The Fiscal Impact Handbook

Estimating Local Costs and Revenues of Land Development

David Listokin

• Verlag: Routledge
• Jahr: 2017
• ISBN:
  9781351482738
• Auflage: 1
• Thema: Volkswirtschaftslehre
• Thema: Wirtschaftstheorie

The Fiscal Impact Handbook is a unique manual detailing practical methods for determining the full range of revenues and costs associated with residential and nonresidential growth. Planners, economists, businessmen, administrators, financial officers, assessors, community groups, private organizations, and those interested in the fiscal consequences of growth and non-growth will find The Fiscal Impact Handbook indispensable. Fiscal impact methods are presented in a clear, step-by-step format and are capable of being carried out by the practicing planner with minimal procedural problems.The manual is designed as a basic tool to be used for projections of direct, current public (and private) costs and revenues resulting from population or employment change to the local jurisdiction in which change is taking place. Standardized methods are presented with attention paid to the underlying assumptions, limitations, and applicability of these methods. Necessary factors affecting the planning and legal framework and documentation of key data input are covered for proper utilization of fiscal impact methods.Detailed examples are given to the six flexible methods, presented with suggestions on how they can be modified by the user to meet requirements. In addition, current computer models of analysis are evaluated for operational needs and benefits. Included also is a comprehensive bibliography of the cost-revenue field and an index for quick, easy reference. This is an invaluable work for urban analysts, planners, and developers written by two of the top minds in the field of urban policy.

PART 1

CALCULATING COSTS: METHODS OF PROJECTING MUNICIPAL AND SCHOOL DISTRICT COSTS

The part which follows provides methods for determining the direct public costs associated with residential and/or nonresidential growth. It contains seven chapters. The first introduces the reader to the components and dynamics of costs while the six succeeding chapters detail six fiscal impact projection methods (Per Capita Multiplier—Chapter 2, Case Study — Chapter 3, Service Standard — Chapter 4, Comparable City — Chapter 5, Proportional Valuation — Chapter 6 and Employment Anticipation — Chapter 7).

Each method specifies operating and capital costs to both municipality and school district. Further, methods are presented in a standard format: Background, Application, Basic Assumptions, Procedures, Data Requirements, Sophistication of User, Advantages and Disadvantages and Interpreting Results.

The first few steps within each method walk the user through the analyses necessary to determine costs; the remaining few summarize the revenue calculation and ultimately present a cost revenue comparison. Detailed procedures for determining revenues (the same for each method) are contained in the next part. Most data resources, as well as specific references to augmenting material, are found in each method.

Four methods detail procedures to calculate costs associated with residential growth; two methods provide means to determine costs associated with nonresidential growth. The applicability of one or another method to a specific fiscal impact situation is covered generally in the following chapter and specifically within the “Application” portion of the six succeeding chapters.

When initiating a fiscal impact analysis the user should review all sections of the method before moving to the “Procedures” portion. This will provide an overview of assumptions, advantages/ disadvantages, required user sophistication and necessary data specific to each method. These all bear directly or indirectly on the method’s effectuation and outcome. Further, until the user is confident with the employment of one or another method, it is very important to set up schedules or chart-form exhibits almost identical to the ones found in the text. This will lead to an orderly and predictable presentation of results and additionally offer the opportunity to compare results with those of the example at interim stages of the analysis.

Most methods presented here represent both a culling of existing field practice and necessary refinement to provide standardization within each method. The user, at his discretion, may introduce procedural variations or data alternatives which may be more amenable to or better reflect the local fiscal context.

An important point to remember throughout the analysis is that nothing replaces common sense. With a basic knowledge of the local fiscal context (i.e., “it costs $200 per person to provide municipal services or $2,000 per student to provide school services) a reasonable estimate of cost based on the magnitude of the new population may be inferred. This “sense of cost” is essential to avoid the arithmetic errors which plague many fiscal impact analyses. All fiscal impact methods presented here are capable of being carried out by the practicing planner and should pose few substantive or procedural problems to this level of user.

1

RELATING METHODS TO TASKS AND CONTEXTS OF FISCAL IMPACT ANALYSIS

Introduction

The purpose of this chapter is to direct the planning practitioner to specific fiscal impact cost calculation methods, given both the kind of development situation he is attempting to evaluate fiscally and the type of community in which the evaluation is taking place. The first portion of the chapter lists, by individual method, the more appropriate applications of a method both in terms of the problematical alternatives demanding analysis and the fiscal context of the analysis.

While there definitely appear situations where one or another method may seem more appropriate, there are also instances of fiscal impact evaluation where the use of multiple methods concurrently, or any one of several methods individually, may also serve the practitioner’s needs.

It is thus the province of the fiscal impact analyst, after careful reading of the assumptions, data requirements and situational preferability associated with each of the several methods, to choose one or more of these approaches for the pending fiscal impact evaluation.

While the guides which follow link methods to various geographical settings and problematical contexts, other factors, such as available resources and sophistication of staff personnel, also weigh heavily in the choice of method.

What Methods Are Used, Where, When?

There are six fiscal impact methods: Per Capita Multiplier, Case Study, Service Standard, Comparable City, Proportional Valuation and Employment Anticipation. The axes of Exhibit 1-1 list the tasks for (top) and contexts of (side) fiscal impact analysis. Within the body of the exhibit are found methods which are conceptually more appropriate to a given task-context grouping.

Per Capita Multiplier Method

The Per Capita Multiplier Method, the most widely used of average costing techniques, is employed in situations where service infrastructure bears a close relationship to service demand such that the average costs of providing services to current users is a reasonable approximation of the costs to provide similar services to future users. It is most typically employed in contexts of mid-size, established, suburban areas or second-order cities experiencing slow to moderate growth (Exhibit 1-1, rows 3 and 4). In these situations, it is an excellent tool for analyzing development proposals, zoning changes, land use alternatives, annexations and the economic portion of the EIS requirement.

The versatility of the Per Capita Multiplier Method is a function of its assumptions. It assumes that tomorrow’s costs are not unlike today’s. Service underutilization in a particular municipal function may be balanced by service overutilization in another, or a certain pattern of deficient or excess service capacity exists which is identifiable as a local average and can be extended as such into the future.

The Per Capita Multiplier Method is particularly useful because it provides a fast approximation of the costs of new development based on readily-available, historical, local data. New residential single family or multi-family subdivisions and small-to-average planned residential developments, being developed in communities with a relatively established service infrastructure, represent the mode of application for this method.

Because this method is relatively inexpensive to apply it may also be used when a community posits alternative development scenarios for the future. A local decision to zone for single family versus townhouses or garden apartments may require three separate fiscal impact analyses. To undertake these analyses using the depth probes of the Case Study Method would incur significant extra cost for a possibly more accurate projection which may not be necessary at this early stage of development choice.

Case Study Method

The Case Study Method is ideally suited for the types of fiscal impact activity likely to be undertaken in large or second order, stable/declining cities or small, rapidly growing rural-fringe areas. These are areas with significant over-used or under-used service capacities, respectively, such that if development takes place it does so either at minimal or substantial local operational or capital expenditures (Exhibit 1-1, rows 1-2, 5-6). Thus the average of yesterday’s costs per capita multiplied by the population to be added is not the best indication of future costs. This type of situation calls for a method sensitive to existing excess or deficient service capacity. In the large city, experiencing slow growth or decline, municipal and educational service infrastructures are well established and may contain excess service capacity. In this context the Case Study Method may accurately depict a situation of local growth which occasions little, if any, expansion of the service system. Growth takes place as a result of development, yet no additional operational personnel are hired nor are new capital facilities provided. The size of patrol areas or beats may be increased, classroom size may grow slightly and rescue calls per hour may rise; the scale of the service system however, remains essentially unchanged. The typical task for this method, in an excess capacity context, is an evaluation of the impact of a convenience shopping center in a redevelopment area or a proposal for subsidized housing in the same type of area.

Exhibit 1-1
Relating Methods to Contexts and Tasks of Fiscal Impact Analysis

The Case Study Method is also employed at the other end of the growth-population spectrum. In small, rapidly growing areas with minimal operating services and capital facilities, the Case Study more accurately portrays the immediate and usually significant impact of proposed growth than the two average costing techniques (Per Capita Multiplier, Service Standard). For instance, a small municipality which must review a development proposal in the midst of existing overspent services and probable significant future additional demand, may opt to build a large elementary school while the development itself would occasion only the addition of several classrooms. A tipping point has been reached because of this specific development increment and a local decision is made to build a new school. This, in fact, is the real world of municipal decision making. If development had not occurred, the existing level of services would probably have been maintained. Growth occasioned the necessity for the new school. The costs of this new school are assigned to the growth increment which necessitated the move. In the previous, excess capacity case minimal costs were assigned; in this deficient capacity case substantial costs are assigned. This is the essence of the residential case study.

The Case Study Method is also invaluable for the large nonresidential or public facility development or redevelopment. A coliseum, civic center, large shopping center, hotel, office or industrial complex are the types of facilities which require depth analyses of the service capacities of existing systems. These types of facilities may place unique demands on specific services, public safety or public works for instance, such that an average projection of comparable previous growth is essentially inappropriate as a projection of future impact.

The Case Study (due to its specificity of projection, i.e., number of personnel needed by service category, required capital facilities by type and size, etc.) is further appropriate for analysis of the one-of-a-kind def...