City staff recognizes the need to have a consistent approach to evaluating the fiscal impact of land use proposals. Addressing this issue is increasingly important as the City faces serious budgetary constraints at the same time it faces significant growth and inflationary pressures. In addition, renewed growth is leading property owners and developers to seek annexation to the City of Sparks or request land use changes for large properties.

The City already requires applicants to prepare a fiscal impact analysis for certain land use proposals including annexations, Comprehensive Plan land use amendments, planned developments and tentative maps. However, the analyses are submitted in a variety of formats and using factors and assumptions derived by the applicant. City staff are specifically concerned that these analyses may be overestimating future revenues attributable to development.

City staff see the need to adopt a consistent approach, with common standards and assumptions, for developers and property owners to use when preparing fiscal impact analyses to submit with their annexation or land use proposals. The City would also benefit from gaining a better understanding of the fiscal implications of the City’s current land use plan and how amending the plan – for example, changing the land use designation on a large undeveloped parcel from business park to single family residential – would impact the City’s future fiscal health.   

Economic and Planning Systems, Inc. (EPS) is a land economics consulting company with offices in Denver, Los Angeles, Oakland and Sacramento. This proposed contract would primarily involve staff from EPS’ Denver office. The City of Reno engaged EPS for a similar analysis as part of their recently completed master plan update.  Sparks staff believe this experience enhances EPS’ understanding of local government revenues, expenditures, and employment and housing growth in Washoe County and would benefit their work for Sparks.

The intended outcome of this proposed contract with EPS is not obtaining an in-house fiscal impact model that City staff would have to operate to review land use applications. Instead, the purpose is for the consultant to develop for the City of Sparks a standard approach and consistent assumptions for applicants to follow when submitting a fiscal impact analysis. City staff anticipate asking the City Council to adopt the standardized approach by resolution, as the Council did when it adopted the methodology developed by Atkins for modeling the impacts of development proposals on the City’s sanitary sewer system. In addition, per the proposed scope of work EPS will analyze the fiscal implications of Sparks' land use plan. This includes assessing the amount and mix of development likely to occur over the next 20 to 30 years and evaluating the impacts, in terms of revenues and costs, that projected development will have on the City’s fiscal health.

The proposed Scope of Work is comprised of three components or phases:

• Component 1: Fiscal Impact Factors and Submittal Approach

EPS needs to conduct a baseline level of analysis before it can develop standard assumptions and factors for fiscal impact analyses. Once a baseline model developed, EPS can identify a set of factors and a proposed approach to fiscal impact analysis for property owners and developers to use. The steps for completion of this component of the project are detailed on pages 3-4 of the Project Proposal, which is attached to the City’s Professional Services Contract, and include:

Analyzing the City’s budget to identify the major revenues and expenditures and trends related to them.

Categorizing expenditures to identify those that have a major impact on the budget and/or are directly impacted by new development.

Determining the relationships between City revenues by source and new development by land use.

Development of a fiscal model to determine the net fiscal impact of different types of land uses.

• Component 2: Analysis of the City of Sparks’ Long-Term Fiscal Health

The second component of the project will be an analysis of the fiscal implications of the City’s land use plan based on existing Comprehensive Plan land use designations and growth and development trends. The steps for completion of this component of the project are detailed on pages 4-5 of the Project Proposal and include:

A review of recent employment and housing trends for Washoe County to provide a baseline estimate for future employment and housing growth. The estimated demand for Sparks will be translated into demand for acreage for various types of land use.

In conjunction with City staff, EPS will estimate land capacity by land use designation per the City’s adopted Comprehensive Plan and land use amendments currently being reviewed by the City. The estimated capacity will be compared to estimated demand to determine the number of years of land supply the City has based on its land use plan.

EPS will apply the growth forecasts and development demand estimates to the fiscal model to understand the impact on fiscal balance the land use plan will have on Sparks over a 20 or 30-year planning horizon.

• Component 3: Work-Sessions and Presentations

EPS will conduct work sessions and make presentations to City staff, the Planning Commission and City Council on the fiscal impact model and the impacts of the land use plan.

Project Budget and Schedule.

The contract amount is $71,240.

Based on the schedule (see page 6 of Project Proposal), the analysis, presentations and preparation of reports will take approximately 5 months to complete.

1. Approve the contract with EPS.
2. Reject the contract with EPS.
3. Modify the contract, subject to EPS’ concurrence, or direct the City Manager to revise the contract for future City Council consideration.

I move to approve the Professional Service Contract with Economic and Planning Systems, Inc. for preparation of a fiscal impact analysis methodology for evaluation of land use proposals and an assessment of the City of Sparks' land use plan in the amount of $71,240.