Tool That Aids Job Creation Threatened by Proposed Government Regulation

NEW YORK, Sept. 23 /PRNewswire-USNewswire/ -- The ongoing debate surrounding capital recovery fees (or private transfer fees (PTFs)) often overlooks the immense job creation potential the fees present. PTFs consist of a 1% fee paid by the seller of a home to the property's original developer each time the home is sold to a new owner.  The fees provide much-needed liquidity to developers, many of whom took out loans before the economic crisis and now have negative equity in developments and cannot finish developing them.  When a home builder is able to restart a stalled development they hire construction workers, electricians, and other tradesmen who have struggled during the housing slowdown.  In addition, they increase demand for building materials, which creates a string of secondary jobs.

"Private Transfer Fees, or Capital Recovery Fees, can allow developers to pay down bank loans, restart construction and, most importantly, hire construction workers, passing on the benefits from the PTFs to their communities, said Bryan Cohen, of Freehold Capital Partners.

While the nation's 9.6 percent unemployment rate has hit nearly every aspect of our economy, one segment has been disproportionately affected.  According to the Associated General Contractors of America, the unemployment rate for construction workers is currently 17 percent – drastically higher than the national rate.  New development projects around the country have stalled mid-way through construction as developers struggle to get access the credit necessary to complete the projects. Privately-owned plus single family housing completions were down more than 25 percent between July 2009 and July 2010, and commercial development is facing similar problems.

According to the National Association of Home Builders (NAHB), every new single-family home that is built creates 3.05 direct, indirect and induced jobs.  This means that 1,000 new homes would create 3,005 jobs, whether they're the construction workers themselves, the lumber company supplying lumber to a contractor, or the small businesses and retailers who benefit when these workers have the money to purchase things like groceries and clothes.

SOURCE Freehold Capital Partners