Community Guide to Development Impact Analysis by Mary Edwards

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

Fiscal Impact Analysis 

The purpose of fiscal impact analysis is to estimate the impact of a development or a land use change on the costs and revenues of governmental units serving the development. The analysis is generally based on the fiscal characteristics of the community— e.g., revenues, expenditures, land values—and characteristics of the development or land use change—e.g., type of land use, distance from central facilities. The analysis enables local governments to estimate the difference between the costs of providing services to a new development and the revenues—taxes and user fees, for example—that will be generated by the development. 

Because a fiscal impact analysis is primarily based on an analysis of local government revenues and expenditures, key players on a team to conduct an assessment include the communities clerk or finance officer, the tax assessor and a facilitator to gather additional information from several functions, including public works, emergency services, parks and health and human services. 

Selecting an Appropriate Method 

There are a number of standard approaches to choose from in conducting a fiscal impact analysis, ranging from a per-capita multiplier method to a case study method which relies on local interviews. One consideration in choosing an appropriate method relates to the notion of average costing. There are two basic approaches to assess the cost of services that development imposes on a local government—average costing and marginal costing. Average costing is the simpler more common procedure. It attributes costs to new development according to average cost per unit of service in existing development times the number of units the growth is estimated to create or the demand for that unit. It does not take into account excess or deficient capacity to deliver services, and it assumes that average costs of municipal services will remain stable in the future. Alternatively, marginal costing relies on analysis of the demand and supply relationships for public services. This procedure recognizes that excess and deficient capacity exits in communities. It views growth not in a linear manner, but as a more cyclical process in terms of the impact on expenditures. 

The distinction between average and marginal costing is fundamental to fiscal impact analysis. Marginal and average costing approaches may result in dramatically different estimates of fiscal impacts for the same development. This is due to the “lumpy” nature of certain public services, like sewage treatment plants and water supply systems. When such facilities are built in a community, they are typically financed with long-term debt and built with the expectation that they will also serve future population growth in the community. Therefore, the incremental cost of providing the service to one more resident is low. However, these facilities do have a threshold level where surplus capacity is eventually depleted. It is at this point that the new development or new growth requires new infrastructure investment and the marginal cost of serving a new resident may actually be higher than the average cost. The marginal cost approach focuses on defining a community’s marginal response to a new development or land use change through careful attention to existing demand and supply relationships in a community. 

This chapter includes two sections. This first details a mixed per-capita, case study approach to estimate community costs and revenues associated with the development and the second outlines the steps to calculate impacts on the local school district.

Data Needs

  1. Description of the Development:  number and type of homes, square footage of non-residential space, for example.
  2. Local revenue and expenditure data
  3. Local property value data and current mill rate
  4. Number of workers in the Community
  5. Number of workers anticipated with the new development

Fiscal Impact Analysis: The Process to Estimating Impacts 

This chapter takes you through the steps of fiscal impact estimation. The method used here is a hybrid per-capita multiplier and case study approach. It allows for a quick calculation, but acknowledges that a straight average-costing approach is not ideal and builds in a marginal cost dimension. 

To use the per capita multiplier method, which is used to calculate all costs and revenues, with the exception of the property taxes, state shared revenues and capital costs associated with the development, you will basically translate population into service costs. The method first requires you to calculate current public service costs on a per-unit basis—per capita and per employee. Service costs are initially apportioned between residential and non-residential development to allow for a more precise accounting of costs. Development costs are then estimated by multiplying per capita costs by the total number of people associated with the development and per employee costs, by the number of workers associated with the development. 

Points to Remember 

Again, the most significant limitation of the straight per capita multiplier approach is that it does not account for excess or deficient capacity. It also assumes that the cost of services for new development is the same as existing; and this is not fully justified in all cases. The modified model detailed here requires you to calculate the operating per-capita costs and revenues associated with development and then to examine your capital facilities using a case study approach to allow for issues of capacity. 

This model allows you to examine the fiscal impacts of development if that development were in place in your community today. This approach is intended to make the estimates more meaningful and understandable to citizens and to lessen the need to make assumptions regarding your future fiscal situation. Typical fiscal impact analysis which estimates the future impact of a proposed development requires numerous assumptions as to a community’s future fiscal situation. It requires assumptions as to how your community will grow, how property values will change, how much tax revenue will be generated by the development, the timing of the development and how the community will change with the development. It also requires an estimate of a baseline scenario or a assumed future without the development to allow for a comparison with and without development. In contrast, the method detailed below allows you to use your current budget and minimize assumptions that must be made. 

The process entails nine steps. The analysis is straight-forward and data requirements are minimal. You must begin by describing the development and its potential impacts in terms of new population and new employees. Then, you will estimate the expenditures associated with the development using per capita averages as a way to make estimations. Then, you will estimate revenues to be generated by the development using various approaches. Lastly, you will estimate the net fiscal impact on your community. 

STEP 1  Determine population and employment changes associated with the development. 
STEP 2  Disaggregate budgets into categories of service expenditure (e.g., general gov’t, police). 
STEP 3  Allocate costs to residential and non-residential land uses. 
STEP 4  Divide residentially-associated costs by total population to derive a per capita estimate of service costs. Divide nonresidential costs by local employees for a per employee estimate of non-residential service costs.
STEP 5 Calculate Total Costs Associated with Development: 
     A. Calculate the residentially-induced costs associated with development by multiplying the per capita estimate of current service costs by the population increase. 
     B. Calculate nonresidential costs associated with development by multiplying the per employee estimate of service costs by the employment increase associated with the development. 
     C. Calculate annual debt service costs 
STEP 6 Disaggregate budgets into categories of revenue (e.g., license fees, taxes, intergovernmental revenue).
STEP 7 Allocate revenues, except shared revenues and property taxes, to residential and non-residential uses, and estimate revenues associated with development using the same process as was used to estimate costs.
STEP 8 Estimate property taxes, state shared revenue and total revenues associated with the development
STEP 9 Compare estimated revenues and costs and determine net fiscal impact on your community. 

Cautionary Information 

Fiscal impacts are only one type of impact associated with development, and further-more, fiscal impact analysis has a number of limitations to keep in mind. 


An example development scenario for the “Town of Anywhere” is provided throughout this chapter to illustrate the nine-step technique used in assessing fiscal impacts. Characteristics of the development scenario for the Town of Anywhere include: 

  1. A mixed-use development comprised of 100 two- and three- bedroom single family homes and 50,000 square feet of retail space. 
  2. The value of the development is estimated at $8 million. 
  3. New Residents: Using the demographic multipliers found in the appendix for “other metro areas,” the estimated new population associated with the development is 248 persons. 
  4. New Employees: In this example, there are 70 employees associated with the retail portion of the development. 


The first step in the analysis is to estimate the new population and employees associated with the development. If you know the numbers, use these numbers. If not, refer to Table 2.1 in the appendix which includes demographic information by housing type and use these demographic averages to project residents associated with the new development. 

EXAMPLE: Calculating Number of New Residents

2br 3br 4br total

a) number of housing units 60 40 100
b) persons per unit 2.11 3.03

new residents (a x b) 127 121 248

  Worksheet 2.1 is provided in the Appendix to help you calculate the number of new residents associated with your proposed development. 


A number of studies have shown that the employment intensity of nonresidential development prompts public service expenditures, so a nonresidential development with more employees than another will generate more costs to the local unit. This is the rationale behind using per-employee estimates to calculate the costs associated with non-residential development. 

If the developer has provided an estimate of the number of employees associated with the development, use this figure, or use the estimates presented in the appendix to determine the number of employees. 

Table 2.2 in the appendix provides estimates of the average number of workers for various types of establishments. These are average numbers, based on national data. For further information on employees by establishment, go to the U.S. Census Bureau’s web site to locate the 1992 Economic Census Results at: The results from the 1997 Economic Census are also provided for some categories of employment. 


Discussion Questions
  • Will these new residents associated with the development move in from outside the community or will they relocate from within the community? 
  • If the proposed development is a residential development, what kind of residences will be built—using this method for a project that will be marketed to the elderly may overestimate the number of new residents, for example. 
  • Will new employees be relocating or commuting in to work in the community? 

You will now begin to estimate the costs associated with the development. Beginning with expenditures, the initial step is to disaggregate the budget into service categories. The following service categories represent major services provided by local governments in Wisconsin. A more precise breakdown of service categories may be used. 

  Worksheet 2.2 in the Appendix will allow you to fill in your community’s current budget figures. 

EXAMPLE: Current Budget Figure

Town of Anywhere: 1999 Expenditures

Expenditure Amount
General Government $275,000
Law Enforcement  400,000
Fire Protection  300,000
Inspection  150,000
Public Works  204,000
Conservation/Development  135,000
Health/Human Services  45,000
Culture/Recreation  185,000
Debt Service  200,000

TOTAL $1,894,000



The portion of costs associated with residential uses is generally estimated using one of two methods: either through local knowledge (If possible, you may want to use the allocations determined in the COCS; see chapter 7 for a discussion of COCS); or through the use of property value data and parcel data as a fall-back method. For example, if you know that all expenditures for health and human services are associated with residents only, then allocate all of these costs to residential land uses. If expenditures are associated with both population and workers in the community, use the fall-back method to allocate costs. In using the fall-back method, the residential share of all service costs is estimated by dividing the residential property value and number of parcels by total value and total number of parcels, respectively. These two results are averaged and this value is applied to local costs to determine the residential share of costs. 

EXAMPLE: Calculating Residential Parameters 

Town of Anywhere:
1999 Assessed Value and Number of Parcels

Assessed Value
Total Assessed Value 60,000,000
Residential Assessed Value 30,000,000
Residential Value Percentage 50.00%
Total Parcels 1500
Residential Parcels 660
Residential Parcel Percentage 44.00%

 Estimated Share of Residentially- 47.00%
Associated Costs and Revenues ((.44+.50)/2)


  • What are the major spending categories that development will impact? 
  • Are there any new services that will be necessary to serve the development? 
  • Will the development prompt any change in the delivery of the existing level of services? 
  • Will any additional staff be required to provide the same level of service? 
  • Will development affect service quality, such as police and fire response time? 
  • Will the development be served by new sewer and water lines, existing lines or septic systems? 
  • Do user fees and charges cover the costs of such services? 

  Worksheet 2.3 in the Appendix will allow you to calculate residentially-associated parameters for your local government. 

Once you have calculated the portion of costs associated with residential and non-residential uses, you can apply the proportion to the appropriate service categories to derive residentially-associated costs for each service category. 

In the example below, total costs are multiplied by .47 to estimate residentially-associated costs and the remainder represents those costs associated with non-residential uses. Note that in the example, costs for expenditures of conservation/development, health and human services and culture and recreation, were allocated completely to residential uses. This is assumed to be based on local knowledge of how these expenditures are spent. This may or may not be appropriate for your community. Use your own judgment in allocating costs. 

EXAMPLE: Estimating Residential and Non-Residential Costs 

Town of Anywhere: 1999 Residential vs. Non-Residential Costs

Expenditure Total Residential Non-Residential
General Government $275,000 $129,250 $145,750
Law Enforcement   400,000   188,000   212,000
Fire Protection   300,000   141,000   159,000
Inspection   150,000     70,500     79,500
Public Works   204,000     95,880   108,120
Conservation/Development   135,000   135,000              0
Health/Human Services     45,000     45,000              0
Culture/Recreation   185,000   185,000              0
Debt Service   200,000  see Step 5c

TOTAL 1,894,000  989,630  704,370

Worksheet 2.4 provided in the Appendix allows you to estimate residential and non-residential costs for your community. 

  • Are these estimates reflective of a typical year? 
  • If not, adjust the estimates to reflect a more typical year in terms of what your community spends.


To estimate per capita and per worker figures, divide the residentially-associated expenditures and non-residentially associated expenditures by total population and total workforce in the community, respectively. In the following example, assume that the population of the Town of Anywhere is 5500 and the number of workers in the town is 3500. 

EXAMPLE: Estimating Per Capita and Per Worker Costs 

Town of Anywhere: 1999 Per-Capita and Per-Worker Costs

Expenditure Per Capita Per-Worker
General Government 23.50 41.64
Law Enforcement 34.18 60.57
Fire Protection 25.64 45.43
Inspection 12.82 22.71
Public Works 17.43 30.89
Conservation/Development 24.55 0
Health/Human Services 8.18 0
Culture/Recreation 33.64 0
Debt Service

TOTAL $179.93 $201.25

  Worksheet 2.5 provided in the Appendix will allow you to estimate per capita and per worker costs for your development. 


A. Operating Costs 

Apply the total per capita and per employee costs to the estimated population and workforce associated with the development to derive the total operating costs associated with development. 

EXAMPLE: Calculating Total Operating Costs 

Town of Anywhere:  1999 Total Costs of Development

Residential Costs Amount
a. Per-Capita Costs $179.93
b. Population of Development        248
Total (a x b) $44,623.32
Non-Residential Costs
c. Per-Employee Costs $201.25
d. Workers in Development          70
Total (c x d) $14,087.40

TOTAL $58,710.72

  Worksheet 2.6 provided in the Appendix will help you calculate total operating costs associated with your development.  

B. Capital Costs

Three Steps to Determining Infrastructure Needs and Costs Associated with the Development 

  1. Identify infrastructure facilities needed to accommodate growth. 
  2. Project the costs of needed infrastructure improvements. 
  3. Determine annual debt payment and include it in total costs associated with development. 

In growing communities, it is often necessary to invest in capital facilities to accommodate new development. New streets, water and sewer systems and schools may be needed to serve additional population. Because large capital projects such as sewage treatment plants are often financed by debt paid through user fees and charges to new residents, they are often not explicitly included in traditional fiscal impact studies which focus on operating budgets. Furthermore, many of these initial capital investments are required to be paid for by the developer. It is important to understand the long-term consequences of development in terms of capital improvements and facilities. 

The following allows you to identify whether the proposed development is expected to generate a need for additional capital facilities or improvements. The impact of such expenditures on residents—new and existing—depends on how the capital investment is financed. If it is to be financed through a bond issue, the annual debt payment should be included as an expenditure when the total impacts of development are calculated. This section follows a case-study approach intended to assist in estimating annual debt service expenditures associated with the new development. 


The identification of infrastructure facilities necessary to accommodate the new development should occur in a systematic manner. This information can be identified in a number of ways. One would be to contact department heads for their expertise on necessary capital improvements to serve new development. Another would be to analyze any support documentation the community may have, such as a capital improvement plan. Special studies can be conducted to identify needs. Lastly, to determine the physical quantities of needed capital investments, a standard for each service or facility may be useful. Ideally, this would be based on a community-needs assessment, but the existing standard of provision is an appropriate alternative. Once these service standards are established, the need for new cap-ital facilities can be determined using the following formula: 

Needed Improvements = Service Standard * Demand Unit 

Where the demand unit is associated with the new development, in terms of residents or school age children. For example, your community may have an existing standard for park land, such as 1 of acre of park land per 100 residents. If the development includes 200 new residents, 2 acres of park land are necessary to maintain current service standards for parks in the community. This method is useful if the goal is to maintain your current level of services to residents. 


Once you have determined the need for new capital investment, project the costs using staff expertise and/or local records. The following table provides a frame-work to determine the need for new capital investment and the annual debt service cost to the community. 

For those items to be financed through a bond issue, calculate the annual debt payment using your community’s current debt policy guidelines. 

In many cases, development will not generate new capital investment, as the developer is often required to pay for capital facilities such as roads and sewers. However, in this example, the development generated a need for a new library branch. The annual debt service is estimated to be about $105,000. This illustrates the problem of local capacity in estimating fiscal impacts. Due to this particular development, the community finds itself at the point where surplus capacity in the library system is used up, and new investment in a library branch is required to maintain the current standard of service for residents. In terms of the fiscal analysis, the development is held to be responsible for generating the new library, although the library will not only benefit the entire community, but it just happened that this particular development and not the previous one or the one proposed for next year, generated the need for the new library branch. Because fiscal impact analysis is intended to estimate the net fiscal impact of the development on the community’s balance sheet, the debt service should be included in the final calculation. However, it is more useful and informative to illustrate the analysis under two different scenarios—with and without the debt service of the new library. 

List of Capital Investment Items to Consider in Accommodating New Development

  • Streets, roads and sidewalks
  • Street Lighting
  • Street and road repairs
  • Traffic signals
  • Parking lots
  • Parking meters
  • City halls, courthouses
  • Libraries
  • Major building rehabilitation
  • Jails
  • Tennis courts
  • Playground equipment
  • Recreation buildings
  • Heavy equipment
  • Police and fire stations
  • Fire trucks
  • Police and fire radio systems
  • Police cars
  • Water and sewer treatment plants
  • Storm sewers
  • Sewer and water mains
  • Solid waste sites and equipment


EXAMPLE: Estimating Capital Costs of Development
Infrastructure Need  Cost Method of Finance

Length of Bond Issue

Interest Rate Annual Debt Payment

New Roads $800,000 Developer-paid
Library Branch $900,000 Bond 20 years 10% $105,714

C.  Total Costs

Total costs of the example development are illustrated in the table below. 

EXAMPLE: Estimating Total Costs of Development 

Town of Anywhere: Costs of Development

Costs of Development (Part A)   $45,866 
+ Debt Service (Part B) $105,714

Total Costs $164,424

  Worksheet 2.7 in the Appendix allows you to calculate the total costs associated with your proposed development. 

  • Will new homes be served by public sewer and water lines or private wells and waste water treatment facilities? 
  • What is the capital cost to provide potable water for each dwelling unit of a new development? 
  • What is the current capacity of the water and sewer system? 
  • How will these costs be recouped? 
  • Will development affect service quality, such as police and fire response time? 
  • What is the average daily consumption of water per person? 
  • What is the cost of constructing one gallon of additional capacity? 
  • Will the development require extension of sewer and water lines to the area? 
  • Who is bearing the up-front costs of extensions? 
  • What is the estimated cost to the community of providing sewer and water services? 
  • Will the development require expansion of the wastewater treatment plant or is it operating below capacity? 
  • How much capacity is left? 
  • Will the development require new roads? 
  • Who is bearing the cost of the new roads? 
  • Will the new population associated with the development generate a need for new social services, such as libraries, park space? 
  • What is the current surplus capacity as to these social services? 
  • Will the new population generate a need for any more public safety or public works vehicles?


The table below illustrates a breakdown of major revenue categories. 

EXAMPLE: Revenue Categories 

Town of Anywhere: 1999 Revenues

Source of Revenue Amount
Property Taxes $230,000
Other Taxes   100,000
Special Assessments   150,000
State Shared Revenues   484,000
Other Intergov’t Revenues   150,000
Licenses and Permits     70,000
Fines and Forfeits     43,000
Public Charges   100,000
Intergovernmental Charges     60,000
Miscellaneous   507,000

TOTAL $1,894,000

  Worksheet 2.8 provides a space for you to record the amount of revenue for similar revenue categories. 


The same procedure that was used to estimate costs is used to estimate revenues (with the exception of property tax revenue and shared revenues, discussed below). Revenues are initially apportioned to residential and non-residential using local knowledge (including allocations used in the COCS) or the same ratio of .47 to rep-resent the residential share. The remainder represents the non-residential share. In the following example, it is assumed that all special assessment revenue is generated by residential uses and is allocated as such. 

EXAMPLE: Estimating Residential and Non-residential Revenues

Town of Anywhere: 1999 Revenues vs. Non-residential Revenues
Source of Revenue Amount Residential Non-Residential
Property Taxes $230,000 see step 8 see step 8
Other Taxes   100,000    47,000   53,000
Special Assessments   150,000  150,000           0
State Shared Revenues   484,000 see step 8 see step 8
Other Intergov’t Revenues   150,000    70,500   79,500
Licenses and Permits     70,000    32,900   37,100
Fines and Forfeits     43,000    21,210   22,790
Public Charges   100,000    47,000   53,000
Intergovernmental Charges     60,000    28,200   31,800
Miscellaneous   507,000  235,000  265,000

TOTAL $1,894,000 $742,200 $667,800

  Worksheet 2.9 allows you to record residential and non-residential revenues for your community. 

To derive the per-capita and per-worker estimates, divide residentially-associated revenues by total population to derive a per-capita estimate of revenues. Divide non-residential revenues by local employees for a per employee estimate of nonresidential revenues.

EXAMPLE: Estimating Per Capita and Per Worker Revenues 

Town of Anywhere: 1999 Per-Capita and Per-Worker Revenues

Source of Revenue Per Capita Per-Worker
Property Taxes see step 8 see step 8
Other Taxes   8.55 15.14
Special Assessments 27.27        0
State Shared Revenues see step 8 see step 8
Other Intergov’t Revenue 12.82 22.71
Licenses/Permits   5.98 10.60
Fines/Forfeits   3.67   6.51
Public Charges   8.55 15.14
Intergov’t Charges   5.13   9.09
Miscellaneous 43.33 75.71

TOTAL Revenues $115.29 $155.97

  Worksheet 2.10 in the Appendix allows you to estimate per worker and per capita revenues. 


A. Property Taxes 

To estimate revenues associated with development from the property tax, multiply the expected assessed value of the development by the current local tax rate (expressed as a decimal).

EXAMPLE: Property Tax Revenue 

Town of Anywhere: Property Tax Revenue

a) Property Value of Development $8,000,000
b) Local Tax Rate        .00383

 Total Property Taxes (a x b) $30,640

  See Worksheet 2.11 to estimate property tax revenue. 

B. Other Revenues 

Calculate the residentially-induced costs associated with development by multiplying the per capita estimate of revenue by the population increase. Calculate the nonresidential costs associated with development by multiplying the per employee estimate of revenue by the employment increase associated with the development. 

  See Worksheet 2.12 to calculate other revenues.

C. Shared Revenues 

There are three major parts of shared revenues: a per capita payment, a special utility payment and an aidable revenues payment. Of these, the aidable revenues payment is the largest. In addition, the minimum/maximum adjustment, if applicable, either caps year-to-year growth or limits an annual loss. 

Per Capita Each town, city and village receives a payment based on its population. 

Special Utility A payment based on the value of a company’s production plant and general structures, because light, heat and power companies are exempt form local property taxes. 

Aidable Revenues The payment is based on two factors—the comparative wealth of the community as measured by the per capita value of taxable property and the extent of its local financial effort. 

Value: Under the first part of the formula, the state establishes a standardized value (SV) of taxable property per capita. The amount is determined annually by the Department of Revenue. If the local value per person is less than the state-established amount, the state makes up the difference. A municipality with a per capita value higher than the standardized one receives no payment under this part of the formula. 
Local Purpose Revenue: These consist of the 3-year average of several receipts, including the local property tax levy, special assessments, licenses and permits and the aidable revenue payments.
Payment: The payment is based on the above 2 factors. As examples of the formula, if a municipality’s equalized value per person were 50% of the standardized value, the aidable revenues entitlement would be 50% of its local purpose revenues; if the local value were 75% of the standardized value, then the payment would be 25% of local purpose revenues. 

Minimum/Maximum The minimum guarantee payment provides that a municipality will receive a shared revenue payment equal to at least 95% of the prior years payment. State law also provides a ceiling on the annual growth in shared revenues. To fund the minimum adjustment, the maximum varies each year. 

Payment The total payment consists of the sum of the per capita, utility and aidable revenues payment and any min/max adjustments. 

  • Will the development change the mix of revenue sources? 
  • Will the development require bonding for infrastructure improvements or other capital investment? 
  • How will the development affect bonding authority?


EXAMPLE: Estimating Shared Revenues 
Actual Payment Payment w/ Development

Current Population            5,500           5,748
Per Capita Payment Amount                 27                27
Prior Year Population            5,500            5,500
Aidable Revenues Entitlement        500,000        594,275
Standard Valuation          48,796          48,796
Mfg. Adjusted Value (MAV)   60,000,000   68,000,000
Municipal Standard Value (MSV) 268,376,712 268,376,712
MAV/MSV      0.223566      0.253375
1- MAV/MSV        0.77643        0.74662
Aidable Revenue Payment        388,217        443,700
Per Capita Payment Amount        149,225        155,954
Utility Payment                   0                   0
Payment before Min-Max Adjustment        537,442        599,654
Initial for Min-Max        537,442        599,654
Base for Min-Max        470,223        470,223
Ceiling        483,796        483,796
Floor        446,712        446,712
Excess        –53,646      –115,858
Deficiency                   0                   0
Min-Max Adjustment        –53,646      –115,858

Shared Revenue Payment        483,796        483,796

The above example illustrates the steps to estimating shared revenues associated with the development. The actual payment for the current year is compared to an estimate of the payment with the development in place. To derive the estimate, the formula is run using the new population and property value associated with the development. The two payment amounts are compared and the difference represents the shared revenue amount associated with the development. In this example, there is no change in the shared revenue payment due to the development. The community is already at its maximum payment level, due to the maximum adjustment factor, and the development does not change this situation. 

  Worksheet 2.13 provided in the Appendix allows you to calculate shared revenues for your proposed development. 

D. Total Revenues 

The table below illustrates total revenues associated with the example development. 

EXAMPLE: Estimating Total Revenues 

Town of Anywhere: Total Revenues Associated with Development

Property Tax Revenue $30,640.00
Shared Revenue 0.00
Residential Revenues
  a. Per-Capita revenues $115.29
  b. Population of Development 248
  Total (a x b)  $28,592.15
Non-Residential Revenues
  c. Per-Employee Revenues $155.97
  d. Workers in Development 70
  Total (c x d) $10,918.00

TOTAL $70,150.15

  Worksheet 2.14 is provided in the Appendix to help you to estimate total revenues associated with your development.   


EXAMPLE: Estimating Fiscal Impacts of Development 

Town of Anywhere:
Fiscal Impacts of Development with debt without debt

Total Costs of Development $164,424.72 $58,710.72
Total Revenues Generated  $70,150.15 $70,150.15

Net Fiscal Impact $(94,274.57) $11,439.43

  Worksheet 2.15 is provided to help you estimate the fiscal impacts of your development. 

Special Considerations

Although this model results in an estimate of net fiscal impact on your balance sheet, the more important goal of the model is to raise awareness as to the many questions surrounding how development impacts your community’s fiscal structure. The final estimate is a rough measure of how this particular development may affect your revenues, expenditures and tax base. This process should also prompt you to think about broad issues relating to fiscal impacts—issues of excess and deficient capacity and whether residents are truly “new” or simply relocating from within the community. These are the important questions to address, as they may change the outcome of the final estimate of impact. 

The major limitation of examining a single development is that the cumulative impacts of development are lost. The incremental impact of each development when added together may be significant to your community. This development and all future developments should be examined in the context of all other development in your community. One approach to thinking about cumulative effects is in terms of threshold conditions, beyond which change would be unacceptable to your community. Thresholds are more commonly used in terms of environmental impacts; how-ever, they can also be identified for a community’s fiscal structure. You may decide that any tax increase beyond a certain percent per year is unacceptable or that the existing capacity in your water system must last for ten more years. Such threshold values are identified through a community decision-making process. The complexity of cumulative effects requires a more rigorous analysis than can be illustrated in a workbook format and often complex quantitative analysis is difficult to understand, but nonetheless, the cumulative effects of development cannot be ignored. 

School District Costs and Revenues Associated with Development 

Development often has the most significant impacts on the school district or districts serving the development. The following discussion will assist in determining the operating revenues and costs associated with the new development and the impact on the capacity of the schools in the district. The cost estimates are based on a per-capita method and these methods will provide you with a very general estimate of how the development will impact the school district. State aids are estimated using the equalization aid formula. 


The most important factor affecting the fiscal impact of new development on local schools is the number of school-age children residing in the new development. The table below illustrates an example to assist in estimating new school age children. 

EXAMPLE: Estimating School Age Children 
Type of 
of Units
School Age
Children per Unit
New School
Age Children

Single Family 50 1 50
Apartment Complex 50 1 50

Total 100

  Worksheet 2.16 will allow you to calculate, based on the number and type of residential units, the number of school age children you can expect to reside in the development. 


Operating costs can be calculated based upon the current operating budget of the school district. Another source for both operating costs and revenues is Basic Facts, published by the Wisconsin Department of Public Instruction. It provides fiscal data for every school district in the state. Using local budget data or the DPI data, calculate the per-pupil cost of operations and apply this to the projected number of new students. 

FIVE STEPS to Estimating Costs, Revenues and Impacts on School District Capacity 

  1. Estimate School age children associated with the development. 
  2. Estimate operating costs associated with the development. 
  3. Estimate operating revenues generated by the development. 
  4. Compare costs and revenues to derive a net fiscal impact. 
  5. Examine current capacity and determine need for new capacity. 



Total Costs / current number of pupils = cost per pupil
 Cost per pupil * new school age children = Total costs associated with the development

  See Worksheet 2.17


School districts derive their revenue through four major sources: state aid, the property tax, federal aid and other local nonproperty tax revenues (interest earnings). Property tax revenue and state aids represent most of a school district’s revenue. Based on 1996–97 estimates, school districts received about 93 percent of their revenue through state aid and the property tax. For purposes of this analysis, these two major revenue sources are the focus of the fiscal impact analysis for the school district. 

A. Property Tax Revenue 

Property tax revenues generated by the development are calculated using the school mill rate and the estimated value of the development. The formula is shown below. 

  See Worksheet 2.18


School Mill Rate * Value of Development

B.  State Aids 

State aids are calculated by simulating the state general aid formula as if the development were currently in place in the community. The state aid formula is simulated as if the development were in place by including the increased property value associated with the development and the increased number of students generated by the development. The difference between actual state aids and those estimated represents the impact of the development on state aids. 

State aids may decrease with new development. This is due to the high value associated with the development. The formula for allocating state aids, also known as the equalization formula, distributes aid on the basis of relative fiscal capacity of each school district as measured by the district’s per pupil property valuation. There is an inverse relationship between equalization aids and property valuations; those districts with low, per pupil property valuations receive a larger share of their costs through the equalization formula than districts with high, per pupil property valuations. So, holding all else equal, if property values in the school district increase, state aids will decrease. 

  Worksheet 2.19 in the Appendix illustrates the state equalization formula and will allow you to calculate state aids for the school district with and without development, similar to the method used to estimate shared revenues. 


The net fiscal impact on the school district is calculated by comparing the per capita costs to the sum of state aids and property tax revenue generated by the development. 

  Worksheet 2.20 allows you to calculate the net fiscal impact of the development on the school district.


This section requires an analysis of capacity at the local schools in the district. If current facilities are able to absorb the projected number of students associated with the new development, no new capacity is needed. If not, necessary capital improvements in terms of additions to schools or new schools must be deter-mined by the school district and the community. The table below illustrates how to determine whether or not the development will generate a need for new capacity. 

EXAMPLE: Estimating Capacity 

Grade Level

Current Capacity  2400
Current Enrollment  2350
Projected Enrollment (w. new development)    100

Excess/Deficient Capacity   (50)

  Worksheet 2.21 allows you to analyze capacity in your district.