Not all builder and trade associations endorse tolls
Recent headlines in CTMirror read, “Builders, trades, launch new ad to push for tolls on CT highways.” The Home Builders and Remodelers Association of Connecticut (HBRA-CT) does not count itself among this coalition nor has it endorsed the implementation of tolls on our highways.
HBRA-CT is a statewide trade association of small businesses whose members are responsible for 70 to 80 percent of all residential construction in Connecticut in a given year.
While our association has not taken an official position on the tolls question, I would personally suggest policy makers to think long and hard about the potential ramifications to our industry and consequential impacts on housing accessibility and affordability before tolls are implemented.
We understand that roads and infrastructure need repair, but in the end, at least with respect to the residential construction industry, is there a less onerous way forward? As mentioned in a 2017 report produced by the Congressional Research Service, “One obstacle to increased use of tolling is that tolls are a relatively inefficient way of raising revenue. The costs of toll collection on many existing toll roads exceed 10 percent of revenues even if all tolls are collected electronically, not including the cost of toll collection infrastructure.
This compares unfavorably to the cost of collecting the existing federal motor fuels tax, estimated to be less than 1 percent of revenues.
On any given day, numerous deliveries can be seen coming and going from active construction sites across Connecticut. The additional costs to our friends in the motor transport industry will be passed through to the builder and developer, leading to increased costs associated with the improvement of both the raw land and the construction of home. The builder will pass through those costs.
Finally, the homebuyer will shoulder the brunt of those additional costs in the form of higher home prices. What does this mean? Each home takes four to six months to build with close to one thousand worker–days and well over one hundred deliveries. Reasonable estimates show that the implementation of tolls could impact the price of a new home by 1- 2 percent depending on the location. That would mean a new home built today at the cost of $350,000 will cost an additional $3,500 – $7,000 to build.
Couple this with the fact that the 2019 Annual Report produced by the National Association of Home Builders titled, “Priced-Out” claims for every $1,000 the price of a new home is increased in the state of Connecticut, 696 families are priced out of the market. Ultimately, fewer homes will be built placing greater strain on the resale market and making homeownership less attainable for more Connecticut residents. Fewer affordable home options drive businesses to grow elsewhere.
Single-family housing permits which are tracked by the U.S. Census Bureau show that our Connecticut housing industry has been at deep recession levels since 2009. Single-family housing starts have not broken 2,500 in 12 years. In contrast, prior to the 2008 recession when our industry was experiencing normal market trends, we saw averages of nearly 10,000 new single-family homes a year. New homes are being produced at only a fraction of what is needed just to maintain Connecticut’s current housing stock numbers.
With one of the oldest housing stocks in the country and a workforce population that, in many parts of our state, finds it necessary to commute significant distances to the new homes being built, is this really the right time to increase their commute costs and place even greater strains on housing affordability in Connecticut?
Chris Nelson is President and Chairman of the Homebuilders & Remodelers Association of Connecticut.
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