Urban & Environmental Economics

Urban & Environmental Economics – CMP 3400 ASSIGNMENT 2 – FISCAL IMPACT ANALYSIS DUE THURSDAY, MARCH 29 BY 5 PM ON CANVAS (note extended deadline) Professor J. Robinson ANSWER ALL QUESTIONS (20 PTS TOTAL) Fiscal Impact Analysis: Scenario for Planners As an employee of the planning department of Witch Hazel, Wisconsin, you have been asked to conduct a fiscal impact analysis of a proposed townhome development using the average per capita method (see the spreadsheet for an example and blank template. The following information is available: Proposed residential development 1. 30 senior condos, average market value $250,000 per unit 2. 20 3-BR condos, average market value $375,000 per unit Current Municipal Taxing and Spending Facts (municipality does not have a separate school district) Residential Tax base Existing residential units 8,000 Avg market value of existing unit $300,000 Residential assessment ratio for tax purposes 50% Residential tax rate per $1000 of assessed value $13.33 Residential proportion of real property 80% Schools Number of schoolchildren currently in the town 4,200 Current state school aid per student $2,500 Current local school expenditure per student $3,300 [Total school budget $24,360,000] Town budget Town expenditures excluding schools (i.e. service expenditures) $26,000,000 Town expenditure on schools $13,860,000 Town budget (schools + services) $39,860,000 Total miscellaneous revenues in city budget $15,000,000 Total property tax levy (residential property taxes + taxes on other forms of property) $24,860,000 Residential property tax levy $16,000,000 [Non-residential property tax levy $8,860,000] 2a. What is the expected new property tax revenue associated with the new development? 2b. How much other (misc.) revenue is expected from the new households? 2c. What are the total school costs and total new state school aid expected in conjunction with the development? Use the standard multipliers given in the example and per capita state school aid figures noted above. 2d. What are the non-school service costs associated with the development? 2e. What is the net fiscal impact per year on Witch Hazel’s tax base? 2f. If Witch Hazel is a rapidly growing community whose service capacity (including school building capacity) is already stretched to the limit, would you suggest a different fiscal impact analysis method? Which one and why?