New home construction in Douglas County isn't a financial burden, but rather a benefit to the county, says the Builders Association of Western Nevada. And it commissioned a study to prove it.
The study comes as political and legal battles over growth continue in Douglas County.
The builders' argument is based on data collected and crunched by Brian Bonnenfant, an analyst in the University of Nevada Small Business Development Center. The information then was analyzed by Elliot Eisenberg, a senior economist with the National Association of Home Builders.
The conclusion? Single-family construction and multifamily construction pay for themselves within the first year because the ongoing economic benefits accumulate faster than the ongoing costs.
"The surplus, or net tax to local governments, accumulates fast enough so that, even if local government undertakes all capital investment before the homes are built, the surpluses can be used to pay off the debt entirely by the end of the first year," says Eisenberg.
Based on the 451 residential building permits issued in Douglas County in 2006, he found the one-year local economic benefits of building those homes include: $132.8 million in local income, $13.3 million in taxes and other revenue for local governments, and 3,109 local jobs.
That includes the economic impact of the construction activity itself, and assumes the workers spend part of their construction wages locally.
The same 451 homes also generate ongoing economic benefits every year that include $19.5 million in local income, $2.2 million in taxes and other revenue for local governments, and 497 local jobs.
That includes taxes paid by residents and their participation in the local economy.
Those figures assume a new single-family home built in Douglas County costs $508,693 and is built on a lot costing an average of $68,365. The figures assume, too, the builder and developer pay $16,820 in permit and special fees, and the buyer incurs an average annual property tax payment of $3,048.
In each year after the first, the same 451 single-family homes create $2.2 million in tax and other revenue for local governments.
Local governments, meanwhile, need to provide about $773,000 worth of services to them, Eisenberg says. The difference is a $1.4 million "operating surplus" that can be used to service or pay down the debt.
"It is important to point out that the operating surplus is the subsidy from new construction to existing construction," says Eisenberg. "Without this large annual subsidy, property taxes would either be higher than they are, public services would be of lower quality than they are, or some combination of both."
SIDEBAR
Digging deeper
More detail on the analysis of Douglas County homebuilding, the complete results for multifamily construction, and a technical explanation of the cost model is available in the report: "The Local Impact of Home Building in Douglas County, Nevada: Comparing Costs to Revenue for Local Government." For a copy, contact Rick DeMar at 882-4353 or rdemar@bawn.org.
