Cost of Land Use Fiscal Impact Analysis

Submitted to: March 30, 2018 Prepared by: 4701 Sangamore Road Suite S240 Bethesda, Maryland 20816 800.424.4318 www.tischlerbise.com i

TischlerBise 4701 Sangamore Road Suite S240 Bethesda, Maryland 20816 800.424.4318 www.tischlerbise.com March, 2018

COST OF LAND USE FISCAL ANALYSIS TABLE OF CONTENTS INTRODUCTION... 3 LAND USES EVALUATED... 4 Residential Prototypes... 4 Figure 1. Residential Prototypes... 4 Residential Prototype Narrative... 5 Nonresidential Prototypes... 9 Figure 2. Nonresidential Prototypes... 9 Nonresidential Prototype Narrative... 10 OVERVIEW OF THE APPROACH... 13 SUMMARY OF FISCAL IMPACT FINDINGS... 14 Residential Results... 14 Figure 3. Residential Land Uses: Cost of Land Use Fiscal Results... 14 Figure 4. Fiscal Impact Results by Fund: Residential Prototypes... 15 Residential Findings... Error! Bookmark not defined. Nonresidential Results... 16 Figure 5. Nonresidential Land Uses: Cost of Land Use Fiscal Results... 16 Figure 6. Fiscal Impact Results by Fund: Nonresidential Prototypes... 17 Nonresidential Findings... Error! Bookmark not defined. Conclusions... 18 REVENUE FACTORS... 21 Figure 7. Revenue Allocation Methodologies... 21 Figure 7. Revenue Allocation Methodologies cont.... 22 Figure 7. Revenue Allocation Methodologies cont.... 23 General Methodologies... 24 Figure 8. Functional Population Entire La Plata County... 24 Custom Revenue Methodologies... 25 Figure 9. Property Tax Methodology... 25 Figure 10. Total Vehicles in La Plata County... 26 Figure 11. Specific Ownership Tax Revenue Per Vehicle... 26 Figure 12. Total Specific Ownership Tax Revenue Per Prototype... 26 Figure 13. Sales Per Retail Square Foot... 27 Figure 14. Building Structures Permit Revenue... 28 REVENUE SUMMARY... 29 Revenues from Residential Land Use Prototypes... 29 Figure 15. Residential Prototypes: Revenue Generation by Category per Housing Unit... 29 1

Revenues from Nonresidential Land Use Prototypes... 30 Figure 16. Nonresidential Prototypes: Revenue Generation by Category per 1,000 Square Feet... 30 EXPENDITURE FACTORS... 31 Figure 17. Expenditure Allocation Methodologies... 31 Figure 17. Expenditure Allocation Methodologies cont.... 32 Figure 17. Expenditure Allocation Methodologies cont.... 33 General Methodologies... 33 Figure 18. Functional Population Entire La Plata County... 34 Custom Expenditure Methodologies... 35 Figure 19. Annual Sheriff Calls for Service... 35 Figure 20. La Plata County s Total Sheriff Cost... 35 Figure 21. Total Sheriff Cost Per Call for Service... 35 Figure 22. Functional Population - Unincorporated Areas of La Plata County... 36 Figure 23. Sheriff Cost Per Person or Trip... 37 Figure 24. Sheriff Costs Per Person or Trip... 37 Figure 25. Total VMT for Gravel Roads Exceeding Capacity... 38 Figure 26. Cost per VMT for Gravel Roads Exceeding Capacity... 38 Figure 27. Road & Bridge Fund Capital Expenditure Total... 39 EXPENDITURE SUMMARY... 40 Costs to Serve Residential Land Use Prototypes... 40 Figure 28. Residential Prototypes: Expenditures by Fund per Housing Unit... 40 Costs to Serve Nonresidential Land Use Prototypes... 40 Figure 29. Nonresidential Prototypes: Expenditures by Fund per 1,000 Square Feet of Floor Area... 40 APPENDIX A: PROTOTYPE & BASE YEAR ASSUMPTIONS... 41 Figure 30. Persons Per Household Prototypes within Durango... 41 Figure 31. Average Weekday Vehicle Trip Ends Prototypes within Durango... 42 Figure 32. Average Weekday Vehicle Trip Ends and Employees per 1,000 Sq. Ft. Nonresidential... 43 Figure 33. Average Daily Vehicle Trips in La Plata County... 44 Base Year Data... 44 Figure 34. La Plata County Base Year Assumptions... 45 2

INTRODUCTION TischlerBise is under contract with La Plata County, to conduct a Cost of Land Use Analysis. A Cost of Land Use Analysis selects land use prototypes to be evaluated. In this type of analysis, the characteristics of various residential (i.e., single family, multifamily) and nonresidential (i.e., retail, industrial, office) prototypes are defined and a snapshot approach is used to determine the annual costs and revenues for each land use prototype to the jurisdiction. The factors used to define these prototypes typically include household size, market values, employees per square foot, and vehicle trips. In general, a fiscal impact evaluation analyzes revenue generation and operating and capital costs to a jurisdiction associated with the provision of public services and facilities to serve development residential, commercial, industrial, or other. A fiscal impact analysis is different from an economic impact analysis in that a fiscal impact analysis projects the cash flow to the public sector while an economic impact analysis projects the cash flow to the private sector, measured in income, jobs, output, indirect impacts, etc. The Cost of Land Use Analysis examines the fiscal impact of prototypical land uses to better understand the impacts each land use has independently on La Plata Count s budget. In other words, it seeks to answer the question, What type of development pays for itself? The results can assist the County with making informed decisions about the expenditure of tax payer dollars related to future land use and financial planning. Land use planning can be supported through an understanding of the types of land uses that are more fiscally advantageous to the County s bottom line. While fiscal zoning is illegal, the analysis can help inform an appropriate mix of land uses. Specifically, the results can be used to evaluate the fiscal viability of La Plata County s approach to land use planning and development entitlement. This report includes the following major sections: 1. Prototypes: Descriptions of the land uses evaluated 2. Summary of Fiscal Findings 3. Revenues: Revenue allocation methodologies and description of the analysis 4. Expenditures: Cost allocation methodologies and description of the analysis 5. Fiscal Findings: For each land use, the results of the fiscal analysis are provided and discussed 6. Appendix: Prototype and Demographic Assumptions 3

LAND USES EVALUATED TischlerBise evaluated fourteen land use categories eight residential and six nonresidential provided by County staff. The land use prototypes selected are meant to provide a representative sample of a variety of land uses in the County to compare and contrast. Several assumptions are made to provide definition and parameters to evaluate the land uses in the study, with those assumptions based on data from the County wherever possible and noted throughout. As with any analysis of this type, changing any of the assumptions has the potential to change the results accordingly. This section provides further detail on the characteristics of the land use prototypes and related assumptions. Residential Prototypes Residential prototypes included in the study are shown in Figure 1. The figure below also outlines the residential prototypes associated characteristics. The estimated assessment value, persons per household, and weekday vehicle trips per household are shown in the table for each prototype. The data listed is used to calculate the associated revenue and cost factors in the fiscal impact study. The prototypes are: 1. Agriculture/Farm and Ranch 2. Agriculture Residential 3. Rural, 10+ miles from Durango 4. Suburban Density, within 3 miles of Durango 5. Suburban Density, resort community 6. Suburban Density, within Durango 7. Urban Multifamily, within Durango 8. Urban Multifamily, outside Durango Figure 1. Residential Prototypes RESIDENTIAL PROTOTYPES Assessed Value Vehicle ITE Per Unit Persons Per Trips Per Trip Land Use Prototype Code [1] (rounded) [2] Household [3] Household [4] Adj. % [5] 1 Agriculture/Farm and Ranch 210 $113,000 2.48 7.99 50% 2 Agriculture Residential 210 $49,000 2.32 6.82 50% 3 Rural, 10+ miles from Durango 210 $19,000 2.46 6.65 50% 4 Suburban Density, within 3 miles of Durango 210 $27,000 2.43 6.38 50% 5 Suburban Density, resort community 210 $60,000 2.70 8.52 50% 6 Suburban Density, within Durango 210 $39,000 2.55 8.85 50% 7 Urban Multifamily, within Durango 220 $34,000 1.87 5.28 50% 8 Urban Multifamily, outside Durango 220 $17,000 1.66 3.53 50% [1] Trip Generation, Institute of Transportation Engineers (ITE), 2012. [2] Provided by La Plata County. [3] U.S. Census Bureau, American Community Survey Data, 2011-2015. Resort community person per household factor is from Colorado Welcome Center surveys' average group size. [4] Trip Generation, Institute of Transportation Engineers (ITE), 2012. Vehicle trips ends based on persons using formulas from Trip Generation (ITE 2012). For single family housing (ITE 210), the fitted curve equation is EXP(0.91*LN(persons)+1.52). To approximate the average population of the ITE studies, persons were divided by 21 and the equation result multiplied by 21. For multifamily housing (ITE 220), the fitted curve equation is (3.47*persons)-64.48. [5] Trip Generation, Institute of Transportation Engineers (ITE), 2012. Trip rate adjustment reflecting half of trips because of out-commuting. 4

Residential Prototype Narrative To better understand the prototypes used in this study. The following section gives a brief description of the residential prototypes. Either a street view image or the location from the County s Web GIS Application is provided for each prototype as well. Agriculture/Farm and Ranch The Agriculture/Farm and Ranch Prototype is a single family housing unit that has a considerably large lot (over 100 acres) and is either using a well or septic system. The prototype resides on a County Road that is considered substandard. In the analysis, the housing unit is 2,835 square feet and the lot is 145 acres. Prototype Visual Sample 1. Agriculture/Farm and Ranch Prototype Source: Google Street View Agriculture Residential The Agriculture Residential Prototype is a single family housing unit on a 35-acre lot and is using a well/ septic system. The prototype resides on a gravel County Road that is substandard. In the analysis, the housing unit is in the Eagle Ridge subdivision, north of Bayfield, and is 2,200 square feet. The property is highlighted in red below. Prototype Visual Sample 2. Agriculture Residential Prototype Source: La Plata County, Web GIS Application 5

Rural, 10+ miles from Durango The Rural residential prototype is a single family housing unit that is on a parcel of about 3 acres and uses a well/septic system. The prototype is more than 10 miles from the City of Durango and resides on a County Road that is gravel and substandard. In the analysis, the prototype sample is in Sage Crest Estates, southwest of Bayfield, and is 2,276 square feet. The property is highlighted in red below. Prototype Visual Sample 3. Rural, 10+ miles from Durango Prototype Source: La Plata County, Web GIS Application Suburban Density, within 3 miles of Durango The Suburban Density, within 3 miles of Durango prototype is a single family housing unit that is on a parcel of about half an acre and uses the public water and sewer system. The prototype is within a 3-mile radius from the City of Durango and resides on a paved County Road that is substandard. In the analysis, the prototype is in the Knolls subdivision, east of Durango, and is 1,802 square feet. Prototype Visual Sample 4. Suburban Density, within 3 miles of Durango Source: Google Street View 6

Suburban Density, Resort Community The Suburban Density, resort community prototype is a single family housing unit that is on a parcel of land about half an acre and uses the public water and sewer system. The prototype is within the northern mountain resort communities of the county off of US Highway 550. In the analysis, the prototype is in the Engineer Village and is 3,885 square feet. The property is highlighted in red below. Prototype Visual Sample 5. Suburban Density, Resort Community Source: La Plata County, Web GIS Application Suburban Density, within Durango The Suburban Density, within Durango prototype is a single family housing unit that is on a quarter acre parcel and uses the public water and sewer system. The prototype is within the City of Durango and resides on a paved City road. In the analysis, the prototype is in the Crestview neighborhood and is 2,396 square feet. Prototype Visual Sample 6. Suburban Density, within Durango Source: Google Street View 7

Urban Multifamily, within Durango The Urban Multifamily, within Durango prototype is a multifamily housing unit that is within the City of Durango and uses the public water and sewer system. The prototype resides on a paved City road. In the analysis, the prototype is in the Boulevard complex and is 1,376 square feet. Prototype Visual Sample 7. Urban Multifamily, within Durango Source: Google Street View Urban Multifamily, outside Durango The Urban Multifamily, outside Durango prototype is a multifamily housing unit that is located on US Highway 550 outside of the City of Durango. The property uses the public water and sewer system. In the analysis, the prototype is in the Boulevard complex and is 1,022 square feet. Prototype Visual Sample 8. Urban Multifamily, outside Durango Source: Google Street View 8

Nonresidential Prototypes Nonresidential prototypes included in the study are shown in Figure 2. The prototypes are meant to represent a general sample of the types of nonresidential development that exist in the County today. Figure 2 also outlines the nonresidential prototypes associated characteristics. The estimated assessment value per square foot, employees per 1,000 square feet, weekday vehicle trips per 1,000 square feet, and sales per square foot are shown in the table for each prototype. Trip generation rates are adjusted to avoid double counting each trip at both the origin and destination points thereby allocating the trip to the applicable land use. The data in the figure are used to calculate the associated revenue and cost factors in the fiscal impact study. The prototypes are: 1. Agricultural Commercial 2. Suburban Commercial 3. Specialty Retail Commercial (Auto-Urban Commercial within Durango) 4. Light Industrial 5. Warehousing 6. High-Cube Warehousing, within Durango Figure 2. Nonresidential Prototypes NONRESIDENTIAL PROTOTYPES Vehicle ITE Assessed Value Employees Per Trips Per Trip Sales Per Land Use Prototype Code [1] Per Sq. Ft. [2] 1,000 Sq. Ft. [1] 1,000 Sq. Ft. [3] Adj. % [4] Sq. Ft. [5] 1 Agricultural Commercial 820 $41 3.57 152.03 24% $236 2 Suburban Commercial 820 $98 3.57 152.03 24% $236 3 Specialty Retail Commercial, within Durango 826 $78 1.98 44.32 24% $236 4 Light Industrial 110 $18 2.31 6.97 50% $0 5 Warehousing 150 $23 0.92 3.56 50% $0 6 High-Cube Warehousing, within Durango 152 $30 0.45 1.68 50% $0 [1] Trip Generation, Institute of Transportation Engineers (ITE), 2012. [2] Provided by La Plata County. Assessed value divided by floor area. [3] Trip Generation, Institute of Transportation Engineers (ITE), 2012. Trip rate is adjusted to account for portion attributable to nonresidential. [4] Trip Generation, Institute of Transportation Engineers (ITE), 2012. To convert trip ends to vehicle trips, the standard adjustment factor is 50%. Due to pass-by trips, commercial trip adjustment factors are lower, as derived from the following formula (0.50*(1-passby pct)). [5] TischlerBise, Centennial, CO Cost of Land Use Study 9

Nonresidential Prototype Narrative To better understand the prototypes used in this study. The following section gives a brief description of the nonresidential prototypes. Either a street view image or the location from the County s Web GIS Application is provided for each prototype as well. Agriculture Commercial The Agriculture Commercial prototype is a commercial prototype that is over 10 miles from the City of Durango. The prototype resides on a County Road that is considered substandard and is connected to the public water and sewer system. In the analysis, the structure is 1,860 square feet and on an acre lot. Prototype Visual Sample 9. Agriculture Commercial Prototype Source: Google Street View Suburban Commercial The Suburban Commercial prototype is a commercial prototype that is within 3 miles from the City of Durango. The prototype resides on a paved, substandard County Road and is connected to the public water and sewer system. In the analysis, the structure is 1,632 square feet and on a lot of land that is a third of an acre. Prototype Visual Sample 10. Suburban Commercial Prototype Source: Google Street View 10

Specialty Retail Commercial, within Durango The Specialty Retail Commercial prototype is a commercial prototype that is within the City of Durango. The prototype resides on a City Road and is connected to the public water and sewer system. In the analysis, the structure is 6,720 square feet and on a 1.3-acre lot. Prototype Visual Sample 11. Specialty Retail Commercial, within Durango Prototype Source: Google Street View Light Industrial The Light Industrial prototype is an industrial prototype that is over 10 miles from the City of Durango. The prototype resides on a substandard County Road and uses a private well and septic system. In the analysis, the structure is 15,000 square feet and on a 29-acre lot. Prototype Visual Sample 12. Light Industrial Prototype Source: Google Street View 11

Warehousing The Warehousing prototype is an industrial prototype that is within 3 miles from the City of Durango. The prototype resides on a paved County Road and uses a private well and septic system. In the analysis, the structure is 31,280 square feet and on a 3-acre lot. Prototype Visual Sample 13. Warehousing Prototype Source: Google Street View High-Cube Warehousing, within Durango The High-Cube Warehousing prototype is an industrial prototype that is within the City of Durango. The prototype resides on a City road in the Tech Center Business Park and is connected to the public water and sewer system. In the analysis, the structure is 2,800 square feet and on a lot that is two acres. Prototype Visual Sample 14. High-Cube Warehousing, within Durango Prototype Source: Google Street View 12

OVERVIEW OF THE APPROACH For this analysis, the net fiscal impacts for the eight residential and six nonresidential land use prototypes have been determined by subtracting the costs necessary to serve these land uses from the revenues generated by each land use. To derive the costs, revenues, and service levels, TischlerBise interviewed department staff and reviewed the 2017 budget and other financial and demographic data. The analysis includes the revenues and expenditures in the General Fund, Road & Bridge Fund, Human Services Fund, Joint Sales Tax Fund, and Conservation Trust Fund. These funds represent the operating costs for La Plata County. Additionally, the Road & Bridge Fund has an annual budget for capital projects which has been included in the analysis. For some expenditures, the distance from the City of Durango is used to measure the increasing costs for County services to prototypes further away. A further description of the methodologies used in determining the attributable cost to the prototypes can be found in several sections of the report. 13

SUMMARY OF FISCAL IMPACT FINDINGS The following figures graphically reflect the results of the Cost of Land Use fiscal impact analysis for the land use types in the study. For residential development (shown first in Figure 3), results shown are per residential unit and for nonresidential development (shown in Figure 5) results are shown per 1,000 square feet of floor area. Data points above the $0 line represent annual net surpluses; data points below the $0 line represent annual net deficits. Residential Results Figure 3. Residential Land Uses: Cost of Land Use Fiscal Results Figure 4 shows the fiscal results by Fund. The greatest deficits are generated in the General Fund, followed by the Road and Bridge Fund. 14

Figure 4. Fiscal Impact Results by Fund: Residential Prototypes Agriculture/Farm and Ranch Agriculture Residential Rural, 10+ miles from Durango Suburban Density, within 3 miles of Durango Residential (Per Unit) Suburban Density, resort community Suburban Density, within Durango Urban Multifamily, within Durango Urban Multifamily, outside Durango LA PLATA COUNTY, CO General Fund Revenues $1,141 $640 $417 $470 $751 $569 $472 $325 Expenditures $1,482 $1,387 $1,472 $1,452 $1,614 $774 $566 $993 Net Fiscal Result ($341) ($747) ($1,054) ($982) ($862) ($205) ($94) ($668) Special Fund - Road & Bridge Fund Revenues $87 $41 $19 $25 $49 $33 $29 $17 Expenditures $216 $348 $293 $169 $430 $0 $0 $168 Net Fiscal Result ($129) ($307) ($273) ($144) ($381) $33 $29 ($151) Special Fund - Human Services Revenues $392 $342 $348 $346 $398 $369 $273 $237 Expenditures $427 $399 $424 $418 $465 $440 $322 $286 Net Fiscal Result ($35) ($58) ($76) ($72) ($66) ($71) ($49) ($49) Special Fund - Joint Sales Tax Fund Revenues $0 $0 $0 $0 $0 $0 $0 $0 Expenditures $106 $99 $105 $104 $115 $109 $80 $71 Net Fiscal Result ($106) ($99) ($105) ($104) ($115) ($109) ($80) ($71) Special Fund - Conservation Trust Fund Revenues $15 $14 $15 $15 $17 $16 $11 $10 Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Net Fiscal Result $15 $14 $15 $15 $17 $16 $11 $10 GRAND TOTAL Revenues $1,635 $1,037 $800 $856 $1,215 $986 $785 $589 Expenditures $2,230 $2,233 $2,294 $2,143 $2,624 $1,322 $967 $1,517 Net Fiscal Result ($595) ($1,196) ($1,494) ($1,287) ($1,409) ($336) ($182) ($928) After comparing the revenues generated to the expenditures generated, the results show that all eight residential prototypes have a negative fiscal impact to La Plata County. These results are not surprising given the County s low property tax rate. A component to the analysis is the distance the prototypes are from the City of Durango. Road and Bridge Fund expenditures are greater the further out from the suburban area, which for purposes of this analysis is assumed to be a three-mile circle from the City of Durango. As a result, the residential prototypes that are the furthest from the suburb area (Suburban Density, resort community, Agriculture Residential and Rural, 10+ miles from Durango) generate some of the largest expenditures and negative fiscal impact for the County. Most of the expenditures from the residential prototypes are generated in the General Fund. For the prototypes in the unincorporated areas of the County, the Sheriff expenditures account for the largest component generated in the General Fund. Other large General Fund cost centers are Detention and District Attorney. The least impactful residential prototypes (Suburban Density within Durango and Urban Multifamily within Durango) generate the fourth and seventh largest amounts of total revenue, respectively, but generate substantially lower expenditures than their counterparts outside of the City of Durango. These prototypes have limited or no demand on some of the County s most expensive services, particularly the Sheriff and Road & Bridge Fund. 15

Nonresidential Results Figure 5. Nonresidential Land Uses: Cost of Land Use Fiscal Results Figure 6 shows the fiscal results by Fund. The greatest deficits are generated in the General Fund, followed by the Road and Bridge Fund. 16

Figure 6. Fiscal Impact Results by Fund: Nonresidential Prototypes Agricultural Commercial Suburban Commercial Specialty Retail Commercial, within Durango Nonresidential (Per 1,000 Sq. Ft.) Light Industrial Warehousing High-Cube Warehousing, within Durango LA PLATA COUNTY, CO General Fund Revenues $2,178 $2,615 $2,435 $178 $192 $233 Expenditures $1,351 $1,351 $156 $279 $123 $28 Net Fiscal Result $827 $1,264 $2,279 ($101) $69 $205 Special Fund - Road & Bridge Fund Revenues $725 $766 $749 $15 $17 $22 Expenditures $1,703 $1,467 $0 $252 $92 $0 Net Fiscal Result ($978) ($702) $749 ($236) ($75) $22 Special Fund - Human Services Revenues $20 $45 $35 $9 $11 $13 Expenditures $0 $0 $0 $0 $0 $0 Net Fiscal Result $20 $45 $35 $9 $11 $13 Special Fund - Joint Sales Tax Fund Revenues $519 $519 $519 $0 $0 $0 Expenditures $0 $0 $0 $0 $0 $0 Net Fiscal Result $519 $519 $519 $0 $0 $0 Special Fund - Conservation Trust Fund Revenues $0 $0 $0 $0 $0 $0 Expenditures $0 $0 $0 $0 $0 $0 Net Fiscal Result $0 $0 $0 $0 $0 $0 GRAND TOTAL Revenues $3,442 $3,945 $3,739 $202 $219 $268 Expenditures $3,054 $2,818 $156 $530 $215 $28 Net Fiscal Result $387 $1,127 $3,583 ($328) $5 $240 Five of the six prototypes generate positive fiscal impacts. The three Commercial prototypes generate substantially greater revenue than the other nonresidential prototypes due to Colorado s local government revenue structure, which is heavily reliant on local sales tax. In Colorado, sales tax is allocated on a point of sale basis, meaning sales tax revenue generated within La Plata County, stays in La Plata County. Therefore, retail space receives credit for the retail sales tax. This is unlike states such as Florida, where sales tax is a state revenue that is distributed to local governments using a population-based formula. Two of the five nonresidential prototypes that have a positive fiscal impact are located in the City of Durango (Specialty Retail Commercial and High-Cube Warehousing). The Specialty Retail prototype generates the greatest surplus per 1,000 square feet ($3,583) for two reasons. First, it has a high assessed value, generating a high level of property tax (sales tax generation is the same as the other two commercial prototypes). Second, since it is located within the City of Durango it does not impact County services compared to similar prototypes in unincorporated areas, thus generating less expenditures. Similar to the residential prototypes, the two largest cost savings for nonresidential prototypes located in the City are for the Sheriff and the Road & Bridge Fund. The Suburban Commercial prototype, located in 17

unincorporated La Plata County, generates a net surplus of $1,127 per 1,000 square feet, less than half of the surplus generated by the Specialty Retail Commercial prototype. The Agricultural Commercial prototype, located in unincorporated La Plata County, generates a surplus of $387 per 1,000 square feet. Although there is a significant amount of revenue generated, the prototype generates expenditures that are more than 18 times greater than the commercial prototype within Durango. This can be attributed to the prototype s location in the unincorporated County. The one nonresidential prototypes that generate a negative impact per 1,000 square foot basis is the Light Industrial prototype. The Light Industrial prototype generates a deficit per 1,000 square feet ($328) due to the low revenue generated. Although this prototype generates relatively low expenditures for a prototype in the unincorporated area, industrial developments generally have a very low assessed value compared to other nonresidential land uses due to the materials used in industrial construction. Therefore, property taxes are low. Conclusions The following major conclusions can be drawn from our analysis: All of the nonresidential prototypes generate net surpluses per 1,000 square feet to the Human Services Fund. This is because all of the services and related costs are directly toward the residential population of the County. The fiscal results highlight the inefficient development pattern of continuing to allow scattershot development throughout the County. In other words, current County land use policy allows virtually the same densities 20 miles away from the City of Durango as it does one mile away. The pockets of population in the rural areas of the County have a significantly higher negative fiscal impact on the County. For example, this is observed in the condition of County Roads. Residential developments are occurring further and further away from paved roadways resulting in more trips on gravel roads. As the demand exceeds the capacity, the maintenance costs increase and eventually the capital costs to upgrade the road to pavement exceed the revenue generated. The fiscal results also illustrate the structural imbalance in the County s General Fund. The General Fund is reliant on two primary growth-related revenue sources property tax and sales tax which comprise 66% of total General Fund revenue. Although both revenue sources increase with new development, it can be argued the County s property tax rate is artificially low due the amount of oil and gas revenue the County received in the past as well as the impacts of the Gallagher amendment. The County s property tax rate has not been raised in over 25-years and is the fourth lowest rate of the 64 counties in the State of Colorado. Meanwhile, the County s assessed valuation has decreased over 35 percent over the last 10 years, meaning less property tax revenue is being generated. At the same time, oil and gas revenue has declined sharply as well, making the County s General Fund even more reliant on sales tax. 18

Related to the bullet above, the County s increased reliance on sales tax is also a troubling trend, as there have and will be continued changes in the retail sector that are likely to dramatically impact the County in the future. Although retail sales are increasing nationally, several trends including the rise of e-commerce, the over-supply of retail space, and the surprising effects of a restaurant renaissance have conspired to change the face of American shopping. These factors will have an impact on sales per square foot in La Plata County, if they already haven t, which will impact future sales tax revenue to the County. This is of particular importance since the retail sales tax generating uses are subsidizing the other land located in the unincorporated County. The County s Road and Bridge Fund also has a serious structural imbalance. Discussions with County staff indicate the County is only funding a portion of the needed capital improvements to roads. As the table below indicates, the Road and Bridge relies on a third of its funding from private contributions (e.g., GCC Contributions) and Energy Impact Grants. Both of these revenue sources vary greatly from year to year. Another 25-percent comes from Highway User Tax Fund (HUTF), a source that is not increasing with growth. So more than 50-percent of the Road and Bridge Fund revenue is derived from sources not directly tied to new growth. Only 31-percent of the Fund s revenue (Sales Tax and Property Tax) are directly tied to growth and $201,700 from Property Tax is allocated to be transferred to the municipalities. To maximize economies of scale relative to service provision, the County would be well served to encourage growth to be near or within the City of Durango. It is important to note that this analysis is based on maintaining existing levels of service as defined by the FY17 Budget and does not measure the cost of correcting what some may define as deficiencies in current service levels. The cost of correcting any perceived service level deficiencies would significantly increase the net deficits outlined in this analysis. From a land use policy perspective, it is important to acknowledge that fiscal issues are only one concern. Environmental, land use, housing affordability, jobs/housing balance, and traffic issues must also be taken into consideration when making any final assessments on what is best for the County. Implementation Recommendations Revenue FY18 Amount % Property Taxes $1,289,018 10% Sales Taxes $2,770,000 21% Highway User Tax $3,369,162 25% GCC Contribution Phased Road Work $1,500,000 11% Energy Impact Grant $2,950,000 22% All Other Revenue $1,467,277 11% Total $13,345,457 100% TischlerBise makes the following implementation recommendations based on our fiscal findings: The County should implement impact fees for roadway improvements. The County has several needs in terms of improvements. There are traditional capacity improvements that are needed in the more 19

suburban areas of the unincorporated County, near the City of Durango. There is also a significant need to upgrade many County roads that were originally constructed as farm to market roads that are now, or will be in the near future, experiencing significant increases in traffic volume. Finally, there are intersection improvements needed that will likely increase capacity in the unincorporated County. Given the structural imbalance identified in the County s General Fund, it is imperative the County ensure that is collecting 100 percent of the cost for any of its fee for service activities (e.g., building permits, plan review, etc.). The County should undertake a user fee study to ensure it is 1) collecting user fees for all possible services, and 2) recouping 100 percent of the cost for existing fee for service activities. The County should go back to the voters to increase the property tax for both the General Fund and Road and Bridge Fund. Especially in light of recent initiatives elsewhere in Colorado. This past November, voters throughout the State of Colorado approved tax increases for tens of millions of dollars of local tax dollars for schools, utilities and roads. The County should pursue a Countywide zoning strategy that reduces densities in the more rural areas of the County and concentrates density areas surrounding Durango and other municipalities. Until any measure is passed that increases the County s ability to raise additional revenue, the County should consider developing fiscal neutrality requirements for new residential development. These guidelines would require new development projects to demonstrate how any negative fiscal impacts will be ameliorated. 20

REVENUE FACTORS The following table details the revenue allocation methodologies used in the analysis for all operating funds. The revenue items come from the County s 2017 Adopted Budget. The custom allocation methodology refers to either the approach of directly entering a specific amount each prototype is allocated or an approach that is more detailed. An explanation for the custom analyses used follows Figure 7. Furthermore, when a budget item is considered to not be directly affected by residential or nonresidential land uses, it is considered fixed in the analysis. Figure 7. Revenue Allocation Methodologies Allocation Methodology Revenue Population & Custom Population Jobs Trips Category Jobs Analysis Fixed Taxes Property Taxes P Specific Ownership Taxes P Sales Taxes P Sales Taxes Allocated to Cities P Tobacco Taxes P Delinquent Property Taxes P Penalities & Interest Delin Tax P Prop Tax-Senior/Veteran Exem P Abatements P Lodger's Tax P Intergovernmental: Local Durango Cost Share Reimb P Predator Control Reimb P Intergovernmental: State Severance Taxes P Voting Equipment State Grant P Cost Allocation P Pre-Trial Service Testing Grant P Gaming Funds-SO Patrol P Bulletproof Vest Grant P Gaming Funds- Detentions P Jail Behavorial Health Grant P Office of Emergency Management P CDBG Grant Funds P State Criminal Alien-SCAAP P Intergovernmental: Federal PILT P Southern Ute Tribal PILT P Mineral Leasing P DOW Impact Assistance P Allocation DOW Impact Assist P Veteran's Service P Senior Services P HIDTA Grant P Licenses, Permits, & Fees Medical Marijuana Licenses P Rec Marijuana Licenses P Alcoholic Beverages P Cable Franchise Fees P Useful Public Service Program P Assessor's DPL Fees P Assessor's Fees P Clerk's Restrict HB 1119 Fees P Clerk's Fees P Vehicle Inspection Fees P 21

Figure 7. Revenue Allocation Methodologies cont. Allocation Methodology Revenue Population & Custom Population Jobs Trips Category Jobs Analysis Fixed Treasurer's Advertising P Treasurer's Fees- Treasurer's Tax Collection Fee P Public Trustee Fees P Surveyor Fees P General Planning Fees P Consultant Fee Reimbursement P Oil & Gas Facility Fees P Prisoner Transport P Civil Process Fees P Fingerprint/Weapon Fee/Permit P Law Enforcement Assist Fund P Security Services Fees P Sheriff's Fees P Drug Offender's Dee P Traffic Fines P Inmate Medical Co-Payments P Inmate Phone Refunds P Jail Bond Fees P Booking Fees P Building Structures Permit P Animal Control & Shelter Fees P ATI - Pre-trail Services P ATI-Offender EHM Fees P ATI-Work Release P Victim Impact Panel Fees P Treasurer's Postage Collection P Charges for Services Election Reimbursement P OMPO Utility Allocation Rev P Charges for Services - DHS P GIS Charges for Services P Jail Room & Board P Crisis Intervention Train Fee P Maps & Code Book Sales P Weed Control Enforcement Reim P Senior Services P ATI - Day Reporting P Investment Earnings Investment Earnings P Miscellaneous Revenues Courthouse Rent P GSA Operations Rent P DHS Rent P OMPO Rent Allocation Rev P Senior Services P Fairgrounds P Extension Building Rent P DEA Rent P SW Post Scholarship P Durango Senior Services Don P Senior Services Transport Donations P Insurance Refunds P Employee Wellness P Prisoner Commissary Receipts P Law Enforcement Forfeitures P Law Enforcement Resitution P Transfer from Other Funds Transfer in from JST-Landfill P Transfer in JST-Senior Services P 22

Figure 7. Revenue Allocation Methodologies cont. Revenue Category SPECIAL FUND - ROAD & BRIDGE FUND Population Allocation Methodology Population & Jobs Trips Jobs Custom Analysis Property Taxes P Specific Ownership Taxes P Sales Taxes P Highway User Tax P Allocation of HUTF P Delinquent Property Taxes P Prop Tax-Senior/Veteran Exem P Southern Ute Tribal PILT P Title II - Secure Rural School P SUIT Contribution (BIA) CR 517 P Miscellaneous State Grants P Construction Permits P Utility Permits P Road Permits P GCC Road Improvements P GCC Contibur Phased Road Work P Motor Vehicle $1.50 Fee P Motor Vehicle $2.50 Fee P Energy Impact Grant P Oil & Gas Leases and Royalities P Miscellaneous Revenue P SPECIAL FUND - HUMAN SERVICES Property Taxes P Specific Ownership Taxes P Delinquent Property Taxes P Penalities & Interest Delin Tax P Prop Tax-Senior/Veteran Exem P Abatements P Southern Ute Tribal PILT P Adult Protections P Earned Revenue Child Care P DHS Earned Rev ITQA Grant P IV-D Admin P State Incentives P Refunds IV-D Admin P Earned Revenue 100% CW P PSSF Grant P IV-E Waiver P Child Welfare 80/20 P Refunds 80/20 Admin Ex P Title XX Case Worker P Earned Revenue Parental Fees P DHS Earned Rev Chaffee P CO Works Admin P CORE Services P CORE Services 80/20 P 80/20 Core Serviecs Refunds P IM Adim P Earned Rev Workfare P Refunds Admin P Refunds Job Search P Fraud Investigation P Earned Rev State Inc Fraud P Earned Rev Fed Inc SSA P LEAP Adim P Refunds Mediciad Recovery P Redunds AND P DHS Earned Rev OAP P DHS Refunds EBT P SPECIAL FUND - JOINT SALES TAX FUND Sales Taxes P Investment Earnings P SPECIAL FUND - CONSERVATION TRUST FUND Lottery Funds P Investment Earnings P Fixed 23

General Methodologies Annual revenues are determined for each prototype by applying the applicable revenue factors. In some cases, a unique methodology must be used. These methodologies, along with accompanying examples, are described below. Per Capita Many of the factors utilized in the fiscal impact analysis are derived using a per capita approach. This approach is used for County expenditures that are influenced strictly by population. If a revenue is projected on a per capita basis, the budget is divided by the current population estimate to arrive at the current level of service standard. For example, the Fairgrounds generate a revenue of $60,800 in FY2017. This amount is divided by the current population estimate of 55,178, for a per capita revenue of $1.10. Per Capita and Employee Some factors utilized in the fiscal impact analysis are derived using a per capita and employee approach. This approach is used for County revenues that are influenced by population and employment. If a revenue is projected on a per capita and employee basis a proportionate share analysis of the County is conducted to allocate costs to residential and nonresidential development. To do this, TischlerBise examines population, labor force, and jobs in the County. By using hours in the day, the analysis determines the functional population. Figure 8 indicates that 86 percent of demand is from residential uses and 14 percent from nonresidential uses. Figure 8. Functional Population Entire La Plata County Demand Units in 2014 Demand Person Proportionate Residential Hours/Day Hours Share Estimated Residents in La Plata [1] 54,436 Residents Not Working 60% 32,891 24 789,384 Workers Living in La Plata [2] 40% 21,545 Residents Working in La Plata [2] 76% 16,340 16 261,440 Residents Working outside of La Plata 5,205 16 83,280 Residential Subtotal 1,134,104 86% Nonresidential Jobs Located in La Plata [2] 23,190 Residents Working in La Plata 16,340 8 130,720 Non-Resident Workers La Plata 6,850 8 54,800 Nonresidential Subtotal 185,520 14% TOTAL 1,319,624 100% [1] Source: La Plata County, 2017 Comprehensive Plan [2] Source: US Census, OnTheMap Application 24

These proportions are used to split the individual revenue sources. To calculate the cost factors, the residential portion is divided by the population, 55,178, and the nonresidential portion is divided by the jobs, 33,937, in the County. For example, the revenue from the General Planning Fees total $40,000 for FY2017. This amount is split by the Functional Population percentages, allocating $34,377 to residential development and $5,623 to nonresidential development. These proportions are divided by the current population to calculate revenue per person factor, $0.62, and employment estimates to calculate revenue per job, $0.17. Custom Revenue Methodologies Property Tax For residential and nonresidential prototypes, La Plata County provided the assessed values. To calculate taxes per land use, the taxable assessed value of each prototype is divided by 1,000 and multiplied by the millage rate, 8.5. Of the County received revenue stream, 86.4 percent of the property tax goes to the County s General Fund, 8.4 percent goes to the Road & Bridge Fund, and 5.2 percent goes to the Human Services Fund. Figure 9. Property Tax Methodology RESIDENTIAL PROTOTYPES Assessed Value Per Unit (rounded) [1] County Property Tax Per Unit [2] Land Use Prototype 8.500 1 Agriculture/Farm and Ranch $113,000 $961 2 Agriculture Residential $49,000 $417 3 Rural, 10+ miles from Durango $19,000 $162 4 Suburban Density, within 3 miles of Durango $27,000 $230 5 Suburban Density, resort community $60,000 $510 6 Suburban Density, within Durango $39,000 $332 7 Urban Multifamily, within Durango $34,000 $289 8 Urban Multifamily, outside Durango $17,000 $145 NONRESIDENTIAL PROTOTYPES Assessed Value Per Square Foot [1] County Property Tax Per Square Foot [2] Land Use Prototype 8.500 1 Agricultural Commercial $40.92 $0.35 2 Suburban Commercial $98.11 $0.83 3 Specialty Retail Commercial, within Durango $78.05 $0.66 4 Light Industrial $18.08 $0.15 5 Warehousing $23.00 $0.20 6 High-Cube Warehousing, within Durango $29.52 $0.25 [1] Provided by La Plata County [2] Assessed value multiplied by millage rate of $8.50 per $1,000 Specific Ownership Tax The specific ownership tax is levied on vehicles annually when the vehicle is registered with the County. Vehicle totals were provided by the County; see Figure 10. Of the total, 76 percent of the vehicles are considered to be for residential purposes, while 24 percent is considered for nonresidential purposes. Additionally, there is a 0.53 ratio of nonresidential vehicles per job in La Plata County. 25

Figure 10. Total Vehicles in La Plata County Vehicles Percent Residential 57,039 76% Nonresidential 18,144 24% Total 75,183 Jobs in County 33,937 Nonresidential Vehicles Per Job 0.53 A revenue factor is calculated in Figure 11 by dividing the total revenue from Specific Owner Tax by the total vehicles in the County. There is a revenue factor of $21.02 per vehicle. Figure 11. Specific Ownership Tax Revenue Per Vehicle Specific Ownership Tax Total Vehicles Revenue Per Vehicle $1,580,290 75,183 $21.02 The revenue factor is then multiplied by the vehicles per household, from the US Census Bureau s American Community Survey data, to calculate the total revenue per residential prototype. To calculate the revenue for a nonresidential prototype, the revenue factor, employees per 1,000 square feet factor, and the nonresidential vehicles per job factor are multiplied. For example, to calculate the total revenue for the Agricultural Commercial Prototype the equation is $21.02 x 3.57 x 0.53 = $40. The revenues attributed to the prototypes are listed in Figure 12. Of the total Specific Ownership Tax revenue, 86.4 percent goes to the General Fund, 8.4 percent goes to the Road & Bridge Fund, and 5.2 percent goes to the Human Services Fund. Figure 12. Total Specific Ownership Tax Revenue Per Prototype RESIDENTIAL PROTOTYPES Vehicles Per Revenue Per Land Use Prototype Household [1] Household 1 Agriculture/Farm and Ranch 2.41 $51 2 Agriculture Residential 2.58 $54 3 Rural, 10+ miles from Durango 2.24 $47 4 Suburban Density, within 3 miles of Durango 1.94 $41 5 Suburban Density, resort community 2.15 $45 6 Suburban Density, within Durango 1.69 $36 7 Urban Multifamily, within Durango 1.98 $42 8 Urban Multifamily, outside Durango 2.13 $45 NONRESIDENTIAL PROTOTYPES Employees Per Revenue Per Land Use Prototype 1,000 Sq. Ft. [2] 1,000 Sq. Ft. 1 Agricultural Commercial 3.57 $40 2 Suburban Commercial 3.57 $40 3 Specialty Retail Commercial, within Durango 1.98 $22 4 Light Industrial 2.31 $26 5 Warehousing 0.92 $10 6 High-Cube Warehousing, within Durango 0.45 $5 [1] U.S. Census Bureau, American Community Survey Data, 2011-2015. [2] Trip Generation, Institute of Transportation Engineers (ITE), 2012. 26

Sales Tax Sales Tax is one of La Plata County s largest revenue streams and accounts for about 23 percent of all revenue in 2017. The County s sales tax rate is 2 percent, which is collected by the State of Colorado and distributed back to the County. To attribute sales tax to the prototypes, a sales per retail square foot factor is necessary. TischlerBise recently conducted a study for the City of Centennial, Colorado and found a sales per square foot factor of $236. This is considered to be an accurate approximation for La Plata County considering the community similarities and proximity. Ideally sales tax would be attributable to both residential and commercial land use prototypes. However, TischlerBise was not able to obtain sales tax data detailing the percentage of spending or sales tax attributable to the County s population base versus spending attributable to tourism and the spending of dollars from residents outside of La Plata County. Therefore, sales tax revenue is assumed to be attributed to the commercial nonresidential prototypes. It is assumed that no sales happen at the industrial development prototypes (Light Industrial, Warehousing, and High-Cube Warehousing). Sales tax revenue is distributed in several ways: 38.23 percent to the General Fund, 14.65 percent to the Road & Bridge Fund, 10.57 percent to the Capital Improvement Fund, 11 percent to the Joint Sales Tax Fund, and 25.55 percent to incorporated towns within the County. Figure 13 lists the estimated annual sales tax per 1,000 square feet for the nonresidential prototypes. Figure 13. Sales Per Retail Square Foot Land Use Prototype Estimated Annual Sales Per Sq. Ft. [1] Sales Tax Estimated Annual Sales Tax Per 1,000 Sq. Ft. Agricultural Commercial $236 2% $4,720 Suburban Commercial $236 2% $4,720 Specialty Retail Commercial, within Durango $236 2% $4,720 Light Industrial $0 2% $0 Warehousing $0 2% $0 High-Cube Warehousing, within Durango $0 2% $0 [1] TischlerBise, Centennial, CO Cost of Land Use Study Note: Only Commercial Prototypes are attributed sales tax revenue. 27

Building Structures Permits The building permit fee is the same for residential and nonresidential units, $12.00 per $1,000 of assessed value. To calculate an average annual revenue generation from each prototype the building permit fee is divided by the average age of a building in La Plata County, 40 years. Figure 14. Building Structures Permit Revenue RESIDENTIAL PROTOTYPES Land Use Prototype (rounded) Unit 1 Agriculture/Farm and Ranch $113,000 $34 2 Agriculture Residential $49,000 $15 3 Rural, 10+ miles from Durango $19,000 $6 4 Suburban Density, within 3 miles of Durango $27,000 $8 5 Suburban Density, resort community $60,000 $18 6 Suburban Density, within Durango $39,000 $12 7 Urban Multifamily, within Durango $34,000 $10 8 Urban Multifamily, outside Durango $17,000 $5 NONRESIDENTIAL PROTOTYPES Assessed Value Per Unit Assessed Value Per Square Foot Building Structures Permit Revenue Per Building Structures Permit Revenue Per 1,000 Square Feet Land Use Prototype 1 Agricultural Commercial $41 $12 2 Suburban Commercial $98 $29 3 Specialty Retail Commercial, within Durango $78 $23 4 Light Industrial $18 $5 5 Warehousing $23 $7 6 High-Cube Warehousing, within Durango $30 $9 28

REVENUE SUMMARY Revenues from Residential Land Use Prototypes The largest revenue source for the County from the residential prototypes is property tax. As a result, the prototypes with the highest assessed values generate the most revenue (Agriculture/Farm and Ranch, Suburban Density, resort community, and Agriculture Residential). Property tax supports three operating funds as well: General Fund, Road & Bridge Fund, and Human Services Fund. Furthermore, the Specific Ownership Tax and Licenses, Permits, & Fees generate a significant level of revenue as well. Figure 15 breaks down the revenues for each Fund by category. Figure 15. Residential Prototypes: Revenue Generation by Category per Housing Unit Agriculture/ Farm and Ranch Agriculture Residential Rural, 10+ miles from Durango Suburban Density, within 3 miles of Durango Suburban Density, resort community Suburban Density, within Durango Urban Multifamily, within Durango Urban Multifamily, outside Durango Operating Fund General Fund Taxes $876 $409 $182 $235 $482 $319 $287 $165 Intergovernmental: Local $0 $0 $0 $0 $0 $0 $0 $0 Intergovernmental: State $10 $10 $10 $10 $11 $10 $8 $7 Intergovernmental: Federal $39 $36 $38 $38 $42 $40 $29 $26 Licenses, Permits, & Fees $140 $114 $111 $112 $133 $121 $90 $76 Charges for Services $52 $48 $51 $51 $56 $53 $39 $35 Investment Earnings $0 $0 $0 $0 $0 $0 $0 $0 Miscellaneous Revenues $6 $6 $6 $6 $7 $7 $5 $4 Transfer from Other Funds $18 $17 $18 $18 $20 $19 $14 $12 Total $1,141 $640 $417 $470 $751 $569 $472 $325 Special Fund - Road & Bridge Fund Tax Collections $85 $39 $17 $22 $46 $31 $27 $16 Intergovernmetal $0 $0 $0 $0 $0 $0 $0 $0 Licenses, Fees, & Permits $2 $2 $2 $2 $3 $2 $2 $2 Intergovernmetal $0 $0 $0 $0 $0 $0 $0 $0 Miscellaneous Revenue $0 $0 $0 $0 $0 $0 $0 $0 Total $87 $41 $19 $25 $49 $33 $29 $17 Special Fund - Human Services General Revenue $52 $24 $10 $13 $28 $19 $17 $9 Adult Protection $9 $8 $9 $9 $10 $9 $7 $6 Child Care $23 $22 $23 $23 $25 $24 $17 $15 Child Support $20 $19 $20 $20 $22 $21 $15 $14 Child Welfare $108 $101 $108 $106 $118 $112 $82 $73 Colorado Works $37 $35 $37 $36 $41 $38 $28 $25 Core Services $45 $42 $45 $44 $49 $47 $34 $30 Income Maintenance $97 $91 $96 $95 $105 $100 $73 $65 Other Revnues $0 $0 $0 $0 $0 $0 $0 $0 Total $392 $342 $348 $346 $398 $369 $273 $237 Special Fund - Joint Sales Tax Fund Sales Taxes $0 $0 $0 $0 $0 $0 $0 $0 Investment Earnings $0 $0 $0 $0 $0 $0 $0 $0 Total $0 $0 $0 $0 $0 $0 $0 $0 Special Fund - Conservation Trust Fund Lottery Funds $15 $14 $15 $15 $17 $16 $11 $10 Investment Earnings $0 $0 $0 $0 $0 $0 $0 $0 Total $15 $14 $15 $15 $17 $16 $11 $10 Grand Total $1,635 $1,037 $800 $856 $1,215 $986 $785 $589 29