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The Economic Impact Calculator for Residential Renovation is designed estimate the economic impact of renovated residential construction. The calculator can be used to estimate job creation, gross fiscal revenues, and economic growth due to residential renovation in the short term and the long term. Economic growth includes total increases in employee compensation, taxes on production and imports, and return on investments across all industry sectors. Economic growth & job creation during the short term happens while construction is actually taking place. Economic growth & jobs supported over the long term occurs after construction, when the residential development is in operation. Jobs supported when the development is in operation are typically sustained as long as the development is in operation. Fiscal revenues are gross revenues collected by state and local government. Fiscal revenues raised in the short term are from fees collected before the development is completed: permitting fees, recording fees, utility hookup fees, etc. Long term fiscal revenues are from real estate taxes collected each year. Please read the directions, notes and sources below for more information about using the calculator and interpreting its estimates.
Enter the following data for a proposed development:
County/Independent City where home(s) are proposed to be built:
Type of building*:
Total number of units: unit(s)
Average square feet per unit to be renovated: sq. ft.
Proposed renovation type**:
Anticipated demolition type***:
Anticipated Construction Cost: If you would like to use your own construction cost estimate, enter it here. Only include new construction cost (this figure should not include land value, permitting costs, etc.; leave blank if unknown):
|Estimated Renovation Cost†:|
|Short Term||Long Term|
|Estimated Job Creation:||Estimated Jobs Supported:|
|Estimated Gross Fiscal Revenues:||Estimated Gross Fiscal Revenues†††:|
|Estimated Local Economic Growth:||Estimated Local Economic Growth:|
Interpreting the results:
The calculator’s short-term economic impact estimates are based on its construction cost estimate. The accuracy of the estimate depends on the detail of data entered by the user. Results are most accurate for single buildings and less accurate when aggregated for large renovations. In addition, the calculator’s construction cost estimate assumes average quality of construction. If your development includes higher quality construction specifications (e.g. green building standards), short-term economic impact is likely to be greater.
The calculator’s long-term economic growth and job creation estimates are based on median rents in the selected county or independent city. If the units in your proposed renovation will be rented at a rate that is higher than the gross median rent for the county in which the renovation is proposed to be constructed, long-term economic growth will likely be higher. Actual rent to be charged per unit should include both rent paid by the occupant and any subsidy received by the unit owner on behalf of the occupant. If the units proposed are being rehabilitated for sale, economic impact will be lower than the calculator estimates because median owner costs are typically less than median rent and sold units typically do not require management and maintenance employees.
Economic impact is both local and regional. The localization of economic impact depends on attributes of the locality of the proposed renovation. Estimates of job creation and economic growth in this calculator are based on the US Bureau of Economic Analysis Economic Regions, which are defined based on employment patterns and market connectivity. Use your knowledge of local employment patterns and the renovation’s ownership and management to determine whether economic impact is likely to be more or less localized. For example, if many people in your locality work in the residential construction industry and the proposed renovation will be locally owned, economic impact will be more localized.
Economic impact is affected by many characteristics of the local economy and development details, however many of these variables are not considered in this calculator. In addition, the calculator does not account for very recent economic changes (e.g. major population increases or decreases, the construction of a new highway or mode of transit that significantly impacts regional economic connectivity, the addition or closure of a major construction firm or construction materials supplier, etc.). Use your knowledge of the local economy to gauge the accuracy of the estimates. If you would like help interpreting the calculator’s results or to request a more in-depth economic impact study please contact Mel Jones at the Virginia Center for Housing Research at Virginia Tech (Mel.Jones@vt.edu).
RSMeans Square Foot Costs 2014, RSMeans Commercial Renovation Cost Data 2014, RIMS II multipliers produced by the Regional Product Division of the Bureau of Economic Analysis, U.S. Census Bureau American Community Survey, Weldon Cooper Center for Public Service Virginia Local Tax Rates 2012, Virginia Economic Development Partnership Guide to Local Taxes, Virginia Circuit Court Deed Fee Schedule.
* Each building type is associated with maximum square footage based on data availability. If your entry does not fall within the maximum square footage assigned to each building type, the accuracy of the calculator’s estimates will be diminished. For greatest accuracy, use the calculator to estimate economic impact on a building-by-building basis. Sum the economic impact of each building to determine the total impact of a proposed renovation. The upper limit of square footage for each building type are listed below
- Single Family Detached: 63200 square feet per unit
- Single Family Attached: 3800 square feet per unit
- Garden Style Apartments (1-3 story): 36000 total square feet (all units)
- Multifamily Mid Rise (4-7 story): 100000 total square feet (all units)
- Multifamily High Rise (8-24 story): 600000 total square feet (all units)
** “Total/gut renovation” is a complete and total renovation of a building or house. Everything in the facility is new with the exception of the structure itself, including parts of the exterior and interior down to the bare walls. A building permit is required and new electrical, plumbing, mechanical, windows, doors, exterior roof and siding, and interior surfaces must meet or exceed local code. Typically, 50% of the facility or more will be replaced in a “gut renovation.”
** “Partial/upfit renovation” is a limited process of lesser changes and repairs to a building, house or parts thereof in an effort to upgrade use and/or condition. Portions of the facility are new with the exception of the structure itself, including the exterior and interior. Also termed an “up-fit,” this type of renovation is improvement work within an empty shell space where mechanical, electrical and plumbing are already supplied. A building permit is not always required. Typically, 50% of the facility or less will be replaced in a “partial renovation.”
*** “Basic Demolition” often requires services such as: obtaining necessary permits, submitting necessary notifications, disconnecting utilities, rodent baiting, and development of site-specific safety and work plans. Typically, demolished debris is repurposed, recycled or removed to an offsite location. All utilities for the site are typically closed in a safe manner for the next use of the site or restored to a natural condition.
*** “Hazardous Demolition” often requires services such as: mitigating and abating hazardous or regulated materials, obtaining necessary permits, submitting necessary notifications, disconnecting utilities, rodent baiting, and development of site-specific safety and work plans. Typically, hazardous debris is not repurposed or recycled, but removed in a regulated process and stored according to requirements in an offsite location.
† Construction cost estimates are customized based on type of building, square footage of the building, and location. All construction cost estimates assume average quality of construction. RS Means describes average quality construction as “…a simple design and built from standard plans. Materials and workmanship are average, but often exceed minimum building codes. There are frequently special features that give the residence some distinctive characteristics.&ClosepenCurlyDoubleQuote; Construction quality categories includes: Economy, Average, Custom and Luxury, from least to most cost per square foot respectively.
†† Estimates of economic impact are based on construction cost, local median rents, local median home values, local tax rates, and RIMS II input-output multipliers. Estimated Fiscal Revenues are for the selected county only. Job Creation and Local Economic Growth are regional estimates. Residential construction in the selected county or independent city will likely have economic impacts in a broader region.
††† Estimated Fiscal Revenues in the long term is an estimation of annual real property taxes (real estate taxes). Therefore, the long term fiscal revenue shown in the calculator is an estimate of taxes to be collected on the development in a single year at 2012 local tax rate.
The data estimates provided through the Economic Impact Calculator for New Residential Construction are intended for informational, educational and research uses. The information may not be used for commercial purposes or re-marketed. Any reproduction and distribution of this information must clearly identify Housing Virginia and SOURCEBOOK as the provider of the information.