Fiscal Impact Assessment: Service Standard Method

There are two service standard methods spreadsheets. One, labeled “Impaserv,” provides space to compare four projects, or four alternate versions of the same project. Another, labeled “Impashrt,” is a short form which calculates the impacts of a single project. The tables will illustrate the full service standard spreadsheet; the short form follows the same format but omits the calculations of alternatives.

The first worksheet (Figure 1) requests information about the proposed development: number of units, projected household size, and value per unit. "Unit" means "housing units," not the number of structures; an apartment building may have many units, a single-family home will have only one. Unit value is the sales price, even if the units are rentals. The worksheet also includes an entry for "unit type." This information is not used elsewhere in the program, but is included so you can document the spreadsheet by labeling each alternative for the type of development it contains. The spreadsheet will automatically calculate the projected total residents and the projected total value for each alternative. In addition to information about the projects, the worksheet asks for information about the city: size (number of people) and total real value.

            Project Description (Service Standard Method)

            NUMBER   TYPE

ALT'NTIVE    OF       OF     HOUSEHOLD  TOTAL      UNIT    TOTAL

NUMBER       UNITS    UNITS  SIZE       RESIDENTS  VALUE   VALUE

    1        ......   ......  .......   xxxxx      ......  xxxxx

    2        ......   ......  .......   xxxxx      ......  xxxxx

    3        ......   ......  .......   xxxxx      ......  xxxxx

    4        ......   ......  .......   xxxxx      ......  xxxxx

SIZE OF CITY:              ........

TOTAL REAL VALUE IN CITY:  ........

                                  Figure 1

The next worksheet (Figure 2) provides information about the operating costs of the local jurisdiction. The information should be readily available from the city budget. Operating costs are divided into four functions (public safety, public works, recreation, and general government), with subdivisions under each heading. You are asked to enter the operating budget for each category, and the number of employees. If some of the services are not operated by the local jurisdiction (say, libraries), do not enter the cost of that service to some other jurisdiction (say, the County). You are only concerned with the costs to a specified local government. The worksheet will calculate the average cost per employee. Although Burchell & Listokin's models are built on the assumption that the local jurisdiction is a municipality, they present a combined analysis for the municipality and school district. In this chapter, the local jurisdiction is assumed to be a municipality, and school district impacts are ignored. If you are calculating impacts for a local jurisdiction which is not a municipality, adjust the categories for expenses and revenues as appropriate (keeping in mind that you may have to construct your own table of multipliers).

                              OPERATING COSTS

                                     AVERAGE

                  OPERATING NUMBER   COST PER EMPLOYEE CAP/OPS

FUNCTION          COST      EMPLOYED EMPLOYEE MLTPLIER MLTPLIER

GENERAL GOVT

      FINANCE      ......    ......   xxxxx     xxxxx    xxxxx

      CONTROL      ......    ......   xxxxx     xxxxx    xxxxx

PUBLIC SAFETY

       POLICE      ......    ......   xxxxx     xxxxx    xxxxx

         FIRE      ......    ......   xxxxx     xxxxx    xxxxx

PUBLIC WORKS

      HIGHWAYS     ......    ......   xxxxx     xxxxx    xxxxx

        SEWERS     ......    ......   xxxxx     xxxxx    xxxxx

    SANITATION     ......    ......   xxxxx     xxxxx    xxxxx

         WATER     ......    ......   xxxxx     xxxxx    xxxxx

RECREATION

          PARKS    ......    ......   xxxxx     xxxxx    xxxxx

      LIBRARIES    ......    ......   xxxxx     xxxxx    xxxxx

                              Figure 2

Based on the information you provided on the size of the city, the worksheet will also consult two tables and enter the appropriate multipliers for new capital and operating costs (see Figure 3 for a partial illustration of one table). The multipliers are based on information from the 1972 Census of Governments for the North Central Region of the United States, and expresses the number of new employees needed per 1,000 new population (for operating expenses) and the ratio of new capital expenses to the increased operating expenses. The tables group cities by size, from less than 2500 to more than 1,000,000. Only a portion of the EMPLOYEES table is illustrated in Figure 3 (you can consult the template for the full table, if you wish). You will notice that there are index numbers ("0," "2500," etc.) above each multiplier. Those numbers are used by the spreadsheet to determine which multiplier should be carried onto the OPERATING COSTS worksheet. Each function under operating costs has a command which refers it to the appropriate table, where it searches the appropriate row for the index number of city size. The value immediately below that index number is then carried to the appropriate cell in the Operating Costs table. All three models use tables which are constructed in this format, although the information is slightly different for each model.

                    SAMPLE MULTIPLIER TABLE

           EMPLOYEES PER 1,000 POPULATION (NORTH CENTRAL REGION)

                <2500 2500-  5000- 10,000- 25,000- 50,000-

FUNCTION              4999   9999   24,999 49,999   99,999

GENL GOVT         0   2500   5000    10000   25000   50000

     FINANCE    .22   .35    .34       .3     .29     .29

                  0   2500   5000    10000   25000    50000

      CONTROL    .83   .74    .74      .57     .49     .48

PUBLIC SAFETY     0   2500   5000    10000   25000    50000

       POLICE   1.16  1.83   1.88     1.72      NA     1.72

                  0   2500   5000    10000   25000    50000

         FIRE    .89   .49    .61      .93    1.26     1.32

PUBLIC WORKS      0   2500   5000    10000   25000    50000

     HIGHWAYS  1.06   1.07    .98      .81     .74      .74

                  0   2500   5000    10000   25000    50000

       SEWERS   .01    .45    .39      .4      .36      .31

                  0   2500   5000    10000   25000    50000

   SANITATION   .01    .33    .38      .42     .55      .47

                  0   2500   5000    10000   25000    50000

        WATER   .01    .62    .63      .56     .48      .5

RECREATION        0   2500   5000    10000   25000    50000

        PARKS   .01    .22    .31      .31     .44      .59

                  0   2500   5000    10000   25000    50000

    LIBRARIES     0    .14    .17      .15     .26      .22

                               Figure 3

The next worksheet (Figure 4) projects revenues coming to the local jurisdiction from the new development. The Revenue Projection table requires that you enter a unit rate for each source of revenue. The easiest way to calculate these is by an average cost method: Divide the total revenue for last year (or the average revenue for several years) by the number of housing units in the city. Real property tax is an exception; enter the mill rate and the worksheet will multiply that by the value of the development. If the development project has special characteristics that will affect its revenue-generating properties, enter whatever is judged to be an appropriate unit cost. The spreadsheet will multiply the unit cost by the number of housing units in the project and enter it into the worksheet for each alternative. It will also calculate subtotals by category and a grand total.

                           Revenue Projection

                 REVENUE

                       ALT (1)   ALT (2)   ALT (3)   ALT (4)

                 UNIT  REVENUE   REVENUE   REVENUE   REVENUE

REVENUE SOURCE   RATE  PER UNIT  PER UNIT  PER UNIT  PER UNIT

OWN SOURCE REVENUE

TAXES

1. REAL PROP     ......  xxxxx    xxxxx    xxxxx     xxxxx

2. PRSNL PRO     ......  xxxxx    xxxxx    xxxxx     xxxxx

3. FRANCHISE     ......  xxxxx    xxxxx    xxxxx     xxxxx

4. OTHER         ......  xxxxx    xxxxx    xxxxx     xxxxx

SUBTOTAL                 xxxxx    xxxxx    xxxxx     xxxxx

FEES, ETC.

1. INTEREST      ......  xxxxx    xxxxx    xxxxx     xxxxx

2. PERMITS       ......  xxxxx    xxxxx    xxxxx     xxxxx

3. FINES         ......  xxxxx    xxxxx    xxxxx     xxxxx

4. SPC SRVCS     ......  xxxxx    xxxxx    xxxxx     xxxxx

5. GARBAGE       ......  xxxxx    xxxxx    xxxxx     xxxxx

6. SEWER         ......  xxxxx    xxxxx    xxxxx     xxxxx

7. WATER         ......  xxxxx    xxxxx    xxxxx     xxxxx

8. OTHER         ......  xxxxx    xxxxx    xxxxx     xxxxx

SUBTOTAL                 xxxxx    xxxxx    xxxxx     xxxxx

TRANSFER PAYMENTS

STATE

1. URBAN AID     ......  xxxxx    xxxxx    xxxxx     xxxxx

2. ROAD AID      ......  xxxxx    xxxxx    xxxxx     xxxxx

SUBTOTAL                 xxxxx    xxxxx    xxxxx     xxxxx

FEDERAL

1. REV SHARE     ......  xxxxx    xxxxx    xxxxx     xxxxx

2. LEAA          ......  xxxxx    xxxxx    xxxxx     xxxxx

3. OTHER         ......  xxxxx    xxxxx    xxxxx     xxxxx

SUBTOTAL                 xxxxx    xxxxx    xxxxx     xxxxx

TOTAL REVENUES           xxxxx    xxxxx    xxxxx     xxxxx

                             Figure 4

Finally, we come to the object of the whole process--the table of impacts. The spreadsheet provides two ways of presenting the fiscal impacts of a project. The Summary of Fiscal Impacts (Figure 5) presents the heart of impact analysis: For each alternative, what are its costs, what revenues will it generate, and (the bottom line) what will be the net impact? The summary table also lists the number of housing units each project will provide (in case the various alternatives are not of comparable size). The Fiscal Impact table (Figure 6) presents the costs associated with each alternative. There is a separate table for each alternative (Figure 6 presents only one of them). For each service function, the table calculates the estimated number of future employees, the annual operating and capital costs associated with those new employees, and the total increase in annual costs. The summary table is useful for estimating the overall impact of projects; the fiscal impact table allows the city to predict where the new demands will hit hardest, and to prepare to meet them.

                      SUMMARY OF FISCAL IMPACTS

                            NUMBER TOTAL  TOTAL   NET

                 DEVEL'MNT    OF   ANNUAL ANNUAL  FISCAL

                 ALT'NTIVE  UNITS  COSTS  REVENUE IMPACT

                    1       xxxxx  xxxxx   xxxxx  xxxxx

                    2       xxxxx  xxxxx   xxxxx  xxxxx

                    3       xxxxx  xxxxx   xxxxx  xxxxx

                    4       xxxxx  xxxxx   xxxxx  xxxxx

                              Figure 5

                     FISCAL IMPACT--ALTERNATIVE 1

                         ESTIMATED ANNUAL    ANNUAL   TOTAL

                         NUMBER    OPERATING CAPITAL  INCREASED

                         FUTURE    COST      COST     ANNUAL

       FUNCTION          EMPLOYEES INCREASE  INCREASE COST

GENERAL GOVERNMENT

            FINANCE      xxxxx     xxxxx     xxxxx    xxxxx

            CONTROL      xxxxx     xxxxx     xxxxx    xxxxx

PUBLIC SAFETY

             POLICE      xxxxx     xxxxx     xxxxx    xxxxx

               FIRE      xxxxx     xxxxx     xxxxx    xxxxx

PUBLIC WORKS

           HIGHWAYS      xxxxx     xxxxx     xxxxx    xxxxx

             SEWERS      xxxxx     xxxxx     xxxxx    xxxxx

         SANITATION      xxxxx     xxxxx     xxxxx    xxxxx

              WATER      xxxxx     xxxxx     xxxxx    xxxxx

RECREATION

              PARKS      xxxxx     xxxxx      xxxxx    xxxxx

          LIBRARIES      xxxxx     xxxxx      xxxxx    xxxxx

TOTAL                    xxxxx     xxxxx      xxxxx    xxxxx

                             Figure 6

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