HomeMy WebLinkAboutAgenda - 04-20-1993 - VII-C O R A N G E C O U N T Y 1
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: April 20, 1993
Agenda Abstract
Item # VIr- _.
SUBJECT: FISCAL IMPACT ANALYSIS FOR RESIDENTIAL DEVELOPMENT
DEPARTMENT: Planning PUBLIC HEARING: Yes No
ATTACHMENT(S) : INFORMATION CONTACT:
Sample Impact Analyses Planning Director X2592
[Refer to 4/5/93 Agenda Packet]
Planning Director 4/6/93 Memo PHONE NUMBERS:
Analyses Comparison Sheet Hillsborough 732-8181
Mebane 227-2031
Durham 688-7331
Chapel Hill 967-9251
PURPOSE: To present a report on the assumptions and
methodology used in generating fiscal impact
analyses for residential development.
This item has been carried over from the April 5,
1993 Commissioners' meeting.
BACKGROUND: At its goal setting retreat in December 1992 , the
Board of Commissioners expressed a desire to receive
a report on the assumptions and methodology used in
generating fiscal impact analyses for residential
development. In 1993, the staff has presented fiscal
impact analyses for two subdivisions during the
approval process. In addition, an analysis in
connection with a Comprehensive Plan amendment has
been prepared. It is thus appropriate to review the
information at this time. This report provides the
requested information and compares the newer
methodology [service standard approach] being used
now with the methodology [per capita multiplier
approach] used for previous fiscal impact analyses,
such as the ones included as part of the 1992 report
on public school impact fees.
Three analyses are provided for comparison. The
first is an analysis of Mel Oaks Subdivision
included as part of the Public School Impact Fee
Report. It was prepared using the per capita
multiplier approach and 1989-90 budget data. The
second analysis is also of Mel Oaks Subdivision but
substitutes the service standard approach. The last
analysis is also of Mel Oaks Subdivision but
utilizes 1992-93 budget data and the service
standard approach.
RECOMMENDATION: That the Board receive the report for information.
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MEMORANDUM
TO: ORANGE COUNTY TY BOAR+ .COMMISSIONERS
FROM: MARVIN COLLINS, PLANNING DIRECTOR
DATE: APRIL 6, 1993
SUBJECT: FISCAL IMPACT ANALYSIS FOR RESIDENTIAL DEVELOPMENT
COPIES: JOHN LINK, COUNTY MANAGER
GEOFREY GLEDHILL, COUNTY ATTORNEY
SALLY KOST, BUDGET DIRECTOR
Attached is a sheet which compares the results of the fiscal impact
analyses of Mel Oak Subdivision distributed with the April 5, 1993
agenda material. This memo highlights some of the most basic assumptions
contained in the analyses and identifies some important data
considerations.
Basic Methodology
The earliest version of the template [1989] uses the "per capita
multiplier" approach. Using a simple example, if the County budget were
$45 million and the population of the county was 100, 000, the cost per
person [capita] would be $450. If five new homes were built with two
persons per household, the 10 new residents would result in an
additional cost to the County of $4,500 [$450 x 10] .
The most recent version of the template uses the "service standard"
approach. Using the same example above, if the County budget were $45
million and the number of County employees was 500, the cost per
employee would be $90, 000. With a population of 100, 000, the number of
employees per person [capita] would be 0. 005. If the five new homes were
built with two persons per household, the 10 new residents would result
in 0. 05 new employees [10 x 0. 005] and an additional cost to the County
of $4, 500 [$90, 000 x 0. 05] .
As can be seen above, the methods result in the same "cost" figures. The
significance of the service standard approach is that it enables to the
user to project new employees needed as well as expenditures and
revenues.
Basic Assumptions
The most basic assumption of the service standard approach in general is
that over the long run, average existing service levels can be used to
assign costs to future development. Furthermore, the average servicing
levels for the county and the school district at the time of development
are those that should be used to assign the service load to the new
development. Service levels are determined by the number of employees,
revenues received, and expenditures per capita as denoted in the
approved annual budget.
Another basic assumption contained in the analyses is that they focus
exclusively on the operating budget. Major capital improvements as well
3
as expenditures/revenues which are attributable to nonresidential
development are excluded from the analyses. This assumption is best
illlustrated by the listing of expenditures and revenues on page 33 of
the April 5 agenda abstract.
Debt service payments for school/County bonds and fund transfers to
school/County capital reserve accounts are excluded from expenditures.
[Note that the overall tax rate has been reduced to factor out such
payments.] Likewise, half-cent sales taxes earmarked for capital
improvements are excluded from revenues. Inventory taxes collected from
businesses [nonresidential development] are excluded as are fund
transfers for capital projects. Any appropriated fund balance from a
preceding budget year is also excluded to focus on specific annual
revenues without regard any carry-over from one year to the next.
Data Considerations
Persons Per Household. Perhaps the most important data, other than that
obtained from the annual budget, is information concerning the number of
persons per household and school age children per household. As shown on
the attached comparison sheet, 1980 Census data for Chapel Hill Township
was used to indicate the number of persons per household [2 .72] . Between
1980 and 1990, however, the number of persons per household declined
from 2 .72 to 2 . 22 [See also page 2 of 4/5/93 agenda abstract] .
The implications of such a decline are evident. Using the 1980 figure,
the number of persons expected to live in the 22 new housing units is
59.84 or 60. If multiplied by the FY 1989-90 County per capita
expenditures for General Government [$52 .80] , the expected cost is
$3 , 159. 55 or $3 ,160 without inflation.
When the FY 1992-93 per capita expenditure for General Government
[$59. 59] is multiplied by the projected 48.84 or 49 new residents [22
units x 2 .22 persons per household] , the expected cost for General
Government is $2, 910 or $250 less than the cost projected using FY 1989-
90 budget and 1980 Census data.
School Age Children Per Household. The same change which occurred in
data concerning persons per household also occurred with regard to
school age children. However, an additional factor has affected the
change in number of school age children per household.
In 1980, Census data was not available pertaining to the number of
school age children, only total children, per household. For this
reason, the number of school age children had to be calculated using a
set of "demographic multipliers" for the South Atlantic Region from The
New Practitioner's Guide to Fiscal Impact Analysis [Buchell, Listokin,
and Dolphin, 1985] . When compared to the more detailed 1990 Census, it
appears that the number of school age children per household dropped
dramatically.
In the case of Chapel Hill Township, the "calculated" number of school
age children per household in 1980 was 0. 67 . Based on 22 new housing
units, the number projected number of school age children is 14 . 74 or
15. If multiplied by the FY 1989-90 County per student expenditure
figure of $1, 057, the County expense for the 15 new students is $15, 580
without inflation.
When using the 1990 Census figure of 0. 29 school age children per
household, the projected number of school age children in 22 housing
units is 6. 38 or 6. If multiplied by the FY 1992-93 County per student
expenditure figure of $1, 310, the County expense for the 6 new students
is $7, 860 without inflation, a difference of $7, 720. As evidenced by
these examples, the availability of more detailed Census data has
increased the template's effectiveness.
5
COMPARISON OF FISCAL IMPACT CALCULATIONS FOR MEL OAKS SUBDIVISION
AT BUILDOUT USING FY 1989-90 AND FY 1992-93 BUDGET DATA
FY 1989-90 FY 1992-93
Per Service Service
Capita Standard Standard
Approach Approach Approach
CHARACTERISTICS OF HOUSEHOLDS:
Persons/House: 2.72 2.72 2.22
Children/House: 0.67 0.67 0.29
POPULATION CHRACTERISTICS:
County: 94537 94537 98648
Students: 5717 5717 6791
COUNTY PER CAPITA REVENUES ($) :
Taxes - Other Than Property 37.26 37.26 36.91
Intergovernmental 54.81 54.81 78.65
Service Charges 17.33 17.33 21.44
Miscellaneous 13.62 13.62 10.51
COUNTY PER CAPITA EXPENDITURES ($) :
General Government 52.80 52.80 59.59
Public Safety 42.92 42.92 54.46
Public Works 23.46 23.46 25.84
Human services 96.89 96.89 140.14
Education (Recurring Capital) 7.93 7.93 7.60
Non-Departmental 28.05 28.05 24.72
SCHOOL DISTRICT
PER STUDENT EXPENDITURES ($) :
County Government 1057.00 1057.00 1310.00
school District 738.58 738.58 648.77
State 2385.60 2385.60 2771.25
TAX DATA:
County Tax Rate ($) 0.6550 0.6550 0.8425
School District Tax Rate ($) 0.1775 0.1775 0.1735
FY 1989-90 FY 1992-93
Per Service Service
Capita Standard Standard
DEMOGRAPHIC PROJECTIONS Approach Approach Approach
YEAR 1993 1993 1996
HOUSING UNITS 22 22 22
POPULATION 60 60 49
SCHOOL CHILDREN
Elementary 7 7 3
Middle 4 4 2
High School 4 4 2
TOTAL 15 15 7
h
FY 1989-90 FY 1992-93
Per Service Service
Capita Standard Standard
FISCAL IMPACT - COUNTY Approach Approach Approach
YEAR 1993 1993 1996
TAX BASE ($1000) 3857 3857 4028
REVENUES ($)
Property Tax 25262 25262 30159
Other Taxes 2693 2693 2021
Intergovernmental 3961 3961 4307
Service Charges 1252 1252 1174
Miscellaneous 984 984 575
TOTAL ($) 34153 34153 38236
EXPENDITURES ($)
General Government 3816 3816 3263
Public Safety 3101 3101 2982
Public Works 1696 1696 1415
Human Services 7002 7002 7673
Education 19389 19389 9787
Non-Departmental 2027 2027 1353
TOTAL ($) 37030 37030 26473
NET FISCAL IMPACT -2877 -2877 11763
FY 1989-90 FY 1992-93
Per Service Service
Capita Standard Standard
FISCAL IMPACT - SCHOOLS Approach Approach Approach
YEAR 1993 1993 1996
REVENUES ($)
County Appropriation 19389 19389 9787
School Tax District 6846 6846 6988
State Allocation 42466 42466 19822
TOTAL ($) 68701 68701 36597
EXPENDITURES ($) 75002 75002 34250
NET FISCAL IMPACT -6301 -6301 2347
FISCAL IMPACT
ANALYSIS
PROPORTIONAL
VALUATION
METHOD
ORANGE COUNTY
PLANNING DEPARTMENT
APRIL 1990 1■••■ft..0.0
FISCAL IMPACT ANALYSIS
WALMART
Prepared by Orange County Planning Department
April 1990
PROJECT DESCRIPTION
Walmart is a 44,690 square foot department store in Hillsborough, N.C. Walmart is the anchor for a new
community shopping center known as Hillsborough Commons. There are a total of eleven separate businesses
in the center which include a pizza restaurant, hot dog stand,jewelry store, shoe store, beauty shop, insurance
company, optical store, grocery store, laundry and Walmart.
METHODOLOGY
Fiscal impact analysis is a projection of the direct, current, public costs and revenues associated with residential
or nonresidential growth in the jurisdiction in which the growth is taking place. Fiscal impact analysis considers
only direct impact in that it projects only the primary costs that will be incurred and the immediate revenues that
will be generated. It calculates the financial effect of a planned development by considering the current costs
and revenues such a development would generate if it were completed today. Fiscal impact analysis does not
consider the private costs of public action. It is concerned only with public (governmental) costs and revenues.
The method used in preparing the fiscal impact analysis of Walmart is the Proportional Valuation approach.
This method involves a two-step process to assign a share of municipal costs of a new commercial or industrial
business. A share of total municipal costs is given to all local nonresidential costs and then a portion of these
nonresidential costs is allocated to the new development. Revenues are calculated using municipal own source
revenues and intergovernmental transfers. The difference between the costs and revenues yields a statement of
the net fiscal impact of the project.
TABLE OF CONTENTS
Section 1 Basic Data 1
Section 2 Share of Existing County Expenditures to
Total Local Nonresidential Uses 2
Section 3 Future Total County Operating Costs Induced
By The Proposed Development 2
Section 4 Assign Total Annual Nonresidential Costs to
Component Service Categories 3
Section 5 General Government Data 3
Section 6 County Government Projected Fiscal Impacts
of Project 4
Explanation of Terms and Data Sources
Section 1 Basic Data 5-6
Section 2 Share of Existing County Expenditures to
Total Local Nonresidential Uses 7
Section 3 Future Total County Operating Costs Induced
By the Proposed Development 7
Section 4 Assign Total Annual Nonresidential Costs to
Component Service Categories 8
Section 5 General Government Data 8-9
Section 6 County Government Projected Fiscal Impacts
of Project 10-11
FISCAL IMPACT TEMPLATE: NONRESIDENTIAL DEVELOPMENT/PROPORTIONAL VALUATION
Version 9/9/87
Bureau of Economic & Business Research - University of Florida
Modified 11/30/89 - Orange County N.C. Planning Department
SECTION 1 - BASIC DATA
ENTER THE FOLLOWING DATA FOR EACH PROJECT:
PROJECT NAME: Walmart
TOWNSHIP: Hillsborough
SCHOOL DISTRICT: Orange County
INFLATION RATE: 4.83
COUNTY ANNUAL OPERATING EXPENDITURES: $42,494,467
TOTAL LOCAL EQUALIZED REAL PROPERTY VALUE: $3,463,533,275
TOTAL NUMBER OF LAND PARCELS: 38,500
TOTAL NONRESIDENTIAL EQUALIZED REAL PROPERTY VALUE: $380,988,660
TOTAL NUMBER OF NONRESIDENTIAL LAND PARCELS: 932
REAL PROPERTY (MARKET) VALUE OF PROPOSED DEVELOPMENT: $1,899,819
PERSONAL PROPERTY VALUE OF PROPOSED DEVELOPMENT $611,453
CALCULATED INPUT DATA:
AVERAGE EQUALIZED REAL PROPERTY VALUE PER PARCEL: $89,962
AVERAGE NONRESIDENTIAL EQUALIZED REAL PROPERTY
VALUE PER PARCEL: $408,786
EQUALIZED REAL PROPERTY VALUE AVERAGE NONRESIDENTIAL
PARCEL TO AVERAGE LOCAL PARCEL: 4.54
REAL PROPERTY VALUE OF FACILITY TO AVERAGE
NONRESIDENTIAL REAL PROPERTY VALUE: 4.65
1
SECTION 2 - SHARE OF EXISTING COUNTY EXPENDITURES TO TOTAL LOCAL NONRESIDENTIAL USES
TOTAL COUNTY EXPENDITURES: $42,494,467
PROPORTION OF NONRESIDENTIAL VALUE TO 0.11
TOTAL LOCAL REAL PROPERTY VALUE:
EQUALIZED REAL PROPERTY VALUE AVERAGE NONRESIDENTIAL
PARCEL TO AVERAGE LOCAL PARCEL: 4.54
REFINEMENT COEFFICIENT: 0.2
TOTAL EXISTING COUNTY EXPENDITURES ATTRIBUTABLE TO
NONRESIDENTIAL USES: $934,878
SECTION 3 - FUTURE TOTAL COUNTY OPERATING COSTS INDUCED BY THE PROPOSED
DEVELOPMENT
TOTAL EXISTING COUNTY EXPENDITURES
ATTRIBUTABLE TO NONRESIDENTIAL USE: $934,878
PROPORTION OF FACILITY TO TOTAL LOCAL
NONRESIDENTIAL REAL PROPERTY VALUE: 0.005
PROPORTION OF FACILITY TO AVERAGE NONRESIDENTIAL
REAL PROPERTY VALUE: 4.65
COUNTY COSTS ALLOCATED TO THE PROPOSED DEVELOPMENT: $4,662
2
SECTION 4 - ASSIGN TOTAL ANNUAL NONRESIDENTIAL COSTS TO COMPONENT SERVICE CATEGORIES
CATEGORY PERCENT DOLLARS
COMMUNITY MAINTENANCE 5 $233
GENERAL ADMINISTRATION 25 $1,165
TAX & RECORDS 20 $932
PUBLIC SAFETY 33 $1,538
PUBLIC WORKS 2 $93
PLANNING & EDC 15 $699
TOTAL 100 $4,662
SECTION 5 - GENERAL GOVERNMENT DATA
TAXES
COUNTY GOVERNMENT TAX RATE: 0.71 Per $100 Assessed Valuation
SCHOOL DISTRICT TAX RATE: 0 Per $100 Assessed Valuation
ASSESSMENT RATIO 73.79
COUNTY SALES TAX RATE: 0.02 Gross Annual Sales
COUNTY GOVT'S PERCENTAGE OF SALES TAX 0.61
PERCENTAGE OF TOTAL SALES TAX TO OPERATING 0.5
SQ. FOOTAGE OF PROJECT 44,690
PROJECTED SALES PER SQ. FOOT $110.58
CHARGES/INSPECTIONS/FEES (Initial Costs)
EROSION CONTROL $1,008 (6.72 acres * $150 per acre)
GRADING PERMIT $2,463 (6.72 acres * $365 per acre)
BUILDING PERMIT $3,040
ELECTRICAL $323
PLUMBING $114
MECHANICAL $233
MISCELLANEOUS
TOTAL $7,181
3
SECTION 6 - COUNTY GOVERNMENT/PROJECTED FISCAL IMPACTS OF PROJECT
YEAR 1989 1990 1991 1992 1993 1994 1995 1996 1997
•
TAX BASE ($1000) 1472 1543 1618 1696 1778 1863 1953 2048 2147
REVENUES (s)
PROPERTY TAX 10451 10956 11485 12040 12621 13231 13870 14540 15242
SALES TAX 30145 31601 33127 34728 36405 38163 40006 41939 43964
EQUIPMENT TAX 4341 4551 4771 5001 5243 5496 5761 6040 6331
FEES * 7181
SUBTOTAL REVENUES 52118 47108 49383 51768 54269 56890 59638 62518 65538
EXPENDITURES
GENERAL GOVT. 233 244 256 269 281 295 309 324 340
PUBLIC SAFETY 1165 1222 1281 1343 1407 1475 1547 1621 1700
PUBLIC WORKS 932 977 1025 1074 1126 1180 1237 1297 1360
HEALTH & DSS 1538 1613 1691 1772 1858 1948 2042 2140 2244
RECREATION 93 102 107 113 118 118 124 130 136
SUBTOTAL EXP. 3963 4159 4360 4570 4791 5017 5259 5513 5779
NET BALANCE 48156 42949 45024 47198 49478 51873 54379 57005 59759
* Fees are only paid at the beginning of project
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EXPLANATION OF TERMS AND DATA SOURCES
SECTION 1 - BASIC DATA
Project Name - Name of the proposed development.
Township - Township in which project is located.
School District - School district in which project is located.
Inflation Rate - Unless an inflation rate is entered, the template will calculate fiscal impacts based on constant
dollars. Since the inflation rate changes from month to month, the finance department must be contacted for
the most recent figures. Example - 4.83.
County Annual Operating Expenditures-Total county expenditures for current year. Can be obtained from the
county finance or budget office. Example - $42,494,467.
Total Local Equalized Real Property Value - This figure represents the aggregate county market value of all
county taxpaying properties on which taxes are assessed. This includes residential, farm,vacant, commercial and
industrial. Contact the tax assessor's offices for this figure. Example - $3,463,533,275.
Total Number of Land Parcels - This figure represents the sum of all county properties on which taxes are
assessed. Contact the tax assessor's office for this figure. Example - 38,500.
Total Nonresidential Equalized Real Property Value -This figure represents the sum of the market value of all
commercial and industrial properties. Contact the tax assessor's office for this figure. Example - $380,988,660.
Total Number of Nonresidential Land Parcels-This figure represents the sum of commercial and industrial tax-
paying properties. Because apartment complexes demand services similar to residential parcels, they are not
included. Contact the tax assessor's office for this figure. Example - 932.
Real Property (Market) Value of Proposed Development - This figure represents the total market value of the
development. For an existing development, contact the tax assessor's office. Obtaining an accurate figure for
a proposed development is more complicated and will vary according to the type of development and the planned
location. Because of the many steps involved in calculating market value, it is best to obtain as much information
as possible and seek the assistance of the tax office. They will estimate the market value of the proposed
development based on existing developments similar to that which is proposed. In Case Study# 2, Walmart,
the market value is$1,899,819. This figure was obtained from the assessor's office. The following are three basic
steps used to estimate the market value of a basic empty warehouse with 50,000 sq. ft. of warehouse space:
1) Find a development similar to the one being proposed (type, location, use, size). Based on the
preceding information and the projected demand for the development type, the analyst will
multiply the number of square feet of the new development by the estimated rent per square
foot. Example - 50,000 sq. ft. * $1.50 per sq. ft. _ $75,000 total.
2) If the information is provided, estimate an expense ratio, i.e., the proportion of expenses paid
by the owner to those paid by the tenant. In this example, the owner pays all expenses.
3) Divide that figure (in our example the figure remains$75,000 since there is no expense ratio),
by the current cap rate. The cap rate is determined by the assessor's office at each revaluation
and is based on interest rates and expected return of investments. In this example, the cap rate
is 12%. The market value is therefore $625,000, or $75,000/12%.
5
Personal Property Value of Proposed Development-This figure represents the total personal property value of
the development and is based on their listing of equipment and other personal property. Based on this list, the
assessor's office calculates a total value based on rate of depreciation. For an existing or proposed development,
it is best to contact the assessor's office for this figure. Example - $611,453.
Average Equalized Real Property Value - (Calculated Total Localized Real Property Value/Total Number of
Land Parcels)-This figure is derived by dividing the total local equalized real property value by the total number
of land parcels. The quotient is therefore the average equalized real property value per parcel. Example -
$89,962.
Average Nonresidential Equalized Real Property Value Per Parcel (Total Nonresidential Real Property
Value/Total Number of Nonresidential Land Parcels) -This figure is derived by dividing the total nonresidential
equalized real property value by the total number of nonresidential land parcels. The quotient is therefore the
average nonresidential equalized real property value per parcel. Example - $408,786.
Equalized Real Pro sert Value Avera.e Nonresidential Parcel To Avera.e Local P.rcel(Average Nonresidential
Equalized Real Property Value Per Parcel/Average Equalized Real Property Value Per Parcel) -This figure is
derived by dividing the average nonresidential equalized real property value per parcel by the average equalized
real property value per parcel. This quotient represents the proportionate value of nonresidential to residential
equalized real property value per parcel. In this example, the figure indicates that the average nonresidential
property is valued at 4.54 times the average local property.
Real Property Value of Facility to Average Nonresidential Real Property Value (Real Property(Market) Value
of Proposed Development/Average Nonresidential Equalized Real Property Value Per Parcel) - This figure is
derived by dividing the real property(market)value of the proposed development by the average nonresidential
equalized real property value per parcel. In our example, this figure indicates that the real property value of the
proposed development is 4.65 times the average nonresidential real property value.
6
SECTION 2
SHARE OF EXISTING COUNTY EXPENDITURES
TO TOTAL LOCAL NONRESIDENTIAL USES
Total County Expenditures - This figure represents the total county expenditures for the current fiscal year
budget. This information may be obtained from the county's finance or budget office. Example - $42,494,467.
Proportion of Nonresidential Value To Total Local Real Property Value - This figure is derived by dividing the
county's nonresidential equalized real property value ($380,988,660 in our example)by total local equalized real
property value ($3,463,533,275 in our example). The resulting quotient indicates that 11% of the total local
equalized real property value is nonresidential.
Refinement Coefficient - County expenditures are not allocated according to market values of residential and
nonresidential properties. It is therefore wrong to assume that because 11%of the total equalized real property
value is nonresidential, that 11% of the county's total expenditures go to serve nonresidential developments.
Generally speaking, residential developments place more demands on county services, and therefore, cost the
county more than nonresidential developments. It is best that the analyst contact the tax assessor and finance
department for this figure. Based on input from the tax assessor and a brief overview of services offered by
departments, our refinement coefficient was set at 20 %. This means that 20 % of the 11% nonresidential
market value actually goes to serve nonresidential developments. The resulting 80% goes to residential.
Total Existing County Expenditures Attributable To Nonresidential Uses-This figure is the product of the above
three figures(($42,494,467 * .11) * .20),or$934,878. This figure represents the total existing county expenditures
attributable to nonresidential uses.
SECTION 3
FUTURE TOTAL COUNTY OPERATING COSTS
INDUCED BY THE PROPOSED DEVELOPMENT
Total Existing County Expenditures Attributable to Nonresidential Uses - See above. This figure is$934,878 in
our example.
Proportion of Facility to Total Local Nonresidential Real Property Value -This figure is derived by dividing the
real property market value of the proposed development ($1,899,819 in our example)by the total nonresidential
real property value ($380,988,660 in our example). This gives us a quotient of.005 indicating that the market
value of this development is .5 percent of the total nonresidential real property value.
County Costs to Proposed Development - This figure is the product of the two figures above ($934,878 * .005
= $4,662). This gives us the total county expenditures allocated to the future nonresidential development.
7
SECTION 4
ASSIGN TOTAL ANNUAL NONRESIDENTIAL
COSTS TO COMPONENT SERVICE CATEGORIES
Category * - Specific county government service category.
Percent-These figures are estimates of the percentage of the total expenditure that the county will spend in each
service category. These percentages are based on the type of development and the resulting demand for specific
services. Because of the time involved in attempting to project exact demands on services, this section uses
percentages based on input from various county departments. It is suggested that the analyst check with the tax
assessor, finance and/or the various departments for this distribution.
Dollars - These figures represent the dollar amount that the county spends in each service category for the
nonresidential development.
* Community Maintenance Includes Commissioners, Courts, Elections and Soil and Water
Conservation.
General Administration Includes Manager, Budget, Personnel, Finance, Purchasing, Central
Services and Data Processing.
Taxation & Records Includes Register of Deeds, Land Records, Assessor and Tax
Collector.
Public Safety Includes Sheriff, ABC Law Enforcement and Emergency Services.
Public Works Includes Sanitation, Buildings and Grounds, Road Naming, Building
& Rents and Motor Pool.
Planning & EDC Includes Planning and Economic Development.
SECTION 5
GENERAL GOVERNMENT DATA
TAXES
County Government Tax Rate - The County tax rate per $100 of assessed valuation. Example - .71.
School District Tax Rate - The supplementary tax for either Chapel Hill/Carrboro or Orange County school
systems.
Assessment Ratio-The ratio of market(sales)value to assessed value based on information supplied by the Tax
Office.The assessment ratio is used to convert market value to assessed value for the purpose of computing the
tax base. Example - 73.79.
County Sales Tax Rate - The percentage of county-wide gross annual sales that are returned to the county.
Example - .02 Gross Annual Sales.
County Government's Percentage of Sales Tax - All county jurisdictions receive a percentage of the sales tax
returned to the county by the state. The amount is calculated by taking the total county population as estimated
by the state and adding populations of all county jurisdictions (total Orange County population + Chapel Hill
+ Carrboro + Durham + Hillsborough + Mebane). A percentage of this total goes to each jurisdiction on
a per capita basis by dividing each jurisdiction's population by the total. This results in the percentage of the
original 2 percent that is returned to each jurisdiction. The finance office can supply this information.
Example - .61.
8
Percentage of Total Sales Tax To Operating - In Orange County, 80% of the 1st half cent sales tax goes to
school capital and 20% goes to county capital. The 2nd half cent sales tax goes to county capital. The 1 cent
sales tax goes to the county general fund for operating expenditures. Therefore, 50% of the total county sales
tax revenue goes to operating. Example - .5.
Square Footage of Project - This information can be obtained from the developer or tax assessor.
Example - 44,690 sq. ft.
Projected Sales Per Square Foot - This information can be obtained from the developer or tax assessor or by
referring to SALES PER SQUARE FOOT from Urban Land Institute's DOLLARS AND CENTS OF
SHOPPING CENTERS (depending on the type of development). Example - $110.58 sales per sq. ft. See
Appendix.
CHARGES/INSPECTIONS/FEES (All inspections charges are initial revenues and will not be included in future
yearly revenue estimates.)
Erosion Control- An Erosion Control Plan must be prepared for all land disturbing activities subject to the
Orange County Erosion Control Ordinance whenever the proposed activity is to be undertaken on a tract
comprising more than 20,000 square feet, if more than 20,000 square feet are to be covered. The Erosion
Control Fee schedule is included in the Appendix. Land disturbance for our example is 6.72 acres. At a fee of
$150 per acre the total charge would be 6.72 * $150, or $1,008.
Grading Permit-Before starting a land-disturbing activity greater that 20,000 square feet,the owner or his agent
shall obtain a Grading Permit from the Erosion Control officer. Grading Permit fees are included in the Erosion
Control Fee Schedule in the Appendix. Grading permit fees are $365 per acre. The total fee for this example
would be 6.72 * $365, or $2,463.
Building Permits - Most construction activity in Orange County requires the issuance of a building permit.
Commercial,industrial,and nonresidential buildings, alterations and additions fees are under Schedule D in the
Inspections Fee Schedule in the Appendix. The total building permit fee for this example is $3,040.
Electrical * - All buildings with electricity require an electrical inspection. Fees for electrical inspections are
under Schedules E,F,G and H in the Inspections Fee Schedule in the Appendix. The electrical inspection fee
for this example is $323.
Plumbing * -All buildings with plumbing require a plumbing inspection. Plumbing fees are under Schedule in
the Inspections Fee Schedule in the Appendix. The plumbing inspection fee for this example is $114.
Mechanical * - All buildings with heating and cooling systems require a mechanical inspection.
Nonresidential/Commercial Mechanical fees are under Schedule K in the Inspections Fee Schedule in the
Appendix. The mechanical inspection fee for this example is $233.
Miscellaneous - Miscellaneous Building Inspections include those such as Mobile/Modular Homes, Building
Demolition, Satellite Dishes, Swimming Pools, Signs, etc. All Miscellaneous Inspections are listed under
Schedules E and F in the Inspections Fee Schedule in the Appendix.
* It is difficult to project electrical, plumbing and mechanical fees, especially when the use of the building has
not been determined. The fees in this example were obtained from the Permits Coordinator.
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SECTION 6
COUNTY GOVERNMENT/PROJECTED
FISCAL IMPACTS OF PROJECT
Tax Base - The tax base represents the increase in assessed property value expected each year as a result of the
project development. The values are shown in 1,000's,and are derived from a formula which includes the market
value of the proposed development, the assessment ratio and a percentage for personal (equipment) tax.
Example Market Value = $1,899,819, Assessment Ratio = .7379, Equip. Tax = 5%
1) $1,899,819 * .7379 = $1,401,876
2) $1,401,876 * .05 = $70,094
3) $1,401,876 + $70,094 = $1,471,969
4) $1,471,969/1000 = $1,472
Revenues
Property Tax- Derived from a formula which multiplies the tax base times the tax rate. Inflation rate
is entered in for each year.
Example Tax Base = $1,472,000, Tax Rate = .71 per $100 valuation
1) $1,472,000 * .71 = $1,045,120
2) $1,045,120/100 = $10,451
Sales Tax-Sales tax is derived from a formula which multiplies the proposed square footage of the new
development times the projected sales per square foot of the new development. This product is
multiplied times the county sales tax rate to determine the amount of sales tax generated annually.
Example Square footage = 44,690, Sales tax per sq. ft. = $110.58, County Sales Tax
Rate = .02, County Government's Percentage of Sales Tax = .61,Percentage
of Total Sales Tax to Operating = .50.
1) 44,690 * $110.58 * .02 * .61 = $60,290
2) .50 * $60,290 = $30,145
Equipment Tax- Equipment tax is derived from a formula which multiplies the assessed value of all
personal property(equipment) times the tax rate. The product is then divided by 100 to reflect per$100
valuation.
Example Assessed Personal Property Value = $611,453, Tax Rate = .71 per $100
valuation
$611,453 * .71/$100 = $4,341
Fees - Revenues from fees are included in the first year's total. This figure is taken from the total in
Section 5.
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Expenditures - First year expenditures are taken from the breakdown by category in Section 4. Expenditures
for subsequent years include an inflation factor.
Example General Government expenditure for 1989 = $233. Inflation rate = .0483
$233 * .0483 = $11.25, $233 + $11.25 = $244.25 or rounded to $244
Net Balance - The net balance is the difference between expenditures and revenues. A negative net balance
indicates that it costs Orange County more to provide services for the proposed development than it receives in
revenues from the same development. A positive net balance indicates that more revenues are received than
it costs to serve the project. Our balance shows a positive net balance across the board, starting with a balance
of $48,156 (which includes fees) and leveling out to $42,949 the next year. The county should therefore
experience a signifcant positive net fiscal impact from Walmart.
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