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Introduction
Fiscal Impact analysis estimates the costs and revenues associated with land use decisions. With its focus on the cost and revenue implications for local governments, fiscal impact analysis is often referred to as cost/revenue analysis.
Modified Per Capita Approach
The Fiscal Impact Model estimates the costs and revenues associated with a land use decision by using a modified per-capita approach – that is, unless site-specific data is substituted by the analyst, the model's calculations are based on the “average” cost of an item or service, calculated by dividing the total cost of the item by the number of people that will use it. The Fiscal Impact Model is designed for use by local governments with land use responsibilities, primarily cities and counties. In addition, the Fiscal Impact Model estimates costs and revenue impacts of local land use decisions on school districts.
The model distinguishes between capital costs and operating costs. High cost/high impact public services such as roads, police, fire, emergency management services (EMS), parks, and schools are given special attention. Instead of addressing those facilities on a per-capita basis, Fiscal Impact Model quantifies their respective costs based on a unit-of-capacity approach similar to the way costs are calculated for impact fees. Under the Fiscal Impact Model approach, the cost of capacity for each unit of new growth is calculated for each of the capital facilities identified above.
The Fiscal Impact Model contains the data necessary to conduct fiscal impact analyses for land use decision making. It is a robust framework. It can be used with its default data to provide reliable estimates for costs and revenues. In addition, the assumptions used in the Fiscal Impact Model can be easily modified by users to reflect the effects of specific projects.
The model generates estimates for costs and revenues associated with all types of land uses by phase. The Fiscal Impact Model can explicitly analyze the effects of inflation rates on costs and revenues. The data generated by the model can evaluate the relative fiscal impacts of alternative land uses within the community, to help guide decisions on the location and intensity of proposed land uses.
Usefulness of the Model
The fundamental purpose of the Fiscal Impact Model is to provide additional detailed fiscal information for local government land-use decision making and as a tool for budget and revenue structure analysis. In Florida, those decisions are among the most politically and socially sensitive of all issues faced by local governments. Land use issues are inherently complex, and decision-making often requires delicate balancing of various concerns, including (but not limited to) environmental, social, political, economic and fiscal elements.
Currently, most local governments don't have access to a reliable tool with which to quantify the fiscal impact (cost and revenue effects) of land use decisions. As a result, the short-term and long-run financial impacts of proposed development are either not known or considered during the decision-making process or are provided by the developer. Furthermore, despite complaints about the impact of growth on public facilities and the actual – or perceived – deterioration in levels of service, local governments have rarely quantified the backlog of unmet capital facilities and services. Without adequate information on the fiscal impacts of proposed development, how can local governments know whether existing service levels could be maintained or compromised?
This internet version of the Fiscal Impact Model is designed to provide local governments with a simplified tool to analyze the fiscal impacts of specific development projects. A more detailed model can be developed by Fishkind & Associates that can be used for the more complicated analyses involved with measuring the financial feasibility of:
- Comprehensive Plan Amendments
- Changes to Future Land Use Map
- Sector Plans or Special Area Plans
- Large Annexations
Limitations of the Model
Every analytical tool has its limitations. Most importantly, the Fiscal Impact Model cannot be the sole criteria on which land use decisions would be made. Land use decisions are among the most sensitive issues with which governments grapple. More often than not, they are made in the context of an explicitly political process, in which several considerations are weighed. This highlights the fact that fiscal impact analysis is only a part of a much larger decision-making matrix.
Furthermore, the projection of costs and revenues associated with land use decisions can only be as accurate as the data used for the assumptions. By necessity, this internet version of the Fiscal Impact Model has been simplified and loaded with local, but generalized, assumptions. Therefore, one must recognize that fine distinctions among costs and revenues are outside the capacity of this fiscal model.
Click here to review the Fiscal Impact Model Operating Instructions or here to proceed directly to the free online Fiscal Impact Model.
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