LTC 241-2005 Growth Management Update
CITY OF MIAMI BEACH
Office of the City Manager
Letter to Commission No. 241-2005
m
From:
Mayor David Dermer and
Members of the City Commission
Jorge M. GonzaleZ2::~
City Manager . U
GROWTH MAN EMENT UPDATE
Date: September 13, 2005
To:
Subject:
This is a follow up to the Growth Management workshop held on May 25, 2005.
Attached is a copy of the Workshop after-action, and a Planning Department report
updating the Commission on the post-workshop progress on the issues discussed.
A package of potential ordinance amendments has been assembled. The first two
ordinances, dealing with residential parking, have been reviewed by the Planning Board,
and are scheduled for the City Commission in October. Additional proposed ordinances,
dealing with parking impact fees and other zoning requirements will come to the Land Use
Committee for initial review in October as well.
The Planning Department is putting together a Request For Proposals (RFP) for a
planning/impact fee consultant to help further explore the potential for a Major Use Special
Permit type review system. This RFP will be on a Commission agenda shortly.
Finally, staff of the City Attorney's Office continues to research the rationing system
discussed at the workshop for potential legal obstacles, and should update the
Commission at the applicable Land Use Committee meeting.
~~
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City Commission Workshop Afteraction
May 25,2005
City of Miami Beach
City of Miami Beach - City Commission Workshop
Commission Chambers, 3rd Floor, City Hall
1700 Convention Center Drive
May 25, 2005 City Commission Workshop
Click on back arrow to return to Main Menu
Miarrj Beach
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Mayor David Dermer
Vice-Mayor Luis R. Garcia, Jr.
Commissioner Matti Herrera Bower
Commissioner Simon Cruz
Commissioner Saul Gross
Commissioner Jose Smith
Commissioner Richard L. Steinberg
City Manager Jorge M. Gonzalez
City Attorney Murray H. Dubbin
City Clerk Robert E. Parcher
Visit us on the Internet at www.miamibeachfl.gov for agendas and video "streaming" of City Commission Meetings.
Growth Management Workshop - Issues and Initiatives
Meeting called to order at 4:36:22 p.m. by Vice-Mayor Garcia, who announced that Mayor Dermer would be
delayed.
Jorge Gonzalez, City Manager, introduced the item.
Jorge Gomez, Planning Director, gave an overview of the zoning, Charter amendments and the concurrency
system/MMP done in the last years during a PowerPoint presentation.
Discussion held.
Commissioner Cruz stated that everyone would like to seize the growth control, and added that if the
Commission is going to do something, from a legal perspective, to ensure that they are not going to be
running into Burt J. Harris lawsuits. The sentiment is to try to get something done, trying to avoid a legal
process. There have been millions of dollars spent in legal matters. Whatever action is taken today must
pass a legal standard that will be defendable. The City also must be mindful of litigation, legal fees and
costs.
Murray Dubbin, City Attorney, explained that this issue of taking property people own and altering its use or
reducing the amount of its use is potentially a claim under the Burt J. Harris Act; that may be one of the costs
of doing business and there needs to be awareness that part of the cost of doing business of downsizing and
rearranging may be the payment of compensation under the new laws that the State of Florida has adopted.
The City has never paid a cent under the Burt J. Harris Act, issues have been resolved and the City has paid
attorney's fees.
Discussion continued.
Commissioner Gross asked Fred Beckmann, Public Works Director, where the troublesome intersections are
located and in state offailure now and Gross referred to the chart distributed which identified 41 st Street, 47th
Street, with level of service F in the evening, 43rd Street, Alton Road and Alton Road South as well at 5th, 8th,
Prepared by the City Clerk's Office 1
C:\Documents and Settings\compgarj\Local Settings\Temporary Internet Files\OLK87\aa052505WS.doc
City Commission Workshop Afteraction
May 25, 2005
City of Miami Beach
11th, 15th and 17th, which were all failing in the evening peak.
Fred Beckmann, Public Works Director, explained that the traffic volumes in some of those areas have
increased and reached a level of service F.
Commissioner Gross asked about the status of the protected left turn signals on Alton Road, which have
been order some years ago.
Fred Beckmann, Public Works Director, explained that the protected left turn signals are scheduled to be
installed by October of this year.
Jorge Gomez, Planning Director, explained the three possible choices: zoning amendments, Major Use
Special Project style review system (MUSP), or a Rationing System. He explained that each options has its
positive and negative areas and some of these could be done citywide or by neighborhood.
Discussion continued.
Commissioner Steinberg asked Jorge Gonzalez, City Manager, what legislative agenda items have been
given to the City Commission to make it a priority to give the Commission power to resolve the concurrency
matter.
Commissioner Gross explained that the question Commissioner Steinberg asked would imply imposing an
indefinitely citywide moratorium, since one cannot solve the increased capacity issue; and he does not
believe that this is what the City wants or legally can impose. One way to modulate what is happening is to
monitor it over a period of years, slow and control the rate of growth and definitely having a MUSP review
style process to give the ability to require public improvements, rather than specifically concurrency
payments from the developer. Discussion continued.
Jorge Gomez, Planning Director, explained that each of these options presented can be done citywide or by
neighborhood and would need further study. Lot aggregation issues are consistent and are another way to
deal with this issue.
Commissioner Gross stated that the City Commission had instructed the Planning Department to look at
areas where lot aggregation was not possible in the City, such as the Museum District, where there is a lot
aggregation.
Vice-Mayor Garcia excused himself from the meeting and gave the gavel to Commissioner Bower.
Jorge Gonzalez, City Manager, asked for direction from the Commission to instruct Administration to focus
on Package One; take them to Planning, and back to Commission. He would also recommend pursuing the
MUSP, the most legally defendable in the State.
Commissioner Gross asked Jorge Gonzalez, City Manager, to include the Municipal Mobility Plan.
Commissioner Smith suggested sequencing construction activities as to not to disrupt people's lives. He
suggested a rationing system, that once you start construction, no more construction can occur within a
certain area within a certain period of time.
Commissioner Steinberg added that the MUSP is tight into getting the right fees. If the fees are adequate to
offset some of the impacts, we should have those funds there, and not offer the developer extra rights in
essence to do that. Asking a developer to give you something in order to get additional FAR or building
rights could cause legal problems.
Prepared by the City Clerk's Office 2
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City Commission Workshop Afteraction
May 25, 2005
City of Miami Beach
Jorge Gonzalez, City Manager, suggested having Administration go back and analyze what is the threshold.
His recommendation is to the degree that it can be done, instead of a fee; the City have the developer get a
project built or donate the land, for example, rather than concurrency.
Commissioner Smith stated that one of the issues he raised a number of years ago, is that the County
imposes a parking impact fee on developers that build within unincorporated areas of Miami-Dade County;
and they fund a lot of the parks that way; he understands that under the City's concurrency plan, there is a
parking fee built into it, but the threshold is too high, and maybe the City can lower the threshold to start
collecting moneys for projects in the City. Discussion continued.
Jorge Gonzalez, City Manager, explained that the Rationing System is one of the systems that most closely
resemble the referendum question that was asked from voters in November, and the City is trying to address
that straw ballot question in some way, but it is complicated and does then require the City to get an RFP or
maybe Outside Planning and Legal Consultant help.
Commissioner Steinberg stated that the first question is if the Rationing System is legal under the statutory
system before monies are spent on outside consultants. Discussion continued.
The City Commission was in consensus of directing the Administration to analyze and review zoning
changes Package One and Two, have Legal Department review and look at the threshold project as part of
the MUSP style review process.
Meeting adjourned at 6:57:17 p.m.'
Prepared by the City Clerk's Office 3
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City of Miami Beach
Planning Department
Growth management workshop held
A. Staff presented three options
1. Package of Zoning Amendments
2. Major Use Special Project style review system (MUSP)
3. Rationing System
B. Administration recommended two of the three
1. Package of Zoning Amendments:
Focus on the Package; take them to Planning, and
back to Commission.
2. Major Use Special Project style review system (MUSP)
Manager also recommend pursuing the MUSP
C. Commission directed to look at all three
1. Package of Zoning Amendments
Proceed
2. Major Use Special Project style review system (MUSP)
Research the possibility
3. Rationing System
Legal Department to research the legality
Staff has prepared and reviewed a preliminary package
of zoning amendments
Package of nine (9) amendments attached - More could
follow
Zoning changes:
1. 0 Increasing minimum and average unit sizes
2. 0 Lot Coverage requirements
3. 0 Lot aggregation
4. 0 Modify FAR exemption for parking
Parking changes:
5. 0 Increase code required parking
6. 0 Require guest parking spaces
7. 0 Increase minimum size of parking spaces
8. 0 Eliminate a portion of the Fee in Lieu
9. 0 Increase the Fee in Lieu, add automatic escalator
Process would be to bring package of zoning amendments to:
Land Use Committee - September 12th or October 10th
Planning Board - October or November
Other Committees? - T & P for parking amendments?
City Commission - December th or January
Points to remember:
. Individual changes may be incremental, but cumulative effect.
. Should slow andlor limit the amount of new development.
. Least likely to be challenged, easiest to implement.
. Can be done citywide or by neighborhood; to be determined through review process.
. Each potential amendment should also be analvzed for effect on workforce housing.
o Exemptions for workforce housinQ should be considered.
2
Increasin~ minimum and avera~e unit sizes *carry through all mu/ti-family and other districts
Sec. 142-246. Development regulations and area requirements.
(a) The development regulations in the RM-3 residential multifamily, high
intensity district are as follows:
(1) Max. FAR: Lot area equal to or less than 45,000 sq. ft.--2.25; Lot area
greater than 45,000 sq. ft.--2.75; Oceanfront lots with lot area greater than
45,000 sq. ft.--3.0.
(2) Notwithstanding the above, oceanfront lots in architectural district shall
have a maximum FAR of2.0.
(3) Notwithstanding the above, lots which, as of the effective date of this
ordinance (November 14, 1998), are oceanfront lots with a lot area greater
than 100,000 sq.ft. with an existing building, shall have a maximum FAR
of3.0; however, additional FAR shall be available for the sole purpose of
providing hotel amenities as follows: the lesser of 0.15 FAR or 20,000
sq.ft.
(b) The lot area, lot width, unit size and building height requirements for the
RM-3 residential multifamily, high intensity district are as follows:
Minimum Lot Area Minimum Lot Width Minimum Unit Size Average Unit Size Maximum Building Maximum Number of
(Sauare Feet) (Feet) (Square Feet) (Square Feet) Heil!ht (Feet) Stories
7,000 50 New construction- New 150 Oceanfront lots-- 16 Oceanfront lots--
~ 600 construction--800 200 Architectural 22 Architectural dist:
dist.: New New construction--13;
850 construction--120; ground floor additions
Rehabilitated ground floor additions (whether attached or
buildings--400 Rehabilitated (whether attached or detached) to existing
Hotel unit: 15%: buildings--550 detached) to existing structures on
300--335 85%: Hotel units--N/ A structures on oceanfrant lots--5
oceanfront lots--50 (except as provided in
335+ (except as provided in section 142-1161)
section 142-1161)
3
Regulating maximum lot coverage *carry through all multi-family and other districts
Sec. 142-247. Setback requirements.
The setback requirements for the RM-3 residential multifamily, high intensity district are
as follows:
Front Side, Interior Side, Facing a Street Rear
At-grade parking lot on the 20 feet 5 feet, or 5% oflot width, 5 feet, or 5% of lot width, Non-oceanfront lots--5 feet
same lot whichever is greater whichever is greater Oceanfront lots--50 feet
from bulkhead line
Subterranean 20 feet 5 feet, or 5% of lot width, 5 feet, or 5% oflot width, Non-oceanfront lots--O feet
whichever is greater. (0 whichever is greater Oceanfront lots--50 feet
feet if lot width is 50 feet from bulkhead line
or less)
Pedestal 20 feet Except lots A and Sum of the side yards shall Sum of the side yards shall Non-oceanfront lotsuIO%
1--30 of the Amended Plat equal 16% of lot width equal 16% oflot width of lot depth Oceanfront
Indian Beach Corporation Minimum--7.5 feet or 8% Minimum--7.5 feet or 8% 1018--20% oflot depth, 50
Subdivision and lots 231- oflot width, whichever is of lot width, whichever is feet from the bulkhead line
237 of the Amended Plat of greater greater whichever is greater
First Ocean Front
Subdivision--50 feet
Tower 20 feet + 1 foot for every 1 The required pedestal Sum ofthe side yards shall Non-oceanfront lots--15%
foot increase in height setback plus 0.10 of the equal 16% of the lot width oflot depth Oceanfront
above 50 feet, to a height ofthe tower portion Minimum--7.5 feet or 8% lots--25% of lot depth, 75
maximum of 50 feet, then of the building. The total oflot width, whichever is feet minimum from the
shall remain constant. required setback shall not greater bulkhead line whichever is
Except lots A and 1--30 of exceed 50 feet greater
the Amended Plat Indian
Beach Corporation
Subdivision and lots 231--
237 of the Amended Plat of
First Ocean Front
Subdivision--50 feet
Notwithstanding the above setbacks. the maximum lot coverage for buildings in the RM-
3 district is 60%.
200x450 = 90,000 s.f. 2 acres OBR
site.
Front 20'
Rear 90'
Sides 16' x 2
50* 115 = 5750 s.f typical n blot
front 20'
Rear 11.5'
Sides 7.5' x 2
168 x 340 = 57120 or 64%
35 x 103.5 = 3,622 or 63%
4
Address lot aggregation issues
Sec. 142-155. Development regulations and area requirements.
(a) The development regulations in the RM-l residential multifamily, low density
district are as follows:
(1) Max. FAR: 1.25; west side of Collins Avenue between 76th and 79th
Streets--l.4 .
(2) Public and private institutions: Lot area equal to or less than 15,000 sq. ft.-
-1.25; lot area greater than 15,000 sq. ft.--l.4
(b) The following regulations regarding maximum developable lot shall apply:
(1 ) The maximum developable lot area shall be limited to no more than two
contiguous lots joined along the side property lines.
(2) The maximum developable lot area shall not be achieved through the
assembly of two contiguous lots assembled along the rear property line.
Development on greater than two contiguous lots joined along the side property
lines shall require Conditional Use approval.
Sec. 142-216. Development regulations.
The development regulations in the RM-2 residential multifamily, medium intensity
district are as follows:
(1) Max. FAR: 2.0.
(2) The following regulations regarding maximum developable lot shall apply:
(1) The maximum developable lot area shall be limited to no more than two
contiguous lots joined along the side property lines.
(2) The maximum developable lot area shall not be achieved through the
assembly of two contiguous lots assembled along the rear property line.
Development on greater than two contiguous lots joined along the side property
lines shall require Conditional Use approval.
5
Include some or all of required oarkiniJ in FAR
Sec. 114-1. Definitions.
The following words, terms and phrases when used in this subpart B, shall have
the meanings ascribed to them in this section, except where the context clearly indicates a
different meaning:
Floor area means the sum of the gross horizontal areas of the floors ofa building
or buildings, measured from the exterior faces of exterior walls or from the exterior face
of an architectural projection, from the centerline of walls separating two attached
buildings. However, the floor area of a building shall not include the following unless
otherwise provided for in these land development regulations.
(1) Accessory water tanks or cooling towers.
(2) Uncovered steps.
(3) Attic space, whether or not a floor actually has been laid, providing
structural headroom of less than seven feet six inches.
(4) Terraces, breezeways, or open porches.
(5) Floor space used for required accessory off-street parking spaces up to a
height of twenty-five (25) feet above grade. However, up to a maximum of
two spaces per residential unit may be provided without being included in
the calculation of the floor area ratio.
(6) Commercial parking garages and noncommercial parking garages when
such structures are the main use on a site.
(7) Mechanical equipment rooms located above main roof deck.
(8) Exterior unenclosed private balconies.
(9) Floor area located below grade; however, if the ceiling is above grade,
one-half of the floor area that is below grade shall be included in the floor
area ratio calculation.
(10) Enclosed garbage rooms, enclosed within the building on the ground floor
level.
V olumetric buildings, used for storage, where there are no interior floors, the
floor area shall be calculated as if there was a floor for every eight feet of height.
6
Increase code reauired Darkina
Sec. 130-32. Off-street parking requirements for parking district no. 1.
Except as otherwise provided in these land development regulations, when any
building or structure is erected or altered in parking district no. 1, accessory off-street
parking spaces shall be provided for the building, structure or additional floor area as
follows:
(6) Apartment building and apartment-hotel or hotel: 1 ~ spaces per unit for
apartment buildings on lots that are 50 feet in width: otherwise 2 spaces per
apartment unit.
* Approved by Planning Board; scheduled for City Commission in October.
7
Reauire Guest parkina spaces
Sec. 130-32. Off-street parking requirements for parking district no. 1.
Except as otherwise provided in these land development regulations, when any
building or structure is erected or altered in parking district no. 1, accessory off-street
parking spaces shall be provided for the building, structure or additional floor area as
follows:
Apartment building and apartment-hotel: 1 ~ spaces per unit for apartment buildings
on lots that are 50 feet in width; otherwise 2 spaces per apartment unit,
plus 10% of the required parking as designated guest parking for apartment buildings
on lots wider than 50 feet.
* Approved by Planning Board; scheduled for City Commission in October.
8
Increase minimum size of Darkina SDaces
Sec. 130-61. Off-street parking space dimensions.
With the exception of parking spaces that are permitted in sections 130-101, 130-251,
and 130-281, a standard off-street parking space shall be an all-weather surfaced area, not
in a street or alley, and having a width of not less than leight and one half ~ fee~ and a
length of not less than 18 feet, or when located outdoors, 16 feet with two feet of
pervious area overhang, in place of wheel stops and defined by continuous concrete curb,
for a total length of 18 feet. The provision of having a two-foot pervious area overhang in
standard parking spaces may be waived at the discretion of the planning and zoning
director in those instances where said overhang is not practical. In no instance, however,
shall the length of any standard off-street parking space be less than 18 feet, unless
indicated in sections 130-10 1, 130-251, and 130-281 herein. A standard parallel parking
space shall be an all-weather surfaced area, 21 feet in length and eight and one-half feet
wide. The length required shall be measured on an axis parallel with the vehicle after it is
parked. The width required is to be column-free clear space, except for those standard
off-street parking spaces immediately adjacent to a structural column within an enclosed
parking structure which may have a width of~ight and one halffee~. The required area is
to be exclusive of a parking aisle or drive and permanently maintained for the temporary
parking of one automobile. See section 130-251 for valet parking standards.
Minimum Parking Space size of other communities:
Coral Springs 9x18
Winter Park 9x18
Miami Shores 9x 19
A ventura 9x 18
Bay Harbor Islands 8.5x18
Bal Harbour 9x 19
Miami 8.5x18
Fort Lauderdale 8.67x18
9
Eliminate a Dortion of the Fee in Lieu
PARJaNGIMPACT FEE PROGRAM*
Sec. 130-131. Generally.
A parking impact fee may be paid to the city in lieu of providing required parking
on-site, or within 1,200 feet of the site in the architectural district or otherwise within 500
feet of the site, only in the following instances, except that parking requirements for
accessory commercial uses in newly constructed buildings within the Collins Waterfront
Historic District in an area in the RM-2 zoning district that is bounded by 41 st Street on
the south and 44th Street on the north shall be satisfied by providing the required parking
spaces, and may not be satisfied by paying a fee in lieu of providing parking:
(1) New construction of commercial or residential development and
commercial or residential additions to existing buildings whether attached
or detached from the main structure within the architectural district or a
local historic district may satisfy up to one-half (1/2) of the required
parking. by payment in lieu of parking.
(2) When an alteration or rehabilitation within an existing structure results in
an increased parking requirement pursuant to subsection 130-132(b).
(3) New construction of 1,000 square feet or less, or additions of 1,000 square
feet or less to existing buildings whether attached or detached from the
main structure may fully satisfy the parking requirement by participation
in the parking impact fee program pursuant to subsection 130-132(a).
(4) The creation or expansion of an outdoor cafe (except for those which are
an accessory use to buildings described in subsection 130-31 (b )).
(Ord. No, 89-2665, S 7-7, eff. 10-1-89; Ord. No. 93-2882, eff. 10-1-93; Ord. No. 98-
3108, S 8(A), 1-21-98; Ord. No. 2004-3434, S 2,1-14-04)
10
Increase the Fee in Lieu
PARiaNGIMPACTFEEPROGRAM*
Sec. 130-132. Fee calculation.
o New construction. The impact fee for new construction shall be
satisfied by a one-time payment at the time of issuance of a buildin
permit $15,000.00 ee to be determined based on recent ro'eet data
per parking space. The amount of such fee may be changed in
accordance with subsection (d) of this section.
o Add an automatic escalator clause. based upon construction and land
costs.
11
MUSP plan and I or Rationing plan
Major Use Special Project style review system (MUSP)
Seems to resemble an impact fee system; although the Manager also recommended to
receive payments in kind rather than in fees.
Must be studied to see if that kind of impact fee is legal; especially given the legislature's
recent focus on Impact Fees.
Before monies are spent on outside consultants, what must be determined?
Legality.
We do not have currency, other that phasing building permits.
Commission: focus on true costs of impacts, not on bonuses or extra rights.
Could implement with Conditional Use type process for proiects over threshold.
Include Municipal Mobility Plan, Parks impact fees.
Address construction impacts I sequencing phasing projects.
Traffic Congestion I Choke Points I Master Plan
Top two impact fee consultants:
Duncan Associates
13276 Research Boulevard, Suite 208
Austin, TX 78750
512.258.7347
Fax 512.258.9994
firm@duncanplan.com
www.duncanplan.com
TischlerBise
4701 Sangamore Road N21 0
Bethesda, MD 20816
(800) 424-4318 Ext. 11
FAX: (301) 320-4860
info@tischlerbise.com
www.tischlerbise.com
12
Rationing System
Requires City Attorney to do further research and give opinion.
Points to remember:
While the rationing system is the system that most closely resembles the
referendum question that was asked of voters in November, it raises the most
questions in terms of Burt J. Harris and other takings / legal issues.
May require the City to get an RFP or Outside Planning and Legal Consultant.
Open to challenges from Tallahassee.
13
@ICMA
Dear Reader:
We are pleased to present this excerpt from the ICMA Report.
The ICMA IQ Reports are published monthly by the Management
Information Service, International City Management Association,
777 North Capital Street NE, Suite 500, Washington, D.C. 20002.
Copyright by the International City Management Association. No
part of this report may be reproduced without permission of the
copyright owner.
TA is a fiscal, economic and planning consulting firm
specializing in:
. Fiscal Impact Analysis
. Impact Fees
. Capital Improvement Programs
. Revenue Strategies
. Market and Economic Feasibility
. Growth Policy Studies
. Fiscal and Economic Software
TA's fiscal impact consulting experience is unsurpassed. TA has
conducted over 300 fiscal impact studies for counties, cities, towns,
villages, school districts and developers. These fiscal impact studies
have focused on the case study-marginal cost approach, versus the
average cost-per capita approach.
TA has the most comprehensive, flexible and widely used fiscal
impact systems in the country. TA develops computer models
specific to each assignment. These models can then be licensed as
complete applications for operation and. installation at client
locations,with various functions and user interface options
available. TA's applications are the most successful, comprehensive
and widely used in the country.
As illustrated in the map below, TA has worked throughout the
country conducting the types of analyses and performing the various
services listed above.
Please call TA at 800-424-4318, visit our website at
www.tischlerassociates.com or email us at TAFiscal@tischler
associates. com to obtain further information or to discuss TA's fiscal
impact evaluations, impact fee, and other consulting services.
.,...:1...1..-_.......:.:...
... -~. ..'
--,- ...-.- .
T. . .
ANALYZING
THE FISCAL IMPACT
OF DEVELOPMENT
By Paul S. Tischler
Most states require local governments to
prepare a balanced budget on an
annual basis. However, most states do not
require that jurisdictions conduct fiscal
impact evaluations to help ensure that local
officials understand the short- and long-term
fiscal effects of land-use and development
policies and of new developments that are
approved. A fiscal impact analysis clarifies
the financial effects of such policies and
practices by projecting net cash flow to the
public sector resulting from residential and
nonresidential development. Such an
analysis can enable local governments to
address a number of short- and long-term
planning, budget, and finance issues.
This report discusses the benefits of fiscal
impact analysis and reviews common
methodologies used to collect and analyze
information. Five case studies are provided
to illustrate how fiscal impact analysis can be
used in different situations. The report
concludes by recommending an approach for
conducting fiscal impact evaluations.
Analyzing the Fiscal
Impact of Development
DEFINING FISCAL IMPACT ANALYSIS
A fiscal impact analysis projects the net cash flow to the public
sector (the local government and, in many cases, the school
district) resulting from new development - residential,
commercial, industrial, or other. It is similar to the cash flow
analysis a developer conducts in order to project costs and
revenues likely to result from a proposed development for two
to ten years in the future.
A fiscal impact analysis projects the
net cash flow to the public sector
The dynamics of fiscal impact are shown in Exhibit 1. In
evaluating the costs associated with providing the acceptable
levels of service, the local government should consider
existing unused capacities of public services and programs,
especially of capital facilities. The new development, or new
demand, will be expressed in terms of changes in population,
employment, or land use projected to result from the scenarios
being evaluated.
Since a fiscal analysis will indicate whether and when a
jurisdiction could face deficit budgets, the local government
is able to weigh land-use policy decisions, acceptable levels
of service, plans for capital investments, and long-term
borrowing needs. In addition, a projected fiscal deficit can
prompt local officials to evaluate current and future revenue
sources. Even if a fiscal evaluation indicates a surplus, the
local government may wish to change its use of revenue
sources to fund infrastructure replacement or higher levels of
service.
The goal... is to forecast all relevant
operating expenses, capital costs, and
revenues
Fiscal impact analysis identifies the increases in annual
and cumulative expenses for all services that will result from
new development. This includes annual operating expenses
(including new staff needed per year) and capital expenses
associated with constructing or expanding facilities. The fiscal
impact statement can also summarize the jurisdiction's
bonded debt; its bonding capacity as a percentage of the
increase in the tax base; the increase in the tax base; and the
fiscal surplus or deficit when general revenues are applied
against the net of all special revenues and expenses associated
with the development.
Paul S. Tischler, president of Tischler & Associates, Inc.,
authored this report. Tischler & Associates, Inc. is a Bethesda,
Maryland consulting firm specializing infiscal impact and
related economic analysis, capital programming, and revenue
strategies. Mr. Tischler has a B.A. in economics and an MB.A.
in real estate and urban development. He lectures and writes
on fiscal impact analysis and related topics.
EXHIBIT 1 - The dynamics of fiscal impact.
Changes In
land Use
Demographics
service Levels
Cosls1Revenues elc.
'"
c
o
'u;
U
al
o
C
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Changes in
Public Service
Demands
Changes in
Revenue
Sources
Changes in
Expendilures
Changes in
Revenues
Source: Tischler & Associales. Inc.
APPLICATIONS FOR FISCAL IMPACT ANALYSIS
Fiscal impact analysis is helpful in short- and long-range land-
use policy planning and finance planning. Its applications for
decision-making are discussed below.
Planning Issues
A fiscal impact evaluation can be used as an effective planning
tool. Many local governments view the planning process as
monitoring and enforcing land-use decisions and regulations,
and pay too little attention to long-range planning issues,
including whether future growth will be affordable. The six
applications below indicate how fiscal analysis can be an
effective policy tool for long-range planning.
Luud-use policies. Should a jurisdiction encourage higher
density land use or allow an overlay district in a certain
subarea? Do its current land-use policies make sense? If costs,
as well as other factors, are to be considered, then a fiscal
impact evaluation will help in the decision-making process.
Demographic-economic chl1nges. Many elected and
appointed local government officials can tell interested
parties how they think their community will look in ten or
twenty years in terms of population, housing, and employ-
ment. But very few can say what the fiscal impact will be
-whether service levels will remain the same or deteriorate
under pressure from a growing population. Similarly, when
making changes to land-use regulations, few jurisdictions
evaluate alternative development policies from a fiscal
perspective. Evaluating development alternatives is a
valuable use of fiscal impact analysis.
Rezonings. A rezoning changes the density or type of use
for a parcel; it may also be a signal of a change in devel-
opment policy. Too often, significant rezoning cases are not
sufficiently evaluated from a fiscal perspective. Fiscal
analysis can be helpful in local government-developer
negotiations.
Annexation. An area that may be annexed usually has some
existing public services. One of the uses of fiscal impact
analysis is to ascertain the cost of improving the services in
the area proposed for annexation in order to make them
comparable to the annexing jurisdiction's level of service.
The analysis can calculate whether there will be an annual
financial surplus or deficit from the proposed annexation
during each year of the forecast period.
Infrastructure planning. One ofthe by-products ofa good
fiscal analysis is the forecast of infrastructure needs to meet
anticipated changes in a community. Any change in land
use, population, or employment will have an impact on a
number of capital-intensive services, including streets and
utilities.
A fiscal impact amllysis helps identify
the economic development strategy that
makes the most fiscal sense.
Leveraging public dollars. Local officials considering how
to promote economic growth often face the question of how
to invest limited funds so as to maximize the return. fiscal
evaluations can help them make their investments wisely.
for example, different economic development strategies
can be evaluated for their impacts on land use. Land use in
turn affects services, costs, and revenues. A fiscal impact
analysis helps identify the economic development strategy
that makes the most fiscal sense. If a local government has
$2.5 million for economic development programs and wants
to decide whether to allocate it among several commercial
districts within the community, a fiscal impact analysis can
provide useful information on the potential financial effects.
Finance Issues
There are a number of ways in which fiscal impact
evaluations can address budget and finance questions. As
noted earlier, a fiscal impact analysis focuses on change,
generally over a two- to ten-year period. Although the
accuracy of the projections diminishes over time, the
analysis can help to raise budget and finance policy issues
and suggest alternative approaches for addressing them.
Some of the issues are discussed below.
Capital. improvement programming. Capital improve-
ment planning takes on an extra dimension with the use of
fiscal analysis, which enables a local government to
forecast the need for additional capital facilities given
projected increases in population or employment. Indi-
vidual departments seldom incorporate market forces or
land-use plans into their CIP requests. A fiscal analysis that
looks at subareas of the community can help address this
issue.
Fiscal analysis also clarifies the timing of infrastructure
improvements. By incorporating future demographic and
economic projections, the fiscal analysis will indicate the
demand for capital facilities in the near as well as the longer
term. One community discovered through fiscal impact
analysis that the amount of park land included in its CIP
was insufficient to provide the desired level of service even
for existing development.
This approach can also be used to calculate the cost and
timing for replacing existing infrastructure. Infrastructure
replacement costs are one of the biggest fiscal problems
facing many local governments. An inventory of existing
capital facilities and their related future costs can be
obtained by estimating the remaining useful life of each
facility and its replacement or rehabilitation cost.
Revenue forecasting. For purposes of this discussion, a
revenue forecast defines the projected change in revenues
(assuming existing rates) due to land-use or demographic
changes in the community. The revenue forecast is one of
the results of a fiscal evaluation.
Fiscal planning. Fiscal planning is different from budget
planning because fiscal planning focuses on change and
uses a two- to ten-year time frame. Fiscal planning provides
a long-term perspective on the costs and revenues
associated with each department and activity of a local
government, offering local officials the opportunity to
reconsider plans and policies.
Budget projections. Fiscal impact analysis results in both
short- and long-range budget projections for each depart-
ment in the local government. for example, an increase in
the intensity of land use will generate a higher level of
demand for police services. The analysis offers a budget
projection for the police department, based on these
changes and assuming specified service levels, over the
forecast period. Local officials can look at this information
for alternative levels of service, and project the effects of
those alternatives on the budget.
Level. of service changes. A growing number of local
governments are finding it useful to focus on policy
discussions on the basic levels' of public services that
citizens want and are willing to pay for. The increasing use
of impact fees and user fees also makes it important to
clearly identify a level of service standard, so that appro-
priate fees can be set and collected.
What is the cost of providing different
levels of service'?
Quantifying existing levels of service and the costs of
different service levels can help lead to more constructive
discussions, since all parties will understand the fiscal
consequences of changing the level of service.
Cost and revenue chauges. A fiscal analysis will allow the
local government to vary any number of cost and revenue
assumptions. Police cars, utility plant additions, salaries and
fringe benefits are just some of the items that can be reviewed
for their financial impact at various rates. In a similar fashion,
revenue rates and sources can be reviewed. Using a fiscal
impact analysis computer model makes changes in assump-
tions easy to consider.
BENEFITS OF A FISCAL IMPACT ANALYSIS
Fiscal impact analysis has many benefits, whether it is used
for budgeting or for land-use or capital or financial planning.
(See the full MIS Reportfor the narrative)
METHODOLOGIES
There are two basic approaches to fiscal evaluations: using
average costs and using marginal costs. Average cost
approaches are simpler and more popular - costs and
revenues are calculated based on the average cost per unit of
service times the demand for that unit. Average cost
approaches assume a linear relationship and do not consider
excess or deficient capacity offacilities or services over time.
A per capita relationship is an example of an average cost
approach.
Marginal cost approaches describe the unique charac-
teristics of a jurisdiction's capital facilities. Although over
the long term, average and marginal cost techniques will
produce similar results, the real value of fiscal analysis is in
the two- to ten-year time period. Marginal cost analysis is
most useful in this time frame.
Selecting a Methodology
To get the most accurate information from a fiscal impact
analysis, most local governments find the case study
approach preferable. Although comparisons to regional and
national standards can be helpful, each community is unique.
It has its own levels of services, geographic service
boundaries, cost and revenue factors, and available capacity
of existing capital facilities. Given the potential benefits of
fiscal impact analysis, it is worth the time and effort to use
the case study approach. Where data is not readily available
or where it is difficult to define the service level relationship
EXHIBIT 2 -Impact of new growth under three
alternatives.
COWl"
CITY OF GERMANTOWN
ANNUAl.. SURPLUS OR DEFICIT
DUE TO NEW GROWTH
(IN $1,000'8)
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Source: TIschler &. AssocIates, Inc.
on a true marginal basis, it makes sense to use the per capita
average cost approach to supplement departmental estimates.
The local government may wish to refine the data using
marginal cost data if and when more detailed information
becomes available.
CASE STUDIES
This section discusses five case studies that illustrate different
applications of fiscal analysis. The first three case studies look
at different land-use or growth alternatives and revenue
strategies. The last two cases discuss economic development
alternatives and capital improvement programs. (See the MIS
Reportfor afull discussion)
Germantown, Tennessee - Evaluation of
Land-Use Alternatives
Germantown (population 32,000), a suburb of Memphis,
decided to review the fiscal impact of future land-use
alternatives. As in any jurisdiction, one logical alternative was
the continuation of present trends: an emphasis on low-
density single-family housing with enough commercial
activity to provide services to residents. Germantown officials
were also considering two other alternatives: one was to
encourage nonresidential, light-industrial and office uses; the
other was to increase the density of residential development.
The fiscal impact analysis focused on marginal costs and
revenues based on local data factors -the case study approach
was used wherever possible. Exhibit 2 indicates that all three
alternatives would have positive financial results for the city.
The study confirmed that the current land-use alternative
emphasizing low-density single-family housing will enable
Germantown to remain in a positive fiscal posture for the
foreseeable future. The projected cumulative surplus of$41
million is about 77 percent of the surplus that might be
generated by the high employment scenario. Elected officials
have found that the fiscal impact analysis has given them a
more specific baseline against which to measure requests
proposed by developers. The mayor and aldermen now are
able to ask whether a proposal would have an economic
impact over and above that projected based on the future land-
use plan.
Germantown purchased a tailored software system for
future fiscal evaluations. As quoted in the Germantown News,
the administrator said, "We now have a too\. We can use this
study to calculate what it will cost, both in the short and long
term, to maintain and develop the city in various ways." The
city has continued to use the program for three primary
purposes: reviewing annexation questions, evaluating the
impact of proposed large developments (both shopping
centers and residential), and capital improvements planning.
Germantown has an annual annexation process through
which it looks at the costs and revenues that would result from
additional annexation. Faced with high growth pressures, the
city has found the fiscal impact analysis software program
worthwhile in helping the planning commission and the board
of mayor and aldermen review the fiscal effects of new
growth.
In the capital improvements planning process, German-
town uses the fiscal impact analysis program in planning for
future fire and police service needs. Germantown has a five-
year capital improvements program, and uses the fiscal impact
analysis information for background in scoping out budget
proposals and related capital improvements requests by
departments.
Overall, fiscal impact analysis enables Germantown to
maintain its land-use policies and understand and articulate
the assumptions on which they are based and their fiscal
ramifications.
Venice, Florida - Developing Strategies to
Serve Future Growth
The city of Venice, Florida has a permanent population of
about 15,000 and a seasonal population of 19,000. Located in
Sarasota County on the booming Gulf Coast, Venice is
experiencing growth pressures. Developers in the county are
requesting annexation, in large part because the city can
provide better services to future residents than can the county.
Venice decided to address several items in its 1987 fiscal
impact analysis. It wanted to evaluate two growth alternatives,
develop a capital improvement program that would identify
existing facility deficiencies and project facility needs due to
growth, and create a revenue development strategy.
The first alternative assumed growth would continue to
the year 2000 as projected in the comprehensive plan. The
second alternative assumed that additional growth would
result from annexation of an area to the north and east ofthe
existing city limits.
City department heads and the consultant agreed on
service level, cost, and revenue factors, and these were used
in the fiscal evaluation of the two alternatives. The fiscal
evaluation forecast the need for new capital facilities to serve
growth resulting from annexation.
Florida state law requires that local governments provide
a five-year projection offacilities to serve new development.
Consequently, these new facilities were incorporated into a
preliminary Capital Improvement Element (CIE) for Venice.
According to the state law, the CIE must also describe
existing deficiencies in capital facilities to serve the present
population and the direct operating expenses of those
facilities, and discuss the revenue sources the local
government intends to use to pay for the needed capital
facilities. This last requirement was part ofthe reason Venice
decided to develop a revenue strategy as part of its fiscal
impact analysis.
The cumulative results of Venice's study indicated a
fiscal surplus under both alternatives. An important reason
for this was that the basic road network and schools are
provided not by Venice but by Sarasota County. The
alternative based on the comprehensive plan was slightly
more beneficial from a fiscal perspective primarily because
annexation would require that additional capital facilities be
built within a few years of the annexation.
...the fiscal impact analysis has helped the
elected officials express their vision for the
future....
Raleigh, North Carolina - Analyzing
Economic Development Impacts
Evaluating subareas of a community is a valuable approach
for fiscal impact analysis since, as in the case of southeast
Raleigh, existing capital facility capacities can be specified
and revenue strategies can be targeted. (See the MIS Report
for afu/! discussion)
Plymouth, Minnesota...; Analyzing Land-Use
Alternatives and Costs for a Capital Facility
Replacement Program
Plymouth is a Minneapolis suburb with a population of about
45,000. In 1984, a cost revenue subcommittee composed of
private sector representatives requested that the city conduct
a fiscal analysis of the impact ofland-use plan alternatives.
Four alternatives were evaluated: the existing land-use plan
(the base case); a duplex or high-density residential alterna-
tive; an estate or low-density residential alternative; and a
research and development, or employment, alternative. All
four scenarios project an increase in the city's population of
16,300 over 15 years. The findings indicated that the base
case was as fiscally beneficial as the other alternatives
(Exhibit 3).
Once the city selected the base case as the alternative to
pursue, the software program used by the City calculated the
costs of a capital facility replacement program. Plymouth used
the software to compile and analyze data on all capital
facilities, including each item's projected remaining life and
estimated replacement cost. The capital facilities needed to
serve new growth added to the projected infrastructure
replacement costs equaled the total dollars needed to continue
to provide the citizens with service at existing levels.
EXHIBIT 3 - Surplus to Plymouth general fund due
to growth between 1985 and 2000 (in
millions of constant dollars).
6.0 6.0
Base Duplex Estate
Case Alternative Alternative
Employment
Alternative
Source: Tischler & Associotes. Inc.
The city uses the fiscal analysis as a guide for budget
forecasting, particularly for personnel projects by divisions
within departments. The city has found it helpful in fostering
discussions about the assumptions underlying the numbers in
the budget and, to a lesser extent, the capital facility
replacement program. City Manager Jim Willis estimates that
10 to 15 percent of the assumptions have been changed since
Plymouth began using fiscal impact analysis. These changes
reflect the evolution of needs and the gathering of new
information since the program began to be used. Willis
commented that a key to using fiscal impact analysis
effectively is to understand your own operations and what
needs to be measured. It is important to understand the full
range oftasks for which people are responsible, so that levels
of service can be estimated accurately.
USING FISCAL IMPACT ANALYSIS
This section discusses steps a local government can take in
conducting a fiscal impact analysis and planning a revenue
strategy based on its findings. There are many possible
approaches but this section highlights the most important
steps in the process (See MIS Reportfor narrative)
CONCLUSION
In summary, virtually all applications for fiscal impact
analysis assist a jurisdiction in addressing financial
management and planning issues. Whether the product is an
evaluation of a change in level of service, a forecast of capital
facilities to be replaced or added, or a picture of upcoming
budget changes due to new development, fiscal impact
analysis can be adopted as a regular procedure to improve
management decisions.
__.-1 Tischler & Associates, Inc.
Providing Solutions for Growth
4701 Sangamore Road. Suite N21O. Bethesda, MD 20816
Also: Pasadena, CA
www.tischlerassociates.com
. Fiscal Impact Analyses
. Impact Fees
. Capital Improvement Programs
. Revenue Strategies
. Market and Economic Analyses
. Growth Policy Studies
. Fiscal and Economic Software
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Rockville, MD
Permit #5832
A reprint from: leMA Report "Analyzing the Fiscal Impact of Development"
~ndlYe1opment
Dear Reader:
This article is from the National Association of
Home Builders quarterly magazine, Land
Development. Tischler & Associates, Inc., (TA) is a
fiscal, economic, and planning consulting firm
specializing in fiscal impact analysis, impact fees
and revenue strategies. Our other major services are
market feasibility studies, economic development
analysis, capital improvement programming, and
growth policy planning.
TA has prepared over 500 impact fees for the
following services:
. Schools
. Roads
. Water
. Wastewater
. Storm water
. Parks and Recreation
. Open Space and Trails
. Police
. Fire
. Municipal Facilities
and Equipment
. Libraries
. Transit
TA's impact fee studies include those for clients in
the following states:
. Arizona
. Arkansas
. California
. Colorado
. Georgia
. Idaho
. Iowa
. Florida
. Mary land
. Massachusetts
. Mississippi
. Montana
. New Mexico
. New York
. North Carolina
. Ohio
. Pennsylvania
. Rhode Island
. South Carolina
. South Dakota
. Utah
. Virginia
. West Virginia
. Wisconsin
Our private sector impact fee clients include: Home
Builders Associations; NAIOP Chapters; Private
Developers; Senior Housing Corporations; and
others.
Not one of 500+ public sector impact fees prepared
by TA has been challenged. However, when TA has
critiqued impact fees for the private sector, the fees
have been reduced or eliminated. We think our
experience with the public and private sector is
invaluable.
Please call TA at 800/424-4318 to obtain further
information or to discuss TA's impact fee consulting
services, including our impact fee feasibility
analysis, as well as full fiscal impact evaluations.
IMPACT FEES-
UNDERSTAND THEM
OR BE SORRY
by Paul S. Tischler
Anyone who has developed land in the last 10 to 15
years knows that the popularity of impact fees as a
local government revenue source has skyrocketed. The
three major reasons for the proliferation of fees are state
and local limitations on tax hikes; federal, state and local
mandates increasing costs without a concomitant increase
in accompanying revenues; and perhaps most importantly,
the great reluctance of elected officials to raise taxes.
Impact fees are especially appealing because they are
usually passed onto future (absentee) voters. Therefore, it
Development impact fees are
growing increasingly attractive to
local governments. Developers need
to understand impact fees if they are
to spot illegal uses and improper
calculation of the fees.
is imperative that developers understand fees or risk
becoming the victim of either their illegal use or the
improper calculation offee amounts. This article provides
some examples of illegal fees, discusses caveats pertaining
to the calculation and use of impact fees, and offers a set
of recommendations for ensuring the equitable application
of fees.
Illegal Impact Fees
Hundreds of today's impact fees are probably illegal;
yet, for two major reasons, the fees remain largely
unchallenged. First, the fee amounts are noticeably small
and thus are not particularly burdensome. Second,
developers and builders are fearful of delaying devel-
opment by bringing a legal challenge against a fee. One of
the more blatant examples of an illegal fee is the fee for
public art in a California jurisdiction. The impact fee,
calculated only against nonresidential space, pays for art
exhibited in such public spaces as museums. Rationally
speaking, such a fee - if it is to be imposed at all - should
(continued on next page)
probably be assessed against residential units. After all, it
is residents who generally find the time to visit museums
after work or on weekends.
Less subtle and unsupportable examples of illegal fees
include the imposition of police and fire fees against
housing, but not against nonresidential development.
(Impact fees should not discriminate by type ofland use.)
Or how about the calculation of a park impact fee based on
desired levels of service rather than on lower, existing
levels of service? Another example pertains to school
impact fees for a geographic area that will not generate the
need for any increase in school facilities in the foreseeable
future. Also likely to be illegal is the application of
hypothetical future student generation rates, which are
considerably higher than the actual rates experienced by
the jurisdiction. Flaws in the methodology of calculating
fees or inaccurate data assumptions can result in hundreds
or, in some cases, thousands of dollars per house in
unsubstantiated fees.
Monitor the Process
Increasingly, state law requires fee-imposingjurisdictions
to include representatives of the private sector on fee
review or liaison committees. This is certainly an impor-
tant step in making sure that private as well as public sector
interests are accorded the opportunity to participate in the
review process. Often, however, the few private sector
representatives are as overwhelmed as the other committee
members by pages and pages of text, reams of data, and
maybe even undecipherable tables. Consequently, the
committee, including its private sector representatives,
simply takes the path of least resistance and agrees to a
consultant's methodology, data and technical recom-
mendations.
Given that the actions of the committee automatically
vest the fees with a measure of credibility, it is imperative
that all interested parties monitor the impact fee process.
If local builders defer their involvement until fee amounts
are determined, they will be faced with an uphill struggle
to amend the impact fee report and its recommendations-
especially if the other members ofthe committee and the
larger public have already "bought into" the methodology
and its data assumptions.
Even though impact fees raise several questions
regarding their technical aspects, they also point to several
caveats that are particularly germane and understandable
to the interested party. A few ofthese are discussed below.
D Recognize that impact fees pertain only to new capital
facilities that directly benefit the payer. Many observers
still believe that impact fees can be used for capital
facilities that benefit existing residents. In fact, impact
fees, are assessed and collected to fund only those capital
facilities whose need is generated by new development.
Further, expenditure based on impact fee collections must
demonstrate a direct benefit to those paying the fees.
Under many statutes, an existing facility is eligible for
impact fee financing if it was deliberately oversized to
accommodate new development.
Knowledgeable and willing
homebuilders must participate in
and evaluate all of the relevant
information related to the
impact fee determination process.
fJ Be aware that the impact fees collected must be spent
within a reasonable time period. A mandated or general
rule-of-thumb holds that about six years is a reasonable
period in which to expend fees, although 10 years may
suffice. In most cases, the jurisdiction must operate on the
good faith assumption that the money will be spent for a
specific facility or facility type within the mandated period.
The time limitations encourage or require the preparation
of capital improvement plans.
II Educate the electorate on what impact fees do and do
not accomplish. As already noted, fees fund only those
capital facilities necessitated by new development. Fee
collections cannot be allocated to rehabilitation, retro-
fitting, or replacement of existing capital facilities. The
greater cash cow of operating expenses, not covered by
impact fees, must be explained to the electorate.
Otherwise, the public will wrongly expect that impact fees
can solve the full range of local fiscal problems.
II Make certain that fees are assessed only to maintain
current levels, versus future levels, of service - unless a
jurisdiction has adopted a plan to address existing
deficiencies and is actually implementing this plan. Some
communities and their consultants tend to use a level of
service that is not met elsewhere in the jurisdiction. It is
illegal to extract from new development fees to pay for a
higher level of service unless the jurisdiction is using other
funds to bring other parts of the jurisdiction up to this same
level of service.
II Do not rely solely on the jurisdiction's assumptions;
instead, obtain your own background information. Various
local government departments may not be familiar with the
requirements of impact fees and are therefore unlikely to
understand clearly the difference between adopted and
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i TISCHLER & ASSOCIATES,INC. CAll TOll-FREE (800) 424-4318 i
existing levels of service, the relationship between service
delivery areas and existing and new capital facilities, and
several other issues. If the builders ask local jurisdictions
the right questions, they should also be able to extract the
needed information.
Some of the questions to ask are: What
is the basis for the land use projections?
How were service areas ascertained to
meet the rational nexus requirements?
How were levels of service and cost
factors determined? How have credits
for other payments been considered?
II Analyze the capital improvement budget. Potential
impact fee revenues need to be related to the capital
improvement budget or capital improvement plan. That is,
there should be capital projects in the plan that can
legitimately use impact fees. It is important for builders to
become familiar with this budget and its validity over both
the short and long terms.
fi Be familiar with the likely geographic service areas in
order to evaluate the rational nexus requirement. In
summary, rational nexus requires a reasonable relationship
between the need for the capital facility and the use of
impact fees directly benefiting those paying. To show a
Please send the following:
o Reprint "20 Points to Know About Impact Fees"
o Reprint "Impact Fees - Understand Them or Be Sorry"
o E){cerpts from: ICMA IQ Report "Introduction to Infrastructure Financing"
o Recent TA Fiscal & Economic Newsletters
Information About TA Consulting Services:
o Fiscal Impact Analyses
o Impact Fees
o Capital Improvement Programs
o Revenue Strategies
o Growth Policy Studies
o Market and Economic Analyses
o Fiscal and Economic Software
Name
Title
Street
City
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direct benefit to the development paying the impact fee,
jurisdictions tend to describe larger service areas than may
be appropriate.
m Can a jurisdiction provide the needed capital facilities?
The recommended impact fees should demonstrate some
relationship to what the jurisdiction is capable of providing
(i.e. Has the jurisdiction been spending much money on
this category in the capital improvement budget?).
Whether due to time lag, backlog of existing facilities, debt
ratios, or political constraints, the effort that goes into
setting an impact fee will be diminished if the jurisdiction
cannot provide the needed capital facilities in a timely
fashion (assuming that the impact fee does not pay 100
percent of the new cost).
Ii] Understand the importance of granting credits. Under
the provisions of some state statutes, the future tax
payments of a house or nonresidential property that are
used to cover the debt service of a particular capital facility
need to be credited against the impact amount on a
discounted basis. Even in states that do not require granting
credits, the "spirit" of impact fees is to avoid double
payments.
Reality Testing
As already mentioned, impact fees are popular because
elected officials perceive them as a free revenue
source not paid by current constituents. As a practical
matter, several of the flawed impact fee methodologies
gained acceptance because the fee amount ultimately
proved to be much lower than the amount discussed in the
impact fee report. Of course, in some jurisdictions, lower
4701 Sangamore Road, Suite N210
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Telephone
fees are subject to annual increases.
It is important that the community imposing an impact
fee is experiencing significant growth. If not, the juris-
diction will be unable to generate enough revenues to make
the impact fee process worthwhile. Impact fees incur a set
of administrative costs and, in most cases, are legally
required to be segregated from the general fund by type of
account, type of activity, and geographic subarea (where
appropriate) .
For home builders, two nontechnical points are worth
noting. First, several of the homebuyers assessed impact
fee payments are already residents within a given juris-
diction. In some jurisdictions, over 50 percent of pur-
chasers are trade-up buyers and therefore have been paying
for capital facilities through the property tax from the time
they started residing in the community. Elected officials
should be aware ofthis conundrum.
In some cases, those preparing the
fees hide behind "sophisticated"
models and use them as an excuse
not to explain the methodology and
the supporting data.
Second, impact fees give rise to an "intergenerational
equity" issue. Many of us and almost all of our parents
lived in a community where the capital facilities were paid
as part of the regular tax burden. The increasing reliance
on impact fees and other exactions means that households
moving into a community must now buy into the capital
facilities with a one-time fee.
Steps to Take
From the outset, a private sector advisory group should
be convened to participate in the impact fee review
process and to ensure that private interests present their
concerns as a unified front. Experience suggests that such
groups allow for more rational input into the fee deter-
mination process, help avoid methodological flaws in
setting the fee, and ensure the application of relevant data.
All members of the advisory committee should be able to
understand the data used to justify the fee. "Garbage in"
will produce "garbage out" and will generally lead to
unjustifiably higher impact fees.
Paul S. Tischler is a principal of Tischler & Associates,
Inc., (TA) afiscal, economic and planning consultingfirm
with offices in Bethesda, Maryland, and Pasadena,
California. Thefirm has prepared over 500 impactfeesfor
communities around the country. None of the public sector
fees have been challenged. In representing the private
sector, TA has succeeded in reducing impact fee amounts
or, in one instance, eliminating afee altogether.
Note: Please let us know if you would like to receive a copy
of "20 Points To Know About Impact Fees", a reprint ii'om
Planning magazine.
Tischler & Associates, Inc.
Providing Solutions for Growth
4701 Sangamore Road. Suite N2l0. Bethesda, MD 20816
Also: Pasadena, CA
www.tischlerassociates.com
. Fiscal Impact Analyses
. Impact Fees
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. Revenue Strategies
. Market and Economic Analyses
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August 15, 2005
Professional Services
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Exciting changes....
TischlerBise, formerly Tischler & Associates Inc., is a fiscal, economic and
planning consulting firm located in Bethesda, Maryland, with a branch
office in Pasadena, California.
Our name change is the result of the elevation of Carson Bise to partner at
the firm. This new partnership will ensure that TischlerBise will continue to
offer our clients the exceptional consulting services that have defined the
firm for more than 25 years.
'L~lI'; 'f.
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Did you know that TischlerBise has prepared more impact fees (over 500)
and fiscal impact analyses (over 400) than any firm in the country? This is
due in large part to our excellent staff, detailed approach, proven
methodology and comprehensive work products.
We offer the following professional services to public and private sector
clients, including:
. Fiscal Impact Analyses
. Impact Fees
. Revenue/Infrastructure Financing Strategies
. Capital Improvement Plans
. Economic Impact and Market Analyses
. Fiscal Software
~publications Order I
Please contact us to inc
our consulting services.
our free newsletter or c
he reprints listed be 1m
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. Twenty Points tc
About Impact Fe
. Impact Fees-UI
Them or Be Son
. Introduction to
Infrastructure Fi
. Fiscal Impact Ar
Reader Beware:
Caveats
. Fiscal Impact Ar
Local Comprehe
Planning
. Analyzing the Fi
of Development
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Realities
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Professional Services
~ .flscaJ.,Impact.,AIla.tv:ses
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Professional Services
Impact Fees
TischlerBise has calculated over 500 impact fees/excise taxes throughout
the United States and Canada, more than any firm. None of the firm's
impact fees have been successfully challenged. Whenever the firm has
been retained by the private sector to critique public sector fees, the fee
has always been reduced or eliminated. This public and private sector
experience is very beneficial, as it enables us to approach each project
with a comprehensive understanding of various perspectives.
Capital facilities for which TischlerBise has calculated impact fees for
include: sewer, water, schools, roads, law enforcement, fire protection,
parks, public buildings, stormwater facilities, municipal power and libraries.
Download a PDF to view ap9..r:tjg!Jj$tjngQtQ!J!::QIj~lJt$.
Impact fees are new
fair share of necess.
capital facilities.
lischle
No. 47
I
Fiscal & Economic
III
N E VV S LET T E R
We Are Now TischlerBise
You may have noticed from the new
masthead to this newsletter that Tischler &
Associates, Inc. is now TischlerBise. The
change marks the elevation of Carson Bise
to partner at the firm. Over Carson's long
tenure with the firm, he has performed scores
of studies pertaining to the firm's core busi-
nesses: fiscal, economic and planning con-
sulting services. Carson's new partnership
role will ensure that TischlerBise will con-
tinue to offer our clients the exceptional con-
sulting services that have defined the firm for
more than 25 years.
Denver Suburb
Implements Fiscal Model
TischlerBise was retained by the City of
Westminster, Colorado to design and imple-
ment a fiscal impact model, using a two-
The city wishes to know
the impacts of builduut
phase approach. In Phase I, a beta version
using the Parks, Recreation and Libraries
(See WESTMINSTER, p. 2)
Development Impact Model Designed
for Fast Growing Virginia County
TischlerBise was retained by the
Winchester-Frederick County Economic
Development Commission to design and
implement a development impact model for
use by Frederick County, Virginia. The
Winchester-Frederick County Economic
Development Commission wished to
understand the fiscal impacts to the County
of proposed development projects as well
as countywide growth scenarios.
The modelcFaluatc,; specifIc project,;
as well as growth scenarios
The fiscal model designed for the
County includes a projection of the
demands for service (possibly under differ-
ent levels of service), as well as the impact
on revenues and operating and capital
expenditures. In addition, the structure of
the fiscal impact model allows for future
expansion and/or incorporation of addi-
tional modules (i.e., economic impacts).
Model Flexibility
The Frederick County Development
Impact Model was developed using Micro-
soft Excel and Visual Basic. The result is a
powerful and flexible application that allows
the user to decide the level of detail, as well
as sophistication, reflected in the model. As
the County grows and changes, levels of
service, cost data, funding terms and other
(See FREDERICK COUNTY. p. 4)
Concurrency Model
Prepared
Carroll County, Maryland. impacted by
growth from both Baltimore and Washington,
contracted with TischlerBise to provide a
software application to assess the impacts
of new residential development projects on
the capacity of the County's infrastructure
(water, sewer, schools, police, fire, and roads)
as measured by the County's Adequate Public
Facilities Ordinance (APFO).
(See CARROLL COUNTY, p. 2)
IN THIS ISSUE
Fiscal Impact Models
This newsletter focuses on three recent fiscal
impact applications developed for individual
clients and their unique specifications. A fiscal
impact model provides an effective means to
integrate budget and finance concerns with land
use planning decisions.
The overwhelming majority oflocal govern-
ments do not conduct fiscal impact evaluations
and do not understand the short- and long-term
fiscal effects of land use and development poli-
cies.
The firm's fiscal applications are the most
successful, comprehensive and widely used in
the country. One reason is that we design our fis-
cal applications only after the appropriate
methodologies, levels of service. and costJrev-
enue factors have been agreed upon by both the
client and the finn.
J:.'uch jurisdiction 's individualized
!!Iodel answers their unique
cost olgrowtlt questiofts
This newsletter focuses on three recent fiscal
models developed by the firm. The Frederick
County, VA model calculates the impact of vari-
ous land use decisions. The Westminster, CO
application assists the City in understanding not
only the impact ofland use decisions. but also the
likely impacts of buildout as the City matures.
Finally, the Carroll County, MD model was
developed to monitor the impact of residential
growth on infrastructure capacity, as defined by
their Adequate Public Facilities Ordinance.
Finally, this newsletter is our first under our
new name-TischlerBise. I am pleased to
announce long-time associate and current Vice
President. Carson Bise, as partner at the firm.
This change marks an exciting, yet natural evo-
lution for the finn. We look forward to continu-
ing to provide the best fiscal, economic, and
planning services to our ever-growing roster of
clients.
~ 0;t~
BETHESDA, MD TOll-FREE (800) 424-4318 PASADENA, CA
2
WESTMINSTER, CO
(continued from p. 1)
department as the initial test case was con-
ducted. Since this initial effort involved only
one department, the focus was determining
potential applications for the model, devel-
oping a user-friendly interface and deter-
mining methodologies for projecting capital
and operating costs, as well as program-relat-
ed revenue.
Based on the feedback received during
Phase I, it was mutually decided that
TischlerBise would proceed with Phase II,
development of the complete fiscal impact
model with the following design parameters:
. The model uses a 25-year time horizon
and is capable of analyzing multiple land
use scenarios. These scenarios can include
changes to the land use plan, zoning
amendments, varying absorption sched-
ules as well as major new development
projects.
The model n:f1ects dUTerent
fiscal analysis :'0111'1', including
TiF districts
. The model is designed with the capabili-
ty of incorporating at least three fiscal
analysis zones (FAZs), which allows the
City to reflect varying demographic and
land use characteristics of new develop-
ment. An example is using an FAZ to
reflect development in a tax increment
finance district.
. Inherent in the model design is the ability
to incorporate the City's changing char-
acter from new growth to buildout over
the model's 25-year time horizon; the City
will also be able to vary levels of service.
Like all of the firm's fiscal applications,
the fiscal impact model developed for the
City of Westminster was developed using
Microsoft Excel and Visual Basic. Following
completion of the model, an implementation
program was initiated, which involved
hands-on training with City staff.
CARROLL COUNTY, MD
(continued from p. 1)
The model, designed in Microsoft
Excel and Visual Basic, was developed to
represent the particular demographic, infra-
structure, and legal characteristics of Carroll
County, as well as the types of outputs and
analyses the County desired.
rhe model ('afeulaleS whether
a development meets orfails
COllcurnmcy
As the County grows and changes, lev-
els of capacity, inventory of capital assets,
concurrency management standards and
other similar factors, which define concur-
rency in the County, can be easily modified
and updated. Alternative development
schedules and assumptions can be substitut-
ed to evaluate the concurrency status of dif-
ferent development proposals.
Model Overview
There are two components of the
model. The first evaluates the concurrency
status of a proposed new development. If the
project meets the County's concurrency
parameters adopted in the APFO and is
approved, it is moved to the "Issued &
Allocated Database" and added to the
County's cumulative development database.
If a project fails the concurrency parameters,
it is moved to the "Deferral Database" to be
re-tested at a future date.
Concurrency Analysis
The first component of the model tests
the concurrency status of the project.
Through a series of simple pull-down
menus, the user selects the specific water,
sewer, school, and fire facilities that will
serve the proposed development.
U sing the proposed number of dwelling
units and related demographic data, the
model calculates the impacts of the devel-
opment in terms of population, public school
students, gallons of water, gallons of sewer,
and vehicle trips. Various development sce-
narios with varying phasing assumptions
can be evaluated to test the resulting con-
currencies.
The model adds the impact of the new
development to cumulative development
impacting each category (both from existing
development and future development that
has been approved). The model then com-
pares the total impact on the capacities of the
affected infrastructure and calculates the
project's concurrency status for each cate-
gory.
The model automatically calculates
concurrency management status (adequate,
approaching inadequacy, or inadequate) for
police, water, sewer, and schools. The con-
currency status for fire and roads is entered
directly.
Cumulative Development Databases
The next component of the model
involves adding the development proposal
to the "Issued & Allocated Database" if the
project meets concurrency management
standards; or, to the "Deferral Database" if
the project does not meet concurrency man-
agement standards.
If a project meets concurrency man-
agement standards, it is added to the
"Issued & Allocated Database," which adds
the project's impact to the cumulative
impact of other projects that have already
been approved. This step adds the new
development to the development that cur-
rently exists and those approved develop-
ments that will be served by water, sewer,
police, fire, school, and road facilities in the
future.
"The model provides important
illfimnation for us to make beUer
and quieker deeislotH"
Carron C\1UPtV CHfi,..'ild
If a project does not meet concurrency
management standards, the next step is to
add the project to the queue in the "Deferral
Database." This step adds the project's
impact to the queue of other projects that
have already been deferred.
The model keeps track of the cumula-
tive impact of development when evaluat-
ing the concurrency of future development
proposals. It has been designed to accom-
modate 300 new developments.
The model has several pre-defined
graphs and tables for viewing the impact of
cumulative development in the County.
Fiscal & Economic Newsletter No. 47 Toll-Free (800) 424-4318
TlSchlerBise News
3
Impact Fees
TischlerBise has prepared over 500 impact
fees, more than any other firm. Highlighted
below are three recent impact fee assignments.
Thcson, AZ-Over 95% of our impact fee
work is for the public sector. However, some-
times we critique impact fee studies for the
private sector. We believe it provides us with
a more comprehensive perspective and aware-
ness of the "minefields." The nonresidential
community hired us to critique proposed road
impact fees for Tucson. TischlerBise found a
number of significant issues including
methodology, cost assumptions, no specific
capital improvement program and geograph-
ic nexus issues. By the end of the process, the
City chose to eliminate this fee for nonresi-
dential development.
Buckeye, AZ- The Town of Buckeye will be
one of the largest cities in Arizona when it is
ultimately built out. Given its geographic size,
the calculation of development impact fees
needed to be sensitive to issues related to col-
lection and expenditure zones. TischlerBise
prepared development impact fees for: water,
sewer, parks, library, police, fire/EMS, streets
and general government.
Henrico Co., VA-For the County of
Henrico, VA, TischlerBise was hired to
explore cash proffers for a number of capital
facilities including: police, fire, parks/recre-
ation, libraries, schools, and roads. After an
initial feasibility study for these categories, the
County decided to pursue parks/recreation,
libraries, schools, and roads in more detail. The
firm evaluated possible methodologies and
documented appropriate demand indicators by
type of development for each type of cash prof-
fer.
Fiscal Impact Analysis
TischlerBise is sometimes hired to critique
the fiscal impact evaluations prepared by other
firms. A few are summarized below.
Englewood, NJ- This community, close to
New York City, hired TischlerBise to critique
the fiscal impact study of a proposed residen-
tial and office development that indicated net
surpluses. TischlerBise requested more infor-
mation in order to ascertain what the fiscal
results would be if the residential development
preceded the nonresidential, since the office
market appeared to be soft. The fiscal results
were then negative.
Queenstown, MD-A 500,000 square feet
shopping center is proposed in this small
community. The developer's fiscal consultant
provided a report showing sizeable fiscal sur-
pluses. However, the report failed to ade-
quately account for significant cost increases
for police, fire/EMS and off-site road expen-
ditures. The assessed value assumptions were
also aggressive. A revised study showed sig-
nificantly less net surpluses.
Tiverton, RI-This small community
recei ved a fiscal impact analysis showing sig-
nificant fiscal benefits from a proposed
350,000 square feet retail complex. The calcu-
lation was based on comparable impacts of
similar centers in other jurisdictions. How-
Tivi'!'ton is unique,
as is cl'cry community
ever, TIverton is unique, as is every commu-
nity. A number of capital and operating
expenses were not fully reflected. Also, one of
the tax categories was being phased out These
factors changed the results significantly.
New Fiscal Impact
Assignments;
Arapahoe Co., CO
Lawrence, KS
Pickerington, OH
Suwanee, GA
New Impact Fee and
Feasibility Assignments:
Avenal, CA
Corcoran, CA
DeSoto Co., FL
EI Centro, CA
Frederick, MD
Grass Valley, CA
Imperial Co., CA
Maricopa, AZ
Pahrump, NY
Pasquotank Co., NC
Pickerington, OH
Port St. Lucie, FL
Sedona, AZ
Sherman, TX
Stuart, FL
~--------------------------------------------l
I lischlerBise CAll TOll-FREE (800) 424-4318 I
I ,..__I_.'_.___ I
I Please send the following: 4701 Sangamore Road, Suite N210 I
I a Recent Fiscal & Economic Newsletters Bethesda, MD 20816 I
I a Reprint "20 Points to Know About Impact Fees" (800) 424-4318 . Fax (301) 320-4860 I
I 0 Reprint "Impact Fees - Understand Them or Be Sorry" info@tischlerbise.com I
I 0 Excerpts from: leMA IQ Report "Introduction to Infrastructure Financing" www.tischlerbise.com I
I ::J Excerpts from: leMA Smart Growth Network "Smart Growth & Fiscal Realities" Also: Pasadena, CA I
I I
I Information about TischlerBise I
I Consulting Services: Name I
I a Fiscal Impact Analyses I
Title Agency Telephone
I a Impact Fees I
I 0 Revenue Strategies Street I
I Q Economic Impact Analyses. . I
a Fiscal Software Cny State Zip
L____________________________________________~
Fiscal & Economic Newsletter No. 47 Toll-Free (800) 424-4318
4
FREDERICK COUNTY, VA
(continued from p. 1)
County Working Group
Once selected for this assignment,
TischlerBise interacted with a public/private
similar factors that define fiscal expenditures,
can be easily modified and updated. The
model structure is also transparent and allows
all users to clearly see the methodology, data,
and algorithms utilized to verify the correct
application of the data, thereby avoiding
"black box" concerns.
The model siruclUre is
transparent amlflexiblc
sector working group who reviewed level of
service and cost/revenue assumptions and
The Dynamics of a Fiscal Model
Scenario
Input Module
Base Year Real Property
Demographic Module Tax Base Module
, , , ,
Operating Operating Capital Capital
Revenues Costs Revenues Costs
Fiscal
Outputs
Net
Surplus/Deficit
assisted with implementation of the finished
model.
Design of Model
To develop the model, TischlerBise staff
interviewed major County facility and serv-
ice providers to understand how each depart-
ment is structured, as well as to gather
information regarding current levels of serv-
ice, available capacity of capital facilities,
facility-related operating costs and how dif-
ferent types of growth affect services. Based
on these discussions, a unique methodology
was developed for each service and capital
facility type.
/\ unique methodology was de.'elopedj(lr
each service and capital fadlit)' type
Applications
Although the model can be used for long-
range planning applications such as evaluat-
ing Countywide growth scenarios, the
primary use of the model will be to review
and assess the impact of specific develop-
ment proposals, such as rezonings. The over-
whelming majority of counties in the
Commonwealth of Virginia are not author-
ized to collect impact fees, and therefore rely
on "voluntary" proffers. Since these proffers
can only be committed at the time of a rezon-
ing, the model's output on capital facility
impacts will provide valuable information for
these negotiations.
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dunce.n I associates is an award-winning planning consulting firm
specializing in plan implementation. One of the nation's leading consultants
to public agencies, the firm provides professional services in the areas of
land development regulations, growth management and impact fees.
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Impact Fees
Since 1987, Duncan Associates has become one of the nation's leading consultants in the field of
impact fees. The firm has drafted over 240 impact fee studies for more than 60 clients in over 20
states. In addition, Duncan Associates was selected by a Special Governors Task Force in Florida to
study the fiscal impact of alternative development scenarios throughout the state; by the Puget Sound
Council of Governments (Seattle/King County, Washington) to evaluate alternative growth
management and facility financing strategies; by Montgomery County, Maryland to conduct a
nationwide survey of adequate public facility programs; and by the State of Minnesota to determine
the fiscal impact of growth on local governmental jurisdictions.
Our Approach
Impact fees are somewhat unique in that they are both a financing and a regulatory tool. As such,
they can be developed using a wide variety of alternative methodologies and alternatives. Since each
alternative can have significantly different implications in terms of revenue potential, incidence (who
pays) and resultant urban growth patterns, it is important to carefully select an approach and
methodology that fits local planning and growth management policies. Our familiarity with the
"cafeteria plan" of available methodological alternatives enables us to craft an impact fee system
uniquely tailored to the local community.
Miami/Dade County, Florida
Educational Facilities Impact Fee Study
For the Dade County Public School Board, Duncan
Associates prepared an impact fee study that
addressed critical school overcrowding. Enrollment in
the Dade County public school system, the fourth
largest in the nation, had been increasing at over five
percent per year for more than a decade. By the
early 1990s, over 40 percent of all its students were
being educated in 2,300 portable units and school
overcrowding had become a serious local political
issue. Because of the urgency, the entire study was
completed in only 120 days.
In order to ensure that the new school impact fees were as locally tailored and acceptable as possible, a
24-member advisory committee was appointed to assist and advise the process. Determining the capital
cost to accommodate new students was the first step in calculating school impact fees for the district. This
step involved an examination of all recent capital expenditures for educational facilities, buses, portables
and maintenance buildings. School facility costs were analyzed in terms of land, construction and FF&E
(furniture, fixtures and equipment). Average costs per student were determined to be $12,055. Since so
many of its students were located in portable units, costs were adjusted by a "utilization factor" to take
into account overcrowding (pre-existing deficiencies). Three forms of credit were calculated: state funding
for capital facilities, property taxes from local option millage levies and property taxes from school bond
issues. To address housing affordability, fees were based on unit size (bedrooms and square footage,
using regression analysis of current housing data from tax records). The study concluded with a
comparative analysis of the Dade, Broward and Palm Beach County school districts. All three systems
were shown to be rapidly increasing in enrollment and the Dade County fee was about the same as those
in the other districts.
Period:
Team:
December 1994 - May 1995
Duncan Associates
Dr. James C. Nicholas
duncan aSsociates
h 0 m e
Contact: Tabitha Fazzino
former Planning Director
305.572.0100