Office of Planning, Environment, & Realty (HEP)
Fiscal impacts can be measured from two perspectives:
The overall costs of infrastructure associated with alternative forms of transportation and development, including costs to both the public and private sector; and
Expenditures and revenues for specific localities or government agencies, including the costs of providing infrastructure as well as tax or other revenues that result from development.
The first perspective - overall costs - can be weighed in conjunction with the other costs and benefits of alternative transportation and development patterns, such as travel benefits and environmental impacts. The second perspective is primarily one of distribution of costs and benefits. This perspective can assist in developing equitable financing schemes, appropriate tax and land use policies, etc.
Overall infrastructure costs are made up of regional and local infrastructure costs. Regional costs include arterial roads and highways, as well as regional utilities such as water supply facilities. Local costs include local roads, sidewalks, and utilities. At both levels, the density and design of development can affect the infrastructure cost per unit of development.
Fiscal impacts to specific localities are driven by:
The amount and location of development by type. Tax revenues and service costs vary by type of development. The amount of development in a given area is in turn affected by:
The location of transportation projects. Methods for discussing the impacts of transportation improvements on land development are discussed under "Impacts - Land Development."
Land use policies. Zoning restrictions, in particular, can limit development to specified densities, types, or locations. Zoning and development options in neighboring jurisdictions can also affect development in a given jurisdiction.
Fiscal policies, such as fee and tax structures and rates. For example, some local governments charge impact fees to recoup the costs of providing infrastructure for new developments. Others cover these costs through general tax revenues.
For any specific locality, the existing infrastructure of schools, utilities and services may or may not have the capacity to absorb more growth without the addition of more costly capital investment. Thus, localized impacts can be very important to understand. On the other hand, balanced regional growth (denoting a normal mix of residential, commercial and industrial activity) will tend to grow all forms of expenditure demands (costs) and taxes (revenues) in the same proportion, and hence will tend not to shift the public revenue-expenditure balance.
Based on engineering analysis, cost functions are developed for transportation and utility infrastructure for different development densities and types. From these functions, the overall infrastructure costs of alternative development scenarios are estimated.
Fiscal accounting systems forecast how changes in population, employment, and income patterns will lead to changes in expenditures and revenues for government agencies. Expenditures typically include police, fire, schools, social services, utilities, etc., and revenues typically include various taxes and fees. Fiscal impact models normally focus on the effects of projects which are either very localized or very skewed in terms of the affected sectors of the economy. For instance, a new residential development or a new office park, either one made possible by transportation improvements, can lead to very different effects on school demands, property tax revenues and local service demands.
Guidebooks for fiscal impact analysis have been developed by the Urban Land Institute (Burchell, Listokin, et al., 1994) and the Center for Urban Policy Research at Rutgers University (Burchell, Listokin, and Dolphin, 1985).
FISCALS is the second generation of Tischler & Associates' MUNIES software that was widely used in the 1980s. FISCALS is a family of software systems, each of which is custom designed for every community. Among its features is the ability to project "lumpy" capital facilities, factoring lag-lead time of construction, forecasting associated operating expenses once the facility opens, and considering available and excess capacities. FISCALS operates in a spreadsheet environment and can be used with Microsoft Excel, Lotus 1-2-3 and Quattro Pro.
Infrastructure cost models estimate the costs of infrastructure - roads, water, sewer, etc. - as a function of the characteristics of development. Types of infrastructure modeled include transportation (roads, sidewalks, transit), water and sewer, telecommunications, gas, and electric utilities. Specialized cost models may rely on some of the same data or cost functions as fiscal accounting systems. They differ in that their focus is on the total costs of infrastructure, rather than the cost and revenue impacts to specific government units. The models may also track the level at which costs are accrued (site developer, municipal service provider, or regional agency). Examples include:
The Infrastructure Cost Assessment Model developed as part of the Envision Utah project (see case study). The model estimates infrastructure costs by density and by type of development (greenfield, infill, or redevelopment.)
The Social Cost of Alternative Land Development Scenarios (SCALDS) model, developed by FHWA. SCALDS estimates roadway, water, and sewer costs by development type and density.
InfraCycle software, developed for the Canada Mortgage and Housing Corporation and the Regional Municipality of Ottawa-Carleton. InfraCycle calculates the cost of municipal infrastructure in support of land use plans for greenfield and brownfield applications. It is primarily designed for site-level analysis and has been applied in Ottawa and Nepean, Ontario.
Revenue forecasting and cost estimation models also have been designed specifically for transportation agencies for the purposes of financial planning. An example is The System Cost and Revenue Estimation (SCARE) model, a software package that will provide planners with tools for revenue forecasting, cost estimating, and program balancing. This software is currently being developed by FHWA.
Simulation models are integrated modeling systems that include an input-output (I-O) model to predict economic impacts of different policies, which in turn affect fiscal impacts. Simulation models include:
The TELUS system, developed by the New Jersey Transportation Institute, Rutgers University and the North New Jersey Transportation Planning Authority. TELUS is based on a database containing key information about transportation projects. It then estimates economic impacts through an I-O model as well as tax impacts on local governments. A land use modeling component is being developed to estimate the fiscal impacts of changes in land use induced by transportation investment.
The REMI simulation model, primarily used for economic forecasting, also contains a fiscal element. Because of the regional level of analysis (county or greater), expenditures and revenues generally grow at the same rate. In fiscal analysis, REMI is primarily used as a driver for fiscal accounting systems (Method 1).
Transit Cooperative Research Program (TCRP) Report 39, The Costs of Sprawl Revisited, (Burchell et al., 1999) examines the literature on the relationship between urban form parameters (such as density of development) and infrastructure costs.