Fiscal Impact Analysis

In a Growth Alternatives Analysis, several different development scenarios are evaluated and compared. These scenarios can include variations in absorption schedules, comparison of alternative land use plans, or a comparison of alternative development patterns. This type of analysis is cumulative in that it evaluates the fiscal impacts of all anticipated development within the analysis area over a defined period, usually between ten and twenty years. The majority of the firm’s assignments in this area are related to comprehensive planning efforts.

Champaign, Illinois
Phased Growth Pattern Generates Better Results

TischlerBise recently completed a two-phase fiscal impact study for the City of Champaign. Phase I was a Cost of Land Uses Study, which provided an understanding of how discrete land use categories currently impact the City’s finances. Specifically, the City was interested in knowing what existing development types in the City generate in terms of revenue versus the commensurate service and facility costs. In Phase II, TischlerBise evaluated the cost to serve new development in the future. One scenario assumed all future growth occurs within the current sanitary sewer service area. The second scenario assumed new growth is not contained within the current service area, resulting in a more scattershot development pattern. Our analysis found that capital costs were significantly lower under the scenario that assumes future development occurs within the current sanitary sewer service area.

Shreveport, Louisiana
Shreveport Metropolitan Planning Commission of Caddo Parish, Louisiana – Three-Phase Fiscal Analysis Study

TischlerBise completed a three-part fiscal study as part of the Shreveport-Caddo Parish Master Plan effort. Phase I was an analysis of local demographic, economic, and fiscal conditions, particularly how growth patterns have affected the provision of services and infrastructure over time. Phase II was a comprehensive fiscal impact analysis, which evaluated the potential impacts to the City’s fiscal condition as a result of three alternative future land use scenarios developed as part of the Master Plan analyses. Finally, Phase III identified and analyzed revenue sources and implementation strategies to address infrastructure and operating needs.

Anne Arundel County, Maryland
Growth Generates Surpluses

TischlerBise conducted a two-phase fiscal impact analysis as part of the County’s General Development Plan (GDP) Update, specifically for a “Concurrency Management Element” to ensure the adequate provision of public facilities. Phase I of the fiscal analysis evaluated the fiscal impact of new growth under four development scenarios on the County budget, including schools. Because Maryland’s local government revenue structure includes property taxes, franchise fees, income taxes, transfer/ recordation taxes, and impact fees, it is not surprising that new development generates net surpluses. Phase II of this assignment layered the impact of the existing development and current infrastructure deficiencies on top of new development to determine whether the surpluses generated by new development were enough to offset the costs to correct these backlogs. The results from our analysis were incorporated into the Concurrency Management Element of the GDP, including levels-of-service for facilities, existing and future demand for facilities, long-range capital improvement needs, and potential revenue strategies to fund capital improvements. The element is intended to link the GDP with the five-year Capital Improvement Plan (CIP) and annual capital budget. Finally, TischlerBise provided the fiscal impact model to the County for their ongoing use.

Henrico County, Virginia
Tischlerbise Study and Software Used For Further Policy Analysis and Decision Making

TischlerBise examined the impact of growth on the City of Henrico County, Virginia over the next 20 years. As noted by the City, this information will be used as a foundation for further policy discussions relating to fiscal impacts of growth and development. The firm also developed a fiscal impact model designed for Scottsdale which has been utilizing it in updating the evaluations as well as other relevant fiscal analyses.

Twin Cities Metropolitan Council
First of Its Kind Fiscal Study Conducted for Metro Region

This unique regional fiscal impact study of eight member jurisdictions compared trends and compact growth alternatives. Eight jurisdictions in the Twin Cities Metropolitan Council evaluated the fiscal impact of two different growth alternatives – compact versus trends development. The evaluation included two jurisdictions each from four different types of communities – matured, maturing, suburbanizing and developing. The analysis evaluated the relationship between development densities and infrastructure costs and the return on municipal investment at various densities.

Proposed specific development projects can dramatically affect the fiscal well-being of a community. TischlerBise has conducted a number of these specific project evaluations. It is critical to analyze more than one scenario in order to better understand the demands for services and resulting fiscal consequences of different rates of absorption and/or mix of development. Listed below are a few of the specific development studies that we’ve conducted for a variety of public and private sector clients throughout the United States:

Rouse Company (Howard County, Maryland)
Fiscal Analysis of Infill Development in Columbia, Maryland

TischlerBise conducted a fiscal impact analysis for The Howard Research & Development Corporation on a mixed-use rezoning application to increase residential density within the new town of Columbia, Maryland. The proposal included 1,600 units and 600,000 square feet of nonresidential space. Dovetailing on our previous fiscal work for Howard County, TischlerBise conducted a fiscal impact analysis of three alternative development scenarios reflecting the developer’s proposal: by-right development, higher levels of affordable housing and age-restricted housing as requested by the County Council. All scenarios generated net surpluses to the County due to the revenue structure in Maryland, which includes both property and local income taxes.

Mashpee Township, Massachusetts
A Mixed-Use Development Approved in This Growing Cape Cod Township

In Mashpee Township, Massachusetts, TischlerBise conducted a fiscal impact analysis of the proposed Mashpee Commons development, a mixed use project located on Cape Cod. A series of scenarios were evaluated in which the number and type of housing units and the amount of nonresidential square footage varied. The development program was approved at a Town Meeting.

Sahuarita, Arizona
Should Town Approve a Tax Sharing Agreement with Developer?

TischlerBise conducted a three part evaluation for the Town of Sahuarita. The analysis was triggered by the proposed Rancho Sahuarita Town Center that is seeking a certain level of financing through the future sales tax collections. In response, TischlerBise conducted an assessment of the opportunities for additional retail, transient accommodations and other land uses. The fiscal evaluation conducted by TischlerBise indicated that although the project generates net surpluses, the Town should not enter into a tax-sharing agreement. The Town derives little revenue from residential development because there is no property tax. Since the Town has a significant amount of residential development when compared to nonresidential development, it is imperative that any sales tax revenue generated by new development be utilized to subsidize future residential development (including that of first phase of Rancho Sahuarita)

since the Town, at present, does not have a significant sales tax base. The third phase of this assignment involves implementing a fiscal impact model for the Town’s use in reviewing future development proposals.

Grandview Heights, Ohio
Tax-Increment Financing Evaluated

Grandview Yard is mixed-use development located in Grandview Heights, Ohio, with highway access from State Route 315 and I-670. Grandview Yard is directly across from downtown Columbus, The Ohio State University, the Arena District, the Greater Columbus Convention Center, and Lennox Town Center. The developer, Nationwide Realty, is proposing a mix of urban style housing types and substantial office development, including the relocation of the Nationwide Insurance corporate campus. One of the challenges associated with this analysis is that much of the proposed residential development is comprised of a different product and demographic than what the City has previously experienced. This affects pupil generation rates, persons per household factors, vehicle trip generation rates and transportation choices. TischlerBise evaluated multiple absorption schedules and assumptions for creating a Tax Increment Financing District.

Windsor, Connecticut
Fiscal Impact Analysis of the Great Pond Village Development and Tax Increment District

TischlerBise completed a fiscal impact analysis of the Great Pond Village Mixed-Use Development in the Town of Windsor, Connecticut. The site, a former brownfield, was re-planned to accommodate mixed-use development in an area that is lacking workforce housing. Based on the data acquisition and on-site interviews with Town staff, TischlerBise developed a fiscal impact model and analyzed the impacts of a range of potential development programs for this new community, which reflects a different type of land use pattern than traditionally seen in the Town. The model projected all municipal revenue (one-time and recurring), all municipal operating and capital impacts (including schools), and net fiscal results for each development scenario. Multiple scenarios were tested for tax increment financing viability, which required detailed infrastructure assumptions. The preferred development program is anticipated to be fiscally beneficial to the Town.

TischlerBise has extensive experience evaluating the fiscal impacts of annexation proposals. While it is generally fairly easy to calculate the additional revenues accruing from annexation, it is usually much more difficult to ascertain the fiscal impacts of providing City levels of service to an annexed area. The following are recent examples of Annexation Proposal Evaluations conducted by TischlerBise:

Germantown, Tennessee

The City of Germantown contracted with TischlerBise to evaluate the fiscal impact of annexing two different subareas adjacent to the current municipal limits. TischlerBise additionally evaluated the fiscal impact of various land use scenarios within the current municipal limits on the City’s operating and capital budgets. The four growth scenarios evaluated within the existing City included a Trends scenario, a Higher Density, and two Nonresidential scenarios which assumed increased City success at capturing office development.

An analysis of developable land area by the City for Annexation Subarea B estimated that the remaining developable land had the potential to yield 349 additional single-family units. Two growth scenarios were evaluated for this subarea: Current Trends and Faster Absorption. Annexation Subarea D consisted of five large parcels that could accommodate 5.8 million square feet of office space and 2.7 million square feet of retail activity. Because it was optimistic to assume that all 5.8 million square feet of office space could be absorbed by 2020, three other office absorption scenarios were developed assuming the absorption of 75%, 50% and 25% of the by-right office space. City is in the position to subsidize annexation if necessary.

Kissimmee, Florida

TischlerBise’s fiscal impact of annexation analysis for the City of Kissimmee included three uniquely different annexation areas. Within each annexation area, two scenarios – a base case and an optimistic scenario – were evaluated. In addition, for each scenario there were two development time schedules: trends and slower development. Annexation generates net revenues in all three sub areas although the magnitude is quite different.

Wilmington-New Hanover County, North Carolina

TischlerBise (then Tischler & Associates) evaluated the fiscal impact of providing public services. Impacts were evaluated for Countywide services (provided by New Hanover County), Urban services (provided by the City) and Nonurban services (County provided service costs that decrease with a loss of unincorporated County). In addition, for certain facilities and services, the impact of a higher service level was evaluated.

The analysis shows that the City of Wilmington benefits from existing economies of scale that allow the provision of urban services to contiguous geographies inside unincorporated New Hanover County. The County, which was not in the position of providing services at an urban scale, also benefited from annexation of portions of the unincorporated County. This is because certain revenue still accrue regardless of development being located in the City or unincorporated County, without the commensurate costs.

In many states, city and town taxpayers must also pay county taxes since they benefit from many countywide services. In some cases, sales tax is shared among municipalities as well. These types of revenue structures sometimes lead to questions of fiscal equity. Our Fiscal Equity Studies help determine, from a municipal perspective, if the cost of services provided is commensurate with the taxes paid, and from a county perspective, if the municipalities are paying their fair share.

Such questions are being asked more frequently across the country. With TischlerBise’s experience dealing with fiscal issues and developing revenue strategies, we are frequently asked to evaluate such questions of fiscal equity. Recent examples of Fiscal Equity Studies conducted by TischlerBise are provided below:

Shelby County, Tennessee

TischlerBise evaluation shows that County taxpayers subsidized services to the City of Memphis over $44 million.

At the request of the Commission on Alternative Futures, Shelby County contracted with TB to prepare a fiscal equity study. This study focuses on whether City of Memphis residents and businesses that pay County taxes are receiving a commensurate County expenditure for 16 selected public services.

TischlerBise’s analysis showed the County subsidizes the City Schools, Sheriff, Planning and Economic Development, Health Care Centers, Health Services, The Medical Center, Jail, Corrections, Criminal/Civil Justice and Human Service Grants in the amount of $88,550,839. The City subsidizes County Schools, Memphis/Shelby County Library System, Fire and Emergency Services, Parks, Public Works, and Public Assembly Facilities and Regional Amenities in the amount of $44,524,605. The net result is an annual Shelby County subsidy of over $44 million.

Clovis, California

TischlerBise review of County study reveals methodological flaw in the City’s favor

In Clovis, California, TischlerBise has been retained by the city to evaluate a consultant study prepared for Fresno County that shows the county subsidizes the provision of countywide services to Clovis, as well as to the other municipalities in the county.

TischlerBise, working in cooperation with both the city and county, is helping both parties to understand the implications of different allocation methodologies and is analyzing the data used in the county study. Our review of the county’s study has revealed a serious methodological question, which results in the City of Clovis contributing over $5 million more in revenues to the County than it receives in countywide services.

Napa, California

TischlerBise conducted a two-phase Fiscal Equity Study for Napa County, California. A fiscal equity study is an examination of the relationship between taxes and other revenue paid for by residents and businesses to the County, and the services provided by the County in the unincorporated and incorporated areas of the County. The intent was to determine if the unincorporated County subsidized the cost of countywide services in the incorporated areas or if the opposite was true.

• Phase I: Fiscal Equity Study was a high-level view of discretionary expenditures (“net County costs”) and revenues classified as either “countywide” or “municipal.” Countywide expenditures represent those costs incurred by the County to provide services throughout the County, including within the incorporated areas. Municipal expenditures are costs that the County incurs to provide municipal-type services in the unincorporated areas such as sheriff and planning. The purpose of the study was to determine whether there was an unincorporated area subsidy of countywide services or a City subsidy of municipal services. The overall finding of the Phase I analysis was that the unincorporated area subsidized countywide services.
• Phase II: Fiscal Equity Study was a Service Incidence Study that used geographic information on the County’s expenditures and revenues to allocate costs and revenues to the unincorporated County and/or the incorporated areas. Unlike Phase I, this study included all expenditures, not just net County costs (i.e., those funded by discretionary revenues). It identified distinct services delivered by the County and allocated the expenditures for each service by geographic area—specifically by jurisdiction. The overall finding of the Napa County Service Incidence Study is that in total, the unincorporated area subsidized countywide services provided in the incorporated areas.