Habitat for Humanity of Charlotte Economic Impact Analysis 2013

Transcription

1 Habitat for Humanity of Charlotte Economic Impact Analysis 2013 Prepared by Habitat for Humanity of Charlotte Reviewed by the Center for Real Estate Belk College of Business August 2013

2 Executive Summary Habitat for Humanity of Charlotte has marshaled substantial resources and has been a significant economic force in the City of Charlotte over the last thirty years. The total estimated economic impact is $500,000,000 over thirty years. As Habitat Charlotte has grown exponentially, the estimated economic impact in Charlotte is at least $36,000,000 annually. Community Volunteers have worked over 1.25 million hours valued at $23,000,000. Property Taxes paid by owners of Habitat homes since 1983 total $10,300,000. Habitat Homeowners save $5,000,000 annually compared with renting. Page 2 of 6

3 Analytical Methodology All economists agree that the direct amount of investment in housing is not the final economic impact of home building activity. Some multiplier of the amount invested must be used to account for indirect economic benefits. The Piedmont Public Policy Institute commissioned a recent study on The Economic Consequences of Land Use Regulations on Jobs, Families, Communities and Housing Affordability in Mecklenburg County i that directly addresses this issue of the multiplier. The authors of the study are: Dr. N.V. Desai Dr. Linette Fox Department of Business and Economics College of Professional Studies Johnson C. Smith University Sherrill A. Hampton, J.D. Former Special Assistant to the President and Director of the Center for Applied Leadership and Community Development Johnson C. Smith University Dr. G. Donald Jud Jud & Associates This study explains that the multiplier of economic impact occurs in two distinct phases, the construction phase and the occupancy phase. Both phases have an impact on employment, labor income, value added (regional GDP), output (total business revenues), and local tax revenues. The construction impact is immediate while the occupancy impact is annual and therefore must be expressed as a Net Present Value of future benefit. ii The multiplier applied in the construction phase for Mecklenburg County derived in this study is approximately 2.93 times the direct expense for the creation of the housing. The corresponding multiplier for the Net Present Value of the occupancy period is approximately 8.3 times. The total impact of both phases in Mecklenburg County would therefore imply a multiplier of times the direct expense for housing. iii By contrast, Habitat for Humanity International recommends a US multiplier of 7 times direct investment. This number was developed by reviewing information from various chambers of commerce in their economic analyses. Habitat for Humanity International notes that the National Association of Home Builders (NAHB) uses a somewhat lower number than 7 times. Thus, we find the study described above sets the extremes for Mecklenburg County of 2.93 Page 3 of 6

4 times if we were to use only the construction impact and the higher total number of if the first ten years are calculated using a Net Present Value calculation. The average of the extremes is 7.08 times, almost exactly the factor recommended by Habitat International. Once a multiplier is determined, it must be applied to actual or expected expenditures for goods and services. Habitat for Humanity of Charlotte compiled the data used in this report and is solely responsible for its accuracy. The local statistics were taken from Habitat Charlotte s historical data and archives. The Center for Real Estate in the Belk College of Business at UNC Charlotte reviewed this report to assess the reasonableness of the methodology. The Center for Real Estate makes no representations as to the accuracy of the data or the conclusions presented herein. Total Economic Impact Habitat for Humanity of Charlotte has been at work as a home builder and mortgage lender since 1983 in Charlotte, NC. During that time, the affiliate has constructed, renovated or repaired 1200 homes. The numbers began slowly, climbing to over 100 projects per year each of the last two fiscal years. The overwhelming majority of activity has occurred in the last 15 years. Early houses cost approximately $30,000 per unit while current costs of new homes equal $90,000 per unit. We have conservatively estimated the average cost of a new home at $65,000 per unit over the 30 year history of our work. For repairs, we only counted the value of the work and not the value of the entire home. The average direct cost of each type of project unadjusted for inflation is as follows: Total number new homes built 1000 x $65,000 = $65,000,000 Total number homes acquired and renovated 100 x $65,000 = $6,500,000 Total number homes repaired 100x $20,000 = $2,000,000 Total direct investment in housing = $73,500,000 Using the multiplier parameters described above and applying them to total direct investment of $73.5 million, we find the following total economic impact: Low: $73,500,000 x 2.93 = $215,355,000 over last 30 years Middle: $73,500,000 x 7 = $514,500,000 over last 30 years High: $73,500,000 x = $825,405,000 over last 30 years Page 4 of 6

5 Annual Impact Another approach to understanding total economic impact is to apply at a multiplier to total revenue/expenditure of the entire ministry on an annual basis. This activity picks up total employment, direct cost of housing, retail sales, recycling, mortgage serving and all other dollars expended during the year. Habitat Charlotte has annual cash expenditures of approximately $12 million. iv Using a range of multipliers from 3 times to 7 times for economic activity, one derives the following: Low: Annual Expenditures of $12,000,000 X 3 = $36,000,000 annual impact Middle: Annual Expenditures of $12,000,000 X 5 = $60,000,000 annual impact High: Annual Expenditures of $12,000,000 X 7 = $84,000,000 annual impact Value Of Volunteer Hours The Independent Sector, an organization which promotes volunteerism and non-profit activity, estimates the value of a volunteer hour at $ v The average number of volunteer hours required to build a house in Charlotte is 1,050. vi For a per house value multiply this number by $18.40 $18.40 x 1,050 volunteer hours = $19,320 per house. The total number of volunteer hours both construction and non-construction donated to Habitat Charlotte in 2013 was approximately 96,000. vii Total 2013 volunteer hours 96,000 x $18.40 = $1,766,400 Calculating the value of $19,320 per house or repair times the 1,200 projects completed suggests that the community has contributed $23,184,000 in volunteer time over 30 years. Contribution To The City And County Total property tax paid by owners of Habitat homes since 1983 = $10,300,000. viii Page 5 of 6

6 Savings To Habitat Families The average monthly rental cost for a market rate apartment in Charlotte is $812. ix The average monthly payment for a Habitat home in Charlotte is $405. x Monthly rental payment of $812 less Habitat payment of $405 equals $407 or $4,884 annually. Multiplying by the approximately 1,100 families who have taken mortgages yields $5,372,400 aggregate savings annually. Endnotes i The Economic Consequences of Land Use Regulations on Jobs, Families, Communities and Housing Affordability in Mecklenburg County, : Piedmont Public Policy Institute and Johnson C. Smith University. ii IBID. p.7 iii IBID Table 1, p.9 iv HFHC accounting records v Provided by Habitat for Humanity International vi Internal Records of HFHC vii Includes Construction, ReStore and all administrative volunteers, Internal Records HFHC viii Internal Records of HFHC ix NCHFA x Internal Records of HFHC Page 6 of 6