Economic Development Impact of Alternative Sewer Funding Mechanisms

366 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
366
On SlideShare
0
From Embeds
0
Number of Embeds
12
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Economic Development Impact of Alternative Sewer Funding Mechanisms

  1. 1. Economic Development Impact of Alternative Sewer Funding Mechanisms Justin Brügger Program Manager – Long-Term Control Plan Administration City of Fort Wayne IWEA Annual Conference Indianapolis, IN November 19, 2009
  2. 2. About Fort Wayne Second-Largest City in Indiana - Population: 251,247 - Allen County: 349,498 - MSA: 570,779 2
  3. 3. About Fort Wayne 3
  4. 4. 4
  5. 5. Our Plan at a Glance 5
  6. 6. Plan Overview Cost Program Element (millions) Combined Sewer Capacity $68.3 (partial sewer separation) Interceptor sewers $72.4 Satellite storage/treatment $34.8 Combined sewer overflow $53.9 pond storage improvements Treatment plant upgrades $10 Total Cost $239.4 6 (All cost estimates based on 2005 dollar value)
  7. 7. Total Capital Needed Capital Program Present Dollar Value Future Dollar Value LTCP (4/18, 1/12 events/year) $239.4 million $361.7 million Wastewater Improvements CIP $454.6 million $566.0 million Over next 18 years, total capital needed to fund both CSO improvements required by the LTCP, as well as other wastewater collection and treatment needs, is $927.7 million (inflation-adjusted). Average annual increase in revenue requirements: 2008 – 2014: 10.5 percent annually 2008 – 2025 Average: Seven percent annually Including operations and maintenance costs, an overall revenue increase of 383% is necessary over the 18-year period. 7
  8. 8. Projected Revenue Requirements ($,000) 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Cash Capital O&M Existing DS Non-CSO DS CSO Debt Service (DS) 8
  9. 9. Residential Indicator • Residential Indicator – The ratio of the wastewater cost per household to MHI – > 2% = high burden; 1-2% = medium; > 1% = low • Wastewater Cost Per Household – $1,138 during peak year (2023) – Estimated 2023 MHI: $63,309 – $1,138 / $63,309 = 1.80% Total Peak Future Implement Annual U.S. EPA Residential Peak % MHI ation Costs Indicator Period ($/yr) FV 18 1,138 1.80% Medium 9
  10. 10. Impact to Specific Communities Peak Impact Estimated Estimated 18-Year U.S. EPA 2005 MHI 2023 MHI Implementation Residential Community (Census Tract) (Dollars) (Dollars) (Percent MHI) RI West Central (12) 13,535 20,025 5.68% High Hanna - Creighton (17) 18,058 26,717 4.26% High East Central (14) 26,025 38,504 2.96% High Harvester Neighborhood (15) 27,104 40,100 2.84% High Oakdale (25) 42,441 62,792 1.81% Medium Glenwood Park (108.05) 53,126 78,600 1.45% Medium Arlington Park (108.08) 73,025 108,041 1.05% Medium Autumn Ridge (103.04 BG2) 95,662 141,532 0.80% Low 10
  11. 11. Clean Rivers Task Force • Commissioned by Mayor Tom Henry • Included representatives of commercial business, industry, restaurants, non-profit and social services agencies, school corporations, municipal employees, and a bi-partisan group of City and County elected officials. • Everything on the table • Property taxes, sewer fees, storm sewer fees, income taxes, exclusive and non-exclusive sales taxes, sale/lease of assets, community 11 trust fund, etc.
  12. 12. Sales Taxes Nationally, sales taxes have increased as a percentage of municipal gross receipts Revenue Source 1960 1970 1980 1990 2000 General Revenue, total 100.0 100.0 100.0 100.0 100.0 Taxes 78.1 75.6 66.4 62.5 61.7 Property 68.9 64.1 50.5 46.6 44.2 Sales and gross receipts, total 5.8 6.0 9.3 9.6 10.6 General Sales 3.8 3.8 6.3 6.7 7.5 Selective Sales 2.0 2.2 3.0 2.9 3.0 Individual Income 1.1 3.2 3.8 2.8 3.2 Corporate Income - - - 0.6 0.7 Licenses and other taxes 2.5 1.9 2.6 2.8 3.1 Charges and miscellaneous nontax revenue 21.1 24.4 33.6 37.5 38.3 Note: Because of rounding, detail may not add to totals a Indicates a negligible amount included in the individual income tax figure Source: Management Policies in Local Government Finance (5th edition). Washington, DC: International City Management Association (2004): p. 290. 12
  13. 13. Sales Taxes • Most local option sales taxes are authorized by state legislation – Some based on home rule charters • More than 7,000 jurisdictions • 34 states and District of Columbia • Rates range from 0.25% to 4% • Tax structures generally exempt certain commodities (i.e. food, prescription drugs, etc.), organizations (charities, local government, etc.), and goods purchased for resale 13
  14. 14. Common in Larger Cities • Several cities with populations greater than 250,000 collect more than half their tax revenue from their local general sales tax – Albuquerque (51.1 percent) – Aurora, Colorado (69.1 percent) – Baton Rouge (53.0 percent) – Colorado Springs (70.5 percent) – Denver (52.0 percent) – Mesa, Arizona (73.7 percent) – Oklahoma City (80.8 percent) – Tucson (67.9 percent) – Tulsa (79.2 percent) Source: U.S. Department of Commerce, Bureau of the Census, Government Finances: 1998-99 (Washington, D.C.: U.S. Government Printing Office 2001), 129-151 14
  15. 15. Common in Midwest 5.0% State Broad Home Rule – 6.85% State Generally 3% Local 1% Local 4.0% State + 1% in 5% State summer. Local 0.1-0.6% Local varies – Broad Home Rule 6% State 5.5% State 6.0% State Broad Home Rule – 1.0% Local Current high is 5.5% State 3.35% 6.25% State 2.5% Local 4.0% Local 7% State 5.3% State Broad Home Rule – 4.225% State Current high is Local Varies – 3.35% Broad Home Rule Local Option Sales Tax No Local Option Sales Tax 15
  16. 16. Local Option Sales Tax in Allen County • Beginning in 2010, a half-cent sales tax would generate approximately $14 million per year • Collectively, it would generate approximately $248 million by 2025 16
  17. 17. Regressivity According to the Economic Policy Institute, a two-parent, two-child Allen County family needs $38,100 to meet basic needs. Other Housin Childcar Trans - Health Necessitie Monthly Household Type g Food e portation Care s Taxes Total Annual 2 parents, 2 children $567 587 847 324 311 312 227 $3,175 $38,100 Subject to Sales Tax? No No No Yes No Yes N/A Effect of Additional Half Penny Sales Tax 0 0 0 1.62 0 1.56 0 3.18 $38.16 17
  18. 18. Effect of Sales Tax on Residential Indicator Peak Impac t 18- Year Estimated Curr Imple Annual Estim ent Estimate menta Amount of ated RI + Estimate Current d 2023 tion Sales Tax RI at Sale d 2005 RI MHI (Perc Paid at 1/2 1/2 s Community (Census MHI (Dollars ent percent Perce Tax Tract) (Dollars) ) MHI) (2023) nt RI West Central (12) 13,535 2.26% 20,025 5.68% $ 59.76 0.30% 2.56% Hanna - Creighton (17) 18,058 1.69% 26,717 4.26% $ 59.76 0.22% 1.92% East Central (14) 26,025 1.18% 38,504 2.96% $ 59.76 0.16% 1.33% Harvester Neighborhood (15) 27,104 1.13% 40,100 2.84% $ 59.76 0.15% 1.28% Oakdale (25) 42,441 0.72% 62,792 1.81% $ 74.14 0.12% 0.84% Glenwood Park (108.05) 53,126 0.58% 78,600 1.45% $ 153.18 0.19% 0.77% Arlington Park (108.08) 73,025 0.42% 108,041 1.05% $ 300.38 0.28% 0.70% Autumn Ridge (103.04 0.65% BG2) 95,662 0.32% 141,532 0.80% $ 467.84 0.33% 18
  19. 19. Capture of Out-of-County/Out-of-State Revenue Fort Wayne is a regional shopping hub 19
  20. 20. Location Quotients Local Employment in Industry/Total Local Employment vs. National Employment in Industry/Total National Employment 1 = neutral > 1 = exporting industry < 1 = importing industry University of Utah identified tourist-related industries that contribute out-of-jurisdiction sales tax dollars 20
  21. 21. Location Quotients University of Utah identified travel and tourism-related industries that contribute out-of-jurisdiction sales tax dollars. Motor and vehicle parts dealers; furniture/home furnishing stores; electronic/appliance stores; building material/garden supply stores; food and beverage stores; health and personal care stores; gasoline stations; clothing and clothing accessory stores; sporting goods, hobby, book, and music stores; general merchandise stores; miscellaneous store retailers; air transportation; rail transportation; water transportation; truck transportation; transit and ground passenger transportation; scenic and sightseeing transportation; support activities for transportation; real estate; rental and leasing services; administrative and support services; ambulatory health care services; performing arts and spectator sports; museums, historical sites, zoos, and parks; amusements, gambling, and recreation; accommodation; food services and drinking places; repair and maintenance; personal and laundry services 21
  22. 22. Median Location Quotients – Travel and Tourism-Related Industries Allen County = Base (1.00) Allen County 1.00 Adams County 0.68 Dekalb County 0.68 Huntington County 0.755 Kosciusko County 0.61 Wells County 0.97 Whitley County 0.845 Noble County 0.45 Defiance County 0.96 Paulding County 0.89 22
  23. 23. Most Major Cities Have Ability to Draw Out-of State Sales Tax Revenue 23
  24. 24. Pros and Cons Pros: - Better-distributes burden to beneficiaries of clean water - Less regressive than sewer rates - Reduces rate burden on industry (base employers); thus, reducing economic development impact Cons: - Unstable source of revenue - bonding offsets elasticity - Difficult to get through State Legislature - Somewhat regressive 24
  25. 25. Looking for Support • Community is beginning to notice the reality of the situation due to our recently-approved five-year rate increase • Need support of state legislative delegation • Must build support among other Indiana cities Contact: Justin Brugger One East Main Street, 480 Fort Wayne, Indiana 46802 (260) 427-1117 direct (260) 427-5066 main justin.brugger@cityoffortwayne.org 25

×