Since its creation in 1977, the Utah Housing Finance Agency has had a tremendous impact on the Utah economy by providing 4.6 percent of new multifamily construction activity and 9.8 percent of new single-family construction.
A study by the University of Utah Bureau of Business and Economic Research said the agency has provided permanent financing for 2,629 new apartment units and 10,589 new single-family units.James A. Wood, research analyst, said the purpose of his study was to measure the economic impact on the Utah economy of mortgage funds provided by the agency.
He said 58 percent of UHFA's mortgage purchase funds have been used for construction of new residential units and 42 percent to purchase existing residential units.
"Although financing the purchase of existing residential units does have some positive economic impact, it has less significance than the economic impact of the financing of new residential units," Wood said.
In 1987 and 1988, UHFA accounted for about 20 percent of the total single-family construction activity in the state. In those two years the average price of a UHFA-financed new home was $64,800 and $65,225, respectively, well below the average sales price of $79,000 for a home in Salt Lake County.
The study said these prices demonstrate that UHFA plays a major role in providing capital for housing for low- and moderate-income people.
Wood said the significant economic and social impacts of the UHFA money have been achieved "through highly innovative tax-exempt bonding programs which are totally self-supporting and represent no financial cost to the Utah taxpayer nor present any legal liability to the state for the repayment of the bonds."
Since 1977, UHFA has provided $582 million in mortgage funds for new single-family units and construction of these homes created a total of 7,905 jobs. Wood said the number of jobs includes those directly involved with building the house and the indirect jobs to manufacture and supply the paint, cement, lumber, glass, appliances and other items that become part of the house.
Mortgage funds provided by the UHFA not only create new jobs but also generate additional wage and salary payments for the Utah economy, said Wood. The impact is divided into (1) direct income such as wages and salaries paid to contractors and laborers and (2) indirect and induced income (primarily wage and salary payments to suppliers of products and services for the residential construction sector), the report said.
In addition to income tax revenues, local property tax revenues also have increased because of UHFA housing financing, the report said. Wood said the average value in 1989 of the 10,589 new home construction figures financed by UHFA mortgage programs is $60,150, while the average value of a new multifamily unit is estimated at $20,000.
At these values and given the average statewide property tax for a primary resident and multifamily unit, the residential construction financed by UHFA generates $6.3 million annually in local property taxes, which is $5.7 million for single-family homes and $644,800 for multifamily units, Wood said.