Considering economic data with planning commissions

[southsideamy]

Do any of you have experience dealing with economic data in the review of site plans, special land uses, and rezonings?

We have a commission in our municipality that deals with economics. This commission was recently upset by a decision of our planning commission to grant approval for a special land use. This particular special land use was for a use that would remove property from the tax roles. As a result, the planning staff was directed to have this particular economic commission "review and examine the project in areas including, but not limited to: economic impact, economic development benefit, financial strength, real estate maximization, feasibility, and market. Prior to any vote, Plan Commsision should have the benefit of understanding and reviewing the economic impact of each commercial project in municipality X"

In the city ordinance laying out the responsibilties of the plan commission, nowhere does it mention that economic considerations are a part of their site plan duties. The special land use criteria are land use criteria, not economic criteria (except to say that it doesn't reduce property values). I'm having a hard time undestanding how this information is even germaine to the legal decision making process of the plan commission - we've always focused on site plan and zoning issues.

Does anyone else review site plan, special uses, rezonings or otherwise with regard to economic data? I'm not saying that we should ignore economics/market data. I think it's totally appropriate when master planning or creating zoning. However, when this economic commission is reviewing site plans and issuing a recommendation based on market capitalization, I have a really hard time understanding how we can even legally use that information.

What do you think of this dictate? How would you handle this?

[mike gurnee]

This is so wrong. It reminds me of all the times I heard "highest and best use" from applicants. You could send the economic commission a courtesy copy of your public hearing notices.If they choose to comment at the hearing, so be it.

[Cardinal]

Is this really different from the "big box" ordinances that are springing up in cities everywhere. The Plan Commission can, and should consider the impacts that a given use may have on adjacent properties and the community as a whole. This can certainly include economic impacts in addition to aesthetics, infrastructure, and the usual considerations that are part of the review process.

[southsideamy]

Ah, but therein is the rub, Cardinal. What exactly do we mean when we say economic impact?

For example, we could not refuse a bowling alley as a special use just because a car wash would produce more economic revenues/taxes or even revenue to the property owner or business owner, could we? And we could not, legally, say that a church could not be allowed as a special land use because the municipality would not receive property taxes? Would we deny a condo project today because the condo market is in the tank right now (but might not be in 3-4 years)?

What exactly do we mean when we say that economic impact is important? Do we mean revenues to the municipality? Do we mean rents to the property owner? Do we mean revenues to the business owner? Do we mean property values to the neighbors?

I totally agree that aesthetics, infrastructure, zoning, adjacency, and potential lowering of nearby property values are petinent. I just don't know how to deal with economic data, in general. I'm not sure it's valid. Am I crazy?

[Cardinal]

I think the examples you bring up are all legitimate considerations of economic data in reviewing a development proposal, I don't really see how it is different than aesthetics, for instance. I am not suggesting that the plan commission should buy the "highest and best use" argument from the developer, or that they should prohibit a grocery store from opening because it might impact an existing grocery store. I would hope that the commission would be smart enough to see through those issues.

There are many instances in which economic considerations should play a role in the debate. For instance, I once faced a situation where a church wanted to purchase a building in an industrial park TIF district. As a non-profit entitiy, it would have eliminated value from the TIF and jeopardized the city's budget as well as worked counter to the intention of the district to attract businesses for economic development. It was very legitimate for the city to consider this in rejecting the idea of a zoning change to permit the use.

The plan commission should make an informed decision regarding issues that it reviews. Having an understanding of the project's potential impacts to property values, to other businesses in the community, on municipal finances, or understanding how revisions to the plan may alter the financial feasibility of the project, cqn only help the plan commission to make a better decision.

[Dan Staley]

What exactly do we mean when we say economic impact?

What exactly do we mean when we say that economic impact is important? Do we mean revenues to the municipality? Do we mean rents to the property owner? Do we mean revenues to the business owner? Do we mean property values to the neighbors?

I totally agree that aesthetics, infrastructure, zoning, adjacency, and potential lowering of nearby property values are petinent. I just don't know how to deal with economic data, in general. I'm not sure it's valid. Am I crazy?

[snipped througout]

IME, most economic impact reports are incomplete (says the guy who thinks about an ecological economics degree).

Economic impact is very important, both positive and negative. And there are negative economic impacts - but the key is negative to whom. For example, increased traffic has negative economic impacts to commuters and to residences proximate to increased traffic (negative health impacts from emissions, noise, increased directed attention). But these folks who are affected won't be paying additional tax revenue into coffers, so their equity is deemphasized.

All this to say is that IME economic impact reports are usually skewed toward positive benefits. When's the last time you saw a report stating something like: 'the additional 1272 houses will mean an additional annual expenditure of $71,500) by the city, the equivalent of .82 Police patrol position or .72 Fire.'?

So I look at economic impacts with more than a grain of salt (maybe I should get my blood pressure checked...).

Rents to private parties are important for spillover effects and taxes to the municipality, but the consideration should, economically, only be for government receipts, not private enrichment. Politically, property values increasing are always good for electeds, and they should be good for the municipality if they can tax the increase.

[Cardinal]

[snipped througout]

IME, most economic impact reports are incomplete (says the guy who thinks about an ecological economics degree).

Economic impact is very important, both positive and negative. And there are negative economic impacts - but the key is negative to whom. For example, increased traffic has negative economic impacts to commuters and to residences proximate to increased traffic (negative health impacts from emissions, noise, increased directed attention). But these folks who are affected won't be paying additional tax revenue into coffers, so their equity is deemphasized.

All this to say is that IME economic impact reports are usually skewed toward positive benefits. When's the last time you saw a report stating something like: 'the additional 1272 houses will mean an additional annual expenditure of $71,500) by the city, the equivalent of .82 Police patrol position or .72 Fire.'?

So I look at economic impacts with more than a grain of salt (maybe I should get my blood pressure checked...).

Rents to private parties are important for spillover effects and taxes to the municipality, but the consideration should, economically, only be for government receipts, not private enrichment. Politically, property values increasing are always good for electeds, and they should be good for the municipality if they can tax the increase.

Your point is an important one. It comes down to a question of who is preparing the report or for whom the report is prepared. For instance, there are a number of organizations who prepare impact analyses for Walmart or chain stores in general, that always result in findings of horrible harm to the community. Then there are reports that show just how wonderful a new development may be to the community. Another favorite is the study that shows how expensive a home needs to be before it will "pay its way" in the community. Take that last one how you will.

As with any information, the plan commission needs to weigh the professionalism of the analysis. When I do these studies, I always try to maintain objectivity. It is better to report a concern that the new Walmart with a tire center may impact existing tire businesses in the community, instead of ignoring it or looking for data to "prove" that it won't have an impact. My professional reputation is on the line, and it does not matter if it is Walmart or the city that has hired me. The results will not be influenced by the client. That is not true of all of my competitors, though.

Interestingly, I have developed a spreadsheet model that I use in neighborhood planning workshops. The model measures the impacts on local services based on decisions made by participants concerning land uses, densities, etc. It is rough, but yes, it gives an idea of how many more police officers and other city staff will be needed, how many students can be expected, how much revenue will be generated, and how city costs will be impacted, etc.

[Dan Staley]

Interestingly, I have developed a spreadsheet model that I use in neighborhood planning workshops. The model measures the impacts on local services based on decisions made by participants concerning land uses, densities, etc. It is rough, but yes, it gives an idea of how many more police officers and other city staff will be needed, how many students can be expected, how much revenue will be generated, and how city costs will be impacted, etc.

[snipped]

Everyone should use such a model in scenario planning. You may want to consider budgeting some time to either publish or put in a presentation. Anyway,

This reminds me of a past town where the school district used to object to all my applications, because our taxing system didn't provide them with enough money to service all the new students - their budget grew worse until periodically they mounted a bond campaign; needless to say, some pro-growth bureaucrats didn't take too kindly to their stance.