N.C. State Study: Construction Can Pay For Itself Over Time
Posted May 26, 2005 6:42 a.m. EDT
RALEIGH, N.C. — A study by North Carolina Sate University suggests Triangle cities and counties do not always need to consider new taxes to pay for additional services needed as a result of growth.
The study finds that over time, the construction can pay for itself.
Dr. Mike Walden, an economist at N.C. State, estimates a new 100-home subdivision and the commercial business that typically follows can generate $556,000 in annual tax revenue.
"There's enough new tax revenues generated to fund the services, additional schools, new teachers and additional roads for commuting that a typical subdivision generates," Walden said.
Walden said he believes to provide new services, local governments would have to spend approximately $553,000 each year.
The key to this formula, Walden said, is timing.
First, new businesses have to come quickly. He also suggested cities and counties should revaluate homes more often.
Tim Minton of the Home Builders Association hopes these figures will convince local government new fees are not always the answer to a budget crunch.
Last year, Fuquay-Varina raised one fee on new homes by more than $7000.
"When you raise a fee, that means there's someone else there that may not be able to purchase the American dream," Minton said.
The Home Builders Association said it plans to present a copy of the study to all municipalities in Wake and Durham counties.
The N. C. State study also shows how home building fuels the Triangle's economy. Construction of a 100-home subdivision has an economic impact of $31 million with 147 jobs created during the building process.
Once residents move in and commercial development follows, an estimated $6.7 million of income is pumped into the local economy and 174 permanent jobs are created.