 Other Fees and Charges $188,000 Other Taxes $6,000 TOTAL FEES & CHARGES $10,440,000 TOTAL TAXES $304,000 TOTAL GENERAL REVENUE $10,744,000 PACT OF BUILOING 000 MULTIFAMILY UNITS IN BAN JOAOUIN CO®® C PNASE/t•INOUCEO EFFECT OF SFENOING INCOME ANO TAX REVENUE FROM FHASE 1 A. Local Income and Jobs by Industry Industry Local Income Local Business Owners' Income Local Wages and Salaries Wag Wages & Salaries per Full-time Number of Local Jobs Supported Construction $428,000 $159,000 $270,000 $48,000 6 Manufacturing $2,000 $0 $2,000 $50,000 0 Transportation $47,000 $7,000 $40,000 $34,000 1 Communications $582,000 $192,000 $390,000 $73,000 5 Utilities $261,000 $103,000 $158,000 $82,000 2 Wholesale and Retail Trade $1,437,000 $269,000 $1,168,000 $32,000 37 Finance and Insurance $366,000 $33,000 $333,000 $72,000 5 Real Estate $1,492,000 $1,313,000 $179,000 $50,000 4 Personal & Repair Services $352,000 $156,000 $196,000 $32,000 6 Services to Dwellings / Buildings $76,000 $15,000 $61,000 $32,000 2 Business & Professional Services $1,381,000 $382,000 $999,000 $51,000 19 Eating and Drinking Places $423,000 $57,000 $366,000 $20,000 19 Automobile Repair & Service $203,000 $62,000 $141,000 $32,000 4 Entertainment Services $100,000 $28,000 $72,000 $36,000 2 Health, Educ. & Social Services $1,111,000 $142,000 $969,000 $47,000 20 Local Government $3,684,000 $0 $3,684,000 $49,000 76 Other $231,000 $85,000 $146,000 $34,000 4 Total $12,176,000 $3,003,000 $9,174,000 $43,000 212 Note. Business & professional services include architectural and engineering services The 'other"category consists mostly of landscaping services, and the production of greenhouse and nursery products. B. Local Government General Revenue by TVDe TAXES: 11 USER FEES & CHARGES: Business Property Taxes $205,000 Residential Permit / Impact Fees $0 Residential Property Taxes $0 Utilities & Other Govt. Enterprises $307,000 General Sales Taxes $96,000 Hospital Charges $139,000 Specific Excise Taxes $55,000 Transportation Charges $22,000 Income Taxes $0 Education Charges $24,000 License Taxes $0Other Fees and Charges $305,000 Other Taxes $36,000 TOTAL FEES & CHARGES $797,000 TOTAL TAXES $392,000 TOTAL GENERAL REVENUE $1,189,000 IM PBACT OF BUILOING BOO MULTIFAMILY UNITS IN BAN JOAOUIN CO.. CA PHAGE//t•ONGOING. ANNUAL EFFECT THAT OCCURS BECAUSE UNITS ARE OCCUFIEO A. Local Income and Jobs by Industry Industry Local Income Local Business Owners' Income Local Wages and Salaries Wag Wages & Salaries per Full-time Number of Local Jobs Supported Construction $171,000 $55,000 $116,000 $48,000 2 Manufacturing $1,000 $0 $1,000 $50,000 0 Transportation $22,000 $3,000 $19,000 $35,000 1 Communications $276,000 $94,000 $182,000 $72,000 3 Utilities $75,000 $29,000 $46,000 $82,000 1 Wholesale and Retail Trade $876,000 $165,000 $711,000 $31,000 23 Finance and Insurance $184,000 $16,000 $167,000 $73,000 2 Real Estate $1,735,000 $1,528,000 $208,000 $50,000 4 Personal & Repair Services $125,000 $58,000 $67,000 $32,000 2 Services to Dwellings / Buildings $41,000 $8,000 $33,000 $32,000 1 Business & Professional Services $470,000 $142,000 $328,000 $50,000 7 Eating and Drinking Places $290,000 $39,000 $251,000 $20,000 13 Automobile Repair & Service $113,000 $35,000 $79,000 $32,000 2 Entertainment Services $60,000 $17,000 $43,000 $41,000 1 Health, Educ. & Social Services $540,000 $74,000 $466,000 $48,000 10 Local Government $344,000 $0 $344,000 $49,000 7 Other $105,000 $36,000 $69,000 $34,000 2 Total $5,428,000 $2,299,000 $3,130,000 $39,000 80 Note. Business & professional services include architectural and engineering services The 'other"category consists mostly of landscaping services, and the production of greenhouse and nursery products B. Local Government General Revenue by TVDe TAXES: 11 USER FEES & CHARGES: Business Property Taxes $137,000 Residential Permit / Impact Fees $0 Residential Property Taxes $340,000 Utilities & Other Govt. Enterprises $130,000 General Sales Taxes $64,000 Hospital Charges $89,000 Specific Excise Taxes $37,000 Transportation Charges $10,000 Income Taxes $0 Education Charges $11,000 License Taxes $0 Other Fees and Charges $171,000 Other Taxes $24,000 11 TOTAL FEES & CHARGES $410,000 TOTAL TAXES $601,000 TOTAL GENERAL REVENUE $1,011,000 THE LOCAL IIM ACCT OF HOME BUILDING IN CSACNC JOAOCUCIN COUNTY, CALIFORNIA INCOME. JOBS. AN TAXES GENERATED BACKGROUND ANO A o R IIEFF DESCRIPTION OF THE MODEL USED TO ESTIMATE THE ECONOMIC ICC The Housing Policy Department of the National Association of Home Builders (NAHB) maintains an economic model that it uses to estimate the local economic benefits of home building. Originally developed in 1996, the model was at first calibrated to a typical metropolitan area using national averages, but from the beginning was capable of being adapted to a specific local economy by replacing key housing market variables. The initial version of the model could be applied to single family construction, multifamily construction, or a combination of the two. In March of 1997, NAHB began customizing the model to various areas around the country on a routine basis, primarily at the request of its local affiliated associations. As of January 2008, the Housing Policy Department has produced over 500 of these customized reports analyzing residential construction in various metropolitan areas, non -metropolitan counties, and states across the country (see map below). Areas Covered by NAHB Local Impact Studies The darkest shading indicates studies that covered metro areas and non -metro counties; the somewhat lighter shading indicates studies that were produced for an entire state. The reports have analyzed the impacts of specific housing projects, as well as total home building in areas as large as entire states. In 2002, NAHB developed new versions of the model to analyze active adult housing projects and multifamily development financed with the Low - Income Housing Tax Credit. In 2005 a version of the model that analyzes residential remodeling was added to the mix. Results from NAHB's local impact model have been used by outside organizations such as universities, state housing authorities and affordable housing agencies: The Shimburg Center for Affordable Housing at the University of Florida used results from the NAHB model to establish that "the real estate taxes paid year after year are the most obvious long-term economic benefit to the community. Probably the second most obvious long-term economic benefit is the purchases made by the family occupying the completed home." www.shimberg.ufl.edu/pdfs/Newslett-lune02.pdf �Z The Center for Applied Economic Research at Montana State University used "results from an input-output model developed by the National Association of Home Builders to assess the impacts to local areas from new home construction." The results show that "the construction industry contributes substantially to Montana's economy accounting for 5.5 percent of Gross State Product." www. msubillinas.edu/caer/The%20Impact%20of%20Home%20Construction%20in%20 Montana.pdf �Z The Housing Education and Research Center at Michigan State University also adopted the NAHB approach: "The underlying basis for supporting the implementation of this [NAHB] model on Michigan communities is that it provides quantifiable results that link new residential development with commercial and other forms of development therefore illustrating the overall economic effects of residential growth." www.canr.msu.edu/cm/herc/h5over.html �Z The Center for Economic Development at the University of Massachusetts found that "Home building generates substantial local economic activity, including income, jobs, and revenue for state and local governments. These far exceed the school costs -to -property - tax ratios. ...these factors were evaluated by means of a quantitative assessment of data from the National Association of Home Builder's Local Impact of Home Building model" www.donahue.umassp.edu/publications/housing/7-economicco.html Similarly, the Association of Oregon Community Development Organizations decided to base its analysis of affordable housing on the NAHB model, stating that "This model is widely respected and utilized in analyzing the economic impact of market rate housing development," and that, compared to alternatives, it "is considered the most comprehensive and is considered an improvement on most previous models." www.aocdo.org/docs/EcoDevoStudyFinal.pdf �Z The Boone County Kentucky Planning Commission included results from the NAHB model in its 2005 Comprehensive Report. The Planning Commission used values from the impact model to quantify the increase in local income, taxes, revenue, jobs, and overall local economic impacts in the Metro Area as a result of new home construction. http://www.boonecountyky.ora/pc/2005CompPlan.aspxv 2 A Brief Description of the Model The NAHB model is divided into three phases. Phases I and II are one-time effects. Phase I captures the effects that result directly from the construction activity itself and the local industries that contribute to it. Phase II captures the effects that occur as a result of the wages and profits from Phase I being spent in the local economy. Phase III is an ongoing, annual effect that includes property tax payments and the result of the completed unit being occupied. Phase l; The jobs, wages, and local taxes (including permit, utility Loca/Industries connection, and impact fees) generated by the actual Involved in development, construction, and sale of the home. These jobs Home Building include on-site and off-site construction work as well as jobs generated in retail and wholesale sales of components, transportation to the site, and the professional services required to build a home and deliver it to its final customer. The wages and profits for local area residents earned during the construction period are spent on other locally produced Phase II.• goods and services. This generates additional income for local Ripple Effect residents, which is spent on still more locally produced goods and services, and so on. This continuing recycling of income back into the community is usually called a multiplieror ripple effect. The local jobs, income, and taxes generated as a result of the home being occupied. A household moving into a new home generally spends about three-fifths of its income on goods and Phase III: services sold in the local economy. A fraction of this will become Ongoing, income for local workers and local businesses proprietors. In a Annual Effect typical local area, the household will also pay 1.25 percent of its income to local governments in the form of taxes and user fees, and a fraction of this will become income for local government employees. This is the first step in another set of economic ripples that cause a permanent increase in the level of economic activity, jobs, wages, and local tax receipts. The model defines a local economy as a collection of industries and commodities. These are selected from the detailed benchmark input-output tables produced by the U.S. Bureau of Economic Analysis. The idea is to choose goods and services that would typically be produced, sold, and consumed within a local market area. Laundry services would qualify, for example, while automobile manufacturing would not. Both business -to -business and business -to - consumer transactions are considered. In general the model takes a conservative approach and retains a relatively small number of the available industries and commodities. Of the roughly 600 industries and commodities provided in the input-output files, the model uses only 87 commodities and 89 industries. The design of the model implies that a local economy should include not only the places people live, but also the places where they work, shop, typically go for entertainment, etc. This corresponds reasonably well to the concepts of Metropolitan Statistical Areas and Metropolitan Divisions, areas defined by the U.S. Office of Management and Budget based on local commuting patterns. Outside of these officially defined metropolitan areas, NAHB has determined that a county will usually satisfy the model's requirements. For a particular local area, the model adjusts the indirect business tax section of the national input-output accounts to account for the fiscal structure of local governments in the area. The information used to do this comes primarily from the U.S. Census Bureau's Census of Governments. Wages and salaries are extracted from the employee compensation section of the input-output accounts on an industry -by -industry basis. In order to relate wages and salaries to employment, the model incorporates data on local wages per job published by the Bureau of Economic Analysis. In order to estimate the local impacts generated by home building, it is necessary to know the sales price of the homes being built, how much raw land contributes to the final price, and how much the builder and developer pay to local area governments in the form of permit, utility connection, impact, and other fees. This information is not generally available from national sources and in most cases must be provided by representatives from the area in question who have specialized knowledge of local conditions. SUMMARY OF PHASE I VALUE OF CONSTRUCTION INPUTS: SERVICES PROVIDED AT CLOSING PERMIT/HOOK-UP/IMPACT FEES (Info Obtained From Local Sources) II MODEL OF THE LOCAL ECONOMY I INCOME FOR LOCAL RESIDENTS OUTPUTS: TAX/FEE REVENUE FOR LOCAL GOVERNMENTS The model subtracts raw land value from the price of new construction and converts the difference into local wages, salaries, business owners' income, and taxes. This is done separately for all 95 local industries. In addition, the taxes and fees collected by local governments during the construction phase generate wages and salaries for local government employees. Finally the number of full time jobs supported by the wages and salaries generated in each private local industry and the local government sector is estimated. Clearly, the local residents who earn income in Phase I will spend a share of it. Some of this will escape the local economy. A portion of the money used to buy a new car, for example, will become wages for autoworkers who are likely to live in another city, and increased profits for stockholders of an automobile manufacturing company who are also likely to live elsewhere. A portion of the spending, however, will remain within, and have an impact on, the local economy. The car is likely to be purchased from a local dealer and generate income for a salesperson who lives in the area, as well for local workers who provide cleaning, maintenance, and other services to the dealership. Consumers also are likely to purchase many services locally, as well as to pay taxes and fees to local governments. This implies that the income and taxes generated in Phase I become the input for additional economic impacts analyzed in what we call Phase II of the model. Phase II begins by estimating how much of the added income households spend on each of the local commodities. This requires detailed analysis of data from the Consumer Expenditure (CE) Survey, which is conducted by the U.S. Bureau of Labor Statistics primarily for the purpose of determining the weights for the Consumer Price Index. The analysis produces household spending estimates for 55 local commodities. The remainder of the 87 local commodities enter the model only as business -to -business transactions. 5 SUMMARY OF PHASE II INPUTS:I LOCAL INCOME & TAXES FROM PHASE I SPENDING ON LOCAL GOODS AND SERVICES Consumer Expenditure Survey (U.S. Bureau of Labor Statistics) II MODEL OF THE LOCAL ECONOMY II OUTPUTS: I LOCAL INCOME & TAXES The model then translates the estimated local spending into local business owners' income, wages and salaries, jobs, and taxes. This is essentially the same procedure applied to the homes sold to consumers in Phase I. In Phase II, however, the procedure is applied simultaneously to 56 locally produced and sold commodities. In other words, the model converts the local income earned in Phase I into local spending, which then generates additional local income. But this in turn will lead to additional spending, which will generate more local income, leading to another round of spending, and so on. Calculating the end result of these economic is a straightforward exercise in mathematics. Like Phase II, Phase III involves computing the sum of successive ripples of economic activity. In Phase III, however, the first ripple is generated by the income and spending of a new household (along with the additional property taxes local governments collect as a result of the new structure). This does not necessarily imply that all new homes must be occupied by households moving in from outside the local area. It may be that an average new -home household moves into the newly constructed unit from elsewhere in the same local area, while average existing -home household moves in from outside to occupy the unit vacated by the first household. Alternatively, it may be that the new home allows the local area to retain a household that would otherwise move out of the area for lack of suitable housing. In any of these cases, it is appropriate to treat a new, occupied housing unit as a net gain to the local economy of one household with average characteristics for a household that occupies a new home. This reasoning is often used, even if unconsciously, when it is assumed that a 2 new home will be occupied by a household with average characteristics—for instance, an average number of children who will consume public education. To estimate the impact of the net additional households, Phase III of the model requires an estimate of the income of the households occupying the new homes. The information used to compute this estimate comes from several sources, but primarily from an NAHB statistical model based on decennial census data. Phase III of the local impact model then estimates the fraction of income these households spend on various local commodities. This is done with CES data and is similar to the procedure described under Phase II. The model also calculates the amount of local taxes the households pay each year. This is done with Census of Governments data except in the case of residential property taxes, which are treated separately, and for which specific information must usually be obtained from a local source. Finally, a total ripple effect is computed, using essentially the same procedure outlined above under Phase II. SUMMARY OF PHASE III INPUTS:I INCOME OF HOUSEHOLD OCCUPYING NEW HOUSING UNIT SPENDING ON LOCAL GOODS AND SERVICES PROPERTY TAX PAYMENTS II MODEL OF THE LOCAL ECONOMY II OUTPUTS: II LOCAL INCOME & TAXES The details covered here provide only a brief description of the model NAHB uses to estimate the local economic benefits of home building. For a more complete description, see the technical documentation at the end of the report. For additional information about the model, or questions about applying it to a particular local area, contact one of the following in NAHB's Housing Policy Department: i David Crowe, Chief Economist (202) 266-8383 S Paul Emrath, Assistant Staff Vice President (202) 266-8449 S Elliot Eisenberg, Senior Economist (202) 266-8398 7 CN ACHB°CS LOCAL IMPACT OF HOME BUILDING ING U V UODUU TECHNICAL DOCUMENTATION A Hard Copy of the Technical Documentation is Available on Request from NAHB's Housing Policy Department. THE METRO AREA IMPACT OF HOME BUILDING IN SAN JOAQUIN COUNTY, CA Presented by Elliot F. Eisenberg,, Ph.D. National Association of Home Builders April 21, 2009 Stockton, CA 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 • Conventional wisdom says new jobs produce new homes • But, new home construction is a key source of continued employment! ■ • 11 VALUE OF CONSTRUCTION SERVICES PROVIDED AT CLOSING PERMIT/HOOK-UP/IMPACT FEES (Info Obtained From Local Sources) MODEL OF THE LOCAL ECONOM INCOME FOR LOCAL RESIDENTS TAX/FEE REVENUE FOR LOCAL GOVERNMENTS QD *AIDjDJ■!=DJTIk LOCAL INCOME & TAXES FROM PHASE I SPENDING ON LOCAL GOODS AND SERVICES Consumer Expenditure Survey (U.S. Bureau of Labor Statistics) MODEL OF THE LOCAL ECONOMY -0 -0I9 11:111 LOCAL INCOME &TAXES SINSINJU-1 0 1 OLVAU MEFA INCOME OF HOUSEHOLD OCCUPYING NEW HOUSING UNIT SPENDING ON LOCAL GOODS AND SERVICES PROPERTY TAX PAYMENTS MODEL OF THE LOCAL ECONOMY _ 0 `\1 $11jj11jr► LOCAL INCOME & TAXES •Tel &'A t•] 11PK W W VJ bft7! Thornton a Terminous a ncoln Villa 77�n StOC�Ct41� Yuen Acres4P # Farmington Fr _ Camp # `-Manteca Esralon racy pa n a �� The Stockton,, CA MSA Multiplier Only Captures Spending that Stays in the MSA Includes: Banking, Car Repair, Dry Cleaning Day Care Services, Dental Services, Electricity, Legal Services, Medical Services, Newspaper Delivery, and Restaurants But not: Auto Manufacturing, Mattress Manufacturing, Movie Production, and Travel Agency Services History of the Model • Over 540 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... Assumptions of the Model Average Average house price: raw lot cost: Single FamilX Permits/Infrastructure: $300,000 $15,000 $65,000 Multifamily $141,820 $6,000 $50,000 Annual prop. taxes: $3,750 $x,773 Economic Impact of Single Family Home Building • Construction phase • Ripple effect from construction phase • Occupancy phase • Ten year total FIRST YEAR IMPACT: SF Construction Every 800 SF Homes Local Income Local Taxes Local Jobs $114, 983, 000 $58, 487, 000 1, 768 INCLUDING: 11223 Jobs in Construction 267 Jobs in Wholesale & Retail Trade 139 Jobs in Business and Professional Services FIRST YEAR IMPACT: SF Ripple Local Income Local Taxes Local Jobs $84,317,000 $8,r9021000 11449 INCLUDING: 423 Jobs in Local Government 284 Jobs in Wholesale and Retail Trade 160 Jobs in Health, Education & Social Services ONGOING SF ANNUAL EFFECT Local Income Local Taxes Local Jobs $25,448,000 $6,649,000 1 451 INCLUDING: 119 Jobs in Wholesale and Retail Trade 60 Jobs in Eating and Drinking Places 62 Jobs in Health, Education & Social Services TOTAL SF IMPACT: FIRST TEN YEARS 800 HOMES Local Income LocalTaxes $441,056,000 $130,555,000 Along with 3,217 temporary jobs And 451 permanent ones! FIRST YEAR IMPACT: MF Construction Every 200 MF Homes Local Income Local Taxes Local Jobs $13,352,000 $10,F7441000 207 INCLUDING: 144 Jobs in Construction 31 Jobs in Business and Professional Services 16 Jobs in Wholesale & Retail Trade FIRST YEAR IMPACT: MF Ripple Local Income Local Taxes Local Job $12,176,000 $ 1, 189,000 212 INCLUDING: 76 Jobs in Local Government 37 Jobs in Wholesale and Retail Trade 20 Jobs in Health, Education & Social Services ONGOING MF ANNUAL EFFECT Local Income Local Taxes Local Jobs $5,428,000 $1,011,000 80 INCLUDING: 23 Jobs in Wholesale and Retail Trade 10 Jobs in Health, Education & Social Services 13 Jobs in Eating and Drinking Establishments TOTAL MF IMPACT: FIRST TEN YEARS Local Income LocalTaxes $77,094,000 $21,538,000 Along with 419 temporary jobs and 80 permanent ones! LARGEST LOCAL EMPLOYERS EMPLOYER St. Joseph Medical Center M& R Company New Residential Construction Safeway Distribution Center Pacific Gas & Electric Co. Pacific Coast Producers # of FT JOBS Unilever Best Foods North America Kaiser Permanente 4,000 2,000 1,975 1,500 1,100 1,100 1,100 1,065 NEW HOMES REQUIRE: INFRASTRUCTURE *Fire and police protection *Garbage collection *Parks and recreational opportunities *Roads *Primary and secondary education *Etc... Required Current Expenses per SF Unit Function Single Family State Aid Education $1,331 82% Police Protection $881 0% Fire Protection $466 0% Corrections $397 0% Streets and Highways $106 68% Water Supply $180 1 % Sewerage $143 0% Recreation and Culture $312 0% Other General Government $913 63% Electric Utilities $224 0% Public Transit $3 76% Total $47957 Required Current Expenses per MF Unit Function Single Family State Aid Education $775 82% Police Protection $656 0% Fire Protection $347 0% Corrections $295 0% Streets and Highways $74 68% Water Supply $94 1% Sewerage $75 0% Recreation and Culture $232 0% Other General Government $679 63% Electric Utilities $167 0% Public Transit $3 76% Total $37396 Required Capital per SF Unit Function Single Family Schools $6,811 Hospitals $2,256 Other Buildings $1,388 Highways and Streets $1,169 Conservation &Develop $98 Sewer Systems $2,121 Water Supply $419 Other Structures $784 Equipment $228 Total $15,224 Required Capital per MF Unit Function Single Family Schools $3,962 Hospitals $1,679 Other Buildings $996 Highways and Streets $810 Conservation &Develop $73 Sewer Systems $1,110 Water Supply $219 Other Structures $583 Equipment $170 Total $9,602 Now that we know: The benefits of construction RIO The costs of construction Does new construction pay for itself? Yes it does! For every 800 SF and 200 MF units-- • By the 1St year economic impacts offset fiscal costs • By the end of the 1St year the debt is fully paid off • In the 1St year, net is $66,,109,,000 and is $3,,014,757 thereafter Year Current Expenses Revenue Operating Surplus Investment Start of Year Debt at Year End Interest On Debt Net Income 1 2,3231000 83,1533179 80, 830,179 14,100,000 0 620,517 66,109,662 2 49646,000 796609757 390149757 0 0 0 39014,757 3 416467000 79660,757 39014,757 0 0 0 31014,757 4 41646,000 7,6601757 3,0141757 0 0 0 31014,757 5 49646,000 796609757 390149757 0 0 0 39014,757 6 416467000 79660,757 39014,757 0 0 0 31014,757 7 41646,000 7,6601757 3,0141757 0 0 0 31014,757 8 4,6461000 7,660,757 3,014,757 0 0 0 3,0141757 9 49646,000 796609757 390149757 0 0 0 39014,757 10 416467000 79660,757 39014,757 0 0 0 310147757 I I, IR 50 W, Over 15 years, every 800 SF and 200 MF units generate a cumulative $190.4 million in revenue for local governments but only $82.3 million in costs Costs Compared to Revenue: 800 SF and 200 MF Units $Millions —Cumulative Cost —Cumulative Revenue 1 3 5 7 9 11 13 15 rar, What does 1 year 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 1 year? Almost done, just a bit more K� L r How Large Are Non Property Tax Revenues • SF property taxes are $3,,750/year But, yearly revenue is $8,312/unit per year, which is 122% more. • SF property taxes are $1,,773/year But, yearly revenue is $5,,057/unit per year, which is 185% more. • Clearl story! y, property taxes are not the whole 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 $809 million or 82% of budget QUESTIONS? Elliot F. Eisenberg,, Ph.D. Call: 202.266.8398 Fax: 202.266.8426 eeisenberQ@nahb.com 1201 15thStreet NW Washington,, DC 20005-2800 BUILDING INDUSTRY ASSOCIATION OF THE DELTA ANNIVERSARY aM9gM' AV I TN Y YEARS CF&71.D AU EXCELLENCE OFFICERS April 21,2009 Dudley McGee Larry Hansen Kimball Hill Homes City of Lodi Mahesh Ranchhod American -USA Homes 221 W. Pine St. Jeremy White Lodi, CA 95240 The Grupe Company John Looper Top Grade Construction Mayor Hansen BOARD OF DIRECTORS In the face of the worst recession since the great depression our leaders in Dehhie Armstrong Sacramento and Washington have joined together in bold steps aimed at Old Republic Title Company turning around the economy. Both State and Federal leaders understand Man Arnaiz H.D. Arnaiz Corporation hlla f the hin market and this recession was brought on b te collapse ohousing p g Y g Rod Attebery they know the economy will not recover until the housing industry has Neumiller & Beardslee recovered. Rey Chavez Kelly -Moore Paint Company Ryan Gerding Earlier this year state and federal legislationwas passed giving first time Pulte Homes home buyers of new homes a combined $18,000 tax credit. With this Cathy Ghan Oak Valley Community Bank stimulus package our leaders in Washington and Sacramentohave pledged George Gibson irst! to Fix HousingFirst! FCB Homes Steve Herum He rum Crabtree Brown On behalf of the 190 member companies of the BIA of the Delta we ask Wayne LeBaron you to j oin the national and statewide effort to Fix Housing First and adopt LeBarerl Ranches Terry Miles the San Joaquin Stimulus Package. Teichert Construction Carol Ornelas Visionary Home Builders, Inc Attachedou will find a list of over 50 localjurisdictions which have �' Jim Panagopoulos reduced and/or deferred the time for payment of building and development A.G. Spanos Companies fees. The BIA of the Delta respectfully asks you and the Council to Denise Tschirky Matthews Homes consider deferring all development fees to certificate of occupancy, temporarily suspend all non-essential development and building fees and LIFETIME DIRECTORS consider reducing public facility fees commensurate with the current reductions in construction costs. Most projects put out to bid today are Dennis Bennett Bennett Development coming in 25% to 35% below their estimated costs fromjust two years Bill Filios ago. By taking these steps you will be implementing the San Joaquin AKF Development, LLC Stimulus Package and helping to turn around our increasing g p g g Mike Hakeem Hakeem, Ellis & Marengo unemployment and decreasing wages. Jeffrey Kirst TokaySteve Development Steve Moore Thank you for our consideration of this important and time/ Issue. Y Y p Y CaDevelopment / � Zandra ndra Morris;;?4 la �� Old Republic Title Company � Uobn Beckman Toni Raymus Raymus Homes, Inc. Chief Executive Officer Tony Souza Souza Realty &. Developmen 509 WEST WEBERAVENUE, SUITE410 STOCKTON, CALIFORNIA 95203-3167 (209) 235-7831 PH (209) 235-7837 FX Local Impact Fee Deferral Matrix Date Deferral Date Deferral Bonding or 4-10-09 Ordinance Ordinance Letter of Other Became Expires Fee Pavment Deferrer. Credit Conditions - - r nec[1ve Cif anv) 11..ta n .....:_ —_ .2! - Jim au County of Fresno 2002 None Uoon Certificate of NO •Police Facilities Occupancy • Parks Capital • Quimby Parkland • Traffic Signal • Major Street • Community Sanitation Total deferred a $t t$% City of Clovis • Fire Facilities Upon close of escrow 1998 None NO • Police Facilities • Parks Capital • Traffic Signal • Major Street • Community Sanitation • Underground Utilities Total deferred - $15,601 County of imperial. General Government; SF $1,699, MF $977 -" --- Approved I2 months w/ At annlicatinn or NO - " - possible .1.2 month Certificate of • Parks and Recreation; SF & MF $452 extension Occupancy/ Final • Fire; SF $1,273, MF $977 Inspection • Public Works; SF $1,894, MF $1,453 rotaI deferral; SF S6;-254; MY 54?933 County of Madera Street Tmnart T:Ppc 2000 None Upon Certificate of NO Occupancy City of Madera 9 Park Facilities 200I None Upon Certificate of NO • Street Impact Occupancy •Traffic Signal City nf Irvine system Development t harges Approved 7/23/2004Unnn issue �f NO ■ IHC Development Nipacl Fees certificate of • Park Fees Occupancy • StreetS4ui-y Seal Fees • Affordable Housing In-Lieu Fees Total deferral - UR to $33,000 per unit City of Santa Ana One year deferral up to $15,852 Approved 101112009 Upon issue of NO Certificate of Occu anc City of Mission Viejo Permanent deferral of all DIF's Approved ]Done Upon issue of Certificate of Impact Fees—doesNOT include Police or Fire Approved : /8/2009 Occu anc Upon issue of NOS County of Orange Certificate of Total deferral - Up to 40k per unit Occu anc City of Orange • Police facility fee Approved 1 done Upon issue of NO • Park impact fees Certificate of • Library impact fees Occupancy • Fire protection facility impact fees • Transportation systems improvement program fees • Quimby park fees Total deferral - Up to $13k per unit :�ity of Anaheim • Parks Approved 7/5/20 10 Upon issue of NO • Electrical Service fee Certificate of • Drainage fee occupancy • Signal impact fee • Traffic and Roads impact fee Total deferral - Up to $1ft peT unit difftred I Approved City of Tustin TBD — Based on density 10/1/2009 City of Huntington Total Deferral —up to $30,000 Approved 113012010 Beach TBD Deferral Program TBD Deferral Program School Fees - $20,000 P=ding Pen_digg Approved 213112009 Upon issue of City of Costa Mesa City of Fullerton Anaheim Union High School District Certificate of Clrrnnnnry L OC Sanitation District Enabling Resolution for Deferral —Approx $5,000 Approved 1 7/31/09 Riverside Caunri County of Riverside Impact Fees None ki application fo- Cenificatc of Occupancyl Final Inspection Deposit Based Fees for Transportation/Plan Check 16 -Jan -08 None Deposit prior to inspection 2% instead of 3 of construction cost - $50,000 max. initial deposit Deposit Based Fees for Transportation/Inspecdon 16-Jan48 None Deposit prior to Fees inspection 3% removed deposit for water and sewer construction costs - $75,000 max, initial deposit City of Banning • Administrative program processing fee 5 -Mar -08 12 months Upon issue of • Development impact fee Certificate of • Fire protection facilities fee Occupancy • General facility and equipment fee • General plan • Park land fee • Police facilities fee • Solid waste facility and equipment fee • Traffic control facility fee • Water capital facilities fee --ity of Ind io Quimby Fees - S2,193.75 per unit 19 -Dec -07 None From Map Application to Building permit �ity of Moreno Valley Ifnpact Fees - $13,745 8 -Jan -08 None Upon issue of 2ertificate of Dccupancy '.ity of Palm Desert Planning and Service Fee Increase 13 -Dec -07 Six (6) months wI kt submittal for service possible extension leposit based City of Beaumont $5,2171DU reduction (3201o) in Development Impact February 2009 July 2012 Fees and a deferral of DIF collection until "priorto final building inspection" Eastern Municipal District postponed the imposition of an approved fee April 1, 2009 July 1, 2009 `Nater District increase of over $3,000 per EDU. (Approved (May, 2008) but not instituted fee $10,427.00/EDU. Fee until July I, 2009 $7,275/EDU. Savin s:$3,152.00/EDU San Bernardino tote] Deferral: Pending None Upon issue of Single Fancily Detached (SFD) —$15.506.60 Certificate of Single Family Attached (SFA) —$10,997.20 Occupancy • Law enforcement facilities, vehicles and equipment; SFD, $535; SFA, $474 • Fire suppression facilities, vehicles and equipment;, SFD, $663; SFA, $818 • Regional circulation system; SFD, $2,435; SFA, $1,626 • Local circulation system; SFD, 5195; SFA, 5130 • Quimby Act Parkland and open space acquisition and park improvement; AB 1600 parkland and open space acquisition and park improvement; SFD, $6,688; SFA, 55,293 • Library facility and collection; SFD, $534; SFA, $423 • Public meeting facilities; SFD, $765.60; SFA, $605.60 • Aquatics facilities; SFD, $273; SFA, $216 • Storm Drain Development; SFD, $3,418; SFA, $1,411 Victorville • Roads, $4,470.05 Six (6) months wl Upon issue of • Fire, $328.81 possible extension Certificate of • Police, $139.07 Occupancy • Parks, $5,054.87 —Temp. Adjustment, $0 • Facilities, $1,334.35 — Temp. Adjustment, $0 DIF Fees dropoed from $11,300 to $4,900 per unit Coun(y of Tu larc • Law Enforcement I Upon issue of • Fire Certificate of • General Facilities Oceiipancy/Finak • Streets Inspection • Water • Sewer • Stonn Drainage • Parkes S& bbseraW4@*4 Impact Fees - $6,963 — $9,155 per lot City of Ventura Impact Fees — Determined on a case by case basis Approved Six months wl Upon issue of possible six month Certificate of extension occupancy City of Santa Paula 1Inpact Feeg Approved Upon issue of Certificate of Occupancy tty of RoseVlllO hot:il Deferral: $30,092.43 Approved 31-Dec-08 Close of Escrow NO �25R pe.niii( processing Fees paid at issuance of Building Permit fee • Fire Service Construction Tax, $1,107.30 • Public Facilities Fee, $2,821-50 • Regional Sewer Fee, $5,815 • Local Sewer Fee, $305 • Water Connection Fee, $4,675 o Traffic Mitigation Fee, $4,411.13 Development Agreement Fees • Water meter retrofit program, $135 • Public Benefit Fee, $1,280 • General fund contribution, $1,060 • Traffic signal coordination fee, $100 • South Placer animal control shelter fee, $50 • Transit shuttle service tax, $52.50 Other Fees • Electric direction installation fee, $2,000 • Solid waste impact fee $410 `ity of Lincoli'i Fees deferred: Approved Permanent ! -'ertiffcate of NO 1)ccupancy or up to Q Sewer i nonths following Water i ssuance of building CAT permit, which ever D ain a D,"urz.fuS Community Services Fee Traffic Mitigation Dollar amount depends on location in the city. Could be as hi has $4152 1. Sacramento ('nunt%- City of Elk Grove ■ �_ apital Facilities I cc appI 1�ed The Ordinance Issuance of a Final If d9s___:o to • Affordable Hotising Fee implementing the Inspection; OR to the close of • Vei- , Low-Income Housing Trust Fund Fee program will close of escrow OR to escrow, the • Citywide Roadway Fee expire on June 30, the maximum allowed City must be 2010 deferral period (24 the senior lien $18,595 for SF* months) holder on the $11,931 for MF* property, 'Total deferral may depend on project or part of the After this period, city. residential projects may apply for an extension (12Inonihs at the discretion of the City Manager) during which interest Nvi I I accrue C'% ttt odland 20%discount on impact fees Approved Yuba County • Countywide Capital Focilkies Fee, Pending rune 30,2010 Final inspection. NO No deferral • Levee Impact F"-. shall go • PLSP%K ASA Road Improvement Fee; beyond 18 • PLSPNASA Park Improvement Fee; months. • ELSP Road lmprovement: fee: P ELSP Park Improvement Fee. r Olivehtirst Fire liii pact Fee: and • Linda Fire ltn act Fee. City of San Jose Park Fees 2007 Varies Payment of In-Lieu fees m,ay be deferred under a parkland agreement to final inspection for the first certificate of occupancy associated with the use of a 6 residential unit(s) City of San Ramon Quimby Act Dark fees Approved referred until building permit is pulled - *NBANC and city staff arc in active discussions Common QuirAct regarding additional fee deferral actions practice is to collect park fees at final map approval City of Brentwood Water, wastewater, roadway, community facilities, Deferred to COO/Final parks and trails and administration development Inspection impact fees City of Concord *HBANC and city staff are in active discussions regarding developing fee deferral proposal. Tri. Valley *HBANC and city staff are in active discussions ,rransportation Council regarding developing fee deferral proposal. City of Oakley Repeal of a child care facility fee Approved 10t. Diablo Unified School Facility Fees Deferred to COOIFin4 `.3 -hoof District Inspection Fast Contra Costa The HCP/NCCP provides that the HCP/NCCP Approved 3/14/2010 Habitat Conservation Mitigation Fees are to be automatically updated on Plan /Natural March 15 of every year. For 2009, the Development Community Fees have gone down about 11%. Conservation Plan City of Fremont 10% reduction in development impact fees citywide Approved 12/31/2010 City staff to explore Creation of a package of specific Central Business s collection of fees at District (CBD} incentives including, but not limited final inspection or to, a reduction of Development Impact Fee,s by 25% Certificate of within the CBD area until December 31, 2011. 75% Occupancy of the fees will be collected during this time. City of Livermore *HBANC and city staff are in active discussion regarding developing fee deferral proposal. � School District School fees Ongoing Upon issue of Certificate of Occupancy City of Dublin Reduction to traffic impact fees anywhere from 3 Approved percent to 1 1 percent Two year moratorium on public art fees for residential and coin mercia] development of 20 unit§ or more. City of Petaluma "" ' cunncc on ce which is due at time of setting meter. Approved None Final Inspection or NO Certificate of Occupancy Affordable housing in lieu fees Paid at close of escrow City of Napa Upon issue of Certificate of Occupancy City of Modesto Capital facilities fee Upon issue of Removal of affordable housing requirements and set_ Certificate of asides for SFR Occupancy Fee deferrals from most school districts as in the Modesto MSA due to a pre-existing agreement. County of San Diego Residential and non residential Impact fees are Approved Upon final inspection deferred. Deferred fees include: transportation or Certificate of impact fee, Parkland dedication, Drainage and Occupancy Sewer. Total: $18,000 City of San Diego Affordable Housing in lieu fees reduction. For Approved July 2008 to July project of 10 or more units, $5.01 /SF. For projects of 2009 legs than 10 units, the fee will be S3.16/SF. City of Chula Vista Deferml of development impact fees to Certificate of Approved Upon Certificate of Occupancy for all development projects. Occupancy