Chapter 12 Changes Since This is just a brief and cursory comparison. More analysis will be done at a later date.

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1 Chapter 12 Changes Since 1986 This approach to Fiscal Analysis was first done in 1986 for the City of Anoka. It was the first of its kind and was recognized by the National Science Foundation (NSF). Geographic Information Systems (GIS) was still in its infancy back then, so the mapping ability was still very crude. However, the database capabilities were sufficient to do a generalized analysis based on summaries of land use factors and characteristics. This project for 2009 uses more advanced mapping techniques, allowing us to break the data down to the parcel level, so we can summarize our data in very meaningful and effective ways. It should be noted that several factors even for 2009, such as population, housing units, among others, had to be allocated due to limitations of the source data. Therefore parcel statistics represent estimates. Nevertheless, this allocation down to parcels allows us to summarize by year built, homestead status, for example. This is just a brief and cursory comparison. More analysis will be done at a later date. A. Factors The major factors that we can readily compare between 1986 and 2009 are summarized below. These help us understand the fiscal impact results, and why they are similar or different between the two points in time. 1. Acreage Anoka has experienced some major shifts in land use acreage between 1986 and The following chart shows these changes. However, keep in mind that the GIS technology used in 1986 was very crude. We did not have land use designated and measured by individual parcels. Also, the land use categories we used then do not directly correspond to the ones we are using today for this study. Therefore, we can make acreage comparisons only for generalized, or summary land use categories. However, we do have three black and white maps from 1986 showing commercial/industrial, residential and exempt uses. These have been scanned and georeferenced to the 2009 parcel map. Using the old maps as a reference, the 1986 land map has bee re-created by coding the 1986 land use into the database of the 2009 parcel base map. We also have year built data from the 2009 database to help identify parcels that were vacant in 1986 and have since been developed. We also have much better acreage figures for road right of way, which was greatly underestimated in Map shows the recreated 1986 Land Use Map, and Map shows the 2009 Land Use using comparable generalized categories.. Based on the recreated 1986 Land Use Map, the table below summarizes the changes that have occurred. Some of the categories shown on the 1986 map had to be collapsed to allow comparison. Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-1

2 Map Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-2

3 Map Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-3

4 Table Land Use Changes 1986 to 2009 by Comparable Land Use Categories, City of Anoka Acreage Comparable Uses Change Commercial Industrial CI Vacant Churches & Cemeteries Government & Parks Schools Apartments Residential 1-4 Units Residential Vacant Railroad River and Water Mobile Homes Other Roads Subtotal Annexed Since Total In 1986, Anoka had 243 acres designated as industrial; for 2009, there were 427 acres of industrial, reflecting the development of the industrial park and other areas. There were also 505 acres designated as commercial/industrial vacant. For 2009, we now show only about 48 acres as vacant, a decrease of 419 acres. In addition to the new industrial development since 1986, the C/I vacant acreage has decreased due to some of the old vacant acreage being converted to other uses. In particular, the Tower Pond, Mineral Pond and McKinley Park residential subdivisions have been built on the previously industrial vacant designated area. The city has added about 121 net acres of 1-4 unit residential. Some of the residential land use in 1986 has been converted to commercial and office. Some of it has been redeveloped into better housing than in There were 266 acres of residential vacant in Some of this has been developed, but some of it has been converted to other uses, such as the increased city park acreage on the far west side of the city. Maps on the following page show the change in commercial/industrial land use since Maps show residential changes. Maps show the tax exempt land use changes. Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-4

5 2. Demographic Factors: Population, Housing and Students The table below shows the differences in population, housing units and school students, as well as the multipliers. Anoka s population grew by approximately 2079 persons and 1563 housing units between 1986 and This works out to be only 1.33 persons per unit. Important demographic changes were happening in Anoka during this period. Households were getting smaller. Note the persons per unit in 1986 compared to The city s overall average went from 2.84 down to 2.51 persons per unit. The decline was around.4 persons for Apartments and Quad Homes, and about.21 for One and Two Family housing. Also note that the student population was declining on a per household basis in the 1-2 Family category. Some of this was due to the fact that overall family sizes are getting smaller, and the increasing number of one person or single parent households. However, the average family in Anoka is also maturing: children grow up and leave home, so there are fewer persons in the household as a result. Table Comparison of 1986 and 2009 Demographic Factors Change Housing Persons Popula- Students Stu- Occupied Housing Persons Population Students Stu- Housing Popula- Stu- Residential Type Units per Unit tion per Unit dents Units Per Unit Per Unit dents Units tion dents Apartment Quad Homes One-Two Family Other Uses Metro Treatment Center 481 n.a Nursing Homes 193 n.a Commercial/ Industrial Other Total Average Total Average Total Total Average Total Average Total Total Total Total Another aspect of housing units is when they were built. The table below shows the residential uses, the number of units, and when they were built. These numbers may differ with those shown above, because they are all taken from the 2009 property tax list, which provides the year built. The old 1986 data may reflect units that have been redeveloped into other uses, among other differences. Note that apartments represented 32% of the housing stock in 1986, but now they are 36%. That is because of the over 1900 units built between 1986 and 2009, 46% of them were apartments. Also note that single family attached made up only 6% in 1986, but now they are about 10%. Again, the increase in the percentage is because 21% of the new units built have been in this category. While single family detached represented 56% of the housing stock in 1986, that percentage has fallen to 49% because only 32% of the new units have been single family detached. Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-5

6 Table Occupied Housing Units by Year Built Built in 1986 and earlier Built All Occupied Housing Units Residential Land Use Number Percent of Total Number Percent of Total Number Percent of Total Apartments % % % Condominiums 2 0% 3 0% 5 0% Duplexes 280 5% 2 0% 282 4% Quad Homes 72 1% 12 1% 84 1% Single Family Attached 286 6% % % Single Family Detached % % % Twin Homes 6 0% 16 1% 22 0% Total % % % 3. Employment Anoka has added 1,557 employees since There have also been shifts in employment among the land uses. For example, General Commercial has seen a decline of 1,187 jobs, while office employment has increased by 903. Churches, city parks, schools and the golf course have an increased number of jobs, while the rest of the government categories have shown a decline. Nursing homes have had a decline, which probably goes along with the population decline. Of course, the biggest part of Anoka s employment increase is in the Industrial category, with 1,169 new jobs added. Home-based businesses are also evident when looking at the residential categories, accounting for 529 new jobs. Many of these may be part-time, however. Table Change in Employment, 1986 to 2009 Land Use Change Commercial 3,477 2,280-1,197 Office 872 1, Church City Park Golf Course Government 2,183 2, Industrial 3,943 5,112 1,169 Nursing Home One-Two Family Quad Homes Apartment School 1,242 1, Other 1 1 Total 12,298 13,855 1,557 Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-6

7 4. Market Value Anoka s total Market Value has tripled since 1986, resulting in a 202% increase. Some of this is due to inflation. From 1986 to 2009, the total rate of inflation was 92.65%, averaging out to about 4% per year. While the rate for residential land use may be higher, we are using the rate of 92.65% to be able to more realistically compare market values. This is something that will have to be studied in more depth at a later date. The most noticeable areas of taxable growth have been in Commercial Offices and Industrial, that have grown at triple the city average (over 300%). This has been due to the growth in those land uses. There have also been large value increases in city owned property, such as the Golf Course. City parks have also grown because of the increase in park acreage. Of course, these are tax exempt and do not affect the ability to raise revenue through property taxes. Table Market Value Change, 1986 to 2009 % Change Land Use Change Gross Adjusted for Inflation Commercial 32,151,000 94,661,100 62,510, % % Office 6,789,200 38,082,000 31,292, % % Cemetery 1,078,700 2,488,200 1,409, % 38.35% Church 17,604,900 40,710,500 23,105, % 38.35% City Park 4,445,500 24,407,400 19,961, % % Golf Course 1,835,100 13,276,500 11,441, % % Government 54,557, ,598, ,041, % % Industrial 31,324, ,309, ,985, % % Nursing Home 1,416,700 2,356, ,500 66% % One-Two Family 238,423, ,583, ,160, % % Quad Homes 4,331,500 9,325,200 4,993, % 22.35% Apartment 42,142, ,390, ,248, % % Railroad 661, ,600 Residential Vacant 3,432,700 3,627, ,900 6% % School 68,559,400 69,601,000 1,041,600 2% % Water 0 555, ,100 Other 0 451, ,900 Roads 0 1,520,700 1,520,700 Total $508,754,000 $1,534,945,900 $1,026,191, % % 5. Police Calls Police Calls are a significant factor in Fiscal Impact Analysis. In 1986, calls were addressmatched to census blocks, and then allocated to land uses within the block. For 2009, of course, we had the individual parcels and addresses for matching. Therefore, the results are considered to be much more accurate. In 1986, the one and two family residences generated about 1.11 calls per housing unit. In 2009, the number was just slightly higher at Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-7

8 Table Police Calls, 1986 and Land Use Calls Calls/ Housing Units Unit Calls Calls/ Housing Units Unit Commercial Office Commercial Vacant Cemetery 0 25 Church City Park City Park Vacant 0 51 Golf Course Government * Industrial Industrial Vacant 0 18 Nursing Home One-Two Family Quad Homes Apartment Railroad 0 16 Residential Vacant School Water 36 6 Other 0 1 Roads 0 89 Totals * Note: to be adjusted downward. The biggest difference was for Apartments, with 1.09 calls per unit in 1986, and an average of 1.68 in That is a significant increase. Some of this may be due to the methodology used in 1986, but there may be other issues that make apartments more prone to having police calls. The 1986 units are now 23 years older, and possibly there are maintenance or security issues. This is an issue that should be examined in more detail. The following table shows the relationship between the age of the units and police calls. Note that the older units generate the bulk of the police calls, and the newer units have a rate comparable to (and even less than) the one and two family units. Table Police Calls To Apartments By Year Built Year Built 2009 Occupied Housing Units 2009 Police Calls Calls Per Unit 1986 and earlier Total Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-8

9 B. Operating Revenue The city s operating revenue has increased by $6 million since 1986, which represents a 146% change. In simple terms, this represents about a 6% a year increase. Some of this is due to inflation, as described earlier. From 1986 to 2009, the total rate of inflation was 92.65%, averaging out to about 4% per year. The table below shows the comparison between 1986 and 2009, as well as the percentage change. Assuming the revenue items were subject to the inflation rate of 92.65%, we can deduct this amount from to get the net change. After the adjustment the revenue increase was about 53%. Table 12.08, below shows an approximate comparison of operating revenue in 1986 and The categories have changed a bit, so this is the best attempt at grouping them together to get totals that are comparable. Property Taxes have grown by about 100%, which is quite a bit higher than the overall revenue increase. The reason for this can be understood by looking at Local Government Aid (LGA). The city receives less than it did in Back then, LGA represented about 25% of the operating revenue for the city. In 2009 it was less than 10%. Another thing to examine is Fiscal Disparities. Anoka has had a significant expansion of its Commercial / Industrial base. Also, with inflation, property values have also generally increased, so that the 40% of the growth in C/I value since 1971 has increased simply by inflation. After adjusting for inflation, the city s contribution has grown by over 370%. The region has also grown in C/I value, so the regional or areawide pool for redistribution back to cities has also grown. Anoka s share has increased by about 250%. However, Anoka s contribution has grown faster than its distribution because of its CI growth since Presumably this growth was at a faster rate than that of the overall region. Table Comparison of Operating Revenue Categories, 1986 and 2009 Adjusted Revenue Item Change Percent Change for Inflation Property Taxes & MV Credit 1,883,168 5,528,970 3,645, % % Fiscal Disparities Contribution -140, , , % % Fiscal Disparities Distribution 283,769 1,260, , % % Subtotal Taxes 2,026,791 5,998,121 3,971, % % Charges for Services 210,519 1,563,877 1,353, % % Franchise Fees, Licenses & Permits 291, , , % % Local Government Aid 1,156,847 1,063,673-93, % % MSA 15, , , % % Police & Fire 155, , , % 0.31% Other Grants 131,647 42,701-88, % % Misc 213,303 10, , % % Investment Income 231, , % Transfers -82,527-65,004 17, % % Total $4,118,861 $10,137,249 6,018, % 53.47% Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-9

10 Charges for services have grown by over 550%, which far exceeds the overall revenue growth rate. This is probably due to the need to compensate for the loss of Local Government Aid. However the amount of MSA aid has increased substantially to partially offset the LGA loss as well. Investment income in 1986 was considered a component of the Property Tax Revenue, since those funds generated it. However, investment income in 2009 was more due to the Electric Utility, so now it is shown as a new item for In 1986 there was a large miscellaneous category. Probably some of this could have been assigned to some of the other categories. C. Operating Expenditures Overall, Operating Expenditures have grown by about the same amount as Operating Revenue: 145%, for an average increase of 6% from 1986 to Adjusting for inflation (92.65%), the percentage increase is about 52%. However, there were some major differences in the way expenditures are reported in 2009 compared to 1986, one of which is the treatment of depreciation. The expenditure numbers for each item shown below include amounts before depreciation is subtracted out, and therefore the percentage changes in the different categories are mostly higher than the overall average. Nevertheless, we can see that the highest growth was in Parks and Recreation and Public Safety, at 139% and 123% respectively. Table Comparison of Operating Expenses, 1986 and 2009 Percentage Adjusted Expenditure Item Difference Change for Inflation General Government 839,070 2,199,094 1,360, % 69.44% Public Safety 1,581,297 5,004,364 3,423, % % Public Works 838,412 2,033,195 1,194, % 49.86% Culture 264, ,255 n.a. n.a Parks & Recreation 633,203 2,100,057 1,466, % % Interest on Debt 0 766, ,471 n.a. n.a. Depreciation -1,933,312-1,933,312 n.a. n.a. Totals $4,156,237 $10,169,869 $6,013, % 52.04% D. Surplus/Deficit: Fiscal Impact The final outcome of the 1986 study, and of this one, is the determination of Fiscal Impact. A comparison of the 1986 and 2009 results is provided below. There are some similarities in the results, but there are differences as well. There is no easy way to take an overall surplus/deficit statistic and simply project that out into the future. There have been many changes since Revenue sources have changed dramatically. Expenditures have been a bit more predictable, but as seen above, Parks and Recreation and Public Safety have grown much faster. Can that growth be explained by the growth in the factors that are indicators of those items? A brief analysis of that question follows. However, a more in-depth look at the patterns will follow at a later date, beyond the scope of this project. Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-10

11 Table Comparison of Operating Fiscal Impact, 1986 and 2009 Surplus or Deficit (-) Per Acre Change Comparable Land Use Commercial CI Vacant Churches & Cemeteries Government & Parks Industrial Apartments Residential 1-4 Units Railroad Residential Vacant Schools River and Water Mobile Homes Roads In 1986 and in 2009, commercial/industrial land uses generated surpluses, calculated on an average per acre basis. The city has greatly expanded its commercial/industrial acreage by 224 acres since The table above shows that the surpluses per acre have also increased significantly. Of course, we have inflation to consider, but some of this is also probably due to a higher quality and intensity of the commercial and industrial uses as well. Remember also that some of that growth has been contributed to the regional pool under Fiscal Disparities, and yet the values per acre have increased far beyond inflation. The detail of our data from 1986 does not allow us to adequately analyze the differences between single family detached, and single family attached and quad homes, so the categories have been collapsed into apartments and 1-4 Unit residential. The table below shows the comparisons between these two categories. Table Residential Fiscal Impact per Unit 1986 and 2009 Residential Land Use Surplus or Deficit per Unit Apartments $ $ 4.58 Residential 1-4 Units $18.54 $27.24 The surplus or deficit for residential uses has changed in a number of ways. Apartments now generate a deficit per acre, while they generated a surplus in What has changed? One obvious factor is the decrease in Local Government Aid, which used to account for 25% of the city s operating revenue. This decrease affects only the residential land Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-11

12 use revenues, since the formula was mainly based on population. Apartments have also required greater expenditures for police calls. In 1986 there was an average of 1.09 police calls per unit. In 2009, the average had increased significantly to 1.68 calls per unit. As noted above, the Public Safety budget was one of the major categories that has increased well beyond inflation between 1986 and However, it should be noted that the increase in calls has come from the older apartment units, built in 1986 or earlier. The rate of calls for units built after 1986 is a little less than the rate for 1-2 unit residential. The 1-4 unit residential uses have an increased surplus per acre. This may mostly be inflation. The decrease in Local Government Aid certainly has had an effect that may not be evident in the $ One factor offsetting the loss of aid may be in the types of units that have been built since 1986, which individually show a greater surplus based on our detailed 2009 data. Referring back to the table showing the housing units by the year built, one can see that 21% of the new units built since 1986 have been single family attached, which was far greater than their 6% proportion of the units in Looking at the detailed table SD-02 in Chapter VII, the single family attached units have a surplus of $92 per unit, which is far greater than the single family detached at $22 per unit. The attached units generate a surplus because they require fewer expenditures, particularly for road maintenance. As a result they help to bring up the overall surplus for this aggregate category. Churches and Charities still generate a deficit, but the deficit per acre is less than in Government generates a larger deficit per acre than in Schools have about the same deficit. Mobile homes no longer are present in the city as a land use. Summary A more detailed analysis of these changes is beyond the scope of this particular project, but is contemplated for the future. Hopefully the examples and comparisons provided in this chapter will help to understand the complexity of local government finance, and the many variables and factors that affect it. As shown above, the simple surplus/deficit numbers per acre or per unit from 1986 cannot be used to project the results for 2009 because so many things have changed. Also, the data for 1986 was based on a GIS system that was very crude, and we did not have the parcel level detail that has been generated for Some of the changes since 1986 have been beyond the city s control, and based on state policies and programs. For example, Local Government Aid was drastically reduced as a proportion of the city s revenue. The city has undertaken an ambitious economic development program, including TIF districts. The values and intensities of land uses have changed. The pattern of police calls has also changed. The best strategy for forecasting fiscal impact is to monitor changes in the important factors that affect revenues and expenditures, as well as state policies and programs. Based on the work and input of city staff, the factors that reflect revenues and expenditures are valid surrogates for having the ideal transactional finance system. Monitoring changes in police and fire calls, road frontage, property values, taxation policies, intergovernmental revenue, employment, and in Anoka s case, electrical usage will provide the best tools for forecasting change. Anoka Fiscal Impact Analysis, 2009, by GISRDC.com 12-12