Community Guide to Development Impact Analysis by Mary Edwards

Introduction Fiscal Traffic Socio-Economic Environmental Putting it Together Cost of Community Services

Cost of Community Services

Over the past decade, as urban sprawl has intensified and citizens and policy makers have become more aware of the range of impacts of sprawling development, a number of studies have emerged that attempt to shed some light on how different types of land use affect a community’s fiscal position. The method outlined in this chapter, known as COCS (Cost of Community Services) allows for an assessment of the cost-revenue impacts of broad land use categories on a community. This differs from the discussion in Chapter 2, which provided the process to estimate the fiscal impacts of a specific development. It is not necessary to conduct a COCS study to assess the fiscal impact of a specific development, but such a study may provide more precise information in terms of allocating costs and revenues to residential and non-residential land uses. 

Studies described in this chapter are used to examine differences in the impacts of farmland, residential land, commercial land, industrial land and open space and forest land on a community’s fiscal balance sheet in a single year. The studies are snap-shots of the net fiscal costs of different land uses. They are snapshots because they measure one year in time and do not make projections into the future. The American Farmland Trust (AFT) developed a relatively simple method for conducting such studies, known as the Cost of Community Services Studies (COCS). In general, they found that predominantly agricultural uses generate more revenue than they require in public service expenditures (1).


The COCS approach compares annual revenues to annual expenses of public services for various land use categories. Local revenues and expenditures are apportioned to major categories of land use and the result is a set of ratios showing the proportional relationship of revenues and expenditures for different land uses at one point in time. Various assumptions are made in apportioning costs across land uses, and these are most often based on discussions with local staff and officials. WHAT TO KNOW BEFORE USING THE COCS APPROACH Critics of COCS studies discount them because of the many underlying assumptions. Most notably, the studies often fail to acknowledge workers or residents living on farms. The costs for both workers and residents are apportioned to other land uses, namely residential. There are no costs, such as street maintenance, garbage collection or protective services, assigned to agricultural uses. Predictably, overall costs associated with these uses will be low or nonexistent. Furthermore, many studies do not differentiate between different types of open space—farmland versus forest versus vacant lots for example. These different types of land uses may have different costs and revenues associated with them. In the procedures outlined herein, an attempt is made to account for these issues through the use of property classifications distinguishing farms from forest and open space and through the addition of a new category, Agricultural Residence. 

It is also important to realize that the studies do not account for amenity value or economic activity of land uses, nor the interaction of multiple land uses. It is also important to be aware of what conclusions can be drawn from these studies. Critics point to the fact that the studies are often interpreted incorrectly. A cost of community services study does not provide a community with a measure of the fiscal impact of a proposed development—one residential development may result in a fiscal benefit to a community, and another, a fiscal deficit—depending on a variety of factors from the location of the development to the design. A more detailed fiscal impact analysis must be conducted to ascertain the impact of a specific development proposal—COCS does not provide this information. The ratios rep-resent averages across land use categories and do not speak to a particular development nor to a particular type of land use within a category—apartment buildings, for example. The studies do not provide specific ratios on types of uses within categories. They do not distinguish new, extensive residential from older or centralized or compact residential, which may have different costs, for example. These studies also are not intended to prescribe a course of action. They are intended to provide an assessment of a community’s fiscal situation with regard to different types of land use at a particular point in time. 


This chapter outlines the basic process for conducting a COCS study. The six basic steps in the process are summarized below. In an attempt to address some of the criticisms leveled at previous COCS studies and to improve on the standard processes, the procedures outlined may differ from the original procedures used by AFT. Their methods were refined and adapted to Wisconsin through a series of pilot projects reported in Edwards, et al. (1999). The process outlined here includes steps to determine revenue-cost ratios from the perspective of the community only. COCS should also include school costs, as they represent a major cost to the taxpayer. The example here does not include school costs in an attempt to keep it simple. Please refer to Edwards, et al. (1999) to review the school district process of computing ratios.

  1. Define Land Use Categories 
  2. Collect initial local data 
  3. Calculate a default percentage for allocation of various costs and revenues 
  4. Allocate expenditures by land use category 
  5. Allocate revenues by land use category 
  6. Compute the cost-revenue ratios for each land use type. 


The land use categories described in the box on the following page are based on the seven classes of real property used in the state of Wisconsin for assessment purposes. 

Residential: Property used as a dwelling, including homes, mobile homes and apartment buildings of three units or less. 

Commercial: All land and improvements devoted to buying and reselling goods for profit, including apartment of four or more units, stores with apartments above, and golf courses. 

Manufacturing: Properties used in manufacturing, assembling, processing, fabricating, making or milling tangible personal property for profit, including warehouses, storage facilities and offices that support manufacturing. 

Agricultural: Land devoted primarily to farming. 

Swamp and Waste: Includes bog, marsh, lowland brush and other nonproductive land not classified elsewhere. 

Forest Lands: Land which is producing or capable of producing commercial forest products. 

Other: Agricultural buildings and improvements and the land necessary for their location and convenience, including farm residences, silos, sheds and barns. 


Before you begin collecting data, choose a typical year to examine. The last fiscal year is often used, as records are easy to locate and recall of information is likely to be better among local staff. However, if that year was a unique one for any reason, choose a different year, as the idea is to study a typical year. All of the data necessary can be located in local city, village and town offices. Table 7.1 provides an example of assessed values for the land use categories that should be included in the data collection process. Much of the data can be found in the local budgets, the tax assessment rolls and the statements of assessment. It is also necessary to gather some demographic data on you community, including population and number of farm and non-farm dwelling units. 


The default percentage represents an approach to allocate revenues and expenditures across land use categories when there is no other appropriate approach. It is based on the relative property value of each land use category. For example, often general government expenditures are allocated based on this default percentage due to the difficulty in identifying exactly where general government expenses are spent across land uses. However, this method should be used to allocate costs and revenues as seldom as possible, as it does assume that property value is an appropriate proxy for local spending and revenues. Table 7.1 also illustrates the calculations involved in determining the default percentages. If these were used to allocate general government expenses, ninety-one percent of the expenses would be allocated to residential land and .18 percent to forest lands, for example. Worksheets are provided in the appendix to allow you to conduct your own cost of community services study.

  Worksheet 7.1:  Calculate the Fall-Back Percentages

  Worksheet 7.2:  Allocate current expenditures to land use categories

  Worksheet 7.3:  Allocate current revenues to land use categories

  Worksheet 7.4:  Calculate Cost-Revenue Rations

Table 7.1 Assessed Values, Town of Anywhere
Land Use Assessed Value Relative Value
 (relative to Total)

Residential $275,000,000 91.70%
Commercial       5,350,000   1.78%
Manufacturing       2,000,000   0.70%
Agricultural Land       8,744,600   2.92%
Other (Ag Residence)       6,680,000   2.67%
Forest          535,500   0.18%
Swamp and Waste          293,500   0.10%

Total $298,603,600 100.00%


The allocation of expenditures and revenues is the crux of the approach to estimating fiscal impacts of different land uses. It is extremely important to be as precise as possible in allocating across land use categories. This requires examining local records for items such as police and fire calls and extensive interviewing of staff who are familiar with services provided by the community. Table 7.2 illustrates the significant expenditure categories for a typical local government in Wisconsin. It also includes approaches to allocate the expenditure items. These approaches are suggestions and you may have a better approach, depending on your own local records and staff. Table 7.3 provides an example of the allocation of expenditures across land use categories for a typical town in Wisconsin. 

Table 7.2 Allocation Methods



General Government: Default percentage
     Public Safety:  
     Law enforcement Number of police calls to land use categories
     Fire protection Number of fire calls to land use categories
     Ambulance Number of ambulance calls to land use categories
     Inspection Local records detailing specific sites of inspections
Public works:   
     Street maintenance Local records detailing where maintenance occurred
     Street lighting Location of street lights; often only in residential areas
     Refuse/garbage collection Local records of where collection occurs
     Solid waste disposal Local records and local interviews
     Recycling program expense
Local records and interviews
Health/human services Residential and Other (Ag-Residences)
Culture/rec/education Residential and Other (Ag-Residences)
Conserv/development Residential and Other (Ag-Residences)
Debt service Dependent upon what the debt is financing; elicit through interviews

Cost of community services studies measure demand for services and not the benefit derived from the public services. For example, expenditures such as health and human services are demanded by citizens and therefore, completely allocated to residential uses, even though the entire community may benefit from a healthy population. It is also important to investigate expenses that may not be as obvious as they appear.  Public works and public safety generally represent the two largest expenses in municipal budgets. It is important to obtain detailed information on the categories of expense within these broad public services. Interviews with police and fire personnel and public works personnel are crucial to an accurate analysis of costs across categories. 

Table 7.3 Allocation of Expenditures, Town of Anywhere 
EXPENDITURES TOTAL Residential Commercial Manufacturing Agricultural Swamp/ Waste Forest AgRes/ Other

Total general government 400,000 368,880 7,040 2,640 11,520 400 720   8,800

Law enforcement 100,000   90,000 2,500 2,500         5,000
Fire Protection 125,000 110,000 5,000 5,000         5,000
Ambulance   55,000   45,000 5,000           5,000
Inspection     8,500     8,000    500          
Total public safety   288,500              

Street maintenance 250,000 200,000 12,500 7,500 12,500     17,500
Street lighting     7,000     7,000            
Refuse/ garbage collection 105,000   99,750             5,250
Solid waste disposal     1,500     1,425                 75
                  Recycling program   80,000   76,000            4,000
Total public works 443,500              

Total Health/ human services   85,000   80,750           4,250
Total Cultural/ rec/ education   35,000   33,250           1,750
Total conservation/ development   18,500   17,575             925
Total debt service   68,000   68,000            
TOTAL Expenditures        1,338,500 1,205,630 32,540 17,640 24,020 400 720 57,550


Revenues are allocated across land use categories, just as are expenditures. Again, local interviews and local records provide much of the information necessary to allocate revenues. Many local revenues come from a clearly identifiable source, which can be discerned through the examination of local records. Building permits, for example, can be tracked back to the source of the permit. Table 7.4 provides an example of the methods used to allocate revenues. 

Table 7.4 Allocation Methods

Property Tax Revenues (PTR) 
The amount of property tax revenue generated by each land use can be obtained by multiplying the local mill rate by the amount of assessed value of property (V) in each land use category.
     General property taxes
     Mobile home fees
     Forest crop tax
     Woodland tax
See sidebar
Residential uses
Special assessments:
Dependent upon particular assessment; elicit through interviews
State Shared Revenues

  - Per capita 
  - Special utility 
  - Aidable Revenues 
  - Minimum/ Maximum
Intergovernmental revenue:
     Shared revenue
     General transportation aids
     Recycling grants
     Payment for muni -services
     Highway and bridge aid 
See sidebar and following discussion
Same allocation approach as street maintenance
Same allocation as street maintenance expenditures
Dependent upon who recycles; 
     elicit through records or interviews
Default percentage or as stipulated in contracts
Same allocation as street maintenance expenditures
     Business/ licenses
     Non-business licenses
     Building permits/inspect
     Other regulatory/permits
Direct source of revenue found in local records
Direct source of revenue found in local records 
Direct source of revenue found in local records 
Direct source of revenue found in local records 
Public charges:

     General govt fees
     Refuse garbage collect 
     Solid waste disposal fee
     Recycling fees
Default percentage  
Local records; same approach as used in expenditures 
Local records; same approach as used in expenditures 
Local records; same approach as used in expenditures
Residential and other  
Residential and other
Intergovernmental charges
Local records
 Miscellaneous revenue

     Proceeds from debt
Local records; default percentage
Dependent upon nature of debt 


State Shared Revenues:

One approach to the allocation of shared revenues (discussed in chapter 2) across land use categories is to allocate each payment separately. The state Department of Revenue is responsible for calculating payment amounts and can provide a community with a breakdown of the individual payments—per capita, utility, etc. The per-capita payment is allocated to residences and ag. residences based on the populations or number of dwelling units in each category. The aidable revenue payment is allocated through the default formula (excluding manufacturing value). The utility payment is generated by exempt lands and does not figure into the final ratios for the seven land use categories. Note that in the example below, the town receives only a per-capita aid payment and so the total payment is allocated among residential and agricultural residences. Table 2.5 provides example of the allocation of revenues for a typical town in Wisconsin. 


Land use ratios are calculated by dividing total expenditures by total revenues in each category of land use. Table 7.5 illustrates the ratio for the example provided in this chapter. 

The numbers above are interpreted as: For every $1 in revenue generated from residential uses, $1.01 is spent in public services to these uses in the particular year under examination. Similarly, it costs $.74 to serve the agricultural residences for every $1 they generate in revenue. The ratios represent a hypothetical example. For more information on previous studies, contact the American Farmland Trust. 

Table 7.5 Cost Revenue Ratios
Residential Commercial Manufacturing Agricultural Swamp/Waste Forest AG/other

Total Revenues 1,193,075 33,356 15,818 32,324 676 1,511 60,384
Total Expenses 1,205,630 32,540 17,640 24,020 400 720 57,550

Ratio 1.00:1.01 1.00:.98 1.00:1.12 1.00:.74 1.00:.59 1.00:.48 1.00.95


  1. American Farmland Trust. 1992. Does Farmland Protection Pay? the Cost of Community Services in Three Massachusetts Towns. Northampton, MA: American Farmland Trust. 
  2. Definitions from: Property Assessment Manual for Wisconsin Assessors, Volume 1: Administrative, Procedural, 1998. The “Other” category is a new category of as of 1996. Using it a COCS study, allows for a more precise tracking of revenues and expenditures associated with agricultural residences. 


Edwards, M., D. Jackson-Smith, S. Ventura, J. Bukovak. 1999. The Cost of Community Services for Three Dane County Towns: Dunn, Perry, and Westport. Madison: Wisconsin Land Use Research Program

Table 7.6 Allocation of Revenues-Town of Anywhere
  TOTAL Residential Commercial Manufacturing Agricultural Swamp/Waste Forest AgRes/Other

Property taxes 576,000 525,000  10,000 6,000 16,000 500 1,000 17,500
Mobile home fees   20,000   20,000            
Forest crop tax          60               60  
Woodland tax        135             135  
Total taxes 596,195              
Total special assessments     1,100     1,100            
Shared revenue 165,000 156,750             8,250
Transportation aids   90,000   69,300   4,500 2,700   4,500       9,000
Local Road Improvement Program   20,000   15,400   1,000    600   1,000       2,000
Recycling grants    65,000   50,050   3,250 1,950   3,250       6,500
Highway/bridge aid     6,300     4,851      315    189      315          630
Total Intergovt revenue 358,300              
Business licenses   15,000   10,000            
Non-business lic.     1,800     1,710                  90
Building permits   15,000   14,250                750
Other regulatory permits        100          95                    5
Total Licenses/permits   31,900              
Total fines/forfeits/pen   12,000    9,240    600    360    600      0      0    1,200
General government fees        600       550                   50
Garbage collection 100,000  95,000              5,000
Solid waste disposal fees        400       380                   20
Recycling fees   50,000  47,500              2,500
Cemetery fees     4,500    4,275                 225
Parks fees     2,000    1,900                 100
Total public charges 157,500              
Interest income   55,650  51,320    979    367  1,603   56    100     1,224
Int on special assessments     4,500    4,500            
Miscellaneous revenue    60,150              
Proceeds from debt 120,000 110,664  2,112    792   3,456 120    216     2,640

TOTAL Revenues 1,337,145 1,193,075 33,356 15,818 32,324 676 1,511  60,384