Rationale for Smart Growth Fiscal Impact Analysis and Model Fiscal Impact Assessment Ordinance


Publication Date

June 2022



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Rationale for Smart Growth Fiscal Impact Analysis and Model Fiscal Impact Assessment Ordinance

Fiscal impact analysis is a tool that is already in the playbook for many planners, politicians, and developers. It arises out of the straightforward need to understand how much new development will cost. A typical fiscal analysis uses the average cost method, which assumes that each new resident or employee associated with new development generates an increase in municipal operating costs equal to the average cost per resident or employee. The problem? That isn’t the case! Different types of development have different costs associated—with denser, more connected development generating much more revenue for a municipality compared to other patterns of development. This guide, produced by  Arthur C. Nelson, James C. Nicholas, and Julian Conrad Juergensmeyer for  Smart Growth America, makes the case for a more nuanced, smarter fiscal analysis practice.

The purpose of this Guide is to provide the best information reasonable to show the kinds of fiscal impacts that may be associated with Smart Growth.

An aspect of smart growth is assuring that plans are based on assessments of market needs and that permitting of development occurs only when it is in accordance with a plan. This can help assure that all development that is needed for an efficiently functioning market occurs while preventing over-development that can undermine the fiscal well-being of the community.

This Guide to Smart Growth Fiscal Impact Analysis is comprised of four chapters:

Chapter 1 – Fiscal Impact Findings presents considerable evidence showing that smart growth development patterns reduce the fiscal costs of growth and improves the overall economic performance of communities.

Chapter 2 – Planning Foundations for Fiscal Impact Analysis outlines the role of planning to support fiscal impact analysis.

Chapter 3 – Implementing Fiscal Impact Analysis provides a framework for implementing fiscal impact analysis to address smart growth principles.

Chapter 4 – Model Fiscal Impact Analysis Ordinance for Smart Growth presents a framework for crafting and adopting a fiscal impact analysis ordinance with special reference to advancing smart growth principles.