9/9 fri 4:15 | pay-to-play: paying for growth
DESCRIPTION
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.TRANSCRIPT
Robert Burchell, PhD, PPCenter for Urban Policy Research, Rutgers
University
Tyson Smith, Esq., AICPWhite & Smith | Planning and Law Group2
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Presentation Overview• Background (TS)• The Recovery: US & Florida (BB)• The New Normal (BB)• Infrastructure Need (BB)• Revenue Response (BB)• Why it Matters (TS)• Conclusion
• 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
Back
grou
ndMunicipal Trends ‘67 to ‘07
Back
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ndFlorida Impact Fee Collections, ‘93 to ‘09
State of Florida, Department of Financial Services
Back
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ndFlorida Impact Fee Collections, ‘00 to ‘09
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009$0
$200
$400
$600
$800
$1,000
$1,200
County, Municipality, and Special District Impact Fees 2000-2009 (In Millions)
County
Municipal-ity
Special District
Year
State of Florida, Department of Financial Services
Back
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ndSpecial Assessment Collections, ‘93 to ‘09
State of Florida, Department of Financial Services
Back
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ndAd valorem Collections, ‘93 to ‘09
State of Florida, Department of Financial Services
Back
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ndCapital Expenditures, ‘93 to ‘09
State of Florida, Department of Financial Services
Florida APA Pay to Play
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Nationwide and Florida Trends (I)
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.
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.
Florida APA Pay to Play
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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% increaseNo 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.)
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% increaseNo 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.)
Nationwide and Florida Trends (II)
Nationwide and Florida Trends (II)
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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
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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.
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Florida APA Pay to Play
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.
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Florida APA Pay to Play
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; $7.5 trillion – 20 years infrastructure need costs. 14
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U.S. Infrastructure Need Totals
in Billions ($)
U.S. Infrastructure Need Totals
in Billions ($)1-Year 20-YearNeed Spent Gap Need Spent
GapAviation $ 17.4 $ 9.3 $ 8.1
$ 348 $ 186 $ 162Bridges $ 17.0 $ 10.5 $ 6.5 $
340 $ 210 $ 130Dams $ 2.5 $ 1.0 $ 1.5 $
50 $ 20 $ 30Drinking Water $ 15.0 $ 6.9 $ 8.1
$ 300 $ 138 $ 161Energy $ 15.0 $ 7.1 $ 7.9 $
300 $ 142 $ 158Levees $ 5.0 $ 1.1 $ 3.9 $
100 $ 22 $ 78Parks/Recreation $ 17.0 $ 7.4 $ 9.6
$ 340 $ 148 $ 192Rail $ 12.6 $ 10.3 $ 2.3
$ 252 $ 206 $ 46Roads $170.0 $ 66.0 $104.0
$3,400 $1,320 $2,080Sewer/Wastewater $ 36.0 $ 22.4 $ 13.6
$ 720 $ 448 $ 272Solid Waste $ 15.4 $ 6.7 $ 8.7
$ 308 $ 134 $ 174Transit $ 53.0 $ 15.0 $ 38.0
$1,060 $ 300 $ 760TOTAL $375.9 $163.7 $212.2$7,518 $3,274 $4,243 ($0.375 trillion) ($7.5 trillion)
Florida APA Pay to Play
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Infrastructure Need in Context GROWTH IN THE UNITED STATES,
2010-2030(Woods and Poole-2010)
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 APA Pay to PlayFlorida’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.
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Florida APA Pay to PlayU.S. Versus Florida Infra. Ratings
U.S. Florida New Jersey
Drinking Water D- C+ C
Wastewater D- B- D
Energy D+ D+ C+
Bridges C B+ D
Highways D- C D
Transit D C+ -
Ports - C C
Aviation D - D
Schools D D+ -
Stormwater Mgmt. - C- -
Flood Control - C -
Coastal Areas - C+ -
Overall D C C-
Total Need (5 year $) $2.2 Trillion $0.4 Trillion $0.2 Trillion 18
Florida APA Pay to Play
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Revenues to be RaisedRevenues to be RaisedAviation – 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.
Florida APA Pay to Play
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Revenues to be RaisedRevenues 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.
• The Foreclosure Problem• The Federal Response• Capital Funding and Placement
Decisions shift to Private• Implications for Middle Class• Fiscal Reality
Why
It M
atter
sWhy It Matters…
The Foreclosure Problem (Jul 11)
Why
It M
atter
s
from Realtytrac.com
The Foreclosure Problem (Jul 11)
Why
It M
atter
s
from Realtytrac.com
Florida Trend (Aug 10 to Jul 11)
Why
It M
atter
s
from Realtytrac.com
National Trend (Aug 10 to Jul 11)
Why
It M
atter
s
from Realtytrac.com
• Partially-built out Subdivisions• Empty Houses:
– Tax Revenues– Upkeep/Deterioration/trash removal– Abandoned Pools– Code Enforcement Costs Up
• Crime• Squatting or Reuse
Foreclosure FalloutW
hy It
Matt
ers
• 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
Pasco’s Registry Program
Why
It M
atter
s
• Administration’s I-Bank• American Infrastructure Finance
Authority:– Kerry (D-Mass)– Warner (D-WVa)– Graham (R-SC)– Hutchinson (R-TX)
Why
It M
atter
sFederal Response
• $30 Billion Start-Up (6 years)• Loans (& Guarantees) and Grants• Transportation (Road and Rail)• Under U.S. DOT• Local Gov’t Eligible
Administration’s I-Bank (until last night?)
Why
It M
atter
s
• $10 Billion Start-Up• Loans & Guarantees (No Grants)• Transportation, Water, & Energy• New Federal Entity • Local Gov’t Eligible• Extends Alt. Min. Tax Exemption
BUILD ActW
hy It
Matt
ers
Trends in Tuition/Fees at Public, 4-year Colleges
Trends in College Pricing 2010
Why
It M
atter
s
Trends in State Appropriations
Trends in College Pricing 2010
Why
It M
atter
s
• Jefferson County, Alabama• Harrisburg, Pennsylvania• Vallejo, California• Central Falls, Rhode Island
Chapter 9?W
hy It
Matt
ers
• 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:Co
nclu
sion
• 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
What to Expect (cont’d):Co
nclu
sion
“Funding the New Normal”October 26-28
growthandinfrastructure.org
We go to San Diego…