2006 Land Use Update
Purdue Extension, Agriculture & Natural Resources
Educators
FISCAL IMPACT OF
DEVELOPMENT
by Gregory T. Guerrettaz
September 14, 2006
Indianapolis: (317) 347-0211
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THE MODEL

What is the model supposed to do?

Why even have a model and compute the
cost or benefit of new development?

Now that we have computed the cost or
benefit, what do we do with it?
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BALANCE THE INTEREST OF ALL
PARTIES

As the tax situation becomes more and more
complex, there comes a time when a balance
needs to be struck between new
development and the current burden of taxes
on current residents (2% Circuit Breaker)

Maybe abatement isn’t the only thing costing
the County and other taxing districts
money…
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WHAT THE MODEL DOES

The model is designed to
compute the “overall cost or
benefit” of new development.

The first attempt was made by
BAGI (Builders Association of
Greater Indianapolis).

The BAGI model showed that
most taxing entities made
money from new
development. This simply is
not true!
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ENTITIES BEING COVERED BY THE
COMPUTATIONS



County
Townships
Fire District


Public Library
Schools
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THE MODEL REQUIRED US TO “PONDER”
JUST ABOUT EVERYTHING…FOR INSTANCE,
1.
2.
3.
You ship by truck and send cargo by ship;
We have noses that run and feet that smell;
and
You park on driveways and drive on
parkways.
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ONE OF THE MOST COMPLEX ITEMS
WAS SCHOOL FUNDING
This included such things as:





Target Revenue
Cost per Student
Rate and Levy Controlled Funds
Tuition Support
Basic Grants
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TARGET REVENUE
Target Revenue
$ 4,724.15
Less:
Property Tax Levy
Motor Vehicle Excise
Tax, CVET and FIT
Tuition Support
1,566.46
178.53
$ 2,979.16
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COST PER STUDENT







Preschool
General
Debt
CPF
Transportation
Bus
Total
-
$
37.62
6,030.72
2,293.45
989.13
389.94
221.78
$ 9,962.64
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ON THE COUNTY LEVEL
Items that were taken into
account:
•
The Sheriff’s Department
budget and the significant
increase in both
manpower and number of
runs which occurred as
population grew
1999
2000
2001
2002
Calls
Dispatched
Total
Adult
Arrests
31,481
35,038
34,629
37,686
2,885
3,365
3,398
3,494
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JAIL POPULATION INCREASE
The “Jail Dept.” was analyzed to review the
increased demand placed on the jail facilities as a
result of the increase in population. Most Sheriffs
believe that there is a direct correlation between the
increase in the population and the price range of the
homes in the new subdivision. We’re hoping to
develop this correlation factor as we continue to
expand this analysis.
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JAIL POPULATION INCREASE (CON.)
Year
Average Daily Population
% Increase in Avg. Daily Pop.
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
207.33
204.39
170.45
161.51
156.39
142.29
138.73
119.69
74.02
89.90
1.44%
19.91%
5.54%
3.27%
9.91%
2.57%
15.91%
61.70%
-17.66%
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HIGHWAY FUNDING AND ROAD
IMPACT
The road impact and improvements have
historically been reviewed in a traffic impact
study. Here, we are developing cost impacts
based upon the total vehicle miles, as a direct
comparison to population increase. We
believe that specific improvements will be
necessary and required, but as vehicle miles
increase with new development, the impact
on roads is quite significant.
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OTHER COUNTY FUNDS
Other departments which are impacted as a result of
new development in County Government are:
1.
2.
3.
4.
5.
6.
7.
Auditor’s office;
Commissioner’s budget;
Assessor’s office;
Drainage budget;
Records and Engineering Depts.;
Animal Control; and even
An increase in County Home Expense
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COUNTY COURT COSTS
As we explore additional impacts as a result of new
development, it becomes quickly apparent that
caseloads (just ask your local Judge and be ready for
a half hour dissertation) increase in direct proportion
with the increase in population and dispute cases
continue to increase. At least new court cases can be
appealed.
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ESTIMATED MONEY SPENT AS A DIRECT
RESULT OF CORN PRODUCTION
Impacts three main areas:
TOTAL SPENDING IMPACT
- $57,000
LOST WAGES
- $31,298
INCOME IMPACT
- $34,605
LOST TOTAL IMPACT
- $122,903
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MULTIPLIER EFFECT
The Multiplier Effect is quite substantial when new development arrives
in your County. This impacts the following areas:
1.
2.
3.
4.
The spending to construct the residence, for materials;
The construction salaries;
The boost to the local economy as a result of the construction; and
The boost to the disposable income as a direct result of the increase
in households and the household’s impact on development of
additional commercial areas.
IMPORTANT NOTE: ‘What portion stays in your County versus
the portion which gets on the train and leaves the station?’
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MULTIPLIER EFFECT (CON.)
With help from one of our County
Commissioners, we have added (into the
Multiplier Effect component) the estimated
incomes which are required by mortgage
companies (and usually reality) in direct
correlation to the values of the homes being
built by the developer.
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THE MODEL REQUIRED US TO “PONDER”
EVEN MORE ITEMS, SUCH AS….
1.
2.
3.
4.
How can the weather be ‘hot as hell’ one
day and ‘cold as hell’ another?
When a house burns up, it burns down.
You fill in a form by filling it out; an alarm
clock goes off by going on.
There is no egg in eggplant nor ham in
hamburger.
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FISCAL IMPACTS WE HAVE SEEN SO
FAR
In one report, regarding the impact of a 375acre PUD with over 750 new residential
units, with an increase in population of 1,931
and an anticipated increase in new students
of 465, we have seen the following:
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FISCAL IMPACTS WE HAVE SEEN SO
FAR (CON.)
1.
2.
3.
4.
5.
(1)
(2)
School Corporation Impact
County Impact
Township Impact
Library Impact
Fire Territory
($3,580,000)
($144,000)
($189,000) (1)
($304,000)
$431,000 (2)
Includes fire building debt
Operating cost only; 1 new firefighter per 500 increase in population
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WHERE WE ARE GOING FROM HERE
It is obvious, when reviewing a new
development, that there may be numerous
things both required of the developer and
items which the developer has agreed or
offered to do; therefore, in order to review
new development in a comprehensive
manner, we are developing a Point System to
address items which we have experience
with at this time.
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WHERE WE ARE GOING FROM HERE
(CON.)
Such items are:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Offsite sewers;
Open space that will be provided;
Gifted land to School Corporations and others;
The actual fiscal impact;
Voluntary Impact Fee;
Traffic Improvements;
Drainage Improvements;
Additional Commercial Entities; and yes, maybe even
Above living wage salaries
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RECOMMENDATIONS
We recommend the following:
1.
2.
3.
4.
That the Counties should seek a legislative change to allow
for a Fiscal Impact fee (covering the County, Schools,
Townships and Libraries);
That the County Association should seek legislation for a
Justice Center impact fee;
Require an impact analysis for every new development in
excess of 200 homes;
Require an annual “compliance/monitoring” fee of $25.00 per
acre, from the developers, for the development life of the
area;
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RECOMMENDATIONS (CON.)
5.
6.
7.
8.
9.
Require the developer to file an annual report on the
development, in the first quarter of each new year;
That all County Planning Departments should develop a
comprehensive “Developer Questionnaire” and “Check-Off
List” before the development will be considered;
Compile a data base on the number of new students created
by each new development;
Seek legislative authority for a payment “In Lieu of Taxes”
covering services in the first year, when revenues are not
received; and
Calculate the value of lost farm production income.
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THANK YOU!!!
Gregory T. Guerrettaz
FSG Corp.
Financial Solutions Group,
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