Finance Committee Agenda and Packet 2024 02 22

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City' L. Lollis}lVille COLORADO-SINCE 187t+ TO: FROM: DATE: SUBJECT: Community Development ITEM 2 749 Main Street # Louisville CO 80027 , 303.335.4592 * www. louis villeco. gov CITY COUNCIL FINANCE COMMITTEE ROB ZUCCARO, AICP, COMMUNITY DEVELOPMENT DIRECTOR FEBRUARY 22, 2024 FISCAL IMPACT MODEL OVERVIEW SUMMARY: Staff is presenting an overview of the City's Fiscal Impact Model for discussion and questions. Staff will also provide a demonstration of the model at this meeting. BACKGROUND: Fiscal impact analysis is a tool that a city may use to estimate revenues and costs that may result from new development or land uses changes. Different land uses, such as industrial, cffice, retail, and residential land uses, will have different impacts on city revenue and costs to provide services and infrastructure to those uses. Each land use scenario has different tax and fee structures and demands on city services. The fiscal impact analysis estimates city revenues from one-time fees such as permitting and development impact fees, and ongoing tax revenues anticipated from the development. The analysis compares those revenues to the estimated costs to the city to provide and expand services and public infrastructure when necessary, and provides the net result. It is important to recognize that a fiscal model does not reflect market conditions that may or may not be present to support certain land use scenarios. For example, a city may want to promote commercial development for tax revenue purposes. A fiscal analysis of a primarily commercial development will show a net positive fiscal benefit to the city. However, if market conditions do not support commercial development in the location planned, such commercial development will likely not take place. If a city is promoting new development or redevelopment in these areas to achieve other city policies or goals, market feasibility should be a consideration in addition to fiscal analysis. In addition, promoting non-commercial development can provide secondary positive fiscal impacts to the city not captured in a fiscal analysis model. Such development may provide support to other existing sales tax generating developments or create demand for new sales tax generating development. There can also be positive impact from "place making" and creating vibrant places that attract people to an area that fosters market demand but may not be viewed positively in a fiscal analysis - While positive fiscal balance overall for the city is desired and necessary for a balanced budget, other policies goals related to affordable housing, economic vitality, equity, diversity, and inclusion, desired community character, and 6/ 132