July 25, 2006

Economic IMPAct study shows The Cliffs will generate a net benefit of $830,000 in tax revenue

Initial deficits will shrink as developer offsets service costs and homes boost property tax base

BOISE – The Cliffs, a planned community proposed for eastern Ada County, will start creating a net benefit for local governments by 2012 – a positive fiscal impact that will reach $830,000 annually by 2019, according to an economic study produced by one of the nation’s leading land economic consulting firms, Economic & Planning Systems (EPS), based in Berkeley, California.

As part of the Ada County Planned Community Development process, developers must commission a highly detailed economic analysis, including a fiscal impact analysis, to specifically outline how their proposed development will affect the budgets of local governments and service providers. The economic impact study, by EPS (www.epsys.com), is based on construction beginning in 2007, with buildout by 2017.

The study estimates The Cliffs will start contributing more monies in taxes than it consumes in services in its sixth year of construction (by about $75,000 in 2012) in the midst of the development’s second phase. That amount will rise steadily as more homes come on line, contributing to the property tax base. Over its first five years of development, The Cliffs is projected to cost local governments a five-year total of around $757,000 more in services than it will generate in property taxes. Figures are presented in 2006 dollars.

“Just after buildout, The Cliffs will generate an annual net benefit of $778,000 - in one year exceeding our costs over the first five years combined,” said Tucker Johnson, Skyline development principal. “By 2019, the development will contribute $830,000 a year in net benefit to the citizens of Ada County.”

EPS has worked for about 6 months to study and refine its projections and incorporate recent changes in the tax law. Analysts adjusted earlier figures in light of a likely 50 percent increase in the homeowner’s exemption, from $50,000 to $75,000.  Even with the higher exemption, Johnson said, The Cliffs will be a net public benefit. Initial plans for The Cliffs, envisioned on a plateau near Lucky Peak Reservoir, call for up to 1,350 homes on 707 acres.

“A planned community is an investment in the future economic viability of the larger region,” said Jim Heid, a nationally respected development advisor who is also consulting for The Cliffs. “An equivalent number of small, disjointed subdivisions usually can’t provide all of their own infrastructure and open space, and instead put the costs of emergency services and parks on the general taxpayers. It comes as no surprise to me that The Cliffs will be a net economic benefit to local government.”

“Subdivisions, due to their limited diversity and number of units, cannot deal holistically with all the costs, services and quality of life elements that make for great living,” Heid said. “On the other hand, correctly done planned communities can organize their development to balance or generate new revenues that will more than cover extended services and systems, including advanced cost-effective technologies while also building great parks and public facilities.”

The comprehensive nature and larger scale of development afforded by planned communities allows developers to avoid relying on existing utility districts for implementation, Heid said. For example, to meet the standard of ‘self-sufficiency’ at the Cliffs, Skyline will:

1. Pay for the construction of and equip a fire station at the site.  It will also reimburse local governments for the salaries of the firefighters and station maintenance entirely at the outset, reducing its contributions only as the tax base at The Cliffs expands. This commitment will cost approximately $700,000 a year in the fire station’s early years of operation. Everywhere else in the county, if a fire station needs to be built to service growth, the general tax base pays for it.
2. At the request of Ada County Sheriff’s Office, place a one-time charge of $310 on each home to cover service costs. The study estimated this one-time fee, combined with property taxes at The Cliffs, will be more than sufficient to cover deputy and support costs over the course of the Cliffs development. Everywhere else in the county, the general tax base pays for law enforcement to new unincorporated areas.
3. Provide temporary rent-free shared space for the Ada Community Library in the initial years, followed by a permanent joint-use or stand-alone facility of up to 4,000 square feet on a lease-to-purchase arrangement. Everywhere else in the county, libraries must hold bond elections or pay for growth out of their general funds.  In its first full property tax year after buildout, The Cliffs will provide an estimated positive net fiscal impact of $64,000 to the library system.
4. Donate a site for an elementary school and pay for the bussing costs of its elementary students until the  new elementary school is built at The Cliffs. In its first full property tax year after buildout, The Cliffs will provide an estimated $216,000 more to the Boise School District than it receives in services.
5. Benefit other county services, including paramedic, pest control and the highway district. Increasingly positive annual net fiscal benefits will follow shortfalls in the first few years. None of these other agencies have requested any additional payments or mitigation.

As part of the economic study, Skyline and EPS surveyed public agencies about the potential economic and service-level impacts of The Cliffs on their operations. As a result, the study identified costs beyond the normally expected incremental costs of development, compared them with the expected tax revenue from The Cliffs, and presented figures for mitigation arrangements.

Other benefits to local governments are more difficult to measure. Because of its diverse housing supply, The Cliffs will attract families of all walks of life, including middle-class families who have left the Boise School District in large numbers over the past decade in favor of more affordable housing at the west end of the valley.  Additionally, enabling people to live closer to their jobs reduces commute times, allowing people more time with their families, to spend less on fuel and to reduce air pollution in the valley by traveling fewer miles everyday.

 “It’s important to keep in mind the economic study only looks at hard figures,” Johnson said. “There are many ways The Cliffs will benefit Ada County residents that can’t be measured in terms of money – our commitment to improved habitat and providing the public with dedicated recreation trails and facilities are priceless.”
The family comprising Skyline Development Company, a 38-year-old home-grown Idaho business, has developed and designed more than 15 Treasure Valley neighborhoods totaling more than 5,000 homes, including The Hickories, Vienna Woods and Rockhampton. About 15,000 people valley-wide live in Skyline neighborhoods. 

The study is based on the most accurate available information and projections of government revenues and costs. The findings are subject to change based on unforeseen changes in economic conditions, government operations and state laws. The analysis is expected to serve as the basis for continuing discussions between Skyline, local governments and the county.
To see the economic study, or to learn more about The Cliffs, go to www.thecliffsidaho.com.