Tri-City Area and Real Estate Blog

Job opportunities expected to increase in coming months

Job growth in the Tri-Cities may have lost its earlier momentum, but it’s still healthy. About 2,000 jobs have been added to the area economy since February 2008, a 2 percent growth.

Nonfarm jobs grew a little less than 1 percent over the year, the State Employment Security Department reported Tuesday.

Most gains were in professional and business services, education and health services, food services, leisure and hospitality industry and the government sector. Those helped offset a loss of 500 construction jobs.

Dean Schau, regional labor economist, said the job growth was significant, particularly in light of employment loses of 3.3 percent for the state and about 3 percent for the nation.

The decline of 100 nonfarm jobs last month was more of a cyclical phenomenon as area retailers let go extra workers hired for the holiday season, Schau said. In contrast, the state lost an estimated 28,200 nonfarm jobs and the statewide unemployment rate rose to 8.4 percent last month, up from 7.8 percent in January.

Employment opportunities are expected to increase in the months ahead as new construction projects funded by federal stimulus money to get under way and the agricultural season expands, said Todd Dixon, WorkSource’s area director for Benton and Franklin counties.

From January through mid-March, WorkSource got 300 jobs orders, which he said include entry level jobs with Hanford contractors, skilled worker positions in the food processing industry and in the health care sector.

There are also position available for cooks, janitors, office support staff and computer support specialists.  About two-thirds of those jobs are yet to be filled, Dixon said, adding “We’re going to be OK.”

Schau said the Tri-City economy is diverse and inherently strong thanks largely to agriculture, food processing, power generation and the medical equipment manufacturing sector. He said that will allow the Tri-Cities to survive the recession better than many other communities.

Health services, the second-fastest growing segment of the Tri-Cities economy behind K-12 public schools, added 100 jobs over the month and 600 over the year. Since 2000, Schau said, the area health care industry has grown by nearly 50 percent, and its local payroll this year is likely be a little over $333 million.

Since January, the financial services sector lost about 100 jobs, but over the year showed consistent employment of 3,500. In the third quarter of 2008, jobs in banking and insurance increased from 234 to 277 in Franklin County, while declining marginally from 1,647 to 1,631 in Benton County.

The trade, transportation, warehousing and utilities sector lost 400 jobs in February, bringing total jobs cuts in the sector to 900 over the year. This could be related to the ongoing recession, but the sector still employs more than 15,000 workers, Schau said.

In February, the leisure and hospitality industry had 8,600 workers, an increase of 100 from January. A similar increase in food services brought the number of those employed in that sector to 6,500.

Both tourists and Tri-Citians are helping wineries and restaurants generate business, Schau said. He said recreation and hospitality has seen strong growth in the last five years, from an average of 7,673 jobs in the third quarter of 2003 to an average of 9,082 jobs in the third quarter of 2008.

Agricultural jobs grew from 6,800 in January to 8,300 last month. February ag employment was up by 100 compared with the same period last year and up 700 over February 2007.

Economic development agencies such as the Port of Benton are counting on continued growth of wineries, said Diahann Howard, the port’s economic development director.

The port is developing an 18-acre parcel south of Vintner’s Village in Prosser that it hopes will help create up to 300 jobs by 2010. “There’s a waiting list for the lots.” Howard said.

The Tri-Cities can work to find new opportunities to leverage existing resources to attract manufacturers from other areas, Howard said. The port recently had a specialty label maker from Seattle come to its industrial park in Benton City.

In Washington, the state estimated 330,572 people are looking for work. Officials said the unemployed should visit a Work Source center to get help finding a job.

Economist tells builders benefits of construction

Construction of 1,000 new homes in the Tri-Cities in 2008 will pay for itself in about six years, said an economist with the National Association of Home Builders.

Elliot Eisenberg explained the economic benefits of new home construction in Benton and Franklin counties to a group of about 25 at the Pasco Red Lion on Tuesday.

The economic model uses 2008 local numbers, including $224,225 for the price of a new home, $9,000 for the raw land cost, $5,081 in fees and $2,999 for the average property tax cost in a year.

Eisenberg broke the economic benefits into three phases — construction activity, ripple effects and ongoing effects. Actual construction of 1,000 new homes in the bicounty area in 2008 generated more than $108 million in local income, about $21.5 million in local taxes and supported 2,650 jobs, he said.

The ripple effect — when workers spend their income in the community — is about half the size of the construction phase, bringing in about $51.6 million locally.

There were 1,168 new home permits issued in the bicounty area in 2008, according to the Home Builders Association of Tri-Cities. He also detailed the costs of constructing a new home, including about $7,400 each year to pay for teachers, police officers, health services and other salaries.

A one-time $35,500 cost also is calculated for capital needs such as schools, hospitals, sewer systems, and other infrastructure. After the first year of new construction, which includes the construction and ripple effect phases, the 1,000 new homes generate about $3.4 million in revenue for local government each year, he said.

If that money is used to pay off the infrastructure investments, the debt will be paid in just less than six years. Though it’s longer than the national average of about three years, he made the comparison to paying off a mortgage, which wouldn’t happen in such a short time.

The economic model was developed by the national association about 13 years ago and has been used for more than 530 studies, Eisenberg said.

 Source: Tri-City Herald

Seniors moving to Mid-Columbia from more expensive cities add $1 billion to economy

Retiree income contributes to become a growing slice of the area economy as more retired workers flee higher-priced regions of the country to settle in the Tri-Cities.

Statistics from 2007, the most recent available, show retirees injected about $1 billion into the Tri-Cities, according to Dean Schau, regional labor economist.

For comparison, that was 16.8 percent of the Tri-Cities total personal income of $6.9 billion – which was up from 14.3 percent 10 years earlier, when the area’s total personal income was $4 billion, Schau said.

He said the estimates are based on the share of government transfer payments and pension income in the Tri-Cities, and don’t include other retirement income from personal sources such as dividends, interest and rents.

As property values have dwindled in areas such as California, Florida and Arizona, more retirees have sought inexpensive places to live, said Chicago-based retirement expert Art Koff. Many return to areas where they grew up or where they can be close to family, and they also look for safety, convenience and quality of life, he said.

Older Americans have more money to spend than any other group, said Koff. retirees spend money on services, pay taxes and contribute by volunteering in the communities where they live, Koff said.

Many people choose to retire in the Tri-Cities because of the quality of life, said Carl Adrian, president and CEO of the Tri-City Development Council.

It’s relatively inexpensive and safe community with nice weather and quality medical facilities. Kadlec Medical Center which began offering speciality medical services in cardiac care and neuro-sciences in 2001, also started a senior clinic in 2007.

The expanded services have helped the Tri-Cities become a regional medical center, attracting patients from nearby areas who otherwise would have gone to Seattle or Spokane for treatment, Hall said.

Empty-nesters from out of state or local retirees also are helping socially and economically diversify what’s known as the fastest growing metro area in the state, Adrian said.

A number of senior living facilities also have come to the Tri-Cities in the last decade or so, and the demand for them is expecting to grow. The number of people age 65 and up in Benton County increased from 15,655 in 2000 to an estimated 19,234 in 2008, and in Franklin County that number rose from 4,200 to an estimated 4,984, according to Washington’s Office of Financial Management. The estimates are based on changes in Medicare enrollments, said Theresa Lowe, the state’s chief demographer. 

Scott Ferris, 72, moved from north-central Arkansas to the Tri-Cities about 3-1/2 years ago to work as a doctor at Hanford and decided to live in Kennewick once his wife Rosann checked out the area. Weather in the Tri-Cities, the three rivers and proximity to Seattle and Portland won the Ferris’ over. The Tri-Cities offers a great sense of community.

The Ferrises explore local restaurants and wineries, go to the Americans hockey games and attend Mid-Columbia Symphony concerts, he said. “We like to support our local wine industry that includes some of the finest wineries in the country,” said Ferris, who also loves fly-fishing.

Rosann, 56, who has a degree in mechanical engineering, said initially she found the area expensive compared to where she came from, but now she realizes the Tri-Cities has the lowest cost of living in the Northwest.

She credits Washington State University Tri-Cities, Columbia Basin College and small businesses for helping diversify the Tri-Cities economy. “There’s a lot more here than just Hanford.” she said.

That’s part of the reason why housing prices have been stable. In February, 114 single-family homes were sold in Kennewick, Richland, Pasco, West Richland, Benton City, Burbank and Finley, and the median price was up 2.28 percent over a year ago.

And a review of the state’s housing market in the fourth quarter of 2008 done by the Washington Center for Real Estate Research at Washington State University found Benton and Franklin counties have among the state’s most affordable housing prices.

That survey gave Benton County a housing affordability index of 170 and Franklin County 132, with a rating of 100 marking the level at which a typical family can afford a median-priced home. King County, by contrast, had a rating of 87.

The market may have slowed in the last six months, but real estate agents still get a lot of inquiries from potential customers to buy property in the Tri-Cities. It’s a metro area with a small-town feel and offers many opportunities such as golf and water-related recreational activities.

About half of the 425 members of the Meadow Springs Country Club in Richland can be considered seniors, said Jeremy Simmons, the club’s general manager. Many members have come from elsewhere, attracted by the low cost of living, he said.

“Seniors, that’s anyone 55 and up, have been very positive for us,” agreed Mike Lundgren, president and owner of Canyon lakes Golf Course in Kennewick. They provide about one-third of the business at Canyon Lakes, he said.

Source: Tri-City Herald

Frequently asked questions about the Home Buyer Tax Credit

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.

The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.

1. Who is eligible to claim the tax credit?  First-time home buyers purchasing any kind of home – new or resale – are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

2. What is the definition of a first-time home buyer? The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law test the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

3. How is the amount if the tax credit determined? The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

4. Are there any income limits for claiming the tax credit? The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

5. What is ‘modified adjusted gross income”? Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income” or AGI. AGI is total income for a year minus certain deductions (known as “Adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on  Line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit? Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.

7. Can you give me an example of how the partial tax credit is determined? Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008? The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous ‘credit’ was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at last three years or face recapture of the tax credit amount. Certain exceptions apply.

9. How do I claim a tax credit? Do I need to complete a form or application? Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyers tests.

10. What types of homes will qualify for the tax credit? Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000/$500,000 capital gain tax exclusion for principal residences.

11. I read the that the tax credit is “refundable”. What does that mean? The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involved the government sending that taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would received a check for $7,000 ($8,000 minus the $1,000 owed).

12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead? Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.

13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit? Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.

14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program? Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchase a home in 2008 may not claim the tax credit if they are participating in an MRB program.

15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit? No. You can claim only one.

16. I am not a U.S. citizen. Can I claim the tax credit? Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519.

17. Is a tax credit the same as a tax deduction? No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes, That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

18. I bought a home in 2008. Do I qualify for this credit? No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit.

19. Is there any way for a home buyer to access the money allocatable to the credit sooner than waiting to file their 2009 tax return?  Yes. prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the down payment.

Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a down payment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.

20. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return? Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the  election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it in their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest? Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

The Three Rivers Community Roundtable has asked the Williams B. Ruckleshaus Center in Pullman to tackle the recurring and emotional issue of consolidating the area’s four cities into one entry.

The Roundtable put together its own group, the Communication, Cooperation, Collaboration, Consolidation Task Force, or 4C Task Force, into look at the separate elements surrounding the issues.

Since October 2007 the 13-member group has been meeting to tackle the issues. The group released a 34-page report last month with its analysis and with a recommendation to have a separate study done by an independent party to address the challenges, opportunities and questions raised in the report.

“It’s an enormous, complicated issue,” said Mike Schwenk, Roundtable chairman, during TRIDEC’s 2009 Regional Economic Outlook. “And for all the lessons learned, the bottom line was that we need an independent study by someone at arm’s length, who is not emotionally attached to the issue to look at it.”

The Task Force looked at all the things that have happened over the year in the community where consolidation has already occurred to some extent like the Tri-City Chamber of Commerce, TRIDEC, and the Benton Franklin Health District.

“As a Task Force we have….come to appreciate ongoing efforts to work more efficiently as a region — many of which the community at large in unaware,” said the report. “There are numerous examples of successful and ongoing efforts of communication, cooperation, collaboration and even consolidation, all undertaken to improve services, increase programs and be more fiscally responsible.”

The report also noted the gaps.  The Task Force found three specific areas where they believed more study was needed, government, health care and regional facilities planning.

The report said as the group focused in on government, it was clear that three questions needed to be considered. Does consolidation reduce cost and/or increase services? Does it provide additional clout for the region? And does consolidation create a unified vision or accomplish larger project for the region that could not be done independently?

Consolidation was put on the ballot in 1985 and rejected by voters in Kennewick and Pasco, A later attempt to consolidate Richland and Kennewick failed as well. But a growing population base coupled with a changing economy and caps limited property taxes to 1 percent growth annually many have many residents rethinking the issue.

“It appears the community-at-large believes that consolidation will save taxpayers money through a reduction of duplication of services,” the report said. “It is important to understand that a larger city would not necessarily be more cost effective to operate and manage.”

However, consolidation could give the Tri-Cities a more prominent voice in Olympia. The report notes 93 area agencies, governmental and nongovernmental that could collaborate or consolidate.

The William D. Ruckelhaus Center is jointly operated by the University of Washington and Washington State University. It was created to offer neutral conflict resolution services and to provide research and analysis, mediation and experts for collaborate problem solving. “Matters like this are things the William B. Ruckelhaus Center likes to do,” Schwenk said.

For more information or to see the report, go to www.my3rivers.org.

Tri-City Herald Staff writer, Michelle Dupler

There’s been a lot of talk in the Capital about green jobs since the Legislature went into session nearly a month ago. On Thursday, Tri-City business, science and technology leaders showed up to tell lawmakers that they need look no further than Kennewick, Pasco, and Richland to find green jobs in Washington.

Representatives from the Tri-City Development Council, Pacific Northwest  National Laboratory, Washington State University Tri-Cities, Areva, Infinia, Energy Northwest and the Tri-Cities Research District came to talk to a joint session of two House committees focused on energy, technology and economic development.

The group touted what’s happening in the energy industry in the Tri-Cities, from production of clean wind and nuclear power to solar panels manufacturing. “At the U.S. Conference of Mayors held this past summer, the Tri-Cities ranked among the top 100 cities poised to have the most ‘green collar’ jobs, largely due to our technology assets and brainpower,” said TRIDEC spokeswoman Deanna Smith.

“We have more engineers and PhD’s per capita than anywhere else in the world,” she added. “The Tri-Cities can be a valuable and reliable resource in helping you put together a comprehensive energy plan and strategy for the state that can lead to the creation of green collar jobs, and foster entrepreneurism that will ultimately create the new technologies needed for additional sustainable and renewable energy.”

Renewable energy and green jobs have been a focal point of a plan to tackle greenhouse emissions by spurring new technologies that in turn will help create jobs in renewable energy and energy efficiency. Smith and others said work being done in the Tri-Cities can help lead the way, but they also urged the Legislature to give technology businesses incentives to start up and stay in Washington, whether with tax breaks or by allowing small-scale hydro power plants to be classified as renewable resources.

A presentation by Jack Baker, vice president of energy and business service for energy Northwest, focused on how it has diversified beyond nuclear power to also include wind,solar and hydro power. The agency provides about 10 percent of the electricity distributed throughout the Northwest by the Bonneville Power Administration, he said. But with electric vehicles appearing to be the way transportation is headed, Baker said nuclear power will be needed to generate enough electricity.

“This is the message you want to hear,” Baker said. “I believe we are going to electrify our transportation, but the power is going to have to come from somewhere.” Diahann Howard, executive director of the Tri-Cities Research District, encouraged the Legislature to continue supporting development of innovation partnership zones that can attract technology start-ups, while Jason Modrell, Infinia’s manager of governmental programs and business development, gave examples of how it is developing solar technology.

Modrell said most of Infinia’s products are being sold in Spain because of government incentives there. He urged state lawmakers to consider similar incentives. John Holladay, PNNL’s chemical and biological process chief scientist, and Birgitte Ahring, director of WSU Tri-Cities’ Center for Bio-products and Bioenergy, touted the partnership between the laboratory and the university in developing technologies to convert biomass materials such as wheat, straw and wood waste into biofuels. “It’s something so obvious to me that the first thing we have to focus on is something already there,” she said.