Pflugerville, Texas
Explaining the fiscal value of diversifying housing & commercial development patterns
Project objective
Build alignment within Council, expand the conversation around density and mixed-use development, plan for future infrastructure obligations, and maximize value capture of key development sites in a fast growth suburb.
1.
FROM APPRAISED VALUE TO REVENUE PER ACRE
The first step we always start with is to explain the difference between appraised value and revenue per acre. Here is what the difference looks like for Pflugerville:
Appraised value
This map shows the appraised value of each lot in Pflugerville. Bigger lots tend to have a higher value while smaller lots have a lower value.
Revenue per acre
When you take the property tax levy revenue for a property and divide it by the area of the parcel, you get the actual amount of revenue the city collects per acre of land. This map shows the revenue per acre for each parcel.
2.
FACTORING IN COSTS
Then, we factor in the city’s budgeted costs along with projected service costs and unfunded infrastructure liabilities to get a clearer picture of their long-term fiscal situation.
Revenue minus current budget
When cities budget, they set costs to match the revenue they expect to come in that year. When we allocate the costs down to the parcel level though, we can see which parcels are revenue positive, and which ones cost more to serve than they generate in revenue. We present this information two ways: a net revenue map that shows the net (revenue minus costs) for the parcels, and an ROI (return on investment) map, which shows the amount the city gets back in revenue for each dollar it spends on services. This map shows the net revenue per acre for levy revenue and budgeted costs for Pflugerville.
Unfunded liabilities →
Pflugerville’s future street replacement costs were approximately $632M. Unlike older cities that are behind on maintenance, Pflugerville has the opportunity to proactively plan for these replacement costs in future years. For our modeling, we spread these costs out over 30 years. When we distributed the $21M annual funding gap across the parcels to show the projected cost (or what we sometimes call the “true cost”) to serve development, some parcels and patterns continued to operate at a gain even with the additional costs. These are reflected in green on the map. Note how many of the parcels that were green in the previous map turn red.
This process and these two maps together were used to help city leaders think about how the development they build today impacts the future fiscal health of the city.
Now, here’s what this looks like with each step layered on top of one another:
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4.
ANALYSIS
Once the modeling is done, we can explore how different development patterns perform and use this data to inform land use, zoning, infrastructure and investment decisions.
Revenue/acre by lot size and structural value (residential and commercial)
When Verdunity was brought in, council was debating if, where and how they should support multifamily and small lot (more dense) development. Charts like those shown here help us communicate why revenue per acre is a more useful metric for cities to think about, and how this number changes for different lot and structural value combinations. For both residential and commercial properties, we see the same trend: value per acre is highest for the smallest properties (left of chart), and trends down as the property size goes up.
This information was used to communicate the value of more dense, small scale development, especially in the context of maximizing the return on taxpayer investment. The bigger the lot, the lower this return is. To close the city’s funding gap and increase taxpayer ROI, we encouraged the city to prioritize mixed-use development in key corridors and amend development policies to encourage more of the high ROI patterns and less of the patterns that are losing money for the city and its taxpayers.
Performance by land use code and zoning districts
Data from the models was also reviewed to assess how different land use and zoning districts perform with the current budget and with projected/unfunded service costs and infrastructure liabilities. In this chart, we showed how different land uses performed for the current budget (labeled as Scenario A in the chart) and with projected costs (Scenario B).
Building footprint
Maximizing the building footprint on a site is a key factor in development productivity. Large parking lots (for commercial sites) and yards (for residential) are important considerations, but the more of a property we allocate to non-revenue generating use, the more it reduces the value of the property. We can improve this by reducing the amount of parking and open space and/or requiring multi-story buildings. Graphics like this one were used to illustrate how different combinations of lot size, building design and parking layout contributed to fiscal performance.
4.
APPLICATION
Once we have a baseline of how current development patterns are performing and what the city’s funding gap is, we can explore potential scenarios and solutions to see how they impact the city’s fiscal health.
Planning for future street replacement costs
Future street replacement costs are one of the largest unfunded liabilities in cities, especially in young, growing communities like Pflugerville. Charts like this one help city leaders understand the quantity of costs and when they’re likely to come due. In Pflugerville, this led to discussions about ways they could proactively save money for future needs while also supporting new development that is more balanced between revenue generation and costs.
5.
KEY OUTCOMES
Exploring the math, maps and money helps communities make more informed decisions and build transparency and trust with residents and developers.
“The critical takeaway from our work is that a city can help close its funding gap through adjusting its development pattern, potentially without raising taxes. Our objective is to provide information and new perspective so that city leaders can align their development and service model with what citizens are willing and able to pay for - now and in the future.”
A half day workshop with City Council retreat helped build alignment among council members and staff around what fiscal sustainability and transparency means and how development decisions impact Pflugerville’s fiscal health and future.
Momentum from the retreat was followed with development of the fiscal baseline and analysis for Pflugerville’s development pattern. During the process, we encouraged the city to amend development policies to encourage more of the high ROI patterns and focus development in key corridors around high density, mixed-use centers that can generate enough surplus to subsidize the less productive residential development in the city.
The information is also being used to inform updates to the city’s comprehensive plan, zoning ordinance and infrastructure design standards.
Client contact information
Trey Fletcher, Assistant City Manager
treyf@pflugervilletx.gov