A new report presents a gloomy economic picture for the Sacramento region once a proposed federal flood designation becomes effective for the Natomas area in December of 2008.

Acting on recommendations from the U.S. Army Corps of Engineers, the Federal Emergency Management Agency has designated the Natomas area as an “AE zone,” or a special flood hazard area, effectively stalling future construction in the basin.

The Sacramento Regional Research Institute recently released the findings of a study evaluating the potential economic impacts of a proposed re-designation of the Natomas Basin by FEMA.

Most significant among the findings in the report is the projected loss of 28,000 jobs and $3.1 billion in output from direct, indirect and induced effects of the construction activity if the flood zone designation lasts through 2011 as is expected.

“These are staggering numbers with real implications not only for Sacramento, but for the region as a whole,” said Mike Winn, Chairman of the North State Building Industry Association Board of Directors. “As worrisome as these numbers are, they don’t even begin to address the repercussions for the Natomas Basin’s housing market, economic development, and local government revenue generation.”

The proposed re-designation, which is expected to become effective at the end of this year, would effectively create a development shutdown, placing additional financial burdens on a region already struggling economically.

“This study highlights the urgent need for the Natomas Basin levee improvements to be completed as expeditiously as possible,” said John Dangberg, assistant Sacramento city manager. “This is not only an economic issue, but a public safety issue as well.”

More than 79,000 residents currently call the Natomas Basin home and would benefit from local, state and federal agencies working collaboratively and without delay to ensure their safety and the protection of their homes.

Expectations on the completion of the levee improvements vary from 2010 to 2011. Ultimately, completion of the improvements will rely on a number of factors including availability of funds, compliance with environmental regulations, creation of incentives for developers to work faster and streamlined response time at all levels of government. Any delays, however, will have dramatic fiscal impacts on the region and the local economy.

This study, commissioned to quantify the full range of probable impacts associated with the development shutdown and flood insurance requirements on the six-county Sacramento Region, examines the effects of constructing the planned commercial facilities and housing units. The study also discusses the impacts of employment within the planned commercial facilities, estimates the effects of consumption tied to residents within the planned housing units and analyzes the impacts of diverted homeowner spending to required flood insurance.