HomeMy WebLinkAboutCPA201500002 Staff Report 2016-04-21 (5)Attachment E
COUNTY OF ALBEMARLE
MEMORANDUM
TO: Board of Supervisors and Planning Commission
FROM: Steven A. Allshouse, Manager of Economic Analysis and Forecasting
DATE: June 22, 2015
RE: PRELIMINARY RECALCULATION OF PER -UNIT CASH PROFFER AMOUNTS,
BY DWELLING UNIT TYPE.
Background
At its September 3, 2014 meeting the Board of Supervisors (BOS) requested that the Fiscal Impact
Advisory Committee (FIAC) update the County's maximum per -unit cash proffer amount, by
dwelling unit type. At its February 25, 2015 meeting the FIAC agreed that staff should recalculate
the County's per -unit proffer amounts, by dwelling unit type, using the same methodology that the
County used in 2007, but incorporating into that model updated financial, economic, and
demographic information. The Committee's intent was that this exercise would provide a
departure point of analysis for generating an updated set of recommended proffer figures. This
memorandum briefly outlines the methodology behind the recalculation, the resulting per -unit cash
proffer dollar values, and proposes additional future work that the Committee should undertake.
MethodolM
The task facing staff involved the estimation of capital costs, and offsetting revenues, associated
with an average new dwelling unit, for each of four dwelling unit types. The Committee directed
staff to run two separate scenarios, the first to include capital costs funded in the County's Capital
Improvements Program (CIP) only, and a second scenario to include CIP costs plus the capital
costs identified in the County's Capital Needs Assessment (CNA) program. After determining
capital costs, staff then estimated the revenues, generated by each type of dwelling unit, which
would help offset these capital costs. The difference between capital costs and offsetting revenues
rendered net cost figures. These net cost figures equal the maximum dollar values that Albemarle
should expect in proffered cash amounts per dwelling unit, by dwelling unit type. Note that the
proffer amounts calculated in this memorandum reflect the net costs generated by growth -related
capital projects in the following categories: Public safety facilities, park facilities, libraries,
schools, and transportation projects. Note also, that, under current Virginia law, costs associated
with maintenance and replacement capital projects cannot be included in the calculation.
Staff utilized an average cost approach in calculating the proffer dollar amounts. In an average
cost approach, the dollar expenditure for a particular type of capital project identified in the
County's CIP and CNA is assumed to vary with changes in an associated "demand base" such as
population, school enrollments, and vehicle trips. The relevant capital cost per person, pupil, or
vehicle trip is then calculated. The dollar cost per each type of demand unit then is multiplied by
the relevant estimated number of demand units in the average new dwelling unit. The sum of these
costs equals the gross capital cost per new dwelling unit. Note that different types of dwelling
units (single family detached, single family attached/townhouse, and multifamily) can have
different total costs, since each category of dwelling units contains a different number of demand
units. On the revenue side, a similar type of calculation is performed, involving various streams
such as real property tax, personal property tax, consumer utility tax, etc. This exercise results in
a total revenue figure per each type of new dwelling unit. As mentioned previously, the net capital
cost of an average new dwelling unit, by dwelling unit type, equals the gross capital cost per
dwelling unit minus the revenues associated with that average new dwelling unit.
Results
The recalculated per -unit proffer amounts, based on the FY 15 through FY 24 CIP+CNA capital
program are as follows:
Single Family Detached (SFD): $4,918
Single Family Attached/Townhouse (SFA/TH): $3,845
Multifamily (MF): $5,262
The recalculated amounts, based on the FY 15 through FY 19 CIP alone are as follows:
Single Family Detached (SFD): $487
Single Family Attached/Townhouse (SFA/TH): $1,477
Multifamily (MF): $2,144
Discussion
The figures shown above represent the maximum cash proffer amounts that the BOS could expect
per new dwelling unit and, in both cases, are substantially below the corresponding values
currently expected by the Board:
Single Family Detached (SFD): $20,986.76
Single Family Attached/Townhouse (SFA/TH): $14,270.99
Multifamily (MF): $14,870.61
These last numbers are based on the proffer amounts that the Fiscal Impact Advisory Committee
generated originally in 2007 and which subsequently have been adjusted each year for inflation.
The differences between the recalculated numbers shown in this memorandum and the
currentlyexpected figures reflect primarily a change in state law. The current CIP and CNA
capital programs consist, for the most part, of maintenance and replacement projects and, as
mentioned previously, state law now forbids the use of maintenance and replacement costs in the
calculation of cash proffer amounts. In 2007 state law did not constrain the County in such a
manner, and the resulting per -unit proffer values that the FIAC calculated in 2007 were much
higher than are the figures shown in the current calculation.
The take -away from these calculations is that under the current model, as the County's growth
related capital budgets grow, so too do the dollar values of the proffers per unit. The decline in
the recalculated proffer amount is a direct function and result of the decline in the dollar value of
the County's growth -related capital budgets between 2007 and 2015.
Future Tasks
The existing cash proffer model has a number of missing pieces, or other issues, that concern the Committee
and should be addressed:
The County's cash proffer model does not contain any economic multipliers. In this situation, the
current model assumes that, say, a dollar's worth of real property tax revenue generated by new
residential development results in only one dollar of additional economic activity in Albemarle. In
reality, this dollar might end up generating more than just one dollar's worth of economic activity as it
circulates through the County's economy;
■ In a similar vein, the current model does not take into account potential non-residential
development that might be generated by residential development. Residential development,
for example, might induce additional commercial space to service the needs of new residents;
■ The existing model estimates the net capital costs associated with only five types of capital
projects, mentioned previously. The net capital costs of additional types of capital projects,
e.g., jails, landfills, stormwater, etc., should be estimated as well; and
■ Certain projections made by the model, e.g., population and pupil increases resulting from new
residential development, have not been back -tested to determine the historical accuracy of
these projections.
In order to improve the County's cash proffer calculation methodology, the Committee will
continue to address the above issues. As one strategy to that end, FIAC will examine in detail the
cash proffer models currently used by other jurisdictions around the state (a task that was done last
in 2006), as well as other fiscal impact models that might be relevant to the future recalculation of
Albemarle's per -unit cash proffer amounts. This effort reflects the responsibilities section of the
Committee's charter:
■ Ensure that all fiscal impact analytical tools in use by the County are appropriate to the needs
of the County, and are the very best tools available; and
■ Review the suitability of alternate tools of fiscal impact analysis for potential use by the
County.
Staff requests that the Board establish a specific time frame for the Committee to complete its
review of models, and that, in establishing this schedule, the Board take into consideration other
competing assignments that the Board would like staff to undertake in the near term.
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