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FCA/FIA Summarized

• Full Cost Accounting Fiscal Impact Analysis
• FCA/FIA generally refers to efforts to estimate
  the budgetary effects of various types of land
  uses on local governmental jurisdictions or other
  local service providers. FIA is a comparison of
  public costs and public revenues associated with
  a given project.
• As the name suggests, FCA/FIA is used to
  determine the total fiscal impact (the full
  costs) of a given project on a jurisdiction.
• There are three possible fiscal impacts from any
  project
• 1) Positive The surplus generated by the
  proposed project or scenario will allow local
  tax rates to be lowered, the level of locally
  funded services to increase, or a combination
  of the two.
• 2) Negative The deficits generated by the
  project or scenario will require local tax
  rates to be increased, the level of locally
  funded services to be lowered, or both.
• 3) Neutral There is no project-induced
  changes on tax rates or locally funded
  services.

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FCA/FIA Simplified Formulas
Cost Side Operating Costs Capital Costs Total Costs
RevenueSide Real Property Revenues Other Operating Revenues Operating Revenue Impact Fees/Hookup Fees Special Assessments Offsets Capital Revenue Operating Revenue Capital Revenue Total Revenue
Net Fiscal Impact Total Revenue Total Costs Net Fiscal Impact
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Typical FCA Approaches

• The most common FCA method is for an individual
  development project.
• Most such project-level analyses are prepared by
  or on behalf of a developer seeking regulatory
  approval for a project.
• A second and much less common method is the
  evaluation of the cumulative impact of a
  jurisdiction-wide planning effort or development
  scenario. The cumulative impact approach attempts
  to deal with all expected development within a
  jurisdiction over time.
• Most such analyses are prepared by planning or
  environmental groups to determine the true costs
  for developing a large sector of a city or
  county.
• Other issues complicate the use of FIA1) The
  lack of consistent procedures or requirements for
  the preparation of fiscal impact analyses. 2)
  Such analyses are rarely subjected to outside
  review or judicial scrutiny.

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FCA/FIA Methods

• Typically, a fiscal impact analysis is prepared
  by an analyst with a background in public finance
  or economics. Depending on the chosen
  methodology, the outcomes can vary greatly.
• Typical Methods for the Determining Operating
  Costs --Average Per Capita Method or Adjusted
  Per Capita Method --Disaggregated Per Capita
  Method (by land use type) --Dynamic Method
• Typical Methods for the Determining Capital
  Costs --Average Per Capita Method (average
  costing using debt levels) --Design Capacity
  Approach (marginal costing using projected costs
  for new infrastructure elements)
• Revenues Sources Typically Considered in
  FCA/FIA --Operating Revenues (User Fees,
  Licenses, Tickets) --Property Revenues Property
  Taxes, Fees --Capital Revenues Impact
  Fees/Hookup Fees/Offsets --Sales Taxes,
  Employment Taxes, Business Fees
  (Non-Res) --Grants from State and Federal Gvts
  based on population

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Elements of Good FCA/FIA Techniques

• Appropriate Context for the Analysis
• The accrual of costs and benefits to different
  jurisdictions is recognized and accounted for.
• The location of a proposed new development is
  taken into account.
• Realistic and Reasonable Development Scenario
• Both revenues and costs are linked to demographic
  and economic characteristics of the project or
  scenario.
• Realistic valuation data and build-out scenarios
  are used.
• Realistic and Reasonable Planning Environment
• A reasonable basis for selection of service
  levels and revenues is provided. (LoS ? ? Comp
  Plan ? ? Service Providers)
• The basis for determining capital costs is
  explicitly stated. (CIP or average costs from
  previous capital expenditures)

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Full Cost Accounting in FL

• In 2001 Floridas legislature funded an effort to
  develop a uniform model for evaluating the true
  cost of development.
• This model is supposed to be the foundation for
  developing a financing structure for
  infrastructure that will capture the true costs
  of development ? Growth will pay for itself.
• Reading from the GMSCs Final Report (upon which
  the legislatures decision is based)
• --The tool should be designed to produce and
  apply better data to guide the planning and
  decision-making process. --The model should
  constitute a tool, not an automatic threshold for
  approval or denial.

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FLs Proposed Full Cost Accounting Model

• The model is supposed to be capable of estimating
  the operating and capital expenses and revenues
  for new development based on the type, scale and
  location of various land uses.
• Costs should include those associated with
  impacts directly resulting from new development
  relating to school facilities and transportation
  facilities.
• Costs will also include, but be limited to, other
  infrastructure as currently required by
  concurrency (water, sewer, stormwater and solid
  waste) and also including telecommunications.
• Revenues should include all revenues attributable
  to the new development including impact fees,
  optional local taxes, ad valorem taxes, gas
  taxes, sales taxes, and any other taxes and fees
  generated by the new development.

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FLs Proposed FCA Model Contd

• The model should only be applied prospectively
  (only to new infrastructure).
• Developers should 1) only be responsible for
  costs attributed to impacts of their own
  development project (Rational Nexus, Rough Prop.)
  2) not be responsible for any infrastructure
  backlog that is the responsibility of the state
  or local government.
• The model should apply to all public and private
  projects and all land use categories.
• The model is being developed by Fishkind and
  Associates (www.fishkind.com) and prototypes of
  the model are now being tested. The model has
  been dubbed Floridas Fiscal Impact Analysis
  Model (FIAM).

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The Rationale for the Model

• FIAM is aimed at a very important facet of growth
  management (and one of the concepts at the heart
  of this course) Linking land use decision
  making and local government budgeting
• The ultimate goal is to make FIA a part of the
  decision making process on local land use
  decisions (rezonings, comp plan amendments,
  development proposal reviews).
• The model projects the fiscal impact of a
  proposed land use change in the near term and in
  the longer term.
• The prototypes have the following
  characteristics 1) A large Excel workbook 2)
  Calibrated to local conditions (local data
  inputs) 3) Open model (can alter
  assumptions/formulas) 4) Based on a modified
  per capita approach 5) Capital Costs are
  calculated using a capacity approach

Information derived from presentation by Fishkind
and Assoc. available onlinehttp//www.fishkind.c
om/dep/download/fiam_fac_61703.pdf
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Example Output from FIAM Orange Co.

• An Orange County 175,000 SF home located within
  the Urban Service Area is projected to have the
  budget impact shown below.

Information derived from presentation by Fishkind
and Assoc. available onlinehttp//www.fishkind.c
om/dep/download/fiam_fac_61703.pdf
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Example Output from FIAM Sarasota Co.

• In Sarasota County, a single family home located
  in different areas of the county will need to
  have the following price level to break even
  (revenues attributable to the home will cover the
  costs associated with the home, as estimated by
  the model)
• These findings illustrate that the model has
  (correctly) determined that homes located in the
  urban core are cheaper to service than suburban
  and rural homes.

Information derived from presentation by Fishkind
and Assoc. available onlinehttp//www.fishkind.c
om/dep/download/fiam_fac_61703.pdf