Envision Tomorrow + Fiscal Impact Tool(ET+FIT)

July 16th, 2013

FIT Discussion Topics

• ET+FIT Overview• Revenue Projections• Expenditure Projections• Output and Summary

Model Overview• Method based on the Federal Reserve Fiscal Impact Tool (FIT)

– County-level analysis– Aggregates all sub-county jurisdictions– Provides a standardized method for conducting planning-based fiscal

assessments• Revenues & Cost based on the Census of Gov’t finance data (2010)

– Provides user override for all assumptions• User inputs:

– County / Municipal population– Annual taxable sales (County total & City)– Property & Sales tax rates (weighted average)– Property assessment ratios (weighted average)– Added population & employment (from ET+)– Added project value by land-use (from ET+)

FIT MODEL

ANNUAL REVENUE

ANNUAL EXPENDITURE

NET BENEFIT

PROJECTED

REVENUE

PROJECTED

EXPENDITURE

EXISTING CONDITIONS

FUTURE SCENARIOS

What drives the model?

Existing Conditions

What is the current fiscal outlook?• Census of Governments (2010)

- County-level data- Annual revenue, capital outlays, operations & maintenance

• Local data (2011)- Taxable sales- Tax rates- Assessment Ratios

Local Data Sources

More recent data (2011) gathered for each city, village and township and aggregated to the county level:• State Auditor of Ohio - Summarized 2011 Annual Financial Data for

all jurisdictions• Ohio Department of Taxation – Sales tax and property tax rates for

all jurisdictions• Assessor’s Data– Assessed land and building valuation at the

parcel level as an input to property tax calculations• Longitudinal Employer-Household Dynamics Data (Census)–

Counts of employment by location as an input to municipal income tax calculations

FIT Data Sheet

FIT MODEL

FUTURE SCENARIOS

Scenario Impact

FIT MODEL

• Population change• Employment change• Private investment (value of new construction)• Infrastructure costs

Sample of ET+ Output

What is Envision Tomorrow?

• Suite of planning tools:• Prototype Builder

• Return on Investment (ROI) model

• Scenario Builder • Extension for ArcGIS

Density & MixTravelHealth

SustainabilityInvestment

Fiscal Impact

A Linked System of Spreadsheets and GIS

5 Story Mixed Use

2 Story Mixed Use

3 Story Apartment

Townhome

Compact Single Family

Conventional Single Family

BuildingsROI Model

GISPainting

ArcGIS

Town Center

Town Neighborhood

Residential Subdivision

Evaluation CriteriaScenario Spreadsheet

Development TypesScenario Spreadsheet

Scenario Building Process

Building Types Development Types

Scenario Development

Evaluation

Step 1: Model a library of building types that are financially feasible at the local level.

1

Building Prototypes

• Density and Design• Rents, Sales Prices• Market Value• Employment• Population• Costs and Affordability• Energy and Water Use

Use Real-World Examples

• Rents, sales prices calibrated to NEO region

• Design and density modeled using local examples

Scenario Building Process

Building Types Development Types

Scenario Development

Evaluation

Step 2: Define the buildings, streets and amenities that make up all the “places” in which we live, work and play.

2

Development Type MixA Variety of Buildings, Streets and Amenities Create a “Place”

Town Center

Medium-Density Residential

Single-Family Residential

Development Types are Scalable from Parcels to Districts

• Include one or many building types depending on scenario planning geography

• Parcels, Census Blocks, uniform grid

Place Types Composed of Regionally Calibrated Prototype Buildings

Plac

e Ty

pes

Mix of Buildings

Place Types Include Street Characteristics

Housing Units per Acre

Jobs per Acre Street Lane Miles per Acre

Intersection Density per Sq Mi

40 DU/Gross Acre 50 Jobs/Gross Acre .07 204

Place Type Example: Urban Center

Scenario Building Process

Building Types Development Types

Scenario Development

Evaluation

Step 3: Paint future land use scenarios to test the implications of different decisions or policies.

3

Hard Costs and Revenue From New Construction

PRIVATE INVESTMENT + EMPLOYMENT

CAPITAL OUTLAYS(INFRASTRUCTURE COSTS)

TO FISCAL IMPACT TOOL

NEW CONSTRUCTION

Scenario Building Process

Building Types Development Types

Scenario Development

Evaluation

Step 4: Compare the scenarios and monitor the impact of land use decisions in real-time.

4

Questions?

ET+FIT Overview• Up Next: Revenue Projections• Expenditure Projections• Output and Summary

Projecting Future Revenue

ET+ FIT applies user-defined tax rates to scenario-defined population, employment, and building values.• Revenue projections

– Property tax– Sales tax– Income tax– Non-tax revenue

• Sewerage• Solid waste• Utility• Intergovernmental

FIT MODEL PROJECTED REVENUE

USER-DEFINED TAX RATES

Sales Tax Revenue Projection

• Annual sales tax revenue = [Total payroll in scenario] x [% consumer dollars spent subject to sales tax]

• Payroll based on County Business Patterns (CBP) data and scenario employment by sector

Property Tax Revenue Projection

• Annual scenario property tax revenue = [market value of scenario construction] x [millage rate] x [assessment ratio]

• Broken out by residential and commercial property types

Income Tax Revenue Projection

• [annual average wage by sector] x [scenario employment by sector] * [weighted average income tax rate]

• Weighted average based on municipal population ratio – incorporated v.s. unincorporated population in county

Proportional Ramp-upProjecting Future Sales Tax Revenue

TIME

TAX

REVE

NU

E

We assume that the scenario ramps up at a constant rate over the scenario period

For example, over a period of 30 years – 3.3% per year

Non-Tax Revenue Projection

• Assume a constant per-capita revenue• [current non-tax revenue per person]*[new

population in scenario]

NO

N-T

AX R

EVEN

UE

POPULATION

Questions?

ET+FIT OverviewRevenue Projections• Up Next: Expenditure Projections• Output and Summary

Projecting Future Expenditures

• One-time expenditures (capital outlays)– New roadways, sewage treatment plant, school

construction• On-going expenditures (operations & maintenance)

– Public safety, housing and community development, roadway maintenance

FIT MODEL PROJECTEDEXPENDITURE

Capital Outlay Projection

• Envision Tomorrow + tracks capital outlay costs related to infrastructure:– Roads – lane miles of new roadway– Utilities – miles of overhead electric– Water/Sewerage – lineal feet of pipe

Development Type Assumptions• Each development type has associated road

lane miles per vacant acre assumptions• Less than 100% of these are publicly financed• City Architecture provided estimates of %

publicly financed by development type• It is assumed that sewer, water, and utilities

scale with miles of new roadway

Sample of Development Type Street Assumptions

Infrastructure Cost AssumptionsNew Infrastructure Costs

(Capital Costs only) Unit Cost

New Roadway Lane Mile $ 1,700,000

Streetscape Lineal Foot $ -

Sewerage Lineal Foot $ 100

Utilities - above-ground Mile $ 600,000

Water Lines Lineal Foot $ 227

Source:• Road – Arkansas DOT• Utilities - Western Mass. Electric Company• Sewerage – Dept. of Public Works, Ipswich, MA• Water Lines – Dept. of Public Works, Baltimore, MD

Operations and Maintenance (O&M) Projection

• The following categories are tracked:– Education– Hospitals– Roads– Police– Fire– Parks– Sewerage– Solid Waste– Utility

Operations and Maintenance (O&M) Projection

• ET+FIT uses scenario capital outlay to “pivot” around existing annual per capita O&M

• Future O&M is a factor of the change in average annual capital outlays

• Future per capita O&M = [Baseline per capita O&M] x [% change in average annual capital outlay]

• In estimating future O&M costs, it is assumed that all roads in a shared right of way will eventually be publicly maintained, even if privately constructed.

Level of Service AssumptionProjecting Future O&M

POPULATION

OPE

RATI

ON

S AN

D M

AIN

TEN

ANCE

• We assume a fixed level of service.

• Per capita O&M stays constant as population increases

Questions?

ET+FIT OverviewRevenue ProjectionsExpenditure Projections• Up Next: Output and Summary

Outputs• ET+FIT calculates the net present value of expenditure and

revenue over the forecast horizon• Discount rate of 3.8% is same as the average federal funds

rate over the last 30 years (1980-2010), less inflation (2%)

FIT MODEL NET BENEFIT

PROJECTED

REVENUE

PROJECTED

EXPENDITURE

PROJECT ASSUMPTIONS Scenario 1

Years from up front to on-going 1

Discount Rate 3.8%

Period/Years 30

User enters rate and forecast period:

Outputs

Ramp-Up path: Raw Inflated Discounted

Year 1 3% $43,465,920 $44,543,874 $43,037,560Year 2 6% $43,465,920 $45,648,562 $42,613,422Year 3 10% $43,465,920 $46,780,647 $42,193,463Year 4 13% $43,465,920 $47,940,807 $41,777,644Year 5 16% $43,465,920 $49,129,739 $41,365,922Year 6 20% $43,465,920 $50,348,156 $40,958,258Year 7 23% $43,465,920 $51,596,791 $40,554,611Year 8 26% $43,465,920 $52,876,391 $40,154,942Year 9 30% $43,465,920 $54,187,726 $39,759,213Year 10 33% $43,465,920 $55,531,581 $39,367,383Year 11 36% $43,465,920 $56,908,764 $38,979,414Year 12 40% $43,465,920 $58,320,102 $38,595,269Year 13 43% $43,465,920 $59,766,440 $38,214,910Year 14 46% $43,465,920 $61,248,648 $37,838,299Year 15 50% $43,465,920 $62,767,614 $37,465,400Year 16 53% $43,465,920 $64,324,251 $37,096,176Year 17 56% $43,465,920 $65,919,493 $36,730,590Year 18 60% $43,465,920 $67,554,296 $36,368,608Year 19 63% $43,465,920 $69,229,643 $36,010,193Year 20 66% $43,465,920 $70,946,538 $35,655,310Year 21 70% $43,465,920 $72,706,012 $35,303,924Year 22 73% $43,465,920 $74,509,121 $34,956,001Year 23 76% $43,465,920 $76,356,947 $34,611,507Year 24 80% $43,465,920 $78,250,600 $34,270,408Year 25 83% $43,465,920 $80,191,214 $33,932,671Year 26 86% $43,465,920 $82,179,957 $33,598,262Year 27 90% $43,465,920 $84,218,019 $33,267,149Year 28 93% $43,465,920 $86,306,626 $32,939,299Year 29 96% $43,465,920 $88,447,031 $32,614,679Year 30 100% $43,465,920 $90,640,517 $32,293,259

Discount rates are applied to costs and revenues over the forecast horizon. User can define when costs and revenues “ramp up”

Summary

• The summary tab aggregates existing costs and revenues with 30 year cost and revenue streams to provide a revenue/cost ratio

• If revenue/cost ratio is positive, revenue exceeds costs over the forecast horizon.

• Net reduction tells us the direct impact of the scenario on the cost to revenue ratio. Positive means that there was a negative impact.

• Scenario tells us the revenue/cost ratio of the scenario development by itself.

30 yr. Net reduction ScenarioRevenue/Cost Ratio 16.83% -12.32% 65.25%

Scenario 1 Revenue Cost 30 yr. NetStream Value of chosen time horizon, in years: $783,436,635 $2,411,190,316 -$1,627,753,681Total, One-Time and Ongoing $783,436,635 $3,314,830,336 -$2,531,393,701 One-time $0 $903,640,020 Ongoing $62,071,065

Education $101,852,568 Everything Else $89,184,133

Revenue Source Taxes/Fees $6,655,054 Intergovernmental Transfers $53,863,862 Utilities/Services $1,946,688

Summary

• Annual “full ramp-up” costs and revenues are broken out into categories

SummaryOutput tab

Questions?

ET+FIT OverviewRevenue ProjectionsExpenditure ProjectionsOutput and Summary