Net Fiscal Impact through the Parker Associates Model.

Fiscal Impact is the summation of all local and state government revenue and cost impacts generated by a real estate development. In order to incorporate both construction and operating costs as well as revenues that flow to governments, a multi-year time period is customarily selected such as ten years. The purpose is to determine the net fiscal impact of a new real estate development on the wider community as represented by its state and local governments.

The Parker Model for estimating fiscal impact begins with construction employment and purchase of materials. Employees live in housing for which they pay annual ad valorem taxes to local government, either directly for ownership housing, or indirectly for rental housing. Construction employees also pay a substantial amount of their income on goods and services subject to state sales tax, a portion of which goes directly or indirectly to local government. The direct purchase of materials for construction is also subject to sales tax that is either earmarked for special government costs, or applied directly to the general fund. And, of course, tenants or owners of portions of the new development also contribute ad valorem and sales taxes.  All of these sources generate revenues to government from a new real estate development.

At the same time, the tenants in a new development generate costs to government through demand for services to provide education, social services, transportation, health, safety, parks and recreation and utilities. Although some of these services receive direct assessment or user fees, most are provided on a per capita  basis and can be estimated accordingly.  Occasionally, a neighborhood will be provided special amenities that impact primarily the residents of that neighborhood, and underlying costs can be attributed to the new comers as well as existing residents.

Net Fiscal Impact for a new development is the revenues generated by the new development minus the public costs attributable to the residents and/or tenants of the new development. The past experience of Parker Associates results in positive  fiscal impact for virtually all kinds of new development, a rational argument for support from both local government officials and neighborhood citizens.


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