Financial Impact Analysis
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FISCAL IMPACTS OF ROVEY FARMS LEGACY POINT ANNEXATION INTO THE CITY OF GLENDALE NOVEMBER 2021 11209 N. Tatum Boulevard, Suite 225 * Phoenix, AZ 85028 * 602-765-2400 tel * 602-765-2407 fax 1 Introduction The following summary presents the fiscal impacts of annexation for Rovey Farms Legacy Point Planned Residential Development, which will include 436 units of single family residential on 120 gross acres in Glendale. Rovey Farms is located on the southwest and southeast corners of Northern Avenue and 75th Avenue. All of the land is vacant and currently being used for agriculture. The parcel on the southeast corner has already been annexed into the city, but is included in this analysis to show the impacts of the whole development. The point of this exercise is simply to frame what this type of use could bring to the city in terms of the fiscal impacts. The fiscal impacts for Rovey Farms assume that 9.65 lane miles of interior and exterior streets that would be constructed and taken in to the city for on-going maintenance. It is assumed that all internal streets in the development would be public. Additional assumptions regarding home sizes, prices and construction costs were provided by the developer. Project Assumptions The table below presents the impacts for the 436 proposed single family housing units with public streets. The average construction cost per unit is assumed to be $240,000 and the average sales price would be $400,000, based on information from the developer. Since this is a residential use, there are no job impacts associated this annexation. It should be noted that construction costs shown below exclude land and on-site infrastructure. The housing units would range in size from 1,600 square feet to 3,500 square feet with an average size of 2,400 square feet. FISCAL IMPACTS OF ROVEY FARMS LEGACY POINT Fiscal Results One-time fees are related to construction and are generally proportional to the construction cost because construction sales taxes make up the largest share of one-time fees. However, in this case, one-time sales taxes are based on the home sale prices rather than construction cost since this transaction would be subject to speculative builder’s tax. Impact fees are deducted from the sales price and a 35 percent standard deduction is applied to the home sales price prior to calculating the sales tax, per the city’s municipal code. Land Use Housing Units Housing Construction (millions) Average Home Price Average Unit Size One-Time Fees* Annual Revenues less Expenditures Overall Ranking Single Family PRD 436 $104.6 $400,000 2,400 $8,780,000 -$70,000 Low *One Time Fees include construction sales tax, estimated planning and permitting fees and development impact fees in East Glendale. 2 Development impact fees (DIF) are based on the number of units, using the East Glendale schedule for single family housing (including water and wastewater fees). One-time fees also include estimated planning and permitting fees that are generally proportional to construction costs. Total one-time fees for the Rovey Annexation, are estimated at $8.8 million. This number does not include the value of any infrastructure constructed by the developer. The annual fiscal impacts represent the net value of proposed single family development to the city in terms of revenues less expenditures. These annual fiscal impacts are intended to be order of magnitude only. There are a variety of factors imbedded in the assumptions that will affect the magnitude of fiscal impacts including the expected number of units and housing values. Assuming publicly maintained internal streets, this single family development yields a small negative net impact of about $70,000 per year. The overall rankings show low impacts for residential development compared to other types of uses such as retail, office, manufacturing or warehousing. However, not all sites are suitable for nonresidential uses. ANNUAL FISCAL IMPACTS FOR ROVEY FARMS LEGACY POINT Summary In summary, the 436 residential units would yield a small negative net impact of $70,000 per year, which is normal for single family development that is not renter-occupied and has public streets. Estimated annual expenditures exceed revenues by 12 percent. Despite having a negative net impact in isolation, households do support retail sales at surrounding commercial centers and provide workforce housing to support employment growth. $570,000 $640,000 -$70,000 -$200,000 -$100,000 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 Revenues Expenditures Net Cost