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SUBJECT: FISCAL IMPACT MODEL OVERVIEW <br />DATE: MAY 14, 2024 PAGE 3 OF 6 <br />The City's marginal -cost model was developed for use in area -wide planning efforts and <br />the average -cost model was developed for site -specific development review. Following <br />the adoption of the City's Program Based Budgeting methodology, TischlerBise was no <br />longer able to support the marginal -cost model due to the complexity of this budgeting <br />methodology. Currently the City only utilizes the average -cost hybrid model for <br />development review. <br />In 2018, the City updated its baseline assumptions for the model and created policies <br />on what types of land use applications should trigger an analysis. This was developed <br />in consultation with the City Council Finance Committee and the presented to and <br />endorsed by the full City Council. <br />While the models are complex and much of the formulas have been set by TischlerBise <br />in consultation with the City when the models where created, there are several direct <br />model inputs that the City staff must consider when running the models. These inputs <br />often come from the Census or other publications such as the Institute of Traffic <br />Engineers Handbook. The City may also obtain some of the inputs from an applicant as <br />part of a development proposal. <br />The following table provides a summary of the data source and the assumptions <br />developed with the Finance Committee in 2018. An additional model assumption not <br />included in these standards is the amount of household sales tax captured in the City. <br />Staff recently increased the baseline assumption for residential sales tax capture from <br />40% to 60%. This increase was in consultation with TischlerBise and based new <br />assumptions for online sales tax paid to the city. Both volume of online sales has <br />increased and compliance and enforcement of payment of local taxes has increased <br />significantly since the original assumption was determined. <br />Inputs <br />Source/Assumption <br />Persons/Unit <br />Census/American Community Survey <br />Unit/Construction Value <br />Developer/Market Research (staff also uses 60% value to <br />sales price based on 2023 data from TischlerBise when <br />developer does not have reliable data) <br />Residential Income <br />Developer/15% of Unit Value <br />Residential Income Spent on Taxable <br />Items <br />35% of Income <br />Residential Spending Captured in City <br />40% <br />Vehicle Trips <br />Institute of Traffic Engineers <br />CITY COUNCIL COMMUNICATION <br />