City Council Agenda and Packet 2018 07 17

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City Council Meeting Minutes July 3, 2018 Page 6 of 11 DISCUSSION/DIRECTION/ACTION — FISCAL IMPACT MODEL REVIEW Director Zuccaro stated staff is presenting an overview of the City's Fiscal Impact Models and seeking policy guidance on the model inputs and when to utilize the Fiscal Models in development review. This is on the work plan for 2018. The Finance Committee has reviewed this. Two Fiscal Model Types Originally Developed in 2014 — Move from Direct Cost to Marginal Cost Models and includes a Development Impact Model — Marginal/Average Cost Hybrid for Individual Development Proposals and an Area Planning Model — Marginal Cost Model for City - Wide or Area Land Use Scenarios. The current model was developed in 2014 and we are moving from a direct cost model to a marginal cost model. This will be a better fit for a community like Louisville which is closer to build out. We have been using this as tool on new developments since 2014. Since 2014 there have been some modifications to the model including adding office/worker spending into the model. There were some oddities in the model and it needed to be aligned with the program based budgeting. This is reflected in the newly refreshed model. The Fiscal Model can help ensure new developments have sustainable funding for City capital and services and evaluate fiscal impact of different land use scenarios and changes. Fiscal Models do not evaluate social impacts, environmental impacts, community character or market probability. It is important to relate this to the actual criteria by which a development is to be judged. The model does show the effect on various city funds over a 20-year period. When staff works with the model some assumptions are made including the value of the building, income assumptions, vehicle miles, and more. That is used to determine how much the city will have to pay to provide services. Assumptions are from standardized sources as much as possible. Working with the Finance Committee, staff has created a list of direct inputs and their sources. Staff proposed a standard way to show a range of scenarios so they can have a high and low scenario to bring to Council when considering a development. Director Zuccaro wanted to make sure Council is comfortable with how staff is running the model, bringing a range of possible outcomes and would like to know when to use which model. He presented a suggested table noting the intent to use this when it adds value to the development review. He noted Council has been asking for a range for the Fiscal Model. He proposed a way to do that by taking 80% of the developer provided/anticipated values and then double the absorption rates. 33