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A user's guide for fiscal impact analysis

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Title:
A user's guide for fiscal impact analysis
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Weiner, Anne
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English
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188 leaves : charts ; 28 cm

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Subjects / Keywords:
Municipal finance ( lcsh )
Finance, Public -- Colorado -- Lakewood ( lcsh )
Finance, Public ( fast )
Municipal finance ( fast )
Colorado -- Lakewood ( fast )
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bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

Notes

Bibliography:
Includes bibliographical references (leaves 186-188).
General Note:
Submitted in partial fulfillment of the requirements for the degree, Master of Planning and Community Development, College of Architecture and Planning.
Statement of Responsibility:
by Anne Weiner.

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Auraria Library
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Resource Identifier:
12635216 ( OCLC )
ocm12635216
Classification:
LD1190.A78 1985 .W4255 ( lcc )

Full Text
A USER'S GUIDE
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IMPACT
ANALYSIS
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A USER'S GUIDE
FOR
FISCAL IMPACT ANALYSIS
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is as
Date Due




:
Cerllege of Design and Planning
Master's Thesis
Professor Tom Clark
August 2, 1985


TABLE OF CONTENTS
INTRODUCTION 1
Chapter
I. OVERVIEW OF FISCAL IMPACT ANALYSIS 5
II. ELEMENTS OF FISCAL IMPACT ANALYSIS 14
III. LAKEWOOD, COLORADO FISCAL IMPACT ASSESSMENT 48
IV. APPLICATION OF LAKEWOOD'S FISCAL IMPACT ASSESSMENT 75
V. APPLICATION OF INDEPENDENT PROJECTION TECHNIQUES 95
VI. CONCLUSION 128
APPENDIX A ALLOCATION OF EXPENDITURES (City of Lakewood, 1981) 141
APPENDIX B ALLOCATION OF REVENUES (City of Lakewood, 1981) 151
APPENDIX C 1983 FISCAL IMPACT UPDATE 160
APPENDIX D 1984 BUDGET SUMMARY (City of Lakewood) 164
BIBLIOGRAPHY 186
ii


INTRODUCTION


INTRODUCTION
The purpose of this study is to provide an overview of fiscal
impact analysis as it relates to local governments. Both the advantages
and disadvantages of such studies will be discussed including the
question of secondary impacts caused by proposed developments. To
illustrate the basic principles of fiscal impact analysis, a study
prepared for Lakewood, Colorado, will be reviewed in contrast to the
generally accepted fiscal impact methodologies. The ultimate goal of
this study is to provide local governments with a more complete framework
for reviewing such analyses, which allows for the consideration of
secondary impacts, an understanding of the underlying variables used in
various projection techniques, and results in a more accurate assessment
of future fiscal impacts due to development.
Unlike the Federal government, a municipality must function within
a balanced budget. In order to avoid deficit spending, the local
government must ensure that the necessary services can adequately be
provided to its citizenry at a cost equivalent to or less than incoming
revenues. Most local governments provide such services as police and
fire protection, water and sewer service, and public education. However,
a city is not able to directly assess each citizen according to his or
her usage of each of these particular services. The local government
raises revenue by taxing the citizens for the services in proportion to
the value of real property owned, the amount of money spent on food and
personal property, and sometimes on income earned. User fees are also
charged; however, the amounts charged virtually never cover the actual
cost of delivering the service.
According to the Fiscal Impact Handbook by Burchell and Listokin,.
fiscal impact analysis is defined as "a projection of the direct,
1


2
current, public costs and revenues associated with residential and
nonresident!al growth to the local jurisdiction(s) in which this growth
is taking place.
More and more, local governments are realizing the necessity of
understandinq the potential impacts of future development. They must be
prepared to provide the necessary services reqardless of unforeseen
circumstances. The greater awareness is a partial result of the Federal
government's shift in philosophy and reduction in aid to local
governments. Revenue Sharina can no longer be relied upon as a mainstay
of the local budget. Denver will be facing extreme financial hardship
due to "skyrocketino police and fire pension payments, the expected loss
of Federal Revenue Sharing, and dwindling reserves." According to
David Greenberg, a Denver business and political consultant, the Denver
administration has three options: "it can increase taxes, it can cut
back services, and it can expand its tax base by encouraging economic
3
orowth." If Denver faces a shortfall, part of the increased tax
burden will be placed on the suburban residents. This is very likely if
the sales tax, head tax, or seat tax are raised in an attempt to increase
revenues.
Fiscal impact analyses prepared in the past have all too often been
incomplete or inaccurate. The local officials have then based many of
their land use decisions on misleadinq information. It is crucial that
these government officials understand the basic principles of fiscal
impact analysis and have the ability to recognize when the integrity of
the study is questionable.
The format of this study is as follows:
Chapter I provides an overview of the merits and problems of fiscal
impact analysis and a brief overview of Cities within the Denver
Metropolitan Area with such studies.
Chapter II discusses the elements of fiscal impact analysis
including techniques to project costs, revenues and secondary impacts.


3
Chapter III provides a brief historical introduction to the City of
Lakewood, and provides an analysis of the Lakewood Fiscal Impact
Assessment System.
Chapter IV updates the Lakewood system using 1984 information and
presents the results of this methodoloqy applied to two development
proposals (one residential and one commercial).
Chapter V presents the results of the techniques studied in Chapter
II as applied to the same two development proposals.
Chapter VI presents a comparison of the findings and provides
recommendations for local government usage of such studies.
Additional supporting documentation is located in the Appendices.


4
FOOTNOTES INTRODUCTION
^Robert W. Burchell and David Listokin, The Fiscal Impact
Handbook Estimating Local Costs and Revenues of Land Development
(Piscataway, New Jersey: The Center for Urban Policy Research, 1983)
p. 1.
2"City Faces Shortfall of $25 Million in '86," Denver Post, 13
May 1985, sec. A, p. 1.
3"Red Ink and Tears in Denver's Future," Denver Post, 12 May
1985, sec. A, p. 6.


I. OVERVIEW OF FISCAL
IMPACT ANALYSIS


I. OVERVIEW OF FISCAL IMPACT ANALYSIS
MERITS OF FISCAL IMPACT ANALYSIS
Through the preparation of a fiscal impact analysis, the four
following questions can be answered:
1) Will new development pay its own way?
2) Where should new growth occur?
3) What type of new development is necessary to bolster the local
economy?
4) What capital improvements must be budgeted for?
Each of these questions will be discussed in the following section.
1) A fiscal impact analysis will project the costs of providing services
to a proposed development (police, fire, water, sewer, streets,
etc.). The potential revenues generated by the development will also
be calculated (property tax, sales tax, user fees, etc.). The local
officials will have a reasonably accurate indication of whether the
projected revenues exceed the projected costs. This is just one of
many factors which should be considered before a development proposal
is approved. The environmental, social and socio-economic impacts
must also be considered. 2
2) When a municipality plans for future growth, many factors must be
weighed. Would new growth create the need for extending existing
facilities or would entire new facilities be needed? Is there
sufficient reserve capacity? Would it be beneficial to provide
incentives for infill development? The costs and revenues associated
with a typical development will change depending upon its location
5


6
with respect to existing services. The municipality can incorporate
this type of analysis into its comprehensive planning effort to
encourage growth in locations most easily served.
3) Since so many U.S. cities will face increased economic pressures due
to the inevitable loss of Federal funds, the local officials need to
be aware of the impacts of potential growth. The correct balance
between residential and nonresidential development must exist. The
commercial developments rely on consumers within a given market
area. An excess of commercial zoning may result in vacancies and
lead to an overall decline in the area. However, too much
residential development places a burden on the local infrastructure.
The proper mix of land uses will help to bolster the local economy.
4) In order to budget for capital improvements, most cities prepare a
Capital Improvement Program (CIP) usually for a period of at least
five years. The CIP prioritizes the necessary improvements and
projects the future costs and sources of funding.
PROBLEMS COMMONLY ASSOCIATED WITH FISCAL IMPACT ANALYSIS
Numerous articles have been written dealing with potential problems
that may be encountered when preparing or reviewing a fiscal impact
analysis [(Stern, 1980) (Koch, 1985) (Muller, 1975)]. The following nine
most significant problems will be discussed:
1) Preparer Bias
2) Faulty Assumptions
3) No Consideration of Secondary Impacts
4) Use of Average Cost vs. Marginal Cost
5) Shift in Service Demands
6) Failure to Consider Non-Fiscal Impacts of Development
7) Use of Fiscal Impact Analysis to Promote Exclusionary Zoning
8) Lack of Standardization of Procedures
9) Failure to Look at Overall Fiscal Impact Rather Than Simply
Impacts of Individual Developments


7
1) Preparer bias is evident when a fiscal impact analysis is reviewed.
The bias depends upon the objectives of the preparer/sponsor. The
preparers/sponsors can be categorized into four distinct groups:
developers, anti-development groups, non-profit organizations, and
the public sector (Muller, 1975, p. 2.). The development community
prepares such analyses in hopes of gaining approval for development
from the governing body. Therefore, the analyses usually demonstrate
that at a minimum, the development will not create a fiscal burden
for the community. The anti-development groups, however, use the
analyses to prove that a development will not be fiscally
self-sufficient and will burden the existing taxpayers. The
non-profit organizations which prepare analyses are usually education
oriented. The bias is to study the methodology itself, not to
endorse or oppose potential development. The public sector is
primarily concerned that new development will create sufficient
revenues to allow the government to provide the necessary services.
Economies of scale and efficient land use distribution are also
considered. Therefore, it is essential to know how the study was
sponsored in order to understand the underlying objectives.
2) No fiscal impact model can be more accurate than the underlying
assumptions upon which it was based. "A 1980 U.S. Department of
Housing and Urban Development sponsored study of some 140 fiscal
impact models around the nation found that a majority of those models
contained significanty major flaws to be of poor quality."^
One major area of inaccuracy occurs when making assumptions about
land use ratios. It is critical to accurately understand the
existing development trends as well as potential development trends
to insure that the overall scheme is fiscally balanced. The intent
should not be to seek only those developments which will produce a
surplus. 3 *
3) Almost all fiscal impact models project only the direct impacts of
development. The secondary impacts such as new commercial uses


8
incident to a large housing development are very rarely considered
even though the net fiscal impact may be substantially modified
(Koch, 1985, pp 34-35). The following secondary impacts should be
consi dered:
a. Changes in the value of surrounding land and structures.
b. Increased demand for goods and services resulting from
residential developments.
c. Increased demand for housing and services as a result of
commercial or industrial development.
d. Increased activity on the periphery of new developments.
2
e. Public sector capital improvements.
Secondary impacts will be discussed in much greater detail in Chapter
II.
4) The average cost approach assumes that the average cost of providing
services will remain relatively stable in the future, but it does
allow for inflation. This assumption is true for stable, slow growth
areas where the demand for services matches the supply. The marginal
cost approach should be used in areas facing rapid growth or
decreasing populations. The costs of development are based on the
excess or lack of capacity available. For example, in a rapidly
growing community, a new development may precipitate the need for a
new fire station. If the average cost approach was used, the
development would be placing the majority of this burden on the
existing taxpayers. The marginal cost approach would assign the cost
of the fire station to the new development. 5
5) The basic premise in fiscal impact analysis is that service demands
are assumed to remain constant. However, the income level of new
3
residents tends to be higher than that of the existing residents.
Therefore, the new residents may demand services that have not been
provided in the past. A study prepared in 1970 in Montgomery County,
Maryland, showed that "the demand for public tennis courts, golf


9
courses, libraries, recreation centers, and public parking lots
4
increased with rising income." If the service requirements
increase, the governing body must generate the necessary revenue to
cover the additional cost.
6) Since a fiscal impact analysis provides the local decision-maker with
a dollar figure, they are assumed to be very accurate and precise.
However, in actuality, it is usually not even possible to determine
the margin of error in the revenue and expenditure projections.
Nevertheless, the fiscal impacts appear very easily quantified in
contrast to environmental or social impacts. The tendency is for the
governing bodies to give more credence to the fiscal aspects of a
proposed development than to the less quantifiable aspects. An
effort must be made to understand the broader consequences of
development.
7) Since it is apparent that certain land uses generate fiscal surpluses
while others create fiscal deficits, some local officials may tend to
discourage approval of development which would create a deficit. In
this way, fiscal impact analysis is being used to support
exclusionary zoning. Fiscal impact analysis in conjunction with a
comprehensive plan may be used to help control growth within the
community. However, "the courts have concluded that zoning based on
fiscal well-being may be considered locally, but that it may neither
be the sole basis for zoning nor a means to exclude certain
5
groups.
8) Due to a lack of standard methodology, fiscal impact studies required
by communities very seldom accurately portray the true fiscal impacts
of the development. It is very rare that a developer would submit an
analysis that showed the proposed development would create a fiscal
deficit. The use of different methods for the same project will
yield different results. This concept will be demonstrated in
Chapter V.


10
9) The typical fiscal impact model calculates the impacts of an
individual development in itself and does not consider the overall
effects on the local fiscal balance. The local officials must be
aware of the existing service capacity of the locality and understand
that not all development must provide positive fiscal impacts. The
overall fiscal balance is most crucial to maintain.
SURVEY OF METROPOLITAN DENVER CITIES REGARDING FISCAL IMPACT ANALYSES
In order to more clearly understand the prevailing attitude of
public officials in the area, the following Denver Metropolitan
communities were contacted to see if any performed a fiscal impact
analysis prior to approving annexations, rezonings, or development plans:
1) Arvada Projects are only reviewed in relation to the revenues that
will be generated. Use, sales, and property taxes are calculated
for each potential development; however, no analysis is made
concerning costs to the City for serving the development.
2) Aurora A computer model has been prepared to assess the fiscal
impact of development. The general rule is to keep the citywide
ratio of residential development to commercial development to 7:1 or
less. The program is primarily used in reviewing potential
annexations.
3) Boulder No fiscal impact analyses are prepared. Extensive study
of the fiscal impacts of development occurred during the preparation
of the Boulder County Comprehensive Plan. All projects are then
reviewed in accordance with that document.
4) Broomfield The City Administration is exploring the possibility of
beginning to prepare such analyses in the future.
5) Commerce City Since Commerce City has an extremely strong tax
base, the City has not seen the need to prepare fiscal impact


n
studies for proposed developments. They are actually encouraging
the development of residential uses to create a healthy mix of land
uses.
6) Denver As a rule, no fiscal impact studies are prepared. The
staff may request that the developer submit an analysis if the
project is of a sufficiently larae scale.
7) Englewood No fiscal impact studies are required. All development
occurring within the Downtown Redevelopment District must conform to
the approved District Plan. Tax increment financing was used in the
redevelopment area. Therefore, the staff realizes that a certain
level of development is necessary to generate the revenues needed to
retire the bonds, and they review development proposals accordingly.
8) Lafayette No fiscal impact analyses are prepared. The City
administration is interested in researching the subject further.
9) Lakewood A Fiscal Impact Assessment System was prepared to aid in
reviewing all rezoning requests. Residential developments appear to
create a deficit of $28.16 per unit. No distinction has been made
between multi-family and single family units. Commercial uses were
broken down as follows:
Office
Retail
Hotel/Motel
Restaurants
Industrial
$.09 surplus per square foot
$.42 surplus per square foot
$.21 surplus per square foot
$.34 surplus per square foot
uses create a deficit of $.05 per square foot.
10) Littleton The City has no formal program to require fiscal impact
analyses; however, the staff has required one developer to prepare a
study for an extremely large mixed use project (Centennial Race
Track).


12
11) Louisville The City does not prepare any fiscal impact analyses
when reviewing projects.
12) North glenn Since the City has less than three hundred acres of
developable land left, the administration does not feel that the
preparation of the fiscal impact analyses would be very beneficial.
13) Thornton The City Council has authorized the preparation of a
fiscal impact assessment system. The analyses will run on a
computerized model and be primarily used to assess the impacts of
potential annexations. The system will be ready to implement during
the sunnier of 1985.
14) Wheat Ridge No fiscal impact analyses are prepared.
The City of Lakewood appears to be the only municipality which
reviews the fiscal impacts of every rezoning request. Aurora has the
most sophisticated computer model; however, it is used primarily for the
review of potential annexations. It is apparent that many of these
municipalities will be researching the feasibility of implementing some
sort of fiscal impact analysis program in the future; however, most
currently lack the expertise to both develop a program and evaluate the
accuracy of the analyses.


13
FOOTNOTES CHAPTER I
1"Costing the Future: The Pros and Cons of Fiscal Impact
Analysis," Colorado Municipalities 61 (May-June 1985): p. 34.
^Thomas Muller, Fiscal Impacts of Land Development: A Critique
of Methods and Review of Issues, (Washington, D.C.: Urban Institute,
T975)': "p." 28:----------------
3Ibid., p. 9.
4Ibid., p. 8.
5Richard B. Stern and Darwin G. Stuart, "Beware the Pitfalls in
Fiscal Impact Analysis," Planning, April 1980, p. 17.


II. ELEMENTS OF FISCAL
IMPACT ANALYSIS


II. ELEMENTS OF FISCAL IMPACT ANALYSIS
Several assumptions are made prior to the preparation of a fiscal
impact analysis (Burchell and Listokin, 1980). First of all, it is
assumed that the proposed development is existing in order to calculate
the current cost and revenue figures. Even thouah most developments are
completed over several years, it is assumed that any increase in costs
due to inflation will be offset by a similar increase in revenues. The
second major assumption is that only governmental costs and revenues are
to be considered. Special assessments, land dedication, homeowner
association fees, and other private expenditures are not applicable to
the analysis. The third assumption is that any change to the community's
population or employment base will be considered in the analysis. The
fourth assumption is that only services administered by the municipality
will be considered. This is of special concern because in the Denver
Metropolitan area, the public school systems are independent of the
municipalities. Many of the other governmental services such as water,
sewer and fire protection are also provided by special districts.
Burchell and Listokin make a special note that secondary impacts
will not be considered because of the: "1) near impossibility of
predicting accurately the secondary consequences of growth; and 2) the
recurring potential for double counting when primary and secondary
impacts are viewed simultaneously."^ A thorough review of secondary
impact projection techniques will follow the discussions on cost and
revenue projection techniques.
COST PROJECTION TECHNIQUES
The two primary methods for projecting municipal costs are average
costing vs. marginal costing. In average costing, costs are allocated to
14


15
new development at an average cost per unit of service and multiplied by
the number of service units the development will need. The marginal
costing approach considers the existing capacity (excess or deficient) of
the service required and the effect the development will have on the
capacity level. There are three techniques which use the average costing
approach: Per Capita Multiplier, Service Standard and Proportional
Valuation. The three remaining techniques, Case Study, Comparable City
and Employment Anticipation, use the marginal costing approach.
The six cost projection techniques can also be divided into
residential and nonresidential cost projection classifications. The Per
Capita Multiplier, Service Standard, Comparable City and Case Study
methods can all be used to project the costs of residential
developments. The Case Study, Proportional Valuation and Employment
Anticipation methods are used for nonresidential development cost
projection.
RESIDENTIAL PROJECTION TECHNIQUES
Per Capita Multiplier
The Per Capita Multiplier method is an average costing approach
which is used to project the impacts of population change on local
service costs. This method is dependent upon the availability of
adequate demographic information. Such information as total household
size by type of unit, number of school-age children by type of unit, and
average cost per person (or student) of municipal (or school district)
operating expenses is needed to project an annual cost due to the change
in population. The local costs due to nonresidential development are
subtracted and then a per capita cost is determined. This cost can then
be multiplied by the estimated change in population to determine the
costs attributable to the new development. This method is most
applicable to suburban communities with a relatively stable annual growth
rate of two to three percent.


16
The four basic assumptions of this method are:
1) The current average costs of operation will provide the best
estimate of future operating costs due to additional
development.
2) The current level of service will also provide the best
indication of future service levels.
3) The new population will be of similar composition as the
existing population.
4) The existing percentage breakdown of local costs for services
will remain constant.
The main advantages of using the Per Capita Multiplier method is
that it is very simple to use and the information necessary for its
implementation is readily available. The primary disadvantage is that
the results are not very detailed. Figure II 1 provides a summary of
the procedure.
Service Standard 2
The Service Standard method is an average costing method which
estimates the number of additional employees by type of service that will
be necessary to serve the increased population. According to the U.S.
Census of Governments, the service functions most commonly considered
are: general control, financial administration, police, fire, highways,
sewerage, sanitation, water supply, parks and recreation, and
2
libraries. The operating cost for the additional personnel is
calculated by addina the salary, equipment and benefits costs per
employee within each service function to the annual cost for capital
facilities for the same service function. The Census Bureau can provide
capital-to-operating service ratios which are used to determine the
annual capital expenditure.
The necessary data for implementation of the Service Standard
method is much more extensive than that required for the Per Capita


FIGURE II 1
PER CAPITA MULTIPLIER FISCAL IMPACT METHOD: SUMMARY OF COST PROJECTION PROCEDURES
STEP NUMBER ANALYSIS/ACTIONS EXAMPLE CALCULA TION (A 3,000 UNIT PUD IS PROPOSED FOR A N.j. COMMUNITY OF 16,000 POPULA TION. SEE EXHIBIT 1 FOR FULL COST PROJECTION.)
1 Contact the office of the city manager and superintendent of schools to obtain local municipal and school district budgets and the latest estimates of munlcipal/school district populations. This step reveals the following local information; Municipal population of 16,000 residents; Total municipal expenditures of 13,266,171 ; School district population of 2,400 pupils; and educational expenditures of 14,440,000
2 Categorize local expenditures Into five municipal service categories plus the school district function. Step 2 disaggregates total local municipal and school district expenditure? into component services-general government, public safety, public works, health and welfare, recreation and culture and school district.
3 Obtain total annual municipal expenditures by summing the annual costs, including debt service for capital facilities, for each of the five service categories. Obtain total annual school district expenditures. Step 3 aggregates component service costs Into total municipal and toul school district outlays.
4 Assign a share of total annual municipal costs to existing local nonresidential facilities based on the proportion of their value to total local real property valuation. Subtract this share from the total annual municipal costs. The Proportional Valuation Method (see Exhibit 8) Is used to determine local, nonresidential Induced municipal expenditures In the example community. This amount (11,199,338) Is subtracted from total local municipal costs (13,266,171) to yield residential Induced expenditures of 12,066,833 (13,266,1 71 11,199,338).
5 Calculate the net (residentially-lnduced) annual costs of the five municipal functions on a per capita basis and the annual costs of education on a per pupil basis. Municipal Costs Ptr Capita Residential Induced + Total Municipal Expenditures Population 1129 $2,066333 + 16,000 Per Pupil Education Costs Total Educational + Total School Expenditures District Pupils $1,850 = $4,400,000 + 2,400
6 Calculate anticipated total resident and school population by housing type. As example community is In New jersey,* use demographic multipliers for Northeast region. Middle Atlantic subregion (see Exhibit 2 and Exhibit 1, column 2). See Exhibit 1 columns 1-3 for calculation of total resident (8,154) and school (1 ,456) populations.
7 Calculate resldentially-induced total annual municipal and school district expenditure increases by multiplying per capita/per pupil municipal and school district expenditures by the projected number of residents/pupils. See Exhibit ], columns 3-5 for calculation. This step indicates that the PUD's residential component will generate $3,342,166 in local expen- ditures.
8 Calculate municipal costs for any nonresidential uses if they are inclusive of the growth increment; assign a share of local costs to the nonresidential facility based on the facility's share of total local nonresidential property valuation. The Proportional Valuation Method Indicates that the PUDs nonresidential component will generate $12,353 In local municipal costs. The PUD there- fore increases total local costs by $3,354,519 ($3,342,166 $12,353).
9 Determine total annual public costs and refine the projection by allocating total costs by service category. The PUD generated total costs of $3,354,519 is disaggregated into the different public service components following the percentage breakdowns determined In Step 2.
See page 57 for distribute of 50 states by region and subregion. Reference this page In selecting the appropriate demographic multipliers.
Source: Burchell and Listokin, Practioner1s Guide to Fiscal Impact Analysis, p. 11.


18
Multiplier method. The following information must be available:
multipliers for household size and school ape population for each type of
housing unit, population estimates for the municipalities and school
districts, public employee service standards by service function, average
operatina costs per employee, and annual capital-to-operating expenditure
ratios by service function. This method is most applicable to suburbs
with a moderate growth rate or to slower growing larger cities.
This technigue is based upon the following premises:
1) The existing service levels for personnel and capital
facilities of comparable jurisdictions can be used as a basis
for associating appropriate costs to future development.
2) The personnel and capital facilities required are a function of
the municipality's population.
3) Geographic location is also a factor in service levels.
The primary strengths of the Service Standard method is that it
provides a great deal of detail. The fiscal impact of population change
is calculated in addition to pinpointing the effect of growth within each
service function. This method is also relatively easy and inexpensive to
implement.
The major weakness of this technique is that it may over or under
estimate the actual expenditures by a margin equivalent to the amount the
local situation deviates from the average case. Figure II 2 summarizes
the Service Standard procedure.
Comparable City
The Comparable City method is a marginal costing technique which
relates population, growth rate and local expenditure levels to project
what effect the change in population will have on local expenditures.
This method is dependent upon expenditure multipliers which vary


FIGURE II 2
i-----------
STEP NUMBER
1
2
3
4
5
SERVICE STANDARD FISCAL IMPACT METHOD: SUMMARY OF COST PROJECTION PROCEDURES
ANALYSIS/ACTIONS
Using general multipliers for household and
school age children, determine population
and student Increase resulting from growth.
Using service ratios for communities of
different regions and sizes, project number
of Incremental public employees resulting
from growth.
Calculate average operating expenses per
employee by service category by dividing
total operating expenses per service category
by the total number of employees in that
function.
Pro|ect total annual operating costs by multi-
plying average operating expenses per worker
by the number of employees attributable to
growth.
Project total annual capital costs attributable
to growth by multiplying capital-to-operating
expenditure ratios by total annual operating
cost.
Project total annual costs by adding total
annual oprratlng expenses to total annual
capital expenses.
EXAMPLE CALCULA T/ON (A 2,000 UNIT SINGLE-FA MIL Y DEVELOPMENT IS PROPOSED
FOR A GEORGIA COMMUNITY OF 16,000 POPULATION. ILLUSTRATIVE CALCULA-
TIONS ARE FOR POLICE SERVICES ONLY. SEE EXHIBIT 4 FOR CALCULATIONS FOR
ALL PUBLIC SERVICES.)
As example community is In Georgia, use demographic multipliers for Southern region.
South Atlantic subregion.
Number/type Housing Household She Multiplier School-Age Children Multiplier Total Residents Total School-Age Children
2,000 single* family homes 3.775 1.130 7,550 2,260 (school- age children) 1,989 (Public school-age children)
As example community Is In Georgia and has a population of 16,000, use service standards for
Southern communities with population of 10,000 to 24,999. Multiply these standards (2.01
police per 1000 population) by anticipated project population of 7,550 residents. The develop-
ment therefore generates a need for approximately 15 (7.550 x 2.01 = 1521) police (see Exhibit
4, column 4 for calculation for other services).
The Georgia community expends $480,795 for Its 35 member police force. Operating costs per
employee are therefore $1 3,737 |$480,795j
The development generates $208 ,528 (15.18 x $13,737) in police operating costs (see Exhibit 4,
column 6 for calculations for other services).
Capital-to-operating expenditure ratios are selected In the same manner as service standards.
Capital costs are projected by multiplying predicted operating outlays by capital-to-operating
expenditure ratios. The development generates $11,261 In police capital costs (see Exhibit 4,
column 8 for calculations for other services).
Total Annual
Operating
Government Costs by
Function Function
Police $208,528
CopItal-to-Ope rating
Ratios for
Population Sice
Group and Region
Total Annual
Capital
Costs by
Function
.054
$1 1.261
The 2,000 unit single-family development generates $208,528 In police operating expenditures
and $ 1 1,261 In police capital costs for a total of $219,789 in police costs (see Exhibit 4,
column 9 for calculations for other services).
Source
Burchell and Listokin, Practioner's Guide to Fiscal Impact Analysis, p. 20.


20
according to the City's size and growth rate. The multipliers were
derived by comparing the average expenditures of cities of differing
population sizes and growth rates to the average expenditures of cities
with the most common population size and growth rate. When the
population or growth rate of a city changes, a different multiplier must
be used to determine the new expenditure level. Changes in future
expenditures are projected for the general government, public safety,
public works, health and welfare, recreation and culture service
categories by comparing the expenditure level multiplied by the total
cost (per capita cost x service population) before and after the
development has occurred.
The data necessary for the implementation of this method
(expenditure multipliers) is available in The Fiscal Impact Guidebook: A
Practioners Guide by Burchell and Listokin. The Comparable Cities
technique is most applicable to cities which are anticipating substantial
changes to their existing populations or growth rates.
The two basic assumptions underlying this technique are:
1) Local service costs vary in response to the municipality's
population size and growth rate.
2) Growth and decline each effect local service costs, but in
different ways.
The major advantage of the Comparable City method is that it is a
relatively inexpensive marginal costing technique. The major
disadvantage of this technique is that if the local costs differ from the
comparable cities, the average expenditure multipliers may either over or
under estimate the local response to the change in population. Figure II
- 3 presents a summary of the Comparable City technique.
Case Study
The Case Study method is a marginal costing technique which is
applicable to both residential and nonresidential development. Through


21
FIGURE II 3
COMPARABLE CITY FISCAL IMPACT ANALYSIS METHOD:
SUMMARY OF COST PRO|ECTION PROCEDURES
step number ana lysis/actions example calculatioh (a 2,000 unit sincle-fam.
ILY DC VC LOFMENT IS PROPOSED IN A CALIFORNIA
COMMUNITY OF 16,000. ILLUSTRATIVE CALCULA-
TIONS ARC FOR FUBLIC SAFETY COSTS ONLY. SEC
EXHIBIT 6 FOR CALCULATIONS FOR ALL FUBLIC
SERVICES.)
1
J
Using blended multipliers (or
household tire end school -441
children t determine the magnitude
end rale o( populatlon/student
growth
At example community IsInCallfornla.use drmog raphlc multi-
pliers for Western region, Pacific subregion These multipliers
Indicate a total development generated population of 7,653
residents and 2,284 public school-age children
Using the population projected In
step l, select appropriate e spend I
turc multipliers and determine the
rate of change In these multipliers
As example community has an annual growth rate of 17% and
has a population of 16,000, use current expenditure multi
pllen foe communities of 10,000 25.000 population and an
annual growth rate of 1 3 to 2.0 percent. As development will
Increase the community's population to 23,652 (16P0O
7,652} and the community's annual growth rate to over 2
percent, use future expenditure multipliers for communities
of 10,000-25,000 population and an annual growth rate of
over 2 percent. The future 4o ratio H determined by dMdlng the future expenditure multi-
pliers by the current expenditure multipliers For public safety
service the following multipliers are therefore used (see C xhlblt
6,columns 3 to 5 for multipliers for other services)
Currant ttptndi-
tuft Multlp/itn
Future £ Mptndl
tuft Mu/tlp/im
i uturt'Cufftnt
l Mptndlturt
Mulllpi/tr Ratio
Optroting
Copitot Optroting
Capitol Optroting Copitot
0 82
0.8 1
0.82
1 00
I 00
1.23
3 01 vide total operating and capital The California community expends 53832 In public safety per
outlays for each service category capita operating costs and 55.15 in public safety per capita
by the existing local population capital costs,
to calculate current average
operating and capital expenditures
per capita.
4
f roject future per capita cost by
service category by multiplying the
per capita expenditures determined
In step 3 by the multiplier rateof-
change ratios calculated in step 2.
Current per capita costs arc multiplied by the futurc-to expenditure multiplier ratios to determine future per capita
costs. For public safety the following numbers are used (see
Exhibit, column 7 for other public service calculations):
F uturt i Mpendlturt X
MuitipHtr Ratio
Cufrtnt Annual
Ftr Capita
£ Mptndlturt
Futuff Annual
( Mptndlturt
Ftr Capita
Optroting Capital
Optroting Capital Optroting Capital
IDO 1.33 53832 55.15 5 )8 3 2 56 33
5
Determine future net annual costs
by multiplying the future expendi-
tures per person and per pupil by
the communitys future population
and then subtracting the costs that
would be Incurred even If there
were no growth.
Future annual costs equal the future per capita expenditures
multiplied by the future total population The net cost sttrl
buted to an incoming development equals the difference
between what costs will be (future annual costs) and what
they arc today (current annual costs). The 2.000 unit single-
family development therefore generates 5 )62.072 In public
safely costs
Futurt Annual F uturt futurt Total Currtnl
£ Mptndlturt Municipal Annual £ Mptndi Annual
Ptr Capita Population turtt f Mptndlturt1
Ntt Annual
l Mptndlluftt
Optroting Capital
Uptrvllne Capital Optratln* Cap-la' Capital TOTAL
it 33 23.657
Rnrrhpl 1 anrl
*911.075 ||49 717 *616.570 HJ.400 *794.755 *67.31 7 362.077
listokin. Practioner's Guide to Fiscal Impact
in j?


22
extensive site specific research, the technique is used to determine the
existing capacity levels for each service category (excess or
deficient). The estimated demands of the new development are then
combined with the existinq capacity levels. It can then be determined
whether the growth will be accommodated by the excess capacity or
aggravate the existinq deficient capacity of each of these service
categories.
In order to determine the existing capacity levels, estimates must
be prepared by the municipal personnel most directly related to each
service category. Since the Case Study method is costly and time
consuminq to implement, it is usually only used when none of the other
techniques are suitable or if very specific information is desired.
The Case Study method is based upon the following four premises:
1) Each community is unique in the amount of excess or deficient
capacity provided. The existing capacity level is a very
important factor in future service extensions.
2) The most accurate indicator of future service costs is the
marginal change to provide services in response to the existing
excess or deficient service capacity.
3) The existing excess or deficient capacity should be determined by
comparison against local service levels, not national standards.
4) The department heads of each service category is the most logical
person to accurately estimate future expansion within each
category.
The primary advantage of the Case Study method provides extremely
detailed predictions of future costs of operation and capital facilities by
service category. The disadvantage of such a method is that it is a very
complex and time consuming technique. Extensive interviews and on-site
review is necessary. Figure II 4 presents a summary of the procedure for
this method.


FIGURE II 4
STEP NUMBER
I
2
3
4
5
6
CASE STUDY FISCAL IMPACT METHOD: SUMMARY OF COST PROJECTION PROCEDURES
ANAL YSISIACTIONS
Contact key* public official!, cj., city
mana|er, municipal administrator, super-
intendent of schools.
Categorize public service functions and
delineate responsibilities by local municipal
and school district services.
Determine pretence or absence, and magnitude
of any existing public operating and capital
excess or deficient capacity for various public
services.
EXAMPLE CALCULATION (A 3,000 UNIT PUD IS PROPOSED IN AN ILLINOIS COMMUNITY
ILLUSTRATIVE CALCULATIONS ARE FOR POLICE COSTS ONLY. SEE EXHIBIT 3 FOR
ALL CALCULA TIONS FOR PUBLIC SERVICES)
Use Census of Governments' service categories to group local expenditure
categories. Police protection It classified as follows:
Census of Governments Typical Line Item
Service Category Budget Classification
PUBLIC SAFETY Department/Divlslon/Offlce
Police Protection: of: Police, Traffic Control
and Maintenance
Interview local officials to determine existing slack or excess capacity In local
services. The example community hat the following police operating status
(tee Exhibit 3, Column 2 for status of other public services).
Governmental Functions Capacity Determination
Excess Deficient
Project population and student Increases
through the use of appropriate multipliers.
Estimate population-induced service demand,
using primarily service standards and capital
ratios.
Interview local public officials to determine how
their respective departments will respond to
growth (given Identified areas of existing service
excess or deficiency and the rough gauge of
population-induced demand) In terms of expand-
ing or not expanding their operating and capital
capacities.
Project the costs that will be Incurred by differ-
ent public lurlsdlctions as a consequence of the
manpower and facility expansions pinpointed
In step 5,
PUBLIC SAFETY
Police Protection: +1 Dispatcher -2 Patrolmen
As the example community Is In Illinois, use demographic multipliers for North
Central region and East North Central subregion. These multipliers yield a total
pro|ect resident population of 8,360 residents. This population estimate, multi-
plied by appropriate service standards, gives an estimate of the pro|ect population-
induced demand. For example, the service standard for policemen In North Central
communities of 10,000 to 2J,000 population is 1.72 police per 1,000 residents.
Consequently, a PUD of 8,360 residents will necessitate 14 (8.360 x 1.72) police-
men (see Exhibit 3, Column 3 for calculations for other public services).
Police officials In the example community estimate that the PUD will require the
hiring of 16 patrolmen (see Exhibit 3, Column 4 for calculations for other public
services).
Governmental Functions Local Service Response
----PUbTIC SAFETY----------------------------------------------------------
Police Protection: 16 Patrolmen
As the average cost per patrolmen In the Illinois community Is {16,100 and the
PUD requires the hiring of 16 patrolmen, the PUD generates public safety oper-
ating costs of $257,600 ($ 16,000 x 1 for other services).
ho
go
Source:
Burchell and Listokin, Practioner's Guide to Fiscal Impact Analysis, p. 17


24
PRESIDENTIAL PROJECTION TECHNIQUES
Case Study
This method was described in detail previously under Residential
Projection Techniques.
Proportional Valuation 3
The Proportional Valuation method is an average costing technique
which relies on property values to determine the impact on commercial or
industrial development on service costs. The appropriate percentage of
total municipal expenditures is allocated to the existing nonresidential
land uses in the municipality. Then a portion of the nonresidential
expenditures is allocated to the proposed conmercial or industrial
development. It is premised upon the concept that "relative real property
3
values represent shares of municipal costs." This is a relatively
accurate procedure; however, as the property value of the nonresidential
development begins to deviate significantly from the average property value,
the costs attributed to the development are either over or under estimated.
The next step is to compensate for this over or under-estimation by using a
refinement coefficient to correct the direct proportional allocation of
service costs.
The information necessary to implement the Proportional Valuation
method is relatively accessible: property value for the proposed
development, total value of all nonresidential property within the
municipality, and total property value for all residential property within
the municipality. The refinement coefficients are available in Burchell and
Listokin's Fiscal Impact Guidebook. This method is most applicable to
developments where the anticipated increase in employment is not excessive
or extremely small.
This method is based upon the following assumptions:


25
1) As the intensity of land use increases, so too does the municipal
expenditure associated with the property.
2) An increase in property value is equivalent to an increase in the
intensity of land use.
31 As the property value of commercial or industrial land beains to
deviate from the average property value, a refinement coefficient
must be used to correct the direct proportional relationship in
the allocation of service expenditures.
The main attribute of the Proportional Valuation technique is that it
can be completed in a rather short time frame and the data required are
relatively accessible. The potential flaw with this method lies in the
validity of the refinement coefficients. According to the preparers,
Burchell and Listokin, the coefficients were "derived from retrospective
analyses which compared the actual expenditure generated by nonresidential
facilities to those projected using a simple proportional valuation
strategy. The refinement coefficients are initial approximations which must
4
be significantly expanded in the future."
Figure II 5 provides a step-by-step review of the Proportional
Valuation methodology.
Empl oyment Anticipation
The Employment Anticipation method is a marginal costing technique
which is used to project the impact of commercial or industrial development
on local service expenditures. This technique relates employment levels to
per capita municipal expenditures. The change in expenditures is predicated
on an anticipated increase (or decrease) in commercial or industrial
employment and per capita municipal expenditures. Burchell and Listokin
have developed coefficients by service category and for
statutory/unclassified expenses and debt service to predict the change in
local costs relative to the change in local employment. In more basic


FIGURE II 5
PROPORTIONAL VALUATION FISCAL IMPACT METHOD: SUMMARY OF COST PROJECTION PROCEDURES
STEP NUMBER ANAL YSIS/ACTIONS EXAMPLE CALCULATION (A 100,000 ft.1 SHOPPING CENTER IS PRO-
POSED IN A TEXAS COMMUNITY. SEE EXHIBIT 8.J
1
2
3
4
Source:
Obtain basic data including municipal expenditures, real
property valuation, and land parcel characteristics of the
locality where the cost revenue analysis Is being conducted.
Assign a share of existing municipal expenditures to existing
total nonresidenlial uses by using proportional valuation and
refinement coefficients applied toward total local municipal
expenditures.
Project future total annual nonresidenlial costs induced by
nonresidential facility being studied by using proportional
valuation and refinement coefficients applied toward total
local municipal expenditures induced by growth.
Assign total annual nonresidenlial facility costs to service
categories (general government, public safety public
works, etc.).
Burchell and Listokin, Practioner's
The Texas community has the following expenditures/property values:
Total municipal expenditures: $2,692,031
Total real property value: $1 34,734,889
Nonresidential real property value: $41,841,111
Incoming facility nonresidential property value: $4,000,000
The proportion of nonresidential value to total local property value is .31
($ 41,841,111). The refinement coefficient is derived by comparing the
($ 1 34,734,880)
average value of nonresidential parcels to the average value of all parcels (see
Exhibit 8). Total nonresidential induced municipal expenditures are therefore:
Total Existing
Municipal Ex-
penditures
Attributable to
Nonresidential
Uses
Total Local
Municipal
Expenditures x
Proportion of
Nonresidential
Volue to Total
Local Real Pro- Refinement
perty Value x Coefficient
$1,084,897
$2,69 2,OS 1 x (.31)
x (1.30)
The proportion of incoming facility to total local nonresidential property value
Is .096 ($ 4 000.000). The refinement coefficient is derived by comparing the
iHi:i4i:nf)
value of the new nonresidential facility to the average value of local nonresiden-
tial parcels (see Exhibit 8). The municipal costs generated by the incoming
facility are therefore:
Municipal Costs Total Existing Proportion of Refinement
Allocated to the Municipal Ex- Facility to Coefficient
Nonresidential penditures At- Total Local
Facility * tributable to X Nonresidential X
Nonresidential Real Property
Uses Value
$15,623 $1,084,897 x (.096) * (-15)
Case studies reveal that commercial facilities have the largest impact on public
safety and publit; works services. Other services are only minimally affected.
These case studies suggest the following disaggregation of total projected
expenditures:
Distribution of Total Costs
Percentage Dollars
Municipal Service Category General Government 6 $ 937
Public Safety 75 11,717
Public Works 15 2,343
Health and Welfare 2 313
Recreation and Culture 2 313
TOTAL 100 $15,623
Guide to Fiscal Impact Analysis, p. 31.
ro
CD


27
terms, the coefficients mean that an increase of one employee will increase
per capita local costs by a certain percentage.
The data necessary to implement the Employment Anticipation method
are: the current local population estimates, existing per capita cost by
service category, projections of future employees due to nonresidential
development, and coefficients of per capita percent change per employee.
This method is most applicable to nonresidential developments which will
have either a very high or low ratio of employees/square footage. If the
Proportional Valuation method were used, an art gallery would be assigned a
lower cost than if the Employment Anticipation method due to the relatively
low number of employees needed by such an establishment.
The main advantage of the Employment Anticipation technique is that it
predicts future local costs as a function of additional employees
anticipated. This method is also relatively easy to implement and low
cost. The main disadvantage to using this method is that the coefficients
for the change to per capita cost are determined by the population of the
locality and the direction of growth. Since the cities are grouped within
rather large population classifications (e.g., 50,000 99,999), there is a
likelihood of error due to applying the same coefficient to all cities
within the category. The costs for a development in a city of 99,999 will
appear higher than for a city of 50,000. This method is also only
applicable to cities with populations under 150,000 people.
Figure II 6 demonstrates the procedures for implementing this method.
REVENUE PROJECTION TECHNIQUES 5
According to the United States Census Bureau there are four
classifications of revenue: general revenue, utility revenue, liquor store
5
revenue, and insurance trust revenue. Since utility, liquor store and
insurance trust revenues do not provide significant additions to a
municipality's general fund, general revenue is the only type considered in


FIGURE II 6
EMPLOYMENT ANTICIPATION FISCAL IMPACT METHOD: SUMMARY OF COST PROJECTION PROCEDURES
STEP NUMBER A NA LYSISI ACTIONS EXAMPLE CALCULATION (A 100,000 ft* INDUSTRIAL BUILDING IS
PROPOSED IN A COMMUNITY OF 16,000. ILLUSTRATIVE CALCULA-
TIONS ARE FOR PUBLIC SAFETY COSTS ONLY. SEE EXHIBIT 10 FOR
CALCULATIONS FOR ALL PUBLIC SERVICES.)
1
2
3
4
5
6
Using Information from the published local budget and the This example community has a $726,400 annual expenditure for public safety,
most recent population estimate, determine per capita muni- Per capita public safety costs are therefore $45.40 ($726,400 4 16,000)
dpal expenditures by service category.
Obtain anticipated employment for the new commercial
or Industrial facility from developer estimates or by multi-
plying the square footage of the new facility by the average
number of employees per square foot for a comparable facility.
As comparable commercial facilities employ one worker per 300 ft*, the pro-
posed 100,000 ft commercial structure will employ 333 workers
(333 100,000)
io6
Using the known direction of growth over the previous decade
and current population sire, choose the applicable percent-
age increase per employee, by service category, for municipal
service costs.
Multiply the new employment Increment by the percentage
increase In costs per employee to determine total percentage
increase for each service.
Multiply the percentage increase In per capita expenditures
by service category by the existing per capita expenditures In
that service category to determine the dollar Increase per
capita for each service.
Multiply the Increase In per capita expenditures for each service
category by the existing population to determine the cost
increase assignable to the new nonresldentlal facility for each
service. Total the expenditure Increases for each service
category to obtain the aggregate assignable costs.
As example community is: (1) growing in population; (2) currently contains
16.000 residents; and (3) incoming commercial use is an industrial facility,
use industrial employment anticipation multipliers for growing communities
of 10,000 to 24,999 population (see Exhibit 11). The public safety multi-
plier for the example community is 0 0000162 (see Exhibit 10. column 4 for
multipliers for other services).
Percentage increase
in costs per public
safety employee
.005395
Public safety
multiplier x
.0000162 x
Expected number of
employees
333
(See Exhibit 10, column 6 for calculations for other public services.)
Dollar Increase in
per capita public
safety costs
10.244933
Public safety
per capita cost x
145.40 x
Percentage change In
costs per public
safety employee
.005395
(See Exhibit 10,colum
Public safety cost
Increase
$3,919
(See Exhibit 10. columr
i 8 for calculations for ott
Dollar Increase
* in per capita x
public costs
$0.244933 x
9 lor calculations for oth
:r public services.)
Existing municipal
population
16,000
r public services 1
rv>
oo
Source:
Burchel1 and Listokin, Practioner's Guide to Fiscal Impact Analysis, p. 36.


29
the preparation of a fiscal impact analysis (Burchell and Listokin, 1983, p.
154). General revenue is comprised of locally generated revenue (own
source) and intergovernmental transfers (state and federal).
As can be seen in Figure II 7, most municipalities throuahout the
country rely more heavily on own source revenues than on intergovernmental
transfers (70.1% own source vs. 29.9% intergovernmental transfers). School
Districts, however, appear to rely much more on the intergovernmental funds
than cities (55.6% own source vs. 44.4% intergovernmental transfers).
Own Source Revenues
Municipalities generate revenue by levying taxes (e.g., property,
sales, income) or through direct charges (user and permit fees) and
miscellaneous revenues (interest, fines, and penalties).
Tax Revenue Projection Techniques
Revenue projection techniques for the following five taxes most
commonly levied by municipalities will be discussed: Real Property Tax,
Real Estate Transfer Tax, Sales Tax, Per Capita Tax, and Earned Income Tax.
1) Real Property Tax
Property tax usually generates the largest share of own source
revenues. Colorado law has established 1977 as the base year for
determining the actual value of the property. Vacant land and
nonresidential property in Jefferson County is being assessed at
twenty-nine percent (29%) of the 1977 actual value. Residential
property is assessed at twenty-one percent (21%) of the 1977 actual
value. Each jurisdiction (county, city, special district) then levies a
percentage tax on the assessed valuation. This tax is usually


PERCENT OF GENERAL REVENUE
30
FIGURE II 7
CHANGE IN REVENUE SOURCE DEPENDENCY IN MUNICIPALITIES AND SCHOOL DISTRICTS
(1957-1972)
LEGEND
TOWNSHIPS & MUNICIPALITIES SCHOOL DISTRICTS
Source: Burchell and Listokin, Fiscal Impact Handbook, p. 156.


31
called a mill levy; one mill is equal to one-tenth of one cent ($.001).
A typical example of how the property tax is calculated is as follows:
ACTUAL VALUE ASSESSED VALUE
(1977 Base Year)
Land $ 9,190 X .21 = Land $1 ,930
Building 20,429 X .21 Building 4,290
TOTAL $29,619 X .21 = TOTAL $6,220
Local Mill Levy = 5
The local property tax revenues = $6,220 (Assessed Value) x .005 (mill
levy) = $31.10.
If a development is proposed for 500 additional housing units, the
calculation would be expanded as follows:
Assessed Value/Unit X Mill Levy x Number of Units = Total Revenues
$6,220 X .005 x 500 = $15,550
2) Real Estate Transfer Tax
Some cities generate revenue by levying a tax on the transfer of real
estate. In order to project additional annual revenue from this tax,
due to new development, a baseline figure for the average annual
turnover rate must be established. According to the 1970 Census,
approximately twenty percent of the owner-occupied housing stock is
transferred annually.^ The revenue can then be calculated as follows:
Market Transfer Number Annual Percent of Housinq Total
Value/Uni t x Tax Rate X of Units x Turnover = Revenues
$100,000 x .011 X 500 x .20 = $110,000
Sales Tax
A sales tax can be levied on the retail sales price of any good.
Colorado levies a 3 cent sales tax. The Rapid Transit District also


32
levies a 1/2 cent sales tax in the Denver Metro area. Another 1/2 cent
goes for open space. Each municipality or county may levy such a tax by
a vote of the people. In order to estimate local sales tax revenues due
to residential development, a determination must be made for the
proportion of total local sales attributable to the existing residents.
This may be done by comparino the shopping patterns at various
commercial facilities throughout the city; however, it is very difficult
to get an accurate assessment. One possible method would be to survey
people as they entered or exited the shops. Another, much less accurate
method would be to do a survey of automobile license plates in the
parking lots of conmercial developments. The county government can run
a computer check cross-referencing the license plate numbers with home
address of owner. The problem lies in that many people move within the
metro region and do not notify the Division of Motor Vehicles of their
address change.
Once the proportion of total sales due to residents is obtained, the
additional revenue from sale tax can be estimated by the following
method:
Aggregate Family Income
of New Development
Pre-Development Local
Aggregate Family Income
Current
x Revenues x
from
Sales Tax
Resident
Proportion of
Total Local
Sales
$ 2,500,000
$87,3DD7JUD (or .029) x $500,000 x .5
Additional
Revenue
Due to
Growth
$7,250.00
Sales tax generated by nonresidential development can be estimated by
the following means:
Gross Annual Sales Gross Floor Area Gross Additional
Per Square Foot x of Facility = Sales Income
$75.00/sq.ft. x 50,000 sq.ft = $3,750,000
The next step is to estimate the effect the new development will have
existing businesses in the area. A coefficient must be determined to
estimate the new business attracted to the development and discounting


33
the amount of business drawn from existing businesses. For example, if
a donut shop locates within the market area of another donut shop, it
cannot be anticipated that twice as many donuts will be sold. The new
shop will take away a certain percentage of customers from the old shop
in addition to gainina new customers.
I.
Gross Annual Sales x
Assumed New
Business
Coeffi cient
Additional Gross Income
Subject to Sales Tax
$3,750,000 x .75
$2,812,500
II. Total Additional
Sales Tax Generated x
Local Sales
Tax Rate
Additional Sales Tax
Revenue Due to Growth
$2,812,500 x .025
$70,312.50
4) Per Capita Tax
A per capita tax is a lump sum levied by the municipality on all working
age adults (18 to 65 years of age). Potential revenues are estimated as
follows:
Number of Adults Number of Additional
Average Household Size x Per Capita x New Housing = Revenue due
Minus School-Age Children Tax Units to Growth
3.48 1.01 = 2.47 x $20 x 500 $24,700
5) Earned Income Tax
A local income tax is usually levied on earned income (before
deductions). The typical procedure is to assume that a family spends a
certain proportion of their monthly income on housing. Assume that
twenty-five percent (25%) of the gross monthly income goes to pay rent
or mortgage payments (principal, interest, taxes and insurance), then
the total monthly income can be obtained by multiplying the housing cost
by four (4). Annual income is calculated by multiplying the monthly
income by twelve (12).


I.
34
Averaae Annual Income
(Homeowners)
$36,000
250 Sinaie Family Homes
$750.00 x 48
Average Annual Income
250 Apartments (Renters)
$350.00 x 48 $16,800
II. Number of Total Additional
Total Residential X Income Tax Rate X Units Revenue Due to Growth
$36,000 (Sing!e Family) X .003 X 250 $27,000
$16,800 (Apartments) X .003 X 250 $12,600 $39,600
Miscellaneous Revenues/User Fees
The municipality also generates revenue by several means in addition
to taxation. The most common methods are: 1) Interest Earnings, 2) Fees
and Permit Issuance, 3) Fines, Penalties and Forfeitures, 4) User Charges
for Water, Sewerage and Sanitation Services, and 5) Miscellaneous User Fees.
1) Earnings on Interest
In Colorado, municipalities have the opportunity to invest a portion of
their unused revenues in short term securities. In high growth periods,
the excess revenues increase and a greater portion of the unused funds
are invested. During slow growth periods, the City must rely on its
cash reserves and therefore decreases the issuance of tax anticipation
notes. The additional potential revenue generated can be estimated by
the following method:
Current Annual
Interest x
Earnings
Total Assessed Valuation
of New Development
Total Assessed Valuation
of All Local Properties
75,000
TT^BFTOT
or (.638)
Estimated Earnings
on Investment Due
to Growth
$43,900
x
$1 ,668.20


35
2) Fees and Permits
Most municipalities issue permits or charge fees for the review of
building plans, and require inspections for all phases of construction.
Revenues from new development can be estimated as follows:
I. Annual Revenue
Generated from 7 Number of Units
Fees and Permits Under Construction
Fee/Permit Revenue per
Dwelling Unit
$100,000
7,200
$13.89
Permit/Fee
Revenue per x
Dwelling Unit
Number of
Antici pa ted
Additional
Dwell ing Uni ts
Additional Revenues
from Fees and Permits
Due to Growth
$13.89 x
500
$6,945.00
3) Fines, Penalties and Forfeitures
Cities have the ability to levy fines or penalties for violation of
municipal ordinances. One example of this would be a fine levied by a
municipal judge for a traffic violation. The increased revenue due to
development can be estimated on a per capita basis.
I. Existinq Annual Current
Revenues - Population = Per Capital Revenue
(Fines, Penalties) Estimate from Fines/Penal ties
$50,000 f 15,000 = $3.33
II. An ti ci pa ted Additional Revenue
Per Capi ta Revenue x Population = from Fines/Penalties
from Fines/Penalties Increase due to Growth
$3.33 x 1,500 = $4,995.00
Water, Sewerage, Sanitation ! Service Charges
Some Colorado cities provide water, sewerage and sanitation services as
an integral part of their program. The services are provided by City


36
personnel and the user fees are returned to the general fund. The
technique for estimating the increased revenue from user charges is as
follows:
I. Annual Water
Daily Water 1 Mumber Number of Consumpti on
Consumption x of X Additional = (Gallons) due to
(Gallons/Day) Days Dwelling Units New Development
250 Units x 365 X 500 = 45,625,000
(Single Family)
200 Units x 365 X 500 = 36,500,000
(Mul ti -Family)
II. Annual Water Consumption Addi tional
(Gallons) due to New X Water Rate = Revenue from Water
Development Charges due to Growth
45,625,000 X $2.00/1,000 Gallons = $91,250
36,500,000 X $2.00/1 ,000 Gallons = $73,000
5) Miscellaneous User Fees
Depending upon the circumstances, a municipality may charge fees for
specific uses such as building rental or park and recreation class
registration. Revenues associated with potential development may be
estimated on a per capita basis as follows:
I. Annual Revenues
Mi sc. User Fees
$500,000
II.
Per Capi ta Revenue
from User Fees
Current Population
7 Estimate
7 25,000
Anti ci pa ted
x Population =
Increase
Per Capita Revenue
from User Fees
$20.00
ditional Revenue from
er Fees due to Growth
$20.00
x 1,200
$24,000
INTERGOVERNMENTAL TRANSFERS
Intergovernmental transfers to cities come from both the State and
Federal governments.


37
Federal Transfers
The major sources of the Federal transfers are the Federal Revenue Sharing
Program and the Community Development Block Grant Program.
1) Revenue Sharing
Federal Revenue Sharing was established by the State-Local Fiscal
Assistance Act of 1973. The funds are distributed to State and City
governments according to the following complex formula:
Current State State
Estimate of Local Local Tax Per Capi ta Total Local
Fed.Rev. Shrq. x Population x Effort x Income = Share of
Funds to Local State State Tax Local Fed. Rev.
Governments Population Effort Per Capita Income Shrg. Funds
It is evident that the greater proportion of funds is allocated to
cities with the largest general populations, higher tax revenue/personal
income ratios and higher percentage of low income residents.
The method to project the increase in Federal Revenue Sharing funds due
to an increase in population (very large development or annexation) is
as follows:
I. Current State Existing + New State Total Local
Estimate of Increased New Local Per Capita Share of
Fed.Rev.Shrg. x Population x Tax Effort x Income = Fed.Rev.
Funds to New State New State New Local Shrq.
Local Govt's Population Tax Effort Per Capi ta Funds
Income
II. New Local
Per Capi ta
Additional Newly Dev el. Income Local
Current Local Area Tax (Inc. New) Additional
Estimate x Population x Effort x Dev el. = Fed.Rev.
of Local Existing + New Local New Devel. Shrq. Funds
Fed.Rev. Additional Tax Effort Per Capita due to
Shrq. Funds Local (Inc. New) Income Growth
Population Dev el.)


38
Since this method is rather extensive, per capita estimates based upon
the previous year's allocation will usually suffice for smaller scale
projects.
2) Community Development Block Grants
Community Development Block Grants (CDBG) were established under Title I
of the Housing and Community Development Act of 1974. Prior programs
such as Model Cities, Urban Renewal, Neighborhood Facilities, Housing
Rehabilitation, and Water and Sewer Facilities were combined into the
1974 CDBG Program. Funds are allocated according to population, poverty
level, and the degree of overcrowding in housing. The greatest
proportion of funding is allocated to large cities with a greater
percentage of families with incomes below the poverty level and crowded
housing conditions.
Increases in a municipality's CDBG funding due to new growth is highly
unlikely unless a new low income housing project is planned or an
existing low income area is annexed to the municipality. The basic
methodology for such an annexation follows:
I.
Current CDBG
Funding
Allocated
to Munici-
pal ities
Statewi de
New Local
Population
(Inc.
x Annexation) x
Hew State
Population
Local %
Local Average Population
No. Persons Below Poverty
per Room (Inc. Level (Inc.
Annexation) x Annexation)
State Average State %
Persons per Population
Room Below Poverty
Level
Local
Share
CDBG
II. Annexed Area
Average No. % Population
Local Population of Persons per Room Below Poverty
Share x Annexed Area x (Annexed Area) x Level
CDBG New Local Local Average Local %
Population (Inc. No. Persons Population
Annexed Area) per Room (Inc. Below Poverty
Annexed Area) Level (Inc.
Annexed Area)
Additional
CDBG
Revenues
Due to
Annexati on


39
STATE TRANSFERS
The State government redistributes several various State levied taxes
back to local governments. The most common taxes are: Gasoline Tax,
Cigarette and Alcohol Tax, Sales Tax, Income Tax, Public Utility Franchise
Tax, Business Tax, and State Road/Lighting Assistance.
1 ) Gasoline Tax
Colorado is one of many states that allocates a portion of the taxes
generated from the sale of gasoline and diesel fuel. The city's
allocation is dependent upon the local population and road mileage. The
increase in revenue due to development can be projected by the following
method:
Existing Statewide Gasoline Tax x New Total Local Population (Inc. Development) New Total Local Road Mileage + (Inc. Development)
for Local Distribution New Statewide Population New State Road Mileage
2
Total Local
= Gasoline Tax
Revenues
II. "Population Due to Road Mileage with
Total Local x Development + Development
Gasoline Tax New Total Local New Total Local
Revenues Population Road Mileage
(Inc. Development) (Inc. Development)
" 2 _
Additional
Gasoline Tax
Revenues
Due to Growth
2) Cigarette and Alcohol Taxes
Some states redistribute a portion of the taxes levied on tobacco
products and liquor sales. The local allocation is dependent upon the
proportion of these taxes collected locally and the local proportion of
total state population. The following example provides the methodology
for determining the increased revenues due to growth.
Existing Statewide Cigarette/Liquor Tax for Local x New Local Population (Inc. Development) Additional Local State Sales Tax + Collected
Distribution New Statewide Population Total Local State Sales Tax Collected
2 _
Total
Local
Ci garette/
Liquor Tax
Revenue


40
II. Increased Tax
Total Local Population Due Collected w/in
Cigarette/ x to Development + Development
Liquor Tax New Total Increased
Revenues Local Population Local Tax Collections
2
3) State Levied Sales Tax
Total Additional
Cigarette/
Liquor Tax
Due to Growth
Each state that levies a tax on the sale of retail goods usually
reallocates a certain proportion of the taxes collected within a
municipality back to that jurisdiction. In Colorado, however, none of
the sales tax is redistributed. According to various surveys of
consumer activity, typically residents purchase seventy-five percent
(75%) of their total consumer goods locally, and twenty-five percent
(25%) of their shopping goods locally. Consumer goods are goods
purchased from grocery, drug, liquor, hardware, beauty, barber, baking,
laundry or cleaning establishments. Shopping goods are items purchased
from department or general merchandise stores.^
Below is an illustration of the methodology for projecting the local
share of state sales tax revenue generated by a new development.
(500 Multi-Family
I. New Development
Aggregate Family
Income
(500 x $20,000)
$10,000,000
II. Amount Spent
on Goods
$2,000,000
$1 ,000,000
III. Value of Taxable
Convenience Goods
its)
Percentage
x Spent on Goods =
x .2 (Convenience) =
x .1 (Shopping)
x Taxable Share =
x .50 (Convenience) =
x .90 (Shopping) =
Percentage Spent
x Locally =
x .75
Amount Spent
on Goods
$2,000,000 (Convenience)
$1 ,000,000 (Shopping)
Taxable Share of Goods
$1 ,000,000 (Convenience)
$ 900,000 (Shopping)
Value of Taxable
Convenience Goods
Purchased Locally
$750,000
$1 ,000,000


41
IV. Value of Taxable
Shopping Goods
$900,000
V. Value of Taxable
Goods Purchased
Locally
($750,000+$225,000)
or ($975,000)
VI. State Collected
Sales Tax
$29,250
Percentage Spent
x Locally
x .25
Sales Tax
x Rate
x .03
State Determined
x Percentage of
Local Return
x .10
Value of Taxable
Purchased Locally
$225,000
State Collected
Sales Tax
$29,250
Local Share of Additional
State Sales Tax Revenue
Due to Growth
$2,925
4) State Levied Income Tax
Many states reallocate a small percentage of the State Income Tax back
to the municipalities. However, Colorado does not redistribute any
state income tax revenue. The process in other states is usually based
solely on the municipality's population in relation to the total state
population. Increased local revenue due to development is estimated by
the method described below:
I. Existing State Income Total Local Population Local Share of
Tax Revenues for Local x (Inc. Development) = Income Tax
Distribution Total State Population Revenue
II. Proposed Population
Local Share of x of Development
Income Tax Revenue Total Local Population
(Inc. Development)
Additional Local Share
Income Tax Revenues
due to Growth
5) Public Utility Franchise/Gross Receipts Tax
The majority of states levy a franchise tax on public utilities such as
telephone, gas, electric, or cable television. A gross receipt tax is
usually levied on the remaining utilities: water, sewerage, street,
railroad. The city usually receives a percentage of the taxes paid by
the utility based upon the locality's share of lines or mains. In order
to predict the increase due to development, the procedure below must be
followed for each utility:


42
I.
Current Telephone
Utility Tax for
Local Distribution
II. Total Local
Revenues from
Telephone Tax
Current Local
Telephone Valuation
x (Inc. Development)
Total Statewide
Telephone Valuation
Valuation
x Current
Local Telephone
(Inc. Development)
Total Local Revenues
from Telephone Tax
Additional Local
Telephone Tax
Due to Growth
6) Business Tax
Most states levy a franchise tax on the gross receipts of a business.
The tax revenue attributable to new business development can be
estimated by two different methods.
A. Incorporated Business
Estimated Municipal Share of
Annual x State Levied Corporate
Gross Receipts Business Tax
Local Share of
Corporate Business
Tax Due to Development
B. Unincorporated Business (Rental Space in Industrial Park)
I. Estimated
Annual Gross
Receipts per
Rental Unit
Municipal Share
of State Levied
Unincorporated
Business Tax
Local Share
of per Unit
Unincorporated
Business Tax
Due to Growth
II. Local Share
of Per Unit
Unincorporated x
Business Tax
Due to Growth
Number of Units
Total Local
Share of
Unincorporated
Business Tax
Due to Growth
7) Highway User Fund
This State program allocates funds to municipalities for road
construction, maintenance, repair, snow removal, and the installation of
street lighting. Colorado provides assistance based on the proportion
of State road mileage and population within the municipality. The
potential increase in aid can be estimated as follows:


43
I. New Local New Local
Current Highway Population Road Mileaae Total Local
Funds for Local X (Inc. Dev.) + (Inc. Dev.) = Highway User
Distribution New State New State Funds
Population ~r Road Mileage
II. Addi tional Addi tional
Population Road Mileage
Total Local Due to Due to Highway User
Highway User X Development + Devel opment = Funds due to
Funds New Local New Local Road Growth
Population Mil eaoe
(Inc. Dev.) (Inc. Dev.)
SECONDARY IMPACT PROJECTION TECHNIQUES
As stated earlier, Burchell and Listokin do not address secondary
impacts because they believe it "is nearly impossible to accurately predict
the secondary consequences of growth, and that there is a potential for
double counting when primary and secondary impacts are studied
Q
simultaneously." Muller; however, asserts that:
"From a community perspective, the following secondary growth
effects of new development which have fiscal implications
require consideration:
1) Changes in the value of surrounding land and structures.
2) Increased demand for goods and services resulting from
residential development.
3) Increased demand for housing and services as a result of
conmercial or industrial development.
4) Increased activity on the periphery of new development.
g
5) Public Sector Capital Investments"
Even if there is no precise methodology for accurately predicting
secondary impacts, rough estimates should at least be made in order to
determine if further study is necessary. Each of Muller's points will be
expanded upon in the following discussion.


44
1) Changes in Surrounding Property Value
A very general means of estimating the impact of development on adjacent
property values is by comparing sales prices or assessment figures for
property adjacent to similar types of developments before and after
construction. Inflation must be taken into account when using this
method. Muller asserts that "while land values contiguous to new
developments can be expected to rise in anticipation of future
development, particularly intensive development, this may be offset by a
proportionate reduction in relative land values elsewhere in the
community or region if total demand for housing and commercial
facilities is unaffected. In this case, increases in land value would
represent a locational shift rather than a net change."1^ Local
officials should attempt to assess the demand within the municipality
for the type of development being proposed.
2) Increased Demand for Goods and Services Resulting from Residential
Development
One possible method of determining the increased demand is very similar
to the technique for calculating the increased revenues from state
levied sales tax due to development.
I. New Development
Aggregate Family
Income
x Percentage Spent
on Goods
New Development Amount
Spent on Goods
$10,000,000
II. Existing
Aggre ga te
Family Income
x .2 (Convenience)
x .1 (Shopping)
x Percentage Spent
on Goods
$2,000,000
$1 ,000 000
Existing Total Amount
Spent on Goods
$2,500,000,000
x .2 (Convenience)
x .1 (Shopping)
$500,000,000
$250,000,000
III. Amount Spent on
Goods Due to
New Development
$2,000,000
$1 ,000,000
x Percentage Spent
Locally
x .75
x .25
Amount Spent on Goods
Locally Due to New
Development
$1 ,500,000 (Convenience)
$ 250,000 (Shopping)


45
IV. Existing Amount x Percentage Spent = Existino Amount Spent
Spent on Goods Locally
$500,000,000 x .75
$250,000,000 x .25
V. Existing Amount Spent
on Goods Locally =
Existing Occupied
Commercial Square Footage
$43,750,000
35,000,000 square feet of
Occupied Commercial Space
on Goods Locally
= $37,500,000 (Convenience)
= $ 6,250,000 (Shopping)
Amount Spent on Goods Locally
Due to New Development
Additional Commercial Square
Footage Required
$1 ,750,000
X Additional Commercial Square
Footage Required
The amount of additional commercial space required locally will be
approximately 1,400,000 square feet. The next step is to subtract
existing vacant commercial space for an estimate of new commercial space
required.
3) Increased Demand for Housing and Services as a Result of Commercial or
Industrial Development
Commercial development is rather unlikely to create a substantial need
for additional housing due to the nature of the employment. Since
retail workers are not highly paid and are commonly part of a two worker
household, they usually live in the community where they work (Muller,
1975, p. 30.).
Industrial development may substantially increase the demand for housing
if there is not a sufficient level of workers available locally. It
would be very difficult to estimate the percentages of workers which
would relocate near the new plant or commute daily; however, the
percentage of workers commuting would be much higher in a large
metropolitan area than in a more rural location. Therefore, the impacts
to municipal services would be less severe.
4) Increased Activity on the Periphery of the New Development
This concept is directly related to changes in surrounding property
value as discussed in Item 1 of this section. Property values rise due


46
to: inflation, speculation, or increased intensity of land use. Once
the property value rises beyond a threshold level, it is no longer
economically feasible to develop for low intensity land uses (single
family homes, churches, agriculture). The local officials should be
aware of this inevitability prior to approving high intensity land use
proposal s.
5) Public Sector Capital Investments
Large scale developments may indirectly lead to the eventual outlay of
substantial governmental funding for large scale capital improvements.
An example of this may be the expansion or relocation of major
roadways. Private developers are not generally expected to participate
in roadway improvements beyond the immediate vicinity of their
projects. The additional traffic will impact the existing road system,
and the local, state, federal governments will be responsible for
improving the traffic conditions.


47
FOOTNOTES Chapter II
^Robert W. Burchell and David Listokin, The Fiscal Impact Guidebook:
A Practitioners Guide (Washington D.C.: U.S. Department of Housing and
Urban Development, May, 1980), p. 3.
^Robert W. Burchell and David Listokin, The Fiscal Impact Handbook:
Estimating Local Costs and Revenues of Land Development (Piscataway, New
Jersey: Center for Urban Policy Research, 19B3), p. 68.
^Burchell The Fiscal Impact Guidebook, p. 23.
4Ibid, p. 23.
8u.S. Department of Commerce, Bureau of the Census, Classification
Manual, Government Finances, (Washington D.C.; Government Printing Office,
T97TT,-pTTF.----------------
^Burchell, The Fiscal Impact Guidebook, p. 33.
^Burchell, The Fiscal Impact Handbook, p. 196.
8Ibid, p. 2.
^Thomas Muller, Fiscal Impacts of Land Development: A Critique of
Methods and Review of Issues, (Washington D.C.; Urban Institute, 19/5), p. 28
10Ibid, p. 29.


III. LAKEWOOD, COLORADO


III. LAKEWOOD, COLORADO FISCAL IMPACT ASSESSMENT
HISTORY OF LAKEWOOD
Lakewood, Colorado is a very young city since it was incorporated just
sixteen years ago on June 24, 1969. The City operates under a
Council-Manager form of Government. The voters approved the present Home
Rule Charter in November of 1983.
An extensive network of special districts evolved in response to the
development which took place prior to Lakewood's incorporation. Lakewood
has still not become a full service city as many services continue to be
provided by special districts. Fire protection is provided by the Lakewood
Fire Protection District and the Bancroft Fire Protection District. Public
education is provided by the Jefferson County R-l School District while
public transit is provided by the Regional Transportation District. A
portion of the City is also served by the Foothills Parks and Recreation
District.
Water and sanitary sewerage services are provided by the following
twenty-seven (27) independent entities:
Alameda Water and Sanitation District
Bancroft-Clover Water and Sanitation District
Bear Creek Water and Sanitation District
Bennett-Bear Creek Water and Sanitation District
Bonvue Water and Sanitation District
Cedar Crest Water District
Crest Hill Water District
Daniels Sanitation District
East Jefferson County Sanitation District
East Lakewood Sanitation District
Green Mountain Water and Sanitation District
Highland Park Sanitation District
Highview Water District
48


49
Kelton Heights Sanitation District
Kelton Heights Water District
Lakehurst Water and Sanitation District
Lakewood Board of Water and Sewer Commissioners
Lochmoor Water and Sanitation District
Miller Heights Water District
Mount Carbon Water and Sanitation District
Mountain Sanitation District
Northwest Lakewood Sanitation District
South Lakewood Sanitation District
South Sheridan Water and Sanitation District
West Lakewood Sanitation District
Westland Water District
The City government is organized on a departmental basis. Figure III
- 1 illustrates this organizational structure. Each department is
responsible for providing the following services:
City Treasurer The Treasurer is responsible for the maintenance of all
City funds, includina paying necessary bills and opening City bank accounts.
City Clerk The City Clerk handles the official administrative record
keeping for the City, and provides general information to the City
Administration and the general public. The Clerk is also responsible for
holding municipal elections, voter registration, issuance of licenses and
permits, and central filing.
City Attorney The City Attorney is appointed by the City Council on a
contractual basis rather than as a member of the general staff. The
Attorney provides legal advice as reguired by the City Council or staff.
City Manager The City Manager is appointed by City Council to carry out
their policies, oversee the preparation and implementation of the Annual
Budget, and to assist the Council in decision making.
Municipal Court The Municipal Judges have jurisdiction to hear all City
Ordinance violations.
Finance The Finance Department is responsible for the accounting,
budgeting, information processina, purchasing, land and water acguisition,
sales tax collection, and printing functions of the City.


FIGURE III 1


51
Employee Relations The Department of Employee Relations is responsible for
personnel recruitment and training, labor relations, equal employment
opportunities, handling employee grievances, administration of employee
benefits, and other personnel-related functions.
Community Development The Department of Community Development is
responsible for coordinating land use and land development. The staff works
with developers requesting to rezone, plat, annex, or develop property.
Public Works The Department of Public Works is responsible for the
construction, operation, and maintenance of many public facilities. Staff
reviews development proposals, and oversees the planning, design, and
construction of many of the City's capital improvement projects.
Parks and Recreation The Department of Parks and Recreation is responsible
for the plannina, designing, and construction of parks in addition to
general park maintenance. Staff also provide various recreational services.
Public Safety The Department of Public Safety is responsible for the
welfare and safety of Lakewood's citizens.
DEMOGRAPHICS LAND USE
Lakewood has experienced an annual average growth rate of 2.3 percent
since 1970 (U.S. Census Bureau, 1970, 1980). In comparison to Jefferson
County and Denver, Lakewood appears to be experiencing moderate, but stable,
growth. Jefferson County's population increased over 57 percent in the ten
year period between 1970 and 1980 while Denver experienced a 4.5 percent
decline in population during the same period.
Lakewood's 1984 year end population was up to 127,600.^ The average
household size had decreased from 3.2 in 1970 to 2.7 in 1980. The smaller
household size resulted in a 55.4 percent increase in the number of housing
2
units, which was more than double the percentage increase in population.


52
The possible factors leading to this decrease in household size are:
increasing single parent families, increasing single populations, later
marriages, lower birthrate.
The median age of the Lakewood resident increased by nine years to
30.7 during the ten year period between 1970 and 1980. The greatest
numerical increase occurred in the 25-34 age group while the largest
percentage increase occurred in the 65 and over age group. The 30.7 median
age in Lakewood is 2 years older than that of the Denver region or
3
Colorado. Figure III 2 illustrates the age breakdown in Lakewood in
comparison to Colorado and the Denver region.
Since Lakewood has experienced a substantial increase in the 55 and
over age group, the City appeared to have a more stable population than that
of the State. 48.1% of Lakewood residents did not change residence between
1975 and 1980 compared to 39.8% statewide.'*
Lakewood's residents tend to follow state and regional employment
trends with 37.2% of the labor force employed in Technical Sales or
Administrative Support positions, and 29.9% in Managerial/Professional
4
positions. The local level of educational attainment is considerably
higher than the statewide average, and slightly greater than in the Denver
region. By 1980, 49.3% of Lakewood residents over 25 years of age attended
some college classes which was much higher than the 20.7% with college
experience in 1970.
The median household income has not kept pace with the Denver Metro,
Colorado or United States figures. Figure III 3 illustrates that the
median household income for Lakewood increased 87% between 1970 and 1980
compared to 110% for the Denver region, 136% for Colorado, and 98.5% for the
U.S. The 1970-1980 inflation rate for the metro area was 127.6%.
The character of the City's housing stock has changed substantially
since 1970. The number of multi-family units increased 54.5% from 1977 to
1984 (Figure III 4). Another important factor is the number of


HZMOHM'-d H=tc hSCOacD
figure hi 2
V. LA KEWOOD/DENV ER/COLORA DO POP BV AGE
A 22-
ra
| 20
18
LAKEHOOD POP
DENVER POP
COLORADO POP
0-4 10-14 20-24 35-44 55-64 75-85
AGE GROUP


Hzwoawij
FIGURE III 3
1401
120-
100-
80-
60-
40
20
0
MEDIAN HOUSEHOLD INCOME
INFLATION RATE
/.CHANGE 1970-1980
LKWD WHTRDG ARy DEN COLO U-S.


FIGURE III 4
TOTAL RESIDENTIAL UNITS
PERCENT


56
renter-occupied units increased 87% in this same period while owner-occupied
5
units increased only 37.5%. Approximately 79% of the residential units
built in the past five years were multi-family compared to a metro average
of 41.2%. Lakewood's apartment vacancy rate for 1984 was 5.3% compared to
Denver metro's 8.1%, and Jefferson County's 5.6%^ indicating that there is
a good market for the multiple family housing in the City.
Lakewood is comprised of close to 37 square miles (23,680 acres). Of
that total 9,325 acres are developed for residential uses, 471 acres for
office uses, 1,045 acres for commercial uses, and 228 acres for industrial
uses. The remaining 12,611^ acres are either vacant or used for
agricultural purposes, parkland or transportation facilities.
The Lakewood Department of Community Development has projected that
the 2% growth rate will remain relatively stable for the next five years,
resulting in a population of 140,884 by the year 1990. The household size
is expected to decrease to 2.28 persons per unit resulting in a total of
61,798 households. Housing units are anticipated to increase approximately
21% overall for 1990 totals of 32,518 single family detached, 2,050 duplex
units, and 27,230 multiple family units.
PURPOSE FOR INITIATION OF FISCAL IMPACT ASSESSMENT SYSTEM
Prior to 1981, the City of Lakewood had been facing an adverse
financial situation. The City was unable to balance the annual budget
without using some reserve funds. In 1981, a cutback management program was
implemented, in addition to an economic development program to help
stimulate revenue producing activity. The City Council came to the
realization that it was crucial for staff as well as themselves to be able
to determine what specific effect development had on the City's financial
well beina. A consultant was hired to prepare a fiscal impact assessment
system in order to provide the City with a method of determining the cost
and revenue impact associated with each development proposal.


57
STUDY OBJECTIVES AND FORMAT
The City Council requested that the study address the following
objectives:
1) Identify the City's fixed and variable operation and maintenance costs
for new residential, commercial, and industrial development.
2) Identify City revenues generated by new residential, commercial, and
industrial development.
3) Clearly define the relationship of the City revenues and expenditures
associated with residential, commercial, and industrial development.
4) Provide documentation costs and revenues associated with specific
development proposals as a basis for negotiations with the development
proponents.
5) Contain a logical theoretical base with adequate explanation of concept
to enable public understanding.
6) Be applicable to all developments and administered by the City's
Community Development Department staff with a minimum of analysis time.
Q
7) Provide step-by-step instructions for annual updating by City staff.
The structure of the study is described below:
t Land Use Profile Existing land use trends.
Service Profile Cost of City services are associated with each of
the three land uses specified in the study objectives (residential,
commercial, and industrial).
Average and Marginal Cost Concepts Description of each method and
their applicability.


58
Cost Allocation Method Specifies method for allocating service
costs to specific land uses.
Revenue Allocation Method Specifies method for allocating revenues
to specific land uses.
Allocation of Costs to Land Uses Allocates the cost of all
City-provided services to specific land uses.
Allocation of Revenues to Land Uses Allocates all City revenues
generated by specific land uses.
Comparison of Cost/Revenue Allocations Reviews the overall
implications of the allocation of cost and revenues to specific land
uses.
Methodology for Fiscal Impact Assessment Provides a method to be
used by staff to assess future fiscal impacts on a continuing
basis. The process for annually updating the base data was also
provided.
MAJOR ASSUMPTIONS
Numerous assumptions were made by the consultant and/or City officials
during the course of preparing the fiscal impact assessment system. Many of
these were implicit assumptions which substantially effected the final
outcome of the study. Each of these instances will be discussed in greater
detail in the following section on Methodology.
The first major assumption is that only residential, commercial, or
industrial developed property would be considered in the study. Since only
10,099 of the total 23,680 acres fell into those three categories, the costs
of servicing and revenues associated with the remaining 13,581 acres were
essentially re-allocated to one of those categories.


59
The next assumption was that only services actually provided by the
City would be considered. That meant that education, water and sewerage
services, fire protection, and public transportation impacts would not be
addressed since these services are provided by numerous special districts.
The third assumption deals with the method for allocatina costs and
revenues to the three land use categories. Since 84.5% of the developed
acreage was residential, 13.4% commercial, and 2.1% industrial, the
consultants allocated total citywide costs and revenues according to these
percentages. The allocation of service demand for Public Safety is
illustrative of the flaw with this methodology as discussed later in this
Chapter.
The fourth assumption led to the use of solely marginal costing
techniques because the consultant believed such methodology would lead to
more accurate assessments of service costs. This assumption will be
challenged in Chapter V where both marginal and average costing techniques
will be applied to two Lakewood development proposals.
The fifth assumption is that secondary impacts of growth are not to be
considered. For example, a commercial development may appear to generate a
surplus of revenues; however, there must be adequate residential property
within the market area of the proposed development before any surplus will
be generated.
The final assumption used was that only the revenues associated with
the general fund were to be considered. This is of major importance since
neither the property tax, Federal Revenue Sharing funds, nor several other
miscellaneous funding sources are deposited into the general fund. Most of
these revenues are based upon the population and amount of residential
development within the City; however, the revenues are not even considered
in this study. The costs of residential development are then falsely skewed
resulting in a more negative service cost per unit figure than is
appropriate.


METHODOLOGY
This section will provide an indepth review and critique of the
methodology behind Lakewood's Fiscal Impact Analysis System.
Land Use Trends In 1982, when the Study was prepared, Lakewood
contained approximately 23,680 acres. At that time only 10,099 acres
were developed for residential, commercial or industrial land uses. The
remaining 13,581 acres of public or semi-public uses, parks and open
space, transportation and utilities, agriculture and vacant land were not
considered relevant to the Study. The relevant land uses were
categorized as follows:
Figure III 5
LAND USE DISTRIBUTION
Percent of Number of
Land Use Acres Total Square Footage Un i ts
Residential
Single Family 7,395 73.2 - 36,845
Mul ti -Family 1,139 11.3 - 7,612
Total STOT - 7M"457
Commercial
Offi ce 433 4.3 8,929,585 -
Retail Community 484 4.8 5,246,627 -
- Regional 250 2.5 6,954,828 -
Hotel /Motel 65 .6 305,883 -
Restaurant 124 1.2 556,028
Total T735S T374 7T7992795T -
Industrial 209 2.1 2,766,505
TOTAL 10,099 100.0% 24,759,456 44,457
The average net density per acre by land use type is demonstrated in
Figure III 6.


61
Figure III 6
AVERAGE NET DENSITY PER ACRE 1982
Average Density
Land Use Acres Square Footage/Units Square Footage/Units
Residential
Single Family 7,395 37,845 4.8 un/ac
Mul ti-Family 1,139 7,612 6.7 un/ac
Commercial
Office 433 8,929,585 20,622 sq ft/ac
Retail Community 484 5,246,627 10,840 sq ft/ac
- Regional 250 6,954,828 27,819 sq ft/ac
Hotel /Motel 65 305,883/1 ,115 un 17.2 un/ac
Restaurants 124 556,028 4,484 sq ft/ac
Industrial 209 2,766,505 13,236 sq ft/ac
Source: City of Lakewood , Fiscal Impact Assessment System, Final
Report, October, 1982, p. 9.
Service Profile This section describes the services provided by each
City Department and the associated expenditure figures . Figure III 7
illustrates the departmental expenditures for the 1981 budget year.
Figure III 7
EXPENDITURES BY DEPARTMENT, 1981
Department Expenditures Percent of Total
Mayor and City Council $ 159,588 .8
City Administrator 253,026 1.2
City Attorney 165,589 .8
City Clerk 241,889 1.2
City Treasurer 9,154 .0
Municipal Court 334,729 1.6
Community Development 1 ,106,744 5.3
Public Works 5,418,703 25.8
Parks and Recreation 3,258,941 15.6
Public Safety 8,478,056 40.6
Employee Relations 332,838 1.6
Finance 987,687 4.7
Non-Departmental 157,460 .8
TOTAL EXPENDITURES $20,904,404 100.0
Source: City of Lakewood, Fiscal Impact Assessment System, Final
Report, October, 1982, p. IT!


62
Average and Marginal Cost Concept This section provides an explanation
of the differences between average and marginal costing techniques. The
marginal costing approach was used throughout the entire Study because it
was believed to provide a more accurate assessment of the actual costs
due to growth. This technique calculates the potential increased costs
on the percentages of fixed and variable costs for each service. The
example used is explained in Figure III 8.
Figure III 8
COMPARISON OF AVERAGE AND MARGINAL COSTS OF
cnr
Method
Total
1982 Budget x % Variable Cost Housing Units
Cost per
Unit
Average $228,443 x - 44,457 = $5.14
Marginal $228,443 x 45.8 - 44,457 = $2.35
Source: City of Lakewood, Fiscal Impact Assessment System, Final
Report, October, 1982, p. 2T.
The marginal costing calculations necessitate the determination of fixed
and variable costs for each Department. The following table provides the
cost breakdown; however, no mention is made as to how these figures were
arrived at.
Figure III 9
FIXED AND VARIABLE COSTS
Department 1982 Budget % Fixed Costs % Variable I
Mayor/City Council $ 161 ,784 100.0 0.0
City Administrator 228,443 54.2 45.8
City Clerk 218,591 39.0 61.0
City Treasurer 11 ,450 26.9 73.1
Municipal Court 333,886 57.9 42.1
City Attorney 171,700 2.9 97.1
Community Development 1 ,100,936 25.9 74.1
Public Works 5,567,100 5.6 94.4
Parks and Recreation 3,392,108 23.3 76.7
Public Safety 8,429,784 10.6 89.4
Finance 1 ,172,909 19.7 80.3
Employee Relations 372,271 18.6 81.4
Non-Departmental 2,161,247 0.0 100.0
TOTAL $23,322,209


63
Source: City of Lakewood, Fiscal Impact Assessment System, Final
Report, October, 1982, p. 2f.
Cost Allocation Method One of the major premises of this Study is to
assume that service costs should solely be attributed to developed
areas. The Study then proceeds to distribute total service costs to the
three primary land uses as demonstrated in the following table.
Figure III 10
COST DISTRIBUTION
Land Use Percent of Acreage Percent of Building Square Footage Cost Distribution Factor
Residential 84.5 . 84.5%
Commercial 13.4 88.8 13.8%
Industrial 2.1 11.2 1.7%
The model then applies the cost distribution factor to each Department's
total expenditures. This is illustrated in Figure III 11.
Figure III 11
LAND USE DISTRIBUTION OF COSTS
Department Total Cost Cost Distribution
Res i den ti a 1 Commercial Industrial
(84.5%) (13.8%) (1.7%)
Public Works $5,567,100 $4,704,200 $768,260 $94,641
The Department of Public Safety is the only Department that can allocate
costs by land use in accordance with service demand. The Department
keeps a log of all calls by location. The following figure illustrates
the service distribution.


64
Figure III 12
PUBLIC SAFETY DEPARTMENT
DEMAND FOfTSTRVICE M'OTTUSE
Land Use # of Calls % of All Calls
Residential
Single Family 10,352
Mul ti-Family 7,133
Total T7,4'8b 10.4
Conmercial
Office 1,657
Retail 16,793
Hotel/Motel 1,062
Restaurants 2,228
Bars/Lounges 1,299
Streets/Sidewalks 51,368
Other 5,450
Total 797837 47.6
Industrial 33
All Others
Public Buildings 2,703
other 24,845
Miscellaneous 42,989
Total 70","537 42.0
TOTAL CALLS 167,912 100.0
Source: City of Lakewood, Fiscal Impact Assessment System, Final
Report, October, 1982, p. 7T.
Since 42.0 percent of the calls cannot be directly attributable to either
of the three major land uses, the model re-allocates these calls
according to the cost distribution factors (84.5% residential, 13.8%
commercial, 1.7% industrial). There is no evidence to support the
assumption that 84.5 percent of these 67,834 calls were attributable to
residential uses. This is especially true since commercial uses were
directly responsible for 47.6 percent of the total calls and residential
uses for only 10.4 percent.
The remaining 40.4 percent which are unattributable to any specific
location should then be re-allocated on a pro rata basis for all the land
uses as follows:


65
Figure III 13
PUBLIC SAFETY DEPARTMENT DEMAND FOR SERVICE BY LAND USE
-----------------ForAumminjsES-------------------
Land Use # of Calls $ of All Calls Including Miscellaneous Reallocation '
Residential 17,485 10.4 (17.5$) 29,356
Conner cial 79,857 47.6 (79.9$) 134,056
Industrial 33 0.0 ( 0.0$) 33
Public Facilities 2,703 1 .6 ( 2.6$) 4,467
Subtotal T0U7U78 HOT T57\TI2
Miscellaneous 42,989 25.6
Other 24,845 14.8
TOTAL 167,912 100.0
The methodology as used in the Lakewood Study questionably attributes a
substantial portion of service costs to residential land uses. It is not
reasonable to assume that this land use type is responsible for 84.5
percent of all service expenditures.
Revenue Allocation Method Only General Fund Revenue sources were
considered relevant to this model. Each of the thirty-two specific
General Fund Revenue sources were allocated by one of the two following
methods:
1 ) Land Use Distribution Model
Residential 84.5$
Commercial 13.8%
Industrial 1.7$
2) Allocation to a Specific Land Use
The model allocates the revenues in the following manner:
1) General Sales Tax Lakewood levies a 2$ sales tax on all items sold
within the City. Since Lakewood has two regional shopping centers,
some of these revenues are generated on purchases made by


66
non-residents. A survey of license plates in parking lots was
performed to assess the percentage of non-resident shopping in
Lakewood. Villa Italia, Westland and two small centers were surveyed
on a Wednesday, Thursday and Saturday at noon, mid-afternoon and
evening. Each sample consisted of 200 cars at the major shopping malls
and 50 cars at the smaller centers. No supporting documentation was
included which explained how these day, time, and sample size
parameters were determined.
The results of the survey showed that 32.6% of the shoppers have their
vehicle registered in Lakewood, 28.7% elsewhere in Jefferson County,
31.6% in other Colorado counties, and 7.1% in other states. This was
interpreted to mean that 67.4% of the vehicles surveyed did not belong
to residents of Lakewood. The City had previously estimated that
approximately 40% of the sales tax revenues generated were due to
non-residents.
The model allocates the sales tax revenue on the following basis:
67.4% Commercial
32.6% Residential
Several questions arise when the allocation is based on the license
plate survey. For example: Are the City Officials sure that the
survey methodology was valid? Can they assume that residents and
non-residents generate the same amount of sales tax on a per capita
basis? Wouldn't local residents purchase both convenience and shopping
poods in Lakewood, since Lakewood provides regional shopping
facilities? What is the percentage of nonresidential tax generated by
the sale of convenience goods? These questions have not been addressed
in the methodology presented.
2) Cigarette Taxes This tax is levied by the State and re-distributed to
the local governments. The revenue generated by this source is
allocated solely to residential land uses.


67
3) Specific Ownership Tax This is a tax paid by owners of motor
vehicles, trailers, and semi-trailers in lieu of a sales tax. The
amount of tax paid is a function of the class, age and value of the
vehicle. The City receives it's share of these revenues based upon the
ratio of property tax collected locally in relation to the total
property taxes collected within the County. The revenue generated by
this source is allocated solely to residential land uses.
4) Public Utility Franchise Tax Lakewood levies a tax on the gross
revenues of Public Service Company and the Cable TV providers.
Mountain Bell is taxed a flat tax which is adjusted annually in
accordance to the Consumer Price Index. These revenues are allocated
on the basis of land use distribution.
5) Motor Vehicle Use Tax The State levies a tax on gasoline and diesel
fuel sales. The City receives its share based on Lakewood's proportion
of population and road mileage in relation to State totals. These
revenues are allocated in the same proportions as sales tax.
6) Liquor Licenses A license is required to operate a business which
sells or serves alcoholic beverages. A license renewal fee is
collected annually. Revenues collected are allocated to the commercial
land use category.
7) Contractor Licenses All contractors doing business in Lakewood are
required to be licensed annually. All fees are allocated to commercial
land use.
8) Sales Tax License Every business selling taxable merchandise is
required to have a license to operate. The revenues are assigned to
the commercial land use category.
9) Arcade Licenses Amusement Arcade operators must be licensed. The
fees are distributed to the commercial land use category.


68
10) Other Licenses Miscellaneous licenses (Christmas tree sales,
pawnbroker, etc.) are issued by the City. Fees are allocated to
commercial land use.
11) Building Permits Permits are issued for all buildinq, electrical,
plumbing and mechanical improvements as well as for signs. The fee is
based upon the value of the improvement. The total value of commercial
improvements in relation to residential improvements has increased
annually since 1978. The allocation method was based on a five-year
averaae for each land use: Residential 44$, Commercial 47$, Industrial
9$.
12) Public Way Permits The City charges a fee for all work done in the
right-of-way. Fees are allocated on the basis of land use distribution.
13) Arcade Permits A permit is required for any business operating ten or
less amusement devices. The revenue is distributed solely to
commercial land use.
14) Miscellaneous Permits The City requires permits for various
activities such as blasting or fireworks display. The fees are
allocated on the basis of land use distribution.
15) Motor Vehicle Registration Fees The County collects $2.50 to $4.50
for every vehicle registered within the County Limits. These fees are
then redistributed to the Cities based upon the number of vehicles
registered within each City. Lakewood allocates the revenue solely to
residential land use.
16) Highway User Fund the City receives revenues based upon a formula
which considers both total street mileage and number of registered
vehicles. All revenues are allocated to residential land use.
17) Traffic Signal Maintenance Reimbursement The City is reimbursed for
performing maintenance on State traffic signals located in the City.
The reimbursements are allocated on the basis of land use distribution.


69
18) Drainage Maintenance Reimbursement Revenues from other agencies for
maintenance service provided by the City. The funds are allocated on
the basis of land use distribution.
19) County Road and Bridge Fund Jefferson County levies a property tax
for road and bridge maintenance. One-half of the amount collected
locally is returned to the City. These funds are allocated on the
basis of land use distribution.
20) Regional Aid to Urban Systems The Denver Regional Council of Local
Governments is the clearinghouse for Federal Highway funds to be
allocated to local governments on a priority basis. The funds are
allocated on the basis of land use distribution.
21) Liquor Administrative Service Fee The City charges a fee to review
all liquor license applications. The funds are distributed solely to
the commercial land use category.
22) Zoning and Subdivision Fee The City charges for rezoning,
subdivision, and easement vacation review. All fees are allocated on
the basis of land use distribution.
23) Sale of Maps and Publications The revenues generated from the sale of
City maps, publications, and other material are allocated on the basis
of land use distribution.
24) Sale of Building Code Books These revenues are allocated on the basis
of land use distribution.
25) Sale of Lakewood Planning Reports The funds generated are allocated
on the basis of land use distribution.
26) Printing Services Charges collected for photocopying and print making
are distributed on the basis of land use distribution.


70
27) Recreation Fees Revenues generated from programs offered by the Parks
and Recreation Department are allocated solely to residential land use.
28) Other Charges Fees for the rental and use of City facilities are
allocated on the basis of land use distribution.
29) Fines and Forefeitures These revenues are generated from Court
imposed fines and allocated on the basis of land use distribution.
30) Investment Income All idle funds are invested in some sort of
interest bearing account or bond. Since sales tax is the largest
single revenue source, the model is based on the assumption that the
majority of investment income is a result of investing sales tax
revenues. The funds are allocated as follows:
70% on the same basis as sales tax.
(67.4% Commercial, 32.6% Residential)
30% on the basis of land use distribution.
Since the validity of the sales tax distribution is in question, the
allocation of the investment income also falls under scrutiny.
31) Refunds The City receives refunds on City purchased materials and
supplies. The majority of these refunds are associated with capital
improvements projects. The funds are allocated on the basis of land
use distribution.
32) Sale of Fixed Assets The revenue generated from the sale of surplus
City property is allocated on the basis of land use distribution.
33) Other Miscellaneous Revenue Any miscellaneous revenue is allocated on
the basis of land use distribution.
Since Federal Revenue Sharing, Community Development Block Grant, and
Property Tax revenues are all deposited into funds other than the General


71
Fund, they are not considered relevant to this model. This approach
again increases the "negative" impact of residential land uses. Each of
these revenue sources are based primarily on population and/or housing
within the City. Therefore, these revenues are generated according to
the percentage of residential land use within Lakewood; however, they are
not considered relevant due to the fact that they are not deposited into
the General Fund.
Allocation of Costs to Land Uses The actual application of the Cost
Allocation Method to specific land uses is provided in Appendix A. The
costs are first allocated to each land use and then the variable costs
are taken into consideration. The results of the cost allocation are as
foil ows:
1) The average service cost for residential property is $397.33 per
unit. The marginal service costs for new residential development is
$276.55 per unit.
2) The average service cost for commercial property is $.183 per square
foot. The marginal service costs for new commercial development is
$.242 per square foot.
3) The average service cost for industrial property is $.114 per square
foot. The marginal service cost for new industrial development is
$.076 per square foot.
Allocation of Revenues to Land Uses The actual application of the
Revenue Allocation method to specific land uses is provided in Appendix
B. The results of the revenue allocation are as follows:
1) Residential uses generate $255.48 per unit annually.
2) Office uses generate $.352 per square foot annually.
3) Retail uses produce $.595 per square foot annually.


72
4) Hotel/motels generate $.537 per square foot or $147.33 per unit
annually.
5) Restaurants produce $.549 per square foot annually.
6) Industrial uses produce $.051 per square foot annually.
FINDINGS
The end results of the Fiscal Impact Assessment are listed below:
1) Residential Each new residential unit creates a deficit of $21.07
annually.
2) Office The development of new office space will generate $.11 per
square foot in revenues annually.
3) Retail Newly developed retail space is expected to qenerate $.353 per
square foot in revenues annually.
4) Hotels/Motels The development of hotel/motel space should aenerate
$.295 per square foot of revenue annually.
5) Restaurants Restaurants are expected to qenerate $.307 per square foot
of revenue on an annual basis.
6) Industrial The development of new industrial space is expected to
create a deficit of ($.25) per square foot annually.
In October of 1984, two years after the Fiscal Impact Assessment
System had been completed, the City prepared an update using 1983 dollars.
The basic framework of the original study was kept intact. The update
report included only minimal land use, expenditure and revenue data. The
results of the 1983 update are shown below:


73
Residential
Office
Retail
Hotel/Motel
Restaurant
Industrial
A copy of
Appendix C.
- $28.16 deficit per unit
- $.09 surplus per square foot
- $.42 surplus per square foot
- $.21 surplus per square foot
- $.34 Surplus per square foot
- $.05 deficit per square foot
the Fiscal Impact Update, October 2, 1984,
s provided in


74
FOOTNOTES CHAPTER III
Icity of Lakewood, Environmental Scan, April, 1985, p. 25.
21bid, p. 26.
3lbid, p. 35.
4lbid, p. 28.
5Ibid, p. 38.
^Ibid, p. 44.
7Ibid, p. 42.
City of Lakewood, Fiscal Impact Assessment System, October, 1982,
pp. 1-2.


IV APPLICATION OF LAKEWOODS SYSTEM


IV. APPLICATION OF LAKEWOOD'S FISCAL IMPACT ASSESSMENT SYSTEM
1984 UPDATE
This section will provide a step-by-step update of Lakewood's Fiscal
Impact Assessment System using 1984 data. The basic framework is identical
to that of the original 1982 report discussed in Chapter III.
Land Use As of December 31, 1984, Lakewood contained 11,068.4 acres of
developed residential, commercial and industrial land. A total of
12,611.6 acres remained vacant or were used for agriculture, parkland,
public facilities, transportation or utilities. Figure IV 1 will
illustrate the developed land use distribution.
FIGURE IV 1
LAND USE DISTRIBUTION
Percent of Number of
Land Use Acres Total Square Footage Units
Residential Sing!e Family Mul ti-Family Total 7,745 1,580 OZB 70.0 14.3 BO 31,991 15,746 797UB9
Comnercial Office Retail Community Regional Hotel/Motel Supermarket Restaurant Total 470.6 503.1 285.5 83.0 57.0 136.0 l.blb.O 4.3 4.6 2.3 0.7 0.5 1.2 H7TF 9,696,629 5,449,239 7,200,135 456,926 624,553 670,688 24',098,17D
Industrial 288.4 2.1 3,018,853
TOTAL 11 ,068.4 100.0 27,117,023
Source: City of Lakewood, Department of Community Development, Planning
Division.
75


76
The average net density per acre by land use types is demonstrated in
Figure IV 2.
FIGURE IV 2
AVERAGE NET DENSITY PER ACRE 1984
Average Density
Land Use Acres Square Footaqe/Units Square Footage/Units
Residential
Single Family 7,745 31,991/un 4.13 un/ac
Mul ti-Family 1,580 17,063/un 10.80 un/ac
Commerci al
Office 470.6 9,696,629 20,604.8 sq ft/ac
Retail Community 503.1 5,449,239 10,831.3 sq ft/ac
- Regional 258.5 7,200,135 27,853.5 sq ft/ac
Hotel /Motel 83.0 456,926 5,505.1 sq ft/ac
Supermarket 57.0 624,553 10,957.1 sq ft/ac
Restaurant 136.0 670,688 4,931.5 sq ft/ac
Industrial 228.4 3,018,853 13,217.4 sq ft/ac
Service Profile Average and Marginal Costs The cost distribution
factors are calculated in Figure IV 3.
FIGURE IV 3
COST DISTRIBUTION FACTORS
$ of Total Cost Distribution
Land Use Acres $ of Total Bldg Sq Ft Factors
Residential 9,325.0 84.3 84.3$
Commercial 1,515.0 13.6 88.9 14.0$
Industrial 228.4 2.1 11.1 1.7$
The next step is to calculate the marginal costs of the actual 1984
expenditures. The percentage of marginal cost by department was held
constant since 1981.


77
FIGURE IV 4
VARIABLE vs. FIXED EXPENDITURES 1984
Department Total Expenditure % Variable Cost Variable Expenditure
Mayor/City Council $ 202,037 0.0 $ 0.00
City Administrator 462,791 45.8 211 ,958.28
City Attorney 337,482 97.1 327,695.02
City Clerk 315,803 61.0 192,639.83
City Treasurer 15,157 73.1 11 ,079.77
Municipal Court 552,749 42.1 232,707.33
Community Development 1,340,487 74.1 993,300.87
Public Works 7,111,400 94.4 6,713,161.60
Parks and Recreation 3,168,926 76.7 2,430,566.20
Public Safety 11,020,190 89.4 9,852,049.50
Employee Relations 471 ,051 81.4 383,435.51
Finance 1 ,801 ,506 80.3 1,446,609.30
Non-Departmental 379,378 100.0 379,378.00
TOTAL $27,178,957 $23,174,581.21
Source: City of Lakewood, Comprehensive Annual Financial Report For
Year Ended December 31, 1984, pi 55.
Cost Allocation Using the cost distribution factors from Figure IV 3,
Figure IV 5 will apply these factors to each Department's total
expenditures.
FIGURE IV 5
LAND USE DISTRIBUTION OF COSTS 1984
Department Total Cost Cost Distribution
Residential Commercial Industrial
(84.3%) (14.0%) (1.7%)
Mayor/City Council $ 202,037 $ 170,317 $ 28,285 $ 3,435
City Administrator 469,791 396,034 65,771 7,986
City Attorney 337,482 284,497 47,247 5,738
City Clerk 315,803 266,222 44,212 5,369
City Treasurer 15,157 12,777 2,122 258
Municipal Court 552,749 465,967 77,385 9,397
Community Development 1,340,487 1 ,130,031 187,668 22,788
Public Works 7,111 ,400 5,994,910 995,596 120,894
Parks and Recreation 3,168,926 2,671 ,405 443,650 53,871
Public Safety 11 ,020,190 9,290,020 1 ,542,827 187,343
Employee Relations 471,051 397,096 65,947 8,008
Finance 1 ,801 ,506 1 ,518,670 252,211 30,625
Non-Departmental 379,378 319,816 53,113 6,449
TOTAL $27,185,957 $22,917,762 $3,806,034 $462,161


78
The Department of Public Safety keeps records of all service call
locations. The following figure illustrates the Public Safety service
distribution.
FIGURE IV 6
PUBLIC SAFETY DEPARTMENT DEMAND FOR SERVICE BY LAND USE 1984
Land Use Number of Calls % of Cal'
Residential
Single Family 7,818 4.5%
Mul ti-Family 5,204 3.0%
Total "TT.TJH 775%
Commercial
Office 1,526 0.9%
Retail 5,426 3.1%
Hotel/Motel 769 0.4%
Restaurants 1 ,565 0.9%
Bars/Lounges 988 0.6%
Supermarkets 669 0.4%
Streets/Si dewalks 55,167 31.7%
Other 4,180 2.4%
Total "70 ,'290 TU74%
Industrial 25 0.0%
All Others
Public Buildings 2,000 1.2%
Other 10,781 6.2%
Miscellaneous 77,739 44.7%
Total 90,520 527T%
GRAND TOTAL 173,857 100.0%
Source: City of Lakewood, Department of Public Safety.
ALLOCATION OF PUBLIC SAFETY COSTS:
Total 1984 Costs = $11 ,020,190
1) 52% Land Use Distribution = $5,730,499
Residential (84.3%) Commercial (14%) Industrial (1.7%)
$4,830,811
$802,270
$97,418


79
- Demand Distribution Residential 13,022 calls 84.3% (90,520) = $5,289,691 Commerci al 70,290 calls + 14% (90,520) Industrial 25 calls + 1.7% (90,520)
89,330 calls 82,963 calls 1 ,564 calls
Residential Commerci al Industrial
51.4% calls 47.7% calls .9% calls
[$2,718,901) ($2,523,183) ($47,607)
3) Total Public Safety Costs by Land Use
Residential Commerci al Industrial
$7,549,712 $1 ,055,453 $145,025
Revenue Allocation The individual revenue sources are calculated as
follows:
1) General Sales Tax $17,163,906 total
Total Residential (32.6%) Commercial (67.4%)
$5,595,433 $11 ,568,473
2) Cigarette Tax $903,994 total
100% allocated to Residential
3) Specific Ownership Tax $193,450 total
100% allocated to Residential
4) Public Utility Franchise Tax $2,883,215 total
Residential (84.3%) Commercial (14%) Industrial (1.7%)
$2,430,550 $403,650 $29,015 5
5) Motor Vehicle Use Tax $990,265 total
Residential (32.6%) Commercial (67.4%)
$322,826 $667,439


6) Liquor Licenses $32,435 total
100% allocated to Comnercial
80
7) Contractor Licenses $176,800 total
100% allocated to Comnercial
8) Sales Tax Licenses $12,959 total
100% allocated to Comnercial
9) Buildinq Permits $944,548 total Residential (44%) Comnercial (47%) $415,601 $433,938 Industrial (9%) $85,009
10) Public Way Permits $46,573 total Residential (84.3%) Commercial (14%) $39,261 $6,520 Industrial (1.7%) $792
11) Miscellaneous Permits and Licenses $167,057 total
Residential (84.3%) Comnercial (14%) $140,829 $23,388 12) Motor Vehicle Registration Fees $450,008 total 100% allocated to Residential Industrial (1.7%) $2,840
13) Highway User Fund $1 ,191 ,893 Total 100% allocated to Residential
14) Traffic Signal Maintenance Reimbursement $149,935 total
Residential (84.3%) Commercial (14%) Industrial (1.7%)
$126,395 $20,991 $2,549
15) County Road and Bridge Fund $1 ,030,917 total
Residential (84.3%)
$869,063
Commercial (14%)
$144,328
Industrial (1.7%)
$17,526


81
16) Liquor Administrative Service Fee $73,350 total
100% allocated to Commercial
17) Zoning and Subdivision Fees $39,802 total
Residential (84.3%) Commercial (14%) Industrial (1.7%)
$33,553 $5,572 $677
18) Recreation Fees $77,415 total
100% allocated to Residential
19) Other Charges $38,819 total
Residential (84.3%) Commercial (14%)
$32,724 $5,435
Industrial (1.7%)
$660
20) Fines and Forfeitures
Residential (84.3%)
$555,136
$658,524 total
Commercial (14%)
$92,193
Industrial (1.7%)
$11,195
21) Investment Income $438,614 total
70% allocated on same basis as Sales Tax:
Residential (32.6%) Commercial (67.4%)
$100,092 $206,938
30% allocated as follows:
Residential (84.3%) Commercial (14%) Industrial (1.7%)
$110,925 $18,422 $2,237
22) Other Miscellaneous Income $104,799 total
Residential (84.3%) Commercial (14%)
$88,346 $14,672
Industrial (1.7%)
$1 ,781
Allocation of Costs to Land Use
1) Residential Costs
The average and marginal per unit expenditures are calculated in the
following figure.


82
FIGURE IV 7
AVERAGE AND MARGINAL COSTS PER DWELLING UNIT - 1984
(49,089 Dwelling Units)
Costs Allocated Average Marginal
Department to Residential Cost/Unit Cost/Uni
Mayor/City Council $ 170,317 $ 3.47 $ 0.00
City Administrator 396,034 8.07 3.70
City Attorney 284,497 5.80 5.63
City Clerk 266,222 5.42 3.31
City Treasurer 12,777 .26 .19
Municipal Court 465,967 9.49 4.00
Community Development 1 ,130,031 23.02 17.06
Public Works 5,994,910 122.12 115.28
Parks and Recreation 2,671 ,405 54.42 41.74
Public Safety* 7,549,712 153.80 137.50
Employee Relations 397,096 8.09 6.59
Finance 1,518,670 30.94 24.84
Non-Departmental 319,816 6.52 6.52
TOTAL $21 ,177,454 $431.42 $366.36
* 52% Land Use Distribution; 48% Demand
2) Commercial Costs
The average and marginal costs of commercial development have been
calculated as shown in Figure IV 8.
FIGURE IV 8
AVERAGE AND MARGINAL COST PER 1000 SQUARE FEET COMMERCIAL 1984
(24,098 Square Peet)
Department Costs Allocated to Conmercial Averaae Cost/ 1000 sq ft Marqinal Cost/ 1000 sq ft
Mayor/City Council $ 28,285 $ 1.17 $ 0.00
City Administrator 65,771 2.73 1.25
City Attorney 47,247 1.96 1.90
City Clerk 44,212 1.83 1.12
City Treasurer 2,122 .09 .07
Municipal Court 77,385 3.21 1.35
Community Development 187,668 7.79 5.77
Public Works 995,596 41.31 39.00
Parks and Recreation 443,650 18.41 14.12
Public Safety* 1 ,055,453 43.80 39.16
Employee Relations 65,947 2.74 2.23
Finance 252,211 10.47 8.41
Non-Departmental 53,113 2.20 2.20
TOTAL $3,318,660 $137.71 $116.58
* 52% Land Use Distribution; 48% Demand


FIGURE IV-9
DISTRIBUTION QF COSTS TO COMMERICAL USES 1984
DEPARTMENT COSTS ALLOCATED TO COMMERCIAL OFFICE (40.2%) RETAIL (52.5%) HOTEL/MOTEL (1.9%) SUPERMARKET (2.6%) RESTAURANT (2.8%)
Mayor/City Council $ 28,285 $ 11,371 $ 14,850 $ 537 $ 735 $792
City Administrator 65,771 26,440 34,530 1,250 1,710 1 ,841
City Attorney 47,247 18,993 24,805 898 1,228 1,323
City Clerk 44,212 17,773 23,211 840 1,150 1 .238
City Treasurer 2,122 853 1,114 40 56 59
Municipal Court 77,385 31,109 40,627 1 ,470 2,012 2,167
Community Development 187,668 75,443 98,526 3.56S 4,879 5,255
Pub!ic Works 995,596 400,230 522,688 18,916 25,885 27,877
Parks & Recreation 443,650 178,347 232,916 8,429 11,535 12,422
Public Safety' 1,055,453 424,292 554,113 20,053 27,442 29,553
Employee Relations 65,947 26,511 34,622 1,253 1,715 1,846
Finance 252,211 101,389 132,411 4,792 6,557 7,062
Non-departmental 53.113 21.351 27,885 1,0.09 1.381 1,487
TOTAL $1,334,102 $1 .742,298 $63,052 $86,285 $92,922
52% Land Use Distribution; 48% Demand
The following figure depicts the average and marginal cost distributions
for commercial uses.


84
Both the average and marginal cost distributions for office uses is
provided in Figure IV 10.
FIGURE IV - 10
COST OF SERVICES TO OFFICE USES 1984
(9,696,629 square feet)
Costs Allocated Average Cost/ Marginal Cost/
Department to Office 1000 sq ft 1000 sq ft
Mayor/City Council $ 11,371 $ 1.17 $ 0.00
City Administrator 26,440 2.73 1.25
City Attorney 18,993 1.96 1.90
City Clerk 17,773 1.83 1.12
City Treasurer 853 .09 .07
Municipal Court 31,109 3.21 1.35
Community Development 75,443 7.78 5.76
Public Works 400,230 41.28 38.97
Parks and Recreation 178,347 18.39 14.11
Public Safety* 424,292 43.76 39.12
Employee Relations 26,511 2.73 2.22
Finance 101,389 10.46 8.40
Non-Departmental 21,351 2.20 2.20
TOTAL $1 ,334,102 $137.59 $116.47
* 52? Land Use Distribution; 48? Demand
The average and marginal cost distribution for retail land use is
provided in Figure IV 11.
FIGURE IV - 11
COST OF SERVICES TO RETAIL LAND USES 1984
(12,649,3/4 square feet)
Costs Allocated Averaqe Cost/ Marqinal Cost/
Department to Commercial 1000 sq ft 1000 sq ft
Mayor/City Council $ 14,850 $ 1.17 $ 0.00
City Administrator 34,530 2.73 1.25
City Attorney 24,805 1.96 1.90
City Clerk 23,211 1.83 1.12
City Treasurer 1,114 .09 .07
Municipal Court 40,627 3.21 1.35
Community Development 98,526 7.79 5.77
Public Works 522,688 41.32 39.00
Parks and Recreation 232,916 18.41 14.12
Public Safety* 554,113 43.81 39.17
Employee Relations 34,622 2.74 2.23
Finance 132,411 10.47 8.41
Non-Departmental 27,885 2.20 2.20
TOTAL $137.73 $116.59
* 52? Land Use Distribution; 48? Demand


85
The cost distribution for hotel/motel uses is provided in the following
figure.
FIGURE IV 12
COST OF SERVICES TO HOTEL/MOTEL LAND USES 1984
(456,526 square feet)
Costs Allocated Averaae Cost/ Marqinal Cost/
Department to Hotel/Motel 1000 sq ft 1000 sq ft
Mayor/City Council $ 537 $ 1.18 $ 0.00
City Administrator 1,250 2.74 1.25
City Attorney 898 1.97 1.91
City Clerk 840 1.84 1.12
City Treasurer 40 .09 .07
Municipal Court 1 ,470 3.22 1.36
Community Development 3,565 7.80 5.78
Public Works 18,916 41.40 39.08
Parks and Recreation 8,429 18.45 14.15
Public Safety* 20,053 43.89 39.24
Employee Relations 1,253 2.74 2.23
Finance 4,792 10.49 8.42
Non-Departmental 1,009 2.21 2.21
TOTAL $63,052 $138.02 $116.82
* 52$ Land Use Distribution; 48$ Demand
The average and marginal costs associated with supermarkets is provided
in Figure IV 13.
FIGURE IV - 13
COST OF SERVICES TO SUPERMARKET LAND USE - 1984
(624 ,bb3 square feet)
Costs Allocated Average Cost/ Marginal Cost/
Department to Supermarket 1000 sq ft 1000 sq ft
Mayor/City Council $ 735 $ 1.18 $ 0.00
City Administrator 1,710 2.74 1.25
City Attorney 1,228 1.97 1.91
City Clerk 1,150 1.84 1.12
City Treasurer 56 .09 .07
Municipal Court 2,012 3.22 1.36
Community Development 4,879 7.81 5.79
Public Works 25,885 41.45 39.13
Parks and Recreation 11,535 18.47 14.17
Public Safety* 27,442 43.94 39.28
Employee Relations 1,715 2.75 2.24
Finance 6,557 10.50 8.43
Non-Departmental 1,381 2.21 2.21
TOTAL $86,285 $138.17 $116.96

52$ Land Use Distribution; 48$ Demand


86
Both the average and marginal cost distribution for restaurants is
depicted in Figure IV 14.
FIGURE IV 14
COST OF SERVICES TO RESTAURANT USES 1984
(670,688 square feet)
Costs Allocated Average Cost/ Marqinal Cost/
Department to Restaurants 1000 sq ft 1000 sq ft
Mayor/City Council $ 792 $ 1.18 $ 0.00
City Administrator 1 ,841 2.74 1.25
City Attorney 1,323 1.97 1.91
City Clerk 1,238 1.85 1.13
City Treasurer 59 .09 .07
Municipal Court 2,167 3.23 1.35
Community Development 5,255 7.84 5.81
Public Works 27,877 41.56 39.23
Parks and Recreation 12,422 18.52 14.20
Public Safety* 29,553 44.06 39.39
Employee Relations 1,846 2.75 2.24
Finance 7,062 10.53 8.46
Non-Departmental 1,487 2.22 2.22
TOTAL $92,922 $138.54 $117.26
* 52$ Land Use Distribution; 48$ Demand
3) Industrial Costs
The following figure provides a breakdown of the averaqe and
marginal costs associated with an industrial development.
FIGURE IV - 15
AVERAGE AND MARGINAL COST PER 1000 SQUARE FOOT INDUSTRIAL USES 1984
(3,018,853 square feet)
Costs Allocated Averaqe Cost/ Marqinal Cost/
Department to Industrial 1000 sq ft 1000 sq ft
Mayor/City Council $ 3,435 $ 1.14 $ 0.00
City Administrator 7,986 2.65 1.21
City Attorney 5,738 1.90 1.84
City Clerk 5,369 1.78 1.09
City Treasurer 258 .09 .07
Municipal Court 9,397 3.11 1.31
Community Development 22,788 7.55 5.59
Public Works 120,094 39.78 37.55
Parks and Recreation 53,871 17.84 13.68
Public Safety* 187,343 62.06 55.48
Employee Relations 8,008 2.65 2.16
Finance 30,625 10.14 8.14
Non-Departmental 6,449 2.14 2.14
TOTAL $462,042 $152,83 $130.26


87
4) Summary of Costs
The average cost of providing services to residential property is
$431.42 per dwelling unit. The marginal cost associated with new
development is $366.36 per dwelling unit.
The cost of providing services to commercial land uses are as
foilows:
Office:
Average Cost = $.14/sq ft
Marginal Cost = $.12/sq ft
Retail
Average Cost = $.14/sq ft
Marginal Cost = $.12/sq ft
Hotel/Motel:
Average Cost = $.14/sq ft
Marginal Cost = $.12/sq ft
Supermarket: Average Cost = $.14/sq ft
Marginal Cost = $.12/sq ft
Restaurant:
Average Cost = $.14/sq ft
Marginal Cost = $.12/sq ft
The average cost of providing services to industrial property is
$.15 per square foot. The marginal cost associated with new
development is $.13 per square foot.
Allocation of Revenues to Land Uses
1) Residential
The total revenues attributed to residential development from all
sources is provided in the following figure.


88
FIGURE IV 16
TOTAL REVENUES ALLOCATED TO RESIDENTIAL LAND USES
Source Amount
General Sales Tax $ 5,595,433
Cigarette Tax 903,994
Specific (Vnership Tax 193,450
Public Utility Franchise Tax 2,430,550
Motor Vehicle Use Tax 322,826
Building Permits 415,601
Public Wav Permits 39,261
Miscellaneous Permits and Licenses 140,829
Motor Vehicle Registration Fees 450,008
Highway User Fund 1,191,893
Traffic Signal Maintenance Reimbursement 126,395
County Road and Bridae Fund 869,063
Zonina and Subdivision Fees 33,553
Recreation Fees 77,415
Other Charqes 32,724
Fines and Forfeitures 555,136
Investment Income 211,017
Miscellaneous Income 88,346
TOTAL REVENUES $13,677,494
$13,677,494
49,089 Dwelling Units = $278.63 Revenues per Dwelling Unit
2) Commercial
The total revenue associated with commercial development is listed
in the following figure.


FIGURE IV-17
TOTAL REVENUE GENERATED BY COMMERCIAL LAND USES 1984
OFFICE RETAIL HOTEL/MOTEL SUPERMARKET * RESTAURANT
REVENUE (40.2%) (52.5%) (1.9%) (2.6%) (2.8%)
Sales Tax (1) $2,908,991 $7,683,555 $199,169 $404,399 $372,359
Public Utility Franchise Tax 162,267 211,916 7,669 10,495 11,302
Motor Vehicle Use Tax (2) 667,439
Liquor Licenses (3) 28,779 746 1,515 1.395
Contractor Licenses (2) 176,800
Sales Tax License (4) 12,311 1 ,622
Building Permits 178,463 233,067 8,435 11,542 12,430
Public Way Permits 2,621 3,423 124 170 183
Miscellaneous Permits 8. Licenses (2) 23,388
Traffic Signal Maintenace 8,438 11,020 399 546 588
County Road & Bridge Fund 58,020 75,772 2,742 3,753 4,041
Liquor Admin. Service Fee (3) 65,083 1 ,687 3,425 3,154
Zoning & Subdivision Fee 2,240 2,925 106 145 156
Other Charges 2,185 2,853 103 141 152
Fines & Forfeitures 37,062 48,401 1,752 2,397 2,581
Investment Income 90,595 118,314 4,282 5,959 6,310
Miscellaneous Income 5.698 7.703 222 181 411
TOTAL REVENUE $3,456,780 $9,372,749 $ 227,493 $ 446,490 $ 415,062
(1) Office sales tax allocated at rate of $.30/sq. ft., remainder to retail 88.7%, hotel/motel 2.3%,
supermarket 4.7%, restaurant 4.3%
(2) Allocated to retail only
(3) Allocated retail 88.7%, hotel/motel 2.3%, supermarket 4.7%, restaurant 4.3%
Office uses generate 9?696?629sq. ft. = $.36 per sq. ft
Retail uses generate $9.372.749 12,649,374 sq. ft. = $.74 per sq. ft
Hotel/motel uses generate $227,493 456,926 sq. ft. = $.50 per sq. ft
Supermarket uses generate $446.490 624,553 = $.72 per sq. ft
Restaurant uses generate $415,062 670,688 = $.62 per sq. ft


90
3) Industrial
The total revenue allocated to industrial development from all
sources is provided in Figure IV 18.
FIGURE IV 18
TOTAL REVENUES ALLOCATED TO INDUSTRIAL LAND USES 1984
Source Amount
Public Utility Franchise Tax $ 29,015
Building Permits 85,009
Public Way Permits 792
Miscellaneous Permits and Licenses 2,840
Traffic Signal Maintenance Reimbursement 2,549
County Road and Bridge Fund 17,526
Zoning and Subdivision Fees 677
Other Charges 660
Fines and Forfeitures 1,195
Investment Income 2,237
Miscellaneous Income 1 ,781
TOTAL REVENUES $154,281
$154,281
3,018,853 square feet = $.05 Revenues per Square Foot
4) Summary of Revenue Allocation
Revenues generated by land use are as follows:
Residential: $278.63 per Dwellino Unit
Office: $ .36 per Square Foot
Retail: $ .74 per Square Foot
Hotel/Motel: $ .50 per Square Foot
Supermarket: $ .72 per Square Foot
Restaurant: $ .62 per Square Foot
Comparison of Cost/Revenue Allocations
1) Comparison of average costs and revenues is portrayed in Figure IV
19.


91
FIGURE IV 19
COMPARISON OF AVERAGE COSTS AND REVENUES
Land Use Service Cost Revenue Surplus (Deficit)
Residential $21 ,177 ,454 $13,677,494 $(7,499,960)
Conmercial
Offi ce 1,334,102 3,456,780 2,122,678
Retail 1 ,742,298 9,372,749 7,630,451
Hotel/Motel 63,052 227,493 164,441
Supermarket 86,285 446,490 360,205
Restaurant 92,922 415,062 322,140
Total Commercial 3,318,659 13',918,574 10,399,9V5
Industrial 462,042 154,281 307,761
TOTAL $28,267,814 $27,750,349 $13,407,716
2) Average and marginal per unit costs are compared to revenues in
Fiaure IV 20
FIGURE IV 20
COMPARISON OF AVERAGE AND MARGINAL COSTS AND REVENUES 3
Per Dwelling Unit/Per Square Foot
Land Use Average Cost Revenue Surplus (Deficit) Marginal Cost Revenue Surplus (Deficit)
Residential Commercial $431.42 $278.63 ($152.79) $366.36 $278.63 ($87.73)
Offi ce .14 .36 .22 .12 .36 .24
Retai1 .14 .74 .60 .12 .74 .62
Hotel/Motel .14 .50 .36 .12 .50 .38
Supermarket .14 .72 .58 .12 .72 .60
Restaurant .14 .62 .48 .12 .62 .50
Industrial .15 .05 (.10) .13 .05 (.08)
3) Summary
Accordinq to the 1984 Update of the Lakewood Fiscal Impact
Assessment System, the results are as follows:


92
Residential: It will cost $366.36 to serve each new dwelling unit.
The City will receive $278.63 in General Fund revenues for each
unit. This results in an annual deficit of $87.73.
Office: It will cost $.12 per square foot to provide services to
office uses. The City will receive $.36 per square foot in General
Fund revenues. This results in an annual surplus of $.24 per square
foot.
Retail: It will cost $.12 per square foot to provide services to
retail uses. The City will receive $.74 per square foot in General
Fund revenues. This results in an annual surplus of $.62 per square
foot.
Hotel/Motel: It will cost $.12 per square foot to provide services
to hotel/motel uses. The City will receive $.50 per square foot in
General Fund revenues. This results in an annual surplus of $.38
per square foot.
Supermarket: It will cost $.12 per square foot to provide services
to supermarket uses. The City will receive $.72 per square foot in
General Fund revenue. This results in an annual surplus of $.60 per
square foot.
Restaurant: It will cost $.12 per square foot to provide services
to restaurant uses. The City will receive $.62 per square foot in
General Fund revenues. This results in $.50 per square foot
annually.
Industrial : It will cost $.13 per square foot to provide services
to industrial uses. The City will receive $.05 per square foot in
General Fund revenues. This results in an annual deficit of $.08
per square foot.