Debate won't stop residential growth
Not so fast, say other researchers on the cost of residential development. New homes require more spending on county services, such as schools and law enforcement. According to authors of studies by Clemson University, University of Georgia and American Farmland Trust — which promotes farm preservation — most homes require more government spending than the revenue they generate. The opposite is true for businesses and industry. “The numbers clearly show the fallacy of depending on residential development as the road to a sound growth policy,” Jeff Dorfman, a Georgia professor of agricultural and applied economics, wrote in a 2002 study of four counties in the Peach State.

Last month, a study commissioned by the Home Builders Association of Fayetteville looked at the number of building permits last year and painted a rosy picture: All of those homes, apartments and condos added $286 million to the local economy and sustained a net 2,251 jobs across various sectors.

Not so fast, say other researchers on the cost of residential development. New homes require more spending on county services, such as schools and law enforcement.

According to authors of studies by Clemson University, University of Georgia and American Farmland Trust — which promotes farm preservation — most homes require more government spending than the revenue they generate. The opposite is true for businesses and industry.

“The numbers clearly show the fallacy of depending on residential development as the road to a sound growth policy,” Jeff Dorfman, a Georgia professor of agricultural and applied economics, wrote in a 2002 study of four counties in the Peach State.

In an interview this month, Dorfman agreed that new homes sustain construction jobs and boost the local economy.

“I like to jokingly tell people it’s those deadbeats that buy the houses that are the problem,” he said. “The trouble is county and city services, especially schools, are very expensive.”

Bill McCoy, a consultant and the former director of UNC-Charlotte’s Urban Institute, said most studies show that for every $1 that a typical home generates in revenue, it requires about $1.15 in local government services. Of course, very expensive homes more than pay for themselves, he said.

Cumberland County commissioners are well aware of those needs. The school system wants the county to borrow $55 million for more classrooms. Library officials say they need $37 million over 25 years, and the Health Department would like a new building that’s expected to cost in excess of $22 million.

G. Donald Jud, a retired business professor at UNC-Greensboro and now a consultant, wrote the study for the Fayetteville home builder group. He said he divided the economy into sectors and multiplied the effect those sectors have on one another. For instance, he assumed that any new home built brings a family to the community that wouldn’t otherwise live there. And that family, he said, will buy groceries and go to the multiplex, sustaining local jobs.

The kind of studies that Dorfman’s did at the University of Georgia don’t factor that multiplier effect, Jud said. “Therefore, I believe they underestimate the total revenue impact of the new housing construction.”

Jud has colleagues to back his claim. One is Mike Walden, an N.C. State professor who specializes in agricultural and resource economics.

“Don (Jud) is well-qualified to do this study,” Walden said in an e-mail. “His approach sounds like exactly the one I would do, and have done for the Triangle, and it is the standard approach used by economists.”

Billy King, chairman of the Cumberland County Board of Commissioners, said the conflicting studies won’t dissuade the board from its policy of rezoning land suitable for development and helping to pay for water and sewer lines that spur construction.

“I have long subscribed to the notion that residential development — while it’s good — we need to also attract manufacturing and industrial activities to enhance the tax base,” he said.

David Sykes, president of the local home builders, said the study was a first for the Fayetteville area. He said it was unfair to compare studies, regardless of the methodology, of other communities to this one.

He is certain about one thing: Developers build the streets and water and sewer lines and then dedicate them to the city for perpetual maintenance.

“From my perspective, I can’t see where limiting growth would help,” he said. “The more we grow, it helps everybody in the tax base.”