A question driving much discussion about growth in Whatcom County is, “Does new development, especially development as the result of population growth, impose fiscal burdens on existing residents in our communities?”
The question has been asked for years by communities across the United States. As a result, there are literally hundreds of studies on the subject.
Making good use of all that analysis to inform the discussion has been problematic in Whatcom County, as elsewhere. Studies are cherry picked for content then misused in local discussions to drive pre-determined agendas.
Understanding the problem, Whatcom County’s Building Industry Association (BIA) recently commissioned a “study of the studies” in an effort to help Whatcom County’s people make reasoned use of the plethora of information available regarding the fiscal impacts of growth on their community.
To accomplish the study this author analyzed more than 100 national, regional, statewide and/or local studies on fiscal impacts of growth. Each study was examined in terms of methodology, apparent lack of, or presence of, bias, and conclusions drawn.
Close examination of the broad variety of academic and professional work on fiscal impacts of development reveals some easily detectable patterns:
• Overall, the evidence is strong that, for the most part, single family homes at residential densities of two or three units to the acre and above provide positive fiscal returns.
• The evidence is much less clear when high multifamily densities (14 – 20 units per acre and up) or low single family densities (2 or 3 units per acre and lower) are considered.
• Most public discussion and academic investigation focuses on costs of development rather than on the costs balanced against revenues equation. That shortcoming accounts for the general lack of accuracy and/or consensus in the larger discussion.
• Disparities between theory and actually experienced results are most often related to approaches intrinsic to the major methodologies generally used in doing fiscal impacts analysis. It is important to understand what is actually being measured if conclusions drawn are to fully inform the discussion.
• “Place” is important. Local conditions (impact fees, taxes, tax abatements and other subsidies, etc.) have substantial influence on outcomes.
Follow the bouncing methodologies
The methodology selected to accomplish a fiscal impacts study is of particular importance in examining conclusions. Most analysis involves applying one or more of three major approaches to the data usually examined in a fiscal impacts study.
Cost Averaging or “Per Capita Multiplier” approaches average past “costs” per person, then assume the average equals future “costs of growth” per new citizen. The upside of the approach is ease of use. However, the approach is inaccurate in the specific; developer contributions, for example, are counted as “costs” rather than as revenues. The methodology is best used to compare development approaches (high density vs. low density development) because error intrinsic to the approach impacts all the data.
Marginal Cost methodologies involve detailed studies of actual costs and actual revenues. The upside of the approach is good accuracy. The downside is the difficulty of data collection. This approach is best used in geographically discrete areas (a particular development, a particular city) with good data available.
Experiential approaches involve analysis of what has actually happened over time coupled with conjecture about what that might mean. The approach is based on actual experience but is limited because it is a broad rather than specific view. Experiential approaches are excellent in testing allegations (If growth is so expensive why haven’t per capita taxes increased?).
Questions to ask
The BIA study illustrates that even a relatively unsophisticated observer can draw reasoned, and reasonable, conclusions about the actual fiscal impacts of growth on community by asking a few simple questions when claims about growth are made. Appropriate questions include:
• What analysis is being cited?
• What is actually being examined in the analysis?
• Are both costs and revenues addressed?
• How do the results compare with other works?
The BIA’s study on the fiscal impacts of growth is important to the local discussion because it draws together a broad range of information derived by investigating what academic, professional, and activist investigations into the fiscal impacts of growth at national, regional, statewide, and local levels conclude.
The study attempts to provide a roadmap ordinary people can use in their own voyages of discovery regarding growth and its fiscal impacts on the community, so don’t look to be told what conclusions you must arrive at.
The drawing of reasoned conclusions is your job.
Jack Petree is a freelance writer and public policy researcher based in Bellingham.