City Council Agenda and Packet 2024 05 14 - SP

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LL Cityof CITY COUNCIL COMMUNICATION Louisville AGENDA ITEM 2 COLORADO • SINCE 1878 SUBJECT: FISCAL IMPACT MODEL OVERVIEW DATE: MAY 14, 2024 PRESENTED BY: ROB ZUCCARO, AICP, COMMUNITY DEVELOPMENT DIRECTOR SUMMARY: Staff is presenting an overview of the City's Fiscal Impact Model. The City uses fiscal impact analysis to inform some types of development review and for land use policy development. The Finance Committee reviewed the Fiscal Impact Model at their February 22, 2024 meeting. As a follow up to that review, and in anticipation of upcoming land use policy discussions as part of the Comprehensive Plan update project, this is an opportunity for all of Council to become more familiar with fiscal impact analysis methodologies, and the potential benefits and limitations of fiscal impact analysis in policy development. BACKGROUND: Fiscal impact analysis is a tool that a city uses to estimate revenues and costs that may result from new development or land uses changes. Different land uses, such as industrial, office, 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. Additionally, policies that promote 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 CITY COUNCIL COMMUNICATION 2