Multi-Family Housing Fiscal and Economic Study

The Tolland Economic Development Commission (EDC), with the support of the Planning and Zoning Commission (PCZ)* contracted with Strategy 5, LLC to assess the fiscal and economic impacts of new Multi-Family Housing in Tolland to assist the PZC  as it establishes policies that guide physical development in Tolland.

The study estimates the impacts of a range of conceptual housing types  and quality levels that may be built up to a total of 250 new units.  It should be noted that Tolland currently requires 5% of any new multi-family housing within a market rate complex over 10 units to meet affordability parameters.  The study assumes affordable housing units may be included  based on policy, development and investment decisions by the public and private sectors. 

The estimates of  fiscal and economic impacts were developed utilizing public and private data sources including Tolland’s Plan of Conservation and Development.  However, in conducting such studies it is understood that despite the veracity of data sources, the extent to which estimated results are actually achieved may vary based on a community’s market, geography, infrastructure and the makeup of its workforce and business base.

Economic Impact:

Tolland’s 175 businesses could reap between $2.5 and $5.8 million annually in new business due to expenditures from multifamily residents, spread in varying amounts over 10 sectors. The bulk of these expenditures will occur in the following sectors:

Buildout of 250 units will result in an estimated one time injection of between $50 and $110 million and 560 FTE construction jobs.  However, the majority of these impacts may be distributed beyond the reach of Tolland companies given the makeup of Tolland’s business base.  

Fiscal Impact:

A projected 18% decrease in Tolland’s population by 2040, due to an aging population and shift to smaller family sizes, can be offset by multi-family housing and limits the impacts the potential fiscal costs.

An estimated $1.6 million in gross annual revenues will accrue to the town at buildout of 250 units, but revenues may fluctuate based on many variables. Net new revenue to the town is estimated at $1 million. Cost increases are primarily associated with public safety and schools. 

The cost to be incurred as a result of multifamily housing development by the Fire Department and the EMS/Ambulance service it provides and is estimated at between $100,000 and $150,000 annually.

Data applied from the CT Economic Resource Center indicates Tolland could anticipate one  student per ten units of multi-family housing, therefore 250 units would result in 25 new students in Tolland schools. The cost of 25 students would be approximately $450,000 annually.  However, Tolland’s school population is projected to decrease by 75 students by 2027. Despite unforeseen costs that could affect such estimates it anticipated that the projected decline in students will offset the cost of the 25 news students. The study notes that housing type – particularly number of bedrooms –  could mean actual student numbers could increase of decrease.

While other town departments may require limited additional funding to serve the estimated 500 new residents resulting from multi-family development,  the expected decline in population should offset costs. For this reason, a discount rate of 37%  was applied to the estimated additional annual revenue resulting in the estimated net revenue gain of $1 million.

Other Findings

While net fiscal and economic gains are projected, the actual dollar amount of such gains will have a direct correlation with the number, type and quality level of dwellings developed as well as the extent to which spending occurs in Tolland.

The Town of Tolland has land able to accommodate new multi-family housing development although application of zoning regulations, land use and growth policies, and special conditions  will have to be considered on an individual project basis. “Intentional development” as noted in the Tolland Plan of Conservation and Development, can encourage new multi-family development.

The housing market appears able to support new multifamily development in Tolland at least up to the build out scenario noted in this study.

Additional affordable housing opportunities may be created in Tolland through the introduction of market rate housing by means of the current 5% minimum unit requirement, incentives and new innovative building options that allow for more economic rent levels.

The new Live/Work conceptual model could contribute to the business base in Tolland.

The Senior Lifestyle conceptual model can help retain long-time residents that may otherwise move elsewhere.

The additional housing units noted in this study alone will not necessarily fill current retail vacancies or spur new retail development.

*The EDC is comprised of volunteers appointed by the Town Manager, the PZC is an elected body.