TUCSON CITIZEN: Tues., May 17, 2005
Growth pays for itself in 4 years, SAHBA finds
David Pittman
When does growth pay its own way?
Having heard the question so often, the Southern Arizona Home Builders Association has sought out the answer.
According to a new, 125-page study commissioned by SAHBA, growth pays for itself in metropolitan Tucson by the end of four years. Every year after that, growth is a revenue generator for local governments.
"Five or six years ago we didn't know if new homes paid their way," said Ed Taczanowsky, SAHBA's president. "This study shows that we are paying our way and then some."
The Tucson Citizen was given an executive summary of the study. The full report will not be released until next month, after SAHBA's board has reviewed it. The study was conducted by Elliot Eisenberg, an economist with the National Association of Home Builders. Eisenberg said he used a conservative set of assumptions in making his calculations because he didn't want to be accused of cooking the books.
"We can stand by these results under any condition," he said.
Last year, 9,071 new home permits were issued in metropolitan Tucson. According to the study, in the first year after being constructed, these homes resulted in:
~ $11.1 million in expenditures by local governments to provide public services to new households at current levels
~ $114.5 million in tax and other revenue to local governments
~ $149 million in capital investment for new infrastructure and equipment undertaken by local governments
In a typical year after the first year, the 9,071 homes resulted in:
~ $22.1 million in local government expenditures to continue providing services at current levels
~ $48.1 million in tax and other revenue for local governments
The study said all government debt incurred in providing services and infrastructure to those living in the new homes can be paid off entirely after four years.
"After that, the operating surplus from home building is available to finance other projects, reduce taxes or decrease construction-related fees," said the summary of the report.
In determining government expenses per single-family housing unit, Eisenberg used data that local governments are required to provide to the Census of Governments. In estimating government infrastructure costs associated with new housing, Eisenberg used a model recommended by the director of the nonpartisan Congressional Budget Office.
"Home buyers are paying their way," Eisenberg said. "The home-building industry is not freeloading off existing homeowners. It is helping them."
Sharon Bronson, chairwoman of the Pima County Board of Supervisors, doubts the SAHBA study is accurate because she said county government is unable to keep up with the costs of providing needed services to growing areas.
"I'm looking forward to examining the document," she said. "We are on the same page because we both believe growth should pay for itself."
County Supervisor Ray Carroll said it's nice to know growth pays for itself in four years. "I hope my kid's college tuition pays off sooner," he said.
"I'd like to see the document before making any comment about it," said Tucson City Councilman Steve Leal. "The key to this stuff is in the methodology. But I am sure the document will be helpful and give us a better basis for discussion."