(Project No. 01-M-08)
S E C T I O N
P R O G R A M
A N A L Y S I S
Sector Plan Alternative
Development Fiscal Impact
Analysis
A N D
M A N A G E M E N T
Office of Financial Management & Budget
Central Western
Communities:
This document is the result of a collaboration between
the Department of Planning, Zoning & Building and the
Office of Financial Management & Budget, Financial Management Division
OCTOBER
2001
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Foreword
1
Executive Summary
2
Introduction
Overview of the Central Western Communities Area
4
Alternative Development Strategies
10
General Study Issues
21
Revenue Estimation Methodology
Major Assumptions
30
Summary of Revenue Projection Factors
31
Detail of Revenue Projection Factors
34
Cost Estimation Methodology
Major Assumptions
43
Expenditure Projection Factors
44
Impact Forecasts
49
Appendix
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Foreword
T
his report grows out of an on-going series of policy deliberations
concerning appropriate land use strategies for the neighborhoods
comprising the Central Western Communities of Palm Beach County.
Its purpose is to provide insights on, and an independent examination of, the
fiscal and service level impacts associated with the principal development
options now before the Board of County Commissioners.
Fiscal impact analyses are useful when they are part of a robust and broadlyfocused policy framework, and not used as the single test for approval and
disapproval of development. By design, fiscal analyses estimate only budgetary
impacts on public services providers; they do not address public policy
priorities or social or environmental or even many economic costs and benefits
to the region. Moreover, because the study team was asked to assess the
differences in impact between each of two proposed growth strategies and the
status quo growth future, our conclusions are stated in terms of relative, rather
than absolute, impacts.
There is one additional characteristic of such studies that the reader should
bear in mind. Fiscal analyses are simulation models of the future under
assumed conditions. Like all models, they are representations of reality, not
reality itself. Just as a model airplane is not the real thing, but merely a
representation which permits us to picture a real airplane, so fiscal models
permit us to imagine what the fiscal future may hold.
Finally, since OFMB was asked to undertake this analysis earlier this year, a
recent development has come to light which may have a bearing on this
matter. New long-range population forecasts were released within the past few
weeks by the Bureau of Economic and Business Research at the University of
Florida. The County Planning Division has advised OFMB that these forecasts
may affect the practicality of one or both of the two growth scenarios which we
were given to study. The reader should be aware that the impacts of these new
population estimates are not presently known, and they are not reflected in the
analysis in any manner.
The authors of this report gratefully acknowledge the assistance of many
county departments and agencies and staff of the School District of Palm
Beach County in the completion of this work under tight time constraints.
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Executive Summary
Report Highlights . . .
Our analysis of the fiscal
impacts of alternative
development proposals for
the Sector Plan area found
that:
þ The development of large
land areas into low
density, medium value
residential communities
with little commercial
activity has a negative
fiscal impact on the
principal service provider
agencies
þ Acquiring 16,000 acres of
existing agricultural lands
as public open space has
an estimated cost of more
than $240 million, and
would require a bond
measure approved by
voters
þ Preserving a rural quality
of life can be achieved by
means of established
planning techniques
without resorting to largescale public acquisition of
open space
T
he Office of Financial Management and Budget was assigned to
prepare a report on the fiscal impacts of alternative growth strategies
on the county government and the county school district. The
alternative growth proposals are part of an on-going policy debate concerning
the future development of the Central Western Communities of Palm Beach
County. OFMB was brought into the process in June 2001 to examine how
the alternatives might affect service levels and costs of the two agencies, and to
evaluate questions of bond feasibility. This report contains the results of that
examination.
Because the analysis intentionally excluded certain costs and revenues—
notably those associated with self-supported enterprise activities—the study
conclusions should not be interpreted as representing the absolute costs of any
of the growth strategies, but only as relative measures of favorability on the
county government and the school district.
The principal findings and conclusions are the following:
None of the three development strategies was found to have a net
positive fiscal impact on either the county or the school district over the
next twenty-five years;
Both of the development proposals made by the county’s Sector Plan
land use consultant WilsonMiller, Inc., have somewhat more favorable
fiscal impacts on the county than does the status quo Trend Plan;
The Rural Lands Stewardship scenario is marginally more favorable to
the county, but marginally less favorable to the school district, than the
Trend Plan;
The Agricultural Preservation scenario has the most favorable fiscal
impact on both the county and the school district;
The estimated cost to acquire the agricultural lands to implement the
Agricultural Preservation scenario is $241.1 million, for which general
obligation bonds could be issued, assuming voter approval; and
The expected return to the county for investing $241.1 million to
implement the Agricultural Preservation option is estimated to be
PV$24.1 million over twenty-five years.
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Central Western Communities
Sector Plan
An analysis of the fiscal impacts of alternative development strategies on the
County government and the School District of Palm Beach County
T
he purpose of this report is to provide the Board of County
Commissioners, senior county management, and project planners
insights into the impacts which may be expected from several
development options now being considered for the future of the Central
Western Communities of Palm Beach County.
The report assesses potential financial benefits and costs to the county
government and the county school district associated with three separate
buildout conditions, two of which were proposed to the Commission by its land
use consultant WilsonMiller, Inc.
only on fiscal implications on the two agencies referred to
above, and not on the broader economic impacts which the development
options would exert on the regional economy, such as employment creation,
housing-to-jobs balance, household income, and the like. Similarly, social
costs and benefits were not examined.
The study focused
The report is divided into five principal sections:
1. Introduction – The existing land use inventory of the Central Western
Communities is profiled, along with its potential for further
development along three distinctly different tracks.
2. General Study Issues – This section discusses the conceptual
framework within which the fiscal impact analysis was conducted, and
describes the limitations of the analysis.
3. Revenue Estimation Methodology – This section describes the analytic
approach taken in forecasting the revenue-generating capacities of the
three alternative growth scenarios.
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4. Cost Estimation Methodology – This section details the methodology
employed to estimate the costs of providing public services which are
thought to be required by each of the land use proposals.
5. Impact Forecasts – The study conclusions.
Introduction
OVERVIEW OF THE CENTRAL WESTERN COMMUNITIES AREA
The sector planning area is a 57,550-acre unincorporated region of about 90
square miles commonly referred to as the Central Western Communities
(CWC). The majority of the CWC is made up of exurban and rural residential
subdivisions, with several large citrus groves interspersed among the residential
areas. Drainage canals and stabilized dirt roads cover the area, outlining the
grid of regularly spaced residential lots. Very little additional infrastructure
serves the CWC residents.1
The CWC is bordered on the east by the incorporated Village of Royal Palm
Beach; a protected slough which serves as the water catchment area for the
City of West Palm Beach; and an unincorporated rural community. To the
south of the CWC is the incorporated Village of Wellington. To the west of
the CWC lies a large commercial mining operation and the Everglades
Agricultural Area, which is principally devoted to growing sugar cane.
Northwest and north of the region is the J.W. Corbett Wildlife Management
Area. The northeast perimeter is adjacent to
ranch lands located within the City of Palm
S P E C I A L D I S T R I C T S
Beach Gardens and the North County
Cypress Grove Community Develop. Dist.
Airport. The CWC, and the large
· Construction of drainage facilities
conservation areas to the north and south of
· Construction of irrigation facil.
this region, serve as a transition between the
· Construction of water/wastewater
suburban development to the east and the
Indian Trail Improvement District
agricultural land uses to the west.2
· Construction of utility services
· Construction of roads & bridges
· Construction of parks/rec. facil.
Loxahatchee Water Control District
· Construction of utility services
Northern PBC Improvement District
· Construction of utility services
Seminole Water Control District
· Construction of utility services
Governance of the CWC is provided by a
myriad of governmental agencies. Because
the CWC lies within the unincorporated
area of Palm Beach County, it is under the
principal jurisdiction of the Board of County
Commissioners (BCC), and the BCC
provides most of the public services available
1
Community Profile for the Central Western Communities Sector Plan, prepared by
WisonMiller, Inc., March 12, 2001, page Introduction - 1.
2
Ibid., page Introduction - 2.
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to CWC residents. The School District of Palm Beach County currently
provides four elementary schools and one middle school in the CWC. Some
students who reside within the CWC attend other schools outside the study
area.3 Five special purpose districts also provide additional infrastructure and
services to the CWC, with revenues raised through property benefit
assessments.
TABLE 1
Central Western Communities Subareas
Subarea
Acres
Existing Communities
The Acreage
20,316
Canal Pine Acres
192
Deer Run
1,259
Deer Run Plat 2
296
Delwood
139
Entrada Acres
186
Fox Trail
1,080
Las Flores Ranchos
187
Loxahatchee Groves
7,728
Mandell
331
Santa Rosa Groves
642
Sunny Urban Meadows
487
Tall Pine Acres
134
Waite Subdivision
70
White Fences Equestrian Estates
417
Other (isolated tracts)
475
Sub-Total
33,939
Large Properties
Callery-Judge Groves
3,954
Indian Trail (Cypress) Groves
8,229
Mecca Farms
1,919
Palm Beach Aggregates
2,176
Other (Southern @ Seminole Pratt-Whitney)
64
Sub-Total
Lion Country Safari
16,342
660
Environmental Lands§
6,609
Total
57,550
§ Includes 5,649 acres of “open space” area and 960 acres currently classified as “agricultural.”
Source: Community Profile for the Central Western Communities Sector Plan, prepared by
WilsonMiller, Inc., March 12, 2001, Map LU-2, p. Land Use-4 (updated on July 30, 2001).
3
Ibid., page Governance - 9.
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Existing Land Uses
The CWC is divided into twenty “subareas” including fifteen existing
communities, four large agricultural properties subject to subdivision, and the
Lion Country Safari facility. The balance of land within the CWC consists of
several isolated tracts not subject to subdivision, a small amount of acreage
near the intersection of Southern Boulevard and Seminole Pratt-Whitney
Road, and environmental lands with no development potential. The size of
each subarea and the other properties are shown in Table 1 on page 5.
The Central Western Communities have developed in a low density, semirural pattern. Large-lot residential and agricultural uses dominate the CWC.4
As shown in Table 2 below, approximately 34 percent of existing land is used
for some type of agriculture, and another 34 percent is developed with
residences. Conservation, utilities, transportation and commercial recreation
uses (Lion Country Safari theme park and camp ground) comprise most of the
remaining land uses.5 Slightly more than twenty percent of total land within
the CWC is presently vacant.
TABLE 2
CWC Existing Land Uses
Existing Land Use
Acres
Per Cent
of Total
Agriculture
19,657
34.2%
Single Family Residential
19,385
33.7%
80
0.1%
Other
Commercial/Employment Center
Open Space§
5,649
9.8%
Public†
421
0.7%
Lion Country Safari
660
1.1%
11,698
20.3%
57,550
100.0%
Vacant
Total
§ “Open Space” includes land intended primarily for environmental or water management
purposes. It includes “Unit 11” land which is being purchased for restoration.
† Includes lands held for public uses, including rights-of-way for roads and power lines.
4
Community Profile for the Central Western Communities Sector Plan, prepared by
WilsonMiller, Inc., March 12, 2001 p. Land Use-1.
5
Ibid., p. Land Use-1.
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Existing Residential Development
As of December 2000, there were an estimated 11,329 residential dwelling
units within the boundaries of the Central Western Communities. These units
were distributed among “rural residential,” “estate residential,” “suburban
residential” and “mixed residential” communities within the CWC as shown in
Table 3.6
TABLE 3
Central Western Communities
Residential Development by Community
Existing Residential Dwelling Units
Existing Land Use
Rural
Estate
Suburban
34
9,624
21
Mixed
Total
Existing Communities
The Acreage
Canal Pine Acres
Deer Run
Deer Run Plat 2
Delwood
Entrada Acres
Fox Trail
Las Flores Ranchos
Loxahatchee Groves
Mandell
Santa Rosa Groves
Sunny Urban Meadows
Tall Pine Acres
Waite Subdivision
White Fences Equestrian Estates
Other
Total
9,679
20
20
139
139
14
5
19
13
4
17
143
3
146
17
17
12
515
12
444
162
7
1,128
33
33
13
13
33
33
16
2
18
9
9
1
1
38
1,050
10,082
183
7
45
14
11,329
Source: Central Western Communities – Housing Mix spreadsheet prepared by WilsonMiller, Inc., July
25, 2001. Updated statistics provided by WilsonMiller, Inc. on August 27, 2001.
6
“Rural Residential” describes the subdivision pattern where lots range from 5 acres to 10
acres in size with conventional (non-clustered) subdivision design. “Estate Residential”
describes the subdivision pattern where lots range from 1 acre to 5 acres in size with
conventional (non-clustered) subdivision design. “Suburban Residential” describes the
subdivision pattern consistent with the “Low Density Residential” land use designation; densities
range from 1 to 3 dwelling units per acre. “Mixed Residential,” also referred to as “Medium
Density Residential,” includes a mixture of multi-family, single-family attached and single-family
housing typical of village or town centers; densities range from 4 to 6 dwelling units per acre.
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Potential Residential Development
Existing development and subdivision patterns within the Central Western
Communities substantially limit the planning options. Approximately 64
percent of the land in the CWC lies within existing communities and is
essentially committed to a pattern of infill with negligible redevelopment or
modification. The remaining 36 percent of the land is held predominantly in
large property ownerships currently committed to agricultural uses.7 Table 4
below compares the usage of lots within the existing communities of the CWC.
TABLE 4
Central Western Communities
Lot Usage by Community
Lots
Other
Community
Use§
Residential
Vacant
Total
% Vacant
9,679
5,398
693
15,770
34.2%
20
12
4
36
33.3%
139
96
9
244
39.3%
10.0%
Existing Communities
The Acreage
Canal Pine Acres
Deer Run
Deer Run Plat 2
Delwood
Entrada Acres
Fox Trail
Las Flores Ranchos
Loxahatchee Groves
Mandell
Santa Rosa Groves
Sunny Urban Meadows
Tall Pine Acres
Waite Subdivision
White Fences Equestrian Estates
Other
Total
19
5
26
50
17
8
1
26
30.8%
17
11
9
37
29.7%
146
56
11
213
26.3%
38
67.6%
12
25
1,128
283
144
1,555
18.2%
33
24
2
59
40.7%
13
21
16
50
42.0%
8
72
43.1%
33
31
18
4
22
18.2%
9
2
11
18.2%
1
19
45
27
11,329
6,022
3
926
23
82.6%
72
37.5%
18,277
32.9%
§ “Other Use” includes agricultural, commercial and institutional uses.
Source: Central Western Communities – Dwelling Units spreadsheet prepared by WilsonMiller, Inc., July
25, 2001. Updated statistics provided by WilsonMiller, Inc. on August 27, 2001.
7
Central Western Communities Sector Plan – Alternative Futures Summary (Draft), prepared
by WilsonMiller, Inc., April 9, 2001, p. 1
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ALTERNATIVE DEVELOPMENT STRATEGIES
Three alternative development strategies have been proposed for the Central
Western Communities Sector Plan area. These include the “Trend Plan”
scenario, the “Agricultural Preservation” scenario, and the “Rural Lands
Stewardship” scenario, the latter two of which constitute a “Preferred
Development Strategy” for the CWC proposed by the firm of WilsonMiller,
Inc. Variations in the intensity, mix and form of land use among the three
scenarios revolve almost exclusively around the treatment of the large
properties currently committed to agricultural uses.8
Tables 5 through 8 beginning on page 18 compare the expected consequences
of these alternative development scenarios on the CWC in terms of land use,
residential development, and commercial development. We begin with a brief
description of each scenario.
Scenario 1: Trend Plan
As its name implies, the Trend Plan scenario involves the buildout of the
CWC according to existing growth patterns consistent with current regulatory
policies, programs and practices. These include the Palm Beach County
Comprehensive Plan, the county’s Unified Land Development Code, and plans,
regulations and programs adopted by other agencies, municipalities and special
districts.9 This development pattern would eventually displace large-scale
agriculture, but would not preclude agricultural and equestrian activities as
ancillary uses.10
The Trend Plan scenario is based on an assumed buildout of 20,138 dwelling
units and a population of approximately 62,500 persons. A total of 17,999
dwelling units would be located within the existing communities. This option
assumes that all lots or tracts vested for residential use within existing
communities will eventually develop for residential purposes and without
significant subdivision or re-subdivision. The remaining 2,139 dwelling units
are dispersed throughout the CWC outside of the existing communities.
Commercial and office space is limited to neighborhood-serving, low intensity
uses. Approximately 700,000 square feet of new neighborhood-serving retail
space would be added to the 250,000 square feet that exists or is approved
within the CWC boundaries. New non-residential development would occur
8
Central Western Communities Sector Plan – Alternative Futures Summary (Draft), prepared
by WilsonMiller, Inc., April 9, 2001, p. 1.
9
Central Western Communities Sector Plan – Alternative Futures Summary (Draft), prepared
by WilsonMiller, Inc., April 9, 2001, pp. 5-6.
10
Central Western Communities Sector Plan – Alternative Futures Summary (Draft), prepared
by WilsonMiller, Inc., April 9, 2001, p. 6.
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within two “traditional marketplaces” and two “village centers” as depicted on
the map on page 12.11 The specific locations of these mixed-use centers would
be as follows:
Mixed Use Center
Location
Marketplace #1
—
Within Callery-Judge in the vicinity of the existing Grove
Marketplace #2
—
At the intersection of Seminole Pratt-Whitney Road and
Village Center #1
—
At the intersection of Seminole Pratt-Whitney Road and
Village Center #2
—
Within the Cypress Groves community
Market
Southern Boulevard
Orange Boulevard
Source: CWC Sector Plan “Trend Plan” map, prepared by WilsonMiller, Inc., April 6, 2001.
The Palm Beach County 2020 Long Range Transportation Plan (LRTP) describes
the major roadway network currently proposed to serve the CWC and provides
the foundation for the transportation network supporting the Trend Plan
scenario. This major roadway network is primarily the responsibility of the
county. In addition to mitigating a current deficiency of some 24 lane miles,
under the Trend Plan the major roadway network is expanded from the 2020
LRTP to serve a village center within the northwestern portion of the CWC
(Cypress Groves area). The CWC is also served by a collector road network
generally maintained by an improvement district. The collector roadway
system must be expanded to support new residential development within the
Trend Plan. These roadway extensions primarily serve the large lot pattern
contemplated by this scenario and are expected to serve as relatively low
volume rural streets.12
All residential development within the Trend Plan (except housing located
within centers) is assumed to be served by private water well and septic tank
systems under this option. Non-residential development would be served by
public water and sewer systems.13
11
“Traditional marketplaces” provide neighborhood-serving retail and office uses and
locations for public and civic uses such as post offices, fire/EMS stations, and civic centers.
Total non-residential space (retail, office and civic) ranges from 350,000 - 500,000 square feet
and requires 40 - 60 acres of land.
“Village centers” serve the same function as traditional marketplaces, but on a smaller
scale. Total non-residential space (retail, office and civic) ranges from 75,000 - 200,000 square
feet and requires 15 - 30 acres of land. [Source: Preferred Development Strategy (Draft), prepared
by WilsonMiller, Inc., April 18, 2001, p. 2]
12
Central Western Communities Sector Plan – Alternative Futures Summary (Draft), prepared
by WilsonMiller, Inc., April 9, 2001, p. 6.
13
Ibid., p. 6.
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Scenario 2: Agricultural Preservation
The Agricultural Preservation scenario achieves the maximum possible
preservation of agricultural lands within the CWC and maintains the existing
rural characteristics of the area. This alternative would be implemented
through the acquisition of development rights or fee title to approximately
16,000 acres of existing agricultural lands and an estimated 2,000 vested lots
within existing communities. This scenario would require voter approval of a
bond referendum to fund the costs of land acquisition or development rights.
At buildout, the Agricultural Preservation scenario presumes a total of 16,000
dwellings—all located within the existing communities—and a population of
approximately 50,000 persons. Approximately 700,000 square feet of
neighborhood-serving retail and 300,000 square feet of local-serving office
space are estimated to be required to meet the commercial needs of the CWC.
These commercial facilities would be situated within two traditional
marketplaces and two village centers as depicted on the map on page 14. The
specific locations of these mixed-use centers would be as follows:
Mixed Use Center
Location
Marketplace #1
—
At the intersection of Seminole Pratt-Whitney Road and
Marketplace #2
—
Within Callery-Judge in the vicinity of the existing Grove
Village Center #1
—
At the intersection of Seminole Pratt-Whitney Road and
Village Center #2
—
Within the Loxahatchee Groves community
Southern Boulevard
Market
Orange Boulevard
Source: Preferred Development Strategy (Draft), prepared by WilsonMiller, Inc., April 18, 2001, p. 2-3.
By reducing population growth, the Agricultural Preservation scenario is
expected to moderate the demand for community facilities and services
including schools, parks, fire/EMS stations and libraries. The Palm Beach
County School District is expected to maintain its adopted level of service
within the CWC. If so, this alternative would generate a demand for a total of
six elementary schools and two middle schools.
By moderating population growth, the Agricultural Preservation scenario is
expected to reduce the projected demand for roads. While the current deficit
of some 24 lane-miles would still need to be mitigated, the need for additional
roadway improvements is expected to be less than expected by the 2020 Long
Range Transportation Plan (LRTP). This scenario is also expected to reduce
the need for a significant expansion of the collector road system.14
14
Preferred Development Strategy (Draft), prepared by WilsonMiller, Inc., April 18, 2001, p. 3.
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The Agricultural Preservation scenario assumes that private water wells and
septic tank systems will be retained within the existing communities. Nonresidential development along with limited residential development occurring
in or adjoining centers would be served by public systems.15
Scenario 3: Rural Lands Stewardship
In contrast to purchasing existing agricultural lands and selected vested lots
within existing communities, the Rural Lands Stewardship scenario encourages
implementation of flexible planning techniques to achieve the desired
development patterns. According to its designers, the Rural Lands
Stewardship option is intended to discourage urban sprawl, protect
environmentally sensitive areas, maintain the economic viability of agriculture
and other predominantly rural land uses, and provide cost-efficient delivery of
public facilities and services. The Rural Lands Stewardship scenario assumes
that owners of undeveloped lands within the large properties will be given
Rural Land Use Credits of 0.5 dwelling units per acre, and that these credits
will be conveyed within the existing communities at a rate consistent with
currently approved density. 16
At buildout, the Rural Lands Stewardship scenario assumes there will be a
total of 24,000 dwellings and a population of approximately 70,200 persons. A
total 16,000 of the dwelling units are located within existing communities.
The remaining 8,000 dwelling units are primarily clustered around two “rural
towns.”17 The design consultants estimate that 1,300,000 square feet of
neighborhood-serving retail, 850,000 square feet of community-serving retail,
2,400,000 square feet of office, and 1,200,000 square feet of industrial space
would be required to meet demand within the CWC. All retail space and
1,000,000 square feet of office space are to be allocated to the two rural towns,
two traditional marketplaces and two village centers, as depicted on the map
on page 16. The remaining office space and all industrial space would be
located in one “employment center.”18
15
Preferred Development Strategy (Draft), prepared by WilsonMiller, Inc., April 18, 2001,
pp. 3-4.
16
Ibid., p. 5.
17
A “rural town” consists of approximately 2,000–4,000 residential dwelling units clustered
around a mixed-use town center supporting an estimated population of 5,000–10,000. The town
center provides both neighborhood and community-serving retail and office uses, public uses
such as fire/EMS stations, libraries, and post office, public open space and live-work housing.
[Source: Preferred Development Strategy (Draft), prepared by WilsonMiller, Inc., April 18, 2001,
p. 6]
18
An “employment center” may contain office and/or industrial uses with retail scaled to be
accessory to the center. [Source: Preferred Development Strategy (Draft), prepared by
WilsonMiller, Inc., April 18, 2001, p. 7]
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The specific locations of these mixed-use centers would be as follows:
Mixed Use Center
Location
Rural Town #1
—
Within Cypress Groves community
Rural Town #2
—
Within Callery-Judge Groves
Marketplace #1
—
At the intersection of Seminole Pratt-Whitney Road and
Marketplace #2
—
Within Mecca Farms
Village Center #1
—
At the intersection of Seminole Pratt-Whitney Road and
Village Center #2
—
Within the Loxahatchee Groves community
Employment Center
—
Southern Boulevard
Orange Boulevard
Southwest corner of the CWC adjoining Southern
Boulevard
Source: Preferred Development Strategy (Draft), prepared by WilsonMiller, Inc., April 18, 2001,
pp. 5-7.
The Rural Lands Stewardship scenario is expected to require additional
community facilities and services including schools, parks, fire/EMS stations
and libraries to meet currently adopted levels of service. The Palm Beach
County School District is expected to maintain its adopted level of service
within the CWC, resulting in a demand for a total of seven elementary schools,
three middle schools and one high school.
The Rural Lands Stewardship scenario is not projected to require capacity
improvements beyond those recommended by the current Palm Beach County
2020 Long Range Transportation Plan nor to require any roadways exceeding
four lanes within the boundaries of the CWC. Significant capacity
improvements will however be necessary at the gateways to the CWC, notably
Northlake Boulevard, Okeechobee Boulevard, and the proposed Persimmon
Connector. The collector road network associated with this scenario should
be modified to enhance connectivity through the addition of several canal
crossings and road segments. Roadways on this collector system are assumed
to be paved, two lane roadways.19
Private water wells and septic tank systems will be retained within the existing
communities under the Rural Lands Stewardship scenario. All new
development, both residential and non-residential, would be served by public
water and sewer systems.20
19
Preferred Development Strategy (Draft), prepared by WilsonMiller, Inc., April 18, 2001,
p. 8.
20
Ibid., p. 8.
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How the Systems Compare
Before turning our attention to the analysis of fiscal impacts, we offer the
reader a series of four summary tables which highlight the differences among
the three proposed scenarios, first by land use distribution at buildout (Table
5), then by residential product types at buildout (Table 6), followed by
residential development by location (Table 7), and finally by non-residential
development types (Table 8).
TABLE 5
CWC Alternative Growth Patterns
Land Use Distributions
Buildout Conditions
Meas.
Category
Unit
Agriculture
Existing
Conditions
Acres
19,657
Acres
19,385
Trend
Plan
Agricultural
Preservation
Rural
Lands
16,032
11,475
32,329
32,329
Residential
Single Family
Existing Communities
New Development
Mixed
Other
Commercial/Employment
Mixed Use Centers
15,820
3,249
Acres
100
500
Acres
80
Acres
Open Space
Public
Lion Country Safari
Vacant
Total
32,329
Acres
106
76
476
200
170
420
Acres
5,649
7,596
7,596
7,596
Acres
421
739
687
845
Acres
660
660
660
660
Acres
11,698
57,550
57,550
57,550
57,550
Source: Central Western Communities – Alternative Futures Analysis: Technical Supplement,
“Assumptions and Methodology (Draft)”, Table 1, prepared by WilsonMiller, Inc., April 19, 2001.
(Updated statistics provided by WilsonMiller, Inc. on July 24, 2001.)
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TABLE 6
CWC Alternative Growth Patterns
Residential Development by Product Type
Buildout Conditions
Category
Meas.
Existing
Unit
Conditions
Trend
Plan
Agricultural
Preservation
Rural
Lands
Rural Residential
DU
1,050
3,614
1,748
1,748
Estate Residential
DU
10,082
15,713
13,994
13,994
DU
183
340
244
6,452
DU
14
471
14
1,806
11,329
20,138
16,000
24,000
11,329
17,999
16,000
16,000
16,000
24,000
Suburban Residential
Mixed Residential
Total
Existing Communities
DU
Large Properties
Total
DU
2,139
11,329
20,138
8,000
Source: 1) Central Western Communities – Alternative Futures Analysis: Technical Supplement,
“Scenario Matrix [Appendix A] (Draft)”, and “Fiscal Analysis Tables [Appendix C] (Draft)”,
prepared by WilsonMiller, Inc., April 19, 2001; 2) Central Western Communities Sector Plan,
Community Design Scenarios, Preferred Development Strategies Data Summary (Draft),
prepared by WilsonMiller, Inc., April 25, 2001. (Updated statistics provided by WilsonMiller, Inc.
on July 30, 2001.)
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TABLE 7
CWC Alternative Growth Patterns
Residential Growth by Location
Buildout Conditions
Category
Meas.
Existing
Trend
Unit
Conditions
Plan
Agricultural
Preservation
Rural
Lands
Existing Communities
The Acreage
Canal Pine Acres
Deer Run
Deer Run Plat 2
Delwood
Entrada Acres
Fox Trail
Las Flores Ranchos
Loxahatchee Groves
Mandell
Santa Rosa Groves
Sunny Urban Meadows
Tall Pine Acres
Waite Subdivision
White Fences Equest. Est.
Other
DU
9,679
15,246
13,618
DU
20
40
35
35
DU
139
249
216
216
DU
19
56
49
49
DU
17
26
23
23
DU
17
37
32
32
DU
146
220
188
188
DU
12
37
32
32
DU
1,128
1,726
1,486
1,486
DU
33
66
57
57
DU
13
64
56
56
DU
33
97
84
84
DU
18
26
23
23
12
DU
9
14
12
DU
1
23
20
20
DU
45
72
69
69
11,329
17,999
16,000
16,000
Sub-Total
Large Properties
Callery-Judge Groves
Cypress Groves
Meccas Farms
Palm Beach Aggregates
Other
DU
609
2,139
DU
921
3,829
DU
192
959
DU
217
1,073
DU
200
Sub-Total
Total
13,618
2,139
11,329
20,138
8,000
16,000
24,000
Source: Central Western Communities – Dwelling Units spreadsheet prepared by WilsonMiller, Inc., July
25, 2001. Updated statistics provided by WilsonMiller, Inc. on August 27, 2001.
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TABLE 8
CWC Alternative Growth Patterns
Non-Residential Development by Type
Buildout Conditions
Category
Meas.
Existing
Trend
Unit
Conditions
Sq Ft
100,000
950,000
700,000
1,300,000
100,000
950,000
700,000
2,150,000
15,000
300,000
300,000
Plan
Agricultural
Rural
Preservation
Lands
Retail Space
Neighborhood
Community
Sub-Total
Office Space
Sq Ft
850,000
Sq Ft
Local-Serving
Sq Ft
Employer
500,000
1,900,000
Sub-Total
Industrial Space
15,000
300,000
300,000
Sq Ft
Total
2,400,000
1,200,000
115,000
1,250,000
1,000,000
5,750,000
Sq Ft
1,303,000
2,363,400
1,872,000
2,808,000
Sq Ft
100,000
950,000
700,000
2,150,000
Retail Space
Demand
Provided
Office Space
Demand
Provided
Industrial Space
Demand
Provided
Sq Ft
1,332,000
2,142,000
1,711,000
2,418,000
Sq Ft
15,000
300,000
300,000
2,400,000
Sq Ft
557,000
1,010,000
800,000
1,200,000
Sq Ft
1,200,000
Total
Demand
Provided
Sq Ft
3,192,000
5,515,400
4,383,000
6,426,000
Sq Ft
115,000
1,250,000
1,000,000
5,750,000
Source: 1) Central Western Communities – Alternative Futures Analysis: Technical Supplement,
“Scenario Matrix [Appendix A] (Draft)”, and “Fiscal Analysis Tables [Appendix C] (Draft)”,
prepared by WilsonMiller, Inc., April 19, 2001; 2) Central Western Communities Sector Plan,
Community Design Scenarios, Preferred Development Strategies Data Summary (Draft),
prepared by WilsonMiller, Inc., April 25, 2001. (Updated statistics provided by WilsonMiller, Inc.
on July 24, 2001.)
General Study Issues
The purpose of this analysis is to assist decision makers by offering insights into
the financial costs and benefits of future land use options for the Central
Western Communities. Our study focuses specifically on the fiscal effects to
the county and the county school district under multiple scenarios for buildout
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of the area. To do that, certain conceptual issues must be resolved, and a
number of assumptions must be made. We begin by defining what the analysis
set out to accomplish.
Following review of the two development alternatives known as “Agricultural
Preservation” and “Rural Lands Stewardship” last May, the Board of County
Commissioners directed that staff provide additional information concerning
bond-funded acquisition of large tracts of agricultural lands in the Sector Plan
area. That information has been prepared and is included later in the report.
Beyond that, however, County Administration and OFMB management also
sought to give the Board a better understanding of the service level impacts
which a decision to pursue either the Agricultural Preservation scenario or the
Rural Lands Stewardship scenario might be expected to have on the county.
Hence, this fiscal analysis.
Agricultural land purchased with bond proceeds would not be developed, but
rather held in a natural state or perhaps used for continued agricultural
production. That intended usage would reduce the number of housing units
which could be built in the Sector Plan area. In general terms, preserving
these lands would reduce the ultimate number of homes by 4,200 units at
buildout (in approximately 19 years). Based on household census data for that
area, this would be expected to lead to a reduction of approximately 12,600
people who would otherwise reside in the CWC under status quo building
forecasts. All of which will cause a number of fiscal impacts: outstanding
bonded indebtedness will increase by $241.1 million, more or less; countywide
tax rates will increase to service that new debt; 16,000+ acres of land will be
removed from property tax rolls; and the costs of providing public services to
the area will be lowered because of the reduction in the number of homes and
people.
To estimate these impacts, a number of assumptions were made. Principal
among them was what would not be included in the analysis. Our study sought
only to make estimates of new revenues and expenditures to the county and
the school district based upon the proposed development strategies described
earlier. Consequently, the report does not address the interdependent
relationships of market forces in the economy—effects on the local labor
market and employment income, job creation, consumer spending or the
transfer of economic activity outside the CWC, for example—nor does it
examine environmental or social costs and benefits. Though worthwhile,
those issues were outside the scope of our inquiry.
Various assumptions have guided the study from the outset. In some cases,
these were simplifying assumptions made necessary by the added complexities
that would otherwise have been introduced into the assignment:
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1. Reducing the number of dwelling units in the CWC will not change
the values of dwelling units being built in the CWC or elsewhere in
the county;
2. Reducing the number of dwelling units built in the CWC will not
result in the construction of those dwelling units elsewhere in the
county;
3. Purchasing development rights to large tracts of agricultural lands in
the CWC will not increase or decrease surrounding property values;
4. The additional new development associated with any of the alternative
growth strategies will not cause a change in levels of service in the
county or school district;
5. The additional new development associated with any of the alternative
growth strategies will not affect adjoining jurisdictions, viz. Palm Beach
Gardens, Royal Palm Beach, Wellington and West Palm Beach.
On first reading, these limitations may be unsettling, appearing to raise the
potential for misleading results. However, the opposite may be true. More
likely, they help guard against introducing additional layers of uncertainty and
imprecision into the study results.
Wherever practical, the analysis takes a case study approach to estimating how
costs and revenues will be affected, relying on the major service providers
themselves for actual service delivery considerations under assumed conditions
for each of the development configurations. Although this approach is more
labor-intensive than the more common per-capita method, it is regarded as
more accurate due to its more detailed data needs and its reliance on
establishing the current capacities of providers to serve specific new
developments. In some instances, this has also meant using marginal costs
rather than average costs in our analysis.
The balance of this section reviews the other principal assumptions which have
guided the study and define its limitations. Study assumptions specifically
related to either revenue or expenditure forecasting are discussed in two
upcoming sections of the report, respectively.
1. Dynamic Impact Analysis – The study sought to estimate the
differences in impacts between each of the two alternative growth
scenarios and the status quo Trend Plan. Because we were interested
in knowing the impacts over extended periods of time as the area
developed, rather than merely under buildout conditions, the study
methodology involved a dynamic, rather than a static, analysis. The
study team, working in close consultation with the project staff at
Planning, Zoning & Building Department and the Sector Plan
consultant WilsonMiller, Inc., developed assumed buildout schedules
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for each of the three scenarios. Forecasting growth far into the future
is an imprecise undertaking. Nonetheless, relying on historical
absorption rates for housing in the area and other pertinent factors,
buildout periods were estimated to range from 19 years to 25 years,
depending on the scenario. Table 9 depicts these buildout schedules.
TABLE 9
CWC Alternative Growth Patterns
Cumulative Buildout Schedules
Calendar
Year
Residential Dwelling Units
Non-Residential Footage
Agricultural
Agricultural
Trend Plan
Preservation
Rural Lands
Stewardship
Trend Plan
Preservation
Rural Lands
Stewardship
2001
12,025
12,067
12,059
115,000
115,000
2002
12,728
12,744
12,729
180,000
180,000
185,100
13,430
13,421
13,398
245,000
245,000
290,205
14,134
14,098
14,068
330,400
310,000
394,055
497,750
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
115,000
14,997
14,775
14,737
431,700
392,700
15,859
15,452
15,406
532,900
475,400
766,445
16,698
15,568
15,985
631,800
540,400
1,121,190
17,530
15,606
16,486
730,000
585,400
1,413,845
1,706,655
18,236
15,644
16,988
815,600
620,400
18,418
15,682
17,489
880,600
655,400
1,999,310
18,534
15,720
17,989
928,100
685,400
2,291,810
18,650
15,758
18,490
965,600
715,400
2,634,465
18,766
15,796
18,991
998,100
745,400
2,917,100
18,883
15,834
19,493
1,028,100
775,400
3,199,870
18,999
15,872
19,994
1,056,100
803,400
3,480,000
19,115
15,910
20,494
1,083,100
831,400
3,760,000
19,232
15,948
20,995
1,110,100
859,400
4,037,625
19,348
15,986
21,496
1,137,100
887,400
4,135,250
19,464
16,000
21,998
1,164,100
915,400
4,587,980
19,580
16,000
22,499
1,191,100
943,400
4,835,595
19,697
16,000
22,999
1,203,100
956,400
5,080,595
19,813
16,000
23,500
1,215,100
969,400
5,325,705
19,929
16,000
24,000
1,227,100
982,400
5,570,705
20,046
16,000
24,000
1,239,100
992,400
5,735,200
20,138
16,000
24,000
1,250,000
1,000,000
5,750,000
Source: Central Western Communities – Alternative Futures Analysis: Technical Supplement, “Assumptions and Methodology (Draft)”, Table 1,
prepared by WilsonMiller, Inc., April 19, 2001. (Updated statistics provided by WilsonMiller, Inc. on July 24, 2001.)
2. Constant Dollar Financial Analysis – The term constant dollars refers to
the net present value of money relative to a fixed date. Net present
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value is a way of comparing the value of money now with the value of
money in the future. Because our analysis is dynamic— forecasting
impacts over extended periods of time—the dollars received and spent
by service providers in later years will be worth less than dollars are
today. The most reliable way of comparing the flow of money under
various conditions (in this case, three separate growth strategies) is to
adjust every revenue and expenditure throughout the life of the
project back to its present value. The factor used to make the annual
adjustments was the assumed interest rate which would be required to
sell general obligation bonds to fund the Agricultural Preservation
option. That rate is presently estimated to be 4.79% per year.
Constant dollar analysis was thus incorporated into our study
methodology.
P O P U L A T I O N P E R
H O U S E H O L D ( 2 0 0 0 )
3. Degree of Land-Use Segregation –
Because different land uses exert
differing influences on public service
Existing Conditions
3.2
needs, costs, and revenues, a fiscal
Rural Residential
3.3
analysis must establish the extent to
Estate Residential
3.1
which broad land uses will be
segregated into specific land use
Suburban Residential
2.7
zones, and perhaps even to growth
Mixed Residential
2.0
patterns and specific housing
product types. The more detailed the segregation, the more refined
have been the estimates of impact. For purposes of this analysis, the
land use zones, product types and growth patterns were all specified by
the Sector Plan consultants in their alternative development proposals
for the CWC. The number of residential dwelling units is the primary
control number. From it, population, student counts, employment and
other factors have been extrapolated. Tables 7 and 9 tabulate all of
the relevant dwelling unit data used in this analysis. Taken together
with household census factors from the schedule above, appropriate
population forecasts were made for use throughout the study (Table
11).21 In similar fashion, forecasts were made for new school-age
student counts associated with each development scenario (Table 12).
The appropriate factors for students-per-household are shown in Table
10 on the following page.
4. County and School District Assumed to be Service Providers – The
analysis assumes that the county and the county school district will
continue to have direct responsibility for serving the CWC with
municipal and education services, as they do at present. We are aware
of discussions currently underway in the Plan area involving possible
21
Resident population per household and student population per household data were taken
from WilsonMiller, Inc.
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municipal incorporation and/or annexation for all or a portion of the
CWC. If that (or other similar arrangements) should occur, the
conclusions might be significantly different than they would be under
prevailing conditions.
TABLE 10
Central Western Communities
Student Population per Household Factors
(Year 2000)
Student Population
Development Type
Elementary
Middle
High
Rural Residential
Single Family
0.38
0.15
0.15
Single Family
0.38
0.15
0.15
0.17
0.12
0.23
Estate Residential
Suburban Residential
Single Family
Mixed Residential
Single Family
0.14
Multi-Family
0.03
0.00
0.05
0.16
0.16
Source: WilsonMiller, Inc.
5. Current Service Levels Are Assumed – In order to forecast fiscal
impacts, assumptions concerning the levels of service to be provided in
the study area are needed. For the purposes of this analysis, it is
assumed that service levels comparable to those provided within the
county will be offered in the CWC area. Capital improvements will be
made in accordance with the adopted levels of service standards
contained in the county’s Comprehensive Plan. The study does not
contemplate the provision of capital improvements which are not of
areawide benefit, such as in-tract subdivision streets, curbs, gutters,
street lighting or the expansion of local utility services. Some or all of
those facilities are under the jurisdictions of special purpose districts
serving the area, and have therefore been excluded from further
analysis. Appendix 1 lists the relevant level of service factors used in
the analysis.
6. Fund Differentiation and Flow of Funds – The analysis avoids
offsetting aggregate costs with aggregate income so as to differentiate
between restricted and unrestricted revenues. Similarly, it notes where
there are likely to be mismatches in the timing of costs and revenues.
Impact analyses of fast growing areas tend to overstate revenues and
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understate costs because of timing considerations. This is the result of
capital investments, which are generally “front-loaded,” while
operating revenues materialize only over time.
TABLE 11
CWC Alternative Growth Patterns
Population Increments
Population
Calendar
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Note:
Trend Plan
Agricultural
Rural Lands
Preservation
Stewardship
37,405
37,512
37,486
39,583
39,619
39,569
41,649
41,758
41,725
43,939
43,831
43,732
46,541
45,938
45,812
49,140
48,044
47,892
49,432
51,672
48,411
54,183
48,536
50,728
56,304
48,662
52,029
56,821
48,787
53,325
54,620
57,203
48,913
57,586
49,039
55,917
58,969
49,163
57,214
58,355
49,289
58,514
59,811
58,738
49,414
59,121
49,540
61,105
58,507
49,665
62,403
59,890
49,790
53,700
65,000
60,272
49,837
60,655
49,837
66,297
61,041
49,837
68,591
61,424
49,837
68,889
61,807
49,837
70,180
62,193
49,837
70,182
62,497
49,837
70,182
Population numbers are projected as of December of the corresponding year. For
calendar year 2000, the original population number of 39,000 used in the
WilsonMiller, Inc. analysis was based on 11,135 dwelling units as of August 2000
multiplied by a person-per-household (PPH) rate of 3.5. The revised calendar year
2000 population number of 36,253 is based on 11,329 Dus as of December 2000
multiplied by a PPH rate of 3.2.
7. Proprietary Fund Operations Excluded – The objective of our analysis
was to estimate the net effects on discretionary revenues on as
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conservative a basis as reasonable. Enterprise operations are supported
entirely by user charges and are, by their nature, neutral in their fiscal
impacts on the county. For that reason, operations such as Water
Utilities, Airports and golf courses have been excluded from further
analysis.
TABLE 12
CWC Alternative Growth Patterns
Student Population Census
Buildout Conditions
Meas.
Category
Unit
Existing
Conditions
Trend
Agricultural
Rural
Plan
Preservation
Lands
Elementary
Students
4,524
7,444
6,025
7,241
Middle
Students
1,797
2,987
2,392
3,316
Students
1,820
3,015
2,418
3,990
8,141
13,446
10,385
14,547
High
Total
Source: 1) Central Western Communities – Alternative Futures Analysis: Technical Supplement,
“Scenario Matrix [Appendix A] (Draft)”, and 2) Central Western Communities Sector Plan,
Community Design Scenarios, Preferred Development Strategies Data Summary (Draft),
prepared by WilsonMiller, Inc., April 19, 2001. (Updated statistics provided by WilsonMiller, Inc.
on July 24, 2001.)
8. Bond Issuance is Required for the Agricultural Preservation Option –
The Agricultural Preservation scenario achieves its objectives through
the acquisition of approximately 16,000 acres of existing agricultural
lands and an estimated 2,000 vested lots within existing communities.
For purposes of this analysis, it is assumed that this scenario would
require voter approval of a general obligation bond measure to fund
land acquisition costs. Under current market conditions, fee title land
acquisition costs are estimated at $240 million. Allowing an additional
0.35% for costs associated with the issuance of bonds, the principal
amount of bonds to be sold is assumed to be $241,095,000.22 Based
upon an average tax-exempt interest rate of 4.79% and amortization
term of 30 years, a separate countywide ad valorem millage rate of
0.1948, more or less, would be required over the term of the bonds to
retire the indebtedness. The issuance of tax-exempt bonds would very
likely limit the county’s ability to lease out these lands at market rates
for continued agricultural production. Just as with earlier Agricultural
22
Land acquisition costs were estimated by PBC Property & Real Estate Management
Division. General Obligation bond interest rate and issuance costs were provided by PBC
Financial Advisor. Interest rate based on AAA-rated G.O. bonds retired over thirty years.
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Reserve land acquisitions in the southern part of the county, use of
tax-exempt instruments in the CWC would be subject to U.S.
Treasury Department restrictions on income production from those
lands. At least one alternative to overcome these restrictions involves
the issuance of fully taxable bonds, removing the limitation on earned
income from the acquired lands. The average interest rate, however,
could be as much as 1½% higher than on tax-exempt bonds, thereby
increasing debt service.23
Revenue Estimation Methodology
In order to analyze fiscal impacts, it is necessary to analyze current and
expected revenue collections by the county and the county school district in
light of the development assumptions for each growth scenario. The analysis
relies primarily on the published revenue data from the FY 2001 budgets of the
two agencies. Other sources which have been consulted include Palm Beach
County Revenue Manual—FY 2001 and Local Government Financial Information
Handbook—September 2000.24
The county receives revenues from a variety of sources, and is governed in
their use by various county, state and federal rules. Some revenue sources,
such as the local ad valorem property tax and local government sales tax, are
discretionary revenues to carry out general county operations. Other revenues
are restricted to specific purposes and are typically accounted for in separate
funds. For example, some motor vehicle fuel taxes must be spent on street and
road maintenance and may not be commingled with other funds of the
jurisdiction. Based upon analysis of fiscal year 2001 revenue estimates and
discussions with Budget Division staff and others, revenue projection factors
were prepared for use in a computerized fiscal impact model. The model was
developed by the OFMB study team to facilitate just such analyses, and to
minimize data errors in situations that call for making thousands of
calculations at a time.
The remainder of this section reviews the major assumptions involving our
revenue forecasts, and ends with a detailed discussion on the derivation of the
revenue estimation factors used in the fiscal analysis model.
23
Pro forma debt service schedules for both tax-exempt and taxable bond issues are included
as Appendix 2.
24
Palm Beach County Revenue Manual—FY 2001, prepared by PBC Office of Financial
Management & Budget. Local Government Financial Information Handbook—September 2000,
prepared by Florida Legislative Committee on Intergovernmental Relations.
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MAJOR ASSUMPTIONS
The following major assumptions have been made in the development of
revenue estimation factors:
1. Principal Data Sources – Analysis of revenues is based on published
data contained in the annual operating and capital budgets of the
county and the school district. Demographic and land use data are as
tabulated earlier in this report. Wherever the analysis calls for
population estimates as a basis of forecasting revenue, the official
population data prepared by the University of Florida, Bureau of
Economic and Business Research, as of April 1, 2001 have been used.
Countywide population is 1,154,171; unincorporated area population
is 531,434.
2. Current Municipal Finance Structure Assumed – The existing system
of Florida municipal and education finance is assumed to prevail
during the entire analysis period. No new revenue sources are
anticipated and no existing sources are assumed to be eliminated,
unless otherwise noted.
3. Appraised Values Applied to New Construction – The Property
Appraiser’s current average values for housing types and nonresidential space were used as a starting point to forecast the
incremental values of new development under each scenario. A
construction inflation rate of 5% per annum was applied in subsequent
years.
4. Current Property Tax Millage Rates Assumed – For purposes of
forecasting ad valorem property tax receipts, the analysis assumed the
continuation of the existing general millage rates of both the county
and the school district. Separate millage rates levied to meet debt
service on outstanding general obligation bonds were ignored,
inasmuch as these rates should be adjusted annually as necessary to
raise no more than the scheduled bond payments.
5. Revenue Materiality – Only the largest sources of revenue among the
county’s governmental funds have been individually forecast in the
analysis. These include ad valorem property taxes, motor vehicle fuel
taxes, sales tax, electric franchise fees, various utility taxes, state
revenue sharing, interest earnings and development impact fees. Less
material revenues were aggregated and forecast as a lump sum,
identified as “other sources.”
6. Revenue Inflation Rates – Public revenues are sensitive to market
factors. For many revenues, these factors include 1) changes in
consumption independent of population growth; 2) changes in
consumption resulting from population growth; and 3) economic
inflation affecting underlying prices. These factors were considered in
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forecasting future income. The chart below analyzes revenue growth
rates. It begins with average rates of growth over the past decade,
which were then adjusted to exclude the effects of population growth,
leaving the net factors as shown.
Revenue Source
Electric Franchise Fee
Electric Utility Tax
Communications Services Tax
Revenue Sharing
Sales Tax
Gas Tax
Other Sources
Average
Rate
2.47%
Net
Rate
1.60%
2.72%
1.77%
3.66%
2.28%
2.11%
1.60%
8.61%
9.62%
5.32%
6.46%
7.31%
4.02%
SUMMARY OF REVENUE PROJECTION FACTORS
Following are a listing of revenue sources and brief descriptions of general
methodology used in connection with revenue forecasts of alternative Sector
Plan growth strategies. Following this overview, detailed discussions of all
quantitative factors employed in making revenue forecasts are contained in the
next section of the report titled “Detail of Revenue Projection Methods.”
1. Property Tax – The ad valorem property tax is the single largest source
of funds for both the county and the school district. In FY 2001, the
county expects to receive $436,761,000; the school district expects
$646,601,700.25 The tax is computed by applying a millage rate
adopted annually by the governing board against annually adjusted
market values of real and personal property located within the
jurisdiction. For revenue estimating purposes, the annual market
values of property will be the products of the buildout increments
tabulated earlier in Exhibit 9 and the average appraised values by
housing types and non-residential space. The constitutional growth
limit of 3% per annum on residential property appreciation has been
incorporated into future year forecasts (6% on all other land uses). In
contrast, property revaluations on transfer of ownership have been
ignored.
25
County receipts result from separate millage levies for the General Fund (4.6000 mills),
Library Fund (0.5403 mills) and Fire-Rescue Fund (2.9945 mills). The school district levies 4
rates totaling 8.4870 mills. Millage rates for voted debt are not included for either agency.
Small reductions in some millage rates were approved beginning in FY 2002. See page 35 for a
listing of rates used in the analysis.
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2. Sales Tax – The county receives sales tax revenues from the state
based upon a series of factors relating to the share of total taxable sales
made in the jurisdiction, and the share of population in its
unincorporated area. At $63,800,000 anticipated in the current year
budget, sales tax is the second largest discretionary source of income to
the county. The school district does not receive general sales tax
proceeds. Taxable sales generation varies widely by geographic area,
competitive market conditions, disposable income of residents, tourism
and type of retail commerce. In the absence of a current sales tax
audit of businesses in the region, nationwide industry standards for
retail sales (as reported by the Urban Land Institute) were used.
Taxable sales were not forecast for office commercial uses, although it
is possible for such uses to generate sales tax, depending on tenancies.
The conservative approach is to ignore the possibility of taxable sales
from this source. For purposes of this analysis, sales tax was calculated
at the rate of 57.1¢ per square foot of retail commercial space added.
3. Gas Tax – The county receives gas tax revenues under various
provisions of state law and local act. In the aggregate, nearly $55.5
million will be received from these sources by the county during the
current fiscal year. The school district does not receive gas tax
proceeds. Depending on the specific enabling provision, gas taxes are
generally restricted to transportation purposes, and they may be shared
with the municipalities in the county. Factors of $113.94 (roads) and
$31.42 (transit) per dwelling unit are used to estimate new revenues.
4. Electric Utility Tax – By local ordinance, a Public Service Tax is levied
on the purchase of electricity within the unincorporated area of the
county. In FY 2001, the county expects to receive $25 million from
this source. These revenues are generated from the county’s graduated
tax on residential and non-residential power sales by Florida Power
and Light Company. The first 200 kilowatts per month are exempt
from the tax for residential accounts. Thereafter, most subscribers pay
a 10% rate, declining as usage becomes very large. Public agencies are
exempt from the tax altogether. The school district does not receive
income from this source. For purposes of this analysis, three revenue
estimation factors were derived: residential is $105.60 per dwelling
unit; commercial is $2,801 per developed acre; and industrial is $139
per developed acre.
5. Communications Services Tax – This is a newly enacted revenue
source, replacing the former cable television franchise fee and the
communications portion of the Public Service Tax. By state
authorization, the new tax is intended to be revenue neutral in
comparison with the two revenue sources it replaces. During the
current year, those two sources are expected to bring in $17,645,000
for discretionary use by the county. The model assumes a factor of
$33.20 per capita. The school district does not share in this revenue.
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6. Electric Franchise Fee – The county receives franchise fees from
Florida Power and Light Company pursuant to franchises granted it to
operate within the county. The fee is 6% of gross receipts. In fiscal
year 2001, the county expects to receive $14.7 million as
compensation for the use of public rights-of-way for utility lines. The
school district does not receive revenue from this source. Three
revenue forecast factors were derived for use in the impact model: the
residential factor is $63.36 per dwelling unit; commercial is $1,681 per
acre developed; and industrial is $83 per acre developed.
7. Florida Revenue Sharing – The state shares portions of its cigarette tax
and sales tax collections with counties, in the form of this discretionary
County Revenue Sharing program. Palm Beach County’s allocation in
the current year is expected to be $21,750,000. The school district
does not receive revenue from this source. Individual county
allocations are calculated via a series of apportionment factors relating
county population to statewide population, unincorporated area
population relative to statewide unincorporated population, and
countywide sales tax as a portion of total statewide sales tax
collections. For purposes of this analysis, the revenue estimation
factor from this source is $25.81 per capita.
8. Development Impact Fees – By local ordinance, fees are imposed upon
all land uses that create infrastructure impacts on schools, roads,
public buildings, fire-rescue facilities, parks, law enforcement and
libraries. The individual fee rates are set to recover 95% of the capital
facility costs of new development, by type of development. Fee rates
are updated every other year for changes in service population, service
levels and recoverable capital costs. In the current year, the county
expects to receive just under $44 million for the six fees it retains,
while the school district is expected to receive slightly more than $8.1
million for school facilities. Amended fee schedules effective October
1, 2001 were used throughout the analysis. Additionally, interest
earnings at 6.5% per annum on impact fee collections have been
included here rather than with interest earned on other funds.
9. Interest Income – The county and the school district regularly invest
available funds to earn interest income. Based upon the current year’s
experience with the investment of idle funds other than impact fees,
the estimation factor for interest earnings for each agency is 2% of new
revenues generated.
10. State School Aid – The school district receives intergovernmental
revenues from numerous federal and state funding sources. In the
current fiscal year, operational revenues from those sources are
estimated to be worth $3,147 per pupil. For purposes of this analysis,
that factor has been applied against new student growth estimates to
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forecast revenues from this source. The county does not receive
revenues from this source.
11. Other Sources – Various smaller sources of discretionary revenue are
available to the county, which have been forecast on an aggregate
basis. The revenues included in this group are: (1) Utility Service
Tax–Gas; (2) Occupational License Fees; and (3) Alcoholic Beverage
License Fees. Together, they account for slightly more than $3 million
in the current year’s budget.
DETAIL OF REVENUE PROJECTION METHODS
This section of the report describes in detail the estimation methods used in
the fiscal analysis. Each of the major revenue sources summarized on the
previous several pages is discussed and, where appropriate, significant issues are
identified.
1. Property Tax – The ad valorem property tax is levied on the assessed
value of real and personal property located within Palm Beach County.
The assessed value is fair market value less certain excluded property,
differentials, and exemptions. Among the exemptions which are
significant to this analysis is the homestead exemption on owneroccupied residential property. Under this constitutional provision, the
first $25,000 of market value is free of taxation. At present, 66% of
households in Palm Beach County qualify for the exemption.26 For
purposes of this analysis, it is assumed that that rate will continue for
future dwelling units constructed in the CWC.
A second constitutional limitation is incorporated into the forecasting
methodology for this source of revenue. The 1995 “Save Our Homes”
Amendment (SOHA) limits year-to-year changes in assessments to
three percent of assessments in the preceding year, or changes in
Consumer Price Index, whichever is less. For purposes of this analysis,
all residential property values were increased 3% per year through
buildout. Non-residential property values are not generally subject to
SOHA, and they have been increased at an historical average rate of
6% per year.27 After a change in ownership, Save Our Homes permits
revaluation of residential property back to market value. On average,
one-seventh of all residential property in the United States changes
ownership each year. However, the OFMB model takes the
conservative approach of ignoring this factor. In reality, because of
26
Source: Florida Property Valuations & Tax Data—December 2000, Florida Department of
Revenue.
27
Source: PBC Property Appraiser’s Office, September 19, 2001.
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M I L L A G E R A T E S
County Millage Rates
General Fund
Library Fund
Fire-Rescue Fund
4.5500
0.5403
3.0500
I M P A C T S
these annual adjustments to market,
property valuation over time is likely
to be somewhat higher than our
analysis assumes.
Ad valorem property tax is computed
by applying a millage rate set by the
School District Millage Rates
governing board to the total taxable
Req’d Local Effort
5.9350
market value of real and tangible
Discretionary (2 rates)
0.6120
personal property located in the
Capital
2.0000
jurisdiction. Both the county and
Assessed Values ($)
the county school district set annual
Single Family Res.
$147,500
millage rates for general operations
Multi-Family Res.
99,000
and for outstanding bonded
Retail Commercial
90/sf
Office Commercial
108/sf
indebtedness. Because bond tax
Industrial
70/sf
rates are assumed to adjust annually
Agricultural
2,250/acre
in order to raise no more than the
scheduled bond payments, millage rates for bonds were not considered
further in this analysis. However, three tax rates for operations are set
by the county and four by the school district. For purposes of this
analysis, property tax receipts are based upon the factors shown above,
when applied to the annual construction increments shown in Table 9.
2. Sales Tax – The state distributes a portion of sales taxes collected
within counties back to those jurisdictions, based upon a series of
factors involving population and taxable sales splits between
incorporated and unincorporated areas. During the current fiscal year,
the county government receives 5.823¢ of every dollar of sales tax
collected within Palm Beach County. This results from an initial
transfer of 9.653% of tax collections by the state into the Local
Government Half-Cent Sales Tax Clearing Trust Fund, followed by an
apportionment of the amount of state-shared tax between the county
and its incorporated cities according to the following formula:
Unincorporated County Population + (b x Incorporated Population)
Total County Population + (b x Incorporated Population)
The product of the initial 9.653% and the 60.318% quotient from the
calculation above leads to the county share of 5.823% used in this
analysis.
Retail trade is the major generator of sales tax, although some office,
industrial and manufacturing land uses produce taxable sales as well.
The commercial and industrial land uses envisioned for the Sector
Plan area by WilsonMiller, Inc. have not been specified to the extent
that one can say what commercial activity will take place in the square
footage set aside for such development. For purposes of this analysis,
the study team has made the conservative assumption that 75% of
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available retail footage will generate taxable sales, and that it will do so
at the industry median rate of $218 per square foot of gross leasable
area.28 We have further assumed that neither office commercial nor
industrial land uses will generate any sales tax. Thus, 1000 square feet
of retail development in CWC would produce taxable sales of
$163,500 per year (1000 x 75% x $218), from which the county would
receive $571 in sales tax back from the state ($163,500 x 6% x
5.823%). The revenue estimation factor is therefore $0.571 per square
foot of developed retail commercial use.
3. Gas Tax – The county receives significant revenues from taxes levied
on motor vehicle fuels sold within Palm Beach County. Five separate
sources of authority govern the collection of these taxes:
County Fuel Tax (§§206.41(1)(b) and 206.60, Florida Statutes) is
levied on motor fuel sold throughout the state at the rate of 1 cent
per gallon. The distribution formula for this tax comprises three
components: an area component (weighted 25%), a population
component (weighted 25%) and a consumption component
(weighted 50%). For each component, the county proportion of the
statewide amount is calculated, and added to each of the other
components, after adjusting each with the weights indicated above.
Proceeds of this tax must be used for transportation-related
expenditures, including both capital and maintenance costs.
Constitutional Gas Tax (§206.41, Florida Statutes) of two cents per
gallon is levied on motor fuel sold statewide. Palm Beach County’s
share is calculated using the same three county-to-state weighted
ratios as in the County Fuel Tax described above. Proceeds of this
tax must be used for the acquisition, construction and maintenance
of roads. The first 80% share is further restricted to meet debt
service requirements of bond issues administered by the State Board
of Administration pledging the fuel tax receipts. If the county has
not pledged the proceeds for bonds administered by SBA, the full
amount of the tax is available for annual road purposes. Based upon
recent years’ experience, approximately one-third of the 80%
remittance is restricted annually.
Three local option gas taxes are collected in the county, pursuant to
permissive state authority (§§206.41(1)(d) and (e), 206.87(1)(b)
and (c), 336.025, Florida Statutes). By Ordinance No. 95-23, Palm
Beach County levies six cents on every gallon of motor fuel and
diesel fuel sold in the county. The county receives approximately
two-thirds of the proceeds; the remainder is shared locally among
municipalities based on interlocal agreements. A second tax of five
28
Source: Dollars and Cents of Shopping Centers: 2000, “U.S. Community Shopping Centers,”
Urban Land Institute, pg. 2.
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cents per gallon is levied pursuant to Ordinance No. 93-19. The
proceeds of this tax are shared with municipalities in the county at
the rate of 79% to the county and 21% to cities. The Board of
County Commissioners has further restricted one-half of the
county’s share to fund mass transit purposes. The balance must be
spent on construction and reconstruction, not maintenance, of
roads in the county road system. The third is a tax of one cent on
every gallon of motor fuel and diesel fuel sold at retail, pursuant to
Ordinance No. 93-18. This tax is sometimes referred to as the
Ninth-Cent Fuel Tax. Proceeds of this tax are not shared with
municipalities, but the Board has restricted one-half of the tax for
mass transit purposes in the county.
Applying the appropriate distribution factors to each of the foregoing
sources yields an effective, overall tax rate of 8.97¢ per gallon for road
purposes, and an additional 2.47¢ per gallon for mass transit purposes.
To complete the derivation of an estimation factor for gas tax revenues
requires that we introduce several additional assumptions. Relying on
travel patterns characteristic of residential uses in Palm Beach County,
one can calculate the rate at which each future dwelling unit is
estimated to generate gas tax revenue. For purposes of this analysis,
the two factors are $113.94 and $31.42, respectively, per dwelling unit.
TABLE 13
Revenue Estimation Factors
(Gas Taxes)
Road
Purposes
Gas Tax Rates
County Tax
$0.01000
Constitutional Tax
6-Cent LOGT
0.01472
0.04020
5-Cent LOGT
Ninth-Cent LOGT
Gasoline Usage Factors
Total
Vehicle trip-ends per day per DU
Average miles per trip
MPG
Gallons per day per Dwelling Unit
Tax per gallon
Transit
Purposes
Tax per year per Dwelling Unit
0.01975
0.01975
$0.08967
$0.02475
10
10
17.25
17.25
$113.94
$31.42
0.00500
6
3.48
8.97¢
0.00500
6
3.48
2.48¢
4. Electric Utility Tax – The county levies this tax on the purchase of
electricity in the unincorporated area pursuant to the Palm Beach
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County Public Service Tax Ordinance (No. 89-13). The ordinance
provides for a graduated tax rate to be applied to billed subscribers of
Florida Power and Light Company. Most accounts pay a rate of 10%.
Although all consumers of electricity pay this tax, the county’s
financial accounting system does not distinguish between taxes paid by
residential and non-residential customers. In order to derive suitable
revenue estimation factors, data supplied by FP&L were used. For
calendar year 2000, FP&L reports that gross receipts from residential
electric accounts were $254.9 million; from commercial accounts the
amount was $96.8 million; and from industrial accounts the company
collected $11.7 million. Dividing the residential income by the
number of residential accounts leads to the forecasting factor shown
below.29 However, calculating factors for commercial and industrial
land uses in similar fashion would not produce meaningful results,
because we do not know how many separate non-residential accounts
will be involved in the future buildout of the CWC. Therefore, in
place of that approach, commercial and industrial factors were derived
by dividing the total collections for each of those types of accounts by
the respective total acreages of developed commercial and industrial
land uses in the unincorporated area to yield the per-acre factors listed
below.
Residential
$254.9M x 10% ÷ 241,382 = $105.60 per dwelling unit
Commercial
$96.8M x 10% ÷ 3,456 = $2,801 per acre
Industrial
11.7M x 10% ÷ 8,439 = $139 per acre
5. Communications Services Tax – Chapter 2000-260, Laws of Florida
rewrote Florida’s communications tax law to provide that
communications services would be subject to a uniform statewide tax
rate, replacing as many as six separate tax sources. In Palm Beach
County, the effect of the legislation was to supersede an existing
portion of the Public Service Tax dealing with telecommunications,
and to replace entirely a franchise fee on cable television operators.
The Legislature intended that these changes be revenue neutral and
competitively neutral across the communications industry. On that
basis, the Board of County Commissioners adopted Resolution No. R-
29
Source: Revenue data were taken from FP&L December 2000 franchise fee remittance
statement, showing full-year revenues attributable to unincorporated area accounts. The
number of residential accounts was calculated by OFMB using an industry standard average of
$88 per month per residential account in the FP&L service area. FP&L reported having
255,323 accounts in December 2000.
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2001-1101 setting the effective rate of the new tax at 5.22% of
communications charges to customers.30
With the convergence of telecommunications, broadband and wireless
technologies, there will be numerous providers of affected
communications services who must collect, report and remit the new
Communications Services Tax to the county. The marketplace is apt
to be more fragmented than we had become accustomed to in past
years. For the moment, we do not have an historical basis on which to
forecast how the new tax burden will be distributed among residential,
commercial and industrial accounts. Accordingly, the model uses new
population growth as a proxy for communications subscribers to
forecast revenue from this source. Based on current year budget
expectations, the per capita rate is therefore $33.20 per year
($17.645M ÷ 531,434).
6. Electric Franchise Fees – The county collects a franchise fee from
Florida Power and Light Company for the privilege of using public
rights-of-way in the county for transmission and distribution lines.
Ordinance 85-39 of the Board of County Commissioners granted
FP&L a 30-year non-exclusive right to construct, maintain and
operate in, under, over and across public places throughout the
unincorporated area of the county. In return, the company must pay
the county a franchise fee equal to six percent of gross receipts, after
deducting taxes it pays to the county. Relying on gross receipts data
reported by the company for calendar year 2000, each of the estimated
241,382 households in the unincorporated area was responsible for
generating an average of $1,056 revenue to the company, on which
the 6% fee is assessed. Accordingly, our estimation factor for
residential land use is $63.36 per dwelling unit ($1,056 x 6%). In
somewhat similar fashion, commercial and industrial factors were
calculated, using developed acreage rather than number of households
to derive the per-acre factors shown in the table below. For each land
use type, these factors were employed in the fiscal analysis model to
forecast revenue from this source.
Residential
$254.9M x 6% ÷ 241,382 = $63.36 per dwelling unit
Commercial
$96.8M x 6% ÷ 3,456 = $1,681 per acre
Industrial
11.7M x 6% ÷ 8,439 = $83 per acre
30
The rate of 5.22% is effective with the start of fiscal year 2003. Fiscal Year 2002 will be a
transition year in which the county will collect only eleven payments, resulting in an effective
tax rate of 5.62% for that year. For purposes of this analysis, the ongoing rate of 5.22% is
assumed throughout the buildout period.
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7. County Revenue Sharing – The Florida Revenue Sharing Act of 1972
was an attempt by the Legislature to ensure a minimum level of
revenue parity among local governments. Under this program, the
state shares portions of its cigarette tax and sales tax collections with
all counties. The state deposits 2.9% of net cigarette tax proceeds and
2.25% of sales and use tax proceeds into the statewide Revenue
Sharing Trust Fund. Each county’s allocation is determined in three
stages. First an apportionment factor is calculated using a formula
consisting of three equally weighted factors. The first two factors are
the ratios of each county’s total population and unincorporated
population to the respective totals for all eligible counties. The third
factor is the ratio of the county’s preceding year’s sales tax collections
to the total sales taxes for all eligible counties. The apportionment
factor calculated in this manner is applied to the amount of funds
available for distribution in the state Trust Fund. Then a series of
adjustments takes place to ensure that no county receives less than it
received from the state in the base year (1972), or that it receives less
than it received in 1981, or that it receives less than is necessary to
meet its obligations as a result of pledges, assignments, or trusts
entered into which obligated funds from this source. Finally, funds
remaining in the Trust are distributed by a growth factor.
Because population heavily influences the distribution formula, new
population growth was used for estimating future income from this
source of revenue. Using current year data, a composite factor was
calculated by averaging total countywide population and
unincorporated population to produce a rate of $25.81 per capita.
$21,750,000
(1,154,171 + 531,434) ÷ 2
8. Development Impact Fees – This revenue source produces restricted
income to both the county and the school district to aid in
construction of specified types of public facilities and essential
infrastructure. Six types of fees are levied for county facilities and one
fee is restricted for school facility construction. As a group, the six
county fees are expected to produce $44 million in FY 2001 for roads,
parks, libraries, fire-rescue facilities, law enforcement and general
public facilities. The school district will collect more than $8.1 for
school construction during this year. The fees are levied pursuant to
Article 10 of the county’s Unified Land Development Code. Fee rates
are adjusted biennially following a review of current service population
data, service levels, and recoverable capital costs to provide new
capacity in the various systems for which the fees are collected.
Effective October 1, 2001, a new fee schedule took effect. For revenue
estimation purposes, the new rates were used for all development
scenarios through buildout. (A listing of common impact fee rates is
included as Appendix 3 to this report.) Countywide, it is estimated
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that the new fee structure will produce in excess of $50 million
annually for the county and $8 million for the school district.
In addition to revenue from the fees themselves, interest earned on fee
collections was forecast as part of this revenue source, rather than
included with general interest earnings as described later in this
section. Because impact fees tend to accumulate for several years
before projects are constructed, they produce interest earnings at a
considerably higher rate than do general proceeds of the county or the
school district which may only be invested for very short periods at a
time. For that reason, revenue forecasts from this source have been
adjusted upward by 6.5% from the respective fee schedule rates to
reflect earned interest.
9. Interest Income – The county and the school district regularly invest
idle funds to earn interest. Occasionally, this may involve periods as
short as overnight. Based upon the current year’s experience, this
analysis uses an effective rate of 2% per year on all new revenues
generated (except development impact fees) to account for interest
earnings.
10. State School Aid – State aid to schools in Florida is part of a revenue
equalization system to ensure that schools across the state are able to
devote generally the same levels of financial resources to their
students regardless of local economic conditions. This equalization
system is known by the name Florida Education Finance Program.
The program works by assigning cost factors to various educational
programs, which are multiplied by the number of full-time equivalent
students in each of those programs locally, and the resulting weighted
full-time equivalents are multiplied by base financial allocations and by
district cost differentials to arrive at the state aid entitlements (as well
as the required local effort). Local effort is derived almost entirely
from ad valorem property taxes. For purposes of this analysis, school
operational revenue from state aid is estimated to be $487,895,000,
supporting an estimated student population of 155,000. On that basis,
the revenue estimation factor is $3,147 per student per year.31
11. Other Sources – Three smaller sources of county revenue are
combined into this category:
Public Service Tax (Gas) is levied on buyers of natural gas, liquefied
petroleum or manufactured gas in the unincorporated areas of the
county. The tax rate is generally 10%, although large monthly
purchasers pay a graduated, declining rate. In the current year, the
county anticipates that it will receive $950,000 from this source.
31
Source: Personal interview with Michael Burke, Budget Manager, School District of Palm
Beach County, October 2, 2001.
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For purposes of this analysis, it is assumed that the majority of
bottled gas purchases are made by households, leading to an
estimation factor of $3.94 per dwelling unit ($950,000 ÷ 241,382).
Occupational License Fee is charged to any person who engages in
or manages a business, profession or occupation throughout the
county. The proceeds of this countywide fee are shared with
municipalities, for licenses sold within city limits. The fee is
computed on several schedules, depending on the type of business
involved. Because the county’s financial accounting system does
not segregate the proceeds according to type of business, new
occupational license revenue has been forecast using an average fee
per acre of commercial/industrial land uses in the county. With
estimated receipts of $1.7 million in FY 2001, an average
occupational license fee factor of $143 per acre has been applied to
gross non-residential acreage in each growth scenario. The relevant
calculation is $1,700,000 ÷ 11,895.
Alcoholic Beverage License Fee is imposed by the state on
manufacturers, distributors, vendors, brokers, sales agents, and
importers of alcoholic beverages. Approximately one-quarter of the
fees collected within a county are returned to the county’s tax
collector to meet general costs of operation. In the current year, the
county expects to receive $400,000 from this source. Because one
cannot know how many eligible fee-paying enterprises will be
licensed within the CWC under future development scenarios, new
population growth has been used as a proxy for alcoholic beverage
consumers and the businesses that would serve them, in order to
estimate revenue from this source. The appropriate factor is thus
35¢ per capita ($400,000 ÷ 1,154,171).
Cost Estimation Methodology
As with revenues, in order to analyze the fiscal impacts of the alternative
development scenarios on the county and the county school district, it is
necessary to analyze current and expected expenditures for each agency. The
analysis relies primarily on two sources: 1) published expenditure data from
the county’s FY 2001 budget and financial reports of the school district; and 2)
cost information from the major service providers for actual service delivery
considerations under assumed conditions for each of the buildout
configurations.
Palm Beach County is a full service county responsible for providing a wide
variety of governmental and enterprise services. Similarly, educational services
from kindergarten through high school are provided by the School District of
Palm Beach County. For purposes of this analysis, only those programs and
services over which the county or school district have effective discretion are
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forecast. In other words, expenditures that are offset by a like amount of
restricted revenues are not included because they are neutral in their fiscal
impacts.32 Examples include enterprise operations supported by user charges
(e.g., Water Utilities), grant-supported operations, and services provided by
the five autonomous special purpose districts lying within the CWC.
The basic approach for developing the cost estimates in this study was twofold,
based on expenditure type. For existing program costs, per capita rates were
developed and projected over the 2001 – 2025 buildout period. For program
expansions necessitated by new development, a case study process was used,
involving four steps:
1. Identification of additional service requirements in terms of new
capital facilities or operating program expansion for each alternative
development scenario based on current levels of service;
2. Estimation of standard capital construction and operating costs
(including staffing) for a typical new capital facility or increment of
program expansion;
3. Scheduling of new capital facilities or additional staffing requirements
over the 25-year study period based on the respective population
growth projections, one for each development scenario;
4. Calculation of the cumulative costs determined above.
The remainder of this section reviews the major assumptions applied in the
analysis of county and school district costs, together with a detailed discussion
of the expenditure estimation factors which were used in the fiscal analysis
model.
MAJOR ASSUMPTIONS
The following major assumptions have been made in the development of cost
estimation factors:
1. Service Classifications – For costing purposes, public services within
the CWC were classified into two groups—primary services and other
services. Included within the primary services are the following
services which are directly impacted by development and have
identified levels of service:
Parks and Recreation
Sheriff
Roads
County Library
Fire-Rescue
Schools
32
Of course, the corresponding revenues are not project either. The effect is to measure
only the net fiscal impacts of the alternative development scenarios.
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Included in the “other services” category are those which are provided
within the county as a whole, but which are less directly associated
with new development or do not have identified levels of service.
Overhead services and other indirect operating costs, such as
legislative, administrative and non-departmental costs, are also
included in this category.
C O S T
I N F L A T I O N
R A T E S
Personal Services Expenses
General Employees
Fire-Rescue Employees
Sheriff Employees
5.0%
8.0%
8.0%
Operating Expenses
County
Fire-Rescue
3.0%
6.0%
Capital Outlay
3.0%
Capital Construction
County
Fire-Rescue
4.0%
5.0%
2. Capital Facility Costs Expensed –
The costs of major capital facilities,
such as new fire stations or schools,
were expensed in the year of
construction, rather than pro-rated
over the useful life of the facility.
3. Future Renewal and Replacement
Costs Are Ignored – The costs of
future renewal and replacement of
major capital facilities were not
included in the analysis.
4. Inflation Rates – The historical
inflation rates for operating and
capital construction costs shown in the table above were used in the
impact model.
EXPENDITURE PROJECTION FACTORS
Following are a listing and brief description of all cost assumptions and factors
which were used in connection with expenditure forecasts of alternative Sector
Plan growth strategies. Table 15 on page 49 recaps the public facility
requirements resulting from the three development scenarios.
Primary Services
1. Parks and Recreation – It is the goal of the county to provide a
countywide system of parks, beaches, open space and recreational and
cultural facilities that is “conveniently distributed, readily accessible,
and adequate in number to serve the current and future needs of the
county’s population.”33 In order to maintain the minimum level of
service of 0.78 developed acres of District Park per 1,000 population
required by the Comprehensive Plan, development of a 60 acre District
Park will be required under all three development scenarios by 2007.
Under the Rural Lands Stewardship scenario, additional development
of the District Park (Phase II), involving the development and
33
Palm Beach County Comprehensive Plan, “Recreation and Open Space Element,” Goal 1.
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operation of a recreation center or aquatic center, would be required
by 2015.
Current costs to construct a District Park are estimated at $5,600,000;
annual operating costs are estimated to total $349,189, including
funding for five additional staff positions. Current costs to construct
Phase II of the District Park are estimated at $3,000,000; annual
operating costs add $300,000, including funding for an additional five
positions.
2. Sheriff – The Palm Beach County Sheriff’s Office is responsible for
providing uniformed law enforcement services, securing the courts,
serving all warrants and processes issued by the courts, and operating
the county detention and correction facilities. In the law enforcement
area, the Sheriff’s Office oversees patrol activities, including those
involved in community initiatives, supervises all facets of
investigations, and provides court services. Patrol activities include
services for the unincorporated areas of Palm Beach County as well as
other specific fee-for-service areas.34
Although the county’s Comprehensive Plan does not specify a level of
service for patrol activities, the Sheriff’s Office has begun to develop
internal levels of service for this activity based on the ratio of deputy
sheriffs to population. These ratios vary by region within the county.
For the region which includes the Central Western Communities, the
current level of service is 1 deputy sheriff per 1,000 population.35
Applying this level of service, a total of 25 additional deputy sheriffs
would be required under the Trend Plan scenario, 12 under the
Agricultural Preservation scenario, and 33 under the Rural Lands
Stewardship scenario. Under all three scenarios, a new substation
facility is estimated to be required in 2002.
Current costs to construct a new Sheriff’s substation are estimated at
$1,725,000. The current cost for each deputy sheriff position,
including related operating expenses and equipment costs, is estimated
at $83,123.
3. Roads – It is the goal of the county to provide “an interconnected
multi-modal transportation system which moves people, goods, and
services in a safe, efficient, convenient and economical manner with
minimal adverse impact on the environment.”36 The county has
34
Palm Beach County Annual Budget for Fiscal Year 2001, pages D-325, D-326.
35
The Sheriff’s Office has indicated that 2 deputy sheriffs per 1,000 population is considered
to be the minimum acceptable ratio for law enforcement operations, based on national averages.
The 1 deputy per 1,000 population does not meet this criteria. [Source: September 14, 2001
memo from the PBC Sheriff’s Office.]
36
Palm Beach County Comprehensive Plan, Transportation Element, Goal 1.
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established levels of service standards for the operations of the roadway
and public transit components of its transportation system. In general,
road capacity is expected to meet Level of Service “D” standards, as
measured by average daily traffic and peak hour traffic volumes.37
Based on these established standards, a total of 173 additional lanemiles of major roadway would be required under the Trend Plan
scenario, 107 under the Agricultural Preservation scenario, and 168
under the Rural Lands Stewardship scenario.
The cost to construct a road segment consists of design costs, right-ofway acquisition costs, and construction costs. These costs vary by
location within the county. On average, the current cost to construct
one lane-mile of major roadway is $610,000.38
4. Libraries – The goal of the county is to provide a library system
throughout the Library Taxing District that “serves the informational,
educational, and recreational reading needs of residents of all ages,
interests, and circumstances, thereby promoting the broad
dissemination of knowledge.”39 In order to maintain the current level
of service of 0.34 square feet per capita required by the Comprehensive
Plan, construction of a branch library is required under all three
development scenarios by 2005. Under both the Trend Plan and the
Agricultural Preservation scenarios, a 15,000 square foot facility would
be constructed; under the Rural Lands Stewardship scenario, a 19,000
square foot facility is planned.40
Current estimates to construct a 15,000 square foot branch library are
$3,573,082; annual costs to operate such a branch facility are
estimated at $1,233,386, including funding for eighteen additional staff
positions. Current costs to construct a 19,000 square foot branch
library are estimated at $4,380,872; annual operating costs add
$1,540,183, including funding for twenty additional staff positions.
5. Fire-Rescue – For Fire-Rescue services, the county seeks to provide
“an effective program of emergency fire and rescue services with a
comprehensive fire prevention program that is responsive to the
desires, needs and economic capacity of the community.”41 In order to
maintain a department-wide average response time of 7.5 minutes for
emergency responses required by the Comprehensive Plan, construction
37
See Appendix 1 for specific information on Level of Service “D” Standards.
38
$610,000 per lane mile for major roads (6 lanes) based on $500,000 per lane mile plus 22%
($110,000) for right-of-way. [Source: WilsonMiller, Inc., June 30, 2001.]
39
Palm Beach County Comprehensive Plan, “Library Services Element,” Goal 1.
40
Memo from Lavinia Gardner, Director of Finance & Facilities, PBC Library Department
41
Palm Beach County Comprehensive Plan, “Fire-Rescue Services Element,” Goal 1.
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of a 5,500 square foot, two-bay fire station with a 1,200 square foot
community room will be required under the Rural Lands Stewardship
scenario by 2010.
Current costs to construct such a fire station are estimated at
$2,770,361; annual operating costs are estimated to total $1,158,437,
including funding for twelve additional staff positions.
6. School District – The School District of Palm Beach County is
responsible for providing educational services from kindergarten
through high school to students living in the county. The “Public
School Facilities Element” of Palm Beach County’s Comprehensive Plan
specifies the level of service for educational facilities, based upon a
series of concurrency service areas (CSAs). Within each CSA, an
overall level of service is established based upon the number of
enrolled students divided by the design capacity of each school type
(elementary, middle, and high). In addition, a maximum utilization
capacity is set for each school type. Once the number of enrolled
students exceeds the design capacity by a pre-determined percentage,
the school district must undertake a “School Capacity Study” to
determine if the school in question can accommodate a greater
number of students than the adopted level of service, and it must
consider boundary adjustments to send students to schools in
adjoining CSAs before building a new school. Only if neither the
School Capacity Study nor boundary adjustments nor new schools
already committed can accommodate the additional student growth
will a new school be approved.42 For purposes of this analysis, data
supplied by school district facility planners was compared against
existing capacity factors for surrounding concurrency service areas to
arrive at new school requirements. Table 14 on the following page
depicts the addition of new schools derived in that manner for each
development scenario, along with the year when each facility is forecast to open.
Current annual operating costs were estimated by the school district to
be $3,949,068 for an elementary school, including funding for 97
additional staff positions; $5,828,388 for a middle school, including
funding for 132 additional staff positions; and $9,756,513 for a high
school, including funding for 171 additional staff positions.
42
Percentages are as follows: 1) Elementary School – 120% for FY 2002, 110% for FY 2003,
and 110 % for FY 2004; 2) Middle School – 125% for FY 2002, 125% for FY 2003, and 110% for
FY 2004; and 3) High School – 120% for FY 2002, 120% for FY 2003, and 110 % for FY 2004.
Consistent with the interlocal agreement for school concurrency, the Capital Improvements
Element of the Comprehensive Plan regards all schools within the first three years of the Five Year
School Plan as committed.
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TABLE 14
Central Western Communities
Schedule of New School Facility Requirements
Buildout Conditions
School Type
Elementary School
Construction
Cost
Student
Capacity
$12,082,800
970
Middle School
$20,132,400
1,300
High School
$50,074,300
2,500
Trend
Plan
Agricultural
Preservation
Rural
Lands
1 (2002)
1 (2002)
1 (2002)
1 (2004)
1 (2004)
1 (2004)
1 (2004)
1 (2004)
1 (2004)
1 (2008)
1 (2008)
1 (2012)
1 (2013)
1 (2008)
Other Services
P E R
C A P I T A C O S T
F A C T O R S
Community Services
$12.35
County Administration
0.29
County Attorney
0.75
County Commission
0.24
Extension Service
1.99
Employee Relations/Personnel
1.76
Engineering (non-gas tax)
19.59
ERM
2.73
Facilities Development/Ops.
6.46
OFMB
0.32
Medical Examiner
1.50
PalmTran (non-gas tax)
8.02
PZ&B
6.65
Public Affairs
1.59
Public Safety
10.26
Purchasing
0.77
Economic Development
0.67
EOC
0.10
Public Health
0.93
Small Business Assistance
0.44
Risk Management
0.05
Court Administration
6.79
Public Defender
0.58
State Attorney
0.65
Clerk of the Court
17.08
Property Appraiser
9.72
Supervisor of Elections
2.46
Tax Collector
2.18
Total
$116.94
The collection of county services grouped in
this category are those which, as a rule, are
either less directly related to new growth, or
do not have existing established levels of
service which can be directly used to forecast
future impacts. As a group, these services
often lend themselves to forecasting on a per
capita basis, where future population growth
is used as a proxy for the number of voters
(as in elections costs), inmates (in estimating
corrections costs), defendants (for public
defender and prosecutor costs), and other
caseload-driven costs. The sidebar at right
lists the departments comprising this
category, and indicates for each the per capita
cost factor employed in this analysis. The
factors were derived by deducting all
internally-generated revenues from each
program to yield the net county costs—the
so-called tax equivalent amounts. These net
costs were then individually adjusted by
deducting amounts representing fixed costs
unlikely to be directly affected by population
growth. The resulting amounts were
converted to the per capita factors shown in
the chart, for use throughout the analysis.
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TABLE 15
Central Western Communities
Summary of All Facility Requirements
Buildout Conditions
Category
Meas. Unit
Existing
Trend
Conditions
Plan
Agricultural
Preservation
Rural
Lands
Schools
Elementary
Units
4
7
6
7
Middle
Units
1
2
2
3
High
Units
Total
Fire-Rescue
Stations
1
1
5
10
8
11
3
3
3
4
Libraries
Facilities
Units
1
1
1
Space
Sq. ft.
15,000
15,000
19,000
Parks
1
1
1
282
216
277
1
1
1
63
50
71
District Parks
Roads
Major Roadways
Lane-miles
109
Sheriff
Substation
Deputy Sheriffs
Units
Persons
38
Source: PBC Fire-Rescue, Library, Parks & Recreation, Engineering & Public Works, Planning, Zoning &
Building, and Sheriff’s Departments, and School District of PBC.
Impact Forecasts
The preceding sections of this report have described general study issues and
the analytic methodologies involved in estimating public expenses and
revenues. This section evaluates the fiscal impacts of both the Agricultural
Preservation scenario and the Rural Lands Stewardship scenario relative to the
status quo Trend Plan.
Because the analysis intentionally excluded certain costs and revenues—
notably those associated with self-supported enterprise activities—the
conclusions should not be interpreted as representing the absolute costs
associated with any one of the growth strategies, but only as relative measures
of favorability on the county government and the school district. Table 16
summarizes these conclusions. None of the three development strategies
examined for this report was found to have a net positive fiscal impact on
either the county or the school district over the next twenty-five years, but
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TABLE 14
Net Fiscal Impacts Relative to Trend Plan Scenario
25-Year Cumulative Impacts
Agricultural Preservation
Scenario
$
%
Net Favorable/(Unfavorable)
Agency/Fund
Rural Lands Stewardship
Scenario
$
%
Net Favorable/(Unfavorable)
County
General Fund
Library Fund
Fire-Rescue Fund
Road Fund
PalmTran (Gas Tax Fund)
Total
$ 29,355,200
17.0%
$39,058,400
22.6%
327,400
1.0%
( 2,379,300)
( 7.1%)
20,304,600
15.1%
( 18,587,200)
(13.8%)
12,495,700
15.4%
2,320,200
13.2%
$ 64,803,100
22,868,800
28.1%
261,300)
( 1.5%)
14.7%
$40,699,400
9.3%
$242,718,400
57.1%
($32,868,100)
( 7.7%)
39,695,100
281.5%
2,649,000
18.8%
$282,413,500
68.7%
($29,219,100)
( 7.1%)
(
School District
Operational
Capital
Total
Source: PBC Fire-Rescue, Library, Parks & Recreation, Engineering & Public Works, Planning, Zoning & Building,
and Sheriff’s Departments, and School District of PBC.
both of the alternative development proposals by WilsonMiller, Inc. have
somewhat more favorable fiscal impacts on the county than does the status quo
Trend Plan. The school district, too, fares much better under the Agricultural
Preservation scenario than it does under the Trend Plan, but the Rural Lands
Stewardship Plan results in a small net unfavorable impact on the district, in
relation to the Trend Plan. These results can be seen from the table above.
AGRICULTURAL PRESERVATION SCENARIO
The Agricultural Preservation scenario has the most favorable fiscal impact on
both the county government and the school district, by margins ranging from
nearly +15% to more than +68%, respectively, relative to the status quo
Trend Plan. For the county, this favorable difference is the result of avoiding
nearly $65 million more in costs than it forgoes in revenues over the 25-year
study period. A similar phenomenon accounts for the net favorable difference
for the school district.
When the $241.1 million bond issue is included in the overall cost comparison,
the Agricultural Preservation option loses its favorable cost position, and
becomes nearly as expensive as the Rural Lands Stewardship option in terms of
its overall cost, though not its net fiscal impact advantage.
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The upshot is that, for a present value investment of $241 million, more or
less, the county can improve its net fiscal position in the CWC by PV$24.1
million over the next twenty-five years.43 The policy question is whether that
would be sufficiently valuable to warrant incurring the additional debt. One
further comment about the bond issue is useful before leaving the subject.
The bond issue involved in this scenario was sized carefully, and with
considerable consultation among the county’s debt managers, financial
advisors and others. The county has some experience with large-tract
agricultural land acquisitions for public open space, which instructs us that this
can be a highly unpredictable market. The conventional approach to
appraising the value of development rights is to first establish a fair market
value for land acquisition, and deduct from that the estimated agricultural
value of the property. In the case of the properties in the CWC, this
calculation raises doubts that the property owners would find it attractive to
sell those rights at prevailing rates. For that reason, the size of the proposed
bond issue reflects an assumed market value of $15,000 per acre for fee simple
purchase of the lands. This value is directly related to the development
capacity (or perhaps the speculated capacity) of the lands, when converted
from agricultural to residential or other uses. In other words, as the allowable
building densities in the area increase, so too will the market value of the lands
there. Of course, the opposite is also true, but there is a practical limit below
which it simply would not pay the owners of agricultural lands (even lands
planted in unprofitable crops) to sell their properties.
If the existing density limits of the Comprehensive Plan are perceived to be at
that lower limit already, the Agricultural Preservation option may be
superfluous, inasmuch as the large agricultural lands would not develop
anyway. In essence, the Trend Plan would not materialize as county planners
have projected, but rather some hybrid would evolve with considerable
agricultural lands remaining. That condition would then persist until either
the housing market changed dramatically or densities were allowed to increase.
RURAL LANDS STEWARDSHIP SCENARIO
In relative terms, the fiscal impact of this scenario is marginally more favorable
to the county than is the impact of the Trend Plan, but moderately less
favorable to the school district. For both agencies, it is the need for major new
capital facilities which makes it fiscally less attractive than the Agricultural
Preservation option. Specifically, the higher populations associated with this
scenario are enough to require the addition of several costly capital facilities
(and associated staffing and operations) for the county, totaling $93.4 million
43
The savings are relative to the Rural Lands Stewardship option, the next most
advantageous scenario.
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more than is estimated for the Agricultural Preservation scenario. Table 15 on
page 49 highlights these facility differences. These additional capital costs
explain why the impact on the school district is so much less favorable than
under the Agricultural Preservation scenario, and also why the county’s
Library Fund and Fire-Rescue Fund are forecast to have fund deficits under
this scenario over the 25-year study period.
The Rural Lands Stewardship scenario is also estimated to be the highest total
cost strategy, just eclipsing the overall cost of the Agricultural Preservation
option when bond costs are included with the latter.
It appears possible from this analysis that a land use design which incorporates
the clustered development patterns characteristic of this scenario, but with
fewer than the 24,000 residential units proposed for this option, might be an
optimal plan from the perspective of its fiscal impacts on the county and the
school district.
52