City f Turlck Fiscal Impact Analysis Tl User Manual
CONTENTS INTRODUCTION TO FISCAL IMPACT ANALYSIS (FIA) TOOL... 1 1. Purpse f the FIA Tl... 1 2. General Assumptins... 1 3. Cmpnents... 2 STEP 1 DEFINE DEVELOPMENT SCENARIOS... 2 1. Jurisdictin Selectin... 2 2. Year Selectin... 2 3. Scenari Name Entry... 3 4. Demgraphic Data Entry... 3 5. Land Use Prgram Data Entry... 3 6. Tax Sharing Data Entry... 4 7. Residential Unit Size Data Entry... 4 8. Develpment Related General Fund Revenue Data Entry... 4 9. Develpment Related General Fund Expenditure Data Entry... 5 STEP 2 REVIEW MODEL ASSUMPTIONS... 5 1. Expenditure Variability per Service Ppulatin... 5 2. Revenue Variability per Service Ppulatin... 5 3. Cmpact Develpment Service Prvisin Efficiency Factr....5 4. Cmpact Develpment Threshlds... 6 5. Emplyee Density Factrs... 6 6. Square Ft Value Factrs... 6 7. Average Pre Annexatin Land Value per Acre Assumptin... 6 8. Prperty Tax Rate Assumptin... 6 9. Sales Tax Rate Assumptin... 7 10. Prperty Transfer Tax Rate Assumptin... 7 STEP 3 REVIEW TOOL OUTPUTS... 8 1. Summary Reprt... 8 2. General Fund Impact Cmparisn Reprt:... 8 3. Revenue Details... 9 4. Expense Details... 10 5. Impacts per Land Use Type... 10 METHODS AND ASSUMPTIONS... 12 1. General Assumptins... 12 2. Estimatin f Revenues... 12 3. Estimatin f Expenditures... 13 1
Intrductin t the Fiscal Impact Analysis (FIA) Tl Purpse Cities use fiscal impact analyses t evaluate the public csts and revenues that are likely t result frm a prpsed develpment prject r land use plan r t cmpare land prject r plan alternatives. The FIA land use alternative cmparisn tl is designed t prvide a general idea f annual revenue generatin as well as expenditures fr service csts assciated with different land use design. This desktp tl will allw the City f Turlck t: Evaluate cmparative fiscal impact f different develpment scenaris; Cmpare ptential revenue and expenditures f alternative develpment scenaris; Assess the ptential tax revenues f prperty annexatin thrugh alternative scenaris; Examine varius frms f cmpact develpment n expenditures related t alternative scenaris. This impact analysis fcuses exclusively n General Fund revenue and expenditure (peratin and maintenance) categries that directly relate t develpment, as described in the belw table. It des nt evaluate impacts t ther General Fund categries, t nn General Fund prvided city services, r services prvided by ther entities (e.g., schl districts and utilities). Other General Fund categries are assumed nt t be affected by develpment r affected t a minimal degree. General Fund Revenue and Expenditure Categries Utilized in Analysis Revenue Categries Sales Tax Prperty Tax Real Prperty Transfer Tax Other Develpment Related Annual Revenues Transient Ldging Taxes Franchise Fees Business License Taxes Other Fines, Frfeitures, and Penalties State Mtr Vehicle In Lieu Tax Fees and Charges per Service Infrmatin prvided can be used t: Expenditure Categries Public Safety Public Ways and Facilities/Transprtatin Recreatin, Parks, Culture Cmmunity Develpment General Gvernment (Administrative) Help select prjects r plans that imprve a cmmunity s fiscal health and avid thse that erde cmmunity funds, and/r Allw decisin makers t understand the fiscal csts and benefits f ne r mre alternative curses f actin relative t nn fiscal cnsideratins. General Assumptins: Baseline year budget, ppulatin, and emplyment data, are used t develp per resident and per emplyee revenue and expenditure factrs. The mdel des nt accunt fr inflatin. All mnetary values are in base year dllars. 1
This analysis assumes full build ut f land uses described within each land use scenari alternative. The City shuld take int accunt the prbability that full build ut will be achieved. A large prtin f the develpment prpsed within the alternatives is lcated within the unincrprated Cunty. A tax sharing agreement will need t be negtiated between the City and Cunty. Because prperty tax cntributes a cnsiderable prtin f General Fund related revenues, the actual fiscal perfrmance f the alternative will depend n the utcme f the negtiatin. Fiscal impact analyses ften assume that emplyees create fewer impacts n the city General Fund than residents. This is based n the lgic that emplyees spend less time in the city and utilize fewer services. An emplyment factr is used t discunt the impact f each emplyee. Within this analysis, an emplyment factr defaults t 50%. Cmpnents f FIA tl: The three majr cmpnents f the mdel are summarized belw and described in greater detail in this dcument. Step One: Define land use scenaris. This mdule requires the user t input the alternative land use scenari descriptrs with crrespnding land use infrmatin including land use data (additinal acres fr each land use categry), develpment parameters (e.g. land use density, mix), and develpment related general fund expenditures. All pssible data entry pints are highlighted in blue. Step Tw: Mdel assumptins. This mdule allws the user t review, and if needed, in mst cases refine the demand, cst, and revenue assumptins pertaining t varius types f services evaluated in the mdel. Default numbers based n industry standards, assumptins, and calculatins are prvided but can be mdified by the user. All pssible data entry pints are highlighted in blue. Step Three: Impact analysis reprts. This mdule generates a series f reprts that allw the user t evaluate the fiscal characteristics and perfrmance f the prject. Step 1 Define Develpment Scenaris Site specificatins and cmmunity design in prpsed land use scenaris influence the cst f related infrastructure that will be needed t serve a new grwth area. The first step in using the IMPACS mdel is t define the existing site cnditins, the prpsed land uses, and ther integral develpment parameters. This is dne under the input data tab. Fields highlighted in blue can be mdified by the user. This user will need t perfrm the fllwing items: 1. Select a jurisdictin by clicking n the blue field and using the drp dwn menu. 2. Select a base line year and planning hrizn year. 2
3. Enter names f up t fur land use scenaris that yu wish t cmpare in the mdel. 4. Enter the existing number f residents and jbs in the City in the base line year highlighted in blue. The additinal residents and jbs prjected fr each land use scenari in the planning hrizn (highlighted in light green) will autmatically calculate based n acreage and residential and nn residential density factrs entered later. 5. Enter the amunt (acres) f delineated land use (e.g. rural residential, high density residential, dwntwn) fr the base year and the additinal acreage fr each land use scenari at full buildut. Only a prtin f Table 5 is shwn in the abve illustratin. It is pssible that the categries listed will nt exactly match the land use categries frm yur city s general plan. The user shuld select the land use categry clsest t the actual land uses being prpsed. Als, enter the density and intensity factrs t each land use categry: i. Residential Density: Input residential use factrs (dwelling units per acre, estimated vacancy rate, average number f peple per husehld, and percentage f residential use); and, ii. Nn Residential Intensity: Input nn residential use factrs (flr area rati, percentage f ffice and/r retail use). 3
As seen in the illustratin abve, high density residential/ffice is a mixed use space with 50% residential and 50% nn residential (all ffice space), 22.5 residential dwelling units per acre, an estimated 1% vacancy rate and 1.55 peple per husehld. The Flr Area Rati (FAR) is 0.35, with an estimated 300 square feet f ffice space per emplyee. Nte: the number f square feet per emplyee clumn cntains numbers that are industry standards (discussed belw) and the vacancy rate is assumed t be 1%, but again, can be mdified by the user t imprve accuracy. 6. Define the percentage f acreage fr each land use designatin fr prperty that is expected t be annexed frm the cunty (bth fr utside city limits and fr unincrprated islands) under each scenari. 7. Determine an estimated residential unit size (square feet) fr each residential land use designatin. The lt size and residential FAR factrs are autmatically calculated. 8. Enter develpment related city general fund revenues fr the base year. There are tw ptins available t cmplete these tables: 4
9. Enter develpment related city general fund expenditures fr the base year. There are tw ptins available t cmplete these tables: Step 2 Review Mdel Assumptins In additin t in the Emplyee Density Factrs, discussed in Step 1, the mdel uses default numbers that are develpment standards, assumptins, r in cases such as Square Ft Value Factrs, are calculated based n infrmatin in ther tables. In this step, the user can utilize the defaults (shwn in the belw illustratins) r if necessary refine the mdel assumptins and calculatins t imprve the accuracy f the resulting cst/revenue analysis. These standards and assumptins include: A. Expenditure Variability per Grwth in Service Ppulatin percentage increase in per capita cst fr each additinal resident. B. Revenue Variability per Grwth in Service Ppulatin percentage increase in per capita revenue fr each additinal resident. C. Cmpact Develpment Service Prvisin Efficiency Factr percentage reductin in ttal expenditure due t increased efficiency assciated with cmpact develpment versus dispersed grwth. 5
D. Cmpact Develpment Threshlds maximum number f residents per additinal acre f develpment. E. Emplyee Density Factrs amunt f additinal cmmercial, ffice and industrial square feet fr each additinal emplyee. F. Square Ft Value Factrs increased value (and subsequently tax revenue) fr each additinal square ft per building type (Table F). The values are autmatically calculated using infrmatin entered under the Prperty Price tab, which can be mdified by the user. G. Average Pre Annexatin Land Value per Acre value f land prir t annexatin. H. Prperty Tax Rate base prperty tax rate and apprtinment t the city (and cunty) General Fund based n a prperty typlgy (within city bundaries, new cunty land annexed, and cunty urban island annexed). 6
The City General fund share f the tax increment fr annexed new lands, and f the Ttal Values fr annexed urban islands (un highlighted fields), are based n the percentages the user inputs int the ther fields and are autmatically calculated. I. Sales Tax Rate the percentage f the sales tax allcated t the City s General Fund J. Prperty Transfer Tax. 7
Step 3 Review Tl Outputs The tl prvides a variety f summary tables and charts that cmpare perfrmance f the different land use scenaris. Summary Reprt: A quick cmparisn f the different land use scenaris perfrmance can be fund n the Summary Tab. As can be seen in the example belw, Alternative Scenaris B and D are generating a psitive net revenue at full build ut. General Fund Impact Cmparisn Reprt: The General Fund Impact tabs displays land use details and fiscal perfrmance fr each alternative land use scenari thrugh tables, charts and graphs. The illustratin belw shws the fiscal perfrmance fr Land Use Alternative One. The table shws the net revenue as a percentage f ttal revenue. In this scenari, annual expenditures are exceeding annual revenues, at full build ut. As seen in the pie charts, sales tax prvides mre than half f the General Fund revenue and the largest expenditure is fr public safety services (plice and fire). 8
Net General Fund Impact f Alternative Revenue Prperty Tax $1,909,100 Transfer Tax $266,676 Sales Tax $5,656,649 Other Recurring Revenues $2,161,980 TOTAL REVENUE $9,994,405 Expenditure Expenditure $13,230,941 TOTAL EXPENDITURE $13,230,941 NET REVENUE $3,236,536 NET REVENUE AS % OF TOTAL REVENUE 32.4% Other Recurring Revenues 22% Sales Tax 56% Prperty Tax 19% Transfer Tax 3% Recreatin, Parks, Culture 8% Public Ways and Facilities/Tran sprtatin 20% Cmmunity Develpment 10% Public Safety 57% General Gvernment 5% The land use details under the these tabs summarizes the number f acres and percentage f each land use type, the amunt f cmpact versus standard develpment, density metrics, and the prtin f the land use alternative (acres and percentage) t be annexed frm the cunty. Revenue Details: The Revenue Detail tab displays a breakdwn f each general fund revenue generatr (e.g. prperty taxes, sales taxes, transfer taxes) by land use categry, bth per acre and as a ttal fr each land use alternative. 9
Expense Detail: The Expense Detail tab displays General Fund expenditures by land use categry, bth per acre and as a ttal fr each land use alternative. Impact per Land Use: The Impact tab shws the fiscal perfrmance f each land use type independent f a specific land use scenari. Metrics fr ttal revenue per acre, ttal expense per acre, and net revenue per acre fr each land use categry is prvided. The table and graph belw shw the Dwntwn land use type is generating the highest net revenue per acre at full build ut. 10
The Impact tab als shws metrics fr ttal revenue per service ppulatin (emplyees and residents) per acre, ttal expense per service ppulatin (emplyees and residents) per acre, and net revenue per service ppulatin (emplyees and residents) per acre fr each land use categry is prvided. The table and graph belw shw the Industrial land use type is generating the highest net revenue per service ppulatin at full buildut. 11
Mdel Methds and Assumptins: General: This analysis assumes full build ut f land uses described within each alternative. The City shuld take int accunt the prbability that full build ut will be achieved. Fiscal impact analyses ften assume that emplyees create fewer impacts n the city General Fund than residents. This is based n the lgic that emplyees spend less time in the city and utilize fewer services. An emplyment factr is used t discunt the impact f each emplyee. Within this analysis, an emplyment factr defaults t 50%. Baseline year budget, ppulatin, and emplyment data, are used t develp per resident and per emplyee revenue and expenditure factrs. T estimate the fiscal perfrmance f the future land use alternatives, the analysis utilizes a mdified per capita multiplier methdlgy. Estimatin f Revenues: Prperty Tax: In Califrnia, the prperty tax rate is set at 1%. Sales Tax: The tax revenue split, between the City and Cunty, is dictated by the percentages input by the user in Table H. The per acre prperty tax value fr each land use type and tplgy (land within the city, new cunty land annexed and cunty urban island annexed), is calculated under the green T8 tabs. Annual prperty tax revenues are then calculated by multiplying the per acre values by the number f acres per land use type. The analysis estimates sales tax revenues using a per acre allwance methd. The per acre sales tax value fr each land use type is calculated under the green T9 Est Sales Tax tab and is based n the percentage allcated t the City s General Fund, input by the user in Table I. There are tw taxable sales assumptins within this analysis. One assumptin is relevant t retail sales and ne relevant t business t business sales. As seen in Table F, the sales rate per square ft f retail area is assumed t be $160. The business t business sales rate per square ft f ffice area is assumed t be $10. While sales rates wuld be expected t be varied between different uses, n reliable data surce was available t prvide better differentiatin. These numbers can be mdified by the user in Table I. Annual sales tax revenues were calculated by multiplying the per acre values by the number f acres per land use type. Prperty Transfer Tax: The analysis estimated prperty transfer tax revenues using a per acre allcatin methd. The analysis uses relatively cnservative average turnver perid assumptins including 10 years fr lwer density residential land uses, and 20 years fr higher density 12
residential and nn residential prperties. The 20 year turnver rate reflects the fact that the rental multi family and cmmercial prperties are ften wned by investrs and d nt transfer between wners very frequently (Ecnmic & Planning systems Inc., 2010). The annual transfer tax rate per acre fr each land use type is calculated under the green T10 Est Prp Transfer tab and is based n the transfer tax rate input by the user in Table J. Prperty transfer tax revenues fr each alternative were then calculated by multiplying the per acre values by the number f acres per land use type. Other Annually Recurring Revenues: Rather than assuming that each recurring revenue surce will increase at a ne t ne rati with new ppulatin and emplyment grwth, the analysis assumes that a prtin f each surce is fixed and independent. T reflect this assumptin, the analysis estimates the degree f independence r dependence (expressed as percent variable) fr each revenue surce. The higher the percentage the mre clsely crrelated the grwth in revenue is t the grwth in ppulatin and emplyment. The analysis estimated revenues frm the ther surces (e.g. transient ldging taxes) using a per service ppulatin (per resident and per emplyee) allcatin methd. These per capita rates and the ttal annual revenue are calculated under the green T7 Other Cty Revs tab. Estimatin f Expenditures: The analysis estimated expenditures in these categries using a per service ppulatin (perresident and per emplyee) allcatin methd. Instead f assuming that each expenditure surce will increase at a ne t ne rati with new ppulatin and emplyment grwth, the analysis assumes that a prtin f expenditures in each categry is fixed and independent frm grwth. The analysis utilizes estimates the degree f independence r dependence (expressed as percent variable) fr each expenditure surce. The higher the percentage the mre clsely crrelated the grwth in expenditure is t the grwth in ppulatin and emplyment. T reflect reduced csts assciated with cmpact develpment, this analysis cntains tw alternative expenditure cnditins, business as usual and high density cmpact develpment. Literature supprts a cmpact develpment adjustment f 17.4% fr public ways and facilities/transprtatin related expenditures. The cmpact develpment rates were applied t land use categries with density at r greater than 30 residents per acre fr residential, 90 emplyees per acre r greater fr nn residential, and 40 residents and emplyees per acre r greater fr mixed use land uses. Expenditures per capita under each f these cnditins are shwn under the green T12 tabs. 13