development impact fees
i'm doing an impact analysis on a ~$24M development project and unsure how to allocate about $1.5M of development impact fees. the funds are intended to be spent on various, unspecified capital projects (in keeping with CA law) but there's no particular timeline for their use. am i best off keeping them external to the model or simply putting them into a non-residential construction category whose impacts are in the out years. thoughts?
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Hi Alex! Our typically recommendation for Capital Expenditures is to make mention of its existence. This is to let the audience know that there was $1.5M of Cap Ex for this project. As that is a considerable value that is noteworthy. However with Cap Ex when looking at the impact most of this will be leaked out of the region. As most of its production is likely to be outside of the study area. This is due to the specialized skill needed to produce this equipment. Because of the nature of the Model if you don't know how or when these funds will be spent, it's best to address them as a set-aside, and not to Model them at this time. With the caveat that they could be examined later when/if more is known about the use of those funds. Typically, unless you Study Area is large, the production of the items purchased as FFE occur outside your Study Area in whole or in part and thus these tend to have low impacts past the initial expenditures. Typically when production is not local, likewise much transport and sometimes wholesale may also not be local to your defined geography. It may be helpful to note this as well for your audience. Thanks!
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