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How do I assess the purported benefits of a new development?

Norm Van Eeden Petersman

Shelly asks

There is a large development coming to our downtown small town, that will increase property taxes of about $140,000 per year, but at what cost? I have asked local officials to determine the financial long-term cost before assuming this is the answer to our budget deficits. Is there a way to calculate this?

We answered this in a recent episode of Office Hours but is there anything more that you'd have to offer as comment or follow up on this question? 

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2 comments

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  • Comment author
    Norm Van Eeden Petersman
    • Official comment

    Edward also wrote Shelly to say, 

     

    There are several ways to do some quick, back of the napkin return on investment. Without knowing all of the specifics of this project, here are some things to ask to help do this math:

    1. Is the community being asked to invest public dollars into this project? This might include paying or building new infrastructure, waving fees, or providing tax abatements.
    2. Are there any other obligations that the city will have with this project? This might be a commitment to provide additional services that other developments are required to pay or a need to expand capacity at a water or sewer plant.
    3. What infrastructure or liabilities will the community be required to accept? This would include streets or pipes that the developer constructs and then hands over to the town to maintain.
    4. What will be the estimated appraised value for the tax rolls for this property? Remember that millage is based on a percentage of actual appraised value and of that only taxable uses will contribute to these revenues. $140,000 in property tax is a lot considering that this is a very small percentage of the actual cost to develop this project.

    1-3 would contribute to the town's long term liabilities. We would need to compare that against number 4.

  • Comment author
    Norm Van Eeden Petersman

    Here's the link to the video response

    https://youtu.be/uYiZklkqBUc

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