The numbers game: New study shows Loudoun homes do, on average, earn their keep
A new study shows Loudoun’s residential development isn’t costing the county as much as it previously thought and, on average, new homes offset the drain of older county housing on county coffers.
In a 2011 analysis, Loudoun’s Department of Economic Development Commission’s Policy and Implementation Committee came up with $1.62, the amount residential development cost the county for every $1 in tax revenue generated.
According to the data in that study, the county was losing money per residential unit built.
However, according to the new study, that $1.62 number is wrong.
Conducted by real estate advisers Robert Charles Lesser & Co. (RCLC), the same group hired by Loudoun to assess the fiscal and market impact of the Metro’s extension to Loudoun, the 2015 analysis showed the average house of any age and type cost the county $1.20 for ever $1 in revenue, showing the county is losing 42 cents less than it thought.
That brings Loudoun’s residential development closer to the national average of $1.18 for every $1 in tax revenue for housing, according to a 2009 Meta-Analysis of Cost of Community Service study from the International Regional Science Review.
All-In Loudoun, an economic development group made up of Loudoun citizens, companies and developers, commissioned the new study to check the validity of the 2011 study and check the actual fiscal impact of new housing coming to the county.
The $1.20 isn’t news. The numbers were released last year while All-In Loudoun was in its first stage of research when gauging the reaction of various county officials. In the process, The Washington Business Journal caught wind and reported the numbers.
“The number may not be as high as we’ve been operating,” Supervisor Shawn Williams (R-Broad Run) told the Business Journal in October. “That said we still need to be leery of the net of bringing in new residential. It still does have a burdensome impact. Residential, even at $1.20, doesn’t pay for itself.”
Such was the general feeling at the time regarding the numbers. However, Andrew Painter, a zoning attorney with Walsh, Colucci, Lubeley & Walsh, P.C. working with All-In Loudoun, said the RCLC study has expanded since the numbers leaked.
The dollar figures found haven’t changed, but the analysis showed that new housing in the county does break even and helps level the playing field made crooked by older residential development in Loudoun, which costs the county more than they’re worth, the study said.
The “breakeven” point RCLC sought is the dollar figure at which the county would neither be making or losing money for a given unit. Anything above that number produces revenue for the county and anything below it is a net loss.
For a single family detached home, that breakeven number is $607,000, according to the study. On average, Loudoun’s single family detached homes built in 2014 were worth $676,000. The average cost of a townhouse is $456,000, which sits above the $400,000 breakeven point for townhomes determined by the 2015 study. The study found this trend across all residential types for new homes built this year.
The study further said the 2011 PIC study didn’t take into account the other tax revenue the residents who fill housing are generating by contributing to commercial development through sales and utility taxes. It also said $152 million of state and federal funding is attributable to residential development compared to $5 million contributed to commercial last year.
While this sounds like good news, there’s more to consider when deciding on a rezone from commercial to residential or a new housing development, Supervisor Matthew F. Letourneau (R-Dulles) said.
Painter said the purpose isn’t to prove the county should build residential but to make the dialogue on decisions on rezones and development easier. Once decision-makers are confident in the numbers, they can focus on the issues at hand.
“The one thing that should not be debated are the numbers,” he said. “This study purely is to show that the homes that are being built are positive for the county ... Some of the older homes in Ashburn, Sterling, Leesburg, they're not paying their way. They’re just not … Something’s got to be done.”
Painter hopes the numbers will be used by the county, but Letourneau voiced skepticism.
“I think the reaction is we’ll take it into account and take a look at it and at some point the county will need to do its own fiscal analysis,” he said. “Sometimes the devil’s in the details.”
Land use has long been a sticking point with Loudoun’s residents and the Board of Supervisors, who have been chastised by some groups for being against new residential. Letourneau said it’s a hard balance to strike between commercial and residential and fitting both into the county’s Comprehensive Plan.
If the board approves a rezone from a commercial plot of land for residential, that decision cuts off the possibility of a commercial build “massive revenue generator” as opposed to the residential, which is either cost neutral or cost negative, Letourneau said.
More residential also creates issues with traffic and student population that supervisors take into account. Letourneau represents a district which has seen both commercial and residential growth with the expansion of the Silver Line. With it has come overcrowding in Dulles schools and higher congestion.
“It doesn’t really matter whether [residential] revenue is positive or negative, it’s still going to create issues. It’s not easy,” Letourneau said. “I’ve always said look if we can get our infrastructure up to speed literally, if we can get our people moving and get traffic dealt with and not have the types of problems that we have been having we might be more open to doing this over time. Sometimes, it’s a question of timing.”
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