Residential Growth Moratorium


1 comment

  • Avatar
    IMPLAN Support

    Hi Richard,

    Thank you for your post. Please see below for our response.  

     I am looking at the impact of a residential growth moratorium - which essentially ends residential development in a jurisdiction.  I am trying to estimate the "lost" economic activity from this foregone development - ie how much would county economic activity be greater if this development was allowed to occur.  The construction impacts are straightforward - but I have a question on calculating the economic losses in the form of reduced local spending by the residents who would purchase this housing if it were made available;

    In estimating the economic impact of the occupancy (not construction) of a residential unit - what is the difference between: 1)  using the Household Income Change as the activity type; and 2) importing the Household Spending patterns (Activity Options>Import>Institution Spending Pattern) and adjusting for DPI.  I ran it both ways and apart from the fact that using the Household Income Change only yields an induced impact - the results are pretty comparable.  Is one better than the other?  

    Neither is necessarily better – it depends on what data you bring to the model as inputs.  In a Household Income Change (HIC), the initial amount is distributed among local spending on commodities, imports of commodities, savings, other transfers, and taxes, but the only amount passed to the model and that generates results is spending on locally produced commodities.  The Household Spending Pattern (HSP) approach only counts spending on commodities.  When you import the HSP, the LPP is set to remove imports.  So, if you know how much households will spend on commodities (goods and services), then use an HSP, but if you know only the income levels of the households, you probably should start with an HIC.

    In general, then, results are going to be higher with HSPs, if you plug in the same $ value for each.

    Finally - and to confirm - using either approach - the state and local revenue estimate derived from the model is for the economic activity generated by the spending (local purchases made by) - not by the households themselves - and as a result - a separate calculation of the tax revenues associated with these residents would need to be calculated outside of the model to calculate the actual fiscal impacts on the county.

    That’s correct, except that the spending and taxation of owner-occupied dwellings is treated as an industry, so results from that (which include property taxes), will be included in the tax results.  One way to obtain direct estimates of household taxes is to view the detailed IxC SAM to see IMPLAN estimates of tax payments by each household income class, and calculate shares of the column totals to estimate effective tax rates paid on total income (that is, all sources of income, not just wages and salaries).  In general, though, we recommend using your own estimates of direct taxes wherever possible.

    My question is - is it correct to put the "lost" resident incomes in the Household Income activity - and also to confirm that the fiscals from this (or the household spending approach) include only spending based incomes - not the incomes of the households themselves.

    See above.  If you have income values for the households, then you should use HIC.  If you already have estimates of how much those households will spend on commodities, then use HSP.

    There are some issues with reporting fiscal results.  For example, if there’s vacant land, presumably some property taxes are being paid on it.  If it is improved, those taxes will be higher.  But IMPLAN will assume households, via their purchases of “owner-occupied dwellings” are paying property taxes on the total value of the land and improvements.  So, to represent the difference between a world with and without the development as being the results you obtain directly from IMPLAN would be inaccurate.

    Hope this helps and let us know if you have any additional questions.

    Thank you,

    IMPLAN Staff

Please sign in to leave a comment.