Cost of Services

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Growth Studies: 

Growth Studies American Farmland Trust; Cost of Services Studies Shows the balance of tax revenues versus cost of delivering services for different land use types Tischler & Associates; Fiscal Impact Analysis of Three Land Use Scenarios Shows the relative cost of services for three different areas of Georgetown, KY

AFT Cost of Services Study: 

AFT Cost of Services Study PROTECTING FARMLAND MAKES TAX SENSE FOR LEXINGTON-FAYETTE COUNTY RESIDENTS Study Shows Farms and Open Land Cost Communities Less than Residential Development September 23, 1999, Lexington, KY - Lexington-Fayette County’s farms and open lands contribute more in tax revenues than they receive in public services, according to a study released today by the American Farmland Trust. The study also found that revenues from residential development fall far short of supporting the cost of services demanded by such land use. The study, which looked at the costs and revenues associated with different land uses, found that for every $1.00 in revenues that residential development generated, $1.64 was required in public services. For every $1.00 generated by farms and open land, only $.93 was required for associated services. Because the majority of Lexington-Fayette County’s funding comes from an employee withholding tax, commercial/industrial uses generated the most revenues of any land use: For every dollar raised, the county only spent $.22 in public services. ”Farmland and open space generate substantial revenues, yet require far less services than those needed to support residential development,” said Melissa Adams, the economic research specialist who conducted the study. “Farmland also supports the many farm businesses that sustain the local and regional economy. It is clear from this study that protecting farms and open land in Lexington-Fayette County is a worthwhile fiscal investment in the community.” The Land and Nature Trust of the Bluegrass and the Bluegrass Conservancy retained the national non-profit American Farmland Trust to conduct the study in order to give residents current facts on land use to help inform planning decisions. The study was made possible in part by a grant from the Abercrombie Foundation. “There is this myth out there that residential development lowers property taxes,” said Margaret Graves, executive director of The Bluegrass Conservancy, a regional land trust committed to promoting the conservation of Bluegrass farmland. “In reality, residential development costs taxpayers money, when compared to keeping land in farming. The local and regional economy will suffer greatly if the county’s existing farmland is converted to residential development.” “Farmland and open space contribute to the quality of life in Lexington-Fayette County through their environmental, aesthetic, cultural, and economic values,” said Dag Ryen, president of The Land and Nature Trust of the Bluegrass, a non-profit organization that has been following land use issues in Central Kentucky for 20 years. “By taking a managed approach to growth, we can balance the county’s tax base, while maintaining its natural resources and rural character. The results of this study point to a need to protect this important resource that has served the county for generations.” “Lexington-Fayette County ranked first in Kentucky for agricultural sales in 1997, with 4.5 percent of the state’s receipts, totaling $139.3 million,” said Frank Penn, owner of Pennbrook Farm and a member of the county’s Farm Bureau and Green Space Commission. “When you add up all of the secondary economic impacts of farming, such as farm-related industries, jobs, and tourism, you see that it is really the backbone of the county’s economy.” “The horse industry and the tourism that it generates, contribute millions of dollars and thousands of jobs to the local economy each year,” said David Switzer, executive director of the Kentucky Thoroughbred Association. “Not only do we value our Thoroughbreds, but we’re known around the world as the heart of horse country.” The county’s other agricultural products include, tobacco, corn, soybeans, hay and beef cattle. Pioneered by AFT in 1986, COCS studies have been performed in more than 63 communities nationwide. While every community is different, COCS studies show that for every dollar of revenue generated by residential development, the median cost is $1.15 to provide services to this land use. By comparison, the median cost of farm, forest and open land is $.27 per dollar of revenue, and the median cost of commercial/industrial development is $.34.

AFT Cost of Services: 

AFT Cost of Services COCS studies help address three claims that are commonly made in rural or suburban communities facing growth pressures: 1. Open lands—including productive farms and forests—are an interim land use that should be developed to their “highest and best use.” 2. Agricultural land gets an unfair tax break when it is assessed at its current use value for farming or ranching instead of at its potential use value for residential or commercial development. 3. Residential development will lower property taxes by increasing the tax base. While it is true that an acre of land with a new house generates more total revenue than an acre of hay or corn, this tells us little about a community’s bottom line. In areas where agriculture or forestry are major industries, it is especially important to consider the real property tax contribution of privately owned working lands. Working and other open lands may generate less revenue than residential, commercial or industrial properties, but they require little public infrastructure and few services.

AFT Cost of Services: 

AFT Cost of Services Lexington-Fayette Ratio of Revenues to Cost of service delivery Residential including farm houses 1 : 1.64 For every dollar of tax revenue, $1.64 cost to deliver services Commercial & Industrial 1 : 0.22 For every dollar of tax revenue, $0.22 cost to deliver services Working and open land 1 : 0.93 For every dollar of tax revenue, $0.93 cost to deliver services American Farmland Trust, 1999

Tischler Report: 

Tischler Report

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