Willdan Group, Inc. · NASDAQ:WLDN
Willdan — International City Manager's Association 2009
51 slides from Willdan's conference presentation, Sep 14, 2009
Slide 1: Diverse Stakeholders, Development Costs, and Infrastructure Funding: A Case Study from Fort Worth
Diverse Stakeholders, Development Costs, and Infrastructure Funding: A Case Study from Fort Worth International City Manager’s Association September 14, 2009 Susan Alanis, Eric Nickell, and Robert Spencer Copyright Willdan 2009
Slide 2: Outline
Outline • Study Background & Objectives • Gap Analysis • Development & Occupancy Cost Survey • Economic Impact Analysis • Toolkit and Recommended Options Copyright Willdan 2009
Slide 3: Study Background
Study Background • Fort Worth, Texas – 720,000 population – Dynamic economy • Recent efforts to address $2.4 billion transportation infrastructure needs – $292 million bonds – $161 million first-ever transportation impact fee • Development community had significant concerns • Still had $1.3 billion
Slide 4: Study Objectives
Study Objectives • Define the problem • Analyze develop costs burden • Analyze infrastructure benefits • Identify funding alternatives • Evaluate and recommend funding alternatives Copyright Willdan 2009
Slide 5: Underlying Principles of Study
Underlying Principles of Study • Maintenance of economic competitiveness – Avoid the “tipping point” • Equity – Apportion costs among beneficiaries of the infrastructure • Efficiency – Funding mechanism that allows efficient delivery of projects Copyright Willdan 2009
Slide 6: Dramatic Growth Without Adequate Infrastructure
Dramatic Growth Without Adequate Infrastructure Developed land grew 23% from 1995 to 2008. Copyright Willdan 2009
Slide 7: Adequate Public Facilities Ordinances
Adequate Public Facilities Ordinances • Pros: – Allow control over timing and sequence of new development – Can encourage contiguous, infill, and growth center development proximate to existing infrastructure and services – Can inform the Capital Improvement Program of a municipality • Cons: – Const
Slide 8: Use of APFO Tools in Fort Worth
Use of APFO Tools in Fort Worth • Water and wastewater service: – Developers required to extend lines to their developments at their cost – City may participate in over-sizing – Developers can be reimbursed from future developers who tap into lines within 10 years • Roads: – Transportation impact fe
Slide 9: Debt Service Tax Rate Trend
Debt Service Tax Rate Trend Copyright Willdan 2009
Slide 10: Tax Levy Trend
Tax Levy Trend $350 Millions $300 $250 $200 O&M Tax Levy I&S Tax Levy $150 $100 $50 $- 00 04 06 05 07 08 95 98 96 97 99 01 02 03 20 20 20 20 20 20 20 19 19 19 19 19 20 20 Copyright Willdan 2009
Slide 11: Gap Analysis
Gap Analysis General Fund Deficit as a % of Total Expenditures 2009 2011 2013 2015 2017 0.00% (1.00%) (2.00%) (3.00%) (4.00%) (5.00%) (6.00%) (7.00%) (8.00%) Willdan Forecast City Forecast Copyright Willdan 2009
Slide 12: 10-Year TIP - Existing Gap: All Costs & Revenues
10-Year TIP - Existing Gap All Costs & Revenues 2,500 Expenditures 2,000 Ongoing Maintenance New Development Needs $ Million Capacity Deficiencies 1,500 Deferred Maintenance Revenues 1,000 Unfunded General Fund Impact Fee - Existing 500 Gas Well Revenues Debt Capacity - Existing 0 Expenditures Reven
Slide 13: 10-Year TIP - Existing Gap
10-Year TIP - Existing Gap Existing & Future Deficiencies 1,200,000,000 Future Deficiencies Stop 1,000,000,000 (development impacts net Digging of fee revenue): $500 m 800,000,000 600,000,000 Existing Deficiencies: $700 m Fill 400,000,000 The Hole 200,000,000 0- 2009 2010 2011 2012 2013 2014 2015 20
Slide 14: Development Cost Survey: Comparison Cities
Development Cost Survey Comparison Cities Texas Out Of State Oklahoma City Grand Prairie San Antonio Kansas City Fort Worth McKinney Charlotte Burleson Chicago Phoenix Atlanta Denver Austin Dallas Irving SF Res. 9 9 9 9 MF Res. 9 9 9 9 Retail 9 9 9 9 9 Office 9 9 9 9 9 9 9 9 9 9 9 9 Indust. 9 9 9 9
Slide 15: Development Cost Survey: Transportation Impact Fee Zones
Development Cost Survey Transportation Impact Fee: 27 Zones Current Fee Levels = 33% of Max. • 17 zones: Fee Reduced to $1,500 / SFD • 2 zones: Max. Fee (<$1,500 / SFD) • 8 zones: No Fee (no improvements needed for growth) Copyright Willdan 2009
Slide 16: Development Cost Survey: Sample Development Map
Development Cost Survey Sample Development Map - Single Family Copyright Willdan 2009
Slide 17: Development Cost Survey: Types of Costs
Development Cost Survey Types of Costs City Fees Design Standards • Building Construction • Park Dedication Costs Requirements • Processing Fees • Storm Water Design • Impact Fees Standards • Other Mitigation Fees • Paving/Streets Standards • Tree Preservation Requirements Building Costs • Construct
Slide 18: Single Family Development Costs
Development Cost Survey Single Family Development Costs Copyright Willdan 2009
Slide 19: Single Family Building and Development Costs
Development Cost Survey Single Family Building and Development Costs Copyright Willdan 2009
Slide 20: Occupancy Costs Survey
Occupancy Costs Survey • Stormwater fees • Transportation user fees • Landscape irrigation service fees • Fire protection fees • City property taxes Copyright Willdan 2009
Slide 21: Single Family Annual Charges and Property Taxes
Occupancy Cost Survey Single Family Annual Charges and Property Taxes Copyright Willdan 2009
Slide 22: Development Costs - Existing
Development Costs - Existing Fort Worth Percent of Median Single Multi- Office Office Indus- Family Family Retail Central Outer trial (n = 4) (n = 4) (n = 5) (n = 12) (n = 12) (n = 12) Infrastruc- ture & Fees 104% 91% 100% 85% 111% 83% Infrastruc- ture, Fees & 101% 100% 99% 97% 98% 97% Bldg Costs Oc
Slide 23: Benefit - Cost Ratio
Benefit - Cost Ratio Economic Impact Analysis with IMPLAN Benefits $206 mil. Costs 140 mil. Net Benefit $ 66 mil. Benefit - Cost Ratio 1.47 Copyright Willdan 2009
Slide 24: Key Findings
Key Findings • Property Tax & Debt Financing – Per capita property tax rates and expenditures high – Share of tax allocated to debt much lower • Development Costs: At or below the median of comparable cities • Occupancy Costs: – Residential costs near the median of comparable cities – Non-residentia
Slide 25: Impact of Impact Fees: Residual Land Value
Impact of Impact Fees: Residual Land Value Value Added By New Facilities No Value Added By New Facilities Impact Fees Profit Construction & Soft Costs Land Value No Fee Reduce Land Value Increase Land Value (or Limit Land Appreciation) Copyright Willdan 2009
Slide 26: Economic Impact of Impact Fees
Economic Impact of Impact Fees Impact Fee Revenues Economic Expanded Development Infrastructure Copyright Willdan 2009
Slide 27: Toolkit
Toolkit Revenue Options Planning Options 1. Increase Property Tax 9. Require Infrastructure Financing Plan For Growth Areas 2. Increase Debt Share of Property Tax 10. Adopt Adequate Public Facilities Ordinance 3. Increase Share of Debt Funding To 11. Incentivize Development To Use Transportation Pro
Slide 28: Recommended Option: Increase Share of Debt For Transportation
Recommended Option: Increase Share of Debt For Transportation Average = 75% 100% 80% 60% 40% 20% 0% 1960s 1970s 1980s 1990s 2000s Transportation Non-Transportation Copyright Willdan 2009
Slide 29: Recommended Option: Increase Transportation Impact Fee
Recommended Option: Increase Transportation Impact Fee 100% 80% 50% 60% 36% 27% 33% 40% 20% 0% Existing Proposed Residential Commercial & Industrial Average Copyright Willdan 2009
Slide 30: Recommended Option: Transportation User Fee
Recommended Option: Transportation User Fee • Like a utility charge - user pays – Trip generation rate by land use type – Same trip rates used for impact fee • Austin and Bryan currently have similar fees – Austin raises $28 mil. for road maintenance • Dedicated revenue source for road maintenance u
Slide 31: Recommended Option: Transportation User Fee (cont.)
Recommended Option: Transportation User Fee (cont.) • Replace $25 million current General Fund expenditures for road maintenance • Fee estimated at $4.75 per equivalent single family unit per month • Exemptions possible for special cases • Allow shift of property tax to debt service for transportati
Slide 32: Recommended Option: Promote Use of Public Improvement Districts
Recommended Option: Promote Use of Public Improvement Districts • Advantages: – Avoid high initial infrastructure costs – Low cost of financing • Tool for new development: – Effective financing tool for offsite transportation improvements • Tool for existing developed areas: – Property owners can ap
Slide 33: Recommended Options: Revenue Estimates
Recommended Options: Revenue Estimates 10-yr. Revenue Debt Capacity - Increase Share to 90% $ 104 mil. Increase Impact Fee To 50% of Max. 83 mil. Adequate Public Facilities Ordinance Development Incentives To Use Existing Infrastructure Transportation User Fee 494 mil. Public Improvement Districts N
Slide 34: Development Costs with Revenue Options
Development Costs with Revenue Options Fort Worth Percent of Median Single Multi- Office Office Indus- Family Family Retail Central Outer trial (n = 4) (n = 4) (n = 5) (n = 12) (n = 12) (n = 12) Infrastruc- ture & Fees 105% 103% 146% 85% 154% 86% Infrastruc- ture, Fees & 101% 101% 102% 97% 99% 97% B
Slide 35: 10-Year TIP With Revenue Options
10-Year TIP With Revenue Options All Costs & Revenues 2,500 Expenditures Ongoing Maintenance 2,000 New Development Needs Capacity Deficiencies $ Million Deferred Maintenance 1,500 Revenues 1,000 Unfunded Impact Fee - Increase Transportation User Fee Debt Capacity - Incr. Share 500 General Fund Impac
Slide 36: 10-Year TIP With Revenue Options: Deferred Maintenance & Deficiencies
10-Year TIP With Revenue Options Deferred Maintenance & Deficiencies Only 2,500 Expenditures Capacity Deficiencies 2,000 Deferred Maintenance $ Million 1,500 Revenues Unfunded 1,000 Transportation User Fee Debt Capacity - Incr. Share 500 Gas Well Revenues Debt Capacity - Existing 0 Expenditures Reve
Slide 37: 10-Year TIP With Revenue Options: Impact Fees & New Development
10-Year TIP With Revenue Options Impact Fees & New Development Needs Only 2,500 Expenditures New Development Needs 2,000 $ Million 1,500 Revenues 1,000 Unfunded Impact Fee - Increase Impact Fee - Existing 500 0 Expenditures Revenues Copyright Willdan 2009
Slide 38: 10-Year TIP With Revenue Options: Ongoing Maintenance & General Fund
10-Year TIP With Revenue Options Ongoing Maintenance & Gen. Fund Revenues Only 2,500 Expenditures Ongoing Maintenance 2,000 $ Million 1,500 Revenues Unfunded General Fund 1,000 500 0 Expenditures Revenues Copyright Willdan 2009
Slide 39: Now What?
Now What? Copyright Willdan 2009
Slide 40: Sample Fees – Single Family Home
Sample Fees – Single Family Home Current: • 36% collection rate: $2,000 • 15% discounted rate: $1,700 Proposed: • 50% collection rate: $3,005 • 50% discounted rate: 2,000 sf house $1,502 Copyright Willdan 2009
Slide 41: Sample Fees – General Office
Sample Fees – General Office Current: • 27% collection rate: $60,540 • 15% discounted rate: $51,390 Proposed: • 50% collection rate: $121,080 • 50% discounted rate: $60,540 Typical area: 30,000 sf Copyright Willdan 2009
Slide 42: Sample Fees – Drive-Thru Fast Food
Sample Fees – Drive-Thru Fast Food Current: • 27% collection rate: $30,801 • 15% discounted rate: $26,181 Proposed: • 50% collection rate: $61,704 Typical area: 3,000 sf • 50% discounted rate: $30,852 Copyright Willdan 2009
Slide 43: Sample Fees - Daycare
Sample Fees - Daycare Current: • 27% collection rate: $27,404 • 15% discounted rate: $23,296 Proposed: • 50% collection rate: $54,900 • 50% discounted rate: $27,448 Typical area: 4,000 sf Copyright Willdan 2009
Slide 44: Sample Fees – Grocery Store
Sample Fees – Grocery Store Current: • 27% collection rate: $319,440 • 15% discounted rate: $271,560 Proposed: • 50% collection rate: $639,960 • 50% discounted rate: $319,980 Typical area: 60,000 sf Copyright Willdan 2009
Slide 45: Sample Collection Rates
Sample Collection Rates Status Quo Ideal Funding Single-family Residence $4.75 $5.50 Multi-family Residence $2.92 $3.38 Office / 1,000 sf $6.38 $7.39 Retail / 1,000 sf $8.91 $10.33 Industrial / 1,000 sf $3.85 $4.46 Annual Revenue for $26.7M $31M Street Maintenance Copyright Willdan 2009
Slide 46: Political Issues
Political Issues • High tax rate – Generous homestead exemption • Equity of Public Improvement Districts • More fees (storm water, environmental, street maintenance) – Veiled tax – Residents with fixed incomes – Effect on occupancy costs for businesses • Current economic environment: – City service
Slide 47: Discounts for Extraordinary Investment
Discounts for Extraordinary Investment • Discount rate of 15-50% • Minimum capital investment of $15 million – Fort Worth Chamber and Housing and Economic Development suggest reducing this threshold to $10 million • Creation of 100 jobs – Minimum salary of twice minimum wage, plus benefits • Other t
Slide 48: Smoothing
Smoothing Copyright Willdan 2009
Slide 49: Alternative Collection Structure
Alternative Collection Structure • 25% for developments located on existing infrastructure • 50% for developments located within ½ mile of existing infrastructure • 75% for all other developments Copyright Willdan 2009
Slide 50: Conclusion
Conclusion 1. Use multiple revenue options to address funding gap to spread burden across all beneficiaries 2. Use pricing signals to use infrastructure more efficiently 3. Further evaluate General Fund cost structure to determine constraints on allocation of property tax for debt service Copyright
Slide 51: Questions?
Questions? For permission to use any material from this presentation, please contact Willdan Financial Services at 800.755.6864. Copyright Willdan 2009
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