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Fiscal Impact Analysis – Reed
Putnam Urban Renewal
Project
Fiscal Impact Analysis – City of Norwalk, Connecticut
October 5, 2006
Prepared by:
RKG Associates, Inc.
Economic, Planning and Real Estate Consultants
277 Mast Road
Durham, NH 03824
Presentation Outline
Project Scope and Approach
Methodology and Assumptions
Net Annual Fiscal Impact
Summary
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Project Scope and Approach
Purpose – Evaluate the potential fiscal impacts to the City of
Norwalk that may be expected to occur under different
development scenarios at Reed Putnam parcels 1, 2 & 4
Approach and Tasks
Compare the municipal costs of providing services to a
development to the revenues generated by the proposed
development
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Determine population, school-age children and employment
Project revenues from new taxes, fees, etc.
From projected growth, estimate public service costs
Compare costs to revenues
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Methodology and Assumptions
Scenario One:
(Approved Plan)
1,000,000 SF Office Space
50,000 SF Retail Space
Scenario One-A:
(Tax Abatement)
1,000,000 SF Office Space
50,000 SF Retail Space
(Assuming State of Connecticut Urban Jobs benefit - 40% abatement of property
taxes for five years)
Scenario Two:
(Staff Recommendation)
500,000 SF Office Space
150,000 SF Retail Space
80,000 SF (130 Units) Hotel
300 Condominium Units (Mix of 1 and 2 Bedrooms)
Scenario Three:
(95/7 Proposal)
485,000 Office Space
225,000 SF Retail Space
80,000 SF (130 Units) Hotel
310 Condominium Units (Mix of 1 and 2 Bedrooms)
Project built in phases (up to ten years)
100,000 SF office space per year;
85,000 SF retail space per year;
150 condominium units per year
Reduced to 60 per year (conservative market repositioning estimate)
Hotel absorbed in one year (in Year 10 upon completion of office
development)
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Methodology Cont’d
Rising costs of providing public services matched by comparable
increase in revenues
Per capita method used to allocate costs
Current costs best measure of future costs
Municipal officials interviewed
6 sources of school-age children multipliers/methods
Constant dollars, tax rates, tax base distribution, etc.
Property values derived from combination of:
Tax assessment data
Comparable properties
Recently completed market studies
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Net Annual Fiscal Impact
All scenarios generate an annual fiscal benefit
$4.3 million (Scenario 1 & 1A) to $5 million (Scenario 2 & 3)
NPV of Scenarios 2 & 3 at least $11 million more than 1 & 1A over 10
year period
Impact does not include one-time permit/inspection fees
$1.6 million (Scenario 1 & 1A)
$1.8 million (Scenario 2) and $1.9 million (Scenario 3)
Could serve as (re)development catalyst for neighboring
properties
Caution in incentives for large-scale office development
Few “net new” office users in County
Adding more supply could depress current/future lease rates
No indication that incentive will provide marketing advantage to site
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Figure 1. Net Fiscal Impact by Year
$6,000,000
Full Build-Out
(Year 10)
$5,000,000
$4,000,000
$3,000,000
$2,000,000
Impact of Tax Abatement
$1,000,000
$0
Year 1
Year 2
Year 3
Year 4
Scenario 1
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Year 5
Scenario 1A
Year 6
Scenario 2
Year 7
Year 8
Year 9
Year 10
Scenario 3
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Cumulative Impact and NPV
Figure 2. Cumulative Net Fiscal Impact [1] and Net Present Value [2]
$45,000,000
$40,000,000
$38,498,674
$36,601,842
$35,000,000
$29,246,803
$30,000,000
$25,000,000
$27,805,984
$22,898,396
$19,679,252
$20,000,000
$16,864,410
$14,111,321
$15,000,000
$10,000,000
$5,000,000
$0
Scenario 1
Scenario 1A
[1] Net fiscal impact from each year aggregated over the ten year absorption period
[2] Net present value of income stream over the entire ten-year period
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Scenario 2
Cumulative Net Fiscal Impact
Scenario 3
Net Present Value
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Summary
All scenarios generate (comparable) annual fiscal benefit
Phasing schedule influence
NPV of Scenarios 2 & 3 higher than Scenarios 1 & 1A
Doesn’t include one-time fees
All scenarios may influence neighboring (re)development
Caution needed re: adding to office supply
Questions?
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