9/9 FRI 4:15 | Pay-to-Play: Paying for Growth
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9/9 FRI 4:15 | Pay-to-Play: Paying for Growth

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Tyson Smith ...

Tyson Smith
Dr. Robert Burchell

The presenters will provide commentary on the shift from broadbased funding mechanisms (like property taxes) to user fees and special assessments (private or quasi-private mechanisms) as the principal means of funding new infrastructure. This shiftslow economic recovery and an anti-tax and anti-government
resurgence. Planners will be facing an environment where infrastructure increasingly is provided by either private parties (think
development agreements) or subsets of the jurisdiction who can afford it (think special assessments). This session discusses
what this trend means for planners and for society.

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9/9 FRI 4:15 | Pay-to-Play: Paying for Growth 9/9 FRI 4:15 | Pay-to-Play: Paying for Growth Presentation Transcript

  • 2011 APA Florida Annual Conference
    Robert Burchell, PhD, PPCenter for Urban Policy Research, Rutgers UniversityTyson Smith, Esq., AICPWhite & Smith | Planning and Law Group
  • Presentation Overview
    Background (TS)
    The Recovery: US & Florida (BB)
    The New Normal (BB)
    Infrastructure Need (BB)
    Revenue Response (BB)
    Why it Matters (TS)
    Conclusion
  • Municipal Trends ‘67 to ‘07
    Per capita Revenues
    $819 to $1,747 (up 113%)
    Municipal /capita Expenditures
    $819 to $1,679 (up 105%)
    Operations increased at greater rate than Capital
    Background
  • Florida Impact Fee Collections, ‘93 to ‘09
    Background
    State of Florida, Department of Financial Services
  • Florida Impact Fee Collections, ‘00 to ‘09
    Background
    State of Florida, Department of Financial Services
  • Special Assessment Collections, ‘93 to ‘09
    Background
    State of Florida, Department of Financial Services
  • Ad valorem Collections, ‘93 to ‘09
    Background
    State of Florida, Department of Financial Services
  • Capital Expenditures, ‘93 to ‘09
    Background
    State of Florida, Department of Financial Services
  • Nationwide and Florida Trends
    (I)
    • National real estate median list prices, as of July 2011, appeared to have hit bottom at 70% of January 2007 price (-30%). DCC will continue it until end of 2012 (-40%).
    • Until debt ceiling crisis, more markets were recovering value; Fewer cities were experiencing decline.
    • Nationally, inventories stabilizing; reduced amount of new net inventory entering markets. DCC shook confidence.
    • Nationally, foreclosures, short sales, and other distressed transactions account for 31% of sales.
    • Nevada (68%), Arizona (59%), California (53%) and Florida (40%) have the highest percent of sales in the above category.
    9
  • Nationwide and Florida Trends (II)
    • 1985–2003:Average 4% annual increase in prices
    • 2003–2007: 7–20% annual increase or more
    • 2007–2011: 0–10% annual decrease(2005 High)
    • 2012:Beginning 2% increase
    • No significant real estate investment since January 2007; beginning to see some comeback nationally; coastal.
    • Luxury markets coming back the most; higher median prices experiencing lower decreases or slightly faster increases.
    • Yet 10 states, as of July 2011, had discounted prices reflective of foreclosure of at least 40% (OH, KY, TN, CA, PA, IL, NJ, MI, GA, WI). (Florida not represented in this group.)
    10
  • Nationwide and Florida Trends (III)
    • Home prices will decline through 2011 bringing average peak to trough decline to 40 percent. Florida is part of this decline; only off 30 percent in house price.
    • Washington, D.C., Boston, Raleigh and Silicon Valley have done well in recession and have actually picked-up.
    • Florida falls within a group of states where prices remain depressed and have not yet stabilized (Florida, Georgia, Arizona, Nevada). Georgia could be worst.
    • Yet, Miami, FL and Orange County CA are experiencing significant activity due to the presence of foreign buyers.
    11
  • Nationwide and Florida Trends (IV)
    • Forecast nationally is for slow recovery with housing starts not returning to normal (1.3 million) until 2015. No double dip at this time; slower return than anticipated.
    • The healthiest of housing markets is multifamily where net absorption nationally has been positive for two years.
    • The pool of single-family housing buyers has thinned due to the tightening of underwriting standards by lenders/GSEs.
    • The inventory of unsold new homes nationally is less than 165,000 units – the lowest level on record – 9.3 months supply.
    • The inventory of unsold existing S.F. homes nationally is 3.77 million – 9.5 months of supply.
    12
  • The Effect of the Deficit Ceiling
    • Federal dollars account for one-third of state revenues.
    • Debt limit will lead to large cuts in federal and state subsidies to local governments.
    • This will occur in worst year of fiscal solvency for states.
    • This will involve cuts to both new infrastructure finance and regular repair of infrastructure.
    • States will have less than 25% of revenues currently spent for infrastructure.
    13
  • Thinking About Infrastructure
    • INFRASTRUCTURE – The basic physical and organizational constructs (buildings, roads, power supplies, etc.) necessary for the operation of a society.
    • INFRASTRUCTURE NEED – The summation of what is necessary, what is done, and what remains by category of infrastructure.
    • INFRASTRUCTURE NEED TALLIES – This is usually compiled by the American Society of Civil Engineers (ASCE). ASCE assigned a D grade for U.S. $0.375 trillion – 1 year; $7.5 trillion – 20 years infrastructure need costs.
    14
  • U.S. Infrastructure Need Totals
    in Billions ($)
    1-Year 20-Year
    Need Spent Gap Need Spent Gap
    Aviation $ 17.4 $ 9.3 $ 8.1 $ 348 $ 186 $ 162
    Bridges $ 17.0 $ 10.5 $ 6.5 $ 340 $ 210 $ 130
    Dams $ 2.5 $ 1.0 $ 1.5 $ 50 $ 20 $ 30
    Drinking Water $ 15.0 $ 6.9 $ 8.1 $ 300 $ 138 $ 161
    Energy $ 15.0 $ 7.1 $ 7.9 $ 300 $ 142 $ 158
    Levees $ 5.0 $ 1.1 $ 3.9 $ 100 $ 22 $ 78
    Parks/Recreation $ 17.0 $ 7.4 $ 9.6 $ 340 $ 148 $ 192
    Rail $ 12.6 $ 10.3 $ 2.3 $ 252 $ 206 $ 46
    Roads $170.0 $ 66.0 $104.0 $3,400 $1,320 $2,080
    Sewer/Wastewater $ 36.0 $ 22.4 $ 13.6 $ 720 $ 448 $ 272
    Solid Waste $ 15.4 $ 6.7 $ 8.7 $ 308 $ 134 $ 174
    Transit $ 53.0 $ 15.0 $ 38.0 $1,060 $ 300 $ 760
    TOTAL $375.9 $163.7 $212.2 $7,518 $3,274 $4,243
    ($0.375 trillion) ($7.5 trillion)
    15
  • 16
    Infrastructure Need in Context
    GROWTH IN THE UNITED STATES,
    2010-2030
    (Woods and Poole-2010)
    2010-2030 2010 2030 (in millions)
    Population 65.00 310.00 375.00
    Employment 46.65 181.63 228.28
    Households 28.10 120.15 148.2
    Annual Infrastructure Need ($0.375T) = $1,210 /capita (2010)
    The above is: 2/3 times the average per capita municipal expenditure ($1,700); it is equivalent to average per capita county expenditures ($1,200); and is 40% of average per capita state expenditures ($3,025).
  • Florida’s Infrastructure Need
    • Vehicle travel on Florida’s roads increased by over 100% from 1990 -2010. Population increased by 45% over the same period.
    • 13% of Florida’s major roads are in poor or mediocre condition; nearly 50% of Florida’s major highways are considered congested.
    • 18% of Florida’s bridges are structurally deficient or functionally obsolete.
    • 72 high hazard dams (can cause loss of life; significant property losses by bursting) exist in Florida.
    • Florida’s drinking water needs $14 billion investment (20 years).
    • Florida has $9.0 billion in wastewater infrastructure needs; it has $8.3 million in unmet needs for outdoor recreation and parkland acquisition.
    17
  • U.S. Versus Florida Infra. Ratings
    18
  • 19
    Revenues to be Raised
    • Aviation – Increase aviation user fees (fares); increase passenger facilities charge (luggage, etc.).
    • Bridges – Increase personal income/gasoline tax and devote portion to transportation/bridges.
    • Dams/Levees – Look to increased state sources of revenue (increased state income tax / real estate transfer tax) to cover some of the costs.
    • Drinking Water – Create Water Infrastructure Trust Fund at federal level; user fees (impact fees); G.O. bonds.
    • Energy – Additional federal/state funding through income tax; federal/state income tax incentives for energy conservation and alternative energy sources.
  • 20
    Revenues to be Raised
    • Parks/Recreation – Public-private partnerships; foundation funding; additional federal allocations to the Land and Water Conservation Fund.
    • Rail – Increase farebox revenues (passenger) and user charges (freight).
    • Roads – Increase fuel taxes significantly.
    • Sewer/Wastewater – Create Water Infrastructure Trust Fund at federal level; user fees (impact fees); G.O. bonds; public-private partnerships.
    • Solid Waste – Encourage methane gas-to-energy conversion at landfill sites; increase user fees; encourage recycling.
    • Transit – increase user fees; explore cross-subsidy by highway users.
  • Why It Matters…
    The Foreclosure Problem
    The Federal Response
    Capital Funding and Placement Decisions shift to Private
    Implications for Middle Class
    Fiscal Reality
    Why It Matters
  • The Foreclosure Problem (Jul 11)
    Why It Matters
    from Realtytrac.com
  • The Foreclosure Problem (Jul 11)
    Why It Matters
    from Realtytrac.com
  • Florida Trend (Aug 10 to Jul 11)
    Why It Matters
    from Realtytrac.com
  • National Trend (Aug 10 to Jul 11)
    Why It Matters
    from Realtytrac.com
  • Foreclosure Fallout
    Why It Matters
    Partially-built out Subdivisions
    Empty Houses:
    Tax Revenues
    Upkeep/Deterioration/trash removal
    Abandoned Pools
    Code Enforcement Costs Up
    Crime
    Squatting or Reuse
  • Pasco’s Registry Program
    Why It Matters
    Registration required
    Code Enforcement Officer visits each property
    Compliance evaluated for:
    Debris accumulation
    Overgrown conditions
    Public safety violations
    Code Enf. Officer and lot clearing funding set aside
  • Federal Response
    Why It Matters
    Administration’s I-Bank
    American Infrastructure Finance Authority:
    Kerry (D-Mass)
    Warner (D-WVa)
    Graham (R-SC)
    Hutchinson (R-TX)
  • Administration’s I-Bank (until last night?)
    Why It Matters
    $30 Billion Start-Up (6 years)
    Loans (& Guarantees) and Grants
    Transportation (Road and Rail)
    Under U.S. DOT
    Local Gov’t Eligible
  • BUILD Act
    Why It Matters
    $10 Billion Start-Up
    Loans & Guarantees (No Grants)
    Transportation, Water, & Energy
    New Federal Entity
    Local Gov’t Eligible
    Extends Alt. Min. Tax Exemption
  • Trends in Tuition/Fees at Public, 4-year Colleges
    Why It Matters
    Trends in College Pricing 2010
  • Trends in State Appropriations
    Why It Matters
    Trends in College Pricing 2010
  • Chapter 9?
    Why It Matters
    Jefferson County, Alabama
    Harrisburg, Pennsylvania
    Vallejo, California
    Central Falls, Rhode Island
  • What to Expect:
    Conclusion
    Home prices to drop until ~ 12/2012
    ~ 9-10 mo. Inventory of new & existing housing
    Luxury Markets to rebound first
    Housing-start recovery ~ 2015
    Positive MF Absorption
    Innovative Fee/Charges
  • What to Expect (cont’d):
    Conclusion
    Lower Levels/Quality of Service
    Potential Problems with Local/State Debt
    Infill interest
    A Federal Response
    “Meritocracies” to Thrive
    Sorting by class, education, politics
    Pay-to-Play
  • We go to San Diego…
    “Funding the New Normal”
    October 26-28
    growthandinfrastructure.org