The Home Builders Association of Maryland

Issue:
Increasingly, there is a view among local policymakers that new homes do not pay for themselves. This view is promulgated most forcefully by anti-growth advocates, who have emerged as a powerful force throughout the country, but particularly in certain metropolitan areas. The view of these people is that the cost associated with the service demands of households (e.g., public safety, schooling) outweighs the revenue generation of the new home (through, for instance, property taxes) and the household that inhabits it (income taxes, etc). This has caused local governments in and out of Maryland to enact a host of policies that frustrate the homebuilding market, including building moratoria, tighter adequate public facilities ordinances, and impact fees.

Solution:
The Home Builders Association of Maryland hires Anirban Basu to conduct a fiscal impact analysis of new homebuilding activities. Anirban begins by studying homebuilding in Harford County, MD, and then proceeds to apply his developed methodologies to several other Maryland markets, including Baltimore, Howard and Anne Arundel counties, MD. His study shows that new homes do in fact pay for themselves, and that fiscal shortfalls at the local level are not due to homebuilding, but to the inability of older neighborhoods to appreciate sufficiently in value, often because of insufficient public investment in these neighborhoods.

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