oki fiam in apa 10 22 09
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Overview presentation on fiscal impact analysis method and model developed with OKI for Greater Cincinnati region.TRANSCRIPT
Using Fiscal Impact Analysis to Build Sustainable LocalGovernments
Della Rucker, AICP, CeCD
Larisa Sims, AICP
Indiana APA State ConferenceOctober 22, 2009
Today’s agenda What is Fiscal Impact
Analysis?
Why do it?Why don’t people do it? How does it work?
Sneak Peek: The OKI Fiscal Impact Model
What is fiscal impact?
How many times have you heard this:
Question:“Is growth good or bad for the
property tax base in my community?”
Answer:“Um… yes.”
Huh?
What does a fiscal impact analysis do?
Measures cash flow to and from the public sector
Compares alternativedevelopment scenarios
Analyzes ramifications ofdevelopment proposals
Asks: Are the revenues generated by new growth enough to cover the service and facility demands it will create?
Why Bother?
If we can quantify the impact that land use and development decisions will have on their community’s financial health – if we can provide facts, not assumptions – our communities will be more likely to make land use decisions that build long-term fiscal health.
What Does Fiscal Impact Analysis not do?
Does not directly calculate economic impacts (job creation, multiplier effects, etc.)
Does not calculate economic impacts resulting from multiplier effects.
Does not account for non-fiscal impacts of development.
Fiscal impacts are only one of many factors that may provide a reason for land use change:
Keep in mind…
So how do we figure out the fiscal impact of a plan alternative or a development proposal?
Revenues Actual Unrealized
CostsPublic Private (surrounding property owners)
Two methods: Average costing or per capita multiplier method
Marginal costing method
== XX$$
$$$$
$$AVGAVG NewNew = FI= FI
How do you do this?
LAND USE
DEPENDENT VARIABLES
Budgets Revenues and Expenditures
INDEPENDENT VARIABLES
PopulationTraffic volumesEmployment…etc.
LU
LUREVENUE and EXPENDITURE
$/Unit
$/Unit
The easy part first: estimating property taxes The parts:
Assessed value (link) Property tax rate (millage) Adjustments, deductions, rollback,
caps, etc
The formula: Assessed Value X Millage –
Adjustments = Property tax obligation
Estimating income/earnings tax The parts:
Estimated number of employees Actual (might be low) or Potential based on national/regional
average per square feet Income/earnings tax rate
Estimated percent of employees paying income taxes to locality (may be receiving reciprocity or abatement)
The formula: (Employees X income tax rate) = income
tax obligation
Sales tax The parts:
Estimated sales Actual (might be low) or Based on typical local experience, or based on national/regional average per square feet
Sales Tax rate May differ from one county or city to next May have different parts (part to state, part to county)
The formula: Estimated sales X sales tax rate = sales tax obligation
Other types of taxes:
Business Establishment-type taxes Tax on profits Tax on personal property or inventory Tax on holdings Capital gains Etc., etc., etc…..
Estimating Costs (externalities):
Not so easy…Highly variable across local
governments.Depends on how you count. They probably don’t know themselves.
Typical types of costs:
Public Safety Health and Welfare Public Service (Streets, water, sewer, etc.) Courts and Incarceration General Administration Building and Development
Ways to estimate costs: Per unit costs based on what local
government can tell you (eg: road maintenance per square mile, course load per social worker)
Per unit costs from comparable communities (census of governments)
Proportional allocation of local budget.
Potential types of costs: Police/fire runs Traffic congestion/management Sewer/water/road infrastructure
(note: this is often paid by the developer).
Stormwater runoff Students in schools.
Potential costs General formula: average unit cost
(per student, per lane mile of roadway, per fire run) X number of units added as a result of proposed activity =estimated public cost
This “public cost” may not include any improvements that the local government is paying for directly. This “public cost” measures the impact on existing services, and may indicate whether or not existing services can fill the need, or if the development will necessitate adding service capacity in the future.
What’s the difference between a fiscal impact analysis and a fiscal impact analysis
model?
Model Challenges1. Interfacing between different
data sets: Land use Assessment Factors that influence fiscal
impacts
Different purposes Different sorting criteria Different levels of detail
Model Challenges
2. Differences in governmental structure Cities, Counties,
Townships States
Model Challenges3. Do the numbers we need exist?
Local data (budgets, assessments) Regional/national sources
Population census Census of governments
Data discrepancies Data suppression
Other Model ChallengesNet impacts (difference
between existing impacts and proposed)
Default values and overrides
Administrative functionality
Issues and Challenges
The best model in the world will be useless unless it is easy and straightforward for the average professional planner/administrator to use
And now: the OKI Fiscal Impact Model:
Thank you!
Della Rucker, AICP, CEcDNational Lead for Economic Development
Jacobs1880 Waycross Rd.
Cincinnati, OH 45240513-288-6613
www.jacobs.com/jacobsworld
LinkedIn: Della RuckerPlaxo: Della Rucker
Facebook: Della Rucker Aicp CecdTwitter: dgottrucker
Blog: [email protected]
Larisa Sims, AICPRegional Planning Manager
720 East Pete Rose Way, Suite 420Cincinnati, Ohio 45202
www.oki.org