THE ECONOMIC
IMPACT of THE
CHATHAM PARK
DEVELOPMENT
Dr. Michael L. Walden, Project Director
North Carolina State University
December 2014
EXECUTIVE SUMMARY
Chatham Park is a planned multi-use “live, work, play” development under construction in
eastern Chatham County, North Carolina. Comprising over 7,000 acres, when fully developed
Chatham Park will have approximately 22,000 residential units, 2.4 million square feet of
commercial space, 16.6 million square feet of office space, and 2.5 million square feet of civic,
school, and hospital space.
A project of this size and scope will clearly have large economic impacts. Indeed, the
calculated economic impacts on Chatham County, the Triangle region, and North Carolina are
significant. After accounting for the leakage of some spending and employment impacts to outside
of the area as well as direct and supply-chain effects within the area, the analysis shows the peak of
annual spending generated from the project will occur in year 40 at $4 billion for Chatham County,
$7 billion for the Triangle region, and $7.7 billion for North Carolina. After year 40 as construction
ends and full occupancy occurs, the annual spending impacts moderate to $3.6 billion in Chatham
County, $6.2 billion in the Triangle region, and $6.8 billion in North Carolina (all dollar values are
in 2014 purchasing power dollars). Also, after the full build-out of Chatham Park, the development
will have created 61,000 permanent jobs in Chatham County, 99,000 permanent jobs in the Triangle
region (including Chatham County), and 115,000 permanent jobs in North Carolina (including
Chatham County and the Triangle region).
Local and state governments will receive a share of the economic gains from Chatham Park
through additional public revenues. After completion, the economic impacts of Chatham Park will
generate $146 million of annual public revenues to Chatham County, $248 million of annual public
revenues to the Triangle region (including Chatham County), and $442 million of annual state
public revenues to North Carolina (all dollar values are in 2014 purchasing power dollars).
2 TABLE OF CONTENTS
General Limiting Conditions ……………………………………………………………. 5
Acknowledgements ……………………………………………………………………… 6
About the Project Director ………………………………………………………………. 6
Introduction ……………………………………………………………………………… 7
Concepts and Measures of Economic Impact …………………………………………… 8
Economic Impact at 10-Year Intervals ………………………………………………….. 10
Construction Impact ……………………………………………………………..
11
Occupancy Impact ………………………………………………………………. 15
Combined Construction and Occupancy Impact ………………………………... 18
Public Revenue Impact ………………………………………………………………….
21
Conclusions ……………………………………………………………………………… 24
Tables
1. Aggregate Construction Impact at 10-Year Intervals ……………………….. 12
2. Annual Occupancy Impact at 10-Year Intervals …………………………….
16
Figures
1. Aggregate Value-Added & Employment Construction Impacts, Chatham Co. 13
2. Aggregate Value-Added & Employment Construction Impacts, Triangle ….. 13
3. Aggregate Value-Added & Employment Construction Impacts, N.C. ……… 14
3 4. Aggregate Value-Added & Employment Occupancy Impacts, Chatham Co... 17
5. Aggregate Value-Added & Employment Occupancy Impacts, Triangle ……. 17
6. Aggregate Value-Added & Employment Occupancy Impacts, N.C. ………... 18
7. Smoothed Total Annual Combined Value-Added Construction &
Occupancy Impact ………………………………………………………. 19
8. Smoothed Total Annual Combined Employment Construction &
Occupancy Impact ………………………………………………………
20
9. Estimated Public Revenues to Chatham Co, the Triangle, and N.C. ……….
23
4 GENERAL LIMITING CONDITIONS
All practical and reasonable efforts have been used to make the analysis and conclusions
developed in this study reflect the best possible estimates of economic impact. The study is based
on numerous data, assumptions, and parameters provided by the client and other sources cited in the
study. No responsibility is assumed for inaccuracies reported by the client or any other data source
used in developing and preparing the study. No warranty or representation is made by North
Carolina State University or the project director that any of the values or estimations in the report
has been, or will be, actually achieved.
5 ACKNOWLEDGEMENTS
Numerous individuals and organizations contributed to the completion of this project.
Funding was provided by the Chatham County Economic Development Corporation, and thanks are
due to the organization’s President, Dianne Reid, for supporting the project. Ken Atkins, Director
of Economic Development for Kilpatrick, Townsend, and Stockton LLP, Thomas J. D’Alesandro
IV, President of Blakefield LLP, and Bubba Rawl and Tim Smith, both of Preston Development
Company, provided background information and data for the project. The research assistant for the
project was Robert Dinterman, who accomplished vital tasks in support of the project.
ABOUT THE PROJECT DIRECTOR
Michael L. Walden is a William Neal Reynolds Distinguished Professor at North Carolina
State University, where he has taught since 1978. The author of eight books and over 250 articles
and reports, among Walden’s specialties is economic impact analysis, particularly for public and
educational institutions. His most recent book is North Carolina in the Connected Age (The
University of North Carolina Press, 2008).
Walden frequently comments about the economy in
the media, writes a biweekly newspaper column, broadcasts a daily radio program, and makes
scores of public presentations each year in various forums.
The winner of several national and
state awards, he was the recipient of the UNC Board of Governors Award for Excellence in Public
Service in 2010. In 2013 he was made a member of the Order of the Long Leaf Pine by North
Carolina Governor Perdue, and in 2014 he was presented with the Alexander Quarles Holladay
Medal for Excellence by North Carolina State University.
6 INTRODUCTION
Chatham Park is a planned, multi-use “live, play, work” development under construction in
eastern Chatham County, North Carolina. When completed in 40 years, it will be the largest such
development in North Carolina and one of the largest in the country. Comprising over 7,000 acres,
Chatham Park will have approximately 22,000 residential units, 2.4 million square feet of
commercial space, 16.6 million square feet of office space, and 2.5 million square feet of civic,
school, and hospital space.
A development of this size will obviously have a significant economic impact on the
community. The purpose of this report is to estimate multi-dimensional measures of this economic
impact for three geographical areas: Chatham County, the multi-county Triangle region, and the
state of North Carolina.1 Economic impact is measured by three key quantities - contribution to
gross domestic product (GDP)2, creation of employment, and contribution to public revenues.
The
economic impacts are based on activity from construction of the project as well as occupancy and
operation of the residential, commercial, and industrial spaces. Since the project will require
several decades until completion, the economic impacts are measured at the end of each decade
during the development period.
The report is divided into several sections. The next section discusses the concepts and
measures of economic impact and applies them to Chatham Park. Using data for the expected pace
of the build-out of Chatham Park, the third section applies the economic impact concepts to arrive at
economic impact measures for the three geographical areas at each decadal point of the project’s
1
The Triangle region is composed of the two metropolitan areas of Raleigh-­‐Cary and Durham-­‐Chapel Hill and includes the counties of Chatham, Durham, Franklin, Orange, Person, and Wake. 2
GDP can be viewed in two ways – as the aggregate value of output using local inputs, or as the aggregate income of local input owners. 7 development. The fourth section estimates the potential public revenue impacts. A summary and
conclusions are offered in the final section.
CONCEPTS AND MEASURES OF ECONOMIC IMPACT
A large development such as Chatham Park creates economic impact in two phases. The
first phase occurs during the construction of the project. Funds will be spent on labor, materials,
and equipment in the construction of the various components of Chatham Park, such as residences,
office space, commercial space, and roads. That portion of the spending going to local input owners
will generate new local income and new local spending. The construction phase of economic
impact lasts until construction is completed.
The second phase of the development occurs when construction is completed and the
resulting projects are occupied and used. This is commonly termed the occupancy phase. New
residences will attract new households to the area who will bring with them new incomes which, in
turn, will produce new local spending. Similarly, business occupants of Chatham Park will produce
output and sales that will add to local income and spending. 3 The occupancy phase is measured on
an annual basis once households and firms move to Chatham Park.
Economic impacts from both the construction phase and the occupancy phase occur at
several levels. The direct effect measures impacts from the economic activities at the development
– for example, from the on-site construction, from the households occupying the new residences,
and from the firms occupying the new non-residential space. The indirect effect measures impacts
from off-site suppliers who sell products and services to on-site households and firms. Examples
3
Some of the new households and firms moving to Chatham Park may come from other locations in the Triangle or North Carolina. However, since both North Carolina – and especially the Triangle region – are growing areas which are expected to continue adding population and firms, a move by a within-­‐region or within-­‐state household or firm to Chatham Park will ultimately be matched by a new household moving to the region and state from an out-­‐of-­‐state location and by a new firm being created in the region and state. 8 are suppliers of lumber and concrete to construction activities, and farm and food processing firms
supplying food products to supermarkets and restaurants operating in Chatham Park. The induced
effect accounts for further economic impacts when employees or other input owners of companies
engaged in the direct and indirect effects spend their additional earning. The total effect is the sum
of the direct, indirect, and induced effects. The indirect and induced effects are sometimes referred
to as multiplier effects because they multiply, or expand, the impacts of the original direct effects.
An important – but sometimes overlooked – aspect of measuring economic impact is the
element of leakage. Leakage occurs when an expenditure made in the local economy immediately
leaves the area and so is not effectively a component of direct, indirect, and induced effects. A
good example is spending on gasoline. Almost two-thirds of the price per gallon of gasoline
ECONOMIC IMPACT CONCEPTS Direct Effect: Economic impacts from the activities occurring at the project Indirect Effect: Economic impacts from off-­‐site suppliers of activities at the project Induced Effect: Economic impacts from the spending of input owners engaged in the direct and indirect effects Total Effect: The sum of the direct, indirect, and induced effects Multiplier Effect: The size of the indirect and induced effects relative to the direct effect Leakage: Spending occurring in the local economy that is immediately sent to input owners outside the local area Value-­‐Added: Economic output after subtracting leakage IMPLAN: A proprietary model of local economies used to measure economic impacts 9 is accounted for by the cost of the crude oil and the refining of that crude oil into gasoline.4 So
although an individual might spend $3.00 for a gallon of gasoline pumped at a local station, the
majority of that price leaves the area and flows to the suppliers of the crude oil and the refinery
owners. Another example is specialized construction equipment or machinery that is supplied to
the project by owners outside the local area. Spending which is “leaked” from a local area should
not be counted as local economic impact. Value-added is the term to describe economic output
after leakage has been subtracted.5
Models of local economies have been developed to calibrate direct, indirect, and induced
effects and to account for leakage. This report uses the IMPLAN economic model for Chatham
County, the Triangle region, and North Carolina to measure the economic impacts from the
Chatham Park development.6 IMPLAN is the most widely-used such economic model in the
country. It is used by the North Carolina Department of Commerce to evaluate the economic
impacts to the state of a new business location or an existing business expansion.
ECONOMIC IMPACTS AT TEN-YEAR INTERVALS
The Chatham Park development is expected to require 40 years for total completion. This
section provides economic impacts for ten-year intervals during that process.
Each ten-year
snapshot includes the economic impact of all the construction which occurred during the ten years
plus the occupancy impact at the tenth year of the interval. Thus, this section presents economic
impacts at four points of time defined as:
4
U.S. Department of Energy, Energy Information Administration. Value-­‐added can also be considered as Gross Domestic Product. 6
IMPLAN, LLC, Huntersville, North Carolina. 5
10 At Year 10: Economic impact of construction from year 1 to year 10 plus occupancy impact
at year 10.
At Year 20: Economic impact of construction from year 11 to year 20 plus occupancy
impact at year 20.
At Year 30: Economic impact of construction from year 21 to year 30 plus occupancy
impact at year 30.
At Year 40: Economic impact of construction from year 31 to year 40 plus occupancy
impact at year 40.
The construction impacts are aggregate values for the entire decade. Each occupancy impact is an
annual value at the decadal points. The rate of construction and implied rate of occupancy can be
used to provide annual occupancy impacts between the decadal estimates.
Several parameters were required to develop the economic impact estimates. As already
indicated, IMPLAN is the source for the parameters used to calculate the direct, indirect, induced,
and total economic impacts, as well as leakage.
Preston Development Company – the developer of
Chatham Park – provided the planned rate of build-out of Chatham Park, including number or
square footage of units and unit or square footage prices.
CONSTRUCTION IMPACT
The aggregate construction impact of Chatham Park at ten-year intervals is shown in Table 1
for the three geographic areas, Chatham County, the Triangle region, and North
11 Table 1. Aggregate Construction Impact at 10-Year Intervals of Chatham Park.
Value-Added Effects (2014$ millions)
Employment Effects (Person-Years)1
Direct Indirect
Induced Total
Direct
Indirect Induced Total
Chatham Co.
Yrs. 1-10
Yrs. 11-20
Yrs. 21-30
Yrs. 31-40
674
849
794
272
362
453
424
145
158
198
186
63
1,194
1,500
1,404
480
4,291
5,379
5,026
1,714
2,179
2,732
2,553
870
678
865
796
272
7,148
8,976
8,375
2,856
Triangle
Yrs. 1-10
Yrs. 11-20
Yrs. 21-30
Yrs. 31-40
990
1,245
1,166
399
452
567
530
181
474
596
557
190
1,916
2,408
2,253
770
9,511
11,898
11,134
3,791
3,999
5,006
4,685
1,596
2,998
3,754
3,513
1,197
15,411
20,658
19,332
6,584
North Carolina
Yrs. 1-10
Yrs. 11-20
Yrs. 21-30
Yrs. 31-40
1,123
1,414
1,322
453
539
679
635
218
517
642
610
208
2,179
2,735
2,567
879
12,438
15,611
14,587
4,983
5,166
6,525
6,097
2,084
3,709
4,603
4,291
1,450
21,313
26,739
24,975
8,517
1
total employment, including full-­‐time and part-­‐time employment Carolina.7 Note that the impacts rise as the geographic area expands. This is because as the
geographic area expands, leakage decreases and more local inputs are able to be supplied to the
project.
Value-added is the economic spending impact remaining in the geographic area after
subtracting leakage. Each person-year employment is one job held by a person for one year. So,
for example, the number “4,291” in Table 1 for Chatham County direct employment effects, years
1-10, means there were a total of 4,291 job positions held for one year. Of course, the same person
could hold the same position for ten years (which would be counted as “10 person- years”),
7
The rate of the construction build-­‐out was provided by Preston Development Company, the developer of Chatham Park. Construction costs are also from Preston Development and the American Road and Transportation Builders Association. 12 Figure 1. Aggregate Value-Added (2014$ millions, left scale bar) and Employment (personyears, right scale line) Construction Impacts by Decade for Chatham County.
1600 10000 1400 9000 2014 $ millions 7000 1000 6000 800 5000 600 4000 3000 400 # of person-­‐years 8000 1200 2000 200 1000 0 0 Yrs. 1-­‐10 Yrs. 11-­‐20 Yrs. 21-­‐30 Yrs. 31-­‐40 Figure 2. Aggregate Value-Added (2014$ millions, left scale bar) and Employment (personyears, right scale line) Construction Impacts by Decade for the Triangle.
3000 25000 20000 2000 15000 1500 10000 1000 # of person-­‐years 2014 $ millions 2500 5000 500 0 0 Yrs. 1-­‐10 Yrs. 11-­‐20 Yrs. 21-­‐30 Yrs. 31-­‐40 13 3000 30000 2500 25000 2000 20000 1500 15000 1000 10000 500 # of person-­‐years 2014 $ millions Figure 3. Aggregate Value-Added (2014$ millions, left scale bar) and Employment (personyears, right scale line) Construction Impacts by Decade for North Carolina.
5000 0 0 Yrs. 1-­‐10 Yrs. 11-­‐20 Yrs. 21-­‐30 Yrs. 31-­‐40 or different persons could hold the position for different numbers of years over the ten-year period.
The estimates are substantial. Total value-added impact exceeds $1 billion for three of the
four decades in Chatham County and is near or exceeds $2 billion for three of the four decades in
the Triangle and North Carolina. Employment (person-years) is also significant.
Employment
(person-years) is between 7,000 and 9,000 in three of the four decades in Chatham County and is
between 15,000 and 27,000 in the Triangle and North Carolina in three of the four decades. The
impacts are greatest during the years 11-20 and years 21-30 decades.
Figures 1, 2, and 3 graphically summarize the total value-added and employment (personyears) construction impacts on the three regions.
14 OCCUPANCY IMPACT
The occupancy impact measures were constructed separately for the residential and nonresidential occupants of Chatham Park. For the residential occupants, average annual incomes of
the households occupying the Chatham Park dwelling units were derived by assuming a household
could afford a unit with a value 2.6 times the household’s annual income.8 Parameter values from
IMPLAN were then used to identify that part of household spending that “leaks” to outside the
region and that part that remains in the region and creates direct, indirect, and induced effects for
the three geographic areas.
The development of the non-residential occupancy impacts began with the plans for
construction of various types of non-residential structures, including general office space, research
and development office space, retail space, lodging space, civic space, school space, and hospital
space – all measured in square footage.9 The square footages were converted to expected number of
employees using average parameters for each type of space.10 The numbers of employees were
converted to the expected dollar value of output for each type of non-residential structure using
parameters from the U.S. Census.11 Labor income was subtracted from the output values so as not
to “double count” the labor income already identified with the household occupancy effect. The
output values (less labor income) were then used with the IMPLAN parameters to identify leakage
and to construct the direct, indirect, and induced effects for each of the geographic areas.
8
This is the average value to income ratio used by lenders in the current market, from forbes.com. Average dwelling unit prices were provided by Preston Development Company. 9
The planned build-­‐out of these non-­‐residential structures and their square footage were provided by Preston Development Company. 10
The parameters for the average number of employees per square foot in each structure type are from the Institute of Transportation Engineers and the U.S. Dept. of Energy, 2011. 11
U.S. Census Bureau, 2012 Economic Census. No market value of output was assumed to be associated with the school and civic structures. The 2012 dollar values from the U.S. Census Bureau were converted to 2014 dollar values using data from the U.S. Dept. of Commerce. 15 Table 2. Annual Occupancy Impact at 10-Year Intervals at Chatham Park.
Employment Effects1
Value-Added Effects (2014$ millions)
Direct Indirect
Induced Total
Direct
Indirect Induced Total
Chatham Co.
At year 10
At year 20
At year 30
At year 40
434
869
1,676
2,759
116
278
434
576
87
208
322
307
637
1,355
2,432
3,642
7,378
14,773
28,153
50,077
868
1,738
3,352
6,484
781
1,654
2,937
4,660
9,027
18,165
34,442
61,221
Triangle
At year 10
At year 20
At year 30
At year 40
731
1,477
2,554
4,256
168
354
591
897
201
427
709
1,049
1,100
2,258
3,854
6,202
14,511
30,113
50,859
79,793
1,608
3,249
5,619
9,363
1,765
3,625
6,182
9,926
17,884
36,987
62,660
99,082
North Carolina
At year 10
At year 20
At year 30
At year 40
809
1,656
2,838
4,593
192
404
677
1,028
226
480
797
1,183
1,227
2,540
4,312
6,804
17,422
36,722
61,374
92,964
1,918
3,953
6,733
10,769
2,147
4,502
7,556
11,592
21,487
45,177
75,663
115,325
1
total employment, including full-­‐time and part-­‐time employment Table 2 combines the occupancy impacts for both residential structures and non-residential
structures at 10-year intervals in the development of Chatham Park. As the Park is constructed, the
occupancy impacts increase. At full build-out in year 40, the annual occupancy impact in valueadded is $3.6 billion for Chatham County, $6.2 billion for the Triangle region, and $6.8 billion for
the state. In terms of permanent jobs, by year 40 over 61,000 jobs will have been created in
Chatham County, over 99,000 jobs (including those in Chatham County), will have been created in
16 Figure 4. Aggregate Value-Added (2014$ millions, left scale bar) and Employment (right
scale line) Occupancy Impacts by Decade on Chatham County.
4000 70000 3500 60000 50000 2500 40000 2000 30000 1500 employment 2014 $ millions 3000 20000 1000 10000 500 0 0 At yr. 10 At yr. 20 At yr. 30 At yr. 40 7000 120000 6000 100000 5000 80000 4000 60000 3000 40000 2000 employment 2014 $ millions Figure 5. Aggregate Value-Added (2014$ millions, left scale bar) and Employment (right
scale line) Occupancy Impacts by Decade on the Triangle.
20000 1000 0 0 At yr. 10 At yr. 20 At yr. 30 At yr. 40 17 Figure 6. Aggregate Value-Added (2014$ millions, left scale bar) and Employment (right
scale line) Occupancy Impacts by Decade on North Carolina.
8000 140000 7000 120000 100000 5000 80000 4000 60000 3000 employment 2014 $ millions 6000 40000 2000 20000 1000 0 0 At yr. 10 At yr. 20 At yr. 30 At yr. 40 the Triangle, and over 115,000 jobs (including those in Chatham County and in the Triangle) will
have been created statewide. These levels of value-added and employment would then persist
annually beyond year 40. Figures 4, 5, and 6 summarize the total value-added and employment
occupancy impacts on the three regions.
COMBINED CONSTRUCTION AND OCCUPANCY IMPACT
This section shows the combined construction and occupancy impact over the forty year
build-out period of Chatham Park. The combined impact assumes a smooth rate of construction
and occupancy over the build-out period.
18 Figure 7. Smoothed Total Annual Combined Value-Added (2014$) Construction and
Occupancy Impact for Chatham County, the Triangle Region, and North Carolina.
9000 8000 2014 $ millions 7000 6000 5000 4000 3000 2000 1000 0 1 10 20 30 40 41 42 43 Year Chatham Co. Triangle North Carolina Figure 7 shows the combined value-added construction and occupancy impacts for the three
geographic areas of Chatham County, the Triangle region, and North Carolina. For each area the
value-added impact peaks at year 40 when the build-out is complete. After year 40 the impact is
derived only from the continuing annual occupancy impact associated with full usage. Figure 8
presents the same information for the combined employment construction and occupancy impacts.
For the annual construction employment impact, the annual averages for the person-years in Table 1
are used.
19 Figure 8. Smoothed Total Annual Combined Employment Construction and Occupancy
Impact for Chatham County, the Triangle Region, and North Carolina.
140000 Total Empoyment 120000 100000 80000 60000 40000 20000 0 1 10 20 30 40 41 42 43 Year Chatham Co. Triangle North Carolina SUMMARY OF ECONOMIC IMPACTS OF CHATHAM PARK Combining both construction and occupancy impacts, the estimated economic impact of Chatham Park is significant. For Chatham County, annual economic activity (GDP) peaks at $4 billion (2014$) at year 40 and then settles at $3.6 billion in years thereafter once construction is complete. Employment peaks at 61,000 in years 40 and after. For the Triangle region, maximum annual economic activity is $7 billion (2014$) in year 40 and $6.2 billion thereafter; maximum employment is 99,000 in years 40 and after. For the entire state, top annual economic activity is $7.7 billion (2014$) in year 40 and $6.8 billion in later years, while peak employment is 115,000 beginning in year 40 and continuing in later years. 20 PUBLIC REVENUE IMPACT
Local and state governments are interested in the public revenue impact of economic
development. It is important to realize these impacts are not in addition to the economic impacts
already reported; instead they are an allocation of those impacts.
Estimating public revenue impacts over a long period of time – such as the forty year buildout of Chatham Park – is challenging because the composition of public revenue levies frequently
change. Both tax and fee rates as well as the economic bases for taxes and fees frequently change.
However, what is more stable is the proportion of public revenues to economic bases. Research has
shown that despite changes in rates and bases, the relative size of public revenues stays remarkably
constant.12 For local governments in the Triangle region (including Chatham County), a long-run
average over several business cycles is near 4% of total value-added (also termed gross domestic
product). For the state government in North Carolina, a similar long-run average is near 6.5%.13
These rates are applied to the estimated value-added totals generated by Chatham Park to
derive public revenue estimates with one addition. Chatham County is one of only two counties in
North Carolina to levy a one-time impact fee of $3,500 per residential unit. This fee is applied to
the pace of construction of the residential units and included in the public revenue totals for
Chatham County.
The results are shown graphically in Figure 9. Recognize that the amounts for the Triangle
region include those for Chatham County, but the state amounts are only based on state revenues
12
W. Kurt Hauser, "The Tax and Revenue Equation," The Wall Street Journal, March 25, 1993. Reprinted in: W. Kurt Hauser, Taxation and Economic Performance (Stanford, California: Hoover Institution Press, 1996), pages 13-­‐16; 2009 U.S. Government Budget documents, Congressional Budget Office, 2009. 13
Both the local rate and the state rate are based on a multi-­‐year analysis of data from the U.S. Census and the U.S. Dept. of Commerce. For public revenues, only “own revenues” – meaning revenues from local or state tax bases – are used. 21 and fees.
The annual amounts peak in year 40 and decline slightly after construction ends. The
long-run annual amounts after the Chatham Park build-out is complete is $146 million for Chatham
County, $248 million for the Triangle region (including County), and $442 million for North
Carolina. The Triangle region and state outside of Chatham County experience long run public
revenue gains as a result of the economic interactions created in those locations with the Chatham
Park development.
The public revenue estimates in Figure 9 excluded revenues from the undeveloped land at
Chatham Park, since the land existed prior to the development. The value of the undeveloped land
is estimated at $131 million.14 The estimates also assumed a long-run real (inflation-adjusted)
appreciation rate of real estate of 0%, which is consistent with the findings of Shiller.15 Some
research has found that planned communities, such as Chatham Park, are able to extract price
premiums for units and structures compared to similar units and structures in unplanned
communities.16 Presumably this occurs because planned developments significantly reduce
negative externalities to property owners from future development that may be inconsistent with
existing development. The public revenue benefit from these premiums is accounted for in the
prices estimated for the units.17
14
Based on 7,500 acres of undeveloped land and an average price per acre of $17,500 (Preston Development Corporation). 15
Robert Shiller, Irrational Exuberance. Princeton University Press, 2005 p. 13 16
Chris Eves, “Planned Residential Community Developments: Do They Add Value?” Property Management, vol. 25, issue 2, 2007, pp. 164-­‐179. 17
As indicated earlier in the report, unit prices were provided by Preston Development Company. Interestingly, Eves’ research showed no higher appreciation rate for properties in planned developments compared to properties in unplanned developments. 22 Figure 9. Estimated Public Revenues (2014$) to Chatham County, the Triangle Region, and
North Carolina Provided the Value-Added Developed by Chatham Park.
600 2014 $ millions 500 400 300 200 100 0 1 10 20 30 40 41 42 43 Year Chatham Co. Triangle North Carolina SUMMARY OF PUBLIC REVENUE IMPACTS OF CHATHAM PARK After construction build-­‐out and total occupancy of Chatham Park, annual local public revenues to Chatham County will be $146 million (2014$) annually, annual local public revenues to Triangle governments (including Chatham County) will be $248 million (2014$), and annual state public revenues to North Carolina will be $442 million (2014$) 23 CONCLUSIONS
Chatham Park is a planned multi-use “live, work, play” development under construction in
eastern Chatham County, North Carolina. Comprising over 7,000 acres, when fully developed
Chatham Park will have approximately 22,000 residential units, 2.4 million square feet of
commercial space, 16.6 million square feet of office space, and 2.5 million square feet of civic,
school, and hospital space.
A project of this size and scope will clearly have large economic impacts. Indeed, the
calculated economic impacts on Chatham County, the Triangle region, and North Carolina are
significant. After accounting for the leakage of some spending and employment impacts to outside
of the area as well as direct and supply-chain effects within the area, the analysis shows the peak of
annual spending generated from the project will occur in year 40 at $4 billion for Chatham County,
$7 billion for the Triangle region, and $7.7 billion for North Carolina. After year 40 as construction
ends and full occupancy occurs, the annual spending impacts moderate to $3.6 billion in Chatham
County, $6.2 billion in the Triangle region, and $6.8 billion in North Carolina (all dollar values are
in 2014 purchasing power dollars). Also, after the full build-out of Chatham Park, the development
will have created over 61,000 permanent jobs in Chatham County, 99,000 permanent jobs in the
Triangle region (including Chatham County), and 115,000 permanent jobs in North Carolina
(including Chatham County and the Triangle region).
Local and state governments will receive a share of the economic gains from Chatham Park
through additional public revenues. After completion, the economic impacts of Chatham Park will
generate $146 million of annual public revenues to Chatham County, $248 million of annual public
revenues to the Triangle region (including Chatham County), and $442 million of annual state
public revenues to North Carolina (all dollar values are in 2014 purchasing power dollars).
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