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HomeMy WebLinkAboutPackets - Council Packets (872) AGENDA ORO VALLEY TOWN COUNCIL STUDY SESSION OCTOBER 24, 2007 ORO VALLEY TOWN COUNCIL CHAMBERS 11000 N. LA CANADA DRIVE STUDY SESSION - AT OR AFTER 5:30 p.m. CALL TO ORDER ROLL CALL 1. PRESENTATION OF DRAFT DEVELOPMENT IMPACT FEE REPORT BY PAUL TISCHLER OF TISCHLER/BISE, INC. 2. PRESENTATION AND DISCUSSION OF ECONOMIC DEVELOPMENT INCENTIVE POLICY GUIDELINES FOR PROFESSIONAL LEVEL JOB CREATION 3. DISCUSSION OF EXISTING LODGING INDUSTRY INCENTIVES POLICY/GUIDELINES ADJOURNMENT POSTED: 10 17 07 3:00 p.m. cp The Town of Oro Valley complies with the Americans with Disabilities Act (ADA). If any person with a disability needs any type of accommodation, please notify the Town Clerk's Office at (520)229-4700. • s TOWN OF ORO VALLEY Page 1 of . COUNCIL COMMUNICATION MEETING DATE: 10/24/07 TO: HONORABLE MAYOR AND COUNCIL FROM: DAVID ANDREWS, TOWN MANAGER SUBJECT: PRESENTATION OF DRAFT DEVELOPMENT IMPACT FEE REPORT BY PAUL T1SCHLER OF TISCHLER/BISE INC. SUMMARY: On August 1, 2007 the Town Council voted to contract with TischlerBise Inc. for Phase I of a development y Impact fee feasibility/cost of service study to determine whether the Town could support the creation of additional developmentimpact nal im act fees. Specific areas of interest were: police facilities, street and transportation improvements, parks and recreation facilities, library facilities, open space and riparian areas, operational needs g and storm water management. Based on land use and population data, interviews with staff, and established demand factors, Paul Tischler, of TischlerBise, has completed a comprehensive cost of service study and provided a draft report of his findings. On September er 19, 2007, Mr. Tischler spent the day on-site interviewing staff and gathering information to y complete a cost of service study. He is here tonight to provide an overview of his findings and his suggestions for moving forward. As partRequest of the initial Re uest For Qualifications, the Town asked for an estimate of Phase II costs once the cost was completed.of service study The last half of Mr. Tischler's report details the scope of work for Phase II and provides a price for those services. Should the Council choose to continue with Phase II of this project, TischlerBise would be asked to create a methodology for formulatingdevelopment impact fees for the areas decided. In addition, the sound meth gy TischlerBise will use these methodologies to calculate legally defensible impact fees for the Town. ATTACHMENTS: 1. Copy of draft final report from TischlerBise Inc. 6,444) David Andrews, Town Manager DEVELOPMENT IMPACT FEE FEASIBILITY REPORT Prepared For TOWN OF 01ZO VALLEY, ARIZONA • - - aP," °( 4,',alit,. • •- y° .4100Ir , • 4110,. - , , " • N - r - • .4. - rir lt-mge 4 4, _ Town of Oro Valley schPreparelerd By Ellse• Fiscal, Economic & Planning Consultants OCTOBER 16 2007 4111111.11111111111111111111111N111111.111111111111111111. Town of Oro Valley,Arizona— Development Fee Feasibility Report TABLE OF CONTENTS —EXECUTIVE SUMMARY— 1 GROWTH ISSUES 1 REVENUE ISSUES 1 DEVELOPMENT IMPACT FEES 1 DEVELOPMENT IMPACT FEE CATEGORIES 1 REVENUE POTENTIAL 2 NEXT STEPS 2 —GROWTH ISSUES— 2 —REVENUE ISSUES— 3 —DEVELOPMENT IMPACT FEES— 4 DEFINITION 4 METHODOLOGIES/CREDITS 4 —DEVELOPMENT IMPACT FEE CATEGORIES— 5 TRANSPORTATION 5 POLICE 5 PARKS AND RECREATION 6 LIBRARIES 7 MUNICIPAL FACILITIES AND EQUIPMENT 7 —REVENUE POTENTIAL— 8 —WORK SCOPE— 8 Task 1:Recommend Land Use Assumptions 8 Task 2:Ascertain Demand Factors and Level of Service for Relevant Public Facilities 8 Task 3:Evaluate Different Allocation Methodologies 9 Task 4:Identify Capacity Needs and Costs 9 Task 5:Determine Need for and Calculate"Credits"to be Applied Against Capital Costs 9 Task 6:Discussion of Preliminary Methodologies and Policy Options 10 Task 7:Prepare Infrastructure Improvement Plan (IIP) 10 Task 8: Complete Development Impact Fee Methodology and Calculations 10 Task 9:Conduct Funding and Cash Flow Analysis 10 Task 10:Preparation of Development Impact Fee Report 11 Task 11:Presentations/Meetings 11 Task 12:Liaison Committee(Optional) 11 —DELIVERABLES— 12 —SCHEDULE— 13 —COST— 14 —QUALIFICATIONS— 14 TischlerBise - 1 F sc 1,xcc►nomic&Planrung Consultants 4701 SANGAMORE ROAD SUITE 5240 : BETHESDA, MD 20816 1ishIerBise T: 800.424.4318 F F: 301.320.4860 Fiscal,Economic at Plannirw Consultants 80 ANNANDALE ROAD x PASADENA, CA 91105-1404 T: 818.790.6170 F: 818.790.6235 WWW.TISCHLERBISE.COM —EXECUTIVE SUMMARY— TischlerBise was hired by the Town of Oro Valley to conduct a Phase 1 Development Impact Fee Feasibility Study. The summary findings noted below are based on interviews, information review, and the firm's development impact fee experience nationally and in Arizona, where over 25 Arizona communities have retained TischlerBise to prepare development impact fees. GROWTH ISSUES The Town is expected to increase in population, averaging about 330 new housing units annually. Retail employment is expected to stabilize once the Oro Valley Marketplace opens. REVENUE ISSUES The Town relies heavily on local sales tax since it does not impose property taxes. The recently enacted 2% utility tax is providing an important supplemental revenue source; however, this provision sunsets 2009. For reasons noted in the Revenue Issues section of this report, it is important for the Town to consider other sources of annual revenues for the long term. g Exp andin the facility categories on which development impact fees are collected will result in growthpaying a ing for growth in terms of capital facility impacts. However, development impact fees cannot be used for the more costly annual operating expenses. DEVELOPMENT IMPACT FEES p Development impact fees can be defined as new growth's fair share of the cost to provide capital facilities. The various requirements and methodologies are discussed in this report. DEVELOPMENT IMPACT FEE CATEGORIES The Town is expanding capital facilities to serve new growth. TischlerBise recommends that the Town have development impact fees calculated for the following categories: - Transportation (recalibrate) - Police (new) - Parks and Recreation (new) - Library (new) - Municipal Facilities and Equipment(new) - 1 C ,x i"si',t 9t%is#'i:sfit'iRn C u tir Town of Oro Valley,Arizona— Development Fee Feasibility Report . ai- yr .. K<c�.-b., :..�s.-..._ 'ate-z_�"�,-",� '•_ �•:.-�=,b-:i %..�.--.,�,,._,;..^-.. '2_._,— -�..._-:F.. ...z, ..� _ - - ....P...ts?�,a-sx The library fee should be calculated only if an expansion to the library will be reflected in the Capital Improvement Program within the next six years. REVENUE POTENTIAL Based on the above information, it is likely that a development impact fee would range from $1,000 to as high as $4,000 per single family house, exclusive of the existing road and water fees. Therefore the revenues could range from over $300,000 to $1,300,000 annually. These monies could be used to pay for debt service for capacity expansion and/or cash expenditures. NEXT STEPS The Town should decide on whether a library development impact fee should be included in the development impact fee categories and then proceed to Phase II, calculation of the fees. GROWTH ISSUES The Town has been growing and is likely to continue to grow. Residential permits averaged 423 over the last five years (2002-2006), with a high of 500 in 2003. The Town's "Population Projection Report" of June 15, 2006, indicated a population of 44,180. Assuming this number, the population is approximately 45,000 now. The number of new housing units is projected to grow by an average of 330 annually, according to the "Special Report for the Town of Oro Valley of a Homebuilding Forecast" issued in 2007. At the estimated average household size of about 2.4, the increase in population would be about 768 annually. The Special Report notes that of the new home closings in 2006, 36% were priced from$500,000-1,000,000, 43% from$350- 500,000 and 16% were from $300-350,000. The report also notes that these housing prices are "significantly higher than those in most of Pima County." These higher income households are likely to demand high levels of service. (The housing prices would generate high property tax revenues for the Town if there were Town taxes.) As noted in the "Budget Message from the Town Manager FY 2007-2008," "the development of major retail centers along Oracle Road are underway." Construction of Oro Valley Marketplace, a 880,000 square feet retail center will open in the fall of 2008. The Special Report notes that "future development of any large commercial nature is not expected." The 2007 employment estimate for the Town, obtained from ESRI Business Information Services (a private company specializing in market data) is 5,765, as of earlier in the year. This figure will increase as more retail opens, although these jobs usually are relatively low wage positions. TischlerBise - 2 l:C.i3i ;s:ti FCifll 1.5-4tR 2 Co uRant Town of Oro Valley,Arizona— Development Fee Feasibility Report y`y —REVENUE ISSUES The Town is fortunate from a fiscal perspective that is has attracted a significant amount of retail activity. Since the Town does not impose a property tax, it is heavily dependent on outside sources. Retail sales taxes, a local source but much of which is paid by out-of-towners, represents 25% of total budgeted revenues. The next largest revenue source is outside funding sourcesP tied to specific projects), which includes reimbursements from Pima Association of (23% Governments, Pima County Bond proceeds and various federal grants, followed by State Shared Revenue (21%). This last category, State Shared Revenue, is primarily comprised of State sales and income tax revenues. If one deleted the outside funding sources category, the importance of the Town sales tax category is significant, particularly since this is the one major category which is locally derived. The utility tax of 2% will sunset on January 1, 2009 unless renewed by the Town Council. This time frame is reflective of the anticipated increase in sales tax revenues to be generated by the newly opening Oro Valley Marketplace. As noted in a September 20, 2006, memorandum from the Finance Director to the Mayor and Council discussing the need for additional Town revenues, the revenue constraints of the Town resulted in "eliminating all new position requests, reductions to operations and maintenance items and funding reduced levels of CIP projects out of the General Fund cash reserves." The other reasons cited for the need for the utility tax included "lack of diverse funding sources and over-reliance on one-time construction related revenues; ... threats to State-Shared revenues," and additional funding sources needed for the CIP. Over time, the Town will also need to increase its monetary allocation for rehabilitation and retrofit of capital facilities as they age. The Special Report notes "Oro Valley can expect that its commercial customers will come from Oro Valley and its immediate surrounds as well as those developments in Catalina and lower Pinal County that cannot be served by existing entities." To the extent the retail sales tax revenues are from out-of-towners, and therefore independent of Town population increase, the Town will experience growth in sales tax revenues even if there were no more Town population growth. Conversely, the more the Town population increases, the less sales tax income the Town can spend per Town resident. Therefore it is important for the Town to consider other sources of revenues for the long term. To help maximize available revenues, the imposition of development impact fees so that new growth will pay its fair share of its capital facility demand should be pursued. TischlerBise — 3 fconrc'rnk&P nn;^ Cort�ulta is TownTownof Oro Valley,Arizona— Development f.:.-.:.. .. . D e3�vi.e'"op4'J'Tm. fht±....t4'a+acx+..Fee � ':. o rt --DEVELOPMENT IMPACT FEES DEFINITION Development impact fees are one-time payments used to fund capital improvements needed to accommodate new development. Development impact fees relate only to capital facility expansions benefiting new development and are not to be utilized for rehabilitation efforts or operating expenses. In determining the reasonableness of these one-time fees, the fee must meet the rational nexus test, which consists of three requirements: (1) needed capital facilities are a consequence of new development; (2) the fees are proportionate to the development's capital facility demand; and (3) revenues are managed and expended in such a way that the new development receives a benefit. To meet the proportionality requirement, the development impact fees cannot be used to provide a higher level of service (LOS) than is currently being provided unless there is a funding plan on how to raise the existing LOS to that higher level. For the Town of Oro Valley, this may occur with several infrastructure categories as the Town plans for additional capital facilities. METHODOLOGIES/CREDITS There are three typical methodologies that can be applied in the calculation of development impact fees. These are the plan-based, incremental expansion and cost recovery approaches. The plan-based approach is usually based on a master plan or facility study that indicates the future facility needs over a certain time frame to service certain population thresholds. The incremental expansion approach reflects the methodology in which capital items are added incrementally to meet growth. The cost recovery methodology is used when the jurisdiction has already oversized capital facilities from which new growth will benefit. Regardless of the methodology, a consideration of "credits" is integral to the development of a legally valid development impact fee methodology. There is considerable confusion among those who are not immersed in development impact fee law about the definition of a credit and why it may be required. There are, in fact, two (2) types of "credits" each with specific, distinct characteristics, but both of which should be addressed in the development of development impact fees. The first is a credit due to possible double payment situations. This could occur when contributions are made by the property owner toward the capital costs of the public facility covered by the development impact fee. The second is a credit toward the payment of a development impact fee for dedication of public sites or improvements provided by the developer and for which the development impact fee is imposed. IschlerBise — 4 Jr,e:t.iSil''tliY��y#•'c.-„Flie.'yip Ct'3'.'•t,ltZol`s a . Town of Oro Valley,Arizona— Development Fee Feasibility Report — DEVELOPMENT IMPACT FEE CATEGORIES The relevant topics are discussed in turn. TRANSPORTATION The Town currently has a road development impact fee. There is no fee component for road- related equipment ui ment or building space. As growth continues, existing trips will utilize roadway capacity.aci . Additional lane miles of roads, primarily local streets, will create the need for more road equipment ui ment and space to accommodate not only the additional items, but also the additionalp ersonnel needed. The current CIP reflects several capital equipment items that a transportation equipment development impact fee component could be used to purchase. New growth's fair share of the public works building space related to transportation could also be reflected in a transportation development impact fee. TischlerBise recommends renaming the road development impact fee to a transportation development impact fee. Two new components would be added—vehicles/equipment and buildings. New growth would pay its fair share of the related public works space in the new Municipal Operations Center (MOC). Additional trucks and other vehicles and equipment would be reflected in the vehicles and equipment component of the transportation development impact fee. In addition, the existing road development impact fee component needs to be recalibrated to meet recent changes to the requirements as set forth by State law as well as recent national court decisions. One latest change in State law includes the requirement for localities to prepare an Infrastructure Improvement Program (IIP). The fee would also have a nonresidential component added. POLICE As the Town increases in population and employment there will be an increase in calls for police services, which has occurred consistently over the last five years. According to the "Town-wide Space Needs Study Phase 1", "all work and operational spaces at Police Headquarters are currently fully occupied." Police development impact fees should be pursued. There are three likely components for the police development impact fee component: land, building and vehicles and equipment. The land component reflects the land used to support the relevant building space. The second component relates to the building square footage. The fee would be calculated so that new growth, both residential and nonresidential, will pay their fair share of the total square footage owned by the Town. This square footage will increase substantially around 2009 with new space in the Town Hall and Phase 1 of the MOC. This higher level of service could be reflected in the development impact fee. TISChledrilSe ci5C3,,FtOrtalink, PLLnrong Con t;jtt<nt Town of Oro Valley,Arizona— Development Fee Feasibility Report A third component of the police development impact fee is vehicles and equipment. The department currently has about 100 vehicles. More calls for service will create more demand for staff (which cannot be covered by development impact fees) and more cars, and the one- time costs for equipping the officer. (The replacement cost for the cars would not be eligible for development impact fees). PARKS AND RECREATION There are several development impact fee components to the Parks and Recreation category. These components are park land, park improvements, recreational facilities, trails/bike paths, building and vehicles equipment. Given the increased demand for these facilities from growth, this category should be pursued for development impact fees. Each component is discussed in turn. The components would be based on parks that have a townwide appeal because of their amenities. Neighborhood parks, which have a small service area, would not be included. The Town owns several large tracts of park land. Active park land includes James D. Kriegh Park and the CDO Riverfront Park. Passive park land, which is yet undeveloped, is West Lambert Lane Park and the Naranja Town Site. Assuming that the Town does not acquire any more park land for Town parks, new growth would pay its pro rata share of the cost of the park land. The Town could use this money to help pay for relevant debt service or to pay itself back for the initial expenditure. The actual improvements to the park land are another component of a development impact fee category. Examples include ball fields, ramadas, restrooms, as well as site development costs. In this case the development impact fee could be based on either the incremental or plan-based approach, depending on various factors that would be analyzed as part of the impact fee study. The fees would be used to pay for the new additional park improvements. The recreational facility category usually relates to larger unique facilities. Major examples include the municipal pool, outdoor Olympic pool, and children's pool. The particular methodology to calculating this component would depend on whether the Town planned to spend money on new or expanded facilities or recoup costs for the oversizing of these facilities. The Town has several miles of trails and bike paths. Most of these are on easements. The land value of these easements cannot be included as an existing level of service since they are not owned by the Town. However, if there is a funded program for implementing a purchase program for land, new growth could pay its fair share of this new funded level of service. Improvements paid by the Town can be a candidate for inclusion of a development impact fee component. A current example is the trail development for the Naranaja Town Site. A building component may be practical, particularly if there is a planned expansion to house additional park and recreation staff. TischlerBise 6 Ftiia,FroncJmit&Platt#n.g Concutt cfl Town of Oro Valley,Arizona— Development Fee Feasibility Report Since additional vehicles and related equipment will be needed as more park and recreation provided,spaceis there should be a vehicles and equipment development impact fee component. LIBRARIES The library is an affiliate of the Pima County Library System. The Town library is 25,000 square feet. As the Town grows, the demand for library services will increase. According to the librarian, the Town library is at capacity. If development impact fees were calculated, they would be for land (if more is needed), library space and the collection system. This money would be used to expand capacity. TischlerBise recommends the calculation of a library development impact fee if the Town plans an expansion of library space beginning within the next five to six years. If this is not likely, it will beq uestionable to collect development impact fees for something that is not reflected as needed by the Town in the near term (through the CIP). MUNICIPAL FACILITIES AND EQUIPMENT TischlerBise recommends the calculation of a municipal facilities and equipment development impact fee. The fee amount would reflect new growth's fair share of the capital costs. This category reflects the space and vehicles and equipment needs of general government activities due to growth. This basically reflects administrative space needs for community development, human resources, legal, town clerk, town manager, etc. The Townwide Space Needs Study indicates the increased need for building square footage due to growth. The initial increase will be addressed by the Municipal Operations Center (MOC). There are likely to be three development impact fee components for this category. The first is land. The Town has acquired land for the expansion of the building space. Therefore the cost recovery approach is likely to be used for this component. The building component would probably reflect the plan-based approach since the MOC is in process. The vehicles and equipment component would reflect the vehicles utilized by the general government activities (i.e., Inspection, etc.). The incremental approach is likely. TISChleffliSe° - 7 3St:3s,E C-11i MR :PLinning ,.onS4.tt:ta`:, Town of Oro Valley,Arizona— Development Fee Feasibility Report �t'�.s�. +�.a;�stx .w ,�r #�' .:a.- n`'��.r,9..<: .�. '� ;r'+x.: „��,s�i. --' .� r..:._:.,z.-_.- .- . _ --_ - -•-�--�_�_-.__ __ _ — REVENUE POTENTIAL Given the complexities of the various categories in terms of approach, allocation of increased level of services, potential credits, etc., a "guesstimate" of the development impact fees for each category is not possible. However, it is highly likely that the development impact fee amount, in addition to the current road fee amount, would be at least$1,000 per single family house. An upper range of $4,000 might result. The specific fee amounts by component would be calculated in Phase II. The revenues this could provide, assuming 330 residential units a year is shown below: Residential Units $1,000 $2,000 $3,000 $4,000 330/Year $330,000 $660,000 $990,000 $1,320,000 The above annual amount excludes revenues from the existing road fee and revenues which might accrue from nonresidential. WORK SCOPE The following tasks are recommended to provide a defensible development impact fee study. The tasks are discussed in turn. Task 1: Recommend Land Use Assumptions TischlerBise will review and, if appropriate, update annual projections of population, employment, housing, commercial, industrial and other nonresidential square footage data for at least five years. This will be based on discussions with Town staff. We will prepare a memorandum discussing the recommended land use projections. This task will serve to establish forecasts reflecting population, housing, employment,nonresidential building area and other relevant data. Task 2: Ascertain Demand Factors and Level of Service for Relevant Public Facilities There are several important components to this task that are outlined below. a. Ascertain Demand Factors — The actual demand factors that generate the need for new capital facilities will be reviewed. b. Evaluate Existing Levels of Service —It is important to note that development impact fees should use existing levels of service for the purpose of calculating the new demand, unless there are extenuating circumstances. We will determine the existing level of service by conducting onsite interviews, evaluating the appropriate studies and analyzing relevant local data. TischlerBise S rival,Fconorr3ic Planning Care uttants Town of Oro Valley,Arizona— Development Fee Feasibility Report - ? s �:f'. �'�§��-� �`�: '' i?5?5 %a+ '... _...,.,. C. Determine Geographic Service Area — The appropriate geographic service area for purposes of calculating the development impact fees will be determined. The above subtasks will enable us to ensure that three important development impact fee requirements are met;namely the need, proportionate share and benefit test. Task 3: Evaluate Different Allocation Methodologies TischlerBise will consider different possible allocation methodologies to determine which is the most appropriate for each component of the particular development impact fee. This comprehensive approach will allow maximization of the development impact fees. Task 4: Identify Capacity Needs and Costs This task will culminate in the relevant capital needs and costs due to growth. 1) Long Range Capital Need - In this subtask, TischlerBise will further review the various studies and other relevant data. The discussions may include not only an understanding of the specific costs, but also whether these capital facilities needs were due to normal replacement, catch-up or new demand. The issue of catch-up will be discussed in the context of new development impact paying for higher levels of service than those that currently exist. 2) Review Cost Estimates -In this subtask TischlerBise will review, as relevant, the various capital costs. As part of this subtask, we will ascertain whether the facilities are likely to be financed and, if so, the amortization schedule. As part of calculating the fee, the jurisdiction may include the construction contract price; the cost of acquiring land, improvements, materials and fixtures; planning, surveying, and engineering fees for services provided for and directly related to the construction system improvement; and debt service charges, if the Town will use development impact fees as a revenue stream to pay the principal and interest on bonds, notes or other obligations issued to finance the cost of system improvements. All of these components will be considered in developing an equitable allocation of costs. Task 5: Determine Need for and Calculate "Credits" to be Applied Against Capital Costs A consideration of "credits" is integral to the development of a legally valid development impact fee methodology. There is considerable confusion among those who are not immersed in development impact fee law about the definition of a credit and why it may be required. There are, in fact, two (2) types of "credits" each with specific, distinct characteristics, but both of which will be included in the development of development impact fees. The first is a credit due to possible double payment situations. This could occur when future contributions are TischlerBise — 9 ri d 3 T r ril~trn,¢ PI,'+nn.nu;Corltitta t, Town of Oro Valley,Arizona— Development Fee Feasibility Report made by the property owner toward the capital costs of the public facility covered by the development impact fee. This would be integrated into the fee calculation. The second is a credit toward the payment of a development impact fee for the required dedication of public sites and improvements provided by the developer and for which the development impact fee is imposed. Task 6: Discussion of Preliminary Methodologies and Policy Options The completion of the above tasks will allow us to prepare draft levels of service tables and supporting documentation for each infrastructure category. We will discuss this information with service providers to ensure understanding and acceptance. Policy alternatives will be discussed as appropriate. This should help ensure "sign-off" and prevent time delays. Task 7: Prepare Infrastructure Improvement Plan (IIP) In this task TischlerBise will prepare an IIP which reflects the costs of infrastructure, improvements, real property, financing, other capital and associated appurtenances, equipment, vehicles, furnishings and other items associated with meeting those future needs for necessary public services. This IIP will meet the new State requirements. Task 8: Complete Development Impact Fee Methodology and Calculations The completion of the above task will enable the development impact fee methodology and calculations to be finalized. The maximum justifiable fee that can be charged and conform to fee requirements will be calculated. (The Town will subsequently decide what percentage of the maximum justifiable fee it wants to charge.) Task 9: Conduct Funding and Cash Flow Analysis In order to prepare a meaningful capital improvement plan, it is important to evaluate the anticipated funding sources. In this task, TischlerBise will prepare a cash flow analysis. This calculation will allow the Town to better understand the various revenue sources possible and the amount which would be needed if the development impact fees were discounted. It will also provide a good understanding of the cash flow needed to cover the infrastructure costs both for existing and new development. The initial cash flow analysis will indicate whether additional funds might be needed or whether the capital improvement plan might need to be altered. This could also affect the total credits calculated in the previous task. Therefore, it is likely that a number of iterations will be conducted in order to refine the cash flow analysis reflecting the capital improvement needs. TischlerBise — 10 F,sca; t:fti t,f 73C ?Lanr ng Cor suEitntt J , Town of Oro Valley,Arizona— Development Fee Feasibility Report Task 10: Preparation of Development Impact Fee Report TischlerBise willp pre are a draft report that summarizes the need for development impact fees for the appropriate public facility category, the relevant methodologies employed and documents all assumptions and cost factors. The report will include at a minimum the following information: — Executive Summary — A detailed description of the methodologies used during the study — A detailed description of all level of service standards and cost factors used and accompanying rationale — A detailed schedule of all proposed fees listed by land use type and activity — Other information which adequately explains and justifies the resulting recommended fee schedule Following the Town's review of the draft report, we will make mutually agreed upon changes and issue final copies. TischlerBise's fee report will have flow diagrams clearly indicating the methodology and approach, a series of tables for each activity showing all of the data assumptions and figures,and a narrative explaining all of the data assumptions, sources and the methodologies. The report will be a stand-alone document clearly understood by interested parties. Because of the firm's extensive experience in calculating development impact fees and preparing such reports, we have developed a very succinct written product that leaves a well-understood paper trail. Task 11: Presentations/Meetings TischlerBise will attend two meetings/public hearings to explain the analysis and conclusions. In addition, we will conduct on-site interviews with relevant staff at the beginning of the process to gather data and obtain a detailed understanding of capital needs. Task 12: Liaison Committee (Optional) In our calculation of fees around the country, it has been very beneficial to have a liaison committee. The purpose of this committee is to allow interested parties, designated by the Town, to understand assumptions and raise any questions about the technical demographic, cost, revenue, credit and other data and supporting documentation that is being used in the calculation of development impact fees. This will not be a forum to discuss the political and/or philosophical use of fees. Rather it will be an opportunity for these interested parties to understand the soundness and the reasonableness of the technical development impact fee methodology. We anticipate two meetings with this group. The first would be to discuss the initial data assumptions, after "sign-off" by the client. The second would be to discuss the draft - - ,_ -. , -- - 1 s c e we 1 1 w. Town of Oro Valley,Arizona— Development Fee Feasibility Report report. Utilizing this forum will enable the focus of the public hearings to be on the political and economic issues of implementing fees, not the technical approach. —DELIVERABLES TASK DELIVERABLE Task 1. Recommend Land Use Assumptions Memorandum Discussing Land Use Projections Task 2. Ascertain Demand Factors and Level of Service for Relevant Public Facilities Memoranda as Appropriate Task 3. Evaluate Different Allocation Methodologies Memoranda as Appropriate Task 4. Identify Capacity Needs and Costs Memoranda as Appropriate Task 5. Determine Need for and Calculate "Credits" Memoranda as Appropriate to be Applied Against Capital Costs Task 6: Discussion of Preliminary Methodologies and Polic O tions Memoranda as Appropriate Y p Task 7. Prepare Infrastructure Improvement Plan Infrastructure Improvement Plan(IIP) (IIP) Task 8. Complete Development Impact Fee Methodologyand Calculation Memoranda as Appropriate Cash Flow Analyses Reflecting Capital Task 9. Conduct Funding and Cash Flow Analysis Improvement Plan(s)and Applicable Development Impact Fees Task 10.Preparation of Development Impact Fee Development Impact Fee Report Report p p p Task 11.Presentations/Meetings Appropriate Materials and Graphics Task 12.Liaison Committee (Optional) Appropriate Presentation Material TischlerBise - 13 •� r Town of Oro Valley,Arizona— Development Fee Feasibility Report .. ...- .. _ - - .'..._ — SCHEDULE The time estimated to complete the development impact fee report is approximately four months from the start of Task 1. This assumes prompt receipt of requested materials and data from the Town, as well as allowing sufficient time for Town staff to review the appropriate products. The anticipated four-month schedule is indicated below. TASK MONTH 1 MONTH 2 MONTH 3 MONTH 4 Task 1. Recommend Land Use Assumptions Task 2. Ascertain Demand Factors and Level of Service for Relevant Public Facilities Task 3. Evaluate Different Allocation Methodologies Task 4. Identify Capacity Needs and Costs Task 5. Determine Need for and Calculate "Credits" to be Applied Against Capital Costs Task 6:Discussion of Preliminary Methodologies and Policy Options Task 7. Prepare Infrastructure Improvement Plan(IIP) Task 8. Complete Development Impact Fee Methodology and Calculation Task 9. Conduct Funding and Cash Flow Analysis Task 10.Preparation of Development Impact Fee Report Task 11.Presentations/Meetings Task 12.Liaison Committee (Optional) --• 13 TischlerBise ♦ ,`'ihc.�,Fif"}IIL�?�Ei11�1 i'a't`i;�k'stl;�C:g�,t�n 4e.#�.•�,;#L!e Town of Oro Valley,Arizona— Development Fee F.,.,.easibility Report AirgaeX ---COS T The costs are broken down by category below. Transportation $19,600 Police $11,300 Parks and Recreation $13,600 Libraries $ 6,500 Municipal Facilities and Equipment $13,800 Total $64,800 The optional liaison committee meeting will be priced upon request. TischlerBise's cost will be reflected in the development impact fee amount, which the Town will recapture. QUALIFICATIONS— TischlerBise, Inc., formerly Tischler & Associates, Inc., is a fiscal, economic and planning consulting firm that specializes in development/capacity fees, fiscal impact analysis, and revenue strategies. The firm has been providing consulting services to both the public and private sectors for over 25 years. In this time, TischlerBise has prepared over 600 development/capacity fees and over 500 fiscal impact analyses. Through our detailed approach, proven methodology and comprehensive product, TischlerBise is established as a national expert on development impact fees. Our Arizona development impact fee clients include: Apache Co., Apache Junction, Avondale, Buckeye, Bullhead, Camp Verde, Carefree, Casa Grande, Cave Creek, Cochise Co., Coolidge, El Mirage, Eloy, Flagstaff, Glendale, Goodyear, Lake Havasu City, Maricopa, Navajo Co., Peoria, Phoenix*, Pinal Co., Pinetop-Lakeside, Prescott, Queen Creek, Scottsdale, Sedona, Show Low, Sierra Vista, Snowflake, Springerville, Surprise, Taylor, Tolleson, Tucson*and Yuma. *Private Sector ISC 11Se 14 Fiscal Fcc;ornsc a" Plann,ng C.o<s ut ani, h O CD CD '0alO (Ig ON.% ,„,4„, 0 oa EbS 0am poi. ...„, (.1.6., aii%., m "N sof. � d� v � ):b � N) s 3 � (1/ �(j4) r MEM "Il � N'k 0 y 0 IV • 9 • • • • • IV 0 0 > 1 1 1 1 1 3j 0 0 —I c CD = CD CD 0 vIF W ii < e E ao�i o � � m � o y F-t: 5 .a.....) = " -4. a-. m ED 75 5- cp— (1:1 = 320 (D 3CDaCD ) -DO c� c�CD = �' 3 7:1 CI) �• Z CD �1 %I., oft,. = ...._.� co su m o cX —. �> = CD -n ,,T,, ,-4. ...i. c x � (1)* _03D FIT (93( m O--I. � cp "0 O cp O CD a) -0 E. su CD CD Fff .7.1. 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(1) a) 3 ("D' "fti LI) m m CD — 0-0 K ..?-t. - . _ et CB cp � ig Cl) Cr, Pi* mom PO (i) AMIE 2 TOWN OF ORO VALLEY Page 1 of 1 COUNCIL COMMUNICATION MEETING DATE: October 24, 2007 TO: HONORABLE MAYOR & COUNCIL FROM: David Welsh, Economic Development Administrator SUBJECT: Economic Development Incentive Policy Guidelines for Professional Level Job Creation SUMMARY: At the August 14, 2007 regular Town Council meeting, the Oro Valley Town Council directed staff to draft a policy outlining the use of economic development incentives for the retention and attraction of businesses that create professional level employment in Oro Valley. The purpose of the October 24, 2007 Study Session is to present the draft Incentive Policy Guidelines for Professional Level Job Creation. ATTACHMENTS: 1. DRAFT Economic Development Incentive Policy idelines for Professional Level Job Creation a''d Welsh, Economic Development Administrator azirt4144,),.„,. David Andrews, Town Manager J • TOWN OF ORO VALLEY ECONOMIC DEVELOPMENT INCENTIVE POLICY GUIDELINES FOR PROFESSIONAL LEVEL JOB CREATION GOAL: To provide the Oro Valley Town Council (Council) and Economic Development staff a set of policy guidelines that outline the use of incentives to encourage professional level employment in the Town of Oro Valley (Town), resulting in the diversification of the community's employment and tax base. TARGETED INDUSTRIES: Business sectors outlined in the Oro Valley Community Economic Development Strategy (CEDS) should be the focus when considering incentives. The following sectors are outlined in CEDS: 1. High Tech/Bio-Tech 2. Tourism/Resort/Convention Facilities 3. Other Lodging 4. Other Service Providers 5. Campus-Type Employment Centers and 6. High-End Commercial/Retail Establishments. POLICY GUIDELINES: In certain cases, at the discretion of the Council, the Town may consider using economic incentives in order to attract or retain targeted businesses capable of generating professional level employment to the community. These incentives will only be used when the Town can objectively demonstrate that the addition or expansion of the business would result in increasing the professional level employment of the Oro Valley economy. The following policy guidelines shall be considered prior to the offering of economic incentives: 1) Projects being considered for incentives should emphasize and contribute to the goals and objectives of the Focus 2020: 2005 General Plan and the CEDS. 2) Business attraction projects should add professional levels obs in the targeted industries mentioned above. A professional level job is defined as a job that pays above the prevailing median wage and offers full employee benefits, including employer-paid medical benefits, vacation and sick pay. I:\ED Agreements\Incentives Policy\Economic Development Incentive Policy Guidelines\Job Creation Incentive Policies 101107.doc a x,. • I. • 4 • 3) Business attraction/retention and/or expansion projects should make a substantial capital investment in Oro Valley. 4) Infrastructure improvements benefiting the community and the project should be emphasized over direct financial incentives. Such improvements may include but are not limited to the construction of streets, water lines, traffic signals, storm drainage, parking structures, and parks. 5) All economic incentives should be limited to no more than a 10 year period. 6) In certain instances incentives may be offered in conjunction with annexation activities which are viewed as strategically important. 7) Specific performance criteria for each project should be established for professional job creation. 8) Each project will be evaluated on an individual basis by the Oro Valley Town Council. Changing economic conditions and availability of funds may cause the Town Council to modify, amend, or discontinue any economic development incentive program. Should an incentive be discontinued, the Town Council will honor any incentives committed to before the discontinuance of the program. I:\ED Agreements\Incentives Policy\Economic Development Incentive Policy Guidelines\Job Creation Incentive Policies 101107.doc 3 TOWN OF ORO VALLEY Page 1 of 1 COUNCIL COMMUNICATION MEETING DATE: October 24,2007 TO: HONORABLE MAYOR& COUNCIL FROM: David Andrews, Town Manager SUBJECT: Discussion of Existing Lodging Industry Incentives Policy/Guidelines SUMMARY: At the August 14, 2007 regular Town Council meeting,the Oro Valley Town Council discussed economic development incentives for retail enterprises. Council Member Barry Gillaspie made a motion, which was seconded by Vice-Mayor Helen Dankwerth to not consider tax sharing economic development incentives for the attraction of new retail businesses, the retention of existing retail businesses or the annexation of areas containing existing primarily retail businesses. The motion carried, 6-1 with Mayor Paul Loomis opposed. During the discussion of economic development incentives for retail enterprises, Mayor Paul Loomis stated the Town of Oro Valley had an existing lodging industry incentive policy. The purpose of the October 24, 2007 Study Session is to review the existing Lodging Industry Incentives Policy/Guidelines, which has not been updated since 1999. ATTACHMENTS: 1. (R) 99-79A Lodging Industry Incentives Policy/Guideline D David Andrews, Town Manager RESOLUTION NO. (R) 99 - 79 A A RESOLUTION OF THE MAYOR AND TOWN COUNCIL OF THE TOWN OF ORO VALLEY, ARIZONA, ADOPTING A LODGING INDUSTRY INCENTIVES POLICY/GUIDELINE. WHEREAS, the Town of Oro Valley has identified expansion of the lodging industry as highly g y desirable and well supported by the community, and; WHEREAS, the existing Community Economic Development Strategy states that one major action step desired is the development and adoption of a Business Incentive Policy, and; WHEREAS, the existing Community Economic Development Strategy further states that the Town may from time to time wish to use some form of incentives to attract or retain desirable businesses, and; WHEREAS, the Town of Oro Valley recognizes the importance of developing guidelines that include similar considerations for existing businesses as those that apply to the attraction of new desired businesses; NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND TOWN COUNCIL OF THE TOWN OF ORO VALLEY, ARIZONA: The adoption of Exhibit A, Town of Oro Valley Lodging Industry Incentive Guidelines, attached herewith • • • • ' • "• •• " •= = •• === . :. - PROVIDES EXAMPLES OF ITEMS THAT A LODGING OPERATOR/OWNER MAY REQUEST CONSIDERATION FOR. PASSED, ADOPTED AND APPROVED by the Mayor and Town Council of the Town of Oro Valley, Arizona, thisclay of4.%4 19� \. ° TOWN OF ORO VALLEY, ARIZONA Paul H. Loomis, Mayor ATTEST: fria,thej et,t44/4:, Kathryn Cuveller, Town Clerk ' 'ROVED AS TO FO ' - ///' Dan L. Dudley, Town Attorney Exhibit A TOWN OF ORO VALLEY LODGING INDUSTRY INCENTIVE GUIDELINES Qualifying Facilities. The following type of facilities may qualify for the incentive(s) identified in these guidelines: hotels/motels/resorts and other businesses that derive more than 50%of their revenues from providing lodging rentals to transient visitors. The Town Tax Code defines transient lodging as lodging provided for not more than thirty(30) consecutive days. The lodging operator/owner must initiate consideration for the incentive(s)through a written request to the Town Manager. Bed Tax. Increase the Bed Tax from 1%to 2%, 3% or 4%. Continue the MTCVB revenues at the current.75%of the first one percent. Retain the existing .25% General Fund revenue at .25%. Provide up to .75%of the second one percent as a potential incentive for lodging operations that qualify. Allocate the remaining Bed Tax funds as determined by the Town Council. The enclosed Bed Tax Rate Distribution spreadsheet indicates the distribution of the higher Bed Tax rates. 1.0 % 2.0 % 2.5 % 3.0 % 3.5 % 4.0 % General Fund .25 % .25 % .25 % .25 % .25 % .25 % MTCVB .75% .75 % .75 % .75 % .75 % .75 % Incentive .75 % .75 % .75 % .75 % .75 % Designated Programs .25 % .75 % 1.25 % 1.75 % 2.25 % Total 1.00% 2.00% 2.50% 3.00% 3.50% 4.00% Sales Tax on Construction Materials. Currently the Town of Oro Valley charges a 2% Sales Tax on all construction materials. As previously indicated major resort/lodging facilities are investment intensive given that in many cases average room construction costs can reach from $ 100,000 to $ 167,000. This high per room construction cost is a significant factor in identifying investment capital,the total investment commitment for a resort can easily be from $ 35,000,000 to much larger amounts. Given the importance to Oro Valley in attracting and encouraging expansion of resort/high end lodging facilities any inducement that results in investors looking at this community more favorable should assist in fulfillment of a major economic strategy. To encourage high investment intensive resort/high end lodging facility construction in Oro Valley the following incentive is proposed. A rebate of the Sales Tax on Construction Materials for lodging and related facility construction be made available for qualifying projects: Sales Tax Oro Valley Investment Amount Rebate Retains % >$ 5,000,000<$ 10,000,000 0.50% 1.50% >$ 10,000,000<$ 17,500,000 0.75% 1.25% >$ 17,500,000<$25,000,000 1.00% 1.00% >$25,000,000<$32,500,000 1.25% 0.75% >$32,500,000<$40,000,000 1.50% 0.50% >$40,000,000<$47,500,000 1.75% 0.25% >$47,500,000 2.00% 0.00% Development Agreement. A written document, a Development Agreement,will be created wherein any/all incentive(s)provided from the Town of Oro Valley to the lodging operator/owner will be separately identified. Included in the Development Agreement will be the length of time that agreement will be in effect between all parties. Sunset Clause. The Development Agreement created and entered into by all parties will be the governing document as to terms,considerations, and all other specifics. The revenue sharing for the lodging operator contained within the Bed Tax incentive shall be in force for a period of from five(5)to no more than ten(10)years. The revenue sharing period may be extended or re-authorized as new qualifying investments are made. Each separate action must be preceded by a formal request from the.lodging operator. 4.1 L 'O V 01 01 L Z a N ® ® i :ii' ....ma I- O sem 14 .r■• 10 ■... CO O III X ■if.;i.iiis.ss..r■...■■r...t.sf 145 O .sss.a..■s.sssss....■■..ss..0 ss■sras■rsss■ssr....rrss.sss• O sas■sssss.■s..ss.....rs■.■s.* 00 riss■sss.■ssssss■■.rssss■srs1 ■.. O ................. ........� ■arMitl...... ..■■sa s..... . 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W In ******************************************** N ***.'**************************************** 0 O M N 0 in oM N N Arizona Community's Comparison of Bed Tax Rates Comparison of Sales & Bed Tax Rates Property Sales Tax Bed Tax Bed Tax Town/City Tax Rate Rate Collections 1 Apache Junction No 2.00 % 2.00 % N/A 2 Avondale Yes(P&S) 1.50 % 2.00 % N/A 3 Benson Yes (P) 2.50 % 2.00 % N/A 4 Bisbee Yes(P) 2.00 % 2.50 % $ 36,778 5 Buckeye Yes(P&S) 2.00 % 0.00 % N/A 6 Bullhead City No 2.00 % 3.00 % $ 104,048 7 Camp Verde No 1.00 % 3.00 % N/A 8 Carefree No 2.00 % 3.00 % N/A 9 Casa Grande Yes(P&S) 1.80 % 2.00 % $ 128,773 10 Cave Creek No 2.00 °/0 4.00 % N/A 11 Chandler Yes(P&S) 1.50 0/0 2.90 % $ 871,000 12 Chino Valley No 2.00 % 0.00 % N/A 13 Clarkdale Yes(P&S) 2.25 % 2.00 % N/A 14 Clifton No 2.00 % 0.00 % N/A 15 Colorado City Yes(S) 2.00 n/o 0.00 % N/A 16 Coolidge Yes(P) 2.00 % 3.00 % N/A 17 Cottonwood No 2.20 % 2.00 % $ 56,684 18 Douglas Yes(P) 2.50 % 2.00 % $ 31,985 19 Duncan Yes(P) 2.00 % 0.00 % N/A 20 Eagar Yes(S) 3.00 % 3.00 % $ 10,899 21 El Mirage No 3.00 0!0 0.00 % N/A 22 Eloy Yes(P&S) 2.00 % 2.00 % N/A 23 Flagstaff No 1.00 % 2.00 % $ 3,335,957 24 Florence Yes(P) 2.00 % 2.00 % N/A 25 Fountain Hills Yes(S) 1.20 % 3.00 % N/A 26 Fredonia No 2.00 0!0 0.00 % N/A 27 Gila Bend Yes(P) 2.50 % 2.00 % $ 23,875 28 Gilbert Yes(S) 1.00 010 3.00 % N/A 29 Glendale Yes(P&S) 1.30 % 3.00 % N/A 30 Globe Yes(P) 1.50 % 5.00 % $ 158,804 31 Goodyear Yes(P&S) 2.00 % 2.00 % N/A 32 Guadalupe No 2.00 % 4.00 % N/A 33 Hayden Yes(P&S) 2.00 % 1.00 % N/A 34 Holbrook Yes(P&S) 3.00 010 2.00 % N/A 35 Huachuca City Yes(P) 1.00 % 0.00 % N/A 36 Jerome Yes(P&S) 3.00 % 0.00 % N/A 37 Kearny Yes(P) 2.00 % 3.00 % N/A 38 Kingman Yes(S) 2.00 % 2.00 % N/A 39 Lake Havasu City Yes(P) 2.00 % 3.00 % $ 416,963 40 Litchfield Park No 2.00 % 2.00 % N/A 41 Mammoth Yes(P) 2.00 % 0.00 % N/A 42 Marana No 2.00 % 3.00 % N/A 43 Mesa No 1.50 °/m 2.50 % $ 1,432,186 44 Miami Yes(P) 1.50 % 0.00 % N/A Arizona Community's Comparison of Bed Tax Rates Comparison of Sales & Bed Tax Rates Property Sales Tax Bed Tax Bed Tax Town/City Tax Rate Rate Collections 45 Nogales No 1e25 0/0 4.00 % $ 151,558 46 Oro Valley No 2.00 0/0 1.00 % $ 164,827 47 Page No 2.00 0/0 2.00 % N/A 48 Paradise Valley No 1.20 % 3.00 % N/A 49 Parker No 2.00 % 3.00 % N/A 50 Patagonia No 3.00 % 3.00 % N/A 51 Payson Yes(P&S) 2.00 % 0.00 % $ 1 $ 67,829 52 Peoria Yes(P&S) 1.50 0/0 3.50 % $ 92,520 53 Phoenix Yes(P&S) 1.30 Q/o 3.00 % $ 18,888,000 54 Pima Yes(P) 1.00 % 0.00 % N/A 55 Pinetop-Lakeside No 2.50 A/o 0.00 % N/A 56 Prescott Yes(P&S) 2.00 % 2.00 % $ 208,329 57 Prescott Valley No 2.00 % 2.00 % N/A 58 Quartzsite No 2.00 % 0.00 % N/A 59 Queen Creek No 1.00 0/0 1.00 % N/A 60 Safford Yes(P) 2.00 % 3.00 % $ 86,754 61 Sahuarita No 1.00 % 2.00 % N/A 62 St. Johns No 2.00 % 0.00 % N/A 63 San Luis No 2.50 % 0.00 % N/A 64 Scottsdale Yes(P&S) 1.40 % 3.00 % $ 6,877,314 65 Sedona No 3.00 % 3.00 % N/A 66 Show Low No 2.00 % 0.00 % N/A 67 Sierra Vista Yes(P) 1.50 % 4.00 % $ 284,480 68 Snowflake No 2.00 % 0.00 % N/A 69 Somerton No 2.50 % 0.00 % N/A 70 South Tucson Yes(P) 2.50 % 2.00 % $ 7,437 71 Springerville No 3.00 % 1.00 % $ 8,354 72 Superior Yes(P) 2.00 % 0.00 % N/A 73 Surprise Yes(P&S) 2.00 % 1.00 % N/A 74 Taylor No 2.00 % 0.00 % N/A 75 Tempe Yes(P&S) 1.70 % 2.00 % $ 1,524,679 76 Thatcher Yes(P) 2.00 % 3.00 % N/A 77 Tolleson Yes(P&S) 2.00 % 2.00 % N/A 78 Tombstone Yes(P&S) 2.50 0!0 3.00 % N/A 79 Tucson Yes(P&S) 2.00 % 4.00 % $ 1 $ 6,409,172 80 Wellton No 2.50 % 0.00 % N/A 81 Wickenburg Yes(P) 1.00 % 0.00 % N/A 82 Willcox No 2.00 % 4.00 % $ 130,523 83 Williams Yes(P&S) 3.00 0/0 1.25 % $ 278,556 84 Winkelman Yes(P) 2.50 % 0.00 % N/A 85 Winslow Yes(P) 3.00 % 2.00 % $ 71,790 86 Youngtown No 2.00 % 2.00 % N/A 87 Yuma Yes(P) 1.70 % 2.00 % $ 2,190,493 Yes/Property Tax 50 57,00 No/Property Tax 37 43.00 0/0 Arizona Community's Comparison of Sales & Bed Tax Rates Distribution of Data I. Distribution of Bed Tax Rates. Total of 87 Community's. Number of Community's Using 0.00 % Bed Tax 25 290/0 Number of Community's Using Up To 1.00 % Bed Tax 5 6% Number of Community's Using > 1.00% - 2.00 % Bed Tax 26 30% Number of Community's Using > 2.00 % - 3.00 % Bed Tax 23 26% Number of Community's Using > 3.00% - 4.00 % Bed Tax 7 8% Number of Community's Using 5.00 % Bed Tax 1 1% 87 100% II. Nearby Community's (within 70 miles). Local Property Tax Benson 2.00 % Yes - Primary Casa Grande 2.00 % Yes - Primary& Secondary Eloy 2.00 % Yes - Primary& Secondary Marana 3.00 % None Nogales 4.00 % None Sa h ua rita 2.00 % None Sierra Vista 4.00 % Yes - Primary South Tucson 2.00 % Yes - Primary Tucson 4.00 % Yes - Primary& Secondary Willcox 4.00 % None AZ Community Comparison Incl Property Tax 7/27/99 ai I, N h in 0000 0 CO C100MNNt0 o1NNC1 CONNNN03 M N N N N M rNhhrlh NNhhtON Nhh0tO ip 00000 .1 00 10o .an 4 I C4 .4744 C174MMrlC1N -+ MMMNet .-4c. othriMMooh r0- 1r1MM .-1o100 .4 M M .-i 00 .-1 rM M M .-1 M rt M M LAM LA .� M M h LA r♦ M M O h } et O M h et N et .4 h M C1 03 NNtO N 00 N et firilet3 rl00 .� h00 et 41,' hM o0tDMC100 '� M01.-4 0 N C1 N .O.4 to .121 0.1 et N O M M et LA .-i 1 et rel ct et et h e!' h h et iT M h M 1.4 M t0 � � hh O .-Iet � 00 M � � � MM O r-r N M N C1 . in-.4 .-i ri N N iA-46 46 rl 46 46 46 46 14 rt 401-ill 46 ri rl 401-46 ilk rl N ill-ii!-40V.4 N N ill ill-ill-ri N 7 N r-i N LA ill'in-46 ill- AA. 46 46 ill+ 401 iA. 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(42 !i:„ISIINZ,,611.„ itt*Maraliniti: ACµr+{f•T•S( .4:^:. .:iiii\>.'`•'3r{ryi.'y:iii .e. 4:;S: 1$114"' ..r UVI ED1\3 Memorandum To: The Honorable Mayor and Town Council From: Tory Schlievert, Management Assistant Date: 10/29/2007 Cuvelier, Kathryn Re: Additional Impact Fee Information When making his presentation to Council at the October 24th Study Session, Paul Tischler of TischlerBise left behind some additional information about development impact fees. For those of you who were unable to attend the Study Session, the information attached to this memo answers some basic questions about the advantages and limitations of development impact fees. Consideration for continuing with Phase II of the development impact fee study is on the agenda for November 7, 2007. Should the Council choose to proceed with Phase II, TischlerBise will be asked to create a sound methodology for formulating development impact fees in the areas selected by Council. They will use these methodologies to calculate legally defensible impact fees for the Town that will require new growth to pay its proportionate share of capital costs. If you have any additional questions please let me know. Attachments: 1. "20 Points to Know About Impact Fees," by Paul Tischler 2. TischlerBise Fiscal & Economic Newsletter No. 49 CC: David Andrews, Town Manager Jerene Watson, Assistant Town Manager Department Heads Division Administrators 1 i A PLANNING ,,,,, „,,, ,. i.:<:''5'''',;;*',.,'';"''',af ,,.,.: , $-- Points .., ,i ,.:,. � -- , ,-`f O/jN` to Know About Dear Reader: We are pleased to present this article,originally act IF e e s published in Planning magazine.TischlerBise is a fiscal,economic and planning consulting firm by Paul S. Tischler specializing in: _ y TischlerBise, Inc. ❑Fiscal Impact Analyses LI Impact Feq, Tmpact fees are an increasingly popular revenue D Capital Improvement Programs source to local governments. While there are a LI Revenue Strategies number of advantages to impact fees and related ❑Market and Economic Analyses D Growth Polic Studies exactions, there are limitations.As communities Y ❑Fiscal Software and development groups become more sophis- ticated about what should be expected from a TischlerBise has never had to defend any of our 600+ thorough act fee study, theywill become impact fees in court. However,when TischlerBise has g p y critiqued impact fees for the private sector,the fees more critical and their level of expectation will have been reduced or eliminated. We believe this increase. This article briefly notes 20 nontech- public and private sector experience is invaluable. nical points of which one should be aware. The infrastructure categories for which TischlerBise hasared re impact fees include the following: r.` Impact fees are viewed as a free revenue p p p • • Schools •Fire source without any constituency requirement. •Roads 'EMS Impact fees maybe voted in without an •Water •General Government p election, •Wastewater Facilities usually apply only to new development (which •Stormwater •Libraries does not yet exist) and are perceived to exclude •Parks and Recreation •Transportation current taxpayers. Therefore, impact fees are a •Open Space and Trails •Electric fairlypainless and free revenue source since •Police/Sheriff •Jail/Detention Center there is no obvious increase in cost to current TischlerBise has conducted impact fee(and other voters. one-time fee)studies in the following states: z •Alabama •Montana -4. Impact fees pertain only to new capital •Arizona •Nebraska facilities which reasonably f payer. benefit the •Arkansas •Nevada •California •New Mexico Many people still believe that impact fees can •Colorado •North Carolina be utilized for capital facilities which benefit •Delaware •Ohio •Florida •Oklahoma existingresidents. However, expenditures •Georgia •Rhode Island utilizing impact fees must show a reasonable •Idaho •South Carolina benefit to those paying. Under some statutes, an •Illinois •Texas existingfacilitycan be included in an impact fee •Iowa •Utah •Maryland •Virginia calculation if it was oversized to serve the new •Mississippi •West Virginia development. •Missouri •Wisconsin fees; „4�” f�: � The impact collected must be spent Please contact TischlerBise at 800-424-4318, www.tischlerbise.com,or info@tischlerbise.com within a reasonable time period. to obtain further information,receive the reprint, "Impact Fees -Understand Them or Be Sorry," A mandated or general rule-of-thumb is about six TischlerBise Fiscal&Economic Newsletters,or to years, although ten years may suffice. In most discuss TischlerBise's impact fee and other consulting cases the jurisdiction must have a good idea that services. the money will be spent within the reasonable (continued on next page) 0 time period for a specific facility. This ` Planning departments are probably the encourages capital improvement programs to be most appropriate center for managing impact fee prepared. activity. s r The electorate may think that impact fees The calculation of impact fees is closely afor all new ca italfacilities, thereforerelated to land use and rational nexus. Planning willp yp negating the needfor hi her taxes. departments are generally the most appropriate g g g center for managing this activity. Impact fee This expectation by the electorate could lead to calculations are not primarily an accounting or long term negative political consequences. Even engineering exercise. Because rational nexus if impact fees are eligible to pay for all capital requires one to show a benefit of the impact fee to facilities, which is highly unlikely, they will not the capital facility or the particular service, land negate the need for higher taxes due to operating use issues are very important.Also,projections, costs. usually provided by planning departments are very important. In jurisdictions where there is an I Educate the electorate on what impact active planning department, this department will II fees do and do not accomplish. probably be the most appropriate center for managing impact fee activity. This should not preclude other departments, such as finance and �f k° Educate the electorate on what impact fees budget, from playing an integral part. do and do not accomplish. Impact fees relate solely to capital facilities I Current levels of service must for new development. They do not pertain to be met rehabilitation,retrofitting, or replacement of existing capital facilities.Also, the greater cash cow of operating expensesmust be explained to `..: Current levels of service must be met p g the electorate. Otherwise, their expectations will unless there is a plan to address existing be artificially high. deficiencies. There is a tendency for communities and their The amount of impact fees must beconsultants to assume the adopted level of service politically acceptable. for the impact fee study.You cannot extract a The amount that is politically acceptable will vary higher level of service and commensurate fee by state and jurisdiction. If an impact fee solely from new development unless there is a of$1,500 is the politically acceptable amount, plan to address deficiencies generated by the while the maximum justifiable is $8,000, it may current population. not make sense to pursue some impact fees. This depends on how much revenue can be obtained by I Do not rely solely on departmental impact fees and/or other sources. assumptions. tlx3 The community should be growing. Y. Do not rely solely on departmental A 3-5% growth rate may allow the community to assumptions; instead, obtain your own raise a reasonable amount of revenues and also background information. show the need for additional capital facilities due Because may departmentsnot be familiar with to growth.A very low growth rate will generate p the requirements of impact fees, they are unlikely minimal revenues and new capital facilities may to clearlyunderstand the difference between not be needed in the foreseeable future for most adopted and existing levels of service, service services. delivery areas and their relationship to existing .,. What are the realities of charging and new capital facilities and several other nonresidential development. g issues. If the right questions are asked, they p should be able to provide the information. The In many states the jurisdiction may not discrim- inate fail-safe way to ensure this is to obtain hate between different types of land use for the our own information from the departments. same service. In one county, a road impact fee y was not implemented because the officials did Anal ze the ca ital im rovement bud et. not wish to add another fee to nonresidential y p p g development. This particular Jurisdiction wanted The potential impact fee revenues will need to to attract as much nonresidential development as be related to the capital improvement budget or possible. The question of charging nonresidential capital improvement element. It is important for development should be raised and answered near the analyst to be familiar with this budget and its the outset of the study in order to avoid extra validity, both short and long term. work if the answer is no. Be familiar with the possible geographic r Be aware that some new home buyers are service areas in order to comply with rational already residents within theJ jurisdiction. nexus. In some jurisdictions 50-70% of new home As the development community becomes more buyers are trading up within the same concerned about pass-throughs due to tighter jurisdiction. The reality is that these people have markets and fiscal constraints, they are more been paying for capital facility needs through likely to look at the geographic service areas their existing tax base from the time they were in and their relationships to their project. There is a the community and are now being asked to pay a tendency for jurisdictions to have larger service second time.As a point of information, elected areas than may be appropriate. The service areas officials should understand this. will vary by type of activity. ,�- Decision makers should be aware of the f0: Can a jurisdiction provide the needed "intergenerational equity" issue a negative . capital facilities? f impact o aspect im fees. p The recommended impact fees should have some In many cases, impact fees mark the change from relationship to what the jurisdiction can actually intergenerational equity to site-specific equity. provide. Whether it is due to time lag, backlog Many of us and almost all of our parents lived in of existing facilities, debt ratios or political a community where the capital facilities were constraints, the impact fee work will be paid as part of the regular tax burden. The use of diminished if the jurisdiction cannot provide the impact fees and other exactions means that those needed capital facilities (assuming that impact who move into a community are now buying into fees do not pay 100% of the new cost). capital facilities with a one time fee. Beware of granting credits. Educate elected officials on In some state statutes, the future tax payments impact fees. of a house or nonresidential property which are utilized for debt service of a particular capital a : . to, Educate elected officials on impact fees. facility will need to be credited on a discounted basis against the impact fee amount. Even in For many elected officials the term impact fee states where this is not required, the "spirit" of means a new revenue source that can be utilized impact fees is to avoid any double payments. in tight times. The only thing they may know Therefore, credits will be granted in most cases. (continued on next page) about impact fees is that existing taxpayers will I Garbage In —_ not have to pay them. However,there are II Garbage Out. important pluses and minuses to the use of impact fees which have been noted above and which ltftt should be conveyed to elected officials. Garbage In Garbage Out. The above 19 points focus more on the non- Including a public/private sector technical issues; however, they allude to a advisoryI groupmayease the number of technical issues,such as rational nexus.As noted, communities and development acceptanceprocess. p p groups will become more sophisticated regarding the substantiation of impact fees. The relation- It),, ‘,. Including a public/private sector advisory ship of level of service, geographic areas, capital group may ease the acceptance process. improvement budgets, and comprehensive plans Usingthistype of groupeducates everyone on are all critical in devising a solid impact fee important study. Perhaps most is the need for the the openness of the process and reasonableness y p of the data as well as providinga means to reveal, analyst to "get his feet dirty"by reviewing the local data to ensure that it is valid to be included before the end of the study, any major oversights which mi ht have been made. TischlerBise in the study itself.An adopted recreation plan g does not necessarilymean the data is valid for recommends this process to its clients and in over 90% of the cases it is acce ted. B corrin to impact fee calculations. Overcrowded school p y g conditions mayneed to be reflected in the level closure with such a group prior to the final report, there are fewer acrimonious hearingsand less of service definitions. Garbage in will result in g chance of litigation. garbage out. TischlerBise CALL TOLL-FREE (800) 424-4318 COST OF GROWTH SERVICES Please send the following: 4701 Sangamore Road,Suite S240 U Reprint"20 Points to Know About Impact Fees" Bethesda,MD 20816 (800)424-4318•Fax(301)320-4860 U Reprint"Impact Fees—Understand Them or Be Sorry" info@tischlerbise.com ❑ Excerpts from:ICMA IQ Report"Introduction to Infrastructure Financing" www.tischlerbise.com ❑ Recent Fiscal&Economic Newsletters Also:Pasadena,CA Information about TischlerBise Consulting Services: U Fiscal Impact Analyses Name U Impact Fees U Capital Improvement Programs Title Agency Telephone U Revenue Strategies U Growth Policy Studies Street U Market and Economic Analyses ❑ Fiscal and Economic Software City State Zip No.49 el _ a f -7,w4 „„: .....„.,,., ...___,, K&y � ; ! . itSyg Ti _ _ -_ -__ NJ FE 5 I . = _E T T E Fl Cost of Land Use Fiscal Impact Analysis IN THIS ISSUE The City of Lawrence, Kansas, sought to selected land use prototypes without regard to geo- understand the fiscal impact of different types and graphic location,it focuses on average costing. Fiscal Impact Approaches patterns of development. To do this, the City The second type of fiscal impact analysis con- retained TischlerBise to conduct two separate fis- ducted for the City of Lawrence was a Fiscal TischlerBise specializes in fiscal impact cal impact analyses.The first is a Cost of Land Use Impact Analysis of Development Scenarios.This analysis and impact fees.A fiscal impact analysis Study,which examines the fiscal impact of proto- analysis tests different mixes of land use as well considers all relevant revenues,operating expens- as development patterns and identifies future rev- es and capital costs,while an impact fee reflects What Type of Land Use enue and costs needed to support growth in the only capital facilities related to growth.Total cap- Pays for Itself? City. ital facility costs are usually only 10%-20%of a Major results from the Cost of Land Use fis- jurisdiction's General Fund.In this issue we focus typical land uses on a jurisdiction's budget.In cal analysis for the City of Lawrence are summa- on the two prevalent types of fiscal impact stud- other words, it seeks to answer the question, rized in Figures 1(below)and 2(page 4)for both ies and use our work in the City of Lawrence, "What type of land use pays for itself?"Since this residential and nonresidential land uses. Kansas,as a case study to illustrate both types. type of analysis focuses on the fiscal impact of (See Land Use,p.4) - Different Types of Fiscal Impact Figure 1.Residential Land Use Prototypes Studies Provide Different Annual Net Results–Residential Prototypes Perspectives on the City of Lawrence Cost of Land Use Fiscal Analysis(Per Residential Unit) Fiscal Impacts of Growth SF-Suburban SF Urban Duplex Apartment 0 Cost of Land Use Fiscal Impact Analysis.ysi s. �� Kz "� . ��� ,� t -Iv This first study shows the annual fiscal surplus or($50) 26 :� � J � fi',s x deficit from specific types of land uses.This ($100) tt47-41110:* snapshot approach helps communities under- k. ; r ;-M ($150) ------ _ .__ _ --_ __-.___ _ ._--_-_ __ ------w____ - __ _ - i. stand how different ferent land uses currently impact fi�Efuo VS- them fiscally.Mt($200) _ -- _-- _ _ _- _ --- _ _. _ _--_ — _ _-._ N , Fiscal Impact Analysis of Development : . ($250) _..-_....._._....__ __._.. .-._......__._....... __...._.._...._._..____.. j� ;���� Scenarios.This second type of analysis focuses AO 9., ;Of, � , on the case study-marginal approach and exam- ($300) ���z_ .•;"17::',O f t erevenues costsgenerated mixof �' r �: ��. s ines theand e ra d by sy y R $,f �.'mr'G�s�4T 17 *'tx land use types and development patterns under ($350) __.... _..._...._.._. _..._........._...__.._..__._.._..... ($341) different growth scenario assumptions.It includes ($400) capital facility forecasting and can reflect geo- graphic subareas.TischlerBise conducted both types of studies for Lawrence,Kansas,and this Two Approaches Fiscal Impact Analysis of issue includes an article on each. Impact Fees. The third article pertains to for One Impact Fee Development Scenarios impactfees and presents one example of how two different impact fee methodologies were used for TischlerBise routinely considers all three A Fiscal Impact Analysis of Development one infrastructure category(fire)in Lake Wales, impact fee methodologies(cost recovery,incre- Scenarios determines whether revenues gener- mental and plan-based)for most impact fee cate- ated by new growth under different land use Considering Different Impact Fee gories.This is possible even if legislation requires assumptions are sufficient to cover the result- Methodologies Can Result in a capital improvement program.In this article we ing costs.The methodology focuses on the case Enhanced Revenues briefly note one example in Lake Wales,Florida, study-marginal approach. a growing community with a peak population of After understanding how different types of over 20,000. land uses affect the City's fiscal condition(see Florida.One hallmark of our impact fee work is To encourage development in the historic area, the above article, "Cost of Land Use Fiscal that we consider all possible impact fee method- where the City's main fire station has capacity,a Impact Analysis,"for further detail),the City of ologies and discuss the potential tradeoffs with cost recovery approach was used. In the fast Lawrence wanted to understand the overall fis- clients. This approach can yield substantial rev- enue differences to the client. (See Two Approaches,p.2) (See Fiscal Impact Analysis,p.2) BETHESDA, MD TOLL-FREE (800) 424-4318 PASADENA, CA. 2 Fiscal Impact Analysis of Development Scenarios Average Annual Net Fiscal Impacts-Scenario Comparisons (continued from P 1 City of Lawrence Fiscal Impact Analysis cal impacts of a mix of land uses for four sub- SE SE South of South of Airport West of West of areas over the next twenty years. Residential Industrial Wakarusa Wakarusa TND Industrial K-10 K-10 TND By comparing multiple land use scenarios 0% ,................ _-•_- within a geographic subarea,the City is better �.�, ($1,000) -__... _ ...___..._... .._.- :;; ._. .... ..........__ - able to understand how different land use mixes and forms affect the City's fiscal bottom line. ($2,000) --- ----- --- ------ -- 3.; Growth Areas and Scenarios ©a($3,000) -- - ----- _.___��.---- Four geographic subareas were evaluated as © ($4,000) -- -------- ---__ - - ------ - --- ------ -- part of this fiscal impact analysis. Suburban ($5,000) -w---- -- ------------ --- -- -- -- style development versus traditional neighbor- ($6,000) ..._-------.__..___._.._...._..._...____.._._-------......-.__. ..__...__._.... ___-_.----._..__._._._.__.._._.___.._. hood design(TND) was evaluated in two sub- -- �"--� • areas; more residential versus industrial in a -.-.._...___....--_--. __ _--___._._....._.._..... _.... . ($7,000) _...... _._.. third subarea and more business park develop- ■Years 1 to 10 ®Years 11 to 20 ■Years I to 20 ment in a fourth area. ($8,000) Traditional Neighborhood Cumulative Net Fiscal Impacts-Operating vs.Capital-Scenario Comparison Design(TND)Generated More City of Lawrence Fiscal Impact Analysis Favorable Fiscal Results Than SE SE South of South of Airport West of West of Residential Industrial Wakarusa Wakarusa TND Industrial K-10 K-10 TND Suburban Type Residential $60,000 $40,000 -_...__...._.. _..__..._...........- - -_ .._.._.. ....._...---____._._. _--•--..._.._._..._-•---.___ -.. Average Annual Net Fiscal Impacts $20,000 _.._._.-- _---...__ _..__.___--..._._.-..___ - III As shown on this page,average annual net $0 •----al,w,;61._... - �....__- ��w_,.. _ _ -. -,4 ti , ate deficits are generated over all time periods for 41 � .F ($20,000) -. _....�_._ 0 cJE ' t - key c _ -- all subareas/scenarios.Net deficits are higher g �f K 4g in the last ten years of development for all ($40,000) --- r� ,,u, ;:ii_ •,.''',3 '4'. areas.This is due to the cumulative nature of . , ,c _ tw ($60,000) _ - __-... ------- debt service payments as well as the number ' -- II of facilities—and associated operating costs— ($80,000) T --- ---- —---- y -~----. i --- required in the latter half of the analysis peri- ($100,000) • $ • od. As shown, revenues generated are insufficient to cover the required costs. ($120,000) ` _..__...-_.__... _._._._...___........___....._._._...._.---_._-_.._..-_.__-___...._ Average annual net deficits over the 20-year ($140,000) period range from a low of$967,000 to a high •Operating lia Capital ■Combined of over$4.7 million. Cumulative Net Fiscal Impacts Another way of understanding the fiscal Two Approaches for One Impact Fee sis for the two service areas.The cost allocation results is to look at the operating versus capi- (continued from p.1) for residential development was based on actual tal budget. The fiscal system designed by calls for service. Residential development growth,northern portion of the City,a new station accounts for approximately 54%of the demand. TischlerBise for this assignment forecasted a is needed to serve new development,andplan-capital budget that is not fiscally constrained. P a Nonresidential was also charged a fire impact fee. based approach was used.The cost per person is It shows the capital costs that should be 76%higher in the newly developing area. incurred to serve new growth. Plan-Based and Cost Recovery The table below summarizes some of the key Methodologies Were Used components used in the residential demand analy- Capital Expenditures Drive the Net Deficits Figure 1.Fees by Service Area:Lake Wales,Florida } j Y�..S /� Sout JxEr£ ''''''''4:448-'-"7 � :4r3 31 North ;3Y 3 t... While all subareas/scenarios generate cumu- (Historic ;rearr"-- Ff xta :(Greenfield Area 5''''-------96c,,, lative net combined deficits, the overall net Fee Method Incremental Expansion Plan-Based deficits are a result of deficits to the capital Square Feet of Station 16,300 4,100 funds. In fact,there are net surpluses generat- ed to the operating budgets in all but one sub- Fire Station Cost 1,793,000 651,000 area/scenario(Airport Industrial). Peak Population 17,066 3,511 (See Fiscal Impact Analysis,p.4) Cost Per Person $56.39 $99.50 Fiscal & Economic Newsletter No. 49 Toll-Free (800) 424-4318E r 3 ischlerBise News Listed below are some of our new clients since our last Fiscal&Economic Newsletter. Speaking Engagements American Planning Association Impact Fee and Impact Fee National Conference Feasibility Assi nments: Salisbury,Maryland • g Carson Bise and Julie Herlands presented Snow Hill,Maryland on:Voluntary Mitigation Payments.For Daphne,Alabama Belgrade,Montana jurisdictions that lack impact fee authority, Orange Beach,Alabama Gallatin County,Montana this approach may be very appealing.The Baldwin County,Alabama Manhattan,Montana approach will calculate the new capital Apache Junction,Arizona Missoula,Montana costs due to growth. Eloy,Arizona North Las Vegas,Nevada Glendale,Arizona Cabarrus County,North Carolina Voluntary Mitigation Payments May Be a Maricopa,Arizona Orange County,North Carolina Good Alternative if Impact Fees Not Allowed Navajo County,Arizona Lebanon,Ohio S rin erville,Arizona Pickerington,Ohio P g National Impact Fee Roundtable Surprise,Arizona Aiken County,South Carolina Siloam Springs,Arkansas Anderson County,South Carolina • Julie Herlands and Yvonne Dawson Cache Count Utah presented on:Cash Proffers Butte County,California y' • Carson Bise presented on:Economic El Centro,California Sussex County,Virginia Impact of Homebuilding and Rancho Cucamonga,California Calculating Long Range Operating and Suisun City,California Infrastructure Needs with Fiscal Models Fiscal Impact Assignments:Castle Rock,Colorado Paul Tischler presented on:Impact Fees by Louisville,Colorado Housing Type,Size and Bedroom Count Coral Gables,Florida Pasadena,California Manatee County,Florida New Castle County,Delaware International City/County Management Naples,Florida Lenexa,Kansas Association National Conference Punta Gorda,Florida Frederick County,Maryland • Carson Bise and Paul Tischler presented on: Gordon County,Georgia Great Falls,Montana Dealing with the Cost of Growth:From Henry County,Georgia Englewood,New Jersey Soup to Nuts Ada County,Idaho Beaufort County,South Carolina HCount South Carolina Arizona City/County Management o Post Falls,Idaho ' y' Association Conference Shoshone County Fire District,Idaho Rock Hill,South Carolina Evanston,Illinois Leesburg,Virginia • Carson Bise and Chris Cullinan presented on:The Cost of Growth:It's Not Just the . Capital Costs r TischIerT2se CALL TOLL-FREE (800) 424-4318 °:CO'S T OF GROWTH SERVICES Please send the following: 4701 Sangamore Road,Suite S240 U Recent Fiscal&Economic Newsletters Bethesda,MD 20816 U Reprint"20 Points to Know About Impact Fees" (800)424-4318•Fax(301)320-4860 U Reprint"Impact Fees Understand Them or Be Sorry" info@tischlerbise.com ❑ Excerpts from:ICMA IQ Report"Introduction to Infrastructure Financing" www.tischlerbise.com ❑ Excerpts from:ICMA Smart Growth Network"Smart Growth&Fiscal Realities" Also:Pasadena,CA Information about TischlerBise Consulting Services: ❑ Fiscal Impact Analyses Name ❑ Impact Fees CICapital Improvement Programs Title Agency Telephone ❑ Revenue Strategies ❑ Growth Policy Studies Street U Market and Economic Analyses ❑ Fiscal Software City State Zip L J 1°- Fiscal & Economic Newsletter No.49 Toll-Free (800) 424-4318 4 _ Cost of Land Use Fiscal Impact Analysis net revenues to the City,with Big Box Retail gener- • Business Park and Manufacturing land uses (continued from p.1) ating net revenues of$2,711 per 1,000 square feet, generate net surpluses,primarily due to lower costs due primarily to the amount of local sales tax gen- from low employment densities and trip generation Residential Land Use Prototypes: erated (see Figure 2 on this page).This local sales rates while the General Office prototype generates Annual Net Fiscal Results tax accrues to the City based on"point of sale." a net deficit due to relatively higher costs from a • All four residential land use prototypes gener- higher employment density. ate deficits to the City(see Figure 1 on page 1).The single family-detached prototypes differ in revenue Figure 2.Nonresidential Land Use Prototypes generation—due to different taxable values—and Annual Net Results-Nonresidential Prototypes operating costs—due to different road frontage City of Lawrence Cost of Land Use Fiscal Analysis(Per 1,000 SF) assumptions. $3,000 ---_-. - - - All Residential Prototypes�es y $2,500 --- -- $2,284 . . Generated Deficits $1,631 $1,500 • Apartment units generate the largest net deficit $1,000 - --------------- --'- ---__r_._.-.___.__ • at$341 per unit. Although this prototype generates � 3 . the lowest costs,it yields the lowest revenue. $500 ----- _--� .._$74 ---�--- --- *)�� $0Yp .A Nonresidential Land Use Prototypes: ($116) Annual Net Fiscal Results ($500) Bus.Park Manuf. Office Big Box Retail Community Neigh.Retail • The three retail land use prototypes generate Retail Fiscal Impact Analysis of Development Scenarios Annual Net Fiscal Impacts-Scenario Comparisons (continued from p.2) City of Lawrence Fiscal Impact Analysis X001�zo�ti0�0�z'\\'�p<ti�z\'��y0\� 0�5�y04) ~< .\( r \e,ti00 `.1 1> ' �^) 1� ���ti0r. ri> Annual Net Fiscal Impacts 2 � As shown on the chart to the right,all sub- areas/scenarios produce annual net deficits to 0% the City throughout most years of the 20-year ,\�4 ($2,000) development period. Some of the subareas/ _---..__._....._..-._.__.____...._..__..__.... � ._ .. _.---....... ._.__._.._._._.....___..._._____.._......_.....__.______--...._-.._�...._ c($4,000) __..._......___........._.._.... _ -_...._.._...._........ What are the Fiscal Impacts Under Multiple Development Scenarios? ($6,000) —._ __ ($8,000) _._.___...._.-_.-. scenarios generate fiscal surpluses in the initial , year(s).The worst fiscal results for all subar- ($10,000) eas/scenarios are in Year 20,due to the cumu- lative nature of debt service payments, ($12,000)- --A- SE-Residential -f- SE-Industrial -1- South of Wakarusa - - South of Wakarusa TND primarily for roads. -4- Airport Industrial Park -- West of K-10 — West of K-10 TND 81 1 V-tiZt7 (008) ammuos jEosid sarpn1s'oTlod glnnorD sasiquuy olumuoog pug 1avew saI2aluils anuanaj• S UE.JSoid luatuanoidtU1 pEiidEj (sIsijuuu Xliltgrsuoj Suipnioui)sao j louduii• sasXluuy iotduiI Iuost3• . 9NIH331__0 uuoY asiq.,01r1a521414x41 v3`vuapvsvd:osiy C2S#1!Waad 9180Z UJAI`upsat110g•ODZS alms.pioj aioulaums T0Lb O W`alIin000t,i Qldd S.3J1=n=113`5 H1MO`'dD dO ISOD a6e sod•s'n ssu s.q , ��, g elq3st pa�losaad e`Sr 3