Local Building Industry Announces Results of Economic Impact Study

Norman Builders Association

Norman Developers Council

(Norman, Okla.) For a long time local builders and developers have said they make significant economic contributions to the growth of Norman—now they have the numbers to back them up.

According to Elliot Eisenberg, housing policy economist for the National Association of Home Builders (NAHB), in 2004 Norman builders and developers generated nearly $80 million in local income, $9 million in taxes and other revenue for local governments, and 1,597 local jobs.

And that is just in the first year of building 652 single-family homes and 200 multi-family homes. The annual recurring impacts on those same homes include $20 million in local income, nearly $3 million in taxes and other revenue for local governments, and 419 local jobs.

Eisenberg recently presented the results at a luncheon attended by more than 70 city officials and community leaders as part of a 2005 Economic Impact Study he conducted for the NAHB.

“This report captures what builders and developers have been saying for a long time… we invest in our hometown,” said Steve Risser, president of the Norman Builders Association. “New homes really do equal jobs, disposable income and more tax revenue for local services.”

The economic impact study was commissioned by the Norman Builders Association and the Norman Developers Council to evaluate the effect of residential construction activity on income, jobs and taxes generated locally. The data included 652 single family homes and 200 multi-family units built in Norman but took into account the economic effect on Canadian, Cleveland, Grady, Lincoln, Logan, McClain and Oklahoma County.

“I was surprised by the numbers,” said Trey Bates, chairman of the Norman Developers Council. “As a developer you go about your daily business working to create your own community within Norman. It is amazing and validating to hear the financial impact that we, builders and developers, have on our community as a whole.”

Seventy percent of Norman’s general fund income is derived from sales taxes. Gross receipts taxes paid to the city from construction and real estate activity account for about $10.7 million in tax and other revenue for local governments, not counting the trickle down effects, like homebuyers purchasing furniture or subcontractors buying local supplies, which increase the fiscal impact of growth on the city's coffers.

The economic impact study also addressed the common misperception that “growth doesn’t pay for growth.” According to the NAHB study, growth in Norman not only pays for itself in just four years, but also creates an operating surplus as well.

Home building generates local economic impacts such as income and jobs for local residents, and revenue to local governments. It also typically imposes costs on local governments—such as 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.

In the first year of building 652 single family homes in Norman, an estimated $9.4 million in tax and other revenue for local governments was generated; $1.1 million was spent by local government to provide public services to the new households; and $8.3 million in capital investment for new structures and equipment was undertaken by local governments

In a typical year after the first construction phase, the 652 single family homes resulted in $2.9 million in tax and other revenue for local governments and $2.1 million in local government expenditures needed to continue providing services at current levels. The difference is an $800,000 “operating surplus.”

After 15 years, the homes will generate a cumulative $50.1 million in revenue compared to only $41.6 million in costs, including annual current expenses, capital investment, and interest on debt.

The money can then be used to advance other development projects, implement tax cuts, or lower fees for new construction. "Homebuyers are paying their way," Eisenberg concludes. "The homebuilding industry is not freeloading off existing homeowners.”

According to Bates the economic impact study did an excellent job spelling out the tangible economic benefits of home construction in our community.

“Naturally, we are pleased to see the scope of the real estate development industry’s efforts quantified,” said Bates, “but the numbers are just as significant to us as Norman citizens.”

These numbers show how builders and developers are major contributors to our community. Our industry helps provide adequate public services and education for all of our children, supports the economic viability and marketability of our city, and helps maintain a city where all of our families and their generations can proudly call home.”

“Every person in the real estate development industry should be proud of what we have heard today. Our work and livelihoods do make a difference in our community,” added Risser.

If you have any question, please contact the Norman Builders Association

Trey Bates, NDC Chairman

(405) 229-9687 or trey@hallbrooke.com

Wanda Frost, NBA Executive Director

(405) 360-4161 or normanba@coxinet.net