Greg Guerrettaz Gives Excellent Fiscal Impact of Development Presentation

8 June 2005 Fiscal Impact of Land Use Decisions- Plan Commission Working Session

Guest Speaker- Greg Guerrettaz an economist from Hendricks County from Financial Solutions Group, Inc. Guerrettaz has twenty years experience in school and township budgeting and is quite familiar with many Indiana counties. In his talk he went into much greater detail than expected on county fiscal details and impacts. It is unfortunate that more people (and politicians) weren’t present to hear it.

Attendees besides the majority of Plan Commission and BZA members included representatives from the DCEDI, a representative of the Chamber of Commerce, a homebuilder/developer, one county commissioner, one county council member, and 6 citizens.

Guerrettaz’s PowerPoint presentation tied the fiscal impacts of land use designations (Ag/Open Space, Residential, and Commercial/Industrial) to our specific Master Plan.
He emphasized that just as our master plan is a living document, so is the fiscal impact study. Both need to be reviewed on a regular basis to be certain they are appropriate to the current times and conditions in the county.

He used 1782 notices from the Dept. of Local Government Finance to get an economic picture of our county. These forms have an appropriations section that summarizes how our tax revenues are spent.

With a 17-18% growth rate, it is critical to now where that growth is originating. It also is critical to understand how we are going to pay for it. He noted our lack of a 10-year road plan, the 21% expulsion rate from L-bg Schools, when the state average is 13.9%, and our fairly decent amount of park space.

Using data from Hendricks County and a point system, he showed some examples of how to potentially balance development, not only by balancing high end homes with low end ones (and the resulting taxable incomes, for example COIT, of the families in those homes), but also by utilizing VOLUNTARY IMPACT FEES as a means of softening the effects of development on fire/EMS, schools, and infrastructure. He noted that fire/ems staff requires a minimum of 3 per shift ( x 2- 3 shifts) and if the voluntary have to be replaced by paid staff, the cost is approximately $45-70,000 per staffer. The recommended ratio is 1 police officer and 1 fireman to every 500 people.

The basic premise of the entire presentation is to create a balance of land uses, so that the fiscal impacts upon the taxpayers are minimized, while still preserving a good quality of life. This means a VARIETY of housing choices, CONSERVATION of farmland and open space to preserve the economy and quality of life, and ATTRACTING business and commercial opportunities for the residents that will help offset their costs on the system.

It was noted that an independent fiscal analysis is better than having ones prepared by developers, for obvious reasons. Not all developers pay their fair share of impact- even within our own county. A few here are VOLUNTEERING to fix roadways and add infrastructure, almost like generating their own impact fee. So far, our Plan Commission has yet to deny based upon the lack of volunteering from a developer.
Examples were given that show that $100-150,000- even 200,000 home do not pay for all their services in taxes. The average was near $225,000 or upwards before a home was paying enough in taxes to offset their services. He noted that as populations increase; so do jail populations in DIRECT PROPORTION! He also noted that sheriffs would tell you that there is a direct correlation between the home value and the number of police calls to the area.

Guerrettaz showed data that explained a problem in school funding formulas. Apparently, if a school district grows at too high a rate, the target revenue received from the state can be as low as half of what is needed. This revenue then has to be made up on the local level. It would be critical to know where these levels are in our three local districts and how the growth in these districts should be managed to offset this. (We’re back to the concept of pacing and placing development.)

Facts to note included that for every $1 of Residential tax it takes $1.20-1.50 to provide services. For Commercial it takes $.30-.75 for services, and for Ag it’s $.20-.40.

In Dearborn County using limited data at this point, Guerrettaz estimated our particular ratios to be as follows: Residential $1.00/1.18, Industrial/Commercial as $1.00/0.64 and Ag/ Open space as $1.00/0.36.

Using our last year’s tax info he noted that we have $21 million in revenue with $19.7 million in expenditures. There was a $3.097 million loss on residential, a $2.824 million gain on commercial, and a $3.121million gain on Ag/open space lands.

There is a concern with getting this data for the unincorporated county only. The towns and cities need to be included in the balancing of this development pattern, because the heaviest development and businesses are located there due to infrastructure. To forget how we all fit together would be a huge mistake in planning.

The conclusion was not to stop all growth, but to manage and balance it. Voluntary impact fees from developers might help offset the issues involved. Clearly a current snapshot of the county patterns is useful, but equally important, is to update that database annually and to continually communicate those numbers to the citizens, business people, and schools in the entire county.

Christine Brauer Mueller
Lawrenceburg Township