903R93Q28
Cost of Providing
Government Services to
Alternative Residential
Patterns
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1993
Chesapeake Bay Program
\ Printed on recycled paper
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Cost of Providing
Government Services
to Alternative Residential
Patterns
May 1993
Prepared for
The Chesapeake Bay Program's
Subcommittee on Population Growth and Development
Produced under contract to the U.S. Environmental Protection Agency
Contract No. 68-WO-0043
Printed by the U.S. Environmental Protection Agency for the Chesapeake Bay Program
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Acknowledgement
We wish to express our sincere appreciation to the individuals listed below who served
as reviewers of the draft report. They provided a number of excellent, constructive
comments that greatly enhanced the quality of the final report.
Mr. Randall Arendt
Vice President, Conservation Programs
Natural Lands Trust
Media, Pennsylvania
Mr. Uri P. Avin
Senior Planner
LDR International
Columbia, Maryland
Professor David Burchell
Center for Urban Policy Research
Rutgers University
Mr. J. P. Blase Cooke
President, Thomas P. Harkins Inc. (General Contractors)
Silver Spring, Maryland
Mr. John Epling
Director, National Association of Regional Councils
Washington D.C.
Mr. Thomas Jacobson
Director of Planning, Chesterfield County Planning Department
Chesterfield, Virginia
Mr. Dean Severson
Senior Land Use Planner
Lancaster County Planning Board
Lancaster, Pennsylvania
Mr. David Slater
Hamer, Siler, George and Associates
Washington, D.C.
Mr. Joseph Valenza
Senior Planner
Prince Georges County Department of Planning and Zoning
Upper Marlboro, Maryland
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CONTENTS
Executive Summary
Chapter 1
Introduction 1-1
Purpose 1-1
Organization 1-5
Assumptions 1-6
Chapter 2
General Approaches Used in Cost of Development Studies 2-1
Purpose 2-1
Methodology 2-1
Type of Development Analyzed 2-1
Cost Approaches 2-5
Allocating Costs 2-11
Classification of Services 2-13
Intraneighborhood Services 2-15
Interneighborhood Services 2-15
Regional Services 2-16
Factors That Influence the Cost of Providing Services 2-17
Attributes of the Service 2-17
Development Density 2-20
Character of the Development 2-21
Population Characteristics 2-22
Locational Attributes 2-25
Service Characteristics 2-27
Shape 2-30
Conclusion 2-31
Chapter 3
Sensitivity of Capital Cost for Different Service Types 3-1
Capital Cost Sensitivity of Intraneighborhood Services 3-3
Attributes of the Service 3-3
Development Density , . . 3-3
Character of the Development 3-6
Population 3-8
Locational Attributes 3-8
Service Characteristics 3-8
Interneighborhood Services 3-9
Characteristics of the Service 3-9
Development Density 3-11
ii
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Development Character 3-11
Population 3-11
Locational Attributes 3-13
Service Characteristics 3-14
Regional Services 3-15
Characteristics of the Service 3-15
Development Density 3-15
Character of the Development 3-18
Population 3-18
Locational Attributes 3-19
Service Characteristics 3-19
Capital Costs in Relation to Total Annual Local Government Service
Costs 3-19
Baltimore County 3-20
Annual Costs of Serving Residential Development 3-21
Conclusion 3-23
Chapter 4
The Cost of Development 4-1
Capital Costs of Intraneighborhood Services 4-2
Capital Cost of Interneighborhood and Regional Services 4-4
Chapter 5
Conclusions 5-1
Conclusion 1 5-1
Conclusion 2 5-2
Conclusion 3 5-3
Conclusion 4 5-3
Conclusion 5 5-4
Conclusion 6 5-4
Conclusion 7 5-4
Conclusion 8 5-5
Conclusion 9 5-6
Conclusion 10 5-6
Conclusion 11 5-6
Conclusion 12 5-7
Intraneighborhood Services 5-7
Interneighborhood Services 5-8
Regional Services 5-9
Groups Contacted by CH2M HILL for Chesapeake Bay Development and Cost
Analysis Study G-l
Works Cited W-l
iii
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Appendix A
Review and Analysis of Relevant Studies A-l
Impact Assessment of the New Jersey Interim State Development and
Redevelopment Plan A-l
Methodology A-2
Results A-7
Summary and Applicability A-9
Development in Wright County, Minnesota: The Revenue/Cost
Relationship Resource Management Consultants, Inc., 1989 A-12
Methodology A-13
Results A-13
Summary and Applicability A-14
Loudon County, Virginia Fiscal Impact Assessment Model A-15
Methodology A-16
Results \-18
Summary and Applicability \-19
The Search for Efficient Growth Patterns
A Study of Fiscal Impacts of Development in Florida
James Duncan and Associates, et al, 1989 \-2Q
Methodology \-20
Results \-22
Summary and Applicability \-23
The Costs of Alternative Development Patterns:
A Review of the Literature
James E. Frank, 1989; Prepared for the Urban Land Institute (ULI) \-24
Methodology \-25
Results \-25
Summary and Applicability \-27
Development in Richmond County, Virginia:
The Revenue/Cost Relationship Resource
Management Consultants, Inc., 1988 A-27
Methodology 4-28
Results 4-29
Summary and Applicability 4-29
Impacts of Development on DuPage County Property Taxes
Dupage County, Illinois Development Department,
Planning Division; 1989 4-30
Methodology 4-31
Results " 4-32
Summary and Applicability 4-33
IV
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Environmental and Economic Impacts of Lot Sizes
and Other Development Standards Maryland Office of
State Planning, 1989 A-34
Methodology A-34
Results A-36
Summary and Applicability A-37
Crossroads: Two Growth Alternatives for Virginia Beach
Virginia Beach Growth Management Study
Prepared By: Siemon, Larsen & Purdy, Chicago, Illinois, et at A-38
Methodology A-39
Results A-41
Summary and Applicability A-41
Appendix B
Other Reviewed Studies B-l
The Cost of Community Services (COCS) in Three Pioneer Connecticut
Valley Towns: Agawam, Deerfield, and Gill (Review Draft)
The American Farmland Trust; 1992 B-l
Methodology B-l
Results B-2
Summary and Applicability B-3
A Framework for Thinking About the Impacts of Growth in the
Portland Metropolitan Area Submitted to The State Council for
Growth Management in the Portland Area ECO Northwest, 1991 B-4
Summary and Applicability B-4
Encouraging Compact Development in Florida, Star Grant 88-053
Joint Center for Environmental and Urban Problems for the
Department of Community Affairs and the Institute of Government B-5
Summary and Applicability B-5
The Cost of Population Growth in the Patuxent River (Maryland)
Population/Environment Balance B-7
Summary and Applicability B-7
Growth Management and Economics: Developing Common Ground
National Growth Management Leadership Project, 1992 B-8
Summary and Applicability B-8
The Economics of Growth Management: A Background Reader
The National Growth Management Leadership Project; 1991 B-8
Summary and Applicability B-8
Economic/Fiscal Impacts of Development-Selected References Urban
Land Institute (ULI), Infopacket Number 386 B-9
Summary and Applicability B-9
"Not in My Back Yard": Removing Barriers to Affordable Housing
Advisory Commission on Regulatory Barriers to Affordable Housing B-9
Greater Toronto Area Urban Structure Concepts Study
*** Prepared for the Greater Toronto Coordinating Committee B-10
Methodology B-10
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Results B-ll
Summary and Applicability B-14
"Population Growth Density and the Costs of Providing Public
Services" Helen F. Ladd, Urban Studies, 1992 B-15
Methodology B-15
Results B-17
Applicability B-18
VI
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Tables
Number Page
2-1 Capital Intensity of Service Types 2-18
2-2 Persons/dwelling unit by Type of dwelling unit and Number of
Bedrooms 2-24
2-3 School-Age Children/dwelling unit by Type of
dwelling unit and Number of Bedrooms 2-24
3-1 Attributes of Intraneighborhood Services 3-4
3-2 Capital Costs Sensitivity of Intraneighborhood 3-5
Services
3-3 Attributes of Interneighborhood Services 3-10
3-4 Capital Costs Sensitivity of Interneighborhood Services 3-12
3-5 Attributes of Regional Services 3-16
3-6 Capital Costs Sensitivity of Regional Services 3-17
4-1 Cost of Capital Facilities for Intraneighborhood 4-3
Services
4-2 Cost of Capital Facilities for Interneighborhood 4-6
and Selected Regional Services
4-3 Cost of Capital Facilities for Intraneighborhood, 4-7
Interneighborhood, and Selected Regional Services
A-l Impact Differences Between IPLAN vs TREND From 1990-2010 A-10
(1992 Dollars where Applicable)
A-2 Subdivision Characteristics A-35
A-3 Land Use and Cover Characteristics A-35
A-4 Annual Fiscal Impacts on the Virginia Beach General Fund A-42
(First Quarter, 1990 $)
A-5 Total Capital Costs for Infrastructure A-43
vn
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C-l Sensitivity of Capital Costs for Intraneighborhood C-l
Services to Development Density
C-2 Sensitivity of Capital Costs for Intraneighborhood C-2
Services to the Character of the Development
C-3 Sensitivity of Capital Costs for Intraneighborhood C-3
Services to the Population Characteristics
C-4 Sensitivity of Capital Costs for Intraneighborhood C-4
Services to Locational Attributes
C-5 Sensitivity of Capital Costs for Intraneighborhood C-5
Services to Service Characteristics
C-6 Sensitivity of Capital Costs for Interneighborhood C-6
Services to Development Density
C-7 Sensitivity of Capital Costs for Interneighborhood C-7
Services to the Characters of the Development
C-8 Sensitivity of Capital Costs for Interneighborhood C-8
Services to Population Characteristics
C-9 Sensitivity of Capital Costs for Interneighborhood C-9
Services to Locational Attributes
C-10 Sensitivity of Capital Costs for Interneighborhood C-10
Services to Service Characteristics
C-ll Sensitivity of Capital Costs for Regional Services C-ll
to Development Density
C-12 Sensitivity of Capital Costs for Regional Services C-12
to the Character of the Development
C-13 Sensitivity of Capital Costs for Regional Services C-13
to Population Characteristics
C-14 Sensitivity of Capital Costs for Regional Services C-14
to Locational Attributes
C-15 Sensitivity of Capital Costs for Regional Services C-15
to Service Characteristics
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Figures
Number Page
3-1 Change in Radius and Perimeter vs Change in 3-7
Area
IX
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Executive Summary
Study Context
The Subcommittee on Population Growth and Development (the Subcommittee) was
established to assist in the implementation of one of the seven goals of the 1987
Chesapeake Bay Agreement which reads "Plan for and manage the adverse
environmental effect of human population growth and land development in the
Chesapeake Bay watershed."
An important precursor to the work of the Subcommittee was a panel established by
the 1987 agreement, known as the year 2020 Panel. The Panel's report, Population
Growth and Development in the Chesapeake Bay Watershed to the Year 2020, known as
The 2020 Report, contained a number of significant findings, including:
• A total of 1,716,418 new housing units will be constructed between 1990
and 2020; within the Chesapeake Bay watershed; if current development
trends continue, 80 percent of these units will be located on one-third of
the land converted to residential use. The remaining 20 percent of the
dwelling units, consisting of large lot residential development, will be built
on two-thirds of the land converted to residential uses.
• "It is unlikely that the roads, sewers, and other public facilities needed to
fully support growth could be built, if growth continues in present
patterns and densities (p. 33)."
• "Sprawl is an ineffective use of the land, difficult to service with
infrastructure and transportation, requiring extensive use of automobiles,
and consuming large land areas (p. 36)."
The 2020 Report noted that "the low density residential alternative produces
environmental effects and infrastructure demands that are more expensive to remedy
than medium and high densities" (p. 38). All of the above and other findings contained
in the report have led the Subcommittee to seek additional information regarding the
environmental and economic costs of low density residential development, often
referred to as "sprawl" development to provide vital information to those making land
use decisions within the Chesapeake Bay watershed.
In this report, "sprawl" is defined as residential development at a density of less than 3
dwelling units per acre, which does not have a locational component. That is, sprawl
can occur either as leapfrog development located outside of existing service areas or as
a development located in or adjacent to existing service areas.
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Objective
As a result of these concerns, the Subcommittee established a two step process to begin
to analyze the environmental and economic impacts of residential development. Its
objective is to determine if there are significantly different economic and environmental
costs that can be attributed to different types, forms, and locations of residential
development. While the Subcommittee's objectives are set within the overall
environmental context of the Chesapeake Bay Agreement, its initial focus is to assess
the economic impacts of different types of residential growth. In particular, the
Subcommittee has decided to investigate how the capital cost per dwelling unit of
providing services and infrastructure, specifically public services and infrastructure,
varies according to type, form, and location of new residential development.
As a next step, the Subcommittee will be investigating the specific water-quality impacts
of various forms and patterns of development. With detailed analysis of both the
economic and ecologic issues in place, the Subcommittee will be able to fully inform
the Chesapeake Bay Program, the policy-makers of the region, and the development
community regarding these issues.
The Subcommittee retained CH2M HILL to perform a comprehensive review of the
literature dealing with how the capital cost of providing services and infrastructure
varies according to the characteristics of residential development. The consultant's
charge is to present the findings from the literature and draw conclusions where
appropriate. The information in the study will then be one of many sources to be used
by the Subcommittee in fulfilling its responsibility to "Plan for and manage the adverse
environmental effect of human population growth and land development in the
Chesapeake Bay watershed".
This first study has the following specific objectives:
• Provide an in-depth review of the current cost of development literature
and other studies that address the cost of providing public services and
infrastructure to different residential developments
• Describe the methods, approaches, and assumptions of the studies, and
describe the applicability of their conclusions to the Subcommittee's
mission and to the Chesapeake Bay watershed
• Identify factors that affect the capital cost of providing services and
infrastructure to residential development
• Present data and conclusions from relevant studies concerning variations
in the capital cost per dwelling unit of providing services and
infrastructure, specifically for providing public services
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The objective of the second study will be to examine the relationship between different
arms of development and their affects on surface and groundwater quality. The study
will attempt to concentrate on the effects of different residential patterns, and will
explain the processes through which water quality is affected. Where they exist, recent
and current watershed-wide studies in the Chesapeake Bay watershed will be examined.
the results of the study will help local planning officials to better understand the water
quality impacts of the different development terms they are faced with deciding upon at
the local level.
Activities
CH2M HILL performed a comprehensive survey of the literature on cost of
development studies (that is, those such as The Costs of Sprawl that had calculated
variations in capital and annual service costs for different types of dwelling units), and
other related planning studies. According to the Subcommittee's wishes, this search
was primarily focused on identifying studies whose results would be the most applicable
to the Chesapeake Bay watershed. The review encompassed a broad range of studies
that had been performed throughout the country. The consultant contacted planning
agencies within the watershed to obtain relevant studies. A number of planning
agencies and non-profit organizations (such as the American Planning Association,
Lincoln Land Institute, universities, trade organizations, etc.) were also contacted. A
list of the organizations and individuals contacted is presented on pages Gl through
G-4 following Chapter 5.
Organization
The literature review appears in Appendices A and B. Appendix A contains the more
relevant studies that provided information about the costs of serving different types of
residential developments. Each review describes the methodology and results, and
presents a summary of the applicability of the results. Appendix B contains reviews of
less directly applicable but interesting studies.
The report begins with Chapter 1 which presents the context of this study within the
context of the mission of the Subcommittee and the Chesapeake Bay Program.
Chapter 2 presents a review of the general approaches used in cost of development
studies, based primarily on the material in Appendix A. Chapter 2 also identifies three
types of public services based on the service characteristics and identifies factors that
effect the capital cost of the different types of services. Chapter 3 describes the
relationship between the cost factors and the capital costs of different types of services.
Summary tables presented in Chapter 3 are supported by more detailed tables
contained in Appendix C. Chapter 4 presents information from the literature about the
capital costs per dwelling unit for providing infrastructure to different types and forms
of residential development. Chapter 5 presents conclusions.
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General Approaches Used in Cost of Development Studies
Chapter 2 contains an analysis of the methods and assumptions used in the reports
analyzed for this study.
Types of Developments Analyzed
Most cost of development studies, such as The Costs of Sprawl and a number of others
identified in Frank's The Costs of Alternative Development Patterns, defined prototype
communities to control as many variables as possible, and to focus on cost variations
due to differences in density, lot size, type of dwelling unit, and proximity to se:rvice
areas. These studies usually use different mixes and densities of dwellings units for
different prototypes with the same total number of dwellings units and the same total
area. The distribution of dwellings units and density is not uniform across the
prototypes.
Cost Approaches
The two approaches used in estimating capital costs produced by new residential
development are the per capita and the marginal cost approach. The marginal cost is
defined as the true cost incurred by a local government in supplying service or
infrastructure to a new increment of residential demand, such as a subdivision.
Marginal cost is the preferred approach and is used in project-specific studies. The
definition of prototypical communities, used in such studies as The Costs of Sprawl, is an
attempt to estimate marginal capital costs.
The per capita approach is more commonly found in county-wide fiscal impact models.
This approach will be accurate where capacity utilization is high but not where it is in
over-capacity, so that the average cost is close to the marginal cost. In situations where
this is not true (that is, there are large amounts of current excess capacity), this
approach will not be as accurate because the marginal costs of serving new
development will be low.
Allocating Costs
One issue that confronts many studies is how to accurately allocate the true cosls for
new services and infrastructure to different types of land use, such as new residential
development. This is relatively easy to do for infrastructure, such as water distribution
pipes, sidewalks, streetlights, sewer collector pipes, and local streets, required within a
new subdivision. Allocating costs is harder to do for other types of services and
infrastructure, such as police, fire, recreation centers, libraries, and general government.
Accurate allocation is particularly important for studies employing the per capita cost
approach.
The most common approach is to allocate costs based on the residential proportion of
the jurisdiction's total assessed valuation. This ratio is sometimes modified by also
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considering the ratio of the number of residential taxable parcels to the total number of
taxable parcels, and by considering the average size of residential parcels to the average
size of all taxable parcels. Allocation of costs can be done at a department level by
examining service and use statistics, such as the distribution of police and fire calls, and
solid waste flow records.
Classification of Services
Chapter 2 presents a classification of services based on their characteristics, including
capital intensity (ratio of annual capital cost to total annual costs - defined as annual
capital plus annual operating and maintenance costs); form (linear vs point), spatial
arrangement, and the size of the service area (within a subdivision or neighborhood vs
county or region). Four classes of services were identified:
• Onsite. These are the capital facilities on the lot that connect the
dwelling unit to nearby, offsite public systems and right-of-ways
• Intraneighborhood. These services are provided to individual dwelling
units within distinct residential developments, such as subdivisions or
neighborhoods
• Intel-neighborhood. These services are provided over a larger service
territory that covers a subarea of an entire municipality that contains
many separate neighborhoods or residential developments. The services
are provided to a group of neighborhoods and consist of the capital
facilities connecting them.
• Regional. These services are provided to an entire municipality or to a
larger region consisting of a number of municipalities
This study addresses only three types of off-site services: intraneighborhood,
interneighborhood, and regional. This study does not address on-site services because
these are almost always incurred by the property owner.
Services were classified as follows:
Intraneighborhood
• Sewer collector lines
• Water distribution lines
• Stormwater collector lines
• Collector streets, including subcollectors, loops, and cul-de-sacs
• Streetlighting
• Stormwater and drainage improvements, excluding the collector lines
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Intel-neighborhood
• Capital-intensive
Sanitary sewer trunk or collector lines, and interceptors
Stormwater trunk or collector lines
Water trunk or distribution lines, and supply mains
- Parks and recreation
Arterial streets
• Labor-intensive
- Police
- Fire
Solid waste collection
- Emergency medical
Education, particularly elementary and possibly junior high/middle
schools
Regional
• High schools
• Wastewater treatment plants
• Water treatment plants
• Water supply reservoirs
• Solid waste disposal facilities
• Highways
• General government administrative buildings
Chapter 2 describes the attributes of these services, noting their level of capital
intensity, size of the service area, ability to allocate costs to residential uses, form, and
arrangement.
Factors That Influence the Cost of Providing Service
Chapter 2 also presents a list of factors that influence the costs of providing services to
new residential development. The primary focus is on the capital cost. The effect of
the following factors is described below:
Attributes of the Service
• Capital intensity
• Form
• Spatial arrangement
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Development Density
Gross density
Net density
Characteristics of the Development
• Lot size and shape
• Type of dwelling unit
Population Characteristics
• Total population served
• Population density
• Number of school-age children
Locational Attributes
• Proximity to existing service areas
• Proximity to employment
• Proximity to community facilities
Service Characteristics
• Capacity utilization
• Service and design standards
• Regulatory standards
• Shape of service area
Chapter 2 describes how these factors affect service costs, noting how variations in
these factors affect the demand for and the cost of providing services.
Sensitivity of Capital Costs for Different Service Classes
Chapter 3 describes the sensitivity of capital costs for individual services within each of
the three classes of off-site services (listed above) to the different factors. For example,
for intraneighborhood services, the sensitivity of the capital costs of sewer collector
pipes to the various factors is described in qualitative terms; for interneighborhood
services, the sensitivity of the capital costs of elementary and middle schools to the
same set of factors is presented.
A summary table for each class of service is presented in Chapter 3. It presents an
ordinal ranking of capital cost sensitivity using the following scale:
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• Highly Sensitive: a factor has a strong, direct effect on the capital cost of
a service
• Sensitive: a factor has a direct, but not overly strong effect on the capital
cost of a service
• Moderately Sensitive: a factor has a weak effect on the capital cost of
service
• Minimally Sensitive: a factor has little or no affect on the capital cost of
a service
Appendix C contains a set of tables that describes, in more detail, the capital sensitivity
relationship between an individual service and each of the cost factors.
This scale expresses the sensitivity of the capital cost of a specific service to various
factors. The determinations of capital cost sensitivity were made by CH2M HILL
based on the literature reviewed for this study, on our experience in conducting
planning studies, and on our engineering and design experience in preparing designs for
different types of infrastructure.
The following trends can be observed in Tables 3-2, 3-4, and 3-6:
• The capital costs of intraneighborhood services are, for the most part,
most sensitive to net density and lot size. These capital costs are also
effected by service and design standards. Population and locational
factors have moderate to minimal affects on the capital cosls of
intraneighborhood services.
• The capital costs of interneighborhood services tend to be, depending on
their level of capital intensity, highly sensitive and sensitive to gross
development density (for trunk lines and arterial streets), and highly
sensitive to the population to be served (for labor intensive services).
For the capital-intensive services, net density and lot size have less of an
effect. Capital costs are also sensitive to service standards. Locational
attributes have, with the exception of arterials, a minimal effect on capital
costs.
• The capital cost of regional services is most sensitive to the total
population to be served, and is only slightly less sensitive to capiacity
utilization and to design and service standards. The type of dwelling unit
affects the capital cost for some services, such as high schools, water
supply and water treatment, and highways. The cost of regional services
is not sensitive to development density or to lot size.
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Relationship of Capital Cost to Annual Cost
While the focus of this report is on the capital costs per dwelling unit, the annual
capital costs required to provide services and infrastructure to a new dwelling unit
comprise a minority of the total annual costs (annual capital plus annual operating and
maintenance costs) incurred by local governments. Three studies indicate that annual
capital costs per dwelling unit are probably between 20 to 30 percent of total annual
costs per dwelling unit. This assumes that public water and sewer are provided and
that the bundles and levels of services provided are comparable to those supplied in
most suburban counties located in metropolitan areas within the Chesapeake Bay
watershed.
This proportion would be near or below the low end of this range when impact fees
and proffer charges require property owners to pay the full marginal capital cost of
providing services and infrastructure, particularly if some of the marginal capital costs
of interneighborhood and regional services are incurred by property owners. The
actual proportion could be higher where service levels are high or where high public
capital costs are incurred in providing interneighborhood and regional services, such as
water and sewer trunk lines, new water and wastewater plant treatment capacity, and
school expansions.
The Cost of Development
Chapter 4 presents data on the capital costs per dwelling unit for different types of
density of housing. The two main sources were The Costs of Alternative Development
Patterns and The Costs of Sprawl. This chapter provides readers with estimates of the
capital cost per dwelling unit that are contained in the literature. The estimates are
presented in Tables 4-1, 4-2, and 4-3. The information in these studies was modified to
correspond to the classes of services identified in this study, although it was impossible
for the information to correspond exactly.
Chapter 4 notes how difficult it is to develop capital cost estimates and to precisely
measure the influence of different factors, such as density, lot size, location, service
levels, etc. Chapter 4 presents a caveat concerning the complexity of the relationship
between capital costs per dwelling unit and the factors identified in this study. This
caveat is worth noting here:
"Distinctions among alternative development factors form the experimental
variables that are manipulated to observe the extent to which development costs
change concurrently. The crucial terms are density and lot size or lot width,
municipal improvement standards, characteristics of the occupants, contiguity of
development, distance to central facilities, and size of the urban area. Each one,
when allowed to vary, has a discernible effect on development costs, but when
they are all allowed to vary at the same time, the independent effect of each is
difficult to measure because of simultaneous effects" (Frank, p. 37).
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Two important points are worth noting. First, there are factors that affect the capital
costs per dwelling unit in addition to density and lot size; the list Frank identified
corresponds to the list of factors identified in Chapter 2. Second, it is difficult to
precisely isolate the effect of the different factors on the cost of providing piiblic
services to residential development.
Capital Costs of Intraneighborhood Services
Table 4-1 contains capital cost estimates for densities of 1 dwelling unit per acre or
greater, and compares the cost of neighborhood services (updated to account for
escalation) in The Costs of Alternative Development Patterns with intraneighborhood
services as defined in this study. The figures in Table 4-1 show a decline in capital
costs per dwelling unit as density increases. This should not be interpreted as density
being the only factor causing such a decline in capital costs. Frank's caution presented
above should be kept in mind. An examination of Table 3-2 indicates that factors
other than density and lot size, such as service standards and the type of dwelling unit,
affect intraneighborhood capital costs.
The capital cost per dwelling unit of intraneighborhood services for residential
development at a density of 1 dwelling unit per acre or greater declines on a per
dwelling unit basis as density increases. While such a decline may be due primarily to
development density and lot size, other factors also have an effect.
Capital Cost of Intel-neighborhood and Regional Services
Attempts at estimating the capital costs for interneighborhood services have been made
in several studies while few attempts have been made at estimating the capital costs of
regional services, with the exception of high schools. The Costs of Sprawl paid only
limited attention to the capital costs for other interneighborhood services thai are
external to a residential development. As Frank has noted, even where
interneighborhood capital costs, such as water and sewer trunk lines connecting
treatment plants to leapfrog residential development, have been estimated, the estimate
has been flawed.
Table 4-2 presents a partial estimate of the capital cost for providing both
interneighborhood services and some regional services. This table includes the costs for
sewer, water, and storm sewer trunk lines; all schools; solid waste collection and
disposal; police, fire, parks and recreation; general government; and arterial streets.
The table excludes the cost of constructing new wastewater and water treatment plants,
and a new water supply facility. Capital costs are presented for 5-mile and 10-mile
distances between the residential development and employment centers, water and
wastewater treatment plants, and a receiving body of water.
The data for interneighborhood and regional services show that the capital costs per
dwelling unit of inter-regional and some regional costs decline relatively little as density
increases. Other factors, such as proximity to the service area (for sewer and water
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trunk lines), population (for labor intensive interneighborhood services, water and
sewer treatment plants), and locational attributes (for arterial streets and highways)
have more of an effect on capital costs than does lot size or density.
Table 4-3 combines the figures from Tables 4-1 and 4-2 and presents the capital costs
per dwelling unit for intraneighborhood, interneighborhood, and some regional services.
The total capital cost per dwelling unit of facilities needed to service new residential
development declines as development density increases. Such a decline is due to many
factors other than density and lot size, particularly for interneighborhood and regional
services. The decline in capital costs per dwelling unit occurs primarily for
intraneighborhood services, assuming these are publicly funded-not incurred by
property owners through impact fees and proffer charges.
The caveats contained in the literature, and the complexity of the relationship that
determines the capital cost of providing services and infrastructure to residential
development, make it virtually impossible to precisely specify the effect contributed by
any one factor. For example, it would be inaccurate to interpret that these tables show
that density is the most important factor. Density is clearly not the only factor in
reducing capital costs per dwelling unit in providing public services and infrastructure.
When looking individually at the three classes of service and assuming that the capital
costs of the full bundle of services is incurred by local jurisdictions, some conclusions
can be drawn about 15 dwelling units per acre, according to the literature.
The capital cost per dwelling unit of providing intraneighborhood services declines as
density increases, primarily because of the spatial effects noted in this study that
increase the length of collector and distribution pipe, and local streets per parcel. High
density, compact residential developments are cheaper to service, on a dwelling unit
basis, up to about 15 dwelling units per acre, according to the literature. Above a
certain point, for example for high rise apartments, the capital costs per dwelling unit
begin to increase over the costs for attached housing, such as townhouses. The
decrease in intraneighborhood capital costs per dwelling unit observed as density
increases is due to density and lot size, and other factors, such as the service standard.
Conclusions
Presented below are the conclusions that can be made from the literature reviewed for
this study:
Conclusion 1: The capital cost per dwelling unit of intraneighborhood services declines
as density increases and lot size diminishes; although the decline is due primarily to
development density and lot size, other factors also have an effect.
Conclusion 2: An increasing proportion of the marginal capital costs per dwelling unit,
particularly for capital-intensive intraneighborhood services, are being incurred by the
homeowners through the imposition of impact fees and proffer charges.
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Conclusion 3: Density and lot size are not the only factors that determine the capital
cost of providing intraneighborhood services. Service and design standards also affect
capital costs.
Conclusion 4: The precise contribution of cost factors in determining the total capital
cost per dwelling unit remains unclear, particularly for interneighborhood and regional
services, but some idea of relative effects can be ascertained.
Conclusion 5: The greatest reduction in total capital costs per dwelling unit through
the use of higher density residential development is achieved in intraneighborhood
services. The reduction in capital cost per dwelling unit from more efficient
development forms is greater at the subdivision or neighborhood level and is smaller at
the municipal, county, or regional level.
Conclusion 6: The use of compact, higher density residential development forms
produces a small percentage savings in capital cost at the regional or statewide levels.
Conclusion 7: Infill development or contiguous development will minimize marginal
capital costs for interneighborhood services and, to a lesser extent, for regional services.
Conclusion 8: Increases in the population growth rate and population density produce
increases in local per capita annual operating and maintenance expenditures and, to a
lesser extent, in annual per capita capital spending.
Conclusion 9: The capital cost per dwelling unit of providing services is only a minor
proportion of the total annual costs per dwelling unit (annual operating and
maintenance cost plus annualized capital cost).
Conclusion 10: Not all local jurisdictions provide comparable bundles of services,
either in terms of the types provided or service levels. This complicates comparing the
cost of providing services to dwellings units located in rural areas to that of subvirban
areas.
Conclusion 11: Demographic characteristics of the occupants of dwellings units to be
served are a major factor in determining the demand for and resulting cost of providing
labor-intensive services to new residential development.
Conclusion 12: The cost of providing education services, both capital and operating, is
the largest cost per dwelling unit expense in most local budgets. Education costs are
only minimally sensitive to development density and lot size, and, to a lesser extent, to
the location of new development.
Presented below are conclusions about capital cost for each of the three types of
services considered by this study.
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Intraneighborhood Services
Because of their linear, capital-intensive nature, the capital costs of intraneighborhood
services are the most sensitive to the form and development density of residential
development. These services have the greatest potential for shifting capital costs from
local governments to property owners through the use of impact fees.
• The capital cost of all intraneighborhood services, except stormwater
structures, is highly sensitive to lot size and net development density.
Both factors interact to determine the spacing between dwelling units;
frontage length of pipe, streets, street lighting, and sidewalks required per
residential lot; and, ultimately, capital cost.
• Intraneighborhood capital costs are sensitive to gross density. Where
gross and net densities are nearly equal (as in standard subdivisions
where there is no clustering), capital costs are highly sensitive to gross
density.
• Intraneighborhood services can be provided most efficiently (cost per
dwelling unit) for high-density, compact, residential developments,
although density and lot size are not the only important factors. As
shown in Table 3-2, intraneighborhood capital costs vary in sensitivity to
service and design standards.
• The marginal capital cost of providing intraneighborhood facilities to new
residential development is much lower when density is increased or infill
development occurs than it is when the new development is built in
unserved areas in a leapfrog or scattered form. Changes in density and
flow coming from within a given residential area produce relatively small
changes in the capital cost of intraneighborhood and interneighborhood
facilities, particularly water and sewer pipes.
Interneighborhood Services
The capital cost of interneighborhood services are, in general, less sensitive to lot size
and net density, and are more sensitive to gross density and to the size of the
population to be served. Major conclusions about interneighborhood services are
presented below:
• The capital cost of interneighborhood services is less sensitive than that
of intraneighborhood services to the development density and lot size of
the residential areas being served, and is more sensitive to population
density within the service area and to locational factors
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The cost of linear, interneighborhood services, such as water, sewer, and
stormwater trunk lines, and roads, are highly sensitive to the gross
development density of the service area. This determines the total length
of the network that connects demand centers, such as neighborhood and
subdivisions, with interceptors or central treatment facilities.
The most expensive residential land use pattern in capital costs per
dwelling unit consists of scattered, noncontiguous neighborhoods and
subdivisions, which results in low service area gross density
The capital cost of interneighborhood services, with the exception of
education, is a much smaller proportion of total capital costs per dwelling
unit than that of intraneighborhood services
Locating new residential development at the edge of existing service
areas decreases the capital and annual costs of providing
interneighborhood services. The capital cost of providing the linear
capital facilities that connect a new development to the existing
infrastructure systems is minimized. A contiguous location also allows for
more cost-effective capital facilities that support such labor-intensive
interneighborhood services as solid waste, police, fire, and emergency
medical.
Regional Services
In general, the capital costs for providing regional services are most sensitive to the
population factors and service standards, and are less sensitive to the development
density, type, and location of the new residential development. Regional services, with
the exception of general government, generally are provided in large increments of
capacity, have long service lives, and often enable economies of scale in unit capital and
operating and maintenance costs to be obtained.
t
• The capital costs of water and wastewater treatment, water supply
facilities, and solid waste disposal facilities are highly sensitive to the
number of persons to be served, which includes the current and projected
populations. Often, these facilities must be designed with substantial
initial excess capacity to accommodate future development.
• The capital cost of most regional services are sensitive to service
characteristics, specifically service standards and capacity utilization.
Design standards determine the capital cost of regional facilities through
engineering standards and regulations that may specify treatment
methods. Underutilized regional facilities, particularly water and
wastewater treatment plants, highways, and water supply facilities., can
impose high initial marginal costs on existing residents.
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Chapter 1
Introduction
Purpose
The significant population growth and development that occurred within the
Chesapeake Bay watershed from the 1970s through the mid-1980s concerned the
citizens and public officials. Specifically, they were concerned that the environmental
and economic vitality of the region was increasingly threatened. Unmanaged growth
was creating pollution and traffic congestion, farmland and forest lands were being
converted to residential uses through the outward expansion of low density housing, and
the environmental quality of the Chesapeake Bay was declining. In response to these
concerns, in 1987, the Chesapeake Bay Agreement was developed to promote
intergovernmental cooperation to help restore the environmental and economic health
of the watershed. Signers of the agreement included: the Governors of Maryland,
Pennsylvania, and Virginia; the Mayor of the District of Columbia; the Chairman of the
Chesapeake Bay Commission; and the Administrator of the U.S. Environmental
Protection Agency.
The agreement included goals and commitments for seven areas, including the
following goal for population growth and development:
"Plan for and manage the adverse environmental effects of human population
growth and land development in the Chesapeake Bay watershed."
To achieve this goal, a 12-member panel was commissioned to report by December
1988 about anticipated growth and related issues through 2020. The panel's specific
charge was to report about the following items:
• "Anticipated population growth and land development patterns in the
Bay region through the year 2020."
• "Infrastructure requirements necessary to serve growth and
development."
• "Environmental programs needed to improve Bay resources while
accommodating growth."
• "Alternative means of managing and directing growth."
• "Alternative mechanisms for financing government services and
environmental controls."
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The 12-member panel published its report, Population Growth and Development in the
Chesapeake Bay Watershed to the Year 2020 (The 2020 Report) in December 1988. This
report contained the following projections about future development patterns
anticipated in the watershed:
• Population within the Pennsylvania, Maryland, and Virginia portions of
the watershed would grow by 2.6 million people (from 13.6 million in
1990 to 16.2 million by 2020); an increase of 19 percent. The highest
percentage increase in population was forecast for Virginia, followed by
Maryland and Pennsylvania.
• The growth will not be uniformly distributed but will be concentrated in
metropolitan areas and near shore areas located in the southern part of
the watershed, adjacent to the Bay
• Land consumption for developed uses was projected to continue to
increase faster than the rate of population growth. Between 1970 and
1980, the population in Maryland grew by 7.5 percent but developed
acreage increased by 16.5 percent. Within the entire basin, population
grew almost 50 percent between 1950 and 1980, while the amount of land
used for commercial and residential purposes grew by 180 percent. The
report forecast that developed land, which comprised 10 percent of the
land area within the watershed, will increase to 16 percent by 2020.
• A total of 1,716,418 new housing units will be constructed between 1990
and 2020, consuming a total of 636,360 acres (gross density of 2.7
dwelling units per acre), including an allowance for the area required by
new roads. Most of this development will occur through the conversion
of farmlands and forestlands.
• Eighty percent of new housing units will be built on only one-third of the
land area being converted to residential uses, most of this occurring
within sewer service areas. In contrast, 20 percent of the new hotising
units will consume two-thirds of the land converted to residential uses.
Most of this development will occur on large lots located outside water
and sewer service areas. Future land consumption per new dwelling unit
could decrease because of a variety of factors, including higher land costs,
higher energy costs, and decreased household size.
The 2020 Report described recent trends and forecast the impact of these future growth
patterns on key resources within the watershed:
• Between the mid-1950s and the late 1970s, approximately 2,800 acres of
wetlands were lost annually to new development. During this period,
Maryland lost about 5 percent of its total wetlands, while Pennsylvania
and Virginia lost about 6 percent each. Inland wetlands disappeared at a
faster rate than coastal wetlands.
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• By 2020, an additional 260 million gallons of wastewater per day will be
generated within the watershed, requiring a substantial investment in
sewer collection and treatment infrastructure.
The 2020 Report noted that the infrastructure cost impacts associated with the new
residential development, particularly low-density development, could be significant to
both state and local governments:
• Eighty percent of the variation in on-site capital costs is attributable to
variations in density and lot size. Most of these capital costs are incurred
by the home buyer. Off-site costs for roads, water, sewer, and schools,
usually incurred by local or state governments, could be significant.
• It is unlikely that the roads, sewers, and other public facilities needed to
fully support growth could be built, if growth continues in present
patterns and densities
• Sprawl is an ineffective use of the land, is difficult to service with
infrastructure and transportation, requires extensive use of automobiles,
and consumes large land areas
These findings all confirm the Subcommittee's continuing concern with both the
environmental and economic impacts produced by continued low density residential
development.
The term "sprawl" is used often to describe the extension of new, low-density
residential development beyond the existing edge of suburban development. "Sprawl"
is one of those terms everyone seems to know but has no standard definition. In The
Costs of Sprawl (Real Estate Research Corporation; 1974), "sprawl" at the
neighborhood or subdivision level was defined as standard single family detached
dwelling units at a gross residential density of two dwelling units per acre. Based on
definitions used in other studies, such as The Costs of Alternative Development Patterns,
"sprawl" used in our study will refer to residential development at a density of less than
three dwelling units per acre. This definition does not have a locational component,
although many people often infer that sprawl applies only to "leapfrog" residential
development located beyond the edge of development and public service areas.
Regardless of its location (suburban or rural), sprawl is a land-consumptive form of
residential development and, when combined with other locational factors, such as
"leapfrog" or "scattered" development, may result in inefficiencies in providing
government services.
The concern about the continuation of residential sprawl development includes the
density of the new development and its location within a metropolitan region. Several
other terms also apply to the spatial pattern of new residential development, including
"leapfrog", "contiguous", and "scattered". The first term, described above, results in
vacant land between the development and the suburban fringe, which is often the edge
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of the service area for water, wastewater, and other local government services. The
second term refers to new development that is located at the edge of the suburban
fringe. The third term refers to separate new residential developments (all of which
are leapfrog) that are dotted throughout rural or agricultural areas and are surrounded
by undeveloped land. Depending upon its density, scattered developments may not
necessarily be "sprawl" but its locational attributes, as explained in Chapter 4, do affect
the capital cost of providing public services.
The Subcommittee is concerned that the continuation of the recent trends of residential
development that have occurred within the Chesapeake Bay watershed, be they sprawl,
leapfrog, or scattered, may have significant environmental and economic impacts within
the watershed. In economic effects, a primary concern is that sprawl development,
along with leapfrog or scattered residential development patterns, may impose high
costs on local governments and their taxpayers (the capital costs of supplying the local
government services, particularly infrastructure, such as roads, water, sewer, storm
sewers, and schools). Sprawl development can also have wildlife negative
environmental consequences such as the elimination of habitat conversion of
agricultural soils, loss of wetlands, and encroachment of development into water supply
areas. The specific question for this study is whether higher public service capital costs
per dwelling unit are incurred in servicing residential development that is sprawl,
leapfrog, or scattered.
This study examines the literature that estimated the capital costs of providing local
public services to alternative residential forms that vary according to their density, lot
size, location, type of dwelling unit, and other characteristics. The primary emphasis is
on capital costs because this type of cost impacts a local government's long-term
financing, although annual operating and maintenance costs also are discussed, where
appropriate. However, in Chapter 4, both total capital and annual capital costs
examined for their proportion of total local annual cost per dwelling unit (annual
capital and annual operating costs).
CH2M HILL reviewed the literature and analyzed it to accomplish the following:
• Describe the methodologies used in the study
• Indicate the applicability of each study's findings to the Chesapeake Bay
watershed
• Classify local government services based on characteristics that determine
their capital costs, such as size of service area, degree of capital, labor
intensity, form, and spatial arrangement
• Identify those factors that affect the capital cost of providing local
government services and describe how their impacts vary by the type and
characteristics of the service being considered
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• Present estimates from the literature about the capital cost per dwelling
unit for different forms of residential development
• Present conclusions drawn from the literature on how capital costs per
dwelling unit for different types of services are affected by different cost
factors
This report concentrates on the capital costs of providing the full bundle of local
government services to new residential development. The emphasis here is on costs
that would be incurred by public jurisdictions. However, through the growing use of
proffer charges and impact fees, an increasing share of the cost of capital facilities
required to serve new residential development is being incurred by the property
owners.
Organization
Chapter 2 identifies the factors that affect the cost of providing local government
services to residential development. This is done in three steps:
• Describe the approaches used in cost of development studies
• Classify local government services according to their characteristics
• Identify the factors that affect the capital cost of providing the different
types of services
Chapter 2 gives the reader an understanding of the full range of factors that affect the
capital costs of providing local government services. These factors include the
characteristics of the service, locational considerations, and regulations, as well as the
characteristics of the residential development, such as development density.
Chapters 3 and 4 synthesize the results of the two preceding chapters. Chapter 3
describes how the sensitivity of the capital cost for the different types of service varies
according to the different cost factors. Summary tables describe the relationship
between cost and a service's capital cost sensitivity. Chapter 4 presents figures from
the literature about how capital cost per dwelling unit varies for different types of
residential development.
Chapter 5 presents a summary of the results of the study, focusing on the material
presented in Chapters 2 and 3.
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Appendix A presents summaries of the studies and the findings that are most
applicable to the objectives of the Subcommittee. This material was used in preparing
Chapter 2. Appendix B presents summaries of additional studies. Appendix C displays
the detailed tables and information that were used as a basis for the summary tables
found in Chapter 3.
CH2M HILL conducted a comprehensive literature search to identify the most recent
studies by performing the following activities:
• Performing a computerized literature search to identify studies and
journal articles
• Contacting national planning organizations, such as the American
Planning Association, Lincoln Land Institute, and the Internationa] City
County Managers Association, to obtain relevant studies
• Contacting state, county, and local planning organizations throughout the
Chesapeake Bay watershed to obtain relevant studies and to identify case
study developments
Assumptions
This study analyzes the capital cost of providing the full bundle of local government
services to new residential development located in suburban areas. The complete list
of services considered is presented in Chapter 2 and this list includes public water and
sewer, plus the other services noted in Chapter 2. The service bundle does not include
local social services that are often incurred by city governments, nor does it consider
the smaller bundle of services provided to residential development in rural areas (which
usually excludes public water and sewer waste collection, and includes the u;se of
unimproved local roads). This study considers capital costs that will be incurred by
public jurisdictions, such as a municipality, township, county, or state government; or a
utility authority.
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Chapter 2
General Approaches Used in Cost of Development Studies
Purpose
This chapter presents the general approaches that were used in the studies described in
Appendices A and B. Before analyzing how different factors affect the capital costs of
providing services (the topic of Chapter 3) it is useful to identify what methods, data, and
assumptions were used in the various studies. (It is important that local policy makers
understand how the literature approached the analysis of the cost of development,
particularly in assumptions and methods employed. This is particularly true where local
planning officials may be evaluating the costs of new residential development.) The items
discussed in this chapter include the methodology used, the types of services, and cost
approaches used. Following this section, a classification of service types is presented,
based on the geographic area they serve.
One important finding from the literature is worth noting now. The density and location of
a residential development were not the only factors that were important in determining the
capital costs of providing local government services. Other factors included the
characteristic of the service (that is, capital intensity), the characteristics of the residents,
and the service standard. A secondary objective of this chapter is to identify those factors
that affect the capital cost of providing services.
Methodology
This subsection describes the major methodologies used in performing cost-of-
development strategies. This subsection covers the analytical basis for the developments
that were evaluated, the economic approaches, and the allocation of costs.
Type of Development Analyzed
There were two analytical approaches that were used in cost-of-development studies:
• Use a hypothetical residential subdivision or community that contains
assumptions about type and mix of dwelling units, gross and net density, lot
size, demographics, distance to work and community facilities, etc. The
assumptions are used to define, in detail, the demand for services and
infrastructure produced by a dwelling unit.
• Analyze existing residential patterns of either the entire residential land use
sector within a local government or an individual residential development,
such as a subdivision (that is, the case study approach). This empirical
approach uses data on the existing costs and revenues in the jurisdiction
being studied and allocates them to the residential sector.
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Hypothetical Residential Pattern
The use of a hypothetical development pattern required that a number of characteristics
and design standards be described and defined to determine the demand for services and
infrastructure produced by a dwelling unit. Some of the characteristics requiring definition
included the following items:
• Development characteristics, including dwelling unit mix, density (both net
and gross), and lot size
• Locational assumptions, such as proximity to water and sewer treatment
plants, journey to work, proximity to schools, etc.
• Dwelling unit characteristics, such as floor area, cost, number of bedrooms,
and real and assessed market value
• Demographic parameters, such as persons and school children per household
• Service standard levels, such as the number of persons served by a park,
number of fire stations, or number of children per classroom
• Design standards, such as road cartway width
• Unit demands for service, such as water consumption per capita, wastewater
generated per capita, and solid waste generated per capita
• Unit infrastructure amounts, such as length of sewer, water, and roads per
dwelling unit or inhabitant
• Costs borne by the home buyer vs those incurred by the government
jurisdiction
• Characteristics of inhabitants, including income levels and age of inhabitants
• Transportation characteristics, such as number of trips per dwelling unit and
trip length by type
Information used to define these variables came from a variety of local, empirical sources
and from published literature.
Once the demand was estimated, cost data were developed and used to estimate capital
and total annual costs. This cost data included unit capital costs for infrastructure and per
capita costs for annual services. The cost data came from either local empirical sources,
such as budgets and capital improvement plans, or from the published literature, such as
unit costs for infrastructure. Most of the studies using hypothetical development patterns
evaluated the costs of new "greenfield" residential developments located at (that is,
contiguous) or beyond (that is, leapfrog) the existing edge of services and for which a
complete set of new services and infrastructure would be required.
The most well-known example of the use of hypothetical development patterns is The Costs
of Sprawl, which analyzed residential development patterns at both the neighborhood (that
is, 1,000 dwelling units of the same type) and community (that is, 10,000 dwelling units
consisting of a mix of dwelling unit types). James Frank's review of cost-of-developrnent
studies, The Costs of Alternative Development Patterns, prepared for the Urban I^and
Institute in 1989, identified five other studies (Wheaton and Schussheim, 1955; Isard and
"Coughlin, 1957; Urban Land Institute, 1958; Stone, 1973; and Downing and Gustely, 1977)
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that used a hypothetical subdivision as a basis for analysis. More recently, the Maryland
Department of State Planning's Environmental and Economic Impacts of Lot Size and Other
Development Standards also used different hypothetical subdivision arrangements.
Advantages. There were some significant advantages in using a hypothetical residential
development pattern:
• The marginal costs directly attributable to a new development could be more
accurately measured. The level of services and amount of infrastructure
required for the new dwelling units could be precisely defined, permitting
costs to be determined more accurately. For example, explicit assumptions
concerning the level of service, length of water and sewer mains (or roads)
required per dwelling unit, or the size of the population being served could
be defined and accurate costs developed from them.
• The use of current cost data and assumptions enabled the actual service
costs that would be incurred to be more accurately estimated.
• The effect of an individual factor (for example, density, lot size, or number
of bedrooms) on demand and on costs could be more easily determined.
This could be done by using a sensitivity analysis in which the values for one
factor, such as lot size or number of persons per household, was changed
while holding all the other factors constant.
• A hypothetical development may have more accurately reflected the service
costs that actually would have been incurred under the existing master plan
and zoning ordinance. (A study of an existing development unavoidably
incorporates the zoning regulations and service levels that prevailed when
the development was built, and may produce costs and revenue estimates
that will not accurately represent those that will be incurred.)
Disadvantages. There were disadvantages in using a hypothetical community:
• The studies required a large amount of data to define all the factors
determining demand and to provide the necessary cost assumptions. These
studies can be costly and time consuming to prepare.
• The hypothetical community may not have accurately reflect current
conditions, if it was too abstract. It may, in fact, have represented an
idealized development pattern as opposed to an actual pattern that would
have occurred under the zoning ordinance.
• The results were highly dependent upon the assumptions used in constructing
the prototype.
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• When comparing different forms of development, occupying the same land
area and containing the same total population, the high density alternative
consisted of a cluster of high density development surrounded by open space
in comparison to the low density alternative that is usually uniformly
distributed. High density development may have not necessarily occurred in
this way, except in a planned community, so the results may be limited in
applicability.
Existing Residential Land Uses
Existing residential developments or the entire residential land use sector of a municipality
are used less frequently in cost of development studies, and more often in fiscal impact
studies (American Farmland Trust, Loudon County, 1992). Existing residential land uses
were assessed in two ways:
• The entire residential sector of the jurisdiction being studied was evaluated.
This sector consisted of all parcels classified by a tax assessor as being in
residential use. This was commonly done when using fiscal impact models to
assess the impacts of alternative future development scenarios (Loudon
County, 1990).
• An individual residential project is analyzed. This project can be either a
new individual subdivision, when assessing leapfrog growth, or a spatially,
well- defined neighborhood, when assessing infill developments.
The cost and revenue estimates were obtained from local data sources, such as municipal
budgets, capital improvement plans, and state level documents that provided financial data
by service category. Heads of local agencies were also contacted to determine capacity
utilization levels, plans for expansion, and average and marginal costs of services. Other
published data sources, such as census information, were also used. This information was
often supplemented by other data, such as unit cost estimates, socioeconomic assumptions,
and generally accepted values that have been published.
Advantages. There were four advantages in using an existing development as the basis for
an analysis:
• Costs specific to the host locality providing the service were used. This
ensured that costs accurately reflecting conditions prevailing in the study area
were used.
• Information was readily obtainable and the studies could be performed more
quickly and cheaply
• The development, if very recent, reflected the type of projects allowed by the
master plan, zoning ordinance, and site plan ordinance
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• Enabled marginal costs to be more accurately considered, particularly when
accompanied by discussions with local service providers to determine actual
marginal costs to be incurred
Disadvantages. There were four disadvantages in using an existing development as the
basis for an analysis:
• It was difficult to determine and allocate the proportion of total local service
and infrastructure costs to the residential sector that accurately reflected its
demands. Costs were usually allocated based on some combination of the
residential sector's proportion of total municipality-wide assessed value,
taxable acreage, and average parcel size.
• It was hard to determine the effect on total service costs attributable to one
specific factor (that is, conduct a sensitivity analysis), such as density, lot size,
floor area, or population
• It was primarily an average cost approach as opposed to a marginal cost
approach (see below for an explanation of the difference)
• It may have been hard to determine the allocation of total annual costs
among annual capital and O&M costs
Cost Approaches
There were two methods used in determining the total costs of service and infrastructure
produced by the demands generated by a residential development:
• The average or per capita cost approach
• The marginal cost approach
Many cost of development studies determine the true marginal cost of providing services
and infrastructure to a new residential development. In some cases, the use of average
costs accurately measures these costs; in other cases, it does not.
Average or Per Capita Cost Approach
Average cost is the total cost for providing services or infrastructure divided by the number
of persons (or dwelling units or school-age children) served. Average cost factors are
usually calculated for an entire municipality or service area. The average cost approach is
the most commonly applied and is heavily used in municipality-wide fiscal impact studies.
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There were several assumptions implied in using per capita multipliers:
• The true cost of serving a new dwelling unit or person (that is, the marginal
cost) was the prevailing average cost. This tended to be true where existing
systems were utilized close to their full capacity, having neither significant
excess capacity nor operating at or above current capacity. In these
situations, the cost of extending service to one more unit of demand was at
or close to the average cost.
• The current level of utilization for a service system was used in estimating
the average cost. Thus, a system with a high level of capacity utilization
tended to have lower per capita costs, and vice versa.
• The current cost situation would prevail in the future. This may not be true
if service standards are different in the future (that is, capital costs/seirvice
unit would change), or if technological innovations or new regulations change
the cost of providing a service. Even if the current average cost accurately
measured marginal cost, it was not necessarily true that the average cost
would prevail in the future.
• The current level of service would prevail into the future
• It assumed that the increment of demand was a small proportion of the total
system capacity. If this was not true, marginal costs could be high as a
capacity expansion could be required.
The average cost approach was most applicable to infill projects or those located at the
edge of a current service boundary. This approach could be accurately applied to fully
developed municipalities where the service and infrastructure systems have been installed
and have a high capacity utilization factor. The average cost approach was also applicable
where the incremental increase in demand was a small percent of the total service system
capacity, assuming, of course, that the system has a high, but not a 100 percent, capacity
utilization factor. In these situations, the increase in demand was not likely to be large
enough to require an increase in system capacity, which would impose a high marginal
capital cost because of the excess capacity.
Another issue of concern in applying the current average cost to future developments was
whether the applicable average cost should be that which prevails now at the current
capacity utilization rate, or that which will result in the future once the new development
begins receiving service. In general, as the size of the population served by a system
increases when it has sufficient excess capacity to accept them without needing a physical
expansion (that is, no new capital expenditures are required), the average cost declines.
This was particularly true for capital-intensive services, like water and sewer, and was less
so for labor-intensive services, like police, fire, and education. The marginal cost was less
than the average cost because of the excess capacity.
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Advantages. There were number of advantages to using the average cost approach:
• It is the most widely applied methodology
• It is applied easily and quickly
• Existing information could be used, such as revenue and expense data from
local budgets
• It was most accurate where utilization was at or near capacity and where the
incremental increase in demand was small
Small increments of demand (that is, one or two new students in a classroom) may be
absorbed with little or no marginal costs, so analysts had to examine the current capacity
utilization. Small increments of demand, relative to current capacity utilization of the
entire system, were less likely to require large capacity expansions.
Disadvantages. There were some significant disadvantages to using the average cost
approach:
• It is an average cost method. The true marginal cost of providing services or
infrastructure to a residential development may not be accurately measured.
• It measured costs at one point in time. As technology, service standards, and
preferences of residents change, the average cost can change over time.
• Its applicability was limited to those situations where the marginal cost
equals the average cost.
• It tended to make demographic factors (for example, persons and school-age
children per household) the most important factors in the cost of providing
services, particularly labor-intensive services, to residential developments.
For forecasting future impacts, it placed a premium on having accurate
forecasts.
• It assumed that current capacity utilization levels and service standards
prevail in the future
Marginal Cost Approach
The marginal cost is defined as the true cost incurred by a local government in supplying
service to a new increment of demand, such as a new subdivision. Marginal costs consist
of the actual expenditures that the local government would otherwise not have made to
supply services that are directly attributable to the demands of a new development. The
marginal cost approach was most applicable where current systems have either significant
excess capacity, or are operating at or over capacity, and was most applicable for leapfrog
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developments located beyond current service boundaries. In both cases, the marginal cost
of servicing new dwelling units would not be accurately reflected by the average cost.
Marginal costs can vary significantly from average costs depending on capacity utilization
and other factors. The average cost of educating a student is the total annual educational
expenses divided by the number of students, usually a figure of around $4,000 to $8,000 for
most suburban school districts. The marginal cost of accommodating a student from a new
home would be very low, if the nearest school had sufficient capacity. In situations where
there is room in individual classrooms for new students, the marginal cost for adding a
single student, or even a small number of students to classrooms would be very low. No
new teachers would have to be hired and the building would not need to be expanded.
The marginal cost would consist of the cost of providing the student with books, materials,
other services, and possibly transportation. The marginal cost would certainly be much less
than the average cost. The reverse would be true where the development of a large
subdivision would produce a large enough increase in enrollment such that a new school
would have to be constructed. In this case, the marginal costs would exceed the current
average costs.
Marginal costs were determined by examining the current and future capacity utilization
levels in the services that would be demanded by a new residential development. The key
issue was what additional resources will be required to accommodate the new units of
demand. Managers of local service systems should be interviewed to determine capiacity
utilization levels before and after the new development was being served, and to obtain
their judgement about the additional resources that they will have to commit to
accommodate the new demands. This is the case study approach as defined by Burchell
and Listokin in The Fiscal Impact Handbook.
The marginal cost approach was the most theoretically correct approach to apply in
estimating the cost of development studies, and offered the following advantages and
disadvantages.
Advantages. The advantages to the marginal cost approach included the following:
• It measured the actual incremental costs to service a new residential
development. Thus, it was the most methodologically correct approach..
• It considered existing and projected capacity utilization in developing cost
estimates
• It can consider situations where there was either excess capacity, or a
shortage of capacity, and where development would result in a large
proportional increase over current levels
Disadvantages. There were some disadvantages to using the marginal cost approach:
• Defining the true marginal cost was difficult, and required a large amount of
information and time
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• It has been applied only in a few studies
• It required an in-depth understanding of the functioning of current service
systems to determine the incremental costs that would actually be incurred
Full Capital Costs vs Precipitated Capital Costs
One of the early cost-of-development studies (Wheaton and Schussheim, 1955; as
summarized in Frank, 1989) made a valuable distinction between full capital costs and
precipitated capital costs that relies on the concept of average vs marginal cost. Most
developments will not require the local municipality or authority to install capital
improvements for all of the services they provide. The marginal capital costs will be very
low or possibly zero for some service categories (that is, no additional classroom space is
needed to accommodate a new student), and high for others. This study offered the
following definitions:
• Precipitated capital costs are for those improvements, either new facilities,
upgrades, or expansions in capacity, that must be made to meet the service
demands generated by a new development
• Full capital costs are those incurred for providing the full range of services
provided to a new development, including the per capita portion of existing
services
• Where there is existing capacity in infrastructure or service systems, there
may be no precipitated capital costs, although some annual operating and
maintenance costs may be incurred. In this instance, the marginal annual
costs (including capital and O&M) are very low.
The concept of precipitated capital costs is important because when new residential
development imposes full capital costs for a full range of services, the total costs begin to
be unacceptable to existing taxpayers and the new residents being served. One objective in
managing new residential developments could be to minimize precipitated capital costs.
Statistical Approach
A small number of studies also applied statistical methods in estimating the costs of
providing services as a function of the type of development. This more empirical approach
was best suited for analyzing general, community-wide development questions.
Statistical studies first developed a historical time series containing cost, revenue,
demographic, and development data from a municipality. Multiple regression analysis was
used to identify significant relationships between a dependent variable and a number of
independent variables. The result was a series of equations that explained past
relationships between service costs (the dependent variable) and a set of independent
variables.
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The dependent variables usually consisted of cost and revenues, often by major service
category, or by household or per capita, and tax rates. The independent variables were
usually development and demographic indicators (that is, proxy indicators of demand for
services) such as land use, assessed valuation, development measures (that is, residential
building permits, floor area of non-residential buildings), density, and demographic
assumptions.
The equations then projected service costs and revenues based on changes in the
dependent variables. The statistical approach was explained in Borgos (1979) and Johnson
(1990).
Advantages. A statistical approach offered the following advantages:
• It may be more accurate in predicting future costs and revenues than other
methods because it used a historical time series in developing equations.
This assumes, of course, that the conditions that prevailed during the time
series period prevailed into the future.
• It focused on the broad relationships between local government costs and
revenues, and between development and land use patterns as opposed to
attempting to model all the variables that determine the cost of providing
services to individual developments. The statistical approach was highly
suitable for answering broader, community-wide land use policy questions.
• It could measure the incremental or marginal costs and revenues associated
with changes in land use at a community-wide level because it was not based
on average costs .
• It could measure all of the relevant factors that affected the cost of a service
by including the correct independent variables in the regression equation
• It analyzed an entire municipality, county, etc., as opposed to an individual
subdivision
Disadvantages. There were several disadvantages to using a statistical approach:
• It was not useful for assessing the impacts of an individual development
project, primarily because data will not be available in a sufficient time series
form or at the proper level of detail
• A statistical relationship or correlation did not necessarily imply a cause-and-
effect relationship, so it may not have precisely captured or identified a
cause-and-effect relationship between changes in independent variables; and
changes in service cost
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Allocating Costs
One of the crucial methodological steps in performing cost-of-development studies,
particularly when analyzing existing development and using municipality-wide data, was
allocating the total costs for a service category to residential and non-residential land uses.
Other issues were allocating costs over time for new capital facilities and allocating the
burden for repaying them through user fees. This was particularly important when new
capital facilities, such as a sewer trunk line, may have had a low capacity utilization during
the early years of its operating life, and thus had high marginal costs per user served.
Allocating by Land Use Type
It was difficult to allocate costs properly between residential and non-residential sectors
based on their demands for services. These sectors differed in terms of the type and
amount of services they required based on their direct demands. For example, residential
uses had obvious high direct demands for schools, recreation facilities, libraries, and
emergency medical, while non-residential uses produced little direct demand for these
services. Some studies have suggested that, over time, non-residential development will
produce demands for these services as persons desire to live near their places of
employment. In contrast, other services, such as water, wastewater, police, fire, and solid
waste were required by both residential and non-residential land uses. Non-residential uses
could place high demands for transportation services and infrastructure.
The most common method for allocating costs between residential and non-residential
sectors encountered in fiscal impact studies is on the basis of the proportion of the total
real property tax base that was classified as residential. Under this approach, total
municipal costs and revenues for service categories were allocated to residential and non-
residential land uses based on one or a combination of the following factors:
• The proportion of total residential assessed valuation to the jurisdiction's
total assessed valuation
• The proportion of the total number of taxable residential parcels to a
jurisdiction's total number of taxable parcels that is classified as residential.
• The average size of all residential parcels compared to the average size of all
non-residential taxable parcels.
In some cases, equalized valuations as opposed to assessed valuations were used to better
approximate the total market value of taxable parcels. Burchell and Listokin, in their
Fiscal Impact Assessment Guide, defined this as the proportional valuation method. A
number of studies have used this approach including The Cost of Community Services in
Three Pioneer Valley Towns (American Farmland Trust); and Development in Wright County
(Gray).
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Burchell and Listokin incorporated the varying demands for different categories of seivice
between the residential and non-residential sectors. This was done by allocating all or
nearly all of the annual costs for certain service categories to residential land uses, such as
education and recreation, and by allocating the costs for other service categories based on
proportional valuation. The allocation of costs was also based on interviews with seivice
providers.
There was no obvious cause-and-effect relationship that would indicate that the proportion
of total service costs within a category demanded by residential land uses was precisely
equal to the residential proportion of total local assessed valuation or the ratio of average
lot sizes. However, to determine accurately the residential demand proportion for each
service category was very difficult and may in fact be indeterminant. One alternative was
a case study method where the local heads of service departments were interviewed to
obtain their judgement about the proper demand proportion. Another was the
comparable city method where the distribution of costs from similar cities was used to
estimate the distribution in the city being analyzed.
As noted by one of the reviewers (Avin, 1993), this approach could introduce distortions in
the allocation of costs and revenues that did not align with the service costs they demanded
or the revenues they produced. Capital-intensive industrial and commercial land uses with
high taxable values and few employees may have been allocated a higher share of costs
than they actually required. Labor-intensive uses, such as retail and office commercial,
may have demanded more in services than the proportion of the tax base they represented.
The proportional allocation method could be complemented by asking actual service
providers to estimate the proportion of their services and costs that went to different land
use types. Data, such as the number of police, fire, and emergency medical calls made to
residential vs non-residential uses; solid waste collection statistics; or sewer and water
metering data for residential and non-residential customers, may be available to help in
allocating cost. Another approach was to examine the proportion of residents vs
employees working within a jurisdiction.
Allocating Over Time
Another difficult to resolve methodological issue encountered in many of the studies was
properly allocating the marginal costs for providing new services and infrastructure over
time. This issue was also a concern in estimating and equitably applying impact fees.
When capital facilities were expanded to meet new increments of demand, the amount of
capacity provided was often much larger than the initial demand increment that
precipitated the need to increase capacity. There were sound, long-term economic reasons
for doing this. There were usually economies of scale in capital costs achieved by
constructing larger capacity facilities, such as water and wastewater treatment plants, water
and sewer trunk lines and collectors, and highways. In addition, long-term total unit costs
may be minimized by constructing one large, new capital facility with a large increment in
capacity instead of constructing several smaller facilities over time.
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The potential, short-term adverse effect of constructing a new capital facility with a large
capacity was that, initially, it may have served only a few users and thus resulted in very
high marginal capital and total costs per capita for the new service population. The classic
example is a sewer or water line extended to a leapfrog development with the capacity to
accommodate significant, future infill development along the line. When the line is
underutilized early in its operating life, early users may bear a high cost, if only those
benefitting from the improvement are paying for it. This would be a subsidy of the future
users. The excess capacity also creates an incentive for local government officials to
permit growth along the line to finance it, and to lessen the cost burden on current
residents. Over time, as utilization increases, the future and current users will incur lower
costs as capacity utilization increases.
Under this scenario, the key question was what are the true marginal costs that should be
allocated to the first and future users of the improvement? Clearly, assigning the current
average costs based on the utilization of existing systems would understate the true
marginal costs of serving the initial users of the new facility. On the other hand, should the
initial beneficiaries of the capital facility incur very high marginal costs, particularly when
the long-term costs will decline as capacity utilization increases? These issues have obvious
corollaries in the application of the rational nexus test in determining how and to whom
impact fees should be allocated.
Classification of Services
Services provided by local governments to residential land uses could be grouped into four
classes based on the size of the area they served and to a lesser extent, on their
characteristics. This classification was based on those found in the literature, specifically
Frank's monograph (Frank) and several of the previous studies he reviewed. A
classification of services is important because different factors operate within each class to
determine the costs of providing the service. The four classes are comprised of the
following:
• On-Lot or onsite. These are the capital facilities on the lot that connect the
dwelling unit to nearby, offsite public systems and ROWs
• Intraneighborhood. These are services provided to individual dwelling units
within distinct residential developments, such as subdivisions or
neighborhoods
• Interneighborhood. These are services provided for a larger service territory
that covers a subarea of an entire municipality that contains many separate
neighborhoods or residential developments. The services are provided to a
group of neighborhoods and consist of the capital facilities connecting the
services and neighborhoods
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• Regional. These services are provided to an entire municipality or a larger
region consisting of a number of municipalities
This study addressed only the three types of off-site services: intraneighborhood,
interneighborhood, and regional. This study did not address on-site services because l:hese
are almost always incurred by the property owner. These costs have also been addressed
in a number of other studies, such as Cost Effective Site Planning (National Association of
Home Builders). Increasingly, through the use of proffer charges and impact fees
(primarily in Maryland and Virginia as opposed to Pennsylvania), the capital costs for the
intraneighborhood and some interneighborhood services are being incurred by the property
owner. The local government often will assume maintenance responsibility for these
improvements, so even if it did not incur the initial capital cost, it will incur maintenance
costs.
The characteristics of the services in each class differed significantly. For example,
intraneighborhood services were capital intensive and consisted primarily of linear capital
facilities (that is, sewer, water, and stormwater pipes; and roads) laid out in a fine-grained
network required to provide services to individual dwellings. In contrast,
interneighborhood services consisted of a mix of linear and point capital facilities (that is,
schools, police and fire stations, parks, etc). Some of these were highly capital intensive,
such as sewer and water collector lines, while others were more labor intensive.
The classification of services was also important in terms of who pays directly for the
services. The cost of providing onsite services, such as stormwater improvements, water
and sewer connections between the house and the street, driveways, and curbs, are
incurred directly by the homeowners and were included in the cost of home. To a lesser
extent, the costs of intraneighborhood services may also be borne by home buyers. In
contrast, the cost for the other classes of services were incurred by the local government or
utility authority, and were then recovered from consumers through taxes or user fees.
Many studies have evaluated the cost of onsite services as a function of residential form
(Cost Effective Site Planning and Affordable Residential Land Development).
One observation about the cost of onsite services is worth making. There was concern in
some of the literature that minimizing environmental impacts at the individual dwelling unit
level through innovative site planning and use of large lots, coupled with stringent local
environmental regulations, increased the price of housing. This had a short-term equity
impact of making housing less affordable and of limiting the purchase of such housing to
more affluent households, particularly where large lot sizes and on-lot septic systems are
used. The concern was that achieving environmental benefits in developing new housing
may have offsetting social and economic effects that need to be considered.
Intraneighborhood Services
Intraneighborhood services provided services to an individual dwelling unit or residential
^structure. They consisted of infrastructure that extended up to the lot line and distributed
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service within discrete neighborhoods and subdivisions. The characteristics of
intraneighborhood services are comprised of the following:
• Primarily capital facilities, usually linear in form
• Capital intensive (have a high ratio of annual capital to total annual costs)
• Cost of the service was closely linked to demand coming from within the
service area
• Linear facilities, usually located in the public ROW fronting the lot
• The network pattern spatial pattern
• Designed for a high level of capacity utilization (little, if any, future
development will occur within a neighborhood)
The types of intraneighborhood services included the following:
• Sewer collector lines
• Water distribution lines
• Stormwater collector lines
• Collector streets, including subcollectors, loops, and cul-de-sacs
• Streetlighting
• Stormwater and drainage improvements, excluding the collector lines
Interneighborhood Services
Interneighborhood services were provided to a larger area covering a group of distinct
neighborhoods or a portion of a municipality. They consisted of the facilities and
personnel needed to distribute services to a group of neighborhoods, or consisted of the
facilities needed to link distinct neighborhoods. The services were delivered to the edge of
a neighborhood or subdivision, instead of to individual dwelling units.
The characteristics of interneighborhood services included the following:
• Service area covered a portion of a municipality containing multiple
neighborhoods
• Consisted of a mix of:
- Linear, capital intensive services
- Labor-intensive services provided from centrally located facilities
• Usually designed with initial excess capacity to accommodate future growth
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• Costs could be allocated primarily to the residential demands originating in
the neighborhoods being served, although the nonresidential sector in these
areas also was served
• Linear facilities were arrayed in a coarse network
There were two types of interneighborhood services:
• Capital-intensive:
- Sanitary sewer trunk or collector lines, and interceptors
- Stormwater trunk or collector lines
- Water trunk or distribution lines, and supply mains
- Parks and recreation
- Arterial streets
• Labor-intensive:
- Police
- Fire
- Solid waste collection
- Emergency medical
- Education, particularly elementary and possibly junior high/middle schools
Regional Services
Regional services were provided to an area usually covering at least a single municipality,
but may often have served a county or a metropolitan region. The characteristics of
regional services are listed below:
• Centrally located facilities
• Service area was an entire municipality, several municipalities, county, or
region
• Costs of these facilities were allocated over the entire community, which
included both the residential and nonresidential sectors
• There were often economies of scale by constructing larger capacity
treatment or service centers. These economies could offset the costs for
constructing the distribution infrastructure that covered the service territory.
Usually designed with substantial, initial excess capacity to accommodate
future growth
Variable capital intensity. High schools and general government are labor-
intensive, while highways and water supply facilities are capital-intensive.
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Annual capital costs for wastewater treatment plants are a majority of total annual costs.
The types of regional services are listed below:
High schools
Wastewater treatment plants
Water treatment plants
Water supply reservoirs
Solid waste disposal facilities
Highways
General government administrative buildings
Factors That Influence the Cost of Providing Services
There are many factors that determined the cost of providing services to residential
developments. They varied in importance for the three types of off-lot services being
considered in this study. Some of the factors were clearly related to residential
development form, while others were a function of locational characteristics and design
criteria. The purpose of this section is to identify these factors. (Chapter 3 describes how
the factors determine the cost of providing the different services.)
Attributes of the Service
The physical characteristics of the system required to provide a service was a major
determinant of the cost of providing it, and of the proportion of total annual costs
allocated to annual capital and O&M costs. In some cases, the characteristic of service
was independent of residential development form, while in other cases, it was directly
related to it.
Capital Intensity
Capital intensity is defined as the ratio of annual capital to total annual costs. The annual
total costs of a capital-intensive service, such as a water or sewer collection system,
consisted primarily of levelized capital cost, with relatively low annual O&M costs. In
contrast, the annual total costs of labor-intensive services such as police, fire, and education
consisted primarily of labor, vehicle operation, supplies and equipment, as opposed to
annual capital costs.
A recent study in Florida (James Duncan et al., 1989) estimated the capital intensity of
major service categories. They are presented in the Table 2-1.
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Table 2-1
Capital Intensity of Service Types
Service Category
Roads
Water
Wastewater
Parks
Education
Solid Waste
Fire/Rescue
Police
ALL SERVICES
Percentage of Annual Costs
That are Annual Capital Cos t
92.1
42.9
33.6
21.1
16.3
10.2
4.4
2.2
23.5
Source: The Search For Efficient Urban Growth Patterns. James Duncan and
Associates, et al., 1989.
These costs were compiled for eight existing detailed service areas that encompassed a
variety of different development forms ranging from low-density scattered or leapfrog
developments to urban infill projects.
Because the costs are for developments in Florida, the relative rankings in terms of capital
intensity will be somewhat different in the Chesapeake Bay region. Some differences are
that road O&M costs would be higher in The Chesapeake Bay region because of winter
plowing and repairing freeze and thaw cracks produced by the use of road salt, and
because parks and recreation centers would be open only part of the year. The capital
intensity of road would be lower than shown above, but it would still be high. Finally, the
proportion of annual capital costs for water and sewer treatments, will be higher in the
Chesapeake Bay region due to climate effects and higher construction costs.
The capital intensity and spatial form of a service's infrastructure were significant
determinants of how sensitive capital costs would be to residential development patterns.
Form
Another important characteristic was the spatial form of the infrastructure and capital
facilities required to provide or convey a service. There were two basic forms:
, • Linear, where capital facilities, such as water and sewer pipe, comprised a
network within a service area
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• Point form, consisting of centrally located facilities at which either service
was provided (that is, a school, park, general government, police, or fire or
recreation center), or at which material was either conveyed to or received
from a service area (that is, wastewater treatment plant, water treatment
plant, or solid waste disposal plant)
Some services with a linear form were very capital intensive, such as water and sewer pipe.
In contrast, the capital intensity of point forms can vary widely. Water and sewer
treatment facilities were capital intensive while others, such as a school or recreation
centers, were more labor intensive.
Spatial Arrangement
The spatial arrangement of a system's capital facilities, particularly those with a linear
form, was also a major determinant of capital cost. Interneighborhood facilities, such as
water and sewer collector pipes, comprised a detailed network that was contained in
virtually all subcollector and collector streets. Intraneighborhood services provided service
to individual dwelling units. Other services comprised a coarser network because they
were farther up the service hierarchy and were fed by collector facilities. These facilities
included arterial roads, and water distribution and wastewater collection lines. Regional
capital facilities, such as sewer interceptors, did not comprise a network but instead
comprised a corridor or "highway" connecting a centrally located treatment or service
facility to the distribution facilities.
Point facilities also had some differences in how their services were provided spatially.
Solid waste collection was provided over the most detailed network as collections were
made at individual dwelling units. Schools must cover a similar network, although some
proportion of students walked to school instead of taking a bus. Schools were also
arranged in a hierarchy with scattered elementary schools and more centralized high
schools. Police and fire services needed to be able to respond to any location within their
service areas, even though emergency vehicles do not have to make stops at all locations
on a regular basis.
Development Density
Development density measures the number of dwelling units per unit of area. Because the
size of a service area and the amount of demand for most services correlated closely with
the number and spacing of dwelling units, it was an important characteristic of a residential
development form.
There are two ways to measure development density: gross and net. Each type had
differing impacts on service costs, depending on the type of service being considered. It is
important to understand the difference between these two measures within the service
areas for the three types of services, particularly for intraneighborhood services.
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Gross Density
Gross density is defined as the number of dwelling units divided by the total area of
residential land use. The total residential area included land area in all the individual lots
plus any common open space; interior street and road ROWs for collectors, sub collectors,
loops, and cul-de-sacs; undevelopable areas; and areas for public facilities such schools,
stormwater improvements, etc. For example, a subdivision covering 100 acres and
containing 75 homes would have a gross density of 0.75 dwelling unit per acre (du/acire).
The significance of gross density was that it indicated the average distribution or spacing of
dwelling units within an area of residential land use, although not necessarily the spacing
between individual dwelling units. While gross density depended on minimum lot size, it
also depended on other factors, such as the width of road ROWs, proportion of
undevelopable land, and land dedicated to other public uses. Gross density is an accurate
indicator of the length of the network required for interneighborhood services.
Net Density
Net density is defined as the number of dwelling units divided by the developed residential
area, excluding area for streets, undevelopable land, and other non-residential uses. Net
density is determined primarily by the minimum lot size. In a residential cluster, net
density is the number of dwelling units within the entire subdivided lot divided only by the
parcels occupied by the dwelling units (that is, the developed residential area, excluding
common open space). In the example above, if residential clustering were used and the 75
homes were clustered within 25 acres, the net density would be 3 dus/acre, while the gross
density for the subdivision would remain at 0.75 du/acre.
Net density more accurately represented the actual concentration of demand (in terms of
dwellings units, household, or population per area) by considering only the amount of
residential area. Net density accurately indicated the spacing between individual dwellings
units and the amount of intraneighborhood infrastructure that may be required (that is,
sewer, water or road frontage along each lot or per dwelling units served). Net density
would also indicate the concentration of service demand coming from within a residentiary
developed area (that is, total gallons of water required or wastewater generated per area
of development), which, in turn, could be used to size the infrastructure (that is, the
diameter of the pipe).
Character of the Development
Lot Size and Shape
The size and shape of the lots within a development determined both the gross and net
development densities, and therefore determined the amount of linear facilities, such as
water and sewer collector pipe, and streets, that would be required per dwelling unit.
Even within the single-family detached residential form, lot size and configuration, and site
planning principles could be used to reduce service costs. These would increase net
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densities while holding gross density constant. Net density is an accurate surrogate for lot
size and shape and examples include the use of clustering, reducing lot frontages through
the use of "Z" lots, zero lot lines, reducing setbacks, and minimizing right-of-way widths.
Type of Dwelling Unit
The type of the dwelling unit was a major factor in determining the demand for labor-
intensive services. The type of dwelling unit determined the number and the
characteristics of the people residing in them. Single-family dwelling units had more
bedrooms per dwelling unit, and more persons and school age-children per dwelling unit
than other forms of residential housing that had the same floor area. Single-family
dwelling units had higher populations and they generated greater demands for labor-
intensive services, such as education, police, fire, solid waste, emergency medical, and
general government. The demand for these services depended more on the number of
persons being served and less on the location of the services.
There were also activities that were unique to single-family dwelling units that created
greater service demands. These included greater generation of yard wastes as a part of
municipal solid waste and greater per capita consumption of water for watering lawns and
gardens. Trip generation rate data (ITEE, 1990) showed that single-family detached
homes generated more automobile trips per dwellings unit than other residential types,
resulting in a higher need for street and road capacity.
One reviewer (Valenza, 1993) noted that the incidence of police and fire calls was highly
correlated with the type of dwelling unit, among other factors. The incidence of both types
of calls was higher for multifamily housing units that it was for single family detached units.
The capital cost savings in infrastructure that could be gained by constructing multifamily
dwelling units may be offset, to some extent, by higher annual operating costs for police
and fire services, and, in more urban areas, by higher social services costs. The income of
the residents could also have been a factor with a higher incidence of calls found in
multifamily housing whose residents have lower incomes.
The type of dwelling unit also had a direct effect on the cost of providing capital-intensive
intraneighborhood services. Single-family detached dwelling units were more likely to be
located on larger lots, had lower gross and net development densities, and therefore
require longer lengths of water and sewer collector pipe, streets, and streetlighting per
dwelling unit served than were attached residential forms. Attached dwelling units offered
significant efficiencies in providing both capital-intensive and labor-intensive services
because they required shorter lengths of linear capital facilities per dwelling unit served,
while they also offered efficiencies in providing labor-intensive services.
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Population Characteristics
Two aspects of population, the total size and density, were major determinants of the
aggregate demand for and the cost of providing local government services.
Total Population Served
The demand for local government services and, for the most part, the cost of providing
them, was determined largely by the number of persons to be served. The cost of
providing labor-intensive services, such as police, fire, emergency medical, and education,
was particularly sensitive to the size of the population or to the number of school-age
children to be served. The demand other services, such as water and wastewater, also
depended on total population because the number of persons determined the daily flows of
water consumed, wastewater to be treated, or solid waste to be collected. The number of
persons correlated closely with the type of the dwelling unit and with the number of
bedrooms.
Population Density
Population density measures the number of persons present per unit of area, and
therefore, the spatial concentration of demand for services. There were cost efficiencies in
providing most types of services to a more concentrated population occupying a smaller
developed area. Even though a larger diameter sewer or water pipe was required to
accommodate a larger total flow coming from a densely populated development, the
capital costs per dwelling unit or person served would be lower in suburban and new
development situations. These costs could increase in urban situations, where the cost of
construction and acquiring rights-of-ways becomes very high, but the urban setting was
outside of the scope of this report.
At the intraneighborhood level, population density correlated closely with net development
density and with lot size. Net development density focused on the developed residential
area, or the area where the residents are located. At the larger interneighborhood or
regional service areas, population density correlated more closely with gross development
density. Gross density included within its area all types of areas, including both the
developed residential areas plus the area occupied by streets, undeveloped areas, open
space, etc. Population density for a municipality was calculated as total land area divided
by total population.
Number of School-Age Children
The number of school-age children determined the demand for educational services at all
levels. A lesser, but highly variable factor, was the number of school-age children that
actually attended public schools. The proportion not attending public schools could be
quite large (that is, approaching 30 or 40 percent) in areas where there are a large number
of parochial schools and other nonreligious private schools, and where residents have high
incomes. The service standard would also be a major determinant of education costs,
2-22
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reflected in average classroom size demanded by parents, teacher salaries (a function of
the value of the tax base and residents' incomes), income and educational attainment
characteristics of parents, and state regulations.
Variations in Population and Number of School-Age Children by Type of Dwelling
Unit
An interesting question was the extent to which the number of persons and the number of
school-age children varied by the type of dwelling unit, number of bedrooms, or both (that
is, was there a difference between a single-family dwelling unit and a townhouse with 3
bedrooms each in terms of either the number of persons or number of school-age children
per dwelling unit?). Tables 2-2 and 2-3 present data from the 1980 Census of Population
as presented in Burchell and Listokin's update to the Fiscal Impact Assessment Guide for
the South Atlantic states, which included Maryland, Delaware, and Virginia. (The data
from the 1990 census presenting this information from the STF3 tapes will not be available
until the end of 1992.) The figures in each cell were averages for that particular cross
tabulation.
As expected, single-family dwelling units had, on average, higher population and more
school-age children per dwelling unit than did that of other housing types as shown in
Table 2-2. Single-family dwelling units were the only dwelling unit type with a significant
number of 4- and 5-bedroom units. The type of dwelling unit was significant when
considering 2- and 3-bedroom units:
• For 2-bedroom dwelling units, there was some variation in population per
dwelling unit by type of dwelling unit. The variation from the low to the
high value was only 20 percent.
• There was more variation among 3-bedroom dwelling units. Three-bedroom
single-family, garden apartments, and duplexes/triplexes had similar figures.
Mobile homes had the highest population per dwelling unit. Single-family
dwelling units had the lowest population per dwelling unit among these four
types. All four types had a significantly higher population/dwelling unit than
did 3-bedroom townhouses. The variation from the low to the high value is
31 percent.
• There was more variation in the number of school-age children by type of
dwelling unit when considering both 2- and 3-bedroom units, as shown in
Table 2-3. The variation from the low to the high value (excluding high rise
apartments) within 2-bedroom units was 32 percent, and 98 percent for 3-
bedroom units. Excluding high-rise apartments, townhouses had the lowest
figure and mobile homes had the highest figure.
Two other key variables that could affect local service expenditures were associated with
Different types of dwelling units. These key valuables were income and age, and they
sometimes reinforce or even offset the demographic figures presented above. Wealthier
2-23
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Table 2-2
Persons/du by Type of du and Number of Bedrooms
Type of du
Single Family
Garden Apt.
Townhouse
High Rise Apt.
Mobile Home
Duplex/Triplex
Quadraplex
Number of Bedrooms
1
NA
1.47
1.75
1.33
2.02
1.71
2
2.3
2.09
2.12
1.91
2.3
2.24
3
3.12
3.23
2.69
NA
3.53
3.23
4
3.90
NA
NA
NA
NA
NA
5
4.67
NA
NA
NA
NA
NA
All
3.18
2.09
2.49
1.58
2.76
2.43
Note: The data in this table are for the Middle Atlantic states.
Source: Fiscal Impact Assessment-Practioners Guide, Burchell and Listokin, 1985.
Table 2-3
School-Age Children/du by Type of du and Number of Bedrooms
Type of du
Single Family
Garden Apt.
Townhouse
High Rise Apt.
Mobile Home
Duplex/Triplex
Quadraplex
Number of Bedrooms
1
NA
0.05
0.18
0.02
0.19
0.10
2
0.23
0.19
0.19
0.07
0.21
0.25
3
0.72
0.86
0.50
NA
0.99
0.81
4
1.32
NA
NA
NA
NA
5
1.89
NA
NA
NA
NA
NA
AH
0.78
0.26
0.41
0.05
0.51
0.40
Note: The data in this table are for the South Atlantic states, which include Maryland and
Virginia.
Source: Fiscal Impact Assessment-Practioners Guide, Burchell and Listokin, 1985.
2-24
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residents were more likely to demand higher service levels or, in economic terms, the
income elasticity of demand was positive. Weathier residents were, on average, more likely
to inhabit single family detached units as opposed to garden apartments and trailers. Local
planners should take into consideration the income levels and wealth, along with the type
of dwelling unit, when considering potential demands for services.
Older persons with few or no children were more likely to be found in certain types of
housing units, such as high rise apartments and townhouses, resulting in minimal demands
for local education services. A report done by CH2M HILL found that residential golf
course developments, consisting of townhouses and actively marketed toward empty
nesters, had a fewer number of children per dwelling unit than did townhouses in general.
The key conclusion was that both the type of dwelling unit and the number of bedrooms
interacted to determine population and school-age children/dwelling unit. Both were
particularly important when considering the number of school-age children produced by a
development with a mix of 2- and 3-bedroom attached and detached units. The type of
dwelling unit became more important when considering population; and became even
more important when considering school-age children and potential impacts on the
educational expenditures. Impact studies and fiscal impact assessment models that
assumed the same population or number of school-age children per dwelling unit across
different bedroom sizes and dwelling unit types may have miscalculated the demand for
labor-intensive services.
Locational Attributes
The spatial characteristics of residential development, in terms of its proximity to
employment, existing urban service boundaries, and community facilities, were important in
determining the cost of providing interneighborhood and regional services, and to a lesser
extent, intraneighborhood services.
Proximity to Existing Service Areas
A number of the studies reviewed showed clearly that there were significant cost savings
obtained from locating new residential development either at the edge of existing service
areas or at infill projects on vacant land located within currently served areas. This point
is made in Frank's study, The Costs of Alternative Development Patterns (specifically his
Table 8), and also in the Impact Assessment of the New Jersey Interim State Development
and Redevelopment Plan. The length and cost of interneighborhood capital facilities was
minimized and, because existing systems with excess capacity can be used, this resulted in
low marginal (and low precipitated) costs. The proximity of a new residential development
to existing service areas was a major cost factor for interneighborhood and regional
services.
2-25
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The advantages of proximity to service areas or service centers also applied to labor
intensive-service such as police, fire, education, and solid waste. The capital cost of
vehicles to provide police, fire, and solid waste services, or school busing would depend
upon the total length of the routes to be traveled, service standards to be maintained such
as police and fire response times, and policies, such as walking distance. Annual operating
costs would also be sensitive to the location of the population to be served. Vehicle
operating costs, labor costs, and supplies and equipment were also dependent upon the
total distance to be traveled, the annual minutes of operating time, and on the resulting
efficiency (solid waste collections or student pick-ups per mile traveled).
A potentially adverse cost effect associated with the proximity to service centers was that
the acquisition costs for rights-of-way were higher in more densely settled areas,
particularly in urban areas. The higher construction costs of new roads in urban areas is
partially due to this fact. Construction costs were also higher in urban areas with linear
infrastructure, apart from the costs of acquiring the ROW. The Impact Assessment of the
New Jersey Interim State Development and Redevelopment Plan took these differences into
account when estimating the cost of constructing new state roads and local streets in urban
areas.
Proximity to Employment
The proximity to employment and to mass transit affected the number and length of
vehicle trips that persons would take to and from work. These trip characteristics
combined determined the demand for streets and roads, particularly for arterials and
expressways that will be used to convey traffic from residential areas to employment
centers.
Proximity to Community Facilities
The number and length of vehicle trips was also determined by the proximity to community
facilities such as schools, shopping, churches, and government centers. If people could
walk to some of these facilities, the demand for local and collector streets, and arterials
would be lower.
Proximity to employment and community facilities could be enhanced by prodding
residents with opportunities to use mass transit. This would reduce the demand and cost
for roads, streets, and parking facilities, and provide other benefits as well. The Impact
Assessment for the New Jersey Interim State Development and Redevelopment Plan projected
significant capital cost savings for state and local roads due, in part, to a shifting of trips
from automobiles to mass transit and due to shorter average trip distances.
2-26
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Service Characteristics
Service levels influenced the cost of providing services in two ways: (1) capacity utilization
affected the unit costs by determining the number of demand units (that is, persons or
dwelling units) over which annual costs can be allocated, and (2) the desired service level
determined the design or service standard that would be used in designing a facility or in
deciding the number of facilities needed to serve a population.
Many studies indicated that the service level or design standard required or desired in
providing services to residential development was a major determinant of cost. Several
studies, in particular Windsor's review of The Costs of Sprawl, noted how changing design
standards, such as street ROW and cartway widths, could achieve capital cost savings in
providing infrastructure.
Capacity Utilization
Capacity utilization, or the amount of spare or excess capacity, is defined as the current
operating level divided by the design capacity. Most service systems unit costs, defined as
total annual costs (annual capital plus O&M) divided by the number of units served,
decline as the capacity utilization approaches 100 percent. Fixed annual capital costs were
allocated over more units and economies of scale produced operating cost efficiencies as
total usage approached the design capacity.
There were two ways that capacity utilization affected capital costs. First, most capital
facilities were designed to achieve a minimum initial level of capacity utilization when they
began operation, which was then expected to increase over time to the design capacity as
additional users moved into the service area. This was particularly true for
interneighborhood and regional services. Based on forecasted demand and desired level of
capacity utilization, the design capacity and ultimately the capital cost of a facility were
determined. A greatly under-utilized facility could result in high, fixed capital costs being
distributed to a few users.
Second, during operation, capacity utilization determined the number of users that would
bear the capital costs through the payment of user fees or taxes needed to retire bonded
indebtedness. In addition, during operation, optimum performance levels and operating
cost efficiencies were often obtainable only by meeting a certain high level of utilization.
Significant under-utilization could result in substandard performance and higher unit O&M
costs.
The marginal capital cost incurred in providing service to new dwelling units would be low
and could approach zero for service systems where the capacity utilization was low (that is,
where there was substantial existing excess capacity). For example, the marginal capital
costs of accommodating an additional student would be very low when there was space in
a classroom (that is, vacant desks were available) for new students. Conversely, marginal
capital costs would be high where a large increment of demand would require the
2-27
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construction of new capital facilities, such as the construction of a new school to
accommodate the enrollment from a new large subdivision.
The size of the incremental increase in demand determined, to some extent, whether the
marginal capital costs would be high or low. Small increments of demand could often be
accommodated even when capacity utilization is high. However, this raises the issue that
the cumulative effects of continuing small increments in demand (that is, lots of minor
subdivisions) would ultimately create the need to construct new capacity. Large increments
of demand were more likely to create a need to expand capacity, particularly when
capacity utilization was already high.
Service and Design Standards
The service or design standard to be achieved or desired by residents was also a major
determinant of service cost. For capital-intensive services, the design standard could be the
major determinant of both capital and total costs. Examples include design standards for
streets and roads (that is, cartway widths, pavement thickness, and paving materials),
performance specifications for water and sewer pipe, and size of the storm event capacity
for stormwater facilities.
Often the capacity and service levels were determined by physical and engineering factors,
such as the size of the pipe diameter required to accommodate water, wastewater, and
stormwater flows; or design criteria for highways to accommodate projected annual average
daily traffic flows at acceptable levels of service. Capital costs could be determined by
regulatory standards, such as the level of treatment to be provided for wastewater or the
discharge levels required under the National Pollutant Discharge Elimination System
(NPDES).
Design standards were also determined by the characteristics of the population served,
particularly their income and education levels. Some studies (for example, Ladd, 1992)
showed a positive income elasticity of demand, indicating that more affluent residents
demanded more and a higher level of services. The Dupage County, Illinois study (Impacts
of Development on Dupage County Property Taxes') hypothesized about the existence of an
income effect in which existing residents demanded more and higher quality services as the
result of development that increased the value of the local real property tax base. The
rationale was that residents felt that either their community had an increased ability to
afford higher quality services or that these costs could be shifted increasingly to the non-
residential sector.
The cost of labor-intensive services was primarily determined by the maximum number of
units of demand to be served. For example, the number of police and fire substations
required was a function of the number of people or number of dwelling units that should
be served by a new facility. The number of new classrooms required was determined by
the standard of the maximum number of students permitted in each classroom.
2-28
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Two of the issues identified by some of the studies reviewed were the change in service
standards over time and the level of similarity or difference in acceptable service standards
across different communities. Several studies (Impacts of Development on Dupage County
Property Taxes and The Costs of Alternative Development Patterns) indicated that service
standards have changed and continue to change over time. As a result, the per capita
costs of providing services, when corrected for inflation, have over time increased due to
rising standards. Examples included increasing performance and design standards for
treating wastewater and controlling stormwater runoff. The Dupage County study
suggested that, in some cases, an income effect was at work in communities—as the area's
tax bases and tax revenues increased, tax payers felt wealthier and began to demand a
higher quality of service, which was ultimately reflected in higher taxes and per capita
service expenditures.
One of the difficulties encountered in reviewing the studies for this report was that service
and design standards varied from municipality, particularly when comparing suburban and
rural municipalities. Service standards were often higher in wealthy suburban metropolitan
municipalities, such as the suburbs of Baltimore, Harrisburg, Richmond, and Washington,
due to the preferences and affluence of the residents. In contrast, service standards were
often lower in rural areas, due primarily to lower incomes and taxes bases.
Regulatory Standards
Regulatory standards determined capital costs in two ways: (1) by presenting performance
standards that must be met, which in turn determined the design and the cost of a facility,
and (2) by including or referencing design standards. The regulatory standards that
influenced the cost of residential housing the most were the local zoning, subdivision, and
site planning ordinances. The former contained the overall land use plan that described
the location, composition, and intensity of major land use classes within the community,
including the areas proposed for residential development. The other components of a
master plan, such as the water and sewer plan, the transportation plan, the recreation
element, and the capital improvement plan, determined the location and phasing of the
capital facilities required to support new residential development.
The three ordinances (zoning, subdivision, and site plan) regulated the type, location, and
characteristics of development. The most significant direct impact of the zoning ordinance
was on the cost of the housing and on the capital cost of onsite services. Regulations, such
as minimum lot size, gross density, yard setbacks, site planning and design standards,
clustering provisions, and landscaping requirements, all determined the cost of the housing
and the capital cost of the onsite sewer and water connectors, and storm water facilities.
Local site planning regulations also often contained design standards for subcollector and
collector streets (that is, cartway widths, pavement thicknesses) and stormwater
management facilities.
The more general master plan had a larger effect on the capital cost of inter-neighborhood
and regional services, while the zoning, subdivision, and site planning ordinances had larger
effects on the capital cost of intraneighborhood facilities and on the cost of onsite services.
2-29
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The former determined the overall land use pattern of a municipality or county, while the
latter determined the gross and net development densities, and the lot size and shape.
One issue that was mentioned in some of the studies was the effect of local zoning
ordinance regulations on the affordability of housing. Certainly, minimum lot size
requirements created a minimum price for housing based simply on the cost of the land.
Large minimum lot sizes have been found, in some cases, to constitute exclusionary zoning.
A related concern was that the desire to minimize the environmental impacts produced by
new residential development through the use of innovative site planning and site design
methods increased the cost of housing, making such housing affordable only by the
affluent. (This may be more attributable to the desire and ability of affluent persons to
obtain a high quality of life in semi-rural areas by purchasing large homes on large; lots
than on the costs of environmentally beneficial site planning per se.) While this issue is
outside the scope of this study, interested readers are referred to Cost Effective Site
Planning (National Association of Home Builders), Affordable Residential Land
Development (National Association of Home Builders), and more recently, Not In My
Backyard (United States Department of Housing and Urban Development.)
Regulatory standards contained in state and federal legislation, particularly environmental
legislation, also influenced the capital cost of interneighborhood and regional services, and
to a lesser extent, influenced the capital cost of intraneighborhood services. These
regulatory standards specified performance standards that must be achieved, which in turn
determined the capacity, design, treatment processes, and ultimately the capital cost of new
facilities. For example, state environmental regulations for landfills often contained
detailed provisions covering the design and operation of a landfill. Similarly, performance
standards contained in a state's NPDES program were major determinants oi: the
treatment level that must be achieved by a wastewater treatment plant, the processes
required to meet these levels, and ultimately of its capital cost.
Shape
The shape of the service area also affected the cost of delivering services, particularly the
capital cost of providing infrastructure. In terms of linear infrastructure, the issue; was
whether there were obvious differences in the total length and capital cost of the pipe or
road network between circular or square shaped service areas or subdivision and a highly
rectangular or linear service area. As noted in Frank's Costs of Alternative Development
Patterns, a study performed by Stone in 1983 in England found that it cost 14 to 17 percent
more to provide highways to star-shaped or linear regions than it did to rectangular
regions. For the purposes of residential development at the neighborhood or subdivision
level, the question was whether a rectangular or circular shape provided capital cost
economies for linear infrastructure, as opposed to the costs of serving a linearly-shaped
development.
Another component of service annual operating costs was that the shape of the service
area affected the cost and efficiency of those services that used vehicles operating out of a
*"*central facility to provide coverage to a service territory. Both capital costs (the number of
2-30
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vehicles required to provide service), service levels (response time by police and fire), and
operating costs (number of collection points per mile for solid waste trucks and school
buses) were affected by the shape of the area.
Conclusion
This chapter presented the trends and methods found in cost of development studies;
presented a categorization system for local public services, based primarily on the capital
cost component; and identified and described how various factors determined the capital
costs of the different services. All three components are precursors to the objective of the
next chapter, which is to show how sensitive the capital cost of the various type of services
are to the factors that effect capital costs.
2-31
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Chapter 3
Sensitivity of Capital Cost for Different Service Types
This chapter to indicates how the capital costs for the three different types of government
services identified in Chapter 2 are affected by the factors that influence the cost of
providing service to new residential development. This analysis is presented for the three
types of services identified in Chapter 2: intraneighborhood, interneighborhood, and
regional. Capital cost is the focus of this section because these costs have become the
primary budgetary concern of local governments and utility authorities in extending services
to new residential development. Capital costs are often large, short-term expenditures for
such facilities as schools, roads, water, and sewer that must be financed over a long period.
While the objective of this report is to make findings, based on the literature and on how
the capital costs of serving residential development vary according to different factors, it is
also necessary to consider annual operating and maintenance costs of serving residential
development. The annual O&M costs comprise approximately two-thirds of the total
annual costs required to provide the full range of intraneighborhood, interneighborhood,
and regional services to new residential dwelling units. Annual general fund expenditures
by local government entities, such as municipalities, school districts, and counties, usually
comprise 80 percent or more of the total annual budget. The issue of annual O&M
expenditures vs capital expenditures is discussed briefly in the final section of this chapter.
This topic is outside of the scope of this study but the magnitude of capital costs incurred
in serving new residential development needs to be put into its proper perspective for local
decision-makers.
The analysis in this chapter is presented in a tabular form. A summary table is presented
for each of the three types of services, preceded by a table that presents the attributes of
each type of service. Each summary table provides local planning officials with an
indication of the sensitivity of the capital cost for an individual service to the different
factors of residential development that determine the capital costs of serving it. (Appendix
C: Tables contains tables that present, in more detail, the capital sensitivities of the three
service types. Five tables are presented for each service type that presents capital cost
sensitivities in regard to: development density, character of the development, population
characteristics, locational attributes, and service characteristics.)
The summary tables present an ordinal ranking of capital cost sensitivity using the
following scale:
• Highly Sensitive: a factor has a strong, direct effect on the capital cost of a
service
• Sensitive: a factor has a direct but not overly strong effect on the capital cost
of a service
• Moderately Sensitive: a factor has a weak effect on the capital cost of service
3-1
-------
• Minimally Sensitive: a factor has little or no affect on the capital cost of a
service
This scale expresses the strength of the relationship between variations in the factor and
the resulting capital cost for a service type. The use of an ordinal scale necessarily implies
judgement and interpretation in evaluating and classifying capital cost sensitivity. The
determinations of sensitivity were made by CH2M HILL consultants based on the
literature reviewed for this study, and on our experience in conducting planning studies,
and in preparing designs for different types of infrastructure.
The capital sensitivities are presented for the following groups of factors:
• Development Density
- Gross density
- Net density
• Character of the Development
- Lot size and shape
- Type of dwelling unit (du)
• Population Characteristics
- Total number of persons served
- Density
• Locational Attributes
- Proximity to existing service area
- Proximity to employment centers
- Proximity to community facilities
• Service Characteristics
- Capacity utilization
- Service and design standards
- Shape of the study area
The number of bedrooms was eliminated because it is correlated with the type of dwelling
unit. The number of school-age children is not presented because it directly affects only
education services.
The following tables show the sensitivity of the capital costs of different types of services to
the characteristics of new residential development taking place at or beyond current service
boundaries. This best meets the objective of the Subcommittee on Population Growth and
Development which is to obtain a better understanding of how new residential
development taking place within the Chesapeake Bay watershed is affecting the capital cost
of providing this development with local public services. It is recognized that some of
these services are increasingly being incurred by the homeowner through impact fees and
proffer charges.
3-2
-------
The tables shown in this chapter are summaries of the more detailed data found in
Appendix C: Tables.
Capital Cost Sensitivity of Intraneighborhood Services
The discussion below summarizes the material presented in Tables C-l through C-5
contained in Appendix C: Tables.
Attributes of the Service
As presented in Table 3-1, all of the intraneighborhood services are defined as having high
levels of capital intensity. These services are also primarily linear facilities located in
public ROWs that are arrayed in a fine network or grid that provide service to the lot line
of individual dwelling units or residential structures. Because of these characteristics, the
capital cost of providing them are particularly sensitive to lot size and shape, and
development density.
An exception to the linear configuration are drainage improvements. They consist of
retention and detention basins that receive stormwater runoff from a group of dwelling
units, a subdivision, or a large residential structure, such as an apartment building.
Development Density
Table 3-2 shows that the capital costs of the linear intraneighborhood facilities are sensitive
to gross density and are highly sensitive to net density with the exception drainage
improvements. Since these are facilities that provide services within a neighborhood or
development, the area covered by actual residential development (net density) accurately
represents the distance between or concentration of the dwelling units. This, in turn,
determines the length of the intraneighborhood network for these facilities, or the length of
pipe or road per dwelling unit served. In areas where gross density equals net density,
such as in standard subdivisions with single family development dwelling units and no
clustering, the effects on capital cost will be similar.
Pipeline Capital Cost as a Function of Diameter and Length
Relationship of Diameter and Capacity. Simple geometry can affect both the cost and
capacity of a network of pipes, particularly at the intraneighborhood level. Geometry
affects both the capacity of a pipe as measured by its cross sectional area and the total
length of the spatial network required to serve an area. This point was noted by Frank in
his review of a previous study performed by John Kain in 1967.
Additional service capacity can be provided using water and sewer pipes by either
extending them to pick up new dwelling units (assuming that the receiving trunk lines have
^sufficient capacity), or by concentrating development through clustering or infill, and
3-3
-------
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increasing capacity by using larger diameter pipes to accommodate a larger volume of flow
coming from a concentrated residential area.
Figure 3-1 shows that increasing a pipe's cross sectional area, and thus its capacity, requires
a much smaller proportional increase in its radius. The figure shows that only an 11.8
percent increase in radius is needed to increase cross sectional area by 25 percent, and that
only a 22.5 percent increase in radius is needed to produce a 50 percent increase in cross
sectional area. The result is that a pipe with 50 percent more capacity will not be 50
percent more expensive because the increase in material cost (a function of its
circumference) is proportionately much less. In addition, construction costs increase only
minimally as diameter changes. Virtually the same amount of construction hours and the
same-sized trench is required for a 12" diameter pipe as is required for an 18" pipe.
A substantial increase in water or sewer capacity can be obtained at a modest increase in
capital cost. Local policy makers could consider increasing density within an area
proposed for new residential development as opposed to permitting the same number of
units spread over a larger area at a lower density. The other implication is that using
regularly shaped service areas provides efficiencies for school, police, and fire services.
Circular service areas can be expanded with the least increase in radius, which translates
into the least increase in response time from a centrally located facility to new dwelling
units located at the periphery.
Character of the Development
Table 3-2 also indicates, as expected, that the capital cost for most intraneighborhood
services is highly sensitive to lot size and shape but is less sensitive to the type of dwelling
unit. The first conclusion is expected because lot size and shape are closely related to and
correlate with net development density. Both factors determine the length of pipe or road
required per dwelling unit (that is, frontage along a lot).
The type of dwelling unit affects capital cost to a lesser extent than does lot size although
the type of dwelling unit correlates to some extent with lot size. Single family dwelling
units tend to be located on larger lots and require longer lengths of pipe/parcel frontage to
service them. Thus, the length of linear infrastructure/dwelling unit is only indirectly a
function of dwelling unit type.
The capital cost of local streets (that is, subcollectors, cul-de-sacs, and collectors) is
sensitive to dwelling unit type. The capital cost for drainage improvements, streetlighting,
and sidewalks are moderately to minimally sensitive to dwelling unit type.
3-6
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Population
Table 3-2 shows that the sensitivity of capital costs for intraneighborhood services varies
widely based on population to be served, and that this sensitivity is less than lot size or
development density. For water and sewer service, the total flow to be accommodated is
determined, for the most part, by the number of persons to be served, although the type of
dwelling unit and the socioeconomic characteristics of the residents are also factors in
determining demand. The total flow, in turn, determines the diameter of the collector or
distribution pipes that will be needed. The one exception is stormwater collectors and
drainage improvements, whose size and capacity depends more on dwelling unit character
(that is, amount of impervious surface and lot size), and less on population.
Population density correlates at the intraneighborhood level with development density as
concentrations of population occur when development densities are high. Concentrating
population provides efficiencies in delivering many types of service, either because the
length of pipe or road/dwelling unit served is reduced, or because more persons can be
served more efficiently, as with fire and police services. However, increasing population
density also requires that more capacity is required for water, sewer (larger diameter
pipes), and transportation facilities (more lane miles).
Locational Attributes
For the most part, the capital costs of intraneighborhood services are only minimally
sensitive to the regional location of the development. An exception is the capital costs for
local streets which are moderately sensitive to proximity to employment and to community
facilities.
A higher proportion of residents may be able to walk to work, public transportation,
schools, and community facilities when the development is located close to these facilities,
although it is still difficult to convince people to give up their cars even in settings
conducive to walking. Residents of leapfrog developments will have to drive to more
places, resulting in more total vehicle trips and a greater capacity in lane miles.
The primary effect of regional location on transportation capital costs is more significant
for arterials and highways than for local streets.
Service Characteristics
The effect of service characteristics on capital costs are often underestimated. T'his is
particularly true for linear, capital-intensive facilities. Capital costs for intraneighboirhood
services are, in general, more sensitive to service and design standards, and less sensitive to
the shape of the service area and to capacity utilization.
The design standards for the linear infrastructure are based on the total expected flow, be
it traffic, wastewater, treated water, or stormwater, which is, in turn, a function of
population. Since flow determines the cross section, which determines cost, the capital cost
3-8
-------
of most interneighborhood services is sensitive to the design standard. There is also
usually a desired level of capacity utilization, either to avoid incurring very high marginal
capital costs that occur when facilities are very underutilized or to obtain efficiencies in
operating costs. Intraneighborhood water and sewer pipes are designed to operate at a
higher level of capacity (that is, a larger percentage of cross sectional area is used) than
interneighborhood water and sewer pipe. Regulations, such as a site planning ordinance,
often contain or reference design standards.
Capital costs per dwelling unit served can be reduced by changing design standards, such as
by mandating the use of narrower subcollector streets or cul-de-sacs, or other less-
expensive levels of service. The intraneighborhood services whose capital cost most
sensitive to design standards are local streets and drainage improvements because their
capacity and ultimate cost are defined by engineering considerations (that is, the highest
volumes for which it must be designed), and by regulatory standards. Site planning
standards can decrease the cost of off-site stormwater facilities.
Interneighborhood Services
The discussion below summarizes the material presented in Tables C-6 through C-10
contained in Appendix C: Tables.
Characteristics of the Service
As shown in Table 3-3, interneighborhood services vary in terms of their capital intensity.
The three types of trunk lines and arterial streets are highly capital-intensive, while other
services, such as police, fire, and solid waste, are lower. Interneighborhood facilities consist
of a mix of linear and point facilities, ranging from trunk pipelines to police precinct and
fire stations, recreation centers, and transfer stations. They are either arrayed in a coarse
network or consist of a network of facilities distributed throughout the service area based
on the location of the population.
Interneighborhood services and, to a greater extent, regional services have large service
areas and provide services universally to both residential and non-residential users located
there (with the obvious exception of education). For example, collector streets and
arterials carry local residential and non-residential traffic to and from commercial,
institutional, government, and industrial destinations. Police, fire, and emergency medical
services are provided to both the residential and non-residential users, while sewer trunk
lines convey wastewater from both residential and non-residential sources. The total
demand for these two types of services is more evenly spread across the residential and
non-residential sectors, making it harder to accurately allocate the total demand and costs
for the services between the two sectors. This is in contrast to intraneighborhood services,
which are provided to small, homogeneous residential areas the demand for which is easily
and almost entirely attributable to residential users.
3-9
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3-10
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Development Density
In general, the capital costs for capital-intensive interneighborhood services are more
sensitive to gross density, which is a function of the regional land use patterns. This is in
contrast to intraneighborhood services, whose capital costs are more sensitive to net
density. The capital cost of linear interneighborhood trunk lines and local streets are
highly sensitive to gross development density as shown in Table 3-4. This is a point made
by Kain and noted by Frank in his monograph. Interneighborhood facilities serve groups
of neighborhoods so that the spacing between them (that is, gross density within the service
area) is the crucial factor in determining the length of the trunk lines.
The capital cost of the less capital-intensive services, such as education, police, and fire are
sensitive to gross development density because it determines service standards, such as
response time and areal extent of the service area, particularly for schools. The capital
costs for transportation equipment needed for solid waste collection is moderately sensitive
to gross density. Fewer trucks will be needed in densely developed areas as more pick-ups
can be made per mile or route or hour of operation.
Development Character
As shown in Table 3-4, the capital cost of interneighborhood services is minimally sensitive
to lot size, with the exception of trunk lines which have a moderate sensitivity. This is
consistent with the above finding for their sensitivity to gross and net development density.
The capital cost of elementary and middle schools is highly sensitive to the type of dwelling
unit. As noted in Chapter 2, the type of dwelling unit determined the number of school-
age children present. The capital costs of some of other interneighborhood services is
sensitive to dwelling unit type, including water trunk lines, solid waste collection, parks and
recreation, and arterial streets. Demand for these services is a function of dwelling unit,
although not to the extent of that for education. The comments from one reviewer
(Valenza, 1993) noted that demand for police and fire services is, to some extent, related
to the type of dwelling unit.
Population
Table 3-4 shows that the capital costs of the labor-intensive interneighborhood services,
such as police, fire, solid waste, recreation, and emergency medical, are highly sensitive to
the size of the population to be sewed. The total number of persons determines the
demand for labor-intensive services. For example, the more persons to be served, the
more police cars, solid waste collection trucks, or fire trucks-all of which are capital
equipment—will be required. The capital cost of providing these services is less sensitive to
population density.
3-11
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Because they are labor-intensive, the primary cost impact of most interneighborhood
services (except for the trunk lines and arterial streets) is as an annual O&M expense.
The total annual cost to service a dwelling unit is substantially greater than the annual
capital cost as will be discussed in Chapter 4.
Higher population densities allow labor-intensive services to be provided more efficiently
(that is, more households covered in the same amount of police patrol time or more
dwelling units served per mile of a solid waste collection route), thus potentially offsetting
the need to obtain additional vehicles.
Locational Attributes
The location of a residential development within a region has widely varying impacts on
the capital cost of interneighborhood services as shown in Table 3-4. As expected, the cost
of the capital-intensive services that connect residential areas to regional treatment or
processing facilities (water and sewer trunk lines) are highly sensitive to proximity to
existing service areas. This is consistent with a number of studies, for example, Impact
Assessment of the Interim State Development and Redevelopment Plan and Search For
Efficient Urban Growth Patterns) that have shown that infill development or locating new
residential developments at the edge of existing service areas is the most economically
efficient way of providing interneighborhood services. The length of the more expensive
trunk lines and arterial streets is minimized, and existing' excess capacity at the central
treatment or disposal facilities may be available.
The capital costs of labor-intensive services are only minimally sensitive to proximity to an
existing service area. Services will be extended to these areas, particularly when they are
contiguous, by incurring additional O&M expenses for new personnel so as to extend the
service area. Some capital costs may be incurred for new trucks, police cars, solid waste
collection trucks, or school buses.
As one reviewer (Avin, 1993) has noted, it is likely that, in situations of leapfrog
development, interneighborhood services can be most economically provided to
constructing satellite or decentralized facilities. This would be particularly true for labor-
intensive services where it would not be feasible to extend the service area because
decreasing returns to scale would result. Examples include the construction of police
precinct stations, libraries, community service centers, and recreation centers.
The proximity to employment centers and community facilities affects trip lengths which, in
turn, determine the total lane miles of capacity that will be needed for arterial streets and
highways. The effect of proximity to community facilities on the capital cost of materials is
greater than that for proximity to work as trips to community facilities tend to be shorter
and arterials more localized. In contrast, distance to employment is more significant for
highways. Using infill locations or mixed use developments can lessen the total number of
trips, particularly to community facilities, when they are located within walking distance.
3-13
-------
Service Characteristics
The capital cost of the capital-intensive interneighborhood services, as shown in Table 3-4,
is sensitive or highly sensitive to the level of capacity utilization in two ways: (1) the
projected demand and flow determine the design and the size, which in turn determines
the capital cost; and (2) the actual level of utilization determines the number of users who
will be required to pay the capital costs for the trunk lines through user fees or taxes.
The difficult decision in designing water, stormwater, and sewer trunk lines; collector and
arterial roads; and, to a lesser extent, schools, is forecasting increases in utilization over
time and then designing the facility so that future increases in use can be accommodated.
Excess capacity needs to be installed initially to accommodate future growth and because
there may be cost efficiencies obtained in constructing one larger capacity facility initially
as opposed to several smaller ones incrementally over time. However, having a large
amount of excess capacity initially means higher marginal capital costs until future
development brings future users among whom the fixed capital costs can be apportioned.
The capital costs of the labor-intensive services are moderately sensitive to capacity
utilization. Additional capital equipment needed to meet small increases in demand can be
added in small increments as needed (that is, additional police cars, fire trucks, and solid
waste collection vehicles can be acquired). The capital cost of the labor-intensive services
are, in general, more sensitive to design and service standards than they are to capacity
utilization. Service standards determine the desired response times (for police and fire)
and the capital equipment required to support these standards. Standards may also
include the number of police officers or firemen per 1,000 population, maximum class size,
and acres of park space per 1,000 population.
The sensitivity of the capital cost of interneighborhood services to regulatory standards
mirrors that for design standards. Often regulations contain or reference design standards
or engineering criteria to be applied, such as the amount of square footage per student in
classrooms.
The capital costs of arterial roads are highly sensitive to both design and service standards.
Geometric design standards (that is, pavement width and capacity, sight lines, turning
angles, grade, and lane width) determine the design and the capital cost of roads, while
performance standards specify the desired levels of service (that is, a measure of capacity
utilization or even overutilization) to be achieved.
The capital cost of the linear interneighborhood services are the most sensitive to the
shape of the service area. As noted in The Costs of Alternative Development Patterns, a
study done by Stone (1973) in England found that the capital cost for providing main roads
was 14 to 17 percent higher in star-shaped and linear regions than that in rectangular
regions.
3-14
-------
Regional Services
The discussion below summarizes the material presented in Tables C-ll through C-15
contained in Appendix C: Tables.
Characteristics of the Service
Table 3-5 indicates that the capital intensity of the regional services is variable. These
regional services consist primarily of large, centrally located treatment, processing and
disposal, or service centers. One factor common to most of them is that there are
economies of scale, in terms of both unit capital and annual unit O&M costs, that can be
achieved by building larger facilities. These cost savings can be used to offset the cost
inefficiencies that are sometimes incurred in constructing the distribution systems, such as
water and sewer trunk lines. Two of the services, high schools and general government,
are labor-intensive as opposed to capital-intensive, even though they also consist of
centrally located facilities.
The size of the area covered by regional services can vary widely but usually at a minimum,
encompasses at least a portion of a municipality (that is, a high school in a densely
populated residential town), a county (for example, solid waste disposal facilities), and on
up to a multi-county region, such as a wastewater treatment plant serving several counties.
The ability to capture economies of scale in constructing regional facilities means that it is
often most economical to provide additional capacity in large increments. It is usually not
cost-effective to construct facilities in small increments that closely follow increases in
demand over time, although this can be done to some extent with smaller package
wastewater treatment plants by constructing precinct stations or by adding temporary
classrooms. The "lumpy" nature of regional capital facilities means that equitably allocating
their capital costs over time between current and future users is a major pricing and
financing concern.
Development Density
As indicated in Table 3-6, the capital cost of regional facilities are only minimally sensitive
to gross density, with the exception of highways, whose capital cost is sensitive to regional
gross density, and high schools, whose capital costs are moderately sensitive to gross
density. The distribution or collection component of these service systems, which are the
most sensitive to geography and density, are linear capital facilities that are classified as
either interneighborhood or intraneighborhood facilities. For high schools, regional gross
density will determine the number, location, and size of the high schools. New residential
development will face jurisdictions with county-wide systems and large regional high schools
with the choices of either building new schools (which is more difficult to do for high
schools than for elementary schools), providing additional busing or possibly, in the short-
run, adding temporary classrooms.
3-15
-------
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Highways are capital-intensive structures and, because of their regional function, their
capacity and capital costs are determined by a number of factors in addition to the location
and character of residential areas within a region. Other factors, such as the amount and
composition of non-residential land use and the road's regional function (such as
connecting two metropolitan centers), are important determinants of a highway's capital
cost.
Character of the Development
The type of dwelling unit has a widely varying affect on the capital cost of regional facilities
as shown in Table 3-6. The capital cost of high schools is highly sensitive to the type of
dwelling unit, while the cost of water treatment and supply facilities is sensitive to du type.
The demand for water, the number of school-age children, and the number of trips
generated/dwelling unit differ by the type of dwelling unit. Lot size has no effect on capital
costs.
Population
Table 3-6 indicates that the capital cost of most regional services is sensitive or highly
sensitive to the total number of persons residing in the service area. The demand from the
residential sector for these services is directly related to the number of persons served.
This is true for water and sewer treatment services, water supply, and solid waste disposal.
Recent research has shown that there is a correlation between regional population density
and both the per capita annual O&M costs and the per capita annual capital costs incurred
by county governments (Ladd, 1992). The relationship is stronger for the increase in
annual per capita O&M costs as a function of population density. Allowing for a lag
effect, in which population density ultimately requires local governments to increase service
capacity through capital spending, population density does ultimately affect the capita] cost
of providing public services.
Table 3-6 shows that the capital costs of regional facilities are moderately sensitive to
sensitive to population density. The total population to be served is in most cases the most
important factor in determining demand, capacity, and, ultimately, capital cost.
In some sparsely settled areas, the combination of a small to medium capacity required for
a treatment or disposal facility where economies of scale due to size are not obtainable,
and the relatively high costs of providing distribution infrastructure (that is, water and
sewer trunk lines and collection pipes) to fewer users, may justify the construction of
several, smaller-capacity facilities throughout the service territory. This would to provide
more localized service, as opposed to extending the service area from existing facilities.
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Locational Attributes
The capital cost of regional services is minimally sensitive to the regional locational
characteristics of the development as shown in Table 3-6. These regional services are
point facilities. The capital costs incurred in constructing and operating the distribution
and collection components of these service systems have been considered previously. Only
the capital cost of highways are highly sensitive to proximity to work and are sensitive to
proximity to community facilities.
Service Characteristics
The ability to capture economies of scale in constructing some regional services, in
combination with their capital intensity, means that the capital costs of some of these
services are sensitive to capacity utilization. This is particularly true for water and
wastewater treatment plants, water supply facilities, and highways.
As shown in Table 3-6, the capital cost of most regional services are sensitive to highly
sensitive to design and service standards. Design standards, such as classroom area per
high school student, desired levels of service, and pavement designs for highways,
determine capital costs. Regulatory standards have a very significant impact on the capital
cost of wastewater treatment and water treatment plants. These standards specify the
treatment levels, performance standards, or effluent limits that must be achieved by these
plants, which in turn determine the processes to be used, which eventually determine,
along with total capacity, the design and capital cost of the treatment plant.
The capital cost of highways are sensitive to the shape of the service area. They are less
sensitive to this factor than arterials are because some of the determinants of the size,
route, and cost of a highway are due to other factor from outside the region. The capital
cost for buses required to transport pupils is moderately sensitive to the shape of the
attendance area or jurisdiction. This would be particularly true in Maryland and Virginia
with their county-wide school districts and large, regional high schools.
Capital Costs in Relation to Total Annual
Local Government Service Costs
Capital costs, because of their large values, their "lumpiness" in adding capacity increments,
and the need to obtain long-term financing, are often the major focus of local decision-
makers. Focusing exclusively on capital costs misses the point that capital costs, when
properly annualized, comprise a small proportion of most municipalities total annual
expenditures (annual capital costs plus O&M costs). Land use policies that focus only on
controlling the capital cost per dwelling unit are directed at only a minority of the total
annual costs per dwelling unit, even when the capital costs are properly calculated using a
life cycle cost approach. Well-intentioned land use policies, that are directed toward
obtaining some proportion of the marginal capital costs required by a new dwelling unit,
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through proffer charges and impact fees, may not be as effective as they could be if the
effects on operating costs are not taken into account.
It is helpful to have some idea of the distribution of total annual costs per dwelling unit by
capital and operating components, and by service category (that is, police, fire, education,
recreation, etc.). This will first show the true proportion of annual capital costs to total
annual costs and will further identify those service categories where the annual costs are
the highest. Understanding what factors determine the costs of those service will enable
local decision-makers to consider the full range of costs when developing land use policies.
The annual local government service cost/dwelling varies widely from municipality to
municipality, depending upon a number of factors:
• The range of services provided (that is, public water and sewer vs on-lot
septic system and on-site wells, police, fire, solid waste, etc.)
• The service standard
• The income of the residents and their ability to afford and demand high
quality services
• Unit of government providing the service, which can achieve economies of
scale (that is, county-wide school districts in Virginia and Maryland vs a
municipal-level district in Pennsylvania)
• Capacity of the system (that is, are economies of scale achievable?)
There is no standard distribution of annual service (because of the criteria listed above)
but it is helpful to get some idea of a representative distribution of costs based on the
bundle of local government services provided to suburban residential development.
Baltimore County
The most relevant example is from a county located within the Chesapeake Bay watershed.
Baltimore County is a good example, given its location, the full range services it pro'rides
(county-wide education system and other normal local services), and the high level of
services it provides. An analysis of Baltimore County's proposed 1993 budget indicates the
following:
• Proposed capital expenditures during fiscal 1993 comprise 11.8 percent of
the total budget (General Fund plus special funds, and including both local
and non-local revenue sources)
« Proposed capital expenditures, assuming all of them are paid for from locally
generated revenues (which will not be the case) comprise 13.7 percent of
total local revenues
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• Removing the local expenditures for the community college (which many
municipalities and. counties do not fund) and, still assuming that all capital
expenditures are locally funded, raises the proportion of annual capital
expenditures to 14.2 percent of total local revenues
This analysis confirms, at a preliminary level, that annual capital expenditures (to all land
use types, including residential) comprise a small proportion of total local government
annual expenditures.
Annual Costs of Serving Residential Development
Another issue of more direct relevance to this study is what relationship exists between the
annual capital costs and the total annual costs (annual capital and annual O&M) incurred
in providing services to individual dwelling units. What proportion of total annual costs
incurred in serving a dwelling unit are annual capital costs? Is this percentage comparable
to the proportions presented above? This issue is also important for local planning and
zoning officials because they need to be aware, particularly over the long run, of the
relationship between annual O&M costs and annual capital costs that will be incurred by a
local government in providing service to new residential development. If the proportion of
annual capital costs is relatively low, then local decision-makers may be mis-directing their
efforts in managing residential growth by focusing too narrowly on controlling capital
expenditures.
The literature review found little information that accurately estimated the relationship
between annual capital costs/du and total annual costs/du. Most cost of development
studies, and many of the studies that estimate impact fees and proffer charges are designed
to estimate the total marginal capital costs of providing services and infrastructure to a new
du. These studies do not normally calculate the total annual O&M costs/du, and many
studies do not annualized the capital costs.
There is some information that gives a preliminary indication of the proportion between
annual capital and total annual costs/du.
The Search for Efficient Urban Growth Patterns
This study estimated the total annual costs to provide services to single family dwelling
units. These estimates were for a mix of different types of residential developments (that
is, compact, contiguous, scattered, linear, and satellite) which tended, for the most part, to
be contiguous or infill developments. The study calculated that, on average, annual capital
costs were about 23.5 percent of the total annual cost incurred to provide the full range of
services to single family dwelling units.
Because the study considered developments located in Florida, the proportion of annual
O&M expenditures to total annual expenditures, for some service categories, would be
different from those in the Chesapeake Bay watershed. For example, annual street and
road costs would be higher in the watershed, because of snow plowing, road salting, and
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repairing pavement due to the use of salt. Annual expenditures, for parks and recreation
would be lower because of the shorter outdoor season. Even allowing for these
differences, the Florida study indicates that the annual capital costs per single family du
are a low proportion of total annual costs/du.
The Costs of Sprawl
The Costs of Sprawl estimated total capital and total O&M costs for the 1,000 du
neighborhood prototype and the 10,000 community prototypes. Because this study
considered a "greenfield" or new residential prototype, its results are more applicable to
the situation of local governments considering approval of a new residential development
located beyond current services boundaries. Using the community analysis so as to obtain
the full range of services, and omitting costs for electric and gas, and residential capital
costs; the data from The Costs of Sprawl indicates that annual capital costs range between
41 percent and almost 50 percent of total annual costs per du, depending upon the
prototype considered and the length of time over which capital costs are annualized.
This percentage occurs for several reasons. First, The Costs of Sprawl underestimated! the
number of school-age children in the community cost analysis so that annual education
O&M costs were likely underestimated. Because education costs comprise the largest
share of most local expenditures (approximately two-thirds of annual local expenditures),
higher education costs would decrease the proportion attributable to annual capital costs.
There are also other shortcoming in The Costs of Sprawl that limit its applicability (see
Windsor, 1979). The proportions from The Costs of Sprawl should be viewed cautiously. It
is likely that they constitute an upper boundary on the proportion of total annual local
expenditures/du that would be attributable to annual capital costs. The data from The
Costs of Sprawl indicates that annual capital costs are likely to be less than half of total
annual expenditures for local government services to new dwelling units. It is more likely
that this proportion is less than 40 percent.
Virginia Beach Growth Management Study
In 1989, CH2M HILL prepared an analysis of two alternative growth scenarios for a
section of the City of Virginia Beach. (This study is reviewed in Appendk B). The study
analyzed the capital and operating costs/du associated with alternative forms of a large
mixed use development just south of an urban services boundary in Virginia Beach. The
development would have contained, using either scenario, a total of 32,500 dwelling units,
along with a mix of retail and commercial uses. Data from the study, plus other material
supplied to CH2M HILL by the City of Virginia Beach indicated that the annual capital
costs/du would be about 25 percent of total annual costs/du.
Conclusion
Annual capital costs comprise a minority of the total annual local government costs
incurred in providing services to residential development. The literature indicates that
annual capital costs comprise approximately 20 to 30 percent of total annual costs,
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although this proportion would vary widely depending upon a number of factors, such as
the location of the development, service standards, lot size and density, etc.
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Chapter 4
The Cost of Development
How the capital cost of providing services and infrastructure varies according to
characteristics of residential development is difficult to assess. As noted in Appendix A,
particularly in the review of The Costs of Alternative Development Patterns by James Frank,
there are relatively few studies that have attempted to estimate these capital costs, the
most well-known study being The Costs of Sprawl. This study is not without its own
deficiencies as has been noted by Altshuler in 1977 and by Windsor in 1979.
This chapter presents an estimate regarding the cost of providing public services to new
residential development. These estimates have been modified to fit the definitions applied
in this study. This is a difficult and complex question to answer from the existing studies
for a number of reasons:
• Many of the studies analyzed different sets of services so that the results
from them are not directly comparable. For example, some of the studies
considered only onsite or intraneighborhood services, and did not consider
either interneighborhood or regional services. The cost of regional services
were considered in only a few studies.
• Some of the studies, specifically the fiscal impact models and New Jersey's
review of the JPLAN, determined the cost impacts for municipal-wide or
even state-wide broad residential land use classifications. Their results,
therefore, answer the question of how capital costs vary by residential
development form only in a broad sense.
• Services are provided at different levels (that is, municipality, township,
county, or regional authority) in states, which results in cost differences. As
an example, many services in Pennsylvania and New Jersey are provided at
the township level, while in Virginia and Maryland, these services are
provided at the county level. Examples include education, police, fire, and
solid waste. There are economies of scale in providing services in Maryland
and Virginia. These same economies of scale may not be achievable in New
Jersey or in Pennsylvania.
• Service and design standards have changed over time. Costs developed for
studies some years ago may have used service standards that are no longer
applicable. Because of recent technological advances, some capital facilities
can be constructed more efficiently (that is, fewer hours of labor/$ of capital
cost) today.
4-1
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The purpose of this chapter is not to provide a definitive estimate of the capital costs, per
du as a function of location or density. However, it is important to know what trends that
are present in the studies have estimated as the capital costs of serving residential
development. Before doing so, it is necessary to note a caveat against the literal
interpretation of these numbers. This caution was best stated by Frank in his
comprehensive review of cost of development studies, The Costs of Alternative Development
Patterns:
"Distinctions among alternative development factors form the experimental variables
that are manipulated to observe the extent to which development costs change
concurrently. The crucial terms are density and lot size or lot width, municipal
improvement standards, characteristics of the occupants, contiguity of development,
distance to central facilities, and size of the urban area. Each one, when allowed to
vary, has a discernible effect on development costs, but when they are all allowed to
vary at the same time, the independent effect of each is difficult to measure
because of simultaneous effects." (Frank, p. 37.)
The author makes two important points. First, there are a number of different factors that
affect the costs of the development in addition to density and lot size. The list identified
by Frank corresponds to the list of factors identified in Chapter 2. Second, it is difficult to
precisely isolate the effect of the different factors on the cost of providing public services
to residential development. It is reasonable to assume that density and lot size are; the
dominant factors in determining capital costs particularly for intraneighborhood costs. In
reality, the relative effect of the different factors from the existing cost of development
studies cannot be ascertained.
Keeping the above caveat in mind, and recognizing that one purpose of this report is to
present data contained in the relevant literature, the following capital cost information/du
from The Costs of Alternative Development Patterns is presented.
Capital Costs of Intraneighborhood Services
Most of the cost of development studies have assessed the capital costs of
intraneighborhood services, while some studies have also assessed some of the
interneighborhood capital costs. Intraneighborhood costs have usually been assessed using
a hypothetical neighborhood design, such as in The Costs of Sprawl, Cost-Effective Site
Planning, and Environmental and Economic Impact of Lot Size and Other Development
Standards. The most recent definitive assessment of capital costs/dwelling unit for
intraneighborhood and interneighborhood services was presented in Frank's The Costs of
Alternative Development Patterns. Table 4-1 presents a summary of the costs presented in
his report, updated to 1992 dollars, using Engineering News-Record's Building Construction
Index (BCI).
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Table 4-1
Cost of Capital Facilities for Intraneighborhood Services
du Type and Density
SFD, 1 du/acre
SFD, 3 dus/acre
SF Clustered, 5 dus/acre
Townhouses, 10 dus/acre
Garden Apts., 15 dus/acre
High-rise Apts., 30 dus/acre
Mix, 12 dus/acre
Neighborhood Costs"
$50,200
$34,800
$29,400
$22,800
$19,300
$8,600
$22,900
Intraneighborhood
Capital Cost'
$33,700
$17,500
$10,500
$7,200
$4,600
$2,200
$6,300
Source: Frank; 1989. The Costs of Alternative Development Patterns;
a 1992 dollars in cost/dwelling unit. Column 3 from his Table 8.
Note: The mix consists of 20 percent each of sfd, sf clustered, townhouses, garden
apartments, and high-rise apartments.
The table above presents only the capital cost estimates for densities of 1 du/acre (which
qualifies as sprawl, based on the definition presented in Chapter 1) or greater. Figures for
single family developments (sfd) at 1 du/4 acres were presented in The Costs of Alternative
Development Patterns. These figures are not presented here for the following reasons:
• Frank notes in footnote 1 of his Table 8 that neighborhood costs for 1
du/acre and 1 du/4 acres are multiples of the 3 dus/acre figures from The
Costs of Sprawl. It is unclear what the magnitude of the increase in
neighborhood capital cost/du would be in going from 3 dus/acre to 1 du/acre,
much less to 1 du/4 acres. If such a development at 1 du/4 acres required
public water and sewer, it would incur higher costs because the lengths of
water and sewer pipe, streetlighting, etc. per du would be higher than those
for 3 dus/acre.
• Development occurring within the Chesapeake Bay watershed at a density of
1 du/4 acres would most likely use septic systems and on-site wells,
eliminating the two most expensive components of local government service.
These costs would be incurred by the owners.
While it is clear that the capital costs/du of neighborhood services (as defined by Frank)
for residential development at a density of 1 du/acre or less would increase over the capital
costs at 3 dus/acre based on an increase in lot size and the length of infrastructure/du, it is
^nclear that the cost increases would be as significant as those presented in The Costs of
Alternative Development Patterns. The capital costs/du would be higher but, based on
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larger lot frontages and lower development density, at some point, much of the costs would
be incurred by the homeowner.
The following types of services are included within the category of Neighborhood Costs
listed in Table 4-1, Column 2:
• Streets, including local or minor streets, collectors, and arterials, along with
sidewalks and street lighting
• Utilities, consisting of sewer, water, and storm water collector pipes; storm
drainage facilities; and gas, electric, and telephone connections
• Schools, including primary and secondary
Neighborhood Costs, in Table 4-1, Column 2, contains more services than the classification
of intraneighborhood services used in this study. Subtracting the cost of the schools and
the phone, gas, and electric utilities produces the estimates presented in column three of
Table 4-1, Column 3. This presents the figures from The Costs of Sprawl and The Costs of
Alternative Development Patterns in a format consist with this study.
The figures in Table 4-1 show a decline in capital costs/du as density increases. This
should not be interpreted to mean that density is the only factor causing such a decline in
capital costs. Frank's caution presented above should be kept in mind. A glance at Table
3-2 also indicates that factors other than density and lot size, such as service standards and
the type of dwelling unit, also affect intraneighborhood capital costs.
Based on the literature and the figures presented in Table 4-1, the capital cost/du of
intraneighborhood services for residential development at a density of 1 du/acre or greater
declines on a per du basis as density increases. While such a decline may be due primarily
to development density and lot size, other factors also have an effect.
Capital Cost of Intel-neighborhood and Regional Services
The capital costs of interneighborhood services have been estimated in relatively few
studies. For example, The Costs of Sprawl estimated the cost of public facilities in both the
neighborhood and community analyses. These included the capital costs required for
providing police, fire, solid waste collection and disposal, library, health, general
government, and churches. The Costs of Sprawl paid only limited attention to the capital
costs for other interneighborhood services that were external to a residential development.
As Frank has noted, even where interneighborhood capital costs, such as water and sewer
trunk lines connecting treatment plants to leapfrog residential developments have been
estimated, the estimates have often been flawed.
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The Costs of Sprawl did estimate linkage costs in its community cost analysis. These costs
were defined as those required to connect the individual residential areas located within a
larger 6,000-acre community: water, sewer, storm sewer, road, electric, gas, and phone
infrastructure required to traverse undeveloped or passed-over areas between separate
residential subdivisions. These services are, to some extent, consistent with the definition
of interneighborhood services applied in this study but not completely because The Costs of
Sprawl did not account for the full costs incurred when connecting an individual subdivision
with a central treatment or disposal facility. As Frank noted on page 30 of The Costs of
Alternative Development Patterns, The Costs of Sprawl did not estimate the cost for facilities
external to the 10,000 person community such as roads to employment centers, sewer
interceptors, and water mains.
The Costs of Alternative Development Patterns presented updated estimates of what were
called "community costs" that had been estimated in an earlier study performed by the
Rand Corporation. Community costs represented the capital costs of providing fire, street,
sanitary sewer, and storm sewer facilities to new residential developments located at the
edge of existing service areas, and of providing them for developments located 5 miles
beyond existing service areas. Frank also presented results from a study prepared by
Downing and Gustely that estimated the capital costs/mile for providing police, fire,
sanitation, school, water supply, storm drainage, and sewer capital facilities to connect new
leapfrog developments with central facilities.
Table 4-2 presents a partial estimate of the capital cost for providing both
interneighborhood services and some regional services. It includes the costs for sewer,
water, and storm sewer trunk lines; all schools; solid waste collection and disposal; police,
fire, parks and recreation; general government; and arterial streets. It excludes the cost of
constructing new wastewater treatment and water treatment plants, and a new water supply
facility. Capital costs are presented for 5-mile and 10-mile distances between the
residential development and employment centers, water and wastewater treatment plants,
and a receiving body of water. The costs have been rounded off to the nearest $100.
Table 4-2 shows, as expected, that the capital costs/du of inter-regional and some regional
costs vary relatively little according to the density of housing, particularly when compared
to the decline in intraneighborhood costs. A glance at Tables 3-2 and 3-4 indicates that
other factors such as proximity to the service area (for sewer and water trunk lines),
population (for water and sewer treatment plants), and locational attributes (for arterial
streets and highways) have a significant effect on capital cost.
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Table 4-2
Cost of Capital Facilities for Intel-neighborhood
and Selected Regional Services
du Type and Density
SFD, 1 du/acre
SFD, 3 dus/acre
SF Clustered, 5 dus/acre
Townhouses, 10 dus/acre
Garden Apts., 15 dus/acre
High-rise Apts., 30 dus/acre
Mix, 12 dus/acre
Five Miles'
$25,300
$25,200
$25,200
$22,500
$22,500
$13,900
$22,500
Ten Miles'
$33,500
$33,500
$33,500
$30,200
$30,300
$20,500
$30,300
Note: This table includes the capital costs for public facilities as presented in The
Costs of Sprawl's community cost analysis. This includes the costs for police, fire, solid
waste collection and disposal, library, health, and general government. These were
revised by correcting for changes in population by type of dwelling unit and by
excluding the cost of churches.
a!992 dollars in cost/du. Distances to employment, sewage plant, water plant,
receiving body of water from residential development.
Sources: Frank, 1989. The Costs of Alternative Development Patterns. National
Association of Home Builders, 1986; Cost Effective Site Planning. Real Estate
Research Corporation, 1974; The Costs of Sprawl.
Table 4-2 does not include the community costs presented in Table 8 of The Costs of
Alternative Development Patterns because it was not clear to what extent including these
costs would mean "double counting" with the 5 and 10 mile linkage capital costs also
presented in Table 8.
There are other cost variations between single family dwelling unit and detached dwelling
units, particularly the decline in the number of school-age children per dwelling unit, which
significantly decreases the school capital costs per du for attached housing. The capital
costs for public services (that is, police, fire, solid waste, library, health, and general
government) are not sensitive to development densities and lot size, but more according to
the population of the service area. The capital costs/du of the labor-intensive
interneighborhood services are little affected by the form and density of residential
development.
^The figures presented in Table 4-2 do not include the costs that would be required to
" provide additional water treatment or sewer treatment capacity, or additional capacity for
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highways. While capital costs for water and sewer treatment capacity were included in The
Costs of Sprawl's community cost analysis, it is difficult to use the cost figures from that
report. This is for two reasons: (1) the number of pupils/dwelling unit varied by type of
dwelling unit in the neighborhood analysis but was held constant across all types of
dwelling units in the community analysis, and (2) the community analysis consisted of a mk
of housing types and densities, while the neighborhood analysis consisted of homogeneous
developments with one type of dwelling unit. As a result, the development densities are
different.
There are economies of scale in terms of linkage costs and other capital facilities that can
be achieved in a community of 10,000 dwelling units (used in the community cost analysis)
that cannot be obtained in a development of 1,000 dwelling units (used in the
neighborhood cost analysis).
Table 4-3 combines the figures from Tables 4-1 and 4-2 and presents the capital costs/du
for intraneighborhood, interneighborhood, and some regional services. Table 4-3 shows
that the total capital cost/du of facilities needed to service new residential development
declines as development density increases. As noted above, such a decline is due to many
factors other than density and lot size, particularly when considering interneighborhood and
regional services. These cost factors were discussed in Chapter 3 and are presented in
Tables 3-2, 3-4, and 3-6. The precise interrelationship between these factors in
determining the capital cost/du of new residential development has not been addressed yet
by any cost of development study. As noted by Frank, simply trying to isolate the effects
of density alone has been difficult.
Table 4-3
Cost of Capital Facilities for Intraneighborhood, Interneighborhood, and
Selected Regional Services
du Type and Density
SFD, 1 du/acre
SFD, 3 dus/acre
SF Clustered, 5 dus/acre
Townhouses, 10 dus/acre
Garden Apts., 15 dus/acre
High-rise Apts., 30 dus/acre
Mix, 12 dus/acre
Contiguous*
$50,700
$34,500
$27,500
$21,900
$19,400
$9,500
$21,000
Five Miles'
$59,000
$42,700
$35,700
$29,700
$27,100
$16,100
$28,800
Ten Miles'
$67,200
$51,000
$44,000
$37,500
$34,900
$22,700
$36,600
Note: This table does not include the capital costs for new sewage treatment plant capacity, water treatment plant capacity,
water supply capacity, or demand for new regional highways.
a 1992 dollar in cost/du. Distances to employment, sewage plant, water plant, receiving body of water from residential
development.
Sources: Frank, 1989; The Costs of Alternative Development Patterns. National Association of Home Builders, 1986; Cost
Effective Site Planning. Real Estate Research Corporation, 1974; The Costs of Sprawl.
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The caveats contained in the literature, and the complexity of the relationship that
determines the capital cost of providing services and infrastructure to residential
development, make it virtually impossible to precisely specify the effect contributed by any
one factor. It would not be accurate to interpret that the above tables show that density is
the most important factor. Density is clearly not the only factor that reduces capital
costs/du in providing public services and infrastructure. When looking individually at the
three classes of service, and assuming that the capital costs of the full bundle of services is
incurred by local jurisdictions, some conclusions can be drawn.
The capital cost/du of providing intraneighborhood services does decline as density
increases, primarily because of the spatial effects note in this study (that is, declining length
of collector and distribution pipe). High density, more compact residential developments
are cheaper to provide services to (up to a point) on a du basis. The literature indicates
that above a point (for example, for high rise apartments), the capital costs/du begin to
increase over the costs for attached housing, such as townhouses. The decrease in
intraneighborhood capital costs/du observed as density increases is clearly due not only to
density. Other factors have an effect, such as the service standard and the change in the
type of du that occurs as density increases, which shifts some on-site costs incurred by
single family detached owners to the public sector. The capital costs/du can be lowered by
changing standards, such as narrowing street design standards, having fewer trash pick ups,
etc. Public costs/du can also be lowered by shifting marginal capital costs to property
owners through impact fees.
The largest proportion of capital costs incurred in providing public services for new dvis are
due to the intraneighborhood services identified in this study, whose capital costs are most
sensitive to variations in development density and lot size; and to education, which is
usually the largest capital cost/du.
For interneighborhood and regional services, the effect of density, lot size, and type of du
has much less of an affect of capital costs, while population, locational attributes, and in
some cases, the type of du become more important. Design standards and service levels
continue to effect capital costs. The capital costs of interneighborhood and regional
services are, for the most part, relatively unaffected by changes in density and lot size. It
is difficult to properly allocate the correct proportion of capital costs for some
interneighborhood and regional services attributable to new residential development,
although the costs can be allocated accurately for some services, such as education, solid
waste, and recreation.
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Chapter 5
Conclusions
This chapter presents general conclusions that can be drawn from the literature, specifically
the material presented in Chapters 2 and 3, and in Appendices A and B. Data limitations
in the literature prevent detailed conclusions being made for all of the cost factors
identified in Chapter 3. However, some general conclusions can be made using the
classification of the services presented in Chapter 3. The conclusions will be general as the
literature does not always present unambiguous, quantitative results.
It is tempting when reviewing the literature to generalize about the cause and effect
relationship between the capital cost of serving residential development and the factors
that determine that cost. Nevertheless some basic conclusions can be drawn. It should be
remembered that the focus of these conclusions is on the capital cost of providing the full
range of local public services to a new residential development. The bundle of services
considered do not include the social services that would be provided in urban areas, nor do
they consist of extremely limited or low qualities of service that are often provided in rural
areas.
Some general overall conclusions will be presented below, followed by conclusions for each
of the three classes of service.
Conclusion 1: The capital cost/du of intraneighborhood services declines as
density increases and lot size diminishes, although the decline is due
primarily to development density and lot size, other factors also have an
effect.
The cost of these services, and their characteristics (for example, high capital intensity,
linear form, detailed network serving individual dus) make them most sensitive to
variations in lot size and development density. Smaller lot sizes and higher density
combine to minimize the length of pipes, local streets, streetlights, etc. along parcel
frontages. This conclusion assumes that the full bundle of services is being provided
(including water and sewer), that they are being publicly funded, and that median levels of
service are being provided. The use of more compact, higher density residential forms will
minimize capital costs/du up to a point. For very dense forms, such as high rise
apartments, capital costs/du begin to increase.
The cost of development studies reviewed in The Costs of Alternative Development Patterns
indicate that the capital cost/du of providing services declines as density increases and lot
sizes increase. There is a logical geometric and spatial basis for this argument in that
setting houses closer together clearly lessens the amount of pipe, sidewalk, roads,
streetlighting etc. per du, and thus lessens cost. Table 8 of The Costs of Alternative
Development Patterns shows that the total neighborhood capital costs/du (Frank's
definition—includes the cost of schools) declines from $36,300/du (1992 dollars) for a single
family du on a 1 acre lot to $15,500/du for cluster housing at 5 dus/acre.
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Frank made an important point about intraneighborhood services and education:
"By now it is apparent that the large items requiring outlays of capital associated
with residential building are the costs of sewers, water systems, streets, storm
drainage, and schools." "... An additional $2,000 or so above the amounts shown
in that table (Table 8 of The Costs of Alternative Development Patterns) can be
identified for other services (for example, police, fire, solid waste, general
government, sewer and water treatment facilities), but the magnitude of these costs
is not at all sensitive to the parameters of residential building."
The facilities noted by Frank are those whose capital cost is most sensitive to density and
lot size as shown by Table 3-2. However, the service and design level also effects ceipital
cost.
Windsor in his recalculation of The Costs of Sprawl showed infrastructure costs/du
decreasing from $17,600/du (1992 dollars) for a single family du to $12,800 for clustered
townhouses. After correcting for the methodological flaws he noted, Windsor still found a
decrease in capital costs/du, although his decrease was less dramatic than that calculated in
The Costs of Sprawl. The literature indicated that public infrastructure costs/du do decline
up to about 15 dus/acre; above that level, as for example with high rise apartments, capital
costs/du begin to increase. This conclusion should be tempered by the fact that other
factors are influencing capital costs. As a result, the magnitude of the effect based solely
on density is probably less than the literature indicated.
Conclusion 2: An increasing proportion of the marginal capital costsi/du,
particularly for capital intensive intraneighbhorhood services, are being
incurred by the homeowners through the imposition of impact fees and
proffer charges.
A crucial issue in assessing the cost of development is who incurs the cost for which
services? An increasing proportion of marginal intraneighborhood capital costs are being
borne by the homeowner through the imposition of impact fees and proffer charges.
Frank made this point in his study:
"Therefore, while large lots increase the cost of development, those increases are
largely paid for by the occupants of that development in the form of the sale price
of final dwellings rather than by existing taxpayers." (The Costs of Alternative
Development Patterns; 1989.)
This cost-shifting reduces, in the short-run, the marginal capital costs incurred by the local
government. This can have a positive effect on local finances when the infrastructure
contributions are reflected in higher assessed values and higher property tax revenues. In
the long-run, local municipal finances could be adversely affected as local governments
incur maintenance responsibilities for interior collector streets, and package water and
wastewater plants whose capital costs were incurred by homeowners.
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Frank also noted:
"Another implication is that in most communities, costs beyond the neighborhood
level are not fully passed on to the consumer as part of buying a house, whether
those costs are the extra amount induced by leapfrogging or the normal ones
associated with contiguous development." (The Costs of Alternative Development
Patterns; 1989.)
If home owners are not paying the full marginal capital cost, particularly for
interneighborhood and regional services, they are, in effect, being subsidized by the existing
residents of the jurisdictions. Such a subsidy could lead to an over demand for leapfrog
developments.
The use of impact fees to shift marginal capital costs onto property owners raises several
questions well beyond the scope of this study. The first question is whether people should
be allowed to obtain low density sprawl housing if they are willing and able to pay the full
marginal capital costs. Are there other types of external costs, specifically environmental,
that will occur even if the property owners incur the appropriate marginal capital costs?
Conclusion 3: Density and lot size are not the only factors that determine the
capital cost of providing intraneighborhood services. Service and design
standards also affect capital costs.
There are factors other than density and lot size that determine the capital cost of
residential development at the intraneighborhood level. Service and design standards
determine the width and pavement thickness of streets, type and capacity of drainage
improvements, and the diameter of pipes; all of these determine capital costs. Service and
design standards affect the capital cost of all three classes of services, while population and
capacity utilization have an increasing affect on the capital cost of interneighborhood and
regional services.
Conclusion 4: The precise contribution of cost factors in determining the
total capital cost/du remains unclear, particularly for interneighborhood and
regional services, but some idea of relative effects can be ascertained.
Tables 3-2, 3-4, and 3-6 make an attempt at beginning to understand the relative effects of
different factors. In some cases, the relative effects can be easily inferred. For example,
the length and capital cost of sewer collector pipe is clearly more a function of lot size and
development density than it is of the type of the dwelling unit. It becomes more difficult
to say with precision that the capital costs of labor-intensive interneighborhood services,
such as police, fire, elementary schools, and emergency medical, are more sensitive to gross
density than to service levels (Table 3-4 indicates that the capital cost of these four services
are sensitive to both factors). Service levels, such as the desired response time, may be
second only to the number of people to be served, in determining the number of trucks
and stations required. It is possible that gross density determines the size and shape of the
5-3
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service area, the number and length of routes that are required, which in turn will effect
annual O&M costs more than capital costs.
Conclusion 5: The greatest reduction in total capital costs/du through the use
of higher density residential development is achieved in intraneighborhood
services. The reduction in capital cost/du from the use of denser
development forms is greater at the subdivision or neighborhood level and is
smaller at the municipal, county, or regional level.
Higher densities decrease the length of linear infrastructure required per dwelling unit,
thus reducing capital costs. As noted in Table 3-2, the capital cost of intraneighborhood
services are highly sensitive to lot and net density, and are sensitive to gross density. As
noted by Frank above, infrastructure costs, other than streets, water systems, storm
drainage, and sewers, are not sensitive to the parameters of residential building.
Reductions in the capital costs for interneighborhood and regional services are produced
more by character of development and population factors. Gross density over a multi-
neighborhood service area determines the length and cost of trunk lines and arterials.
Conclusion 6: The use of compact, higher density residential development
forms produces a small percentage savings in capital costs at the regional
and state-wide levels.
The analysis of the Interim State Development and Redevelopment Plan, and The Greater
Toronto Area Urban Structure Concepts Study both showed infrastructure capital costs
savings between trend and compact alternatives to be between approximately 4 percent
and 8 percent. Cost of development studies indicate the potential for greater differences
in capital costs/du, particularly for intraneighborhood costs, at the subdivision or
neighborhood level.
Conclusion 7: Infill development or contiguous development will minimize
marginal capital costs for interneighborhood services and, to a lesser extent,
for regional services.
The Search For Efficient Urban Growth Patterns (Frank, 1989) contained the following
statement:
"The conclusion that can be drawn from this study is that the intuitive insights and
theoretical studies on the public costs of development have a basis in reality:
compact, infill and higher density land development is more efficient to serve than
scattered, linear, and lower density sprawl development."
The conclusions from the study (if not the actual cost figures because the study was done
in Florida) are relevant because it compared infill and leapfrog developments, and because
t estimated annual O&M and annual capital costs per du. There are clear short-run
capital cost advantages in locating new development either at infill locations, where eristing
5-4
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service systems have excess capacity (that is, marginal capital costs would be low), or
contiguous to existing service areas, where interneighborhood and, to a lesser extent,
regional marginal capital costs would be lower. For example, the cost of extending water
and sewer trunk lines, or new arterials, would be less because they would be shorter.
Intraneighborhood infrastructure capacity is less likely to be available as subdivision or
neighborhood level collection and distribution systems are designed to be used close to
capacity from start-up.
Infill development has another advantage. It is often cheaper, on a marginal cost basis, to
add small increments of capacity to existing systems than to construct a new larger facility
at another location. The "lumpy" nature of many systems and the ability to capture
economies in design and building often means that large increments of demand may have
to be added. In the short-run, this has the potential for requiring current residents to
subsidize the capital costs of new and future residents. It may be cheaper to add new
classrooms to an existing school building, construct a sewer collector or trunk line, or add
new police and fire squads to nearby fire and police stations. It may not be possible to
cheaply expand all infrastructure systems in infill locations, particularly in more urban areas
where it would be costly to expand roads, sewer, and water infrastructure.
The only way to properly analyze the potential benefits of infill development would be
through a life cycle cost analysis in which long-term operating costs, and potential future
rehabilitation and expansion capital costs would be considered. Infill locations may not
offer the same initial level of service as other locations.
Conclusion 8: Increases in the population growth rate and population density
produce increases in local per capita annual O&M expenditures and, to a
lesser extent, in annual per capita capital spending..
Recent research by Ladd and others has shown that counties experiencing an increase in
population density also experience an increase in per capital annual O&M costs and, to a
lesser extent, annual per capita capital costs. This affect occurs for counties with
population densities between 250 and 1,250 people per square mile. The size of the
population density correlates directly with the increase in per capita spending—the higher
the density, the higher is per capita spending.
Ladd's study identified two main effects of population growth: a surge-effect in which the
short-term per capita costs decrease because local governments are slow to respond to
increases in population and try to serve more people with the same facilities; and a long-
term effect in which the increase in population density increases per capita spending. At a
county or Chesapeake Bay region-level, a continued increase in population density,
particularly in rural counties located at the edge of metropolitan areas whose population
density is more than 250 people per square mile (Carroll and Washington in Maryland,
and Chesterfield in Virginia), will increase local per capita spending.
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Conclusion 9: The capital cost/du of providing services is only a minor
proportion of the total annual costs/du (annual O&M cost plus annualized
capital cost).
As noted at the end of Chapter 3, annual capital costs comprise may comprise 20 to 30
percent of the total annual local government cost of serving a du. By focusing too
narrowly on land use and capital improvement policies designed to limit capital costs, local
officials may be missing opportunities to control the majority of the annual costs/du. The
proportion of annual capital costs to total annual costs may vary according to service levels,
economies of scale achievable in providing new services, and current capacity utilization.
Reductions in annual O&M costs, particularly for labor-intensive interneighborhood
services, can be achieved by changing service standards. Annual O&M costs are also
sensitive to land use policies that affect the gross development density and the total
population of a service area.
Conclusion 10: Not all local jurisdictions provide comparable bundles of
services, either in terms of the types provided or service levels. This
complicates comparing the cost of providing services to dus located in rmral
as opposed to those in suburban areas.
In rural areas, some government services are either not provided, are provided by the state
government, or the costs are incurred by the property owners (for example, septic systems
and private wells). Fair comparisons can be made across different residential development
forms only when the same range of services at comparable levels of service are compared.
A policy that allows low-density residential development on large lots where septic systems
and wells are used (and perform satisfactorily) will lessen, in the short-term, public capital
outlays for infrastructure, with the costs incurred by the homeowner. Several reviewers
noted that, over the long-term, scattered low density residential development may produce
environmental impacts, lead to congestion of local roads, and possibly require the local
community to incur substantial future capital costs in extending sewer and water service.
Conclusion 11: Demographic characteristics of the occupants of dus to be
served are a major factor in determining the demand for and resulting cost
of providing labor-intensive services to new residential development.
In many of the studies reviewed for this report, particularly county-level fiscal impact
assessment models, both the capital cost and annual O&M costs of providing labor-
intensive services, such as education, police, fire, solid waste, and emergency medical, are
dependent upon demographic characteristics, particularly the number of persons and
school-age children per du. The capital cost of such regional services as water, waste water
treatment, and high schools are also highly sensitive to the size of the population to be
served.
Education costs are determined by the number of school-age children to be served, which
in turn is closely related to the type of dwelling unit. Several reviewers noted that the
5-6
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demand for police and fire services, as measured by the number of service calls, is most
closely related to the total population of a service area, regardless of the form or type of
dus, although the type of du may affect the demand for police services. Local policy
makers, particularly when forecasting future fiscal impacts, need know the demographic
characteristics of the population to be served, particularly as they may vary by type of du.
It may be misleading to state that a change in the size of the population to be served is
due to a change in the composition of dwelling units (that is, increasing the proportion of
multi-family housing will decrease the number of school-age children), particularly at the
regional level.
Several reviewers have noted that the education and income levels of the inhabitants could
be a factor in the demand for public services. The literature contains little on this
question. As Ladd noted, the income elasticity of demand for public services is positive.
Meaning that, on average, higher-income residents will demand more public services—
either a larger bundle or services or an increase in service levels. This could be a factor in
rural counties experiencing an in-migration of more affluent residents.
Conclusion 12: The cost of providing education services, both capital and
operating, is the largest cost/du in most local budgets. Education costs are
only minimally sensitive to development density, lot size, and to a lesser
extent, the location of new development.
Education costs (K to 12) comprise approximately 60 to 65 percent of total local
government annual expenditures in most areas and is therefore the largest component of
total annual service costs/du. Education also comprises the largest capital cost/du to serve
new residential development. Capital costs of education are only minimally sensitive to lot
size, density, and location; but are sensitive to the type of du, number of school age
children, and service standards. It is likely that the income level and educational
attainment of residents plays a significant role in determining the demand for education
services.
Presented below are some conclusions for each of the three types of services considered by
this study.
Intraneighborhood Services
Because of their linear, capital-intensive nature, the capital costs of intraneighborhood
services are the most sensitive to the form and development density of residential
development. Intraneighborhood services also have the greatest potential for shifting their
capital costs from local governments to property owners through the use of impact fees.
• The capital cost of all but one intraneighborhood service is highly sensitive to
lot size and net development density, the exception being stormwater
* structures. Both factors interact to determine the spacing between dwelling
5-7
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units; frontage length of pipe, streets, street lighting, and sidewalks required
per residential lot; and, ultimately, capital cost.
Intraneighborhood capital costs are slightly less sensitive to gross density than
to net density. Where gross and net densities are nearly equal, as in
standard subdivisions where there is no clustering, capital costs will be highly
sensitive to gross density.
Intraneighborhood services can be provided most efficiently (cost/dwelling
unit) for high-density, compact, residential developments, although density
and lot size are not the only important factors. As shown in Table 3-2,
intraneighborhood capital costs also are sensitive to service and design
standards.
The marginal capital cost of providing intraneighborhood facilities to new
residential development is much lower when density is increased or infill
development occurs than it is when the new development is built in unserved
areas in a leapfrog or scattered form. Changes in density and, thus flow
coming from within a given residential area, produce relatively small changes
in the capital cost of intraneighborhood and interneighborhood facilities,
particularly water and sewer pipes.
Interneighborhood Services
The capital cost of interneighborhood services are, in general, less sensitive to lot size and
net density, and are more sensitive to gross density and the size of the population 1:0 be
served. The major conclusions about interneighborhood services are presented below.
• The capital cost of interneighborhood services is less sensitive than that of
intraneighborhood services to the development density and lot size of the
residential areas being served, and is more sensitive to population density
within the service area and locational factors.
• The cost of linear, interneighborhood services, such as water, sewer, and
stormwater trunk lines, and roads, are highly sensitive to the gross
development density of the service area. This determines the total length of
the network that connects demand centers, such as neighborhood and
subdivisions, with interceptors or central treatment facilities.
• The most expensive residential land use pattern, in terms of capital cosrs/du,
consists of scattered, noncontiguous neighborhoods or subdivisions which
produce lower service area gross density.
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The capital cost of interneighborhood services, with the exception of
education, are a much smaller proportion of total capital costs/du than are
those of intraneighborhood services.
Capital costs for education, reflected in the number of schools and
classrooms required, are highly sensitive to the type of du, which determines
the number of school-age children. Education capital costs are also sensitive
to population density, which determines the number, size and location of
schools; and are sensitive to service standards, such as the number of
students/classroom.
Locating new residential development at the edge of existing service areas
decreases the capital and annual costs of providing interneighborhood
services. The capital cost of providing the linear capital facilities that
connect a new development to the existing infrastructure systems is
minimized. A contiguous location also allows for the more cost-effective
provision of the capital facilities that support such labor-intensive
interneighborhood services as solid waste, police, fire, and emergency
medical.
Regional Services
In general, the capital costs for providing regional services are most sensitive to the
population factors and service standards, and are not sensitive to the development density,
type, and location of the new residential development. Regional services, with the
exception of general government, generally are provided in large increments of capacity,
have long service lives, and often enable economies of scale in unit capital and O&M costs
to be obtained.
• The capital costs of water and wastewater treatment, water supply facilities,
and solid waste disposal facilities are highly sensitive to the number of
persons to be served, which includes both the current and projected
populations. Often these facilities must be designed with substantial initial
excess capacity to accommodate future development.
• The capital cost of most regional services are sensitive to service
characteristics, specifically to service standards and capacity utilization.
Design standards determine the capital cost of regional facilities through
engineering standards and through regulations that may specific treatment
methods. Under-utilized regional facilities, particularly water and
wastewater treatment plants, highways, and water supply facilities, can
impose high initial marginal costs on existing residents.
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Groups Contacted by CH2M HILL for
Chesapeake Bay Development and Cost Analysis Study
Group
Ad Hoc Associates
Adams County, PA, Planning Commission
American Farmland Trust
Anne Arundel County, (MD) Department of Economic
Development
Anne Arundel County, MD Department of Planning and
Zoning
Baltimore Metropolitan Council
Baltimore County Department of Economic Development
Baltimore County Department of Planning and Zoning
Bucks County, PA, Planning Commission
Center for Rural Massachusetts, Amherst
Center for Urban Policy Research, Georgia State University
Center for Development and Population Activities
CH2M HILL, Reston, VA Office
Chesapeake Bay Foundation
Chester County, PA, Planning Commission
Claremont Institute
Cumberland-Dauphin-Perry Counties, PA, Joint Planning
Commission
CUPR, Rutgers University
Duncan and Associates
Fairfax County, Virginia, Department of Comprehensive
Planning
Fairfax County Federation of Citizens Association,
Transportation Committee
Fairfax County Chamber of Commerce
Florida Joint Center for Environment and Urban Problems
Florida Atlantic University (FAU)/Florida International
University (FIU), Joint Center for Environmental and
Urban Problems
Fulton Research
Contact
Deborah Brighton
John Callenbach
Julie Freedgood
Lynn Palmer
Bob Winchester and Sandy Spear
Eleanor Krell and Jack Anderson
Beth Grouse
Bev Merely
Robert Moore and George Spoils
Kalhy Conway
Brad Doss
Dave Conover
Christine Pauly
Bob Walker
Larry Ain
Tina Fackler
Bob Burchell
James Duncan
Noel Caplan and Beter Braham
George Smith
Clark Massey
John DeGrove and
Marie York
Tom Wilson-FIU and Marie York
FAU
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Groups Contacted by CH2M HILL for
Chesapeake Bay Development and Cost Analysis Study
Group
Governor's Commission on Urban Development Problems
Graham Associates, Loudoun County, VA
Housing Research Center, Virginia Polytechnic Institute
Howard County, MD Planning Department
International City Managers Association
Johns Hopkins University
Lancaster County, PA, Planning Commission
Law Center, Albany Law School
Lincoln Institute of Land Policy
Lincoln Institute of Land Policy
Loudoun County, Virginia, Department of Economic
Development
Loudoun County, VA
Maryland Office of State Planning
Metro-Dade County Department of Public Works
Metropolitan Wash COG
Minnesota Department of Agriculture - Planning
Development
Montgomery County, PA
Montgomery County, MD Department of Economic
Development
Montgomery County, MD
National Science Foundation
National Growth Management Leadership Project
National Association of Home Builders
National Association of Home Builders
Research Center
National Lands Trust
Contact
Ben Starrett
Ben Graham
Ted Koebel
David Holden and David Cook
Reference Librarian
Dr. Phillip Curtin and Grace Bush
Dean Severson
Patricia Salkin
Charles Fausold
Dick Tustian
Terry Holtsheimer and Roselle
George
Karen Gavrilovic
Henry Kay
Larry Jenson
Robert Griffith, Jim Schell, and Pa ul
DesJardin
Paul Burns
Arthur Loeben, Director
Bob Catineau
Lambert Yogi, Andrew Pretz, and
Fred Peacock
Dan Newlon and Brian Hawley
Sandy Hillyar
Dave Crowe and Joe Molinaro
Carol Shaake
Randall Arendt
G-2
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Groups Contacted by CH2M HILL for
Chesapeake Bay Development and Cost Analysis Study
Group
Natural Resources Defense Council
New Jersey Office State Planning
Northern Virginia Planning District Commission
Northern Virginia Building and Associates
Northern Virginia Planning District Commission
Northern Virginia Building Industry Association
NRDC National Resources Defense Council
Office for the Greater Toronto Area
Office of Management and Budget
One Thousand Friends of Oregon
Population-Environment Balance
Prince George's County, MD Department of Planning and
Zoning
Prince Georges County, MD
Prince William County, Virginia; Long Range Planning
Division
Private Consultant
Regional Plan Associates, NY
Resource Management Consultants, Inc.
Richmond Regional Planning District Commission
Strom Thurmond Institute to Clemson University
Suburban Maryland Building Industry Association
United States Department of Housing and Urban
Development
University of North Carolina
University of Florida, Holland Law Center
University of Florida-Bureau of Economic and Business
Research
University of Massachuttes - School of Architecture (Land
Use, Incorporated)
Contact
Jessica Landma and Richard Cohn-
Lee
John Epling
Mike Cocoska and Kimberly Davis
Scott McGary and Ben Graham
Kimberly Davis
Scott McGary
Jessica Landman
Sylvia Davis
Chris Heiser
Kevin Kasowski
Mark Nowak
Joe Valenza
Stuart Bendelow
Dan Ulrich, Gerald Mucci, and Tom
Eitler
Douglas Porter
Bob Yaro
Robert Gray
Tim McGarry
Jeff Allen
Haymer Cambell
Joe Siegle, Dave Engle
Dave Freedom and Paul Batons
Dr. Micheal Stegman and Ray
Burbee
Dr. James Nichols
Anne Shermyan
John Mullen
G-3
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Groups Contacted by CH2M HILL for
Chesapeake Bay Development and Cost Analysis Study
Group
Urban Land Institute
Virginia Polytechnic Institute-SU, Agricultural Economics
Virginia Comm. on Population, Growth & Development
Virginia Commonwealth University
Virginia Department Housing & Community Development
Virginia Center for Public Service
York County, PA, Planning Commission
Contact
Tom Black
Dr. Tom Johnson
Katherine Imhoff
John Moeser and Gary Johnson
Shea Hollifield, Alice Fascitelli, and
Paul Grasewicz
John Knapp
Reed Drum, Director
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the New Jersey Office of State Planning. Rutgers University Center for Urban Policy
Research. February 28, 1992.
Impacts of Development on Dupage County Property Taxes. Prepared for the Dupage
County Regional Planning Commission. Dupage County Development Department
Planning Division. October 9, 1991.
Infill Development Strategies. Prepared for U.S. Department of Housing and Urban
Development, Office of Policy and Research. Washington, DC: Real Estate Research
Corporation. 1982.
Johnson, Thomas G. A Cross-Sectional Econometric Model of Local Fiscal and
Economic Relationships. Virginia Polytechnic Institute and State University.
Johnson, Thomas G. "Fiscal Impacts of Economic Development." Responding to the
Crises in the Rural South: Highlights of Selected Public and Private Sector Initiatives.
Southern Rural Development Center, Mississippi State, MS. October 1987.
Kotval, Zenia, and John R. Mullin, Ph.D. A Fiscal Impact Analysis Technique: The
Pawling Model. Final Draft. Hadley, MA and Ashland, MA. May 1992.
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Ladd, Helen F. "Population Growth, Density and the Costs of Providing Public
Services." Urban Studies. Vol. 29, No. 2. 1992. Pp. 273-295.
MIS Report: Analyzing the Fiscal Impact of Development. Washington, DC: ICM A.
July 1988.
Nicholas, James C. The Calculation of Proportionate-Share Impact Fees. Chicago, IL.
1988.
Oak Terrace Residential Golf Community Fiscal Impact Assessment. Prepared for
Hansen Communities, Horsham, PA. Philadelphia: Rogers, Golden & Halpern.
September 1989.
Parsons, George R. "The Effect of Coastal Land Use Restrictions on Housing Prices:
A Repeat Sale Analysis." Journal of Environmental Economics and Management.
Newark, DE. February 5, 1991.
Peiser, Richard P. "Does it Pay to Plan Suburban Growth?" Journal of the American
Planning Association. Chicago, IL. Autumn 1984.
Policy Water/Sewer Extensions (Proposed). Chesterfield, VA: Chesterfield County
Board of Supervisors. 1987.
Ross and Associates. Final Observations and Recommendations Regarding the "True
Cost" of Growth.
The Southern and Western Area Plan. Draft. Chesterfield, VA: Chesterfield County
Planning Department. May 1992.
Sykes, Robert D. Protecting Water Quality in Urban Areas: Best Management Practices
for Minnesota. October 1989.
Tischler and Associates. Service Level, Cost and Revenue Assumptions: Evaluation of
Development Concepts-Howard County, Maryland. Bethesda, MD. January 1990.
Pp. 22, 32, 44, and 57.
Trip Generation. Institute of Transportation Engineers. Washington, DC. 1987.
Upper Swift Creek Plan. Chesterfield, VA: Chesterfield County Planning Department.
February 13, 1991.
U.S. Department of Commerce. Bureau of the Census. County and City Data Book.
May 1988.
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U.S. Department of Housing and Urban Development. Advisory Commission on
Regulatory Barriers to Affordable Housing. Not in My Back Yard: Barriers to
Affordable Housing. 1991.
Windsor, Duane. "A Critique of the Costs of Sprawl." Journal of the American
Planning Association. Washington, DC. July 1979.
York, Marie L. Encouraging Compact Development in Florida. Fort Lauderdale, FL.
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Appendix A
Review and Analysis of Relevant Studies
This appendix reviews the most recent relevant cost of development studies and focuses
on those that have attempted to measure or estimate the costs of providing public
services to alternative residential forms and to different land uses. This report does not
provide a review of The Costs of Sprawl, clearly the most well-known cost of
development study. The Costs of Sprawl has been reviewed a number of times. Three
reviews in particular (Frank, 1989; Windsor, 1979; and Altshuler, 1977) were read for
this study.
The results of The Costs of Sprawl were presented in a manner most compatible with
the objectives of our study in Frank's The Costs of Alternative Development Patterns,
which is reviewed below.
The objective of this appendix is to identify the trends in the literature, including:
• Describing the types of methodologies used in the studies, focusing on
their relevance to the Chesapeake Bay region
• Identifying the factors that influence the cost of providing public services
to residential development
• Describing how these factors vary in terms of their influence on capital
costs
• Determining, if possible, the cost of providing public services (in $/du) to
different residential forms
While seeking to identify these trends, the review of each study continually focuses on
the question of how applicable the results are to the Chesapeake Bay watershed. The
costs presented in this section are presented in 1992 dollars, unless otherwise noted.
Impact Assessment of the New Jersey
Interim State Development and Redevelopment Plan
The New Jersey Office of State Planning (OSP) was formed in 1986 to create a State
Development and Redevelopment Plan for New Jersey. The State Planning Act
contained six principles to be followed in preparing the plan. The Preliminary State
Development and Redevelopment Plan was released in 1989 and went through a process
of cross acceptance in which local municipalities made changes to their zoning
ordinances and master plans and the OSP made changes to the preliminary plan so that
there was consistency between them.
A-l
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The result of this process was the Interim State Development and Redevelopment Plan,
called the IPLAN Communities of Place, issued in July 1991. The major strategy of the
IPLAN was
"to achieve all the state planning goals by coordinating public and private
actions to guide future growth into compact forms of development and
redevelopment, located to make the most efficient use of infrastructure systems
and to support the maintenance of capacities in infrastructure, environmental,
natural resource, fiscal, economic and other systems."
The IPLAN encouraged the development of five types of population centers: urban
centers, towns, regional centers, villages, and hamlets. The IPLAN stated that "centers
are compact forms of development that, compared to sprawl development, consume
less land, deplete fewer natural resources and are more efficient in the delivery of
public services."
The IPLAN categorized land areas located outside these population centers into five
designated planning areas. The planning areas are intended to guide the application of
the policy objectives of the State Plan and guide local planning and zoning decisions.
These areas were delineated based on their desired minimum or maximum population
density, proximity to public water and sewer, size, and distance to metropolitan centers.
The policy objectives for each area present the desired mix of land uses, housing types,
economic activities, transportation policies, and other uses.
The IPLAN's emphasis on encouraging more compact development forms, particularly
in and adjacent to the centers, made it very controversial. Many people questioned
whether the IPLAN's major strategy would produce the desired economic, social, and
environmental benefits. As a result, the OSP conducted a comprehensive impact
assessment of the IPLAN that compared its impacts with those that would occur if the
current development trend continued. The impact assessment considered the following
general types of impacts: economic, fiscal, environmental, infrastructure, community
life, and intergovernmental coordination.
The following analysis focuses on the fiscal impact and infrastructure components of
the impact assessment.
Methodology
Fiscal impacts were evaluated in two ways: (1) the net fiscal impacts on local
municipalities and school districts were calculated, defined as annual revenues less
annual capital and O&M costs; and (2) the amount and cost of infrastructure
(transportation, water and sewer, and schools) were estimated.
The same population and employment totals were used in comparing the IPLAN and
TREND scenarios. TREND was defined as the continuation of historic growth
patterns in the state. This pattern has consisted of relatively unmanaged growth driven
A-2
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TREND and the IPLAN. Along with cost inputs, the fiscal impact assessment model
also required revenue inputs. These included value and composition of the real
property tax base, tax rates, and per capita estimates of non-property tax revenues.
The model produced a total of 26 outputs. These included estimates of future seirvice
costs (outputs 1 through 13), revenue generation (outputs 14 through 22), and net fiscal
impacts (outputs 23 through 26).
Before running the model, the impact assessment report anticipated that there could be
differences between the TREND and IPLAN scenarios for the following reasons:
• The two scenarios may differ in the level of population and jobs at the
municipal level; at the regional and state levels the scenarios are the
same. These two primary drivers of demand for local government
services would be reflected in different fiscal outcomes (IPLAN and
TREND used the same state-wide population and employment figures).
• The IPLAN's more concentrated growth patterns would produce higher
land costs, which in turn provide higher real property tax revenues for
those municipalities receiving the new population and employment.
• IPLAN could distribute growth into municipalities where service costs are
lower. IPLAN directs growth into municipalities with excess
infrastructure capacity and into municipalities that have historically lost
population, which also have excess service capacities.
• The land use characteristics of IPLAN (that is, higher density and
clustered development relative to TREND) will provide sei"vice
efficiencies resulting in lower costs. Initial per capita infrastructure needs
are lower under IPLAN which, in the short run, lowers new infrastructure
capital costs and which, in the long run, lowers annual O&M costs (fewer
lane miles of roads to maintain, fewer school buildings, and fewer miles
of water and sanitary sewer pipe).
One could argue if and how much the concentration of growth into areas with excess
infrastructure will increase property values and ultimately property tax revenues to local
governments. While it is possible at a macro-level that channeling the same amount of
development into a smaller area will increase pressure and property values, it is not
clear how significant this will be in older urban areas as compared to already developed
suburban areas that have higher locational and amenity values. These suburban areas,
as opposed to central cities, are more likely to be desired by new development, unless
there is no chance for developers to avoid locating in central city areas.
A-4
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Infrastructure—Local and State Roads
The road infrastructure assessment evaluated three approaches for estimating the
demand for road infrastructure produced by alternative land use patterns:
• A model developed by the New Jersey OSP
• The Florida model developed by James Duncan and Associates
• A model developed by Rutgers' Center for Urban Policy Research
(CUPR) for Maryland
OSP Model. The primary rationale underlying the OSP's model was that the demand
for transportation infrastructure, as measured by total lane miles of roads, is a function
of population density. The density of population determines the number of trips that
will be generated within an area, which then determines the demand for road
infrastructure.
Regression analysis was used to estimate an equation that forecasts local road density
(measured as center-line miles of roadway per square mile) as a function of municipal
population density. The regression analysis produced sufficiently high correlations to
warrant its use. Local road density was then converted to an estimate of total lane
miles. Total capital cost was estimated using capital costs per lane mile of new
roadway. The study considered municipal, county, and state roads. Although the study
attempted to exclude intra-neighborhood streets within subdivisions that had been paid
for by the homeowners (where maintenance responsibility for these roads has been
transferred to the local municipality), these streets may have been included in the
study.
Florida Model. The Florida model more explicitly considers land use variables by using
as inputs land use type, density, trip lengths for residential and non-residential trips,
and roadway capacity. This model was designed for urban and suburban areas, and is
not designed for rural areas. Estimates for the inputs were obtained from eight case
studies conducted in Florida that analyzed residential development patterns ranging
from low-density, leap-frog development to high-density, urban development.
Roadway costs were estimated as a function of the number of peak hour trips by land
use type, average trip length, percent of new trips, peak hour lane-mile capacity at
different levels of service, and average capital and right-of-way (ROW) costs.
CUPR Model. CUPR's model (developed for Maryland) estimates total road costs as
a function of land use type, where the demand for each land use type is determined by
the total number of households and employment that will be created there. CUPR's
model contains empirical estimates of road capital costs per dwelling unit and per 1,000
square feet of non-residential floor area. These cost factors were obtained from impact
fee studies performed around the country. Capital cost estimates obtained by
multiplying the number of dwelling units or employment by the cost factors were then
adjusted up or down to account for efficiencies due to type of development
A-5
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environment (developed, growth, and rural), the use of clustering for trend growth, and
the use of clustering in planned growth.
The OSP planning model was selected to be used in the study because of the scope of
the study and the model's relatively simple data and computational requirements.
The model used one figure of $400,000/lane mile for the cost of local roads. This
number was based on discussions with state and local transportation engineers and was
felt to reflect an overall state-wide average, regardless of the location. Three different
figures were used for state highways: $3 million/lane mile in rural areas, $6 million/lane
mile in suburban areas, and $9 million/lane mile in urban areas. These differences
reflect both the difference in construction and the cost of ROWs in these areas.
Infrastructure—Water and Sewer
The fiscal impact study also estimated the amount of water and sewer infrastructure
required under the IPLAN and TREND scenarios. The capital cost of the water
infrastructure for residential demand was based on the number of hookups required.
The number of hookups was obtained from the population projections. Capital cost
factors expressed as $/hookup were developed or obtained from literature that
considered developments in rural vs suburban and urban areas, the type of
infrastructure required, and cost efficiencies gained by clustering.
The OSP developed a sewer cost model that used survey data on existing wastewater
treatment systems in New Jersey. The demand for sewer infrastructure was based on
the population and employment forecasts by municipality. Total wastewater flows were
estimated using per capita demand figures. Capital cost factors from the USEPA for
seven components of a wastewater treatment system (secondary treatment, advanced
treatment, infiltration/inflow, replacement/rehabilitation, new collector lines, new
interceptor lines, and combined sewer overflows) were then used to estimate total
capital costs.
The CUPR adjusted the OSP model to take into account the variation in collection
system capital costs due to the density of development (the number of dwelling units
per acre). Collection system capital costs per dwelling unit were assumed to be higher
in low-density areas and to be lower in high-density areas. Finally, adjustments in
capital costs were made to reflect differences in construction costs in different parts of
the state.
Infrastructure—School
The first step in estimating school infrastructure costs was to convert the municipal
population and housing unit projections into total enrollment. This was done using
empirically derived population ratio factors that estimated school enrollment as a
percentage of total population. This approach was taken instead of the multiplier
approach because of the magnitude and data needs of a statewide study. (The
A-6
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multiplier approach determines school enrollment based on estimates of the number of
school-age children per dwelling unit for different dwelling unit types).
The study then estimated the future demand for classrooms based on the projected
enrollment. The capital cost figures took the grade distribution of students into
account. The OSP model estimated net enrollment from the gross enrollment, based
on the ratio of actual enrollment to enrollment capacity for individual school districts.
Capital cost figures (square foot/pupil) were then multiplied by the net enrollment
projections to estimate capital cost. The capital cost figures took into account
differences by grade (costs per square foot are higher for high school students than
those for elementary students), location (construction costs are higher in northern New
Jersey than those in southern New Jersey), and area (costs are higher in urban and
suburban areas than those in rural areas because of higher land costs).
The result was that while the same total increase in enrollment was forecast for both
plans, IPLAN would take more advantage of schools with existing excess capacity. The
net increase in pupil spaces required is less under IPLAN than that under TREND.
The capital cost required for schools is $18.1 million less under IPLAN, or 3.4% less,
than the capital cost under TREND.
Results
The research findings were summarized by comparing the impacts of the TREND and
IPLAN scenarios. The net fiscal impacts were the difference between annual revenues
and annual costs (capital and O&M). The capital costs were the total value of
expenditures that would have to be made between 1990 and 2010 to accommodate the
demands of growth.
Fiscal Impacts
The study showed that the net annual fiscal impacts would be more positive under the
IPLAN scenario than under the TREND scenario: either the fiscal surpluses would be
greater or the fiscal deficits would be smaller. By 2010, the IPLAN scenario would
produce an annual net fiscal benefit of $112 million for New Jersey municipalities
compared to the annual benefit under TREND. While total service costs would be
slightly higher under IPLAN than under TREND, annual revenues would also be higher
under IPLAN. Growth would be directed into already developed areas where land and
buildings would have a higher value and produce more property tax revenues.
Similar results were forecast for schools. By 2010, annual school expenditures under
IPLAN would be slightly lower than those under TREND, while revenues under IPLAN
would be slightly higher than those under TREND. The net fiscal deficit for schools in
2010 would be $266 million less under IPLAN than that under TREND.
The combined municipal and school fiscal impacts projected that, in 2010, the annual
fiscal deficit under IPLAN would be $398 million less than the annual deficit under
TREND. These deficits under IPLAN and TREND represent only a small proportion
A-7
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of total revenues. The combined (municipal plus school) fiscal deficit under IPLulN is
equal to only 1.6 percent of anticipated revenues, while the combined deficit under
TREND is equal to only 3.8 percent of anticipated revenues. The difference in the
overall net fiscal impacts between the two scenarios is small and both scenario's net
fiscal impacts are relatively small (approximately 2 percent of total revenues).
The primary reasons for these savings in annual service costs include the following:
• IPLAN would concentrate growth in areas with existing infrastructure
capacity where the marginal costs of providing services to new residents
are low
• The use of more compact development forms under IPLAN results in
less infrastructure than that required under TREND, which reduces
annual debt service and O&M costs
In summary, the study noted that:
"In short, the differing land use scenarios affect, but do not dramatically alter
the local municipal and school district financial consequences. For both
TREND and IPLAN an overall moderate fiscal impact deficit ensues measured
against the full revenue base (IPLAN, p. 81)."
Infrastructure— Local and State Roads
IPLAN would require 1,600 fewer lane miles of local roads and 27 fewer lane miles of
state roads by the year 2010 than TREND would require. IPLAN would produce
capital cost savings (roads that do not have to be built) of $650 million for local roads
and $90 million for state roads, for a combined capital cost savings of $740 million by
the year 2010.
Infrastructure— Water and Sewer
The increase in demand for water and sewer service between 1990 and 2010, under
IPLAN, would be 57.5 million gallons per day and 46.7 million gallons per day,
respectively. The comparable figures for TREND would be 60 million gallons per day
and 46.1 million gallons per day. The capital cost savings under IPLAN for providing
water infrastructure were estimated at $61 million because of the greater use of existing
infrastructure, greater clustering of dwelling units, and a greater proportion of attached
and multifamily housing units under IPLAN. All of these reasons reduce the per capita
demand for water, specifically for outdoor uses such as lawn watering and swimming
pools.
The higher increase in demand for sewer service under IPLAN is because of the
concentration of new dwelling units in already developed areas. In contrast, under
TREND, a slightly smaller number of dwelling units would be dispersed throughout
A-8
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suburban and rural areas on more total acreage, where they would use on-lot septic
systems instead of municipal systems. While water demands vary across housing type
due to outside water use, sewer demand does not vary as much by dwelling unit type.
Therefore, demand for sewer services does not vary much between TREND and
IPLAN.
By the year 2010, even with its slightly higher demand, IPLAN would result in a capital
cost savings of $379 million for water and sewer infrastructure. This cost savings is due
to a number of factors, including greater use of existing systems with surplus capacity
and greater use of higher density residential development forms, both of which produce
lower collection system capital costs per dwelling unit.
Infrastructure—Schools
Although both scenarios would have to accommodate the same gross increase in
enrollment of 330,700 students, the net demands for new classroom space would differ.
IPLAN would require a total of 278,000 new pupil spaces by the year 2010, as
compared to the 288,000 spaces required under the TREND plan. Under IPLAN,
more new growth will be directed into already developed areas that have excess school
capacity. The capital cost to accommodate the new students would be $5.115 billion
under IPLAN and $5.296 billion under TREND, resulting in a capital cost savings of
$181 million under IPLAN.
There appears to be some slight inconsistency between the two plans in projecting
enrollment. Since IPLAN would have a greater proportion of attached housing units,
which have fewer students per dwelling, it should have resulted in IPLAN having a
lower gross enrollment increase. However, this was not the case. If this was the case,
the net fiscal impacts under IPLAN would increase somewhat.
Summary and Applicability
The impact assessment of IPLAN indicates that there would be substantial annual cost
and total capital cost savings produced by a combination of concentrating new
development in centers at higher densities and by directing development into areas with
existing capacity in their service systems. At a state-wide level, the savings produced by
IPLAN are substantial in absolute dollars. However, when the savings are viewed as a
percentage of total capital costs or annual revenues, they are small. This study's
findings are significant to the Chesapeake Bay region because the findings are state-
wide in terms of land use and development patterns. This study goes well beyond other
studies that have looked at specific residential development patterns at either the
subdivision or community levels (for example, The Costs of Sprawl, and Cost Effective
Site Planning), and presents for the first time an estimate of the magnitude of the
economic savings. The study also describes the other types of savings, such as
environmental and quality of life, that could be achieved by state-wide or region-wide
growth management.
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Because of the state-wide scope of the impact assessment, it does not present specific
estimates of the capital and O&M costs per dwelling unit for different types and
densities of dwelling units in providing services to new residential development.
However, the research assumptions and underlying cost factors used in the study
indicate that the savings are produced by a combination of needing less infrastructure
per new dwelling unit under IPLAN and by taking advantage of existing infrastructure
capacity. This combination would result in low marginal capital costs for servicing new
dwelling units.
Table A-l presents some of the major impacts forecast in the study. The table shows
clear differences between IPLAN and TREND. The number of housing units are very
similar under the two scenarios. The sewer costs are less under IPLAN because more
growth would be directed into areas with excess capacity, in spite of the higher
proportion of dwelling units under TREND that would use septic tanks. Over a 20-
year period, the IPLAN concept of concentrated growth (including both residential and
non-residential growth) would produce savings in capital infrastructure costs of $1.36
billion for the same amount of population, school children, and employment, and
almost the same exact number of houses, but built on 127,000 fewer acres of land.
Table A-l
Impact Differences Between IPLAN vs TREND From 1990-2010
(1992 Dollars Where Applicable)
Category/Units
Population Growth (persons)
Employment Growth (employees)
Land Consumption (acres)
Number of Housing Units
Water ($ millions)
Sewer ($ millions)
Roads (S millions)
Education ($ millions)
Total Capital Cost of Water, Sewer
Roads, and Schools ($ millions)
TREND
520,000
654,000
292,000
430,447
S634
$6,790
$2,924
$5,2%
$15,644
IPLAN
520,000
654,000
165,000
431,105
$573
$6,411
$2,185
$5,115
$14,284
Diff.
0
0
+ 127,000
-658
+$61
+$379
+$739
+$181
+$1,360
%
0
0
43.5
0.15
9.6
5.6
25.2
3.4
8.7
A-10
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The cost savings would be produced for the following reasons:
• Higher development densities that enable services and infrastructure to
be provided more efficiently
• Development closer to existing development and in-fill development that
minimizes the amount of new, regional connective infrastructure required
• Using existing infrastructure systems with excess capacity that result in a
minimal marginal capital cost for serving new development
• The use of residential development forms and types, such as attached
housing, clustering, and multi-family housing, that reduce service demands
per dwelling unit
• Higher density development forms that reduce the length of linear,
capital-intensive infrastructure such as water, sewer, stormwater, and
roads required per new dwelling unit. Because the cost of these systems
is the most sensitive to the form of residential development, substantial
capital cost savings would be achieved.
An interesting question raised by one of the reviewers (Avin, 1993) is to what extent
demographic multipliers and service demands will change significantly based on the
change in the type of housing. Changes in the housing mix at the local level may
change demands and demographic multipliers in the short run (that is, families decide
to live elsewhere due to a lack of single family detached homes in one community). In
a larger area, such as a region or a state, this would not occur in the short-run.
Families would be required to move into attached housing because of the decline in
single family detached housing units. At a state-wide level, using dramatically different
estimates of residents and students per dwelling unit would tend to overestimate the
reduction in service demands produced by increasing the proportion of attached
housing.
This study is the largest and most comprehensive of its type. Because of its stated
objective of assessing state-wide impacts and the immensity of its scope, this assessment
used the per capita approach in estimating many of the costs and revenues of providing
public services and infrastructure. The assessment did not look at the cost of providing
services and infrastructure to individual residential developments, and was not able to
differentiate service costs by residential dwelling unit type. Given the scope of the
study, its results were not given in a form that enabled the total service and
infrastructure for different forms of residential development to be determined.
In spite of these limitations, individual sections within the assessment contained data
and present assumptions that were directly relevant to the issue of the cost of providing
public services and infrastructure to different development forms. Some of the
*** significant data and assumptions are presented below:
A-ll
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• Longer lengths of sewer and water pipe are needed to service low-density
residential development forms, resulting in higher sewer and water
collection system costs in low-density areas
• The capital cost/hookup for a new water collection system is $2,500 to
$3,500 in rural areas and only $2,000 in suburban areas
• The number of school children is 0.74 pupil per single-family detached
dwelling unit and 0.24 pupil per multi-family dwelling unit
• The number of road miles for both local and state roads increases at a
decreasing rate with increases in population density (that is, the amount
of new roads is a convex, non-linear function of population density where
the exponent has a value of less than 1)
• Annual operating costs for providing services and infrastructure capital
costs are lower when new residential development is either located at the
edge of existing service areas or when an infill strategy is followed. This
enables existing, excess capacity to be used. However, once the excess
capacity is used, the slight fiscal advantage provided by IPLAN vs
TREND would disappear.
• Population growth and employment are directed under IPLAN into
already developed areas having excess capacity and occupying fewer acres
These assumptions and others drove the results to produce a small fiscal advantage for
IPLAN vs. TREND. The assessment of IPLAN reinforced the general conclusion that
the use of more compact and higher density residential development forms, even at a
state-wide level, enabled public services and infrastructure to be provided more
efficiently (that is, on either a cost per dwelling unit or a per capita basis).
Development in Wright County, Minnesota:
The Revenue/Cost Relationship
Resource Management Consultants, Inc., 1989
Wright County is a rapidly growing rural community located within commuting distance
of the Twin Cities and the City of St. Cloud, both Minnesota metropolitan areas. Most
of the county's land area is devoted to farming but 75 percent of the work force
commutes to one of the nearby metropolitan areas. Land consumption for
development and costs to local jurisdictions to provide services are increasing. The
purpose of the study was to assess the revenues and costs associated with various
development densities. The study highlighted the cost/revenue relationship of growth
near existing infrastructure and of development in rural areas lacking infrastructure.
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Methodology
Three hypothetical scenarios were chosen for study:
• A relatively high-density development of 50 units of mixed rental
apartments, condominiums, and single-family homes on 1/4-acre lots in
the City of Buffalo; the City provides all utilities including water, sewer
and electricity
• A subdivision of 50 units of single-family two, three, and four-bedroom
homes, each on one acre, in the Township of Otsego; no utilities are
provided by the Township
• A subdivision of 50 units of two, three, and four-bedroom homes, each
on 7-1/2 acres, in the Township of Silver Creek; no utilities are provided
by the Township
Some of the methodology and factors were derived from The New Practitioners Guide to
Fiscal Impact Analysis. Costs and revenues are determined from local sources only
(county, city, township, or school district levels rather than the state or federal level).
Nine separate budgets were reviewed: three from the county, one from each of the
jurisdictions in the three scenarios, and three from school districts. Sources of revenues
were determined and allocated to individual residential uses. Local residential costs
per household were balanced with household property tax plus the per capita share of
fines, fees, and other local revenues. Specific issues giving rise to separate costs for
roads, schools, added school transportation, and sewage treatment plants were
discussed in individual scenarios. Commercial and industrial costs, and a multiplier
effect were not factored into the formulas used to compute overall costs.
Results
In each of the scenarios, the housing types with only two bedrooms and with
apartments had either positive impacts or had lower negative fiscal impacts than single-
family or condominium units with three bedrooms. The net annual local fiscal surplus
per dwelling unit ranges from between $144 and $188 for 2-bedroom dwelling units up
to $670 for apartments. The annual net fiscal deficit ranges from $347 to $915 for 3-
and 4-bedroom single-family dwelling units.
The annual net fiscal deficit increases as both the lot size increases and as the dwelling
units are located further away from existing water and sewer service areas. The
following figures were produced for 3-bedroom homes:
• City of Buffalo, 3-bedroom home on a 1/4 acre lot: annual net fiscal
deficit (city, county, and school district) of -$585.90.
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• Otsego Township, 3-bedroom home on a 1 acre lot: annual net fiscal
deficit (city, county, and school district) of -$495.49.
• Silver Creek Township, 3-bedroom home on a 7.5 to 10 acre lot: annual
net fiscal deficit (city, county, and school district) of -$500.28.
The report noted that while the annual deficits are currently similar in Otsego and
Silver Creek, both townships will require significant, near-term investments in new
water, sewer, school, and transportation infrastructure, thus raising dramatically the; net
fiscal deficits. There are a wider range of services provided to residents of Buffalo than
to residents of Otsego or Silver Creek. The report makes a valid point-initially, new
residential development in a rural township may look favorable from a fiscal
perspective but when viewed over the longer term, this development will ultimately
generate demands for new services and infrastructure that will have to be paid for
either through impact fees or taxes. This trend is reinforced because new residential
development on large lots often has both a large floor area and a lot of bedrooms, both
of which increase the number of residents and the number of school-age children that
have to be served.
However, it may not be necessary for Silver Creek to extend sanitary sewer and water
infrastructure to homes on 7.5 acre to 10 acre lots if on-lot septic systems perform well
and water is available. If this investment does not occur, the costs of providing public
services to these lots would remain low.
Average cost/revenue ratios indicate that a more beneficial relationship exists among
costs and revenues for development that is closer to and served by utilities. Cost
figures for Otsego and Silver Creek will be exacerbated in the future when they have to
make capital expenditures for water, sewer, additional school capacity, and road
improvements. In addition to being more costly, development in the lower density
areas is more land consumptive and accelerates the loss of valuable farmland.
Summary and Applicability
The results of the study show that higher density development close to existing urban
infrastructure is less expensive to serve with general local government services than
low-density development with no established infrastructure that is located further from
service centers. The study's conclusion is that it is fiscally sound to concentrate growth
around areas with existing infrastructure and to discourage growth on large lots in
farming areas.
The study's conclusions and results are applicable to rural townships in all three states
that are receiving new residential development. The results are most applicable to
Pennsylvania municipalities since municipal- and township-level school districts were
analyzed.
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This study was a relatively straightforward cost/revenue analysis. The researchers were
careful to isolate residential costs and revenues and to eliminate state and federal
contributions to local revenues that might have skewed their findings. The
methodology, although simple, appears to be sound and the results appear to be
accurate. The limitation of this study is that it calculated the net fiscal impacts based
on the share of costs supported by locally generated revenues, not the total cost of
providing the services.
The researchers of the Wright County study had a similar focus to that of the
Subcommittee. They were primarily interested in the comparison between the costs of
serving development on large lots in rural areas and those on smaller lots in more
urban population centers. The analysis would have benefitted from greater specificity
in the contents of the budgets used for the three scenarios and from a more in-depth
assessment of marginal costs.
London County, Virginia Fiscal Impact Assessment Model
Loudon County, Virginia experienced major growth during the 1980s that required the
introduction or expansion of county services and substantial investment in capital
facilities. The Loudon County Department of Economic Development performed an
analysis in 1985 for one of its planning areas. The analysis showed that the average
new house dollars required $3,200 ($3,850 in 1992 dollars) in public services and $9,200
($11,100 in 1992 dollars) in new capital facilities. County officials became increasingly
concerned about the fiscal impacts of continued development trends, particularly the
costs that would be imposed on the county's taxpayers to finance increases in service
and provide new infrastructure. The officials realized that they needed a fiscal impact
model for their master planning process and for assessing the fiscal impacts of new
developments.
In April 1989, Loudon County retained a consultant to prepare a fiscal impact
assessment model. The finished model was delivered in March 1990. The model is
designed to do the following:
• Assess the financial consequences to the County of project development
at the aggregate county level for the next two decades (1990 through
2010). This assessment includes project revenues, operating expenses,
and capital needs.
• Analyze the fiscal impact of projected development at the sub-county
level, including the fiscal effects of modifying current land use policies
• Estimate the direct and secondary financial impacts of individual
residential, commercial, and industrial development
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Loudon County officials decided in the spring of 1990 to use this model in their
comprehensive planning process to assess the financial impacts of alternative land use
policies and alternative development phasing scenarios. This was to be done for four
subareas within the County.
In August 1990, the Northern Virginia Builders Industry Association submitted
comments and questions about the model. The model designer responded to these
questions in several public workshops. Because of these concerns, the Loudon County
Board of Commissioners decided to appoint a permanent technical review committee
(TRC). This committee was to provide technical input to the consultant and. the
Economic Development Department's staff on the model's structure, data inputs 1o be
used, the assumptions to be used in modeling future years. Five Loudon County
residents were appointed to the TRC. The committee held six public work sessions
and worked with the consultant and the County staff in developing the model.
The model is described in detail because it is a good example of a fairly sophisticated,
average cost-based, fiscal impact model.
Methodology
Inputs
Historical time series were used to develop current estimates for demographic,
economic, fiscal, and infrastructure cost values that were put into the model. The time
series was used to develop a trend projection that can be adjusted based on input from
the TRC, the consultant, and the County staff.
Development Baseline. The model required the following development-related inputs:
• Number of dwelling units for six types of dwelling units
• Total floor area for six types of non-residential development
• Per capita personal income and average household personal income
The model also required the following county-wide baseline totals:
• Population
• Number of households
• Number of children in public schools
• Employment
• Personal income
• Number of residential building permits and estimated new residential
dwelling units constructed
• Population density and area in square miles
• Value of unimproved and agricultural land
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Residential Assumptions. Using these inputs, the model then applied a number of
assumptions to produce the forecasts of future development totals and fiscal impacts.
The assumptions for the six types of dwelling units included the following:
• Average household size and number of school children/dwelling unit
• Income and real property value per dwelling unit
• Appreciation rate in the value of real residential property
• Utilization factor (number of total current dwelling units currently
occupied)
• Inflation
Non-Residential Assumptions. The demographic and economic module also contained
the following assumptions for the six classes of non-residential uses:
• Employees per 1,000 square feet for the six non-residential land use
classes
• Real property value ($/square foot) for non-residential property classes
• Utilization factor
• Real property value appreciation factor
Economic Assumptions. The model required assumptions about inflation, income
escalation, and real property appreciation.
Fiscal Assumptions. Finally, the model contained a variety of fiscal assumptions that
enabled it to estimate the costs and revenues of providing services and infrastructure.
These assumptions included the following items:
• Total value of residential, non-residential, unimproved, and agricultural
land
• Real, personal property, and sales tax rates
• Intergovernmental revenues from federal and state sources
• Per capita costs for 12 governmental service areas
• Local government employment (employees per $1,000 of expenditure) for
the same 12 governmental service areas
• Capital costs for eight infrastructure areas
• Capital fund sources, including general fund revenues, intergovernmental
aid, bond proceeds, and other proceeds
• Debt service
Many of the fiscal assumptions were obtained by analyzing recent county budgets to
obtain empirical estimates of per capita service costs, number of employees, and per
capita capital costs.
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Results
Demographic and Economic Forecast
The first phase in running the model was to produce a baseline economic and
demographic forecast for the years 1991 to 2010 in a pro forma arrangement. These
forecasts were primary inputs into producing the remaining forecasts (see below),
particularly the fiscal impacts. The total demand for services and infrastructure was
determined by the number of persons and school children, the total number and
distribution by type of dwelling units, the total amount and distribution by type of non-
residential floor area, and the total number of employees that must be served.
Revenues were determined by forecast incomes and total property values, which were
determined by the number of dwelling units by type and by the non-residential floor
area by class.
Real Property Forecast
The next output of the model was a forecast of real property values by the six
residential and six non-residential land use types. It also produced a forecast of
unimproved and agricultural land values. These two sets of outputs were summed to
produce a forecast of total taxable value of real property.
Revenue Forecast
Based on the forecast of total population, projected residential and non-residential
development, and the model assumptions, a revenue forecast was produced. This
forecast estimates both total local revenues for eight revenue classes and total
intergovernmental revenues.
Expenditure and Labor Forecast
Using the fiscal assumptions, and the demographic and economic forecast, the model
produced a forecast of local governmental expenditures and employment for 12 service
areas.
Capital Cost Component
Using the fiscal and capital cost assumptions, the model estimated the capital costs for
nine infrastructure categories. The total capital costs were then allocated annually over
the planning period. Finally, the probable sources of the capital funds from four
sources (general fund revenues, intergovernmental aid, bond proceeds, and other
sources, such as proffer charges) was forecast, including any necessary debt service.
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Operating Revenues and Expenditures Forecast
The final output from the model summarized all of the previous data into a form that
presents the total annual operating revenues and expenditures that would be produced
by the project. The estimate of annual expenditures included annual operating and
maintenance costs, the total forecast capital expenditures, and the total annual debt
service. The model then determined the annual cash flow to Loudon County produced
by the project, which consisted of net annual current expenditures (annual revenues less
annual operating and maintenance expenditures) less the amount of general fund
revenues that would be needed to cover capital outlays.
Summary and Applicability
The Loudon County fiscal impact analysis model used the standard approach of per
capita cost and revenue multipliers. The model included per capita estimates of annual
general fund revenues, annual operating and maintenance costs, and capital
infrastructure costs. The per capita cost and revenue estimates did not vary directly
according to the type of dwelling unit but instead changed indirectly as the
demographic assumptions change the number of persons inhabiting the types of
dwelling units considered by the model. The model used one set of demographic
assumptions for the four types of single-family detached dwelling units and another set
for the two types of multi-family dwelling units. The cost estimates contained in the
model did not take into account the density, lot size, or location of the different types
of dwelling units independent of the number of persons living in them, and was instead
driven by demographic assumptions, such as persons per dwelling unit, school children
per dwelling unit, and workers per 1,000 square feet for non-residential land uses.
The structure of the model would easily allow for inputing different demographic
assumptions for the four types of single-family detached dwelling units, assuming that
the accompanying per capita service and capital cost estimates would still be valid.
This was not likely to be the case because there are clearly efficiencies in providing
services and infrastructure to higher density single-family detached and multi-family
housing areas.
The model contains a wealth of per capita cost, revenue, and infrastructure data that
was derived from Loudon County data sources. The use of county-specific data means
that the model could do a good job in performing its primary task, which was to
estimate the fiscal impacts on Loudon County of different development scenarios. The
structure of the model would also allow different annual service costs, annual revenues,
and capital costs to be used in evaluating different scenarios.
The Loudon County model is an example of a fairly sophisticated, locally specified, per
capita cost-based, fiscal impact assessment model. It did not take into account either
the marginal capital costs of providing service or infrastructure to new developments, or
the difference in per capita infrastructure costs based on the density of single-family
housing. For both residential and non-residential land uses, demographic assumptions
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drove the model's outcome. The model did not directly address the primary concerns
of the Subcommittee. The model's accuracy was highly dependent upon its many
assumptions, including per capita service cost and revenue figures, demographic
multipliers, and assumptions on future growth rates.
The Search for Efficient Growth Patterns
A Study of Fiscal Impacts of Development in Florida
James Duncan and Associates, et al., 1989
This study was the result of research efforts by the Governor's Task Force to prepare
a report for Florida's governor about the comparative costs of development, public
services, and facilities. The Governor's Task Force was charged with a number of
responsibilities, including the following items:
• Identify where and how programs and processes of state, regional, and
local governments encourage sprawling and inefficient development
• Determine where such programs could be used to encourage efficient
development
• Recommend new programs and policies to provide incentives for more
compact urban development and to reduce or eliminate urban sprawl
The study was intended to identify the public service costs of land development
patterns, and the savings that could result from the adoption of policies, regulations,
and other public actions designed to reduce the amount of sprawling, inefficient
development.
The study focused on the offsite external community costs of mixed use development.
The study avoided the onsite internal costs of developments that are exclusively
residential because studies of those aspects of development that have concluded that
density affects internal costs have been generally accepted. Evaluations of the findings
of previous studies were incorporated into the findings of this study.
Methodology
Eight case studies examined the capital costs for infrastructure, O&M costs, and
revenues for selected public services. The study did not consider the costs of streets,
sewer pipe, and water pipe needed within a residential subdivision. The study did not
consider the on-lot capital costs for sewer, water, gas, and electric infrastructure that
run between the dwelling unit and the adjacent public ROW. These internal
neighborhood costs have been widely studied and shown to be strongly related to
density, and typically have been borne by developers and passed on to consumers.
Internal drainage costs and library costs were also not included. Specific system costs
for water and wastewater were not calculated for each detailed study area because of
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the enormous complexity of large grid systems and the lack of sufficient local data.
Generalized calculations were utilized to develop these costs and revenues.
The study defined efficient development, from the perspective of providing public
services and infrastructure, to consist of:
"Development that pays the marginal costs (capital and operating) of providing
services and facilities to it, except where equity considerations outweigh
efficiency ones (James Duncan and Associates, et al, p. 9)."
Eight detailed study areas (DSAs) were identified, representing one or more of the
following urban form classifications:
• Scattered
• Contiguous
• Linear
Satellite
• Compact
Each DSA had mixtures of land uses, either residential, or residential and some
commercial uses.
The study analyzed the total capital cost, and annual costs and revenues for the
following facilities and services:
• Roadways
• Education
• Wastewater
• Potable water
• Solid waste
• Law enforcement
• Fire and emergency protection
• Parks
Costs and revenues were examined for each facility and service. Costs included capital
facilities, and O&M. Service and staffing levels, and factors such as travel distance and
response times were included as appropriate. The revenues analyzed were those
collected in taxes or those collected in fees, or both. Revenue-cost ratios were analyzed
and the results were graphed for each detailed study area.
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Results
The comparative fiscal analysis indicated that for the eight study areas, both external
capital facility costs to support residential development and overall areawide annual
revenue-cost ratios were significantly lower or more efficient in compact, close-in urban
areas than they were in scattered, outlying suburban areas. Results of the study were
summarized in the following categories:
• Total residential unit capital costs
• Annual residential unit service costs
• Annualized capital-intensive service costs
• Annual DSA revenue-cost ratios
The eight DSAs required the following external capital public facility costs, (in 1992
dollars) per single family dwelling unit:
DSA 1 Compact Form $ 10,049
DSA 2 Contiguous Form $ 10,656
DSA 3 Contiguous Form $ 14,142
DSA 4 Scattered Form $ 16,708
DSA 5 Satellite Form $ 16,853
DSA 6 Linear Form $ 17,740
DSA 7 Linear Form $ 18,017
DSA 8 Scattered Form $ 26,140
The average external capital cost was about $16,288 per dwelling unit, and ranged from
$10,049 and $12,400 per dwelling unit in compact and contiguous DSAs, up to $16,853
to $17,879 per unit in satellite and linear DSAs, and up to $26,140 per dwelling unit in
scattered DSAs located some distance from employment centers. More tha:i 80
percent of the total capital costs per dwelling unit came from two areas: education, and
roads. The high capital costs for DSA were produced by the linear infrastructure
required to serve it: roads, water, and sewer; and by the costs for solid waste disposal.
Total annualized residential unit service costs were the highest for education followed
by police, roads, wastewater, fire/rescue, water, parks, and solid waste. When all of the
DSA costs were averaged, education accounted for 39 percent of the total annual costs
and roads accounted for 29 percent of the costs. Wastewater and law enforcement
accounted for 11 and 8 percent of those costs, respectively. Each of the other services
accounted for less than five percent of the total annual costs.
The three most capital—intensive services (annual capital costs as a percentage of total
annual costs) were: roads (92 percent), water (43 percent), and waste water (34
percent). The costs of these three systems were also the most spatially oriented
because of their network character. The capital and annual costs of these three
systems varied the most as a function of housing density and location. The capital and
annual costs of other services, such as education, police, and fire were less affected by
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alternative development patterns. Level of service was found to be an important
consideration to the cost of services, particularly those services with costs that were less
sensitive to spatial factors, such as police, fire, and recreation. The areas with the
lowest service ratings had the lowest costs.
Areas with revenue-cost ratios that were less than 1.0 can be assumed to be subsidized
by other parts of the community or from intergovernmental transfers. Predominantly
residential areas tended to be farther from services than mixed-use or compact urban
areas and tended to have higher cost-revenue ratios. Only one of the DSAs, a
contiguous mixed office and single-family development, had a ratio greater than one. A
compact development and a contiguous development had ratios of 0.90 and 0.78,
respectively. A linear mixed residential development, including recreational uses, had
a ratio of 0.62. The remaining four study areas were satellite, linear, or scattered in
form and each had ratios of 0.45 or lower.
Summary and Applicability
The conclusion drawn from this study was that the intuitive insights and theoretical
studies on the public infrastructure costs of development had a basis in reality:
compact, infill, and higher density land development was more efficient to serve than
scattered, linear, and low-density sprawl development. Developments in low-density,
sprawling configurations did not always pay their full share of the costs of providing the
off-site public facilities and services they required. If both the external capital costs
evaluated in this study were considered along with internal capital costs (that also
varied directly with housing density and lot size), then the difference in total capital
costs per dwelling unit between high- and low-density housing patterns would have been
even greater.
This study came only somewhat close to the type of study envisioned by the
Subcommittee. This study examined the appropriate costs of development and
compared them to the revenues generated by development. However, the DSAs
tended to be infill locations and tended to consist of both residential and non-
residential uses. The study did not directly evaluate the question of the costs of
providing services to residential development, particularly the cost of leapfrog
development. The study accounted for direct and indirect public subsidies that can
affect the allocation of costs (for example, development regulation, public service
pricing, and taxation).
The study utilized existing development for examples and drew from a variety of
development forms. The analytical methodology appeared to be sound. There was
adequate supporting documentation of the analysis. The study methodology may be
useful for conducting similar studies in the Chesapeake Bay region. However, the study
was essentially a per capita cost-based study and may not have adequately measured
marginal costs, particularly for regional infrastructure. Cost factors usually varied
among regions, so the factors developed for Florida must be carefully analyzed for their
applicability to the Chesapeake Bay region.
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The study is also applicable because it considered a variety of different residential
forms both in terms of their density and their location within a region. Because the
study considered primarily county forms of government with county-wide school district,
the results are most applicable to Virginia and Maryland. Because the study
considered very recent growth, its findings would be most applicable to counties located
at the edge of expanding metropolitan areas within the Chesapeake Bay watershed,
such as Baltimore, Washington, DC, and Richmond.
The Costs of Alternative Development Patterns:
A Review of the Literature
James E. Frank, 1989; Prepared for the Urban Land Institute (ULE)
This study reviewed all of the major cost of development studies that had been
performed to date (1989), critically evaluated their methods, and provided estimates of
the differences in the capital costs incurred in providing services to new residential
developments that vary by density, type, and proximity to service areas. This study
provided the most comprehensive assessment to date of the methods and results found
in cost of development studies. This study provided an excellent discussion of the
methodologies and assumptions employed by the studies that were reviewed.
Starting in the mid 1950s, a small group of studies have analyzed the cost of providing
government services and infrastructure to alternative development forms, in particular
(self-evident) to alternative types, densities, and locations of residential housing. ITie a
priori hypothesis going into these studies was that it would cost more per dwelling unit,
in terms of both total capital and operating costs, to provide infrastructure and services
to low-density, sprawl housing than it would cost to provide these same items to higher
density housing. This hypothesis was based on the observation that sprawl
developments required longer lengths of road, sewers, and water pipe to service them
than did more compact developments, or developments located within or adjacent to
currently serviced areas. This conclusion was reached in the highly publicized and
controversial study, The Costs of Sprawl.
The conclusion that sprawl costs more is not universally accepted and rests on several
crucial assumptions. These assumptions are that the levels of service are the same in
sprawl and non-sprawl areas, that the same bundle of services are provided in both
types of areas, and that all service costs are borne by the public sector. The use cf on-
lot septic systems, individual wells, and small, gravel roads in rural areas means that
both the range and level of public services provided to the dwelling units in rural areas
is less than the range and type of public services provided to residences in well-
developed suburban areas.
Methodology
Frank initially re-examined the literature discussing the costs of development for his
work associated with Florida's Task Force on Urban Growth Patterns. He defined the
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least-cost forms of development that would help implement the state's growth
management goals. ULI published this report, an important comparative evaluation of
existing studies, including the projected costs and methodological approaches to these
studies.
The studies reviewed spanned more than three decades. Each study had its weakness
in methodology and conclusions. Viewed as a whole, the studies reached the same
conclusion: low-density, discontinuous development increases the capital costs of public
facilities. According to Frank, the costs could vary from 40 to 400 percent higher if
development was instead located close to major facilities, was clustered in contiguous
areas, and incorporated a variety of housing types. There was a difference between
services and facilities provided onsite, within a neighborhood or subdivision, between
neighborhoods, and at the regional level.
Results
Frank pointed out the need to account for and distinguish among the various types of
facility costs. Capital costs and O&M costs were easy to distinguish and were
important to analyzing full life-cycle costs that could be spread differentially over time.
Distinctions among precipitated, inherited, and fully allocated costs were important in
understanding differences between long-run and short-run costs. There was a clear
difference between services and facilities provided onsite, within a neighborhood
subdivision, between neighborhoods, and at the regional level.
The development factors crucial to cost qhange analyses included density and lot size,
municipal improvement standards, characteristics of occupancy, contiguity of
development, distance to central facilities, and size of urban area. (It is important to
the effectiveness of any study that each variable be allowed to vary independently. If
these variables are allowed to vary all at the same time, their independent effect is
difficult to measure. Several factors can be allowed to vary in combinations, under
controlled conditions, within the analysis.)
Frank focused on the costs of streets, sewers, water systems, storm drainage, and
schools at the community or neighborhood level, and on the costs of providing regional
highway, sewer, and water linkages. He concluded that the total capital cost to serve
low-density sprawl (three dwelling units per acre) with the facilities listed above would
be more than $39,600 (1992 dollars) per unit. If the unit were located 10 miles from
facilities or major employment centers, then the costs would increase an additional
$16,500. At a density of one dwelling unit per 4 acres, Frank estimated the per unit
capital costs would increase to $87,700, if contiguous, and would increase to more than
$104,000, if located 10 miles from control facilities.
The capital costs of infrastructure could be reduced to $27,300 per unit by increasing
density to 12 units per acre, locating development close to central facilities and
employment centers, and by including a mixture of housing types in equal proportions.
The per unit cost could be reduced to $20,350 by choosing a central location, using a
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mix of housing types in which single-family units and townhouses constitute 30 percent
of the total and apartments 70 percent of the total, and by planning contiguous
development.
Reductions in local service and design standards could reduce per unit capital costs but
overall costs would still be higher for sprawling development because of the effect of
length. Capital costs could be reduced by locating development in areas where l:here
are surpluses in facility capacity.
Frank raised the issue of using regulatory vs pricing policy measures to guide
development. Do residential developments pay their fair share of facility capital costs?
According to Frank, costs for facilities in mixed communities were spread evenly among
three types of facilities: (1) onsite streets and utilities, (2) neighborhood schools and
parks, and (3) community-level facilities. For communities that were comprised
exclusively of large lot single-family units, the cost of onsite streets and utilities may
have comprised 45 percent of the total facility costs. These costs tended to be borne
by the buyers. (Impact fees are becoming more widely utilized in communities to more
equitably distribute costs to those receiving the benefits but such fees rarely account for
distance as a cost factor. The result is the stimulation of overconsumption of housing
developed in costly-to-serve patterns.)
He recommended several areas for additional research. Those conducting further study
may want to consider excess capacity of public facilities, include more detail of O&M
costs (lower initial costs do not necessarily translate to low, long-term costs), and
concentrate their analysis on infill rather than "greenfield" development. (The studies
to date view the development of cities as proceeding on raw land and these studies
tend to ignore temporal considerations.)
Frank believed that the element of time was underanalyzed and may be the most
important variable in the analysis of long-term cost, especially in conjunction with the
management of the dynamics of the building process. The techniques of totally
incremental development and oversizing facilities to accommodate future development
could each exert undue financial burden on existing residents. Standards for facilities
may be upgraded at some time in the future, adding to the costs of either new or
upgraded facilities. According to Frank, assignment of such costs was not obvious, and
hinged on whether the new standard was the result of either social enlightenment or
was the result of new development exceeding existing thresholds.
He suggested that a general area of research referred to as the "optimal facility
expansion path problem" (which to date has been used mostly in theoretical research),
be used to analyze the dynamics of development. (This technique accounts for
uncertainties in the temporal pattern of demand facing decision makers.) Frank
pointed out that existing research has not examined the extent to which building costs
could be reduced, if the pattern of development could be synchronized through means
such as adequate public facility ordinances. Generally, decisions at the local level
regarding development and investment in facilities are made independently.
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Summary and Applicability
The Costs of Alternative Development Patterns is an important resource because it brings
together so much valuable information. Frank summarized and critiqued nine of the
best-known cost of development studies. He adjusted the numbers from the earlier
studies to provide a more current (1989) estimate of the capital cost of different types
of development. The specific cost findings from his study are broadly applicable to
present-day case studies in the Chesapeake Bay region. The concepts in his study are
useful to the Subcommittee in establishing parameters and defining factors for analysis.
Development in Richmond County, Virginia:
The Revenue/Cost Relationship
Resource Management Consultants, Inc., 1988
Richmond County is located on Virginia's Northern Neck along the tidal
Rappahannock River. The county has extensive areas of waterfront and important
timber, agriculture, and shellfish harvesting industries. Richmond County is close
enough to the Washington, DC and Richmond metropolitan areas to be affected by
growth pressures in these too areas.
Prior to this study, county officials assumed that development would progress in an
even and orderly fashion, and that new residents would primarily be retirees. Based on
these assumptions, county officials reasoned that school costs and infrastructure costs
would not accelerate enough to drain the county's economic resources. County officials
assumed that due to the pace and nature of waterfront development, effects on water
quality in the Rappahannock River were not a concern and they assumed that the lack
of county-wide zoning would not affect the nature of development expected.
The goal of the study was to assess the revenue-cost impact of varying residential
densities on Richmond County's budget. The report included discussion of
environmental concerns related to effects of septic systems on water quality in the
Rappahannock River. The intent was to assist the county in making long- and short-
term land use and fiscal planning decisions.
Methodology
The study consisted of a comparative analysis of the revenues and costs to the county
associated with residential development. Revenues included real estate, personal
property, and local sales taxes and other county fees collected on or as a result of new
development. Costs included the monies budgeted by the county for schools,
administrative services, garbage collection, landfill, ambulance services, and possible
costs for water monitoring, sewage treatment facilities, and roads.
Figures were obtained from the 1988 county budget and were assigned on a per-
dwelling-unit basis and on a per-capita basis. Households with school-age children
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were assumed to contain 3.13 persons. Households of retirees were assumed to contain
2.0 persons. Assumptions then were made regarding the percentage of homes with
school-age children and retirees. Four scenarios were run for each alternative,
consisting of 10, 25, 33, and 50 percent of the households containing school-age
children.
The analysis used predetermined real estate assessments for land based on lot size and
dwelling-unit type. Average assessments were used for dwelling units. Waterfront units
were equalized in value with non-waterfront units by decreasing waterfront unit value
by 25 percent.
Personal property taxes and costs were determined based on line items in the county
budget and were assigned on a per-capita basis. Costs or revenue per dwelling unit
then varied accordingly, based on demographic multipliers on the number of persons
and number of school children per du. An average cost per pupil was determined from
the county budget and was used to determine the additional school costs contributed by
new dwellings (no differentiation was made in student multiplier by dwelling type).
Five residential development patterns were selected:
• Wilma Creek subdivision (proposed)
64 single-family units on acre lots
• 20-acre single-family dwelling subdivision (hypothetical)
Mixture of 0.5-, 1-, 2-, and 5-acre lots
• 50-unit townhouse rental development (hypothetical)
• 50-acre mobile home park (hypothetical)
• 500 1-acre lots subdivision (hypothetical)
For each of these five development patterns, revenues were aggregated for property
based on the number and type of dwelling and selected lot sizes. Personal property
taxes were determined based on the number of households containing either 2.0 or 3.13
persons. Costs were determined by multiplying the computed per capita costs of
general county services by adult occupants of all dwelling types and by adding that
figure to the product of the average per pupil school costs and the 1.13 students in
each dwelling. Revenues and costs were averaged for the number of dwellings in each
scenario and were then compared.
The analysis then addressed added costs for schools, garbage collection, septic systems,
and roads that would be incurred by the county as a result of increased population.
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Results
The two single-family residential developments generated revenue surpluses under the
scenarios where households contained 10 and 25 percent school children. At 33 and
50 percent school children, these developments tended to have higher per-unit costs
than revenues. The 50-unit townhouse rental development produced a slight revenue
surplus when household contained 10 percent school children and produced revenue
shortfalls at levels above 10 percent. The 50-acre mobile home park produced higher
costs than revenues under all scenarios. Costs and revenues for the 500 single-family,
1-acre lot subdivision were determined to be proportionally the same as the smaller
subdivisions with total costs and revenues being much higher. Sewage treatment costs
were addressed for this option, with treatment types ranging from mass drainfields to
package treatment plants.
Summary and Applicability
The basic conclusions of the study were that single- or multi-family residential
developments, where 33 percent or more of the households have school-age children,
generated more costs than revenues to local government. Higher density, lower-value
housing tended to generate more costs than revenues no matter how many households
contained school-age children. Large rural subdivisions on individual septic systems,
mass drainfields, or package sewage treatment plants, potentially could have negative
effects on water quality in nearby surface waters. Low-density, clustered residential
development of waterfront property was more beneficial fiscally and environmentally
than small-lot zoning.
Several factors make this study's findings relevant to the Subcommittee:
• It is in the Chesapeake Bay watershed
• It looks exclusively at residential development
• It consists of a revenue/cost analysis
• It includes some consideration of environmental and social impacts
There were several aspects of the study that did not match precisely with the criteria
selected by the Subcommittee for its case study scenarios. This study did not look at
costs of connecting parcels to utility systems and other infrastructure. Most of the
other literature reviewed (see Frank) concurred that compact and contiguous
development patterns are more efficient than less dense, scattered patterns.
Some readers may wish to see greater detail in how costs were allocated from the
county budget and may wish to see a differentiation between the number of school age-
children generated by varying dwelling types.
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Impacts of Development on DuPage County Property Taxes
Dupage County, Illinois Development Department,
Planning Division; 1989
This study was initiated by Dupage County, Illinois after discovering that, after decades
of rapid urbanization and growth, local property taxes had steadily increased instead of
decreasing as expected, and after discovering that the employment base had been
growing more rapidly than the residential base. From 1982 to 1988, taxes had
increased by 82 percent while, during the same period, the national rate of inflation
rose only 23 percent. Development had been encouraged in DuPage County because
of the belief that this development would bring about a higher quality of life through
increased surplus of revenues over costs.
The study measured the empirical relationship between both residential and
nonresidential growth rates, the cost of providing local services, and the accompanying
increases in local property taxes. According to the authors, a change in the local
development pattern from residential to nonresidential caused property tax levies to
increase at a commensurable rate. The study also attempted to account for the the
increased service demands of higher income areas and to account for the effect of
annexation on increased costs for fragmented service areas.
While the methodology and the conclusions of this study have been controversial, it did
address a question often overlooked by planners. Why, in some cases, has increasing
commercial and industrial development been associated with increasing tax rates and
service expenditures? Conventional wisdom says that such development produces a
fiscal surplus and should act to limit the growth of tax rates or even possibly to lower
them.
The most controversial finding was that new commercial and industrial development
did lead to increasing property taxes and to increasing costs for services. The study
implied that commercial and industrial development may not "pay for itself in the long
run due to the indirect impacts that accompanied new commercial and industrial
development, and which ultimately led to increased demands for locally provided
services.
Methodology
This study was not a typical fiscal impact assessment study in which costs and revenues
per unit of development were estimated for different types of residential and non-
residential uses to determine their net fiscal impacts. Instead, the study used a multiple
regression analysis using an equation in the form of a production function. A
logarithmic form was used and constant returns to scale were assumed. The equation
sought to explain the increase in total property tax levies (the dependent variable),
between 1986 and 1989, using the following independent variables:
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Change in residential equalized assessed valuation (REAV)
Change in the total number of nonresidential firms (NRES)
Change in the ratio of nonresidential equalized assessed valuation to
residential equalized assessed valuation (NRSHR)
Median residential property tax levy in 1989 (MEDLEY)
Ratio of tax code equalized assessed valuation (EAV) to total municipal
EAV in 1989 (Tax codes represent all different taxing bodies that levy
their own taxes within a service area in addition to the municipality's tax
levy. Other providers and districts include a library district, fire district,
community college district, and the airport authority.)
In applying these variables, the authors made several crucial assumptions including the
following:
• The tax levy, or the dollar value of taxes collected, represents the cost to
a taxing body of providing its services
• Public services is provided locally based on each taxpayer's demand for
those services, which in turn varies according to income, cost, and desired
service level
• REAV represents the demand for public services
• Residents react to an increase in the non-residential share of the local tax
base by demanding more public services, thinking that the cost burden
for these new services is borne by the non-residential land use (that is
supposed to generate the fiscal surplus to pay for these services).
Looking at these variables, their explanatory value may be somewhat limited and may
due to different reasons than advanced in the study.
It is apparent from looking at the dependent and independent variables that a high
degree of correlation, with positive signs or beta coefficients, should be expected.
There was a direct relationship between increases in both residential EAV and non-
residential EAV, and an increase in tax revenues. Even if the tax rate stayed the same,
an increase in the size of the tax base would have yielded more revenues. One could
expect some multicolinearity between the first two independent variables, REAV and
NRES, and the third variable NRSHR (that is, as the REAV increases the NRSHR will
change depending upon the relative growth rates of REAV and NREAV). There
could also be multicolinearity between REAV and MEDLEV (that is, an increase in
REAV would obviously affect the median residential tax levy).
As some reviewers have noted (Burchell and Listokin, 1992), the form of the equation
is close to that of an identity. That is, the increase in the total property tax levy is by
definition equal to increases in residential assessed valuation, the number of new non-
residential firms, median tax levy, etc. If the equation is close to being an identity, the
independent variables would all be statistically significant. The strong statistical
correlation may not be similarly supported by a cause-and-effect relationship.
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A sample of properties covering almost 60 percent of the county's tax base was selected
and 133 of nearly 1,400 tax districts were examined. The study covered the three
steepest years of tax rate increase, 1986 through 1989. Parcels were segregated into
residential and nonresidential uses.
Results
The regression analysis showed a statistically significant positive relationship between
the increase in property tax levies (the dependent variable) and the independent
variables, as was expected. The study concluded that an increase in property tax levies
was correlated with increased non-residential development. The study then reasoned
that non-residential development caused tax levies to increase due to the direct and
indirect demands for local services that such development produces. The result was
that non-residential development did not necessarily lead to no growth in or slow the
increase in property tax rates. The study presented the possibility that local
expenditures can increase more quickly due to new development. The major reason
was demand for services coming from the new non-residential development and, later
on, from the demand of new residents attracted to the municipality by the jobs.
The study found that non-residential development had an effect on increasing the total
tax levy that is three times greater than the effect for residential development. For
example, a one percent increase in the residential assessed valuation resulted in a 0.4
percent increase in the total tax levy. In contrast, a one percent increase in the number
of nonresidential firms resulted in a 1.3 percent increase in the total tax levy. A one
percent increase in the ratio of nonresidential to residential development resulted in a
0.15 percent increase in the total property tax levy.
The study hypothesized about the relationship between the cycle of job growth and the
influx of new residents in precipitating the imbalance between the tax base, tax rates,
and the cost of services. New jobs brought new residents who frequently required
higher-quality services. Non-residential development also may have caused existing
residents to demand more services to cope with the new growth. These services
include additional police for traffic duty and additional new roads to relieve rush hour
congestion. The study speculated about an income effect through which, as
development occurs, existing residents felt wealthier as a community as tax revenues
increased and, as a result, demanded a higher level of services. Taxes then increased to
meet the demands for higher quality services. An expanding job base also created
demand for additional housing. The increased housing demand caused a rise in
housing costs. The increase in the cost of living eventually required an increase in
salaries of local government employees.
Indirect effects of nonresidential development also were noted. The perception of a
higher quality of life, such as better schools, attracted more people to the community.
Better educated people, in turn, demanded better schools. A significant relationship
was found between the rising income of taxpayers and increasing levies.
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Summary and Applicability
This study advanced the argument that new development, particularly commercial and
industrial, generated increases in the cost of providing local services, and produced an
increase in the local property tax rate. Was a plausible cause-and-effect relationship
between non-residential development and subsequent increases in local tax rates and
costs of providing government services? Did new non-residential development produce
increases in local tax rates and levies, and the cost of services, or was the relationship
merely statistical in nature with other factors at work that were not captured in the
independent variables?
The limitations of the variables contained in the equation estimated in this study did
not definitively answer the question of cause and effect between non-residential
development and service costs. The study confirmed that non-residential development,
as expected, increased local tax revenues. To what extent these new revenues were
spent for either new services, higher levels of existing services, or extending more of the
existing services to new businesses becomes a local political decision.
There were a number of other reasons why there may an association between, but not
necessarily a cause and effect relationship between, commercial and industrial growth,
and increasing local tax levies. These reasons included the following:
• The cost of providing services may increase due to rising service
standards. Residents, believing that commercial and industrial growth
generates a fiscal surplus, may demand more or better services, hoping to
shift the costs to the commercial and industrial properties.
• An increase in service standards may be due to an income effect where
local residents feel their community can afford better services due to the
increase in the tax base, or where new residents bring with them higher
incomes, higher ability to pay taxes, and higher service level expectations.
• Local officials may have been content to let the increased revenues from
commercial and industrial development flow in, and found ways to spend
these revenues, without attempting to restrain costs. This may have been
particularly true in jurisdictions where elected officials could set the tax
rates without voter approval.
The DuPage County study raised interesting questions about the relationship between
the rate and type of development in a community and the increases in that community's
property tax rate and cost of services. The study raised the possibility that non-
residential development may produce higher demands for local services than previously
thought.
This study did not address the study criteria adopted by the Subcommittee regarding
the effects of residential density on the capital cost of infrastructure and the costs of
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public services. The authors of the DuPage County study emphasized that its direct
applicability is limited to DuPage County because of its specificity.
Environmental and Economic Impacts of Lot Size
and Other Development Standards
Maryland Office of State Planning, 1989
Much of the residential development in Maryland is scattered in decentralized, low-
density development patterns (2 to 5 or more acres per lot). This development is
consuming large amounts of forested and agricultural land. The goal of this study was
to evaluate the potential environmental, transportation, and economic impacts of four
hypothetical 100-lot subdivisions developed with different lot sizes. Each of the
subdivision scenarios was accompanied by a set of assumptions describing the location
of the subdivision, distance to employment and service centers, subdivision design,
development standards, and other land use characteristics. Following the initial
analysis, sensitivity tests were performed to evaluate the effects of changing the
subdivision design and site development assumptions.
Methodology
The analysis was performed by defining the characteristics of four types of 100-lot
subdivisions and by using available literature and data to determine model standards
for water, transportation, air quality, energy, economic, and site development costs.
The authors entered this data into a Lotus 1-2-3 spreadsheet to predict impacts.
For the analysis, each of the subdivisions was defined to have 100 houses and the same
subdivision design, so that only the lot size varied between subdivision scenarios.
Characteristics of the four types of subdivisions are summarized in Table A-2.
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Table A-2
Subdivision Characteristics
Lot Size (acres)
Average Distance to Work (miles)
Average Distance to School, Shopping, and Fire
Station (miles)
Sidewalks
% of Site as Open Space
Public Water and Sewer
Small
0.12
15
3
Yes
5
No
Medium
0.25
15
3
Yes
5
No
Large
1.4
20
6
No
0
Yes
Very Large
5.0
30
9
No
0
Yes
Based on the assumptions outlined in Table A-l and the assumption that the prior land
uses were 25 percent cropland, 25 percent pastureland, and 50 percent forested, the
land use and land cover characteristics of each of the development scenarios are shown
in Table A-3.
Table A-3
Land Use and Cover Characteristics
Land Required (acres)
Land in Right-of-ways (acres)
Land in Open Space (acres)
Impervious Surface (acres)
Impervious Surface (% of total site)
Small
17.6
4.7
0.9
7.4
42.1
Medium
32.7
6.1
1.6
9.2
28.0
Large
152.1
12.1
None
11.9
7.8
Very Large
521.4
21.4
None
18.3
3.5
Using these development characteristics, water quality impacts were evaluated by
calculating nonpoint source pollution loads of biochemical oxygen demand (BOD5),
phosphorus, nitrogen, suspended solids, volatile solids, sediment associated with
construction activity, and fecal coliform bacteria. These calculations were based, in
part, on data specific to the region and on regression equations developed for BOD5,
nitrogen, and phosphorus. These calculations were also applied to much older data
(suspended and volatile solids, and fecal coliform) collected in the 1960s and 1970s.
The solids and fecal coliform data originated from a wide variety of locations and were
not correlated well with development intensities. Although they provided order-of-
magnitude estimates of water quality impacts associated with different lot sizes, the age
and variability of the data and the extension of regression equations for BOD5,
nitrogen, and phosphorus to suspended and volatile solids and fecal coliform may limit
the conclusions.
Air quality impacts resulting from automobile trips were calculated by modifying trip
generation and length assumptions presented in The Costs of Sprawl by the Council on
A-35
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Environmental Quality (1977) and were calculated by air pollution generation rates
presented in the Transportation Control Plan for the Baltimore Region by the Regional
Planning Council (1978).
Energy impacts were estimated on the basis of work-day auto fuel consumption and on
the amount of energy imbedded in the roadway pavement. These estimates provided
an indication of the differing energy requirements for developments of differing lot
sizes but did not take into account energy consumption associated with non-workdays
and imbedded energy in other required infrastructure improvements, such as
wastewater and stormwater facilities.
Economic impacts were defined using the average market value of improved residential
parcels in Maryland. Regression analysis showed a high degree of correlation (r2=
99.7) between average parcel cost per acre and lot size as a non-linear or logarithmic
function. Values for newly developed areas were adjusted upward to account for
higher prices of new homes.
Site development costs were estimated using data on lots in Montgomery and Prince
George's Counties for 30 different cost categories for various residential zoning
densities. The costs were inclusive and detailed permitting fees, engineering, surveying,
utility contributions and hook-ups, water, sewer or septic systems, clearing and grading,
sidewalks, street paving, erosion controls and stormwater management, and
landscaping. These costs and building costs were then compared to average market
values, and the residual for raw land, carrying charges, and profit were calculated.
Following the cost calculations, sensitivity analyses were performed for each impact
category by assuming wider lot frontages, reduced pavement widths, increased cul-de-
sac radii, and the combined effects of the most land-consumptive development
standards (for example, all of the above plus square lots, and four lots facing on a cul-
de-sac circle).
Finally, the effect of clustering the very large lot subdivision (that is, 100 units on 5-acre
lots spread over 521.4 acres), so that lot sizes were small, medium, and large was
evaluated. The resulting open space, impervious surface, nitrogen loads in nonpoint
source runoff, imbedded energy in roadways, and site development costs were
estimated.
Results
As expected, development with small lot sizes resulted in less land consumption and
less impervious area. Small lot size developments generated smaller nonpoint source
pollutant loads, required fewer workday vehicle-miles of travel, generated fewer
hydrocarbon emissions, and resulted in less energy embedded in roadway pavement.
Development with small lot sizes also had lower site development costs and generated
greater property tax revenues per acre, even though taxes per unit are less.
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The sensitivity analysis indicated that wider lot frontages and increased cul-de-sac radii
generally increased environmental, energy, and site development costs. Reducing
pavement widths and increasing the number of lots on cul-de-sacs generally decreased
those costs. The greatest savings in environmental, energy, and site development costs
resulted from a combination of the least consumptive standards.
The effect of clustering was an increase in open space, site development cost savings,
and reduced nonpoint sources of pollution. However, the benefits associated with
clustering may be somewhat less than indicated. The effect of clustering was evaluated
by assuming that a 521.4-acre parcel clustered to small lots (0.12 acre each) will result
in the same nonpoint source pollution loads, road requirements, energy consumption,
and site development costs per dwelling unit as a non-clustered subdivision with 0.12
acre lots. If the clustered subdivision was in a fringe area away from an urban core,
infrastructure costs, energy requirements, and air pollution may be somewhat greater
due to the longer distance of connecting the development to service areas, shopping, or
work. If a centralized, on-site wastewater disposal plant or community septic system,
and water supply are provided, then some additional connective infrastructure costs
would be avoided, except for transportation improvements.
Summary and Applicability
In summary, the analysis indicated that small lot developments and clustering resulted
in fewer environmental, energy, and site development costs than those of large lot
developments. This study provided a detailed assessment of selected costs associated
with different density residential developments. The analysis also calculated cost
savings associated with clustering at higher densities. With the exception of selected
nonpoint source pollution loadings, the analysis was based on data collected in the
Chesapeake Bay watershed and has regional applicability.
The limitations of the analysis were that it dealt exclusively with development densities;
the study treated small lot developments and clustering as the same development form,
and did not address the location of the development and its relation to an urban core
or fringe area. This study also focused its review of costs on onsite development costs
rather than all costs. For example, costs associated with schools, recreation, libraries,
police and fire, and infrastructure operation and maintenance costs were not addressed.
In addition, the assessment of water quality impacts was limited to nonpoint sources
and did not consider the variable effect of septic systems vs wastewater treatment plant
effluents on total pollution loads to water bodies.
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Crossroads: Two Growth Alternatives for Virginia Beach
Virginia Beach Growth Management Study
Prepared By: Siemon, Larsen & Purdy, Chicago, Illinois, et at
The City of Virginia Beach experienced rapid growth during the early and mid 1980s,
primarily as a result of development that occurred throughout the entire tidewater
region near Norfolk, Virginia. Much of this growth was fueled by the increase in
defense spending during the 1980s, and by the high quality of life and affordable cost of
living offered by the region. As an example of the magnitude of growth in Virginia
Beach, between 1980 and 1989, a total of 55,883 residential building permits were
issued by the City. The development peaked during 1984, 1985 and 1986 when more
than 7,000 residential building permits were issued. Approximately 47 percent of the
permits were for single family detached dwelling units, and 51 percent were for multi-
family and rental units.
The high rate of growth forced Virginia Beach to examine the impacts of unmanaged
growth in a number of areas, including the fiscal impacts of providing services and
infrastructure to the new dwelling units, environmental impacts on sensitive lands, and
changes in quality of life. There was particular concern with the impacts associated
with the expansion of new development into the sensitive environmental and
agricultural lands located in the southern part of the city. The city realized that it had
to manage its growth better and, as a result, updated its existing Comprehensive Plan in
1986.
In anticipation of the new comprehensive plan calling for controlled growth south of
the "green line", the City had proposed a major "down zoning" in the residential
districts located in southern part of the city. The downzoning produced a lot of
controversy because persons owning land near the Courthouse/Sandbridge area (this
rapidly growing area of the city represented a major southward extension toward
previously agricultural lands) faced a significant drop in the development value of their
properties. Maximum residential densities were lowered to control growth, decrease
the future infrastructure costs to the City, and make residential development
compatible with existing agricultural uses. The Virginia Supreme Court overturned the
downzoning of several parcels located in the Courthouse/Sandbridge area. Because the
new comprehensive plan would have to allow residential development in southern part
of the city, the challenge became how to manage this development.
The major emphasis of the 1986 plan was that the city needed to find a more orderly
and cost-effective way to provide the necessary roads, water, sewer, and storm sewer,
and other local services required by the new development. Specific recommendations
included the following:
• Establish a "green line" across the southern part of the city to designate
the southern-most limit of medium and high density growth. New road,
water, and sewer infrastructure would not be extended south of the green
A-38
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line. Infill development north of this line would be encouraged and the
agricultural lands located south of this line would be protected.
• Modify the Capital Improvement Plan so that the major expenditures for
infrastructure would occur north of the green line
• Revise the zoning ordinance to allow low density residential development
in the agricultural zoning districts that comprise most of the land located
south of the green line. Road-front residential development in
agricultural areas on 1 to 3 acre lots was permitted.
Officials were concenred that allowing low density residential development south of the
green line would result in linear sprawl development that would be expensive to serve,
adversely affect the agricultural economy, and create negative environmental impacts.
City officials hired a team of consultants to identify other means of accomplishing the
objectives of the comprehensive plan, particularly controlling growth just south of the
green line.
Methodology
The City was interested in the implementation of a transfer of development (TDR)
program, and the use of alternative, higher density residential and mixed use
development forms. The consultant team considered growth in three parts of the city:
1) north of the green line, which consisted primarily of infill development and
redevelopment at higher densities; 2) a growth area located immediately south of the
green line, near the Courthouse/Sandbridge area; and 3) the remaining rural areas,
located south of the green line and the growth area.
The team prepared a market study and an analysis of the capacity of the land located
within the city to determine how much development the city was likely to receive, and
capable of accommodating, from 1990 to 2010. The following forecasts were produced
for the three parts of the City:
• North of the green line: A total of 36,700 new residential dwelling units,
14,100 of which would be single family detached; 2.35 million square feet
of office space; and 2.4 million square feet of retail space
• The growth area: A total of 32,500 new residential dwelling units, 21,700
of which would be single family detached; 2.285 million square feet of
office space; and 1.982 million square feet of retail space
• Southern rural area: A total of only 800 new residential dwelling units,
all of which would be single family detached; 62,400 square feet of office
space; and 54,000 square feet of retail space
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City-wide, a total of 70,000 new dwelling units were forecast, producing a population
increase of 180,900 persons and a related increase in employment of 26,500 jobs.
The team designed two alternatives for accommodating development within the growth
area located just south of the green line. A total of 13 different options were initially
defined that accommodated the forecasted 32,500 dwelling units while varying in terms
of the mix of dwelling unit types, net and gross densities, population, commercial and
retail floor area, and number of employment opportunities. Out of these 13 scenarios,
two of them were selected to be analyzed:
• The trend scenario consisted of 24,375 single family detached dus, 2,708
townhouses, and 5,417 multi-family units; had a average gross density of
2.85 dus/acre; and occupied 13,691 acres. A total population of 87,241
persons was projected.
• The community of place scenario consisted of 9,750 single family
detached dus, 7,583 townhouses, and 15,167 multi-family units; had an
average gross density of 5.16 dus/acre; and occupied 7,559 acres. A total
population of 76,163 persons was projected.
The trend scenario consisted of the pattern of the development that occurred in
Virginia Beach during the 1980s—a low density residential development form consisting
primarily of single family detached dus. The major commercial, retail, and community
facilities would be located along arterials and highways. The land use districts would be
spatially distinct from each other and required reliance on the automobile for virtually
all activities. Little opportunity would be provided for nearby employment.
The community of place scenario consisted of urban form representative of neo-
traditional town planning. This scenario would contain a well-defined civic, commercial,
and retail center, surrounded by moderate density residential neighborhoods. The
design of the community of place would include a pedestrian environment that
encouraged walking, minimized the land area needed for roads and parking, and
provided proximity to community facilities, shopping, and employment.
The final purpose of the study was to compare the fiscal, demographic, and economic
impacts that would be produced by developing the two scenarios in the growth area.
Our summary focuses on the difference in the fiscal impacts of these scenarios.
A-40
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Results
A major source of the data on the cost of providing local government services,
including education and transportation infrastructure per dwelling unit, was
Infrastructure Costs, Fiscal Impacts, and Proffer Charges, prepared for the City by
Burchell and Listokin. Another source for information on cost of water and sewer
infrastructure costs, which was not addressed in the Burchell and Listoking study, was
Growth Impact Analysis for the CourthouseJSandbridge Study Area by Harland
Bartholomew and Associates. The consultant team made the necessary design
assumptions to estimate costs for water, sewer, stormwater, and transportation
infrastructure. These assumptions included estimating the amount of local and regional
sewer and water pipe per du, and the number and length of vehicle trips/du.
This study estimated the gross costs for infrastructure, regardless of who paid for them
(that is, the federal and state governments through grants-in-aid and revenue sharing,
the City of Virginia Beach through taxes, or residents through user fees and purchase
costs).
Table A-4 presents the results of the fiscal impacts on the general fund. The results
showed clearly that, under the trend scenario, the net fiscal impacts would be negative
for both single family and townhouse development, but would be positive for
apartments and non-residential land uses. The net fiscal impacts were different under
the communities of place scenario. The single family and townhouse uses would
produce smaller negative impacts, while the apartment and non-residential uses would
produce large, positive fiscal impacts.
Table A-5 presents the total capital costs of infrastructure. The total capital costs
required under the trend scenario to serve the residential land uses were substantially
larger for all three types of infrastructure than they were under the community of place
scenario. This was primarily due to the increased density and the smaller total area of
the development under the communities of place scenario, and, to a lesser extent, was
due to a diminished demand for transportation infrastructure.
Summary and Applicability
The Virginia Beach study reached conclusions for a large, mked use development, as
opposed to the state-wide results presented in the analysis of New Jersey's IPLAN.
Because the Virginia Beach study considered a mixed use development, as opposed to
a residential project, results of the study are indirectly applicable to the purposes of our
study. The Virginia Beach study did consider three different types of dwelling units,
and the costs and revenues associated with these three types are shown in the
accompanying tables. The reason that the percentage savings in capital costs for
infrastructure are so great, as compared to the capital cost difference in the New Jersey
study, is because the community of place scenario required about one-half the total
acreage of the trend scenario. The community of place scenario had a relatively high
A-41
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residential density, producing dramatic reductions in the amount and cost of the
infrastructure required.
The results of the Viginia Beach study are valuable to the Subcommittee because the
study area was within the Chesapeake Bay watershed. The results are also more
applicable to Virginia and Maryland because most of the service and infrastructure
systems considered in the study were county-wide.
A-44
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Appendix B
Other Reviewed Studies
This appendix contains other studies reviewed by CH2M HILL consultants that were
not directly relevant to the issue of how the cost of local government services varies
with the type and location of residential dwelling units. These studies were reviewed in
less detail but they do contain findings and conclusions that are indirectly applicable to
the purpose of this study.
The Cost of Community Services (COCS) in Three Pioneer Connecticut
Valley Towns: Agawam, Deerfield, and Gill
(Review Draft) The American Farmland Trust; 1992
The American Farmland Trust (AFT), a private, national conservation organization,
was concerned that local officials lacked sufficient information to determine both the
impact of residential development on local tax bases and the role of farmland and open
space preservation in improving the ratio of tax revenues to public service costs.
AFT conducted cost of community services (COCS) studies to determine the
contributions of various land uses to the revenues collected by local government and to
the costs incurred by government to provide public services. This study did not
compare different forms and locations of residential development but instead
compared, at a municipality-wide level, three categories of land use: residential,
commercial and industrial, and farm and open lands. Three towns in the Pioneer Valley
section of the Connecticut River Valley were selected to determine if the conversion of
farmland and open space to "higher and better uses* precipitated increases in the
need for local governments to provide new infrastructure and additional services. New
infrastructure and additional services cost more than the revenues generated by the
new development.
Methodology
The COCS study compared annual revenues to the costs of serving different land use
sectors. The studies began by defining basic land use categories, including undeveloped
lands. Income and expenses were allocated by land use for a recent, typical year and
were analyzed with the aid of a computer spreadsheet program. A ratio was
determined for each land use for services and infrastructure expenditures and revenues.
The study was composed of five basic steps:
• Define land use categories
• Collect data
• Group revenues and allocate by land use
• Group expenditures and allocate by land use
• Analyze data and calculate ratios
B-l
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Revenues and expenditures were allocated among four land use categories: residential,
commercial, industrial, and farm and open land. The revenues analyzed included
property taxes, state aid, local receipts, and free cash. Expenditures come from one of
five classes: general government, public safety, education, social services, and public
works. Budget appropriations were used to allocate expenditures, when adequate
records and documentation were not available to adequately allocate expenditures by
actual expenses.
The COCS study had some elements of a fiscal impact study. The COSC study
attempted to allocate costs and revenues to land uses based on the demands for
services and generation of revenues. The allocation of property tax revenues was done
on the basis of assessed value, while the costs were allocated based on the demands for
each service type that arose from each type of land use. For example, education and
social services were allocated totally to the residential sector, along with the vast
majority of public safety and public works costs. Because farm houses were allocated
to the residential category, it was implicitly assumed that there were no persons present
on farm land. Parcels of land classified as vacant residential, commercial, and industrial
were put into the farm and open land category. Assuming these types of parcels were
often assessed based on their highest and best use under the local zoning ordinance,
this may have led to over allocations of local revenues to the farm and open land
category.
The COCS study was not a typical fiscal impact study because it did not apply marginal
costs (that is, by determining the amount of excess capacity available in service areas),
did not estimate revenues and costs in terms of units of development (for example,
dwelling units or 1,000 square feet of non-residential development), and did not
consider service levels.
Results
The results of the study showed that the demand for residential services consistently
exceeded the revenues generated by residential development. Commercial and
industrial land uses showed a positive balance of revenues to expenditures. Farm and
open land also created a surplus of revenues over expenditures, although the study
probably overstated the magnitude of the fiscal surplus produced by farm land (which
also included vacant commercial, residential, and industrial land). In Agawam,
residential uses provided 74.5 percent of the property tax revenues and 81.2 percent of
the total revenues, but required 91.2 percent of expenditures. Similar figures were
found for the other two towns in the study. Undeveloped land in Agawam generated
only 1.7 percent of the revenues but this land required less than one-half of one
percent of the expenditures. In Gill, 21.1 percent of the town's total revenues came
from farm and open land and these areas accounted for only 3.8 percent of the
expenditures. This difference is consistent with the fact that Agawam has relatively
little land, while Gill is almost entirely undeveloped.
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The median ratios of revenues to expenditures by land use are as follows:
Revenues/Expenditures
• Residential $1/1.15
• Commercial/Industrial $1/0.38
• Farm and Open Lands $1/0.29
The residential ratio says that for every $1 in revenues collected, $1.15 is expended in
providing local services to all residential land uses within the municipality. The low
ratio for the Farm and Open Land category may have been due to an over allocation
of revenues and an under allocation of costs to this category, and an over allocation of
costs to the other sectors based on using assessed values.
Summary and Applicability
The ratios found in the Pioneer Valley study are consistent with findings in other COCS
studies, namely that residential land use does not pay its own way. The study also
stated that farmland and open space generates a small but positive net fiscal impact on
local governments, even when farmland is assessed at use value. The findings were
similar to AFT's previous studies that analyzed only farmland in Agricultural Use
Assessment Programs. These studies, taken together, suggest that residential land uses
cost more in services than they generate in revenues, and that a mix of other land uses
offsets this imbalance. The inclusion of vacant residential, commercial, and industrial
parcels in the farmland and open space category in this study lessens the applicability
of its results only to farmland.
The COCS studies analyzed the relationship of revenues and expenditures for selected
land uses. The studies were general in nature and illustrated trends to local decision
makers about the impact of various land uses on the local tax structure. Farm and
open lands can subsidize those land uses that required more public service and
infrastructure expenditures than those lands produced in revenues.
The COCS study methodology has some deficiencies concerning the allocation of both
cost and revenues between the farmland and open space category, and other categories.
Because this study did not contain all of the elements of a fiscal impact study, it could
not answer the question of whether different types of residential development vary in
terms of their ability to pay their own way. (A similar study was conducted by AFT in
Loudoun County, Virginia in 1986 and again in Dutchess County, New York in 1989.
Both studies had results similar to those reached in the Pioneer Valley study).
Farmland, when properly identified, is neither a large source of demands for local
public services, nor a large generator of revenues, particularly when use assessments
are involved. Other vacant land classes, such as commercial and industrial, may
generate a larger net positive fiscal impact than farmland, due to higher assessed values
and having no residences.
B-3
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A Framework for Thinking About the Impacts of Growth in the
Portland Metropolitan Area
Submitted to The State Council for
Growth Management in the Portland Area
ECO Northwest, 1991
Summary and Applicability
This memorandum provided a synthesis of the professional literature on growth
management to the Council as a basis for discussion and decision about growth policies
for the Portland area. This memo, the first of a two-part study, focused on six
questions about growth. These questions related to the causes and impacts of growth,
the amount of growth possible in the metropolitan area, the effect of growth of public
policy on growth, the effects on population and employment, and the inevitability of
those effects. (The second part of the memo, not reviewed by CH2M HILL, was an
investigation of key relationships and an evaluation of selected costs and benefits of
growth.)
Two theories of growth were advanced in the memo: the conventional theory that
people follow jobs and an alternate theory that jobs follow people and amenities. The
authors of the memo acknowledged that growth has positive and negative impacts, but
they submitted that the net effects of growth were difficult to estimate. Growth tends
to have the following effects:
• Positive short-term effects on local and regional economies
• Mixed effects on the cost of public infrastructure in the short-run
• Negative effects on the cost of public infrastructure in the long run.
• Negative effects on the environment
Public policies can have a dramatic effect on the impacts of growth. Market-oriented
economies often fail to provide efficient levels of public goods or to efficiently allocate
costs and benefits from public resources. The existence of and the inequities involved
with allocating external costs and benefits are presented as justifications for
governmental regulation of land uses. Public policies, then, become important in the
allocation of those resources. However, those public policies will, at times, be in
conflict. Conventional policies are inefficient in large and growing urban areas. The
effects of growth on the Portland area were predicted, given current policies.
The memo concluded by examining growth and declining livability. A region's growth
rate was determined by how it compared with adjacent regions in terms of livability,
wages, cost of living, location, presence of raw materials, skills and productivity of the
labor force, and other factors that determined competitive advantage. A region's
growth depended, to a significant extent, on the differences that existed in these factors
across regions. Livability did not have to decrease to slow or stop growth.
Improvements in livability attracted new residents, and increased the labor supply,
which decreased wages and attracted new business. Growth in population and
B-4
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employment increased land demand and price. Equilibrium was re-established (rapid
growth ends) when all of these factors were comparable among areas in the region.
High standards of livability may involve trade-offs between land prices and wage levels.
Areas that had traded amenities for higher wages and higher land prices found the lost
amenities more expensive to replace than if the cities simply had preserved them.
Cities experiencing flight of the affluent (in search of greater amenities) to the suburbs
were left without the fiscal or human resources to prevent the decay of their central
areas.
This memo provided an interesting overview of the factors involved in determining how
and why an area grows and provided some interesting areas to consider for policy
formulation. This information is not directly applicable to the project outlined by the
Subcommittee. Some of the most useful information in the memo addresses the
difficulty of estimating the net effects of growth because of the complexities of the
system of relationships linking development processes, quality of life, and the role of
local government in planning for and providing services and infrastructure.
Encouraging Compact Development in Florida, Star Grant 88-053
Joint Center for Environmental and Urban Problems for the
Department of Community Affairs and the Institute of Government
Summary and Applicability
The topic of this report was the encouragement of compact development in Florida.
This report was commissioned by the Department of Community Affairs through the
Institute of Government. The timing of the research for the report coincided with the
creation of the Governor's Task Force for Urban Growth Patterns and the research
was slightly refocused for its benefit. The report researched three major mechanisms
for encouraging compact development: state-wide programs, regional efforts, and
redevelopment.
The section on state efforts discussed state comprehensive plans that included
incentives for encouraging compact development. The states reviewed included
Oregon, New Jersey, Maine, and Vermont. The discussion of each state provided some
background and history of the state's planning efforts. This section also included some
explanation of major components of the plan and any supporting or associated
legislation. The authors provided either reactions to the states' efforts or their own
comments.
The third section of the report reviewed innovative strategies for achieving compact
growth, including urban growth boundaries (UGBs), transferable development rights
(TDR), point systems, and tax base sharing. The discussion of UGBs provided a brief
description and means of implementation. Several examples from other states and
from within Florida were provided. The authors compared issues-fixed boundaries to
B-5
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flexible boundaries. They highlighted some of the legal challenges, and the impacts on
land and housing prices.
A similar description of TDRs included a brief history, examples of programs, the
impacts of TDR systems on local economies and land development patterns, the
problems with implementation, and examples from within Florida. The section about
point systems began by comparing traditional vs flexible zoning techniques and then
described point systems. The report described some of the effects of point systems on
infill development and density, and provided local examples from within Florida and
other states.
In the next section, the authors described the benefits of tax base sharing in fostering
more efficient infill development. Competition for economic development among
neighboring jurisdictions can contribute to urban sprawl. Tax base sharing was
discussed as a means for equalizing tax base among jurisdictions, thereby reducing
competition for commercial and industrial development. Tax base sharing also reduced
the incentive not to zone for residential uses, which tended not to pay for themselves.
Two examples were cited: The Hackensack Meadowlands District and Minnesota's
Fiscal Disparities Program.
A discussion of infill and redevelopment included problems encountered at the local
level, issues concerning governments and developers, public and private approaches to
encouragement, and an overview of programs from Florida and other states. The
authors included some lessons learned from other jurisdictions and a summary of
implementation strategies for local governments. The report concluded with specific
recommendations for encouraging compact development in the state of Florida.
This report was a review of state-level programs designed to encourage infill and
redevelopment. It may be of the most use to the Subcommittee in the
recommendations this report made for strategies by local governments to encourage
infill and redevelopment. These strategies could provide assistance to the
Subcommittee in formulating their own recommendations.
B-6
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The Cost of Population Growth in the Patuxent River (Maryland) Basin:
Population/Environment Balance
Summary and Applicability
This study identified the environmental impacts of population growth and the
accompanying land use changes in the Chesapeake Bay watershed, and documented, in
detail, the costs to taxpayers of expanding public facilities and services to accommodate
growth. The Patuxent River Basin was selected because the researchers felt that it was
representative of the major tributaries in the watershed. Two counties, Howard and
Calvert, were selected from within the sub-watershed for detailed study. Population,
housing, and land use trends were reviewed and the implications of their environmental
and fiscal impacts on public infrastructure (water, sewer, education, and transportation)
were examined. The report supports the objectives of the Patuxent River Policy Plan.
The report described the study area generally, discussed population growth and land
use change trends, reviewed anticipated environmental impacts associated with the
anticipated trends, and detailed the public costs of growth for Howard and Calvert
Counties. Costs were provided for public infrastructure on a county-wide basis.
Transferable Development Rights were discussed as a strategy for controlling the
location of growth. The report concluded by reiterating the policies developed at the
Maryland Department of State Planning conference entitled, "Land Use or Abuse?":
• Improve and strengthen local planning
• Concentrate development and prevent sprawl
• Enact effective agricultural zoning
• Provide zoning for dense residential development
• Provide public funding for public infrastructure
• Redirect growth into existing urban areas
• Continue programs for conservation and preservation
• Coordinate programs for conservation and growth management
This study provides some useful insight into past and expected development patterns in
the Chesapeake Bay watershed area and the costs associated with trend development.
However, the costs discussed in this report were too general to be utilized in the case
studies envisioned by the Subcommittee. This study did not address the primary issue
of interest to the Subcommittee: the cost differentiations between infill and sprawl
development.
B-7
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Growth Management and Economics: Developing Common Ground
National Growth Management Leadership Project, 1992
Summary and Applicability
The document produced for this conference contained articles and listed studies on
costs of sprawl and the benefits of compact development. CH2M HILL obtained and
reviewed these studies either directly or as they were reviewed by Frank in The Costs of
Alternative Development Patterns: A Review of the Literature.
Most of the cost of sprawl studies in the conference materials are not directly
applicable to the Subcommittee's project. Two studies reinforced the cost efficiencies
of regional sewer planning. An article by Frank stated that average cost pricing of
public utilities and services promoted sprawling patterns of development and created
cross-subsidies in the local economy. Other effects were chronic under-investment in
infrastructure capacity, over-investment in more costly-to-serve developments, and fiscal
deficits. Frank recommended that states require that all public infrastructure be
financed by full, marginal cost user charges and impact fees. An article by Nicholas
and Pappas reviewed the average impact fees across the nation by type.
The other papers and articles spanned a wide variety of topics, ranging from rural area,
natural resources, and tourism development; housing and transportation investments;
and alternative world economies.
The Economics of Growth Management: A Background Reader
The National Growth Management Leadership Project; 1991
Summary and Applicability
The National Growth Management Leadership Project compiled a packet with reprints
and excerpts from 27 journal and newspaper articles and studies that dealt with various
aspects of growth management. The Background Reader was assembled without
foreword or follow-up analysis. The articles and excerpts were grouped into the
following seven categories:
• Costs and Benefits of Growth
• Growth Management as an Economic "Stabilizer"
• The Economic Advantages of Compact Development
• The Economic Importance of Growth Management: Protecting Resource
Industries and Infrastructure Investment
• The Economic Advantages of Growth Management Planning
B-8
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• The "Quality of Life" Benefits of Growth Management
• The Economic Advantages of Environmental Protection
Most of the articles were brief and discussed interesting topics regarding either a
specific aspect of growth management or growth management efforts in a specific
locality. The major studies cited in the document were reviewed independently by
CH2M HILL. The information contained in the articles, while instructive, is of little
direct benefit to the study being undertaken by the Subcommittee.
Economic/Fiscal Impacts of Development—Selected References
Urban Land Institute (ULI), Infopacket Number 386
Summary and Applicability
ULI InfoPackets are packages of photocopied materials relevant to specific topics in
real estate or urban development. The materials came from books, articles from
magazines or newspapers, and published and unpublished reports. InfoPacket No. 386
included a bibliography of all of the references and sections from each reference
included. The sections included were usually enough to give the reader enough
information to determine whether he or she wanted to obtain the full document.
*Not in My Back Yard1': Removing Barriers to Affordable Housing
Advisory Commission on Regulatory Barriers to Affordable Housing
This book identified and described factors that affect affordable housing (for example,
regulatory barriers, environmental regulations, the federal tax system, and the housing
finance system). Regulatory barriers that were described included exclusionary zoning,
fees that were not linked to the costs of providing services, slow and burdensome
permitting, and building codes that raised housing costs and may have discouraged infill
development. The book concluded with recommendations and implementation
strategies for federal, state, local, and private actions.
Because the book's focus was on regulatory and institutional barriers to affordable
housing, this book did not provide quantitative information that could be used to
compare the costs of different growth patterns and intensities. However, the book
provided a good overview of the regulations, policies, and attitudes that contributed to
housing costs, and in some cases, discussed the linkage between them and growth
patterns.
B-9
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Greater Toronto Area Urban Structure Concepts Study
Prepared for the Greater Toronto Coordinating Committee
The Greater Toronto Coordinating Committee was concerned about the long-term
implications of the regional growth trends in the Toronto Metropolitan area. High
rates of growth throughout the 1970s and 1980s had placed increasing pressure on
regional infrastructure systems and had extended growth into the adjacent counties,
raising the concern that large, future investments in infrastructure would be required.
The committee decided that a long-term coordinated planning strategy was needed to
ensure the efficient provision of infrastructure.
The Committee's concerns covered a wide range of issues but were primarily addressed
at infrastructure requirements and capital costs for transportation, hard services (water,
sewer, solid waste management), greening/environment, and human services. Other
issues addressed by the study were environmental quality, energy consumption,
economic development, and quality of life. The study defined and assessed three
generic urban structure concepts for the metropolitan area. Each of these concepts
defined the future spatial distribution of land uses, and future development densities.
Methodology
The study first defined the three generic urban structure concepts:
• Spread, a status quo concept consisted of a continuation of the existing
pattern. This would result in low density suburban development, along
with continuing commercial development within the Toronto CBD and
adjacent subcenters. Under this concept, the transportation emphasis
would be providing facilities for radial and suburb to suburb trips.
• Central consisted of future population growth, and accompanying
increases in population and development intensity. This concept
occurred primarily within metropolitan Toronto and other already
developed urban areas. Under this concept, the future spread of
urbanization outward from Toronto into adjacent areas would be
significantly reduced. This concept would emphasize mass transit and
trips between the suburbs and the central developed area.
• Nodal, an intermediate concept in which future growth occurred in and
around existing developed communities. Relative to the central concept,
the spread of growth into adjacent areas would be greater but would
occur in compact nodes. The transportation emphasis here would be on
trips between nodes, and on using mass transit to a greater extent than
the spread concept.
The Committee had forecast that, by the year 2021, approximately 2 million additional
residents would need to be accommodated within the Metropolitan area. The crucial
B-10
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choice was whether these new residents would be concentrated within the existing
developed central area (Central concept) or outside of it. If the population was to be
distributed outside of the central area, the population could be evenly distributed
through low density development (Spread concept) or through concentrations in nodes
(Nodal concept).
All three scenarios would accommodate the same total regional population of 6.02
million persons by the year 2010. Under the Central concept, 3.8 million of these
people would live in the central built up area, under Spread there would be 2.428
million persons, and under Nodal there would be 2.8 million. The total urbanized area
would be different for the three concepts, ranging from 463,800 acres under Central to
521,800 acres under Nodal, and up to 599,700 acres under Spread. Finally, all three
concepts would have the same total employment of 3.44 million workers.
The study distributed the population, employment, and developed area within the study
area, that consisted of metropolitan Toronto and four adjacent counties (Durham,
Hamilton, Peel, and York). Once this was done, policies were adopted for each
concept to determine the total amount and location of infrastructure. Eight criteria
were defined:
• Urban structure
• Economic impetus
• Transportation
• Hard services
• Greening/environment
• Human services
• External impacts
• Overall infrastructure costs
Individual studies were performed to distribute the population employment, determine
infrastructure and facility needs, estimate cost, and assess other impacts. As an
example, overall population densities would be 16.9 persons per gross residential acre
under Central, 14.9 under Nodal, and 12.6 under Spread. The current (1986) density
figure for the study area was 12.9.
Results
The accompanying table, Table B-l (Exhibit 7 from the Summary Report), presented
the capital cost summary for the three concepts in evaluating the concepts for the last
criterion listed above - Overall Infrastructure Costs. The absolute and percentage
capital cost differences among the three concepts were relatively small. The differences
ranged from 2 percent between the low cost for central and the low cost for nodal, to
7.4 percent between the low cost for Central and the cost for Spread. The differences
between the cost categories were illuminating:
B-ll
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EXHIBIT?
CAPITAL COST SUMMARY
(CUMULATIVE 1990-2021 TOTALS. IN BILLIONS OF 1990 DOLLARS)
TRANSPORTATION
TRANSIT
ROADS
SUB-TOTAL
HARD SERVICES
WATER/SEWER
LOCAL SERVICES/ROADS
SUB-TOTAL
GREENING/ENVIRONMENT
PASSIVE OPEN SPACE (LAND)
STORMWATER QUALITY
SUB-TOTAL
HUMAN SERVICES
HOSPITALS
SOCIAL & OTHER
HEALTH SERVICES
EDUCATIONAL FACILrnES
PROTECTION
CULTURE & RECREATION
PARKS (LAND)
SUB-TOTAL
TOTAL
' 1. SPREAD
7.16
19.93
27.09
s
3.72
15.76
19.48
1.10
2.00
3.10
4.45
2.68
6.40
2.83
10.90
2.32
29.58
79.25
2. CENTRAL
14.41
13.20
27.61
3.68
8.98
12.66
1.10-6.00
2.00
3.10-8.00
5.56
2.68
4.20
2.83
10.90
4.22
- 30.39
73.76-78.66
3. NODAL
11.58
17.04
28.62
3.68
11.04
14.72
1.10-4.70
2.00
3.10-6.70
4.75
2.68
4.79
2.83
10.90
2.82
28.77
75.21-78.81
NOTES:
• This table includes expenditures currently commited or announced by governments in the area
as well as for longer range needs to 2021.
• The above costs do not include federal costs for new facilities serving the entire GTA, such as
for airports, high speed interurban rail service or freight rail links, which would be similar for
all concepts.
• If existing capital expenditure levels (averaged for the period 1984-88, see Exhibits 8 and 9
following) are extrapolated for the period 1990-2021 at expanded levels reflecting projected
population growth, the total expenditure would be S73.97 billion in 1990 dollars. The esti-
mated total of $79.25 billions for Concept 1, spread, is 7% greater than this extrapolated total,
a relatively small increase attributable to assumed increased standards in this study.
LBI
(3UX.T
B-12
-------
• Overall transportation costs were very similar but their composition
varied greatly between roads and mass transit
• Hard services showed the greatest variation, particularly for local
services/roads, but surprisingly not for water and sewer. Costs were very
similar for the three concepts.
• Greening costs (that is, acquisition of open space, stormwater
management, and consumption of agricultural lands) were higher for the
Nodal concept and were lowest for the Spread concept
• Human services, that is, education, recreation, social and health services,
parks, and hospitals, were the largest expense item and were nearly the
same for all three concepts
When the capital costs were converted to average annualized expenditures over the
1990 through 2021 period, they were almost identical: $2.55 billion for spread, and
$2.54 billion each for Central and Nodal. The study noted that the future annual per
capita capital costs (in 1990 dollars) would be only 7 percent above current levels.
These expenditures assumed the maintenance of current service levels, although some
of the expenditures would be needed to bring infrastructure systems up to the current
standards.
The report produced annual operating cost estimates for transportation, including
school busing and solid waste disposal. Qualitative descriptions about costs were
provided for human services and water pumping costs. The total quantified annual
operating costs were similar for spread - $12.96 million, and for Nodal, $12.09 million;
these costs were lower for Central at $10.87 million (16.1 percent below the Spread
figure and 10.1 percent below the Nodal figure).
The report summarized the effects for the three concepts for the other seven criteria:
• Urban Structure: The Nodal concept was preferred because it would
have less impact on existing community character, although Nodal would
consume more rural land than the Central concept. The Nodal concept
would provide a wider range of community sizes, diversity, housing types,
and a better mix of residential and job activity.
• Economic Impetus: The Central concept would have the lowest impact
on agricultural lands, forests, and mineral resources. Central would have
the lowest push effect on land development costs but had a risk of
creating price increases for housing and land if growth was not properly
managed.
• Transportation: The Central concept was preferred because it used mass
transit more, resulted in shorter vehicle trips, and required less road
capacity. The Nodal concept was only slightly less preferred for the same
B-13
-------
reasons. The Spread concept would produce a more detailed road
network, provide better levels of service, and provide better inter-city and
suburb to suburb connections. This would require greater transportation
effort (long trips and more lane miles of roads) and would result in
congestion in central areas because of the lack of mass transit.
• Hard Services: All three concepts were similar in terms of costs for and
impacts of providing hard services. The Central concept had the lowest
costs for servicing developed and redeveloped lands, with the Spread
concept having the highest costs, and the Nodal concept somewhere in
between.
• Greening/Environment: The Central concept was preferred because it
required the least land consumption and produced the least impacts.
The Spread concept would have the lowest need and costs for acquiring
open space. Under the Central concept, residents would have to travel
furthest for open space.
• Human Services: The Nodal concept rated highest in terms of quality of
service, followed closely by the Central concept. The one exception is
cultural/recreation services, whose quality would be maximized by the
Spread concept.
• External Impacts: The Nodal concept was preferred because it would
create the least pressure for spillover growth into surrounding areas.
While the Central concept would have the most concentrated growth, its
higher densities could create a desire for persons to move, ultimately,
into the undeveloped adjacent lands.
The capital cost and operating cost impacts were similar for the three concepts but
other types of impacts, such as quality of life, environmental, and quality of service,
varied at least as significantly.
Summary and Applicability
Because this study was done in Canada, its findings may not be directly applicable to
the U.S. because the governmental structure is different and because Toronto has a
broad regional focus in providing government services. This study's multi-county
regional focus means that the results do not apply to specific types and locations of
residential development. This study's findings, when coupled with those from other
reports reviewed in our study, do have some relevance to the Subcommittee's mission.
This study appeared to complete a continuum between the state-wide focus of the
assessment of the New Jersey Interim State Development and Redevelopment Plan, the
study in Virginia Beach, and local subdivision-specific studies. The clear message from
*•* these studies was that the larger the geographical focus, the more similar were the
B-14
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overall capital and operating costs for infrastructure and local government services. As
the focus was refined, these cost differences became more pronounced. When
considering a large regional area, such as the Chesapeake Bay watershed, the
environmental and quality of life considerations are at least as important as the
economic considerations in assessing alternative land use patterns.
"Population Growth, Density and the Costs
of Providing Public Services"
Helen F. Ladd, Urban Studies, 1992
The relationship between population growth and local government spending on either
a per capita or a total basis has long been of interest to local officials. Is a relationship
between population growth in sparsely populated counties and local government
spending? This paper investigated the affects that an increase in population density
has on local government per capita spending to determine if it makes sense to
encourage higher density development as a means to reducing per capita government
expenditures.
The paper analyzed changes in per capita annual general fund or current account
spending, per capita annual capital expenditures, and per capita annual spending for
public safety cost as a function of an increase in population density. Two aspects of
population growth were considered: increases in population density and the rate of
population growth.
Methodology
The paper hypothesized that an increase in population density could affect public
spending in two ways:
• An increase in population density would increase per capita spending
because more services would have to be provided by the public sector,
and because more of a given type of service (without increasing level of
service) would be needed to serve the larger population
• Per capita costs could fall if there are economies of scale associated with
increases in density
This paper used regression analysis to estimate the change in local government
spending by 247 U.S. counties. Counties were selected because their boundaries are
fixed over time, so as population increases, the population density increases; and
because including all local governments within a county ensured that comparable
bundles of services were being compared.
The paper made an, interesting distinction between the two outputs provided by local
governments:
B-15
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• The direct output, or the type of service provided. The paper noted
police patrols as an example of a direct public output.
• The final output as perceived and demanded by the public. The paper
identified protection from crime as the final output from the voting
public's perspective.
The paper noted that the level of direct outputs required to provide a given level of
final outputs will vary from county to county depending on a number of different
factors. For example, an urban county may have to have more policemen on patrol
(direct output) in order to achieve the same level of crime protection as another more
rural county where the same final output can be provided by fewer policemen.
The paper focused on the costs of providing the final outputs as valued by local
consumers (who express their service preferences through voting). The paper noted
that the effect on an increase in population density may require a local government to
incur more costs in the form of direct outputs to continue to provide the same level of
final outputs.
The regression analysis used the natural logarithms of the variable, in which three
dependent variables were used:
Current per capita spending on operations
Current per capita spending on public safety
Per capita public capital outlays
A series of independent variables were used including:
• Gross population density of the county
• Average annual rate of population change between 1978 to 1985
• Demand, cost, and taste variables, such as the income of county resident,
the residential share of total local assessed valuation, the educational
attainment of residents, and the private sector manufacturing wage rate
• Intergovernmental relations variables, such as the ratio of local direct
expenditures to total local and state expenditures within the county
Results
The regression of current per capita operations spending indicated the following for the
independent density variables:
• The lowest per capita spending occurs for counties with population
densities of about 250 people per square mile, defined as the base case
B-16
-------
• Per capita annual operations spending rises steadily as population density
increases from 250 persons/square mile to 1,250 people per square mile.
At the higher density per capita, spending is about 19 percent higher
than that for counties with population densities of 250 persons/square
mile.
• For counties with the highest population densities of 24,000 people per
square mile, per capita spending is 43 percent higher than that in the
base case.
The regression using the population growth rate instead of population density as an
independent variable yielded the following results:
• The faster the rate of population growth, the lower is the per capita
spending. Specifically, per capita spending in counties with rapid growth
rates of 5 to 8 percent annually is 12 to 13 percent below that of counties
experiencing no population growth.
Counties appear to respond slowly to rapid increases in population growth, letting
service standards fall as they try to serve more people with the same resources. In the
short-run, as population growth surges, per capita spending may fall, but ultimately as
population density increases, per capital annual operations spending increases.
The paper presented similar regression results using per capita annual capital spending
and annual per capita expenditures on public safety as dependent variables. The
results were not as statistically significant as those for the regression with annual per
capita operations spending. The results did suggest that counties with population
densities of about 500 people per square mile have the lowest per capita annual capital
spending levels.
The regression of per capita capital spending using the population growth rate showed
a stronger relationship than that between per capita operations spending and
population growth. The major impact on the local budget from rapid population
growth is felt in the capital budget, not in the current or general fund budget. Per
capita public safety expenditures were also shown to increase as functions of both
increases in population density and in population growth rates.
For counties with population densities between 250 and 1,250 persons per square mile,
per capita annual operating expenditures increase as density increases. It is possible
that per capita expenditures could decline for counties with densities of more than
1,250 persons per square mile, but that ultimately these expenditures would rise in very
heavily populated counties. Focusing only on capital costs associated with residential
growth as expressed by increases in population density would cause local officials to
miss the fact that population density increases per capita operations spending.
B-17
-------
One of its concluding statements said:
"Higher density represents a harsher environment for providing public services
which requires more public sector inputs to provide a given level of service. The
surge effects of population growth work in the other direction; they tend to
decrease per capita spending on current operations. However, this result
suggests that local governments respond to rapid growth in part by allowing
current service levels to decline. Thus, focusing on public sector burdens alone,
established residents in moderately populated counties bear two forms of fiscal
burdens from population growth; higher costs and reduced service levels. Only
if the new development contributed significantly more than the average cost of
providing services could it be said that development pays it fiscal way."
Applicability
This study did not analyze the cost of providing government services to residential
development, rather it considered cost at the county level to all types of land uses
within the county. The study is relevant because it indicates, for moderately populated
counties, that population density produces an increase in annual per capita operations
spending and, to a slightly lesser extent, increases in annual per capita expenditures for
capital improvements and infrastructure. At least for moderately populated counties
up to a density of 1,250 persons per square mile, it raises serious questions about
policies that encourage growth as a means of lowering per capita service costs. The
study makes a very important distinction between direct and final outputs as means of
evaluating the true costs of providing local public services.
B-18
-------
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Service Characteristics
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Service and Design Standards
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water colleclors have to be sized lo accoi
i certain frequency storm event, and whic
f impervious and permeable surface withi
rgulatory standards speciftcy the frequenc
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dislribulion
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local street
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Design standards, such as cartway width,
pilal cost/unit of distance. Use of narrow*
lessen cosls.
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Stormwaler facilities are designed lo ace
usually the 100-year slorm. Regulalory s
design slandard
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erately Sensitive. Gross density dei
acteristics of the routes required to
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ber of lane miles) of collectors and
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rneighborhood Services
Development
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racter of the Development
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population/du, which in turn determines total population to be
served.
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proportions of impervious and permeable surface, which in turn
determine the amount of off-site runoff to be accommodated.
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turn determines total flow required, pipe diameter, and capital co;
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types of dus-specifically multiple family units. The socioeconomi
characteristics of residents are also a factor.
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Sensitive. Sfd dus have more children/du which translates into hig
demand for recreational facilities, particularly those within walkin,
distance.
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of dus-specifically multiple family units. The socioeconomic
characteristics of residents are also a factor.
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eveloped area. Howe
a pipe diameter.
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within a d
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nsitive. The number of persons determines the
satment facility. Capital cost is more a functio
iposed to pipe diameter.
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ed t-i
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lation density cor
meable surface, w
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:nt densities and mon
ing from developed ai
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developrm
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oderately Sensilive. Total flow to be accommc
velopment character and du type, and is less a
rsons served.
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tal cost is more a
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veloped area. Howev
o pipe diameter.
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serve a de
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2 3,
nsitive. The number of persons determines the
the service population. Capital cost is more a
iposed to pipe diameter.
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60
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eates efficiencies
able to walk in hi
U 0
c -°
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A more dense popul
roportion of students
:r of buses required.
co co •£
c" c
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efficiencies in prc
her equipment m
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co e
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A dense population
he number of vehicle;
Sensitive.
decrease t
protection
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c
CO
c
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ll
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a "a
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ighly Sensitive. Service standards determining
e number of personnel required are based on t
X-S
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I
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.c
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c .5
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sl
e £•
c"«
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efficiencies in prc
her equipment ne
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sl
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he number of vehicle:
Sensilive.
decrease t
protection
c
CO
c
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CO
HL c
o.2
ll
i£
ll
ighly Sensitive. Service standards determining
e number of personnel required are based on t
X-S
E
E
— *£.
S •"
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'•§ «$
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i-s
?• ««•
M (M
i's
efficiencies in col
r equipment neeci
8^
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A dense population
number of vehicles a
Sensitive.
lessen the
o
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ighly Sensitive. Total population determines th
>w; this, in turn, determines the number, capac
insfer and disposal facilities required.
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people residing \
nd acquisition co:
Z 3
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Higher densities mez
the demand for facili
areas.
Sensitive.
increasing
populated
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c
w c
.§•§
.^X CO
•— "3
co ^
l*- O
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>- 2
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E c
c °
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ighly Sensitive. Service standards determining
e desired amount of open space required are b
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e
o
eJ
13
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£
b
c
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S "8
S c
00 8
B 1=
1-1
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efficiencies in prc
cles and other eq
s'l
I'S
A dense population <
decrease the number
services.
Sensitive.
which will
providing
c
CO
s
.2
CO
ti S3
^ •§
H
il
ighly Sensitive. Service standards determining
e number of personnel required are based on t
x-s
^j
8
1
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tj
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UJ
ta
CJ
CO
a
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luce more trips a:
and construction
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a
c
CO
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1 a
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nsitive. A large population generates more ve
ps, other things being equal, although other fa
tal lane miles of capacity, such as trip characte:
«5 S
is
o
-------
s
£
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i
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= 1
u S;
V k.
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a
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c
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5
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a £
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s s
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a £
a.
U
Existing Service Area
V
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2
1
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2
Is
ghly Sensitive. The distance between residential areas served and the cen
vage treatment plant delermines the length of trunk lines.
£ S
b
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C/3 C
£-3
« ^
.= C
tt
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1
5
g
1
£•
e
'£
is
s
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inimally Sensitive. Siormwaier is discharged al ihe neighborhood level an
nveyed to treatment plants in modern syslems.
2 8
jj s
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1 c
1
c
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i
2
s
u
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2
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ghly Sensitive. The distance beiween residenlial areas served and the cen
ler irealment plant deterraines the length of trunk lines.
x 1
C
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1
'{= 8
3D
5 'c
15
g
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VI
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2
g
00
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1
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inimally Sensitive. Schools are located where the residenlial areas are; sa
iidential areas located beyond existing attendance zones would require me
ses for transportation, not necessanly new buildings. Development beyon
rtain size— producing about 500 or more elementary children— makes
nstructing a new school the most economical option.
2 ES S 8
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^3
2
"c
£.
C V>
6 8
U £
gj
s
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e
U
C/1
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i
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2
g
1
C/l
£•
i
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1
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inimally Sensitive. Stations arc located where the residential areas are; sc
iidential areas located beyond existing attendance zones would require me
rsonnel and vehicles, noi necessarily new precinct buildings. In areas witJ
ttlered population centers, constructing new branch facilities may be the t
si effective option as opposed to providing service from existing centers.
2 S S.S S
|
|
B
cS
i-
1
B
2
|
g
W
="
E
'c
2
1
= *
inimally Sensitive. Stations are located where Ihe residential areas arc, sc
lidential areas located beyond existing service areas would require more
rsonnel and equipment, not necessarily new stations. In areas with scattel
pulation centers, constructing new branch facilities may be the most cost
ective option as opposed to providing service from existing centers.
^ o V 2 =
2, C O. O. V
£
E
i
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B
£»
i
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S
5;
1
.§•
1
'c
2
inimally Sensitive. Disposal and processing facilities are centrally located;
Ittered residential areas located beyond existing service areas would requi
>re personnel and vehicles; transfer stations are an economical way to sen
tlying population centers.
2 S E g
1)
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n o
•o ji
13
i
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B
£•
1
C
2
g
g
.£>
1
C
2
inimally Sensitive.
2
C
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s
1
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VI
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'c
s
1
1
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2
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inimally Sensitive. Stations are localed where (he residenlial areas are; sc
iidential areas located beyond existing service areas would require more
rsonncl and equipment, not necessarily new stations.
2 B JL
.1
•D
£
a,
1
8%
11
n •=
1|
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sii
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SB
inimally Sensitive.
2
?
c
5
•c
o
5
-------
Table C-10
f Capital Costs for Intel-neighborhood Services
lo Service Characteristics
c
1
*
Service Characteristics
9
£
S
•>,
e
&
CB
W
Service and Design Standards
c
1
X
1
Cb
S
<%
•5
§|
•a 1
c
41
i .E
U M
- §
.§ C
ji
il
Sensitive. Regularly sha
trunk lines. Linear or st
£
"G
a.
Sensitive. Design standard is primarily a function of required ca
which is an engineering calculalion based on expecled flow.
rcrvicc area
odate flows
more users.
D ~ C
E o n
e « g
g ~ 8
c .'s 2
u •- '£.
2 £ 8
|!I
III
OS
0 I 3
111
» =s
| .£? .
- •§ I
c >•» 2
5 ? «•
Sensitive. Tl
and are usu
from future
$
Sanitary Sew
Trunk Lines
Minimally Sensitive.
0 S =
.!>-!;•>
•i £ £ |
u I 2 §
Sensitive. Slorm water collectors have to be sized to accommoda
flow which is based on a certain frequency storm event, which cc
amount and percentage of impervious and permeable surface wil
being served. Regulatory standards specify the frequency of the
as the design standard.
ill
|2jj
c E ^
•S E o
I " 2
S >. S
e 3 2
ll'l
l-= 8
|||
0 " ^
— 0 —
s-s !
*M o v
8 .s? .
t« J=
H 3 Si
u = a
| a a
g -o |
S 8
ll
•s
il
"O i
c
ll
_u .£
U *2
£ g
s ;
I-S
ii
11
Sensitive. Regularly sha
trunk lines. Linear or si
>'
"C
S.
3
T3
Sensitive. The design standard is pnmanly a function of require
which is an engineering calculation based on expecled flow.
:rvice area
odate flows
more users.
* E ^
s|l
S 2
.£ o 5
3^8
III
2 £• 8
iccommodz
:cess capac
tion allocat
S a s
~ X S
"Q m
•3 1 b
Sit
| .2P .
7 •§ 5
•= >> s
9 ~ W)
C «
Sensitive. T:
and are usu
from future
Water
Trunk Lines
•= 8 if
ill
.5 <— o
(3 « 2
*•• o 5
III
w —
•= -1 s
ill 1
Moderately Sensitive. R
percentage of walkers, d
irregularly shaped areas
increasing the need for 1
E
3
1"
Sensitive. The design standard is based on regulations covering
class size and floor area standards for facilities, such as gyms am
Regulations often contain or reference the design standards.
ve, excess
M costs, if
•3 «
50
^5 >.
— £?•
'I-8
3 —
S? TD
g 5
> """
B 8
£ S
I'B-
5 S
- n
u c
w» opulation
c u.
a g
ft- "
£• g
•o c
8 _c
ta,
^
s J
" A
•M
3.2
11
'§ I
3. -a ^
.S o1"
•5 S 8
5 *"* c
w S u
Moderalely
and equipm
could requii
1
Minimally Sensitive.
'o
1
Moderately Sensitive. The number of collections per week and I
wastes collected, including recycling, affect equipment required.
g personnel
c
xi
TJ
&
•o
8
3
g
in capacity
)n capacity,
M 'S
S ?
S- 8
s; c
3 o
e ^^
w g
Moderately
and equipm
Solid Waste
Collection
c
~ 1?
w § fe
Ji ™ 5
lit
Jl) ..
5} 0 Q
2. € ""
itl
flly
g>2 1 1
Moderately Sensitive. P
within walking distance;
irregular shape, more fai
centers within walking di
8
ll
i°
Sensitive. Service standards are based on the ratio of acres of o
or facilities lo population. This determines the number and tyrx
required by Ihe population.
«
•g !G
8 "
Js
"5.
•5,8
'SI
s'l
« "
o Si
11
.S S
3 §
'S. a
3?
££
D.
O u
S 3
U t>
'" C
t>
w "ftj
tl
C "«
s S"
1
b
|
1
Minimally Sensitive.
8
s
1 % 1
S 8 |
.? -S 5
Sensitive. Service standards are based on desired response time
also based on the ratio of emergency staff to population; determ
number of stations and the number of personnel required by po|
g personnel
lation could
C 3
U
£•-
"o 8
o y>
0 CQ
TJ ft
S S
o- „
I! £?
n
'i I
l|
S o* 3
3 *» .0
S ** S
V) U **
Moderately
and equipm
require new
3
1
Emergency 1
8
O
11
•§i
H 5
•g -S
8 ^-
1|
i»
il
i-!
Highly Sensitive. ReguU
of anerials; linear or sta
2 £._
5 §.'!.£
U 21
Highly Sensitive. Lane miles of new roadway capacity are based
design volumes at a specified level of service; design standards a!
pavement thickness and load capacity, etc.; all of which delermin
costs. Regulatory standards specify the construction standards, v
determine the capital cost.
•3
|
.1
3
£
g
.a
* 5
M C
e ii
M) 3
'« 2
aS
£
•— c
g -c
*•§
iS" S
u
•o
C
n
O
if
si
-------
Table C-11
Sensitivity of Capital Costs for Regional Services
to Development Density
Development Density
£*
"05
g
V
Q
4>
S5
Gross Density
V
t/3
t
j£*
"c/5
S
•o
(A
O
1-4
00
^
<2
*+-4
03
U
03
GO
Minimally Sensitive. Capital cost is based on the number of persons
and businesses to be served, which determine design capacity
required; low density may require smaller regional treatment plants
as opposed to one large, centrally located plant.
4-*
c
1
S
E-H
«
03
GO
Minimally Sensitive. Capital cost is based on the number of persons
and on the number and types of non-residential uses to be served.
s*.
"a,
ex
3
co
kri
O
w
^
f
•o
O
Ui
00
l_«
o
*4M
03
O
03
GO
Minimally Sensitive. The capacity depends on the number of persons,
and on the number and type of non-residential uses. Several smaller,
lower capacity facilities with higher unit capital costs may be needed
in areas with low population densities.
«
> "oS
?•• «
o
"2 cL
—- < CA
£5
t
-------
1 Services
ent
2 B
C Q,
.2 o
^P ^S
& «
Q
2 o °
S U U
CB V
HH
••4 ?•
a. fc«
5T ca
c3 js
^
O 4>
£* ^
"5 2
• M *^
0)
co
le Development
•5
o
V
t>
i
JS
U
•5
oc
1
•s
S.
j-
t/3
•O
C3
.N
co
3
4>
U
1
CO
Moderately Sensitive. The type of du determines the
total population/du and the total residential
population to be served, which determine total plant
design capacity and total capital cost.
1
*t/a
O
V)
$?
13
E
°2
§
c
U
E
S
^
s
1 M
11
Sensitive. The type of du determines the total
population/du and the total residential population to
be served, which determine total plant design capacity
and total capital cost; also per capita water use is
higher for sfds (that is, lawn watering and gardening).
qj
cx
Ui
J3
'•2 c
.S '*
QJ
— 12
3 W
*- -o
& a
o
•" .S
60 '"""
l-i 2
»2 5
s> g
~ ca
'i ~
O ,Q
CO
>* S
^ 3
E 2
•S 'E.
2 S
c
E
1
H
^ E
Sensitive. Same reasons as those for water treatment
plants.
£
's
(3
U
CO
>>
T|
E
'2
§
£,
"On
CX
CO
1
Highly Sensitive. The type of du determines the
number of school-age children/du; sfd dus have
higher numbers of school-age children/du than do
other forms.
i
*^
1
CO
>1
13
E
'2
§
C/5
|
%>
£
Moderately Sensitive. Per capita generation of waste
is higher for sfd dus due to the production of yard
wastes.
S
o
E
o
2 "
S 2
§ £
00 ,_
^"^ tjj
'5 -o
•o JJ
t-i C
^^ c
S M
OO.g
eo ^S
>-5 55
> *{
^ t/3 ^"
E ^ '0
'§ "E a.
2 g.8
2
Is
It
Minimally Sensitive. Sfd dus have more children/du
which translates into higher total demand for
government services.
2
• *H
C
-,
^
E
[2
§
§
2 g
U U
§ s
O O
•c «
« xi i2
^ c 5 is
"^ B c ^
f «-si
iiii
2 111
aj c/3 _^ O
JD 3 .2 c
g *O ff3
=3 T3 C —
« "S3 -S 2
:{ |||
O >^ *r* CQ
^0 ^S " O
1
c
,
^
E
'2
§
1
•a
£
-------
Services
CS t/5
C u
0 3
•"_ r^i
Table C-13
ital Costs for Reg
lation Character!!
Sensitivity of Cap
to Popu
haracteristics
U
.0
*rf
Gt
Q.
£
|?
'5
1
CU
CO
CA
Total Number of Person
cu
_CJ
cu
CO
,
•C "O &n
to G 5?
« « .S
-5 r- <«
g 1 g
to o
« >> <=
_g „._
>i S B
.c* .2 £
*s« w CJ
C2 3 «-^
S * «Sn
^'£ «
« .a 3 .
.2 •« „ -
«*£ 8
3 «_T w _
OH Cg CJ CO
o R > .S
a, o o ex
. 13 3
S? ~ ^ o,
Moderately Sensith
term impact on cap
facility have capacit
density will increasi
8%
to U
8 g:
S £
'ex •-
s §
H.
Ill
ex S2 «
S 8.2
B <4-l -0
.£P ° o
Ui *-"
sis
*il
._, fc- ca
•- cj 3
c J= <=
5? *- 4>
(8 e S
>,° S
s -g v
SP « S
S5 §
4-J
fl\
V
1
2
H
»-,
S
CQ
fii (/5
^ *-
52 tf
co ca
^. --
^ OH
4_»
•C "2 an
U5 B £P
> C
S "* '•"
>, S P"
— -2 S
*a *•* CJ
B 3 «^
§ -° 00
•O'S B
a to o
•2 '-3 o £
3--S S
3 _T i_ __
CX «3 cj co
O Q > .*2
OH 8 O CX
. 13 3
5 •£.£> w
I §18
1 § §1
£§ 8a
§ &-S *
2 .§>,>,
cj £\ti
•g 6 3 £
!sa!
§*
to cu
O CX
O >,
1 «
'ex **
S §
«•§
«g .
.^a "8
ili
ca S <«
<-» CX 3 3
•B C3
'i-S s
!«.!
>,° «
S-g V
£P « c
K5 §
4_l
B
O
ca
^ S c
.5 .2 S
w •ti cu
B 3 «
W -0 60
10 '5 S
e tS ^
•2 =3 „ *j
« -6 8
3 «- ^ _
CX uo cu ca
£85i.
. 13 3
S? •? ?:> «»
Moderately Sensith
term impact on cap
facility have capacil
density will increas*
fi~*
to U
O O i
° «"
ca o
'ex w
3 g
y Sensitive. Design capacity and
on the number of persons and <
esidential uses to be served.
s 'S i
.op So B
XS §
£»
Hi
CX
3
CO
1^
S
ca
£
•o
B cj
* -s
is n
.t2 «a
s£
° a
•3 C
3 £
B
B B
ca _o
C* M
i ~ ca
.— -4
CX 3
c? CX
Ea
8-5
J3 ~
I *
*'^
"ca
,53.9 oo
^§•3
^ JS §
5 1 "S
P •? ""
^ K «
ej . o
> c e
.5 u is
'S -a S
§2 1
CO t3 B
"3
0
X!
§
A
00
s
•o
g w
w J3
_^ •*— •
CO ^
.tS ea
3^
" S3
-3 B
§|
B
B B
CO O
_ 'S
co *i
*•* ca
'cx"3
El
fl
S-2
f-'5
CO 3
•S j?1 ^^
.S 0 0
tn > 55 "£
a -8 .S
.sp-a S.
K 2 3
-S
c/a
cO _-
fc^* ^2
l"5 «J
i^^ en
S 1
£5
•o
c u
* J3
•— * +^
ca «
.t3 ca
ex ^
« ^
u a
'—> B
§ ^
S ^
B B
ca _o
CO *S
«^ ca
'ex's
3 §•
1-1 CX
S-i
o-S
S"5
ca u
Sensitive. In gener
O&M costs increas
county level.
B S
emands depend o
intensive service, ;
srately Sensitive. Total service d
lation. However, this is a labor-
Tect on capital cost is moderate.
•S 3 «
| o ^
Ǥ cx^
£H
o
g
2 S
B ^
Uo
^
0 0
to
«- s
__ C3 p
a .s s
2I^
2'3^
O CT« «-'
E 5 B
< -s
8 -a
3 «; ^
•v^ "^ "
*o jfT* Q
ex -a "2
9 S S
populated ares
rger capacity n
>sts for streets ;
Sensitive. Densely
trips and require la
and construction cc
are higher.
CA
ca
:es more vehicle
gh other factors
s of capacity such
tive. A large population general
other things being equal, althou
mine demand for total lane mile:
haracteristics and du type.
•-; -co
SC/l Sx
cx2 ex
« 'C " 'C
CO *-• T3 •*-•
^
p>~i
1
•a
£
-------
en
1
*>
"3
O en
°&s
^ n **
^^ s2 ^3
U 3 -
151
P-H SB -a
Sensitivity of Capit
to Loci
en
"3
-*•>
en
5
£
|?
c
g
u
2
S
e
S
en
S
g
B
CU
'g
i
|-
"o.
&
W
2
1
en
5
Distance to Existing Service Area
s
'S
o^
cu
.g
1
0
CO
2?
13
'S
§
4>
_>
'in
CO
£3*
co
.g
_s
Minimally Sensitive. Excessive distance to
existing facility may require construction of
new treatment plant.
B
CU
E
i
^
"tn
CO
^*
CO
.g
'S
§
Minimally Sensitive. Excessive distance to
existing facility may require construction of
new treatment plant.
c
^*
1— 1 t/i
1 1
^ E
O
.2
1
CO
:§"
13
e
'S
i§
u
_>
e
CO
^"
CO
J3
'S
§
Minimally Sensitive.
o.
0,
D
CO
U*
^
u
_>;
B
<£
.&»
CO
g
'S
§
CU
.s
1
sS"*
CO
fi
'S
2
Minimally Sensitive. Schools are located
where the residential areas are: scattered
residential areas located beyond existing
attendance zones could require construction
of new school; first option would be to
expand bus fleet, if capacity exists.
"3
o
js
u
1
GO
J5>
13
a
'S
§
«5
.>
B
cn
^2
«
_S
'S
1
Minimally Sensitive. Disposal facilities may
be centrally located, but difficulty in siting
disposal facilities or resource recovery plants
means they could be located anywhere. The
first option, to serve new outlying residential
development, if disposal capacity exists, is to
expand collection fleet and possibly construct
transfer stations.
u
to
CO (
;> «o
^ in
sS.
i— i c/3
SB
H>
.>
•^J
B
CO
"w
'S
§
flj
J»
1
CO
~*
CO
1
Minimally Sensitive.
g
CU
B
13 B
u o
0 0
f 's*l
6 -S 2 ^
2 -2 -o B"
cn en B O
2 B W "O
s 1 jg g
Q 5 S <"
.•§,§«
fl^ rn 1
S -a S S
S 3 S o
«^^2l
C CO
q^ t/a
i, 8
2 c
p l
B «-c CU
-------
Table C-IS
ilivity of Capilnl Cosls for Regional Services
lo Service Characteristics
c
M
3
Service Character
1
^
s
.
1
c
is
K
u |
.5 c
Q. "
s •="
= 'l
|i
litive. Design standards along with capacity dc
ulatory standards determine the quality of effli
rmines treatment process and capital cosls.
« 00 V
5 u v
t/i c: -a
.!
3.8
3 S u
2 5- «
a. o f
S|a
£ ! s
x: 2 =
M e -a
-a 5 =
si :
if?
*8I
Sensitive. Underutilized facili
cosls for current users, but p
for new users depending on \
designed.
c
u
E
u
H
u
u
i „
1 1
£ E
i
•3
B
£
>•
m
E
E
S
s e
8 H
"re c
5-u
3.y
£
u S
c .
E u
5 3
tl
iUivc. The design standards along with capacit
ulatory standards determine the quality of trea
rmines irealment process and capital costs.
^ W) CJ
" $ «
to CL, -a
2
a.
2 is
•S. S g
3 "3 £
t. S L.
8. E? K
ty means high
wssibly low m
how rate and
Sensitive. Underutilized facili
cosls, for current users, but f
for new users, depending on
designed.
_
c
u
E
u
£
1 =
& c
|
1
$
*
.i
'e
is
*o
8
2
'B. *J
8|
1 *
^ O
e
ll
If
iitive. Engineering design and safety standards
ity. Regulatory standards determine treatment
n
- ~
« g
•5.°
3 2 u
2 '§•«
•S. 3 8
S g -S
§.'& S
ty means high
XMSibly low m
how rate and
Sensitive. Underutilized factii
costs, for current users, but f
for new users, depending on
designed.
2?
B.
0.
3,
u
?
J3
1
BO
§u»
s
« 3
f?
85
= E
U t)
M f
u v
^ .=
o |
v S
S"o
1}
u c
I '
LO 6|)
>"0
*J C
1 si
s = §•
S.S B
s
"o
s
D
E «
OS'S
c S
•C -a
1 s
§1
litive. Design standards are based on regulatic
and floor area standards for facilities such as j
c u
£ •-
C/) M
•o i-
U U r-
i «;E"
o g « 'S |
S »• ~ B ff
*"*Zo
| ° -a, S 2
§ 1 5 "S S
!!§!!
ht«-«
ilMfi
Moderately Sensitive. Schoo
to capital-intensive; excess ca
marginal capital cosls, almost
enrollment service area and r
schools, a large population in
new school.
•5
5
£
£
bt
iE
|
1
w
>-
"n
S
'E
S
"2
•s
c
«
M>
B
•o
•o
c
lerately Sensitive. Environmental regulations a
rmine capilal cosls to some extent.
S S
So
•o
c
Ui 1>
8.8
f 8
S
c
E t
« J2
ililized facihtii
this can be of
they are used.
Moderately Sensitive. Unden
capita capital costs; although
because landfills are built as
U
5 —
v
"S •—
5 Q
|
1
1)
£>
i
'5
5
imally Sensitive.
c
s
§*"
•5.
s
0
M
.1
is labor-inten!
Minimally Sensitive. Service
effects are small.
S
u
E E
= £
O O
o o
*$ffi!
a-s a^a
l» 861
t-s s s «
3 S 2.-S
S flU ft!
n ° S-? = 8
ia S S g-8
I '!• 'o •« - £
S 8 c g E I
C « o .2 u -
•a c ~ y s s
c e a s a> s
§ 0 j! -0 B g-
'a 5 - 5 B
p s ^r « — •
E « | ' S?
g S S a -o 5
S § s> a. S "
° '§!•£.»!
i> c o .2 5
:i:-lis|
B = .2 o S
1 ! £ 1 g i
«
- B -^
S^-5
si §^
£ 5. B.!g
S 0 " Q
O rs u 3
-o -S S -3
5! « E •=
S -g E .a
•° S a §
«;•§«*.
" 2 .e-S
fr " •- 1
'C =. * 5
ity Sensitive. Lane miles of new roadway capa
gn volumes at a specified level of service; desig
:ment thickness and load capacity, etc.; all of v,
ulatory standards specify the construction slam
tal costs.
S'g * tf'5.
i-§ a.5 5
s
y M
*"* §
i|.§
ill
S * -5
'Hi
Hi
*> -a ^
Highly Sensitive. The design
utilization or level of service
Underutilized highways incur
1
'M
I
------- |