UBC Theses and Dissertations

UBC Theses Logo

UBC Theses and Dissertations

The fiscal implications of land use decisions : an analysis of three municipal expenditure-revenue analyses… Schlagintweit, Elizabeth 1987

Your browser doesn't seem to have a PDF viewer, please download the PDF to view this item.

Item Metadata

Download

Media
831-UBC_1987_A8 S34.pdf [ 6.36MB ]
Metadata
JSON: 831-1.0302335.json
JSON-LD: 831-1.0302335-ld.json
RDF/XML (Pretty): 831-1.0302335-rdf.xml
RDF/JSON: 831-1.0302335-rdf.json
Turtle: 831-1.0302335-turtle.txt
N-Triples: 831-1.0302335-rdf-ntriples.txt
Original Record: 831-1.0302335-source.json
Full Text
831-1.0302335-fulltext.txt
Citation
831-1.0302335.ris

Full Text

THE FISCAL IMPLICATIONS OF LAND USE DECISIONS: AN ANALYSIS OF THREE MUNICIPAL EXPENDITURE-REVENUE ANALYSES UNDERTAKEN IN GREATER VANCOUVER By ELIZABETH SCHLAGINTWEIT B.A. The U n i v e r s i t y of N a t a l , South A f r i c a , 1982 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF MASTER OF ARTS i n THE FACULTY OF GRADUATE STUDIES School of Community and Regional P l a n n i n g We accept t h i s t h e s i s as conforming to the r e q u i r e d s t a n d a r d The U n i v e r s i t y of B r i t i s h Columbia October, 1987 <S E l i z a b e t h S c h l a g i n t w e i t In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department of C o , ^ ^ A*>Q ftg^ltfOAl ^LA>&VaVlS>Ct The University of British Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 Date (S/IQK7 •  DE-6(3/81) A B S T R A C T T h i s t h e s i s e x p l o r e s t h e t h e o r y and p r a c t i c e o f i n c o r p o r a t i n g a f i n a n c i a l p e r s p e c t i v e i n t o l a n d use p l a n n i n g . A l t h o u g h i t i s w e l l known t h a t l a n d use c h a n g e s have d e f i n i t e c o n s e q u e n c e s on m u n i c i p a l f i n a n c e s , t h e r e i s l i t t l e e m p i r i c a l i n f o r m a t i o n t o g u i d e m u n i c i p a l p l a n n e r s i n a n a l y z i n g and u n d e r s t a n d i n g t h e f i s c a l c o n s e q u e n c e s o f t h e i r d e c i s i o n s . I n t h i s t h e s i s t h e r o l e o f m u n i c i p a l e x p e n d i t u r e -r e v e n u e a n a l y s i s i n l a n d use p l a n n i n g i s a n a l y z e d . M u n i c i p a l e x p e n d i t u r e - r e v e n u e a n a l y s i s r e p r e s e n t s a m e t h o d o l o g y u s e d t o q u a n t i f y t h e n e t c o s t t o a m u n i c i p a l g overnment o f p r o v i d i n g s e r v i c e s t o s p e c i f i e d l a n d use c a t e g o r i e s . The n a t u r e and h i s t o r i c a l d e v e l o p m e n t o f m u n i c i p a l e x p e n d i t u r e - r e v e n u e a n a l y s i s i s d e s c r i b e d , and c r i t e r i a f o r t h e e v a l u a t i o n o f s u c h a n a l y s e s a r e d e v e l o p e d . On t h e b a s i s o f t h e s e c r i t e r i a , t h r e e m u n i c i p a l e x p e n d i t u r e - r e v e n u e s t u d i e s , u n d e r t a k e n i n m e t r o p o l i t a n V a n c o u v e r , a r e a n a l y z e d and e v a l u a t e d i n o r d e r t o h i g h l i g h t c u r r e n t f i e l d p r a c t i c e and key i s s u e s i n t h i s a r e a o f a n a l y s i s . The e v a l u a t i o n o f t h e t h r e e c a s e s t u d i e s i l l u s t r a t e s t h a t d e s p i t e c o n s i d e r a b l e e f f o r t s on b e h a l f o f t h e a n a l y s t s i n v o l v e d , t h e r e s u l t s o f t h e s t u d i e s have l i t t l e d i r e c t a p p l i c a t i o n i n p l a n n i n g and p o l i c y f o r m u l a t i o n . A l l t h r e e s t u d i e s were f o u n d t o have i i i shortcomings which p l a c e i n q u e s t i o n the r e l i a b i l i t y and v a l i d i t y of the r e s u l t s . D e s p i t e these shortcomings, i t i s concluded t h a t the process of u n d e r t a k i n g expenditure-revenue analyses i s v a l u a b l e i n t h a t i t p r o v i d e s an e x p l i c i t framework i n which p l a n n e r s and other m u n i c i p a l o f f i c a l s can c o n s i d e r the f i n a n c i a l i m p l i c a t i o n s of l a n d use d e c i s i o n s . On the b a s i s of the a n a l y s i s and e v a l u a t i o n undertaken i n t h i s t h e s i s f i v e recommendations are developed which w i l l help a n a l y s t s to improve the r e l i a b i l i t y of both the process and r e s u l t s of f u t u r e expenditure-revenue a n a l y s e s . T h i s , i n t u r n , w i l l i n c r e a s e the p o t e n t i a l of the d i r e c t a p p l i c a t i o n of these s t u d i e s ' r e s u l t s i n p l a n n i n g and p o l i c y f o r m u l a t i o n . The recommendations made i n the c o n c l u d i n g chapter of t h i s t h e s i s are l i s t e d below: (1 ) M u n i c i p a l expenditure-revenue a n a l y s e s should be undertaken under o b j e c t i v e circumstances; ( 2 ) The r e s o u r c e s a v a i l a b l e to m u n i c i p a l e x p e n d i t u r e -revenue s t u d i e s should a l l o w a thorough and i n -depth a n a l y s i s of the expenditure and revenue a s s o c i a t e d with the s p e c i f i e d l a n d use categories;' ( 3 ) The study methodology should combine the range of approaches d i s c u s s e d i n Chapter 2 of t h i s t h e s i s ; (4) M u n i c i p a l expenditure-revenue analyses should be computerized; and I V (5) A l l aspects of an expenditure-revenue analyses should be c l e a r l y documented. V TABLE OF CONTENTS Page ABSTRACT i i TABLE OF CONTENTS v LIST OF TABLES v i i LIST OF FIGURES v i i i CHAPTER 1 INTRODUCTION 1 1 .1 Thesis Focus 1 1.2 Research Objectives 3 1.3 Municipal Expenditure-Revenue Analysis 4 1.4 Application of Municipal Expenditure-Revenue Analysis 10 1.5 Rationale For Undertaking t h i s Study 12 1.6 Methods U t i l i z e d i n t h i s Research 13 CHAPTER 2 THE DEVELOPMENT AND APPLICATION OF MUNICIPAL EXPENDITURE-REVENUE ANALYSIS 16 2.1 Development of Municipal Expenditure-Revenue Analysis 16 2.2 The State of the Art 18 2.3 Case Study Methodologies 25 2.3.1 The City of North Vancouver: Cost-Revenue Study 25 2.3.2 The City of Vancouver: Expenditure-Revenue Analysis 30 2.3.3 The City of New Westminster: Cost-Revenue Study 41 CHAPTER 3 CRITERIA FOR THE EVALUATION OF MUNICIPAL EXPENDITURE-REVENUE ANALYSES 52 3.1 Methodological C r i t e r i a 54 3.1.1 A l l Calculations Involved i n the Study Study Should Be Accurate 54 3.1.2 The Study Should Consider A l l Sources of Expenditure and Revenue 55 3.1.3 A l l Municipal Departments Should Cooperate i n Undertaking a Municipal Expenditure-Revenue Analysis 57 3.1.4 The D e f i n i t i o n of the Ch a r a c t e r i s t i c s of Land Use Categories Should Be Narrow and S p e c i f i c 59 3.1.5 Assumptions and Sho r t -Cu t Methodo log ie s Used i n the Study Shou ld Be D e f e n s i b l e and C l e a r l y Documented 62 3.2 C o n t e x t u a l C r i t e r i a 65 3.2.1 The A n a l y s t I nvo l ved i n the Study Shou ld Have Noth ing to Gain or Lose From the R e s u l t s o f the Study 66 3.2.2 The R e s u l t s o f the Study Shou ld Be Used W i t h i n the Context o f the S t u d y ' s Scope, Assumptions and Methodology 67 3.2.3 The L i m i t a t i o n s o f Expend i tu re -Revenue A n a l y s i s , and o f the P a r t i c u l a r Expend i ture -Revenue Study, Shou ld Be C l e a r l y Documented and P re sen ted A long w i t h the R e s u l t s 71 3.3 A p p l i c a t i o n o f the C r i t e r i a to the E v a l u a t i o n o f M u n i c i p a l Expend i ture -Revenue Ana ly se s 72 CHAPTER 4 EVALUATION OF THE THREE CASE STUDIES 75 4.1 E v a l u a t i o n o f the C i t y o f Nor th Vancouver Cost -Revenue Study 75 4.2 E v a l u a t i o n of the C i t y o f Vancouver Expend i tu re -Revenue Study 91 4.3 E v a l u a t i o n o f the C i t y o f New Westminster Cost -Revenue Study 104 CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS 119 5.1 The Ro le o f the Case S t u d i e s i n Land Use P l a n n i n g and P o l i c y F o r m u l a t i o n 119 5.2 The Ro le o f Expend i ture -Revenue A n a l y s i s i n Land Use P l ann ing and P o l i c y F o r m u l a t i o n 122 5.3 Recommendations to A n a l y s t s Unde r t ak i ng M u n i c i p a l Expend i ture -Revenue Ana l y se s 127 BIBLIOGRAPHY 1 29 v i i L I S T O F T A B L E S Page Table I R e s u l t s : C i t y of North Vancouver Cost-Revenue Study 30 Table II C i t y of Vancouver Expenditure-Revenue A n a l y s i s : D e f i n i t i o n of A l l o c a t i o n Options 37 Table I I I C i t y of Vancouver Expenditure-Revenue A n a l y s i s A l l o c a t i o n Table 39 Table IV R e s u l t s : C i t y of Vancouver E x p e n d i t u r e -Revenue A n a l y s i s 40 Table V R e s u l t s : C i t y of New Westminster Expenditure-Revenue A n a l y s i s 49 v i i i LIST OF FIGURES Page F i g u r e 1 Schematic Diagram of the C i t y of Vancouver Methodology 35 1 CHAPTER 1 1. INTRODUCTION 1.1 T h e s i s Focus T h i s t h e s i s e x p l o r e s the f i s c a l consequences of m u n i c i p a l l a n d use d e c i s i o n s on the m u n i c i p a l budget. Although i t has long been known that changes i n l a n d use impinge upon the economic system and have very d e f i n i t e consequences on m u n i c i p a l f i n a n c e s , l i t t l e more than i n t u i t i o n guides policymakers as to the f i s c a l i m p l i c a t i o n s of l a n d use d e c i s i o n s . I n d u s t r i a l and commercial l a n d uses are g e n e r a l l y c o n s i d e r e d to p r o v i d e a s u r p l u s to the m u n i c i p a l budget, wh i l e r e s i d e n t i a l l a n d use i s c o n s i d e r e d to be a net d r a i n on the m u n i c i p a l budget ( M u l l e r , 1973). There i s , however, a l a c k of e m p i r i c a l i n f o r m a t i o n and s c i e n t i f i c a n a l y s i s r e g a r d i n g m u n i c i p a l expenditure and revenue a s s o c i a t e d with d i f f e r e n t l a n d use c a t e g o r i e s . The l a c k of ac c e p t a b l e e m p i r i c a l i n f o r m a t i o n i s not a r e f l e c t i o n of l i m i t e d r e s e a r c h i n the area (Mace, 1961; B u r c h e l l and L i s t o k i n , 1978). M u n i c i p a l expenditure-revenue s t u d i e s were f i r s t used i n the 1950s, and s i n c e then there has been a steady growth i n t h e i r a p p l i c a t i o n . Despite t h i s a t t e n t i o n , l i t t l e p r o g r e s s has been made i n i d e n t i f y i n g a g e n e r a l l y a c c e p t a b l e methodology. The f i e l d awaits a comprehensive study that w i l l demonstrate the 2 f e a s i b i l i t y of a r r i v i n g at an a c c e p t a b l e methodology based on a v a l i d set of premises and assumptions. T h i s t h e s i s does not attempt to f i l l the above mentioned v o i d ; i t i s designed to p r o v i d e an e v a l u a t i o n of t h r e e s t u d i e s undertaken i n m e t r o p o l i t a n Vancouver i n l i g h t of t h i s l a c k of an a c c e p t a b l e methodology. A l l three s t u d i e s were independent of each oth e r . Each was undertaken on a l i m i t e d budget and, as a r e s u l t , l i t t l e time was spent on a s s e s s i n g and d e v e l o p i n g the most a p p r o p r i a t e methodology. The o b j e c t of t h i s t h e s i s i s to p r o v i d e a post-hoc e v a l u a t i o n of the methodology used i n each study. On the b a s i s of a set of c r i t e r i a , t h i s t h e s i s w i l l e x p l o r e the s t r e n g t h s and weaknesses of each study, and how these s t r e n g t h s and weaknesses are r e f l e c t e d i n the s t u d i e s ' r e s u l t s . I t w i l l a l s o c o n s i d e r the extent to which the r e s u l t s of each study would be u s e f u l i n l a n d use p o l i c y f o r m u l a t i o n . Based upon a d i s c u s s i o n o f the i s s u e s i n v o l v e d i n e x p e n d i t u r e -revenue a n a l y s i s , and the e v a l u a t i o n of the three case s t u d i e s , a set of recommendations w i l l a l s o be developed to guide a n a l y s t s u n d e r t a k i n g f u t u r e expenditure-revenue analyses to deal with the l a c k of e m p i r i c a l i n f o r m a t i o n r e g a r d i n g the expenditures and revenues a s s o c i a t e d with l a n d use. 3 1.2 R e s e a r c h O b j e c t i v e s Four r e s e a r c h questions are c e n t r a l to the o b j e c t i v e of t h i s t h e s i s : ( 1 ) What are the key i s s u e s i n d e v e l o p i n g an expenditure-revenue study methodology; (2) What are the common problems a s s o c i a t e d with expenditure-revenue s t u d i e s ; ( 3 ) What e f f e c t can the methodology of the study have on the r e s u l t s ; and ( 4 ) How can the i s s u e s and problems a s s o c i a t e d with expenditure-revenue a n a l y s i s best be addressed i n d e s i g n i n g a study methodology? S p e c i f i c a l l y , t h i s t h e s i s w i l l : ( 1 ) d e s c r i b e the nature of m u n i c i p a l e x p e n d i t u r e -revenue a n a l y s i s ; (2) o u t l i n e the h i s t o r i c a l development of m u n i c i p a l expenditure-revenue a n a l y s i s ; ( 3 ) d e s c r i b e the methodology used i n each of the three case s t u d i e s : - the C i t y of North Vancouver: Cost-Revenue A n a l y s i s - the C i t y of Vancouver: Expenditure-Revenue A n a l y s i s - the C i t y of New Westminster: Cost-Revenue A n a l y s i s ; (4) deve lop c r i t e r i a through which the t h r e e case s t u d i e s can be e v a l u a t e d ; (5) e v a l u a t e the t h r e e case s t u d i e s ; (6) d i s c u s s the i m p l i c a t i o n s o f the case s t u d i e s , and e x p e n d i t u r e - r e v e n u e a n a l y s i s i n g e n e r a l , on l o c a l l a n d use p l a n n i n g and p o l i c y f o r m u l a t i o n ; and (7) deve lop a se t o f recommendations to gu ide a n a l y s t s u n d e r t a k i n g f u t u r e e x p e n d i t u r e - r e v e n u e s t u d i e s . 1.3 Municipal Expenditure-Revenue Analysis A l though e x p e n d i t u r e - r e v e n u e s t u d i e s date back to the 1930s they f i r s t i n c o r p o r a t e d the m u n i c i p a l p o i n t -o f - v i e w i n the 1940s. At t h i s t ime almost a l l p u b l i c invo lvement w i th l a n d use came at the m u n i c i p a l l e v e l ; c o n s e q u e n t l y , m u n i c i p a l f i n a n c e s r e c e i v e d the g r e a t e s t impact from l a n d use changes. Whi le b e a r i n g the f i s c a l consequences o f l a n d use changes, m u n i c i p a l i t i e s were l i m i t e d i n t h e i r a b i l i t i e s to respond a c c o r d i n g l y through revenue g e n e r a t i n g measures (Howel l and Stamm, 1979). T h i s brought about an i n c r e a s e d awareness and i n t e r e s t i n the m u n i c i p a l f i s c a l i m p l i c a t i o n s o f a l t e r n a t i v e l a n d use p l a n s , major r e z o n i n g s , growth and development. Today, the re i s a growing p u b l i c con sc i ou sne s s tha t i t i s p o s s i b l e , and i ndeed n e c e s s a r y , to e s t ima te the f i s c a l i m p l i c a t i o n s o f l a n d use 5 d e c i s i o n s ( B u r c h e l l and L i s t o k i n , 1978); c i t i z e n s and p o l i c y makers have begun to demand tha t the f i s c a l consequences o f l a n d use d e c i s i o n s "be c o n s i d e r e d a l ong w i th economic, s o c i a l and p o l i t i c a l consequences. The f u n c t i o n a l b a s i s o f m u n i c i p a l e x p e n d i t u r e -revenue a n a l y s i s , i n terms of l a n d use , i s t h a t m u n i c i p a l f i n a n c e problems stem from an imbalance between e x p e n d i t u r e and revenue i n d i f f e r e n t l a n d use c a t e g o r i e s ( C i t y o f New Westminster , 1974). Land uses which r e q u i r e a net expend i tu re i npu t are more numerous than l a n d uses tha t make a net revenue c o n t r i b u t i o n . The f i r s t s tep i n r e a c h i n g a s o l u t i o n to t h i s prob lem i s to i d e n t i f y which l a n d uses i n v o l v e a net e x p e n d i t u r e i n p u t , and which i n v o l v e a net revenue c o n t r i b u t i o n . The t echn ique used to undertake t h i s f i r s t s tep i s termed m u n i c i p a l e x p e n d i t u r e - r e v e n u e a n a l y s i s ; t h i s t echn ique i n v o l v e s s e p a r a t i n g l a n d uses i n t o s i m i l a r types and then e s t i m a t i n g the net e x p e n d i t u r e r e q u i r e d , or the net revenue p r o v i d e d , by each l a n d use t y p e . S u p e r f i c i a l l y , the a l l o c a t i o n of i tems o f e x p e n d i t u r e and revenue to s p e c i f i e d l a n d use c a t e g o r i e s may seem to be a r e l a t i v e l y uncomp l i c a ted p r o c e s s . In many c a s e s , a l l o c a t i o n p rocedures are obv iou s . For example, e x p e n d i t u r e on the water supp ly system c o u l d be a l l o c a t e d by the percentage of t o t a l water consumption accounted f o r by d i f f e r e n t l a n d use c a t e g o r i e s . In the case of o ther i tems of expend i tu re and revenue, the 6 a l l o c a t i o n p r ocess i s c o n c e p t u a l l y and t e c h n i c a l l y d i f f i c u l t . C e n t r a l to the d i f f i c u l t y i n a c c u r a t e l y a l l o c a t i n g expenditure and revenue to l a n d use c a t e g o r i e s , i s the nature of many of the s e r v i c e s p r o v i d e d by l o c a l governments. A l a r g e p r o p o r t i o n of l o c a l government s e r v i c e s c o n s t i t u t e s e r v i c e s to people, which o f t e n cannot be l o g i c a l l y charged to s p e c i f i c p i e c e s of p r o p e r t y . T h i s problem i s most obvious i n con n e c t i o n with p u b l i c e d u c a t i o n expenditure; w h i l e t h i s s e r v i c e i s e s s e n t i a l to the w e l f a r e and p r o s p e r i t y of the whole community (and beyond), many ex p e n d i t u r e -revenue s t u d i e s a s s i g n e d u c a t i o n expenditures e x c l u s i v e l y to r e s i d e n t i a l l a n d use. T h i s a l l o c a t i o n procedure i g n o r e s t h a t b u s i n e s s e s c o u l d not f u n c t i o n without a l i t e r a t e , t r a i n e d labour f o r c e . The problem of a l l o c a t i n g expenditure on education among l a n d use c a t e g o r i e s h i g h l i g h t s one of the most d i f f i c u l t c o nceptual and t e c h n i c a l i s s u e s f a c i n g a n a l y s t s u n d e r t a k i n g expenditure-revenue a n a l y s i s . M u n i c i p a l expenditure-revenue a n a l y s i s can be d e f i n e d as a q u a n t i f i c a t i o n of the net cos t to a mu n i c i p a l government of p r o v i d i n g s e r v i c e s to a s p e c i f i c a r ea (adapted from Mace, 1961). Some elements of t h i s d e f i n i t i o n should be f u r t h e r d e f i n e d : E x p e n d i t u r e : comprises both o p e r a t i n g expenses and c a p i t a l o u t l a y s ; 7 Revenue: compr i ses a l l monies the m u n i c i p a l government r e c e i v e s from e x t e r n a l s o u r c e s , which i n c l u d e l o c a l c o n t r i b u t i o n s , t a x e s , charges and m i s c e l l a n e o u s revenue; Net Cost : the d i f f e r e n c e between government e x p e n d i t u r e which may be s p e c i f i c a l l y i d e n t i f i e d w i th a p a r t i c u l a r a r e a , and the revenue tha t w i l l come to the government u n i t from the a r e a or by v i r t u e o f the c h a r a c t e r i s t i c s o f the a r e a . Area: a whole governmenta l u n i t , or some p a r t o f i t . The geograph ic c o n f i n e s o f a s tudy c o u l d be a c i t y , a c a tego ry of l a n d use , a ne ighborhood or a s i n g l e p a r c e l o f l a n d . M u n i c i p a l e x p e n d i t u r e - r e v e n u e ana l y se s c o n s i d e r the f o l l o w i n g c a t e g o r i e s o f expend i tu re and revenue: Direct Expenditure and Revenue: Only the d i r e c t or p r imary c o s t s i n c u r r e d and the immediate revenue gene ra ted are c o n s i d e r e d . D i r e c t c o s t s i n c l u d e , f o r example, s a l a r i e s p a i d to f i r e p r o t e c t i o n crews, or c a p i t a l and maintenance c o s t s f o r water and sewer l i n e s s e r v i c i n g an a r e a . D i r e c t or p r imary revenues are compr i sed o f p r o p e r t y t a x e s , s p e c i a l assessments and i n te r gove rnmenta l t r a n s f e r s . I n d i r e c t or secondary e x p e n d i t u r e and revenue ( f o r example, tax l o s s e s from d i s p l a c e d r e s i d e n t s and f i r m s ) are not i n c l u d e d due to the near i m p o s s i b i l i t y o f a c c u r a t e l y measur ing them, 8 and t h e p o t e n t i a l f o r d o u b l e - c o u n t i n g when d i r e c t and i n d i r e c t e x p e n d i t u r e and r e v e n u e a r e v i e w e d s i m u l t a n e o u s l y ( B u r c h e l l and L i s t o k i n , 1978); and P u b l i c E x p e n d i t u r e a nd Revenue: These s t u d i e s do n o t c o n s i d e r t h e p r i v a t e c o s t s o f p u b l i c a c t i o n . F o r example, when c o n s i d e r i n g t h e e x p e n d i t u r e s p a s s e d on t o d e v e l o p e r s o r consumers t h r o u g h l o c a l l a n d u s e r e g u l a t i o n s , o n l y t h e p u b l i c e x p e n d i t u r e a s s o c i a t e d w i t h d e v e l o p i n g and a d m i n i s t e r i n g t h e s e r e g u l a t i o n s w o u l d be c o n s i d e r e d . I t i s i m p o r t a n t t o d i f f e r e n t i a t e between e x p e n d i t u r e - r e v e n u e a n a l y s i s and f i s c a l i m p a c t a n a l y s i s . F i s c a l i m p a c t a n a l y s i s i s a dynamic t e c h n i q u e ; i t i n v o l v e s t h e p r o j e c t i o n o f e x p e n d i t u r e and r e v e n u e a s s o c i a t e d w i t h r e s i d e n t i a l o r n o n - r e s i d e n t i a l g r o w t h t o t h e l o c a l j u r i s d i c t i o n ( s ) i n w h i c h t h i s g r o w t h i s t a k i n g p l a c e ( B u r c h e l l , L i s t o k i n and D o l p h i n , 1985). E x p e n d i t u r e - r e v e n u e a n a l y s i s c o m p r i s e s a s u b - s e t o f f i s c a l i m p a c t a n a l y s i s ; i t i n v o l v e s t h e f i r s t s t e p o f f i s c a l i m p a c t a n a l y s i s , i n w h i c h e x p e n d i t u r e and r e v e n u e a r e a l l o c a t e d t o d i f f e r e n t l a n d use c a t e g o r i e s . F i s c a l i m p a c t a n a l y s i s g o e s one s t e p f u r t h e r ; i t t a k e s t h e r e s u l t s g e n e r a t e d by t h e s t a t i c e x p e n d i t u r e - r e v e n u e a n a l y s i s and p r o j e c t s them i n t o t h e f u t u r e , t h e r e b y , a s s e s s i n g t h e im p a c t o f changes i n l a n d use on t h e m u n i c i p a l b u d g e t . E x p e n d i t u r e - r e v e n u e a n a l y s i s 9 addresses the q u e s t i o n : what i s the e x i s t i n g r a t i o of revenue to expenditure i n s p e c i f i e d l a n d use c a t e g o r i e s ? F i s c a l impact analyses assess how these r a t i o s may change over a s p e c i f i e d time p e r i o d as a r e s u l t of c e r t a i n development, zoning or annexation a l t e r n a t i v e s . Expenditure-revenue a n a l y s i s should a l s o be d i s t i n g u i s h e d from c o s t - b e n e f i t a n a l y s i s or c o s t -e f f e c t i v e n e s s a n a l y s i s . The b a s i c d i f f e r e n c e between these s t u d i e s i s i n terms of the scope of the a n a l y s i s . C o s t - b e n e f i t a n a l y s i s i s the broadest of the t h r e e t e c h n i q u e s . I t compares both the t a n g i b l e and i n t a n g i b l e ( 1 ) c o s t s and b e n e f i t s of a p a r t i c u l a r p r o j e c t or program. Costs and b e n e f i t s may i n c l u d e p u b l i c expenditure and revenue as w e l l as i n d i v i d u a l , environmental and community g a i n s and l o s s e s . C o s t - e f f e c t i v e n e s s a n a l y s i s c o n s i d e r s only the economic c o s t s of c o s t - b e n e f i t a n a l y s i s and i s concerned with the l e a s t c o s t approach of r e a l i z i n g a g i v e n obj e c t i v e . Expenditure-revenue a n a l y s i s focuses e x c l u s i v e l y on p u b l i c expenditures and revenues a s s o c i a t e d with s p e c i f i c forms of l a n d use. The r e s u l t of such an a n a l y s i s i s a statement of net governmental s u r p l u s or d e f i c i t expressed p u r e l y i n f i n a n c i a l terms. I t i s important to emphasize the l i m i t e d focus of these s t u d i e s . Expenditure-revenue a n a l y s i s c o n s i d e r s only the f i s c a l aspects of m u n i c i p a l l a n d use. Economic, 1 0 s o c i a l , environmental and p o l i t i c a l a spects of the l a n d use c o n f i g u r a t i o n are ignored. The emphasis of t h i s t h e s i s on expenditure-revenue analyses i s not intended to imply t h a t f i s c a l impacts are more important than other types of impacts. At times they may be, and at other times they can be accorded a low p r i o r i t y . Yet, at no time can a community s a f e l y d i s r e g a r d e n t i r e l y impacts on the l o c a l t r e a s u r y and, t h e r e f o r e , on the l o c a l government's a b i l i t y to p r o v i d e s e r v i c e s ( M u l l e r , 1973). 1.4 A p p l i c a t i o n of Municipal Expenditure-Revenue Analysis Although expenditure-revenue s t u d i e s are most o f t e n commissioned d u r i n g p e r i o d s of m u n i c i p a l f i s c a l s t r e s s ( 2 ) , such analyses p r o v i d e important i n f o r m a t i o n i r r e s p e c t i v e of the s t a t e of the m u n i c i p a l budget. Assuming t h a t the methods and techniques can be improved to the p o i n t of p r o d u c i n g r e l i a b l e r e s u l t s , e x p e n d i t u r e -revenue analyses would o f f e r the policymaker a means of understanding and e v a l u a t i n g the e x i s t i n g f i s c a l s t r u c t u r e as i t r e l a t e s to l a n d use. Expenditure revenue s t u d i e s have been found to be u s e f u l as a b a s i s from which to understand and e v a l u a t e (a) the e x i s t i n g r a t i o of revenue to expenditure i n s p e c i f i e d l a n d use c a t e g o r i e s ; and (b) tax and u t i l i t y r a t e s t r u c t u r e s . The a p p l i c a t i o n of m u n i c i p a l 11 expenditure-revenue analysis i s l i m i t e d to helping analysts to understand and evaluate the above. The r e s u l t s of expenditure revenue analyses should be recognized for what they represent: an assessment of the r a t i o of revenue to expenditure of s p e c i f i e d land use categories at the time the analysis was undertaken. Where these r e s u l t s are to be used i n a p r e d i c t i v e capacity the expenditure-revenue analysis should be expanded into a f i s c a l impact analysis. Expenditure-revenue analyses became increasingly popular i n the 1970s and 1980s (Muller, 1973; Burchell, L i s t o k i n and Dolphin, 1985). In the early 1970s the world awoke from the dream of unlimited growth. The average annual growth rates of the economies of the developed world dropped alarmingly (Peters, 1980). Although a l l l e v e l s of government began to experience s t r a i n s on t h e i r budgets, the c r i s i s was f e l t most strongly at the l o c a l l e v e l s of government, which frequently lacked the a b i l i t y (economically or l e g a l l y ) to increase taxes (Howell and Stamm, 1979). As there i s l i t t l e evidence to suggest that i n the foreseeable future the demand for municipal services w i l l decrease (Bish, 1984), and there i s great resistance to measures to increase municipal revenue, i t i s l i k e l y that m u n i c i p a l i t i e s w i l l come under greater pressure to understand and recognize the f i s c a l consequences of land use decisions. 1 2 1.5 Rationale For Undertaking t h i s Study There are three u n d e r l y i n g reasons f o r un d e r t a k i n g t h i s study. The f i r s t r e l a t e s to the s e r i o u s n e s s of the f i s c a l consequences of i n a p p r o p r i a t e ( 3 ) l a n d use d e c i s i o n s . D e s p i t e b e i n g only one of many f a c t o r s to be co n s i d e r e d , f i s c a l consequences p l a y a major r o l e i n the success or f a i l u r e of l a n d use d e c i s i o n s . Where a mu n i c i p a l budget i s a l r e a d y s t r a i n e d , i t i s of p a r t i c u l a r importance t h a t the f i s c a l i m p l i c a t i o n s of la n d use d e c i s i o n s be examined c a r e f u l l y . C o n s i d e r a t i o n of the f i s c a l i m p l i c a t i o n s of l a n d use d e c i s i o n s are, however, a l s o important when m u n i c i p a l budgets are h e a l t h y . I n a p p r o p r i a t e tax or u t i l i t y s t r u c t u r e s w i t h i n a l a n d use category c o u l d d e s t r o y the c r e d i b i l i t y of the e n t i r e tax or r a t e system i r r e s p e c t i v e of the s t a t e of the m u n i c i p a l budget. C o n s i d e r a t i o n of the exp e n d i t u r e -revenue r e l a t i o n s h i p of a s e r v i c e , development or a l a n d use category can help to e s t a b l i s h a p u b l i c l y a c c e p t a b l e and f i n a n c i a l l y a p p r o p r i a t e f i s c a l s t r u c t u r e . The second u n d e r l y i n g reason f o r t h i s study i s the s e r i o u s n e s s of the consequences of b a s i n g l a n d use d e c i s i o n s on incomplete and i n a c c u r a t e e x p e n d i t u r e -revenue a n a l y s e s . S e r i o u s problems can a r i s e when the qu e s t i o n a b l e r e s u l t s of such analyses are i n t e r p r e t e d and used as a b a s i s f o r the f o r m u l a t i o n of l a n d use p o l i c y . As mentioned p r e v i o u s l y , no widely a c c e p t a b l e , methodology has yet been e s t a b l i s h e d . Most s t u d i e s are based on a set o f premises and assumptions tha t cannot be shown to be r e a l i s t i c , and i n most, i f not a l l i n s t a n c e s , a re m i s l e a d i n g (Barnes and Raymond, 1955). Both Mace (1961) and B u r c h e l l and L i s t o k i n (1978) suggest t h a t e x p e n d i t u r e - r e v e n u e s t u d i e s have p r o v i d e d one more b a s i s f o r the r a t i o n a l i z a t i o n o f d e s i r e d cour ses o f a c t i o n . Ana ly ses based on poor assumptions and q u e s t i o n a b l e methodo log ies have been used as " p s e u d o - s c i e n t i f i c p romot i ona l dev i s e s to make a case f o r a p r e - d e t e r m i n e d course o f a c t i o n " (Mace, 1961). These s t u d i e s have undoubted ly p roved e f f e c t i v e as "propaganda d e v i c e s " whether or not t h i s was the e x p l i c i t reason f o r u n d e r t a k i n g each s tudy . F i n a l l y , t h i s s tudy w i l l p r o v i d e a f o u n d a t i o n f o r f u r t h e r r e s e a r c h , bo th i n terms o f the s p e c i f i c case s t u d i e s a n a l y s e d , and more g e n e r a l l y i n the f i e l d o f e x p e n d i t u r e - r e v e n u e a n a l y s i s . 1.6 Methods U t i l i z e d In Undertaking t h i s Research The methods used i n c a r r y i n g out t h i s s tudy are as f o l l o w s : - l i t e r a t u r e rev iew to d e f i n e e x p e n d i t u r e - r e v e n u e a n a l y s i s , and to d e s c r i b e the development and a p p l i c a t i o n o f t h i s a n a l y t i c a l t o o l ; - i n - d e p t h d e s c r i p t i o n o f the t h r e e case s t u d i e s , i n terms of the methodology, premises and assumptions used; 1 4 - development of a set of c r i t e r i a by which the case s t u d i e s can be ev a l u a t e d ; - e v a l u a t i o n of the three case s t u d i e s ; and - d i s c u s s i o n of the case s t u d i e s ' i m p l i c a t i o n s f o r l a n d use p l a n n i n g and p o l i c y f o r m u l a t i o n , and p r e s e n t a t i o n o f recommendations to a n a l y s t s u n d e r t a k i n g expenditure-revenue s t u d i e s . F O O T N O T E S I n t a n g i b l e c o s t s are c o s t s which have no obvious market p r i c e . The m u n i c i p a l f i s c a l dilemma of i n c r e a s i n g expenditure r e s p o n s i b i l i t i e s on a stagnant or d e c r e a s i n g tax base has been termed " f i s c a l s t r e s s " . The causes of f i s c a l s t r e s s are complex and i n v o l v e an i n t e r a c t i o n between s o c i a l , economic and s t r u c t u r a l f o r c e s . Land use d e c i s i o n s which are i n a p p r o p r i a t e with r e s p e c t to the " h e a l t h " of the m u n i c i p a l budget. 1 6 CHAPTER 2 2.0 THE DEVELOPMENT AND APPLICATION OF MUNICIPAL EXPENDITURE-REVENUE ANALYSIS 2.1 Development of Expenditure-Revenue Analysis D e s p i t e slow p r o g r e s s i n improving the methods and techniques to a p o i n t of wide p r a c t i c a l a p p l i c a b i l i t y , i n t e r e s t i n expenditure-revenue a n a l y s i s has not waned. I f s u b s t a n t i a l l y improved, the p o t e n t i a l of these s t u d i e s would be f a r r e a c h i n g ; they would equip m u n i c i p a l p l a n n e r s , f i n a n c e o f f i c e r s and managers with a means of understanding and e v a l u a t i n g the e x i s t i n g f i s c a l s t r u c t u r e and would p r o v i d e a b a s i s f o r e v a l u a t i n g the f i s c a l consequences of a wide range of p r o p o s a l s . Such s t u d i e s would p r o v i d e a y a r d s t i c k f o r r a t i n g p r o p o s a l s ' e q u i t y i n terms of t h e i r d o l l a r - a n d -cents i m p l i c a t i o n s , and would y i e l d a b a s i s f o r informed d e c i s i o n making. T h i s p o t e n t i a l has kept i n t e r e s t i n the f i e l d o f expenditure-revenue a n a l y s i s a l i v e . The development of methodologies to determine the f i n a n c i a l i m p l i c a t i o n s of m u n i c i p a l p o l i c y d e c i s i o n s are not p a r t i c u l a r to the years of f i n a n c i a l h ardship f o l l o w i n g the 1960s. C l o s e l y r e l a t e d work, i n response to the dominant i s s u e of the time, has been done s i n c e the 1920s. In the 1930s slum c o s t s were s t u d i e d to p r o v i d e a f i n a n c i a l argument f o r slum c l e a r a n c e and the p r o v i s i o n of p u b l i c housing. These s t u d i e s were 1 7 under taken by o f f i c i a l s w i th s o c i o l o g y or s o c i a l work backgrounds who at tempted to show tha t slum c l e a r a n c e would b e n e f i t the m u n i c i p a l i t y f i n a n c i a l l y (Mace, 1961). Nav in (1934) c l a ims tha t these s t u d i e s were ab le to accomp l i sh what one hundred yea r s o f p l e a d i n g on s o c i a l and mora l grounds had f a i l e d to a c h i e v e . In the l a t e 1940s and e a r l y 1950s m u n i c i p a l governments began to r e a l i z e the importance o f , and the need f o r , such s t u d i e s from a m u n i c i p a l p e r s p e c t i v e . As m u n i c i p a l governments were f a c e d w i t h the suburban boom, r a p i d growth and government r e o r g a n i z a t i o n , e x p e n d i t u r e -revenue s t u d i e s were i n i t i a t e d i n order to e s t a b l i s h a b a s i s from which the f i s c a l i m p l i c a t i o n s o f these changes c o u l d be p r e d i c t e d ( 1 ) (Barnes and Raymond, 1955). Most s t u d i e s undertaken d u r i n g t h i s p e r i o d r e s u l t e d from a d e s i r e to i d e n t i f y the proper ba l ance of l a n d uses to b o l s t e r the e x i s t i n g p r o p e r t y tax bases o f sma l l s a t e l l i t e c i t i e s i n l a r g e m e t r o p o l i t a n a r e a s . The c o n c l u s i o n o f t e n i n h e r e n t i n these s t u d i e s was tha t development above a c e r t a i n va lue was ab le to "pay i t s own way", w h i l e development o f lower v a l u e would be a l i a b i l i t y to the m u n i c i p a l i t y . The emphasis o f most of these s t u d i e s was not so much on f i n d i n g the "break-even p o i n t " , but on the need f o r a b a l a n c e d l a n d use p a t t e r n tha t would i n c l u d e h i gh va lue uses to compensate f o r the co s t o f low v a l u e ( u s u a l l y r e s i d e n t i a l ) uses (Barnes and Raymond, 1955 ) . 1 8 In the 1960s, e x p e n d i t u r e - r e v e n u e a n a l y s i s was l a r g e l y used i n c o n n e c t i o n w i th urban renewal ( C l a r k , 1962; F e i n b e r g , 1964; Weicher , 1972). At t h i s t ime the scope o f the s t u d i e s was o f t e n broadened to c o s t - b e n e f i t a n a l y s i s ( L i t c h f i e l d , 1966; Mao, 1966; L i t c h f i e l d and Chapman, 1969) w i th f i n a n c i a l e x p e n d i t u r e s and revenues as a s i n g l e element o f the o v e r a l l c o s t s and b e n e f i t s i n v o l v e d . In the l a t e 1970s and the 1980s, i n response to the c o n d i t i o n o f r i s i n g m u n i c i p a l e x p e n d i t u r e r e s p o n s i b i l i t i e s d e s p i t e a s h r i n k i n g tax base , r e s e a r c h r e t u r n e d to the focus o f s t u d i e s done i n the 1950s. Once aga in e x p e n d i t u r e - r e v e n u e s t u d i e s were under taken to determine the combinat ion of l a n d uses tha t was n e c e s s a r y to p r o v i d e an adequate p r o p e r t y tax base ( G a r r i s o n , 1971; Chambers, 1972; Booze, A l l e n and Hami l ton I nc . , 1973; S t e i n , 1976). T h i s i s the i m p l i c i t or e x p l i c i t f ocus o f each of the e x p e n d i t u r e - r e v e n u e s t u d i e s a n a l y z e d i n t h i s t h e s i s . 2 . 2 The State of the Art E a r l y e x p e n d i t u r e - r e v e n u e ana l y se s were undertaken i n response to the burden o f w e l f a r e c o s t s on l o c a l , p r o v i n c i a l and f e d e r a l governments. The c o s t s o f w e l f a r e s e r v i c e s were ana l y sed i n d e t a i l from r e c o r d s and were a s s i gned l a r g e l y to the slum a r e a s . S c i e n t i f i c v a l i d i t y was not u s u a l l y c o n s i d e r e d i n the s t u d i e s , as 1 9 the goa l was to produce a set o f f i g u r e s to make a s p e c i f i c case (Mace, 1963).With the i n c r e a s i n g use of e x p e n d i t u r e - r e v e n u e ana l y se s i n the d e t e r m i n a t i o n of p u b l i c p o l i c y , a more s c i e n t i f i c a l l y a c c e p t a b l e methodology was demanded. A l though s i g n i f i c a n t advances have been made i n the l a s t h a l f c e n t u r y , t h i s f i e l d s t i l l awa i t s a w i d e l y a c c e p t a b l e methodology. B u r c h e l l , L i s t o k i n and D o l p h i n (1985) a n a l y s e d 14-0 f i s c a l impact s t u d i e s undertaken between 1970 and 1976, and c o n c l u d e d tha t the q u a l i t y o f the m a j o r i t y o f s t u d i e s was poo r . Twenty pe r cen t o f the s t u d i e s were incomp le te or were c o n c e p t u a l l y or t e c h n i c a l l y wrong, and i n h a l f o f the s t u d i e s , the p r e s i d i n g l o c a l o f f i c i a l had no gauge on the s t u d y ' s a c c u r a c y . S i nce e x p e n d i t u r e - r e v e n u e a n a l y s i s r e p r e s e n t s the f i r s t s tep o f f i s c a l impact a n a l y s i s , i t i s l i k e l y t h a t a l a r g e p r o p o r t i o n o f e x p e n d i t u r e - r e v e n u e s t u d i e s are a l s o i ncomp le te and c o n c e p t u a l l y or t e c h n i c a l l y wrong. In v iew o f t h i s assessment o f the f i e l d p r a c t i c e the re i s a p r e s s i n g need f o r s t a n d a r d i z e d methods w i t h e x p l i c i t assumptions and p r e c i s e d e f i n i t i o n s . Over t ime t h r e e b a s i c approaches to e x p e n d i t u r e -revenue a n a l y s i s have emerged, which can be used e i t h e r s i n g l y or i n comb ina t i on . These approaches are seldom used i n t h e i r " p u r e " form; they are u s u a l l y changed and molded to f i t the s p e c i f i c s tudy c o n t e x t . 2 0 The f i r s t approach, which i s low i n co s t and most commonly u sed , i s to a l l o c a t e expend i tu re and revenue of i n d i v i d u a l "budget i tems ac ro s s areas or l a n d uses on the b a s i s o f c e r t a i n f a c t o r s which have a w e l l d e f i n e d importance i n m u n i c i p a l f i n a n c e , such as p r o p e r t y v a l u e s , a r e a , number o f persons or d w e l l i n g u n i t s . T h i s r e p r e s e n t s a p r o c e d u r a l s h o r t - c u t which was f i r s t used by e a r l y slum cos t a n a l y s t s . An example of t h i s approach i s p r e s e n t e d below. M i s c e l l a n e o u s revenue i n the C i t y o f Nor th Vancouver ($2515.00) was a l l o c a t e d to l a n d use c a t e g o r i e s on the b a s i s o f t o t a l a s se s sed l a n d and improvement va lue i n each l a n d use c a t e g o r y . The r a t i o o f r e s i d e n t i a l to commercia l to i n d u s t r i a l a s se s sed l a n d and improvement va lue was 66 :24 :9 . M i s c e l l a n e o u s revenue was, t h e r e f o r e , a l l o c a t e d to each l a n d use ca tego ry u s i n g t h i s r a t i o , r e s u l t i n g i n the f o l l o w i n g d o l l a r a l l o c a t i o n : T h i s approach i s u s e f u l and a p p l i c a b l e where i t can be s a f e l y assumed tha t the d e f i n e d r a t i o r e f l e c t s the a c t u a l e x p e n d i t u r e or revenue breakdown a s s o c i a t e d w i th a s e r v i c e . For example, i f i t can be assumed tha t e x p e n d i t u r e on f i r e p r o t e c t i o n i s a s s o c i a t e d w i th the v a l u e o f a s se s sed l and and improvements, i t would be a c c e p t a b l e to a l l o c a t e the expend i tu re by the r a t i o o f v a l u e o f l a n d and improvements w i t h i n each l a n d use c a t e g o r y . However, i t i s not always l o g i c a l or p o s s i b l e to d e f i n e a r a t i o tha t w i l l r e f l e c t a c t u a l expend i tu re s R e s i d e n t i a l Commercial I n d u s t r i a l $1685.05 $ 603.60 $ 226.35 21 or revenues ( f o r example, e d u c a t i o n ) ; i n these cases t h i s approach would not be a p p l i c a b l e . The second approach, which i s a l s o f r e q u e n t l y used, i n v o l v e s a s k i n g l o c a l o f f i c i a l s who a d m i n i s t e r each of the s e r v i c e s i n v o l v e d i n the a n a l y s i s to a l l o c a t e expenditure and/or revenue a s s o c i a t e d with the s e r v i c e between l a n d use c a t e g o r i e s . For example, the C h i e f of F i r e P r o t e c t i o n S e r v i c e s of the j u r i s d i c t i o n to be s t u d i e d would be asked to a l l o c a t e expenditure on f i r e p r o t e c t i o n among s p e c i f i e d l a n d use c a t e g o r i e s . The b a s i s on which to make the a l l o c a t i o n need not be s p e c i f i e d ; a v a r i e t y of sources may be used, depending on the time a v a i l a b l e to the o f f i c i a l . Examples of sources i n c l u d e : knowledge and experience; or a sample of cause of f i r e s t a t i s t i c s . Success i n u s i n g the judgement of l o c a l o f f i c i a l s as a b a s i s on which to a l l o c a t e expenditure and revenue, n a t u r a l l y depends on how w e l l informed each i n d i v i d u a l i s , and on how much e f f o r t goes i n t o the a l l o c a t i o n d e c i s i o n . L o c a l o f f i c i a l s ' estimates have been shown to be i n a c c u r a t e i n t h a t they r e f l e c t s h o rt term (the l a s t month) r a t h e r than long term (the l a s t y e ar) expenditures and revenues ( O f f i c e of P l a n n i n g and Research, 1978). I t i s a l s o important to c l e a r l y d e f i n e the a p p r o p r i a t e u n i t of measurement th a t should be used i n making the assessment ( d o l l a r c o s t to the m u n i c i p a l i t y versus time the department spends i n each 22 a r e a ) . When u s i n g t h i s approach i t i s o f t e n u s e f u l to conduct s e n s i t i v i t y analyses to t e s t how s e n s i t i v e o f f i c i a l s ' e stimates are to v a r y i n g s e t s of assumptions. ( I f t h i s approach i s used i n cases where data to make the breakdown does e x i s t , but i t s use would be too time consuming, samples of the data should be examined i n order to assess whether the o f f i c i a l s ' e stimates correspond with estimates made from sample r e c o r d s . ) The t h i r d approach i s more time consuming and l e s s f r e q u e n t l y used. Budgetary techniques are c a l l e d upon to measure a c t u a l expenditure and revenue t h a t can be a s s o c i a t e d w i t h each l a n d use category. The p r e c i s e amount t h a t i s a t t r i b u t a b l e to a g i v e n a r e a or l a n d use i s d e l i n e a t e d from the t o t a l expenditure and revenue a s s o c i a t e d with the p r o v i s i o n of a p a r t i c u l a r s e r v i c e . T h i s i s more e a s i l y accomplished when c o n s i d e r i n g revenue, as revenue i s o f t e n i n t r i c a t e l y t i e d with l a n d use ( f o r example, p r o p e r t y t a x ) , and revenue a u d i t t r a i l s are u s u a l l y reasonably c l e a r . T h i s approach i s o f t e n time consuming and convoluted, however, when c o n s i d e r i n g expenditure; items of expenditure are o f t e n d i f f i c u l t to t i e d i r e c t l y to l a n d use. In a d d i t i o n , s e r v i c e r e c o r d s and accounting procedures are seldom set up i n a manner t h a t allows f o r easy r e t r i e v a l of i n f o r m a t i o n necessary i n making an a c c u r a t e a l l o c a t i o n of e xpenditures to l a n d use c a t e g o r i e s . 23 In the 1970s and 1980s s t a t i s t i c a l theory and computer technology were incorporated into a l l three approaches. Econometric methods(2), f i s c a l flow analysis(3), cross-sectional analysis(4) and time series analysis(5) have been used i n expenditure-revenue analysis. Computer technology and sophisticated s t a t i s t i c a l techniques do not, however, solve the problems associated with the assumptions and premises underlying the analysis. Computers are useful for th e i r "number crunching" a b i l i t y ; t h e i r speed and v e r s a t i l i t y i n t h i s area have allowed more det a i l e d analyses to be done at an acceptable cost. Many problems i n expenditure-revenue analysis, however, remain unsolved by recent innovations i n computer technology. The u t i l i t y of these sophisticated techniques and models i s also l i m i t e d by th e i r need for d e t a i l e d data, which i s often unavailable at the municipal l e v e l . The three case studies analyzed i n t h i s thesis make use of a l l three approaches. The City of New Westminster study r e l i e d t o t a l l y on the f i r s t approach, whereby a l l o c a t i o n of expenditure and revenue was made on the basis of defined factors or va r i a b l e s . The City of Vancouver study r e l i e d on the second approach. City o f f i c i a l s were asked to estimate the breakdown of items of expenditure and revenue among land use categories; th e i r estimates were, however, based on a summary of l o c a l records. The City of North Vancouver study made 24 use of a l l three approaches; where data was a v a i l a b l e , budgetary techniques were used to a l l o c a t e expenditure and revenue among l a n d use c a t e g o r i e s - Where data was not e a s i l y a v a i l a b l e , l o c a l o f f i c i a l s were asked to make an informed assessment of the breakdown. In the case of a number of items of revenue and expenditure, o f f i c i a l s f e l t they were not able to make an informed assessment of the breakdown; i n these cases, d e f i n e d v a r i a b l e s ( f o r example, assessed value of l a n d and improvements) were used as a b a s i s f o r the breakdown. A more d e t a i l e d d e s c r i p t i o n of the methodology used i n each case study i s p r e s e n t e d i n the next s u b - s e c t i o n of t h i s c hapter. In u n d e r t a k i n g expenditure-revenue a n a l y s e s a number of f a c t o r s i n f l u e n c e the c h o i c e of approach. Perhaps the most important f a c t o r s are the time and budget a v a i l a b l e . The approaches d i f f e r g r e a t l y i n t h e i r depth and breadth of coverage and, t h e r e f o r e , i n the r e s o u r c e s r e q u i r e d . As y e t , no comprehensive study e x i s t s which h i g h l i g h t s the r e l a t i o n s h i p between v a r i o u s s h o r t - c u t methods and v a l i d c o n c l u s i o n s (Barnes and Raymond, 1955). The scope of the a n a l y s i s and the use to which the study w i l l be put a l s o determine the approach which would be most a p p l i c a b l e . For example, a study t h a t i s i n i t i a t e d i n order to p r o v i d e the b a s i s f o r p u b l i c p o l i c y s h o uld adopt a d i f f e r e n t approach from t h a t of a s tudy under taken out o f a c a s u a l i n t e r e s t i n the r a t i o s o f e x p e n d i t u r e to revenue f o r d i f f e r e n t l a n d use c a t e g o r i e s . U n f o r t u n a t e l y , p r e - c o n c e i v e d o b j e c t i v e s a l s o p l a y a r o l e i n the c h o i c e o f approach (Mace, 1961; M u l l e r , 1973) Some approaches are more open to m a n i p u l a t i o n of da ta and a r e , t h e r e f o r e , a t t r a c t i v e to an a n a l y s t who wishes to produce r e s u l t s tha t support a p a r t i c u l a r p o s i t i o n . 2.3 Case Study Methodologies In t h i s s u b - s e c t i o n the methodology employed i n each case s tudy i s d e s c r i b e d i n d e t a i l and the r e s u l t s o f each case s tudy are p r e s e n t e d ( 6 ) . An a n a l y s i s o f the s t r e n g t h s and weaknesses o f each methodology, and the e f f e c t o f the methodology on each s t u d i e s r e s u l t s w i l l be under taken i n subsequent c h a p t e r s . 2.3.1 The C i t y o f North Vancouver: Cost-Revenue Study In 1984, the Department o f Development and L i c e n c i n g S e r v i c e s o f the C i t y o f North Vancouver h i r e d a p l a n n i n g c o n s u l t a n t to i n v e s t i g a t e the e x p e n d i t u r e s and revenues a s s o c i a t e d w i th r e s i d e n t i a l , commercia l and i n d u s t r i a l l a n d use . The terms of r e f e r e n c e f o r the s tudy were o u t l i n e d i n the 1984 P l ann ing Program: T h i s s tudy w i l l i n v e s t i g a t e the p u b l i c c o s t s o f v a r i o u s l a n d uses i n the m u n i c i p a l i t y . It i s a n t i c i p a t e d tha t t h i s assessment w i l l 2 6 provide a better understanding of the impacts of growth on municipal services. The study w i l l assess a number of established methods of f i s c a l impact analyses i n the l i g h t of the development pattern i n North Vancouver, and attempt to determine the costs associated with r e s i d e n t i a l , commercial and i n d u s t r i a l development i n the City, u t i l i z i n g one or a combination of methods. The most s i g n i f i c a n t constraint on the study was the amount of time ava i l a b l e ; approximately one month was spent i n researching, designing and conducting the analysis. It i s t h i s c r i t e r i o n that to a large extent shaped the methodology of the study. As a r e s u l t of the time constraint, i t was decided that the study should not attempt to assess the impacts of growth on municipal expenditures and revenues. Predictions of expenditure and revenue must be based on a set of assumptions which are time consuming to develop (requiring extensive analysis and supposition) and are d i f f i c u l t to evaluate. For these reasons the City of North Vancouver study i s a point-in-time, or s t a t i c , analysis which attempts to assess the expenditure and revenue associated with major land use categories i n the City i n 1 9 8 3 . Three land use categories were studied: r e s i d e n t i a l , commercial, and i n d u s t r i a l . The d e f i n i t i o n s of these categories were based on the B r i t i s h Columbia Assessment Authority's (B.C.A.A.) d e f i n i t i o n s . How each land use category i s defined can have a great influence on the r e s u l t s of the analysis. For example, the B.C.A.A. defines l i g h t i n d u s t r i a l 27 a c t i v i t y as a commercial, rather than as an i n d u s t r i a l land use; wherever the r a t i o of expenditure to revenue i s d i f f e r e n t for commercial and l i g h t i n d u s t r i a l land uses, the i n c l u s i o n of l i g h t i n d u s t r i a l a c t i v i t i e s i n the commercial category of land use w i l l a f f e c t both the commercial and the i n d u s t r i a l expenditure-revenue r a t i o s . Recognition of differences i n the d e f i n i t i o n of land use categories are p a r t i c u l a r l y important when re s u l t s of d i f f e r e n t studies are compared. The methodology used i n t h i s case study combined a l l three approaches discussed e a r l i e r i n t h i s chapter. Where time allowed, and the data were av a i l a b l e , budgeting techniques were used to measure the precise expenditure and revenue associated with the three land use categories. The City's annual budget provided the aggregate fig u r e s , and l o c a l records were used to a l l o c a t e the aggregate figures between land use categories. Where records were not av a i l a b l e , or their use would have been too time consuming, l o c a l o f f i c i a l s were approached to assess the proportion of expenditure and revenue that could be a l l o c a t e d to d i f f e r e n t land use categories. Whenever possible, o f f i c i a l s ' estimates were evaluated through a sample of records. Although both the budgetary and estimation approaches have drawbacks, i t was f e l t that the mix of quantitative and q u a l i t a t i v e analysis was both constructive and p r a c t i c a l . It was o r i g i n a l l y thought 2 8 that the analysis would use only the budgetary and estimation approaches; however, items of expenditure and revenue arose which could not be acceptably a l l o c a t e d by either approach. For example, no records existed by which the a l l o c a t i o n of engineering expenditure could be made to the land use categories, and the City Engineer had no basis on which to make an a l l o c a t i o n . In t h i s case, the t h i r d approach was used. Engineering expenditure and revenue were allo c a t e d by the percentage each land use category represented of the t o t a l assessed value of land and improvements(7). Although t o t a l assessed value of land and improvements was the most frequently used a l l o c a t i o n v a r i a b l e , other variables were also used when appropriate. For example, i n a l l o c a t i n g development and l i c e n c i n g service expenditure, the percentage of b u i l d i n g permit value for each land use category(8) was used. The following excerpt from the City of North Vancouver's Cost-Revenue Study summarizes the a l l o c a t i o n procedure: Rules for A l l o c a t i o n 1. Is there a l o g i c a l a l l o c a t i o n of the expenditure or revenue item? For example, expenditure on housing s t a r t s can l o g i c a l l y be allo c a t e d to r e s i d e n t i a l land use. If not 29 2. Do e a s i l y obtainable and usable ( i n terms of the time available) records exist that could f a c i l i t a t e the all o c a t i o n ? For example, the Treasury Department keeps records of l o c a l improvements which can be all o c a t e d by address to r e s i d e n t i a l , commercial or i n d u s t r i a l land use. If not 3. Ask the l o c a l o f f i c i a l i n charge of a p a r t i c u l a r service to make an estimate of s p e c i f i c expenditures and revenues that should be a l l o c a t e d to each land use category. Stress that i t i s the dolla r value to the municipality that i s of in t e r e s t , not time or the number of v i s i t s involved. If the o f f i c i a l i s unable to make the a l l o c a t i o n 4. Allocate the expenditure or revenue on the basis of an appropriate variable; for example, percentage of t o t a l assessed value of land and/or improvements, or percentage of b u i l d i n g permit value. Once a l l expenditure and revenue items were al l o c a t e d to the land use categories, t o t a l expenditure and revenue were calculated for each land use category. The net expenditure or revenue per property i n each land use category was then calculated by d i v i d i n g the net figure by the number of properties i n each land use category. F i n a l l y , the r a t i o of revenue to expenditure for each land use category was calculated by di v i d i n g revenue associated with each land use category by the expenditure associated with the land use category. The re s u l t s of the City of North Vancouver Cost-Revenue Study are presented i n Table I. 30 Expenditure and revenue associated with education were not included i n the study. In Canada p r o v i n c i a l governments have r e s p o n s i b i l i t y for the provision of education. The municipal government merely acts as an intermediary between the taxpayers and the p r o v i n c i a l government by c o l l e c t i n g education taxes and passing them on i n - f u l l to the p r o v i n c i a l government. TABLE I RESULTS: CITY OF NORTH VANCOUVER - COST-REVENUE STUDY RESIDENTIAL COMMERCIAL INDUSTRIAL REVENUE ($) Per Property ($) Percentage of Revenue EXPENDITURE ($) Per Property ($) Percentage of Expenditure NET EXPENDITURE GENERATED ($) NET REVENUE GENERATED ($) REVENUE/EXPENDITURE RATIO 11,789316 1344 60* 13,908879 1586 715. 2,119563 0.85 5,699709 7713 29* 4,700602 6361 24* 2,120722 73128 1 136 1,130876 34133 5% 999107 1,130876 1 .21 2.14 (Adapted from C i t y of North Vancouver, 1984) 2 . 3 . 2 The City of Vancouver: Expenditure-Revenue Analysis A lack of knowledge regarding the consequences of land use decisions on the municipal budget was i d e n t i f i e d by the Finance Department of the City of 31 Vancouver, i n the early 1970s. At t h i s time an attempt was made to quantify expenditures and revenues that could be all o c a t e d to s p e c i f i e d land use categories; however, few resources were dedicated to the study and, consequently, l i t t l e headway was made i n understanding the f i s c a l implications of land use decisions. In 1984 the Finance Department of the City of Vancouver again decided to undertake an expenditure-revenue analysis. Once the methodology was developed and implemented by the Finance Department, the Planning Department was drawn into the analysis i n order to provide an understanding of how d i f f e r i n g perceptions and backgrounds of those involved i n the study may influence the study's r e s u l t s . It was also hoped that a t h i r d department, the Manager's O f f i c e , might also undertake an independent analysis; however, t h i s did not occur. The motivating forces for undertaking the analysis d i f f e r e d for the departments involved. The primary objective Of the study for the Finance Department was to quantify i n t u i t i o n with respect to the expenditures and revenues associated with d i f f e r e n t land use categories in a consistent and e x p l i c i t a n a l y t i c a l framework. It was also anticipated that the study would provide an additional information base to a s s i s t i n s e t t i n g municipal tax rates (Heikkila and Kolk, 1973; He i k k i l a and Leckie, 1986). 32 The Planning Department hoped that the analysis would add a new dimension to the formulation, analysis and evaluation of land use decisions. The r e s u l t s of the analysis would help municipal o f f i c i a l s to add a f i s c a l perspective to major zoning and p o l i c y decisions. For the Manager's Office the analysis was to provide an evaluation of the c r e d i b i l i t y of the e x i s t i n g tax and u t i l i t y rate structures, which i s an important factor i n the smooth operation of the c i t y system(9). The resource requirements of t h i s methodology are large r e l a t i v e to the requirements of the other case study methodologies. However, t h i s i s l a r g e l y a r e s u l t of the number of p a r t i c i p a n t s involved i n the study, rather than a r e s u l t of increased complexity or i n e f f i c i e n c y . A large number of p a r t i c i p a n t s i s central to the q u a l i t y of a study where i n d i v i d u a l or group judgement i s r e l i e d upon i n making the a l l o c a t i o n decisions. By including a large number of p a r t i c i p a n t s i n a study, the e f f e c t of d i f f e r i n g perceptions and backgrounds on the r e s u l t s can be analyzed. The resource requirements of t h i s study would have been much greater r e l a t i v e to the other case studies had the methodology not been computerized. As with the analyis undertaken by the City of North Vancouver, no attempt was made to predict the f i s c a l implications of future changes i n the City's land use configuration. The study i s a s t a t i c analysis of the 3 3 r e l a t i o n s h i p between municipal expenditure and revenue that i s associated with d i f f e r e n t categories of land use in 1984. No attempt was made to model future r e l a t i o n s h i p s ; however, i t was anticipated that the study would provide a basis from which predictions could be made. The methodology used was very d i f f e r e n t from that used i n the analysis undertaken by the Cit y of North Vancouver. The second of the three approaches covered e a r l i e r i n t h i s chapter was used, whereby l o c a l o f f i c i a l s involved i n the everyday running of the municipality were consulted. The methodology was s l i g h t l y d i f f e r e n t from that described e a r l i e r , i n that o f f i c i a l s with generalist rather than s p e c i a l i s t backgrounds were consulted; instead of asking o f f i c i a l s intimately involved with each municipal service to formulate the a l l o c a t i o n decision, o f f i c i a l s with a broad overview of a l l municipal services were asked to make a l l o c a t i o n decisions for a l l municipal services. As a r e s u l t , the o f f i c i a l s had an extensive knowledge o f some services, but only a l i m i t e d knowledge of other municipal services. Two study groups were nominated, one from the Finance Department and one from the Planning Department (four o f f i c i a l s from each department). One in d i v i d u a l had membership i n both study groups; t h i s was by virtue of his work experience i n both departments, and because 34 he was project coordinator. His membership i n both groups helped to ensure a similar format was followed by both groups, but decreased the independence of each group's a l l o c a t i o n decisions. The study methodology was based on group consensus. Figure 1 provides a schematic overview of the consensus process. Individual p a r t i c i p a n t s f i r s t produced independent a l l o c a t i o n s based on the i r best judgement (how they went about specifying t h e i r d i s t r i b u t i o n s i s outlined l a t e r i n t h i s sub-section). The r e s u l t s (expressed i n both the al l o c a t i o n s selected and the outcome i n terms of revenue and expenditure associated with each land use category) of t h i s f i r s t stage were given to each member of the group. The f o c a l point for the consensus process was a meeting of the pa r t i c i p a n t s of each group, during which a group a l l o c a t i o n was formulated. The in d i v i d u a l a l l o c a t i o n s brought to the meeting were c a l l e d upon when h e l p f u l , but did not constrain the group i n any way. A single procedural rule was used i n spe c i f y i n g group a l l o c a t i o n decisions: complete unanimity was required before a proposed a l l o c a t i o n decision could be accepted by the group. With t h i s rule i n place, a proponent for a given a l l o c a t i o n decision had to persuade the rest of the group that the suggestion was reasonable. Each member of the group had veto power over any item under consideration, but t h i s was tempered 35 by a desire to complete the exercise ( H e i k k i l a and Leckie, 1986). FIGURE 1 Schematic Diagram of the City of Vancouver Methodology o F Finance Department P Planning Department in d i v i d u a l member of study team / \ i n d i v i d u a l a l l o c a t i o n I | group a l l o c a t i o n (Diagram adapted from H e i k k i l a and Leckie, 1986) 36 The value of t h i s group process hinges on the membership of the group. The members were chosen for the i r knowledge of how the c i t y functions. The h i e r a r c h i c a l structure of the group was also important in the group process. For example, a junior employee would be less i n c l i n e d to veto a decision of a more senior employee. A well structured group would consist of knowledgeable and experienced municipal o f f i c i a l s who have mutual respect for each other. To test the s e n s i t i v i t y of the r e s u l t s to the group membership, the finance and planning consensus a l l o c a t i o n s were compared. This i s an e s s e n t i a l element of a methodology that r e l i e s on the judgement of in d i v i d u a l s with varied backgrounds and experience. Expenditure and revenue were al l o c a t e d among four categories of land use: single family r e s i d e n t i a l ; multiple family r e s i d e n t i a l ; commercial; and i n d u s t r i a l . In addition, expenditure and revenue associated with vacant and tax exempt land were also considered. The d e f i n i t i o n of each of these categories was la r g e l y based on the B.C.A.A. d e f i n i t i o n , but was modified s l i g h t l y by the City's use code d e f i n i t i o n . To help i n specifying a l l o c a t i o n decisions i n d i v i d u a l s and groups were provided with a set of l o c a l , f i n a n c i a l and population s t a t i s t i c s broken down by land use categories (see Table I I ) . This s t a t i s t i c a l information could be used as a basis for a l l o c a t i n g 37 expenditure and revenue to land use categories. For example, the break down of improvement value, as s p e c i f i e d i n the table, could be applied to expenditure on f i r e protection, i n order to i d e n t i f y the proportion of the expenditure item that should be al l o c a t e d to each land use category. The information presented i n Table II i s , therefore, used as the basis on which a l l o c a t i o n options are s p e c i f i e d . TABLE II CITY OF VANCOUVER EXPENDITURE-REVENUE ANALYSIS DEFINITION OF ALLOCATION OPTIONS ALLOCATION OPTION DATA DATE SFR MFR COM IND VAC EX % * Total Property Values 1984 43.8 9.1 24.0 1 .4- 1 .3 20, .4 Improvement Values 1984- 33.6 14.9 26.3 2.0 - 23. .2 General Purpose Taxes 1984- 35.3 7.3 51 .1 4.0 2.3 People by Residence 1 981 71 .7 28.3 - - -People by Employment 1 981 - - 55.0 20.0 - 25. .0 Water D i s t r i b Charges 1983 44-. 5 20.5 24.9 4.4 -Business Licence D i s t r i b 1983 6.2 31 .7 58.2 3. -Note: SFR - Single Family Residential MFR - Multi Family Residential COM - Commercial IND - I n d u s t r i a l VAC - Vacant EX - Tax Exempt D i s t r i b - D i s t r i b u t i o n (Adapted from H e i k k i l a and Leckie, 1986) The a l l o c a t i o n options presented i n Table II can be used sin g l y or i n combination with one another. For example, 50$ of an expenditure item could be al l o c a t e d by improvement value i n each land use category, while the remaining 5®% could be a l l o c a t e d by general purposes taxes c o l l e c t e d from each land use category. In addition to the a l l o c a t i o n options presented i n Table II, a user s p e c i f i e d option can be used. This allows p a r t i c i p a n t s to specify a d i s t r i b u t i o n option of the i r own, that i s not based on Table II. For example, a p a r t i c i p a n t might wish to a l l o c a t e a l l of a c e r t a i n item of expenditure or revenue to one land use category. Table III i l l u s t r a t e s how the a l l o c a t i o n options presented i n Table II, as well as the user s p e c i f i e d a l l o c a t i o n option may be combined i n a l l o c a t i n g expenditure on f i r e protection to the land use categories. In t h i s example the a l l o c a t i o n as s p e c i f i e d by a combination of general purposes taxes, people by residence and people by employment i s weighted towards single family r e s i d e n t i a l and vacant land through the use of the user s p e c i f i e d option. This a l l o c a t i o n process was repeated for each item of expenditure and revenue (20 items of expenditure and 16 items of revenue i n t h i s case study) i n the municipal budget. The completed tables (both i n d i v i d u a l a l l o c a t i o n s and group consensus a l l o c a t i o n s ) were fed into a Lotus Spreadsheet Program which calculated the expenditure and revenue for each land use category on the basis of the a l l o c a t i o n decisions s p e c i f i e d i n the tables. Grand t o t a l s of expenditure and revenue for each land use category were computed, and from these, 39 TABLE III CITY OF VANCOUVER EXPENDITURE-REVENUE ANALYSIS ALLOCATION TABLE EXPENDITURE ITEM: F i r e Protection - $ 4-0 000 ALLOCATION OPTION Total Property Values General Purposes Taxes People by Residence People by Employment Water Charges D i s t r i b Business Licence D i s t r i b User S p e c i f i e d Note: SFR - Single Family Residential MFR - Multi Family Residential COM - Commercial IND - I n d u s t r i a l VAC - Vacant EX - Tax Exempt (Adapted from H e i k k i l a and Leckie, 1986) r a t i o s of revenue to expenditure were calculated. The re s u l t s of the finance and planning consensus d i s t r i b u t i o n s are presented i n Table IV. Despite differences i n the backgrounds of the finance and planning groups, there are marked s i m i l a r i t i e s between the two sets of r e s u l t s presented i n Table IV. Both showed r e s i d e n t i a l and i n d u s t r i a l properties absorbing more expenditure than they produce i n revenue. O f f s e t t i n g r e s i d e n t i a l and i n d u s t r i a l land uses are commercial properties which are shown to generate revenues 75 to 80 percent i n excess of associated expenditures. The two categories i n which there i s a s i g n i f i c a n t difference between the finance ALLOC ! SFR MFR COM IND VAC EXT * * * * * * 50* ! 35.3 7.3 51.1 4.0 2.3 25* ! 71.7 28.3 15* ! - - 55.0 20.0 - 25.2 10* 100* 99.0 1 .0 40 TABLE IV RESULTS: CITY OF VANCOUVER EXPENDITURE-REVENUE ANALYSIS FINANCE CONSENSUS EXP REV NET EXP R/E RATIO SFR 118.2 85.6 32.6 MFR 47.8 22.5 25.3 COM 66.6 120.1 (53.3) IND 21.2 13.1 8.1 VAC 0.3 4.0 (3.8) EXT 22.1 30.9 (8.7) TOT 276.3 276.3 0 0.72 0.47 1 .80 0.62 14-.76 1 .40 1 .00 PLANNING CONSENSUS EXP REV NET EXP R/E RATIO 117.6 93.6 45.0 24.4 67.9 119-3 14.0 9.6 0.5 4.2 31.2 25.1 276.3 276.3 24.0 20.6 (51.5) 4.4 (3.6) 6.1 0 Note: EXP - Expenditure REV - Revenue NET EXP - Net Expenditure R/E Ratio - Revenue - Expenditure Ratio SFR - Single Family Residential MFR - Multi Family Residential COM - Commercial IND - In d u s t r i a l VAC - Vacant EX - Tax Exempt 0.80 0.54 1 .76 0.68 7.63 0.81 1 .00 and planning r e s u l t s are: vacant and tax exempt land. The discrepancy i n vacant land i s a matter of degree to which vacant land i s a net contributor; however, with tax exempt properties finance suggests them to be net contributors, while planning found them to be net users. This divergence may be due to d i f f e r i n g perceptions of the composition of exempt properties, but also may r e f l e c t the fact that "tax exempt" i s more an accounting designation than a land use category. 41 2.3.3 The City of New Westminster: Cost-Revenue Study In 1974 the Planning Department of the C i t y of New Westminster undertook a cost-revenue study. This study d i f f e r s from the other two case studies covered i n t h i s thesis i n that i t takes the analysis a step further, into the bounds of f i s c a l impact analysis(10). Not only does the study determine the expenditure and revenue associated with four land use categories (single-family, multi-family, commercial and i n d u s t r i a l (11)), but i t goes on to apply the r e s u l t s to a number of p o l i c y a l t e r n a t i v e s . For example, the study assessed the impact of: a l t e r n a t i v e land use configurations, changes i n assessment regulations; increases i n homeowner's grants; changes i n the tax system; and changes i n r e s p o n s i b i l i t y for school costs on expenditure-revenue r a t i o s i n each land use category, and ultimately on the municipal budget. For the purpose of t h i s t h esis, only the f i r s t step of the City of New Westminster case study w i l l be analyzed; only the methodology by which expenditure and revenue were allo c a t e d to the land use categories w i l l be described, analyzed and evaluated. The study did not represent the municipality's f i r s t attempt to understand the f i s c a l implications of land use decisions. In 1962 a methodology to a l l o c a t e expenditure and revenue to land use categories had been developed by the Planning Department. The 1974 study made use of t h i s methodology. 42 The l a t e r study was i n i t i a t e d both for the value of information i t would generate, and i n an attempt to increase i n t e r e s t i n expenditure-revenue analysis. Planning department s t a f f f e l t that there was a need to know more about how land use decisions impact the municipal budget; they were also aware that further research i n the subject area was needed i n order to overcome a rel i a n c e upon unsubstantiated assumptions (City of New Westminster, 1974). I n i t i a l l y , i t was intended that the study would cover a large time scale, stretching back over a decade or more; however, as a r e s u l t of a lack of data, the study was confined to two years: 1971 and 1972. Data for these years was used to determine the costs and surpluses associated with the s p e c i f i e d land use categories. Each year was treated as an independent study; however, the same methodology and simi l a r assumptions were used i n each case. When comparing the resource requirements of t h i s methodology with that of the previous case studies' methodologies, the time involved i n applying the p o l i c y tests should be ignored, as t h i s covers areas that were not dealt with i n the previous case studies. If the time required to apply the p o l i c y tests i s ignored, the resource requirement of t h i s methodology i s less than that of the previous methodologies. 4-3 Again, the methodology used i n t h i s study i s very d i f f e r e n t from those used i n the previous case studies. This case study makes use of the f i r s t methodology discussed i n Section 2.2 of t h i s chapter, whereby a l l o c a t i o n decisions are made on the basis of c e r t a i n variables which have a well-defined importance i n municipal finance, such as population, or assessed value of land and improvements. This methodology uses a two step process i n a l l o c a t i n g expenditure and revenue to the land use categories. F i r s t , items of expenditure and revenue were al l o c a t e d to variables, and second, the variables were brought together for the s p e c i f i e d land use categories. The methodology i s described i n d e t a i l below. Step 1. A l l o c a t i o n of Budget Items to I d e n t i f i e d Variables Items of expenditure and revenue, as l i s t e d i n each year's annual budget were analysed i n d e t a i l , and on the basis of a number of assumptions about the budget item, were a l l o c a t e d to appropriate va r i a b l e s . The example below i l l u s t r a t e s how expenditure on protection services was all o c a t e d to d i f f e r e n t v a r i a b l e s , and the rationale for each a l l o c a t i o n decision. 44 Expenditure on Protection Services ($1000.00) Sub-Component of Item Variable Rationale F i r e , P o l i c e , ($940.00) Justice Protective Inspection ($20.00) Assessed Value of Improvements Assessed Value of Land and Improvements Protects a l l Improvements Protects both Land and Improvements Coroner, Ambulance, Pest Population Direct Benefit to & Animal Control($40.00) People Note: The do l l a r values used i n t h i s table are f i c t i t i o u s The components of the budget item are then broken down by the variables indicated i n the above table, which r e s u l t s i n the following d o l l a r a l l o c a t i o n s to each v a r i a b l e : Expenditure on Protection Services Variable $ Assessed Value of Improvements 940.00 Assessed Value of Land and Improvements 20.00 Population 40.00 A l l items of expenditure and revenue (17 items of expenditure and 20 items of revenue) were al l o c a t e d to appropriate variables (13 d i f f e r e n t v a r i a b l e s ) , as shown in the example above. The t o t a l expenditure and t o t a l revenue a l l o c a t e d to each variable i s then calculated. The smaller of the two t o t a l s i s subtracted from the larger t o t a l , to determine net expenditure or revenue per v a r i a b l e . The net expenditure or revenue per 45 variable i s then divided by the t o t a l variable value to produce the net expenditure or revenue per do l l a r of the var i a b l e . The example below i l l u s t r a t e s the c a l c u l a t i o n of the net revenue per doll a r of assessed value of improvements. Assessed value of improvements was used i n the a l l o c a t i o n of expenditure on protection services (as shown i n the previous two tab l e s ) , environmental health and transportation services. This variable was also used i n the a l l o c a t i o n of revenue from f i r e protection, water d i s t r i b u t i o n and e l e c t r i c i t y d i s t r i b u t i o n . The do l l a r amount al l o c a t e d to assessed value of improvements i n each case i s l i s t e d below: Assessed Value of Improvements Expenditure: Protection Services $4-90.00 * Environmental Health $280.00 Transportation Services $120.00 Total Expenditure Allocated $890.00 Revenue F i r e Protection $220.00 Water D i s t r i b u t i o n $380.00 E l e c t r i c i t y D i s t r i b u t i o n $370.00 Total Revenue Allocated $970.00 •This value i s taken from the previous table, and l i k e other values i n t h i s table, i s f i c t i t i o u s . Net Revenue Associated with Assessed Value of Improvements = $80.00 ($970.00 minus $890.00 = $80.00) Net Revenue Per Dollar of Assessed Value of Improvements = $0,016 ($80.00 divided by $5000.00 = $0,016 where $5000.00 represents t o t a l assessed value) The net revenue per dollar of assessed value improvements represents the f i n a l product of of t h i s step, 46 for t h i s p a r t i c u l a r v a r i a b l e . A simi l a r process i s undertaken for each item of expenditure and revenue, and for each v a r i a b l e . The f i n a l product of step 1 i s , therefore, a per dol l a r value (either expenditure or revenue) for each of the 13 i d e n t i f i e d v a r i a b l e s . Step 2 . C a l c u l a t i o n of Expenditure or Revenue Associated with each Land Use Category In t h i s step, the net expenditure/revenue per do l l a r of each i d e n t i f i e d variable (as ca l c u l a t e d i n Step 1) i s brought together for each land use category. Single-family r e s i d e n t i a l land use w i l l be used to i l l u s t r a t e how t h i s i s c a r r i e d out. The unit values of variables that can be r e l a t e d to single-family r e s i d e n t i a l land use are brought together. For example, assessed value of improvements, assessed value of land and improvements, population, and school population a l l r e l a t e to single-family r e s i d e n t i a l land use. The variables that do not r e l a t e to single family r e s i d e n t i a l land use are not considered; for example, assessed value of machinery. The unit values for relevant variables are m u l t i p l i e d by the value of each variable i n single-family r e s i d e n t i a l land use. Using the example already developed, the net revenue per do l l a r of the assessed value of improvements ($0,016) i s m u l t i p l i e d by the assessed value of improvements i n 47 single-family r e s i d e n t i a l land use ($1200.00), to get the revenue that should be al l o c a t e d to single-family r e s i d e n t i a l land use ($19.20). The unit value of each relevant variable i s m u l t i p l i e d by the value of that variable i n single-family r e s i d e n t i a l land use, as appears below. Assessed value of improvements: revenue - $0,016 per d o l l a r * Assessed value of single-family r e s i d e n t i a l improvements - $1200.00 Revenue a l l o c a t e d to single-family r e s i d e n t i a l land use - $19.20 Assessed value of land and improvements: revenue - $0,023 per d o l l a r Assessed value of single-family land and improvements - $2000.00 Revenue a l l o c a t e d to sing l e family r e s i d e n t i a l land use - $46.00 Population: expenditure - $0.25 per person Population i n single-family r e s i d e n t i a l land use - 250 persons Expenditure a l l o c a t e d to single-family r e s i d e n t i a l land - $62.50 School population: expenditure - $0.37 per school c h i l d School population i n single-family r e s i d e n t i a l - 70 school c h i l d r e n Expenditure a l l o c a t e d to single-family r e s i d e n t i a l land - $25.90 * This value i s taken from the previous page, and l i k e other values above i s f i c t i t i o u s . The revenue a l l o c a t e d to single-family r e s i d e n t i a l land i s then added together, as i s expenditure: Revenue = $19.20 + 46.00 = 65.20 Expenditure = $62.50 + $25-90 = $80.40 The larger amount i s subtracted from the smaller amount to get the net expenditure or revenue associated with the land use category. The r a t i o of revenue to expenditure can also be calculated. 4 8 Net expenditure i n single-family r e s i d e n t i a l land use = $15*20 ($80.40 - $65.20 = $15.20) Rev/Exp r a t i o of single-family r e s i d e n t i a l land = 0.81 ($65.20 divided by $80.40 = 0.81) The net expenditure or revenue associated with each land category, and the revenue/expenditure r a t i o associated with each land use category are calc u l a t e d i n th i s way. These values represent the end product of both Step 2 and of the City of New Westminster case study methodology. The r e s u l t s of the Cit y of New Westminster case study are presented i n Table V. These r e s u l t s represent the actual r e s u l t s of the case study, and should not be confused with the hypothetical r e s u l t s of the example used to i l l u s t r a t e the methodology used i n t h i s case study. Now that the methodologies of each study have been described i n d e t a i l and the re s u l t s of each study have been presented, attention can be turned to the evaluation of each methodology. The purpose of evaluating the studies' methodologies i s to determine the extent to which the studies' r e s u l t s are useful as a basis from which p o l i c y decisions can be made. In order to evaluate the methodologies, c r i t e r i a must f i r s t be developed through which the strengths and weaknesses of each study can be assessed. C r i t e r i a for the evaluation of the three case studies, as well as 49 TABLE V RESULTS: CITY OF NEW WESTMINSTER EXPENDITURE-REVENUE ANALYSIS LAND USE CATEGORY NET EXPENDITURE/REVENUE REV/EXP RATIO Single Family Residential 1971 ($1,4-80359) 1972 ($1,195970) 2 Year Average ($1,338170) 0.85 0.84 0.82 Multiple Family Residential 1971 ($39146) 1972 $119596 2 Year Average $40231 0.99 1 .03 1 .01 Commercial 1 971 1972 2 Year Average $1,167819 $1,341529 $1 .254675 2.65 2.72 2.69 In d u s t r i a l 1 971 1 972 2 Year Average $820677 $965987 $906832 2.45 2.56 2.51 Note: Rev/Exp Ratio - Revenue Expenditure Revenue (Adapted from C i t y of New Westminster, 1974) other expenditure-revenue analyses, are developed i n the next chapter. These c r i t e r i a are applied to the three case studies i n Chapter 4. 50 FOOTNOTES 2 3 4 5 6 7 M u n i c i p a l i t i e s were just beginning to recover from massive debts incurred i n the 1930s, and they were reluctant to take actions that might set them back f i n a n c i a l l y . Econometrics uses a combination of s t a t i s t i c a l procedures and mathematical formulas to es t a b l i s h the re l a t i o n s h i p between expenditure and revenue to other community va r i a b l e s . F i s c a l flow analysis compares expenditure and revenue for d i f f e r e n t locations or population groups. Cross-sectional analysis compares the expenditure and revenue from a number of communities grouped by population size over a ce r t a i n time period. Regression analysis can then be used to determine i f s t a t i s t i c a l l y s i g n i f i c a n t r e l a t i o n s h i p s exist between per capita outlays and the rate of population or other growth. Time series analysis compares expenditure and revenue data over several time periods, and compares them to changes i n population or community c h a r a c t e r i s t i c s . The author of t h i s thesis designed and implemented the City of North Vancouver case study, and acted as a f a c i l i t a t o r of the City of Vancouver case study. The author was not involved i n the City of New Westminster case study; a l l knowledge of t h i s case study was acquired from a municipal document (City of New Westminster, 1974) describing the study's methodology and r e s u l t s . In 1983, the percentage of t o t a l assessed value were broken down as follows: In 1983, the percentages of b u i l d i n g permit value were broken down as follows: Residential Commercial Industrial 66% 2496 9% Residential Commercial Industrial 43% 41% 1 6% 51 9 While a p o l i c y of no cross subsidization would not necessarily be advocated, such subsidizations should be of public knowledge. 10 F i s c a l impact analysis and cost-revenue analysis represent two terms for a single methodology. F i s c a l impact analysis and cost-revenue analysis should not be confused with expenditure-revenue analysis which involves only the f i r s t step i n f i s c a l impact analysis or cost-revenue analysis. 11 The d e f i n i t i o n s of these land use categories were based on B.C.A.A. d e f i n i t i o n s . 52 CHAPTER 3 3. CRITERIA FOR THE EVALUATION OF MUNICIPAL EXPENDITURE-REVENUE ANALYSES In t h i s chapter c r i t e r i a are developed through which the strengths and weaknesses of the three case studies, as well as other expenditure-revenue studies, can be evaluated. These c r i t e r i a would also be useful to analysts who are i n the process of designing or undertaking an expenditure-revenue study; they point out issues, areas of concern and common weaknesses i n expenditure-revenue analyses. The c r i t e r i a serve as warning f l a g s . They serve to i d e n t i f y p o t e n t i a l dangers, but give no insight into the consequences should the warning not be heeded. It i s l e f t to in d i v i d u a l analysts, either evaluating e x i s t i n g expenditure-revenue studies or designing new studies, to consider how each study deals with each area of concern, and how the re s u l t s of the study w i l l r e f l e c t the manner in which the area of concern was dealt with. Many of the c r i t e r i a d e t a i l e d below may seem obvious and s i m p l i s t i c ; however, the analysis of the case studies that follows i l l u s t r a t e s that even the most obvious c r i t e r i a (for example, accuracy and completeness) are often v i o l a t e d . This i s not e n t i r e l y the f a u l t of analysts; the c r i t e r i a represent ideals which i n r e a l i t y are often d i f f i c u l t or impossible to achieve. For example, although the cooperation of a l l 53 municipal departments i s c r u c i a l to the q u a l i t y of an analysis, i t i s often not i n a department's in t e r e s t to reveal the necessary information. Analysts should be aware of the i d e a l , but at the same time should recognize and best deal with r e a l i t y . As expenditure-revenue analysis i s not developed to the point of being an exact science and because the c r i t e r i a represent ideals towards which analysts should s t r i v e , there w i l l always be c r i t e r i a that are not adequately met i n an expenditure-revenue study. It i s , therefore, important that analysts and decision makers evaluate the methodology and r e s u l t s of expenditure-revenue analyses on the basis of the c r i t e r i a discussed below, and use the r e s u l t s of the study i n a manner that considers both the strengths and weaknesses of the p a r t i c u l a r study. At the outset, there are two broad categories of c r i t e r i a relevant to expenditure-revenue analyses: methodological c r i t e r i a , which refer to the appropriateness and usefulness of the studies' methodologies; and contextual c r i t e r i a , which refer to the context i n which the analyses are undertaken, and the r e s u l t s are used. If methodological c r i t e r i a are ignored, the r e s u l t s of the study are thrown into question. If contextual c r i t e r i a are ignored, the methodology and r e s u l t s of the study are used i n a misleading way. Both contextual and methodological 54 c r i t e r i a should be considered when evaluating expenditure-revenue analyses; i d e a l l y each expenditure-revenue study should meet both categories of c r i t e r i a , thereby allowing "good ap p l i c a t i o n of good r e s u l t s " . 3.1 Methodological C r i t e r i a Methodological c r i t e r i a pertain to s p e c i f i c c h a r a c t e r i s t i c s of a study's approach which influence the a c c e p t a b i l i t y of the study's methodology, and ultimately the usefulness of the r e s u l t s . These c r i t e r i a refer to the methodology of the study i t s e l f , and not to the context i n which that methodology i s undertaken, or the re s u l t s are used. 3.1.1 A l l Calculations Involved i n the Study Should Be Accurate The c a l c u l a t i o n s involved i n expenditure-revenue analysis are numerous, i r r e s p e c t i v e of the s p e c i f i c methodology used i n a study. Each item of municipal expenditure and revenue must be apportioned to categories of land use on the basis of s p e c i f i e d a l l o c a t i o n decisions. Although these c a l c u l a t i o n s are simple i n nature, they are numerous and r e p e t i t i v e . Burchell and L i s t o k i n (1978, 1985) observed that a large number of f i s c a l impact studies were inaccurate, i n that they included errors i n c a l c u l a t i o n . This i s also l i k e l y to be true of many expenditure-revenue analyses, p a r t i c u l a r l y of those that r e l y on manual c a l c u l a t i o n s . 55 Errors i n c a l c u l a t i o n w i l l be r e f l e c t e d i n the study's r e s u l t s , and w i l l a f f e c t the usefulness of the r e s u l t s i n the formulation of appropriate p o l i c y decisions. The nature of the ca l c u l a t i o n s involved i n expenditure-revenue analyses makes them well suited to computerization. Despite the a v a i l a b i l i t y of computer software which i s adaptable to municipal expenditure-revenue analysis (for example Lotus 1 - 2 - 3 ) , a large proportion of municipal expenditure-revenue studies are s t i l l performed manually. Where ca l c u l a t i o n s are performed manually each c a l c u l a t i o n should be checked for accuracy; where cal c u l a t i o n s are performed on the basis of computerized equations, only the equations need be checked for accuracy. Computerization of these studies o f f e r s a useful and e f f i c i e n t way of both performing and evaluating the ca l c u l a t i o n s involved i n expenditure-revenue analyses. 3 . 1 . 2 The Study Should Consider A l l Sources of Expenditure and Revenue The scope of data drawn upon i n expenditure-revenue analyses d i f f e r s from study to study. Most studies make use of the municipality's annual budget i n order to specify items of municipal expenditure and revenue to be a l l o c a t e d to the land use categories; however, some studies make use of only a l i m i t e d number of the items of municipal expenditure and revenue which appear i n the annual budget, i n specifying expenditure-revenue r a t i o s (Mace, 1961; Burchell and L i s t o k i n , 1978). Reliance on incomplete data i s generally the r e s u l t of a f a i l u r e to consider a l l sources of municipal revenue; some studies consider only revenue from property tax(1), even where other sources of revenue represent a s i g n i f i c a n t share of municipal revenues (Burchell and L i s t o k i n , 1978). An assessment of the completeness of the data drawn upon i n a expenditure-revenue study i s important i n the evaluation and app l i c a t i o n of the study's r e s u l t s . The re s u l t s should be recognized for what they represent; either a complete or incomplete expenditure-revenue r a t i o . Where the data used i n the study i s incomplete, the impact of the exclusion of s p e c i f i c items of expenditure and revenue should be considered before the re s u l t s are applied i n p o l i c y formulation. The d e t a i l to which municipal expenditure and revenue are broken down into sub-categories a f f e c t s the a b i l i t y of the analyst to specify accurate a l l o c a t i o n decisions. Where expenditure and revenue are broken down into only a few sub-categories each of which are composed of a number of f a i r l y d i s t i n c t municipal functions, i t i s d i f f i c u l t for the analyst to specify an a l l o c a t i o n decision that takes each function into account. Where many sub-categories are used, each of which r e f l e c t s a single municipal function, accurate a l l o c a t i o n decisions are easier to construct. Municipal expenditure and revenue should therefore be broken down 57 to the greatest l e v e l of d e t a i l , given the time and records a v a i l a b l e . 3.1.3 A l l Municipal Departments Should Cooperate i n Undertaking a Municipal Expenditure-Revenue Analysis When complete, municipal expenditure-revenue analyses consider municipal expenditures and revenues associated with a l l municipal functions. In order to make useful a l l o c a t i o n decisions, the analyst requires insight into, and a det a i l e d knowledge of, a l l municipal functions. This insight and knowledge i s seldom possessed by a single person, or even by a c o l l e c t i o n of persons within a single department. Municipal functions are usually managed and administered as f a i r l y separate e n t i t i e s ; each department's s t a f f may have a det a i l e d understanding of the i r department's functions and the expenditures and revenues involved, but they are un l i k e l y to have a thorough understanding of the functions provided by other municipal departments. This i s also true of knowledge regarding the c o l l e c t i o n and maintenance of records which are useful as a basis on which a l l o c a t i o n decisions can be made; only departmental s t a f f are l i k e l y to have a det a i l e d knowledge of what records are kept within each department, and the methodology by which records are co l l e c t e d . As the body of information required to make accurate a l l o c a t i o n decisions i s fragmented among 5 8 municipal s t a f f , i t i s extremely important that knowledgeable and experienced s t a f f from a l l municipal departments are involved i n an expenditure-revenue analysis. The degree of involvement of municipal s t a f f i s l i k e l y to vary greatly. Some s t a f f members w i l l be intimately involved i n the design and implementation of the entire study, while other s t a f f members w i l l have an extremely l i m i t e d involvement, consisting only of providing advice when i t i s s p e c i f i c a l l y asked f o r . A l l s t a f f members involved i n the study (even those involved to the smallest degree) should, however, be b r i e f e d on the goals, methodology and app l i c a t i o n of the study. They should also be b r i e f e d on the l i m i t a t i o n s of expenditure-revenue analysis, and the issues involved in making a l l o c a t i o n decisions. This w i l l ensure that a l l s t a f f members involved i n making a l l o c a t i o n decisions w i l l be aware of the issues and l i m i t a t i o n s involved in expenditure-revenue analysis i n general, and i n the study i n p a r t i c u l a r . The l e v e l of awareness of municipal s t a f f to these issues and l i m i t a t i o n s w i l l a f f e c t the e f f o r t and resources that s t a f f w i l l expend in attempting to make accurate a l l o c a t i o n decisions, and w i l l , therefore, a f f e c t the qua l i t y of the study's r e s u l t s . In summary, the cooperation of a l l municipal departments has the pot e n t i a l to greatly improve the quality of the information on which a l l o c a t i o n decisions 59 can be based and, therefore, the q u a l i t y of the study's r e s u l t s . Within the bounds of r e a l i t y , every e f f o r t should be made by the analyst coordinating the study to gain the cooperation of experienced and knowledgeable s t a f f from a l l municipal departments. 3.1.4 The D e f i n i t i o n of the C h a r a c t e r i s t i c s of Land Use Categories Should Be Narrow and S p e c i f i c To be most useful i n p o l i c y formulation, the d e f i n i t i o n of the c h a r a c t e r i s t i c s of land use categories should be narrow and s p e c i f i c i n nature. By defining sub-categories of major land use categories which r e f l e c t variables l i k e density of population or development, or type of business or production a c t i v i t y , the r e s u l t s and p o l i c y based on the r e s u l t s can be more focused and s p e c i f i c . Instead of concluding that i n d u s t r i a l a c t i v i t y has a greater revenue-expenditure r a t i o than commercial a c t i v i t y , a study that uses very narrow and s p e c i f i c land use categories would enable one to conclude that commercial warehouse a c t i v i t i e s provide a municipality with greater net revenue than commercial r e t a i l a c t i v i t i e s . The majority of municipal land use decisions consider narrow categories of land use. For example, rezoning decisions usually involve changes of use within a general category i . e . single-family r e s i d e n t i a l to multi-family r e s i d e n t i a l , or warehouse commercial to r e t a i l commercial. For expenditure-revenue r e s u l t s to be most useful i n municipal p o l i c y 60 determination, they should consider sub-categories of general land use categories. When general categories of land use are used, the e f f e c t of d i f f e r e n t c h a r a c t e r i s t i c s of sub-categories of that land use are averaged over the entire land use category. For example, a p o s i t i v e r a t i o of revenue to expenditure associated with multi-family r e s i d e n t i a l land use may be the r e s u l t of a predominance of high density developments of high value; a municipality's decision to authorize a subdivision of high density apartments of medium value, based upon the p o s i t i v e r a t i o of revenue to expenditure for multi-family r e s i d e n t i a l land use, would not achieve the desired e f f e c t on municipal finances. Narrow and s p e c i f i c d e f i n i t i o n of land use categories f a c i l i t a t e s appropriate p o l i c y decisions based upon the r e s u l t s of municipal expenditure-revenue analyses. Unfortunately, the resources required to break down expenditure and revenue among categories of land use i s not proportional to the number of land use categories involved; applying expenditure and revenue to narrow categories requires greater resources than are generally dedicated to these studies. Local records are seldom c o l l e c t e d or maintained i n a manner that allows expenditure and revenue to be e a s i l y a l l o c a t e d to narrow land use categories. For example, a municipality may keep records on differences i n the expenditure involved 61 i n removing garbage from commercial and i n d u s t r i a l s i t e s , but i t i s u n l i k e l y to keep records that allow garbage removal expenditure differences between r e t a i l commercial and warehouse commercial land use to be s p e c i f i e d . The rules by which items of expenditure and revenue should be a l l o c a t e d to broad land use categories are easier to construct than the rules to a l l o c a t e expenditure and revenue to narrow sub-categories of land use. In order to a l l o c a t e expenditure and revenue to narrow land use sub-categories, the analyst must construct a l l o c a t i o n rules based upon a set of assumptions regarding the expenditure or revenue breakdown associated with a p a r t i c u l a r municipal function. Accurate a l l o c a t i o n rules are often d i f f i c u l t and time consuming to construct, and require a d e t a i l e d knowledge both of the land use a c t i v i t y and of the municipal function. Whatever the d e t a i l of the land use categories chosen for a study, i t i s important that the c h a r a c t e r i s t i c s of each land use category are c l e a r l y defined. For example, the c h a r a c t e r i s t i c s that d i f f e r e n t i a t e a c t i v i t i e s that f a l l into one land use category from those a c t i v i t i e s of another land use category should be c l e a r l y defined. This f a c i l i t a t e s i n t e r p r e t a t i o n of the study's r e s u l t s , and formulation of appropriate and useful p o l i c y decisions. This also 62 f a c i l i t a t e s the comparison of d i f f e r e n t studies' r e s u l t s over time or d i f f e r e n t j u r i s d i c t i o n s . 3 . 1 . 5 Assumptions and Short-Cut Methods Used i n the Study Should Be Defensible and C l e a r l y Documented In municipal expenditure-revenue analysis, as i n other methods of s o c i a l and s c i e n t i f i c research, assumptions are used to eliminate peripheral variables, so that attention can be focussed on the issue(s) to be explored. There i s , however, a f i n e l i n e between assumptions that are useful, and those which are misleading. For assumptions to be useful, they should be r e a l i s t i c and e x p l i c i t l y stated. If the set of assumptions used to control peripheral variables i n a study does not r e f l e c t r e a l i t y , the study becomes l i t t l e more than a t h e o r e t i c a l exercise with l i t t l e p r a c t i c a l s i g n i f i c a n c e . Just as importantly, assumptions used i n the study should be e x p l i c i t l y stated, thereby allowing independent analysts, and municipal o f f i c i a l s not involved i n the study, to judge the extent to which the r e s u l t s of the study r e f l e c t r e a l i t y and, therefore, can be used as a r e l i a b l e basis on which to formulate p o l i c y ( 2 ) . Two sets of assumptions are used i n municipal expenditure-revenue analyses. F i r s t , contextual assumptions are used to set the stage for the analysis; for example, the years studied are assumed to be t y p i c a l f i s c a l years. The second set of assumptions are used within the methodology of expenditure-revenue studies. Methodological assumptions consist of assumptions regarding the nature of the municipal function involved, and the land use categories to which items of expenditure and revenue are to be allocated. These assumptions are used i n order to help the analyst delineate the precise amount of an item of expenditure and revenue that i s a t t r i b u t a b l e to c e r t a i n land use categories, when the r e l a t i o n s h i p between the land use category and the item of expenditure or revenue i s i n d i r e c t or too time consuming to be accurately defined(3). Short-cut or contrived methods consist of: - using a sample of available and relevant records to help i n the estimation of expenditure and revenue to be a l l o c a t e d to each land use category; - asking experienced and knowledgeable municipal o f f i c i a l s who are f a m i l i a r with s p e c i f i c municipal functions to estimate the expenditure and revenue associated with the p a r t i c u l a r function that should be a l l o c a t e d to each land use category; and - using assumptions to r e l a t e defined variables (for example, assessed value of improvements i n each land use category) to the amount of a s p e c i f i c item of expenditure or revenue (for example, expenditure on f i r e protection) that should be allo c a t e d to each land use category. Each of the methods l i s t e d above are based on p a r t i c u l a r assumptions. Where records are used as a basis for making an a l l o c a t i o n decision, the analyst must make assumptions regarding the records or combination of records that w i l l best r e f l e c t actual expenditure or revenue to be all o c a t e d to each land use category. Where an o f f i c i a l i s asked to specify the a l l o c a t i o n decision, the decision i s then based on the o f f i c i a l ' s assumptions regarding the manner i n which expenditure or revenue should be al l o c a t e d to land use categories. These assumptions may be based on a det a i l e d knowledge of the item of expenditure and revenue; however, they w i l l s t i l l involve the use of personal assumptions regarding the manner i n which expenditure and revenue should be all o c a t e d . F i n a l l y , where a l l o c a t i o n decisions are made on the basis of a variable, the analyst assumes that there i s a dir e c t r e l a t i o n s h i p between the defined variable and actual expenditure or revenue associated with the land use category. The assumptions on which an a l l o c a t i o n decision are based may appear to make common sense, yet i t i s important to keep i n mind that these assumptions are short-cuts to avoid the time and expense that would be necessary to accurately define expenditure and revenue 65 that should be allo c a t e d to the land use categories. I t could be safely stated that two or more sets of equally " l o g i c a l " assumptions and cost a l l o c a t i o n methods based on these assumptions are possible i n every case, and that the conclusions reached on the basis of each set may well point to diametrically opposite courses of action (Barnes and Raymond, 1955). How much v a l i d i t y i s needed, or indeed possible, i n making an assumption? There i s an obvious point beyond which further analysis i s i r r e l e v a n t , but how one knows when one has reached t h i s point i s unclear (Barnes and Raymond, 1955). In evaluating a study or making use of a study's r e s u l t s , i t i s important to remember that the assumptions used i n a study often gloss over major issues without adequate explanation or convincing l o g i c ; assumptions are also sometimes constructed for the purpose of manipulating the study's r e s u l t s . For the r e s u l t s of a study to have any relevance, the assumptions used i n the analysis should be defensible. The assumptions should also be c l e a r l y documented i n order to allow future analysts to assess the degree to which the assumptions are v a l i d and the re s u l t s are usef u l . 3 . 2 Contextual C r i t e r i a Contextual c r i t e r i a refer to the circumstances i n which expenditure-revenue analyses are undertaken, and 66 the r e s u l t s are used. They refer also to the manner i n which the methodology and r e s u l t s of an analysis are documented and presented to p o l i c y makers and po t e n t i a l readers, as t h i s d i r e c t l y impacts the way i n which readers w i l l be l i k e l y to use the r e s u l t s . These c r i t e r i a i l l u s t r a t e areas of p o t e n t i a l misuse of expenditure-revenue studies, and th e i r r e s u l t s . If these contextual c r i t e r i a are observed and met, expenditure-revenue analyses, and th e i r r e s u l t s , are l i k e l y to be undertaken and used i n appropriate circumstances. 3.2.1 The Analysts Involved i n the Study Should Have Nothing to Gain or Lose From the Results of the Study Expenditure-revenue studies have often been used to make a case for a pre-determined course of action (Barnes and Raymond, 1955; Wheaton, 1955; Mace, 1961 (4)). Muller (1973) observed that two analysts given the same data, but using d i f f e r e n t assumptions and methodologies, may reach opposing conclusions as to whether a surplus or d e f i c i t i s generated within a s p e c i f i c category of land use; Muller (1973) also observed that the conclusions of a study are l i k e l y to r e f l e c t the analyst's views. At issue i s whether researchers tend to work backwards from desired r e s u l t s to discover the appropriate set of assumptions, or forward from a set of reasonable assumptions towards a unknown r e s u l t . In addition, despite no proven 67 c o r r e l a t i o n between the d e t a i l of an analysis and the accuracy of the r e s u l t s (Burchell and L i s t o k i n , 1978), analysts seem to assume that the more de t a i l e d and painstaking the analysis, the more convincing the r e s u l t s . The conceptual basis on which many items of expenditure and revenue should be a l l o c a t e d to land use categories i s not well defined. This leaves much room for the manipulation of a study's assumptions and methodology i n order to ensure that the r e s u l t s of the analysis r e f l e c t a desired conclusion. As the methodology of expenditure-revenue analysis i s so open to manipulation, proponents of a proposal should not be asked to supply municipal decision makers with an analysis of the revenue-expenditure r a t i o associated with the proposed type of development as t h i s would i n v i t e manipulation of the study's methodology and assumptions. The analysts who are chosen to undertake a municipal expenditure-revenue analysis should have no obvious i n t e r e s t (monetary or otherwise) i n the outcome of the analysis. Yet, even where t h i s i s the case, each analyst brings to the study an i n d i v i d u a l set of biases and assumptions regarding the r e l a t i v e r a t i o s of revenue to expenditure i n each land use category. These i n d i v i d u a l biases and assumptions are also r e f l e c t e d in the study r e s u l t s . Analysts undertaking an expenditure-68 revenue analysis should be made aware of the po t e n t i a l influence of the i r underlying impressions on the resultant revenue-expenditure r a t i o s . They should be warned that a l l o c a t i o n decisions should only be made on the basis of objective information available to them, and not on the basis of personal perceptions and impressions. As the methodologies involved i n municipal expenditure-revenue analysis are so open to manipulation, every attempt should be made to ensure that: - the analyst (and o f f i c i a l s asked to specify a l l o c a t i o n decisions) have nothing to lose or gain as a re s u l t of the study's conclusion; and - the analyst (and o f f i c i a l s s pecifying a l l o c a t i o n decisions) be warned of the po t e n t i a l impact that t h e i r personal perceptions and assumptions could have on the re s u l t s of the analysis, and be asked to make a conscious e f f o r t to r e t a i n o b j e c t i v i t y i n the choice of data, variables and a l l o c a t i o n decisions. 3.2.2 The Results of the Study Should Be Used Within the Context of the Study's Scope, Assumptions and Methodology There i s a danger i n expenditure-revenue analysis, that the re s u l t s of the analysis w i l l be used without consideration of the study's l i m i t a t i o n s . This i s not a danger that i s p a r t i c u l a r to expenditure-revenue 6 9 analysis; i n every type of study or analysis there i s a danger that the r e s u l t s w i l l be used or quoted without consideration of the scope of the study, and the assumptions and methodology used. Given the state-of-the-art of expenditure-revenue analysis, i t i s p a r t i c u l a r l y important that the r e s u l t s are considered in the l i g h t of the study's l i m i t a t i o n s . The scope of the study, as well as the methodology i n which the a l l o c a t i o n decisions were made, and the assumptions that surround the a l l o c a t i o n decisions a l l influence the re s u l t s of the study. A study using the same data, but a d i f f e r e n t scope, methodology and assumptions w i l l produce d i f f e r e n t r e s u l t s . Where expenditure-revenue analyses are undertaken for the purpose of providing a f i s c a l perspective i n the determination of public p o l i c y , i t i s important that the l i m i t a t i o n s of the study are c a r e f u l l y examined. An analysis that i s l i m i t e d i n scope (for example, where property tax i s used as the only source of municipal revenue), or r e l i e s on misleading assumptions (for example, assuming that expenditure-revenue r a t i o s w i l l remain constant over time), or makes use of an inappropriate methodology (for example, the use of an a l l o c a t i o n rule which does not r e f l e c t actual expenditure on, or revenue from, the s p e c i f i e d land use categories) w i l l produce misleading r e s u l t s . The degree to which the r e s u l t s may be misleading should be 7 0 assessed by examining the a c c e p t a b i l i t y of the scope, assumptions and methodology of the study. The re s u l t s of the study should be used within the context of t h i s assessment ( i f the impact of a study's l i m i t a t i o n s on the r e s u l t s cannot be c l e a r l y i d e n t i f i e d , the r e s u l t s should not be used). "Blind use" of the r e s u l t s of expenditure-revenue analysis i n p o l i c y formulation w i l l produce inappropriate p o l i c y decisions. The s t a t i c nature of expenditure-revenue analysis i s an aspect of expenditure-revenue analyses' scope that i s often ignored i n the in t e r p r e t a t i o n of studies' r e s u l t s . Expenditure-revenue analyses make use of averaging a l l o c a t i o n techniques i n a l l o c a t i n g expenditure and revenue to land use categories(5). Averaging techniques provide a "snapshot" picture of how expenditure and revenue can be all o c a t e d to land use categories, as the techniques do not incorporate a consideration of excesses or d e f i c i e n c i e s i n capacity, or of how service provision may change over time(6). The i n t e r p r e t a t i o n of the re s u l t s of an expenditure-revenue study must take the s t a t i c nature of the study into account. When re s u l t s are extrapolated from one year to another, the analyst must consider how excesses or d e f i c i e n c i e s i n capacity, or changes i n service supply may aff e c t the re s u l t s of an analysis. Recognition of the s t a t i c nature of the re s u l t s of expenditure-revenue analyses, and consideration of how 71 the r e s u l t s may have changed over time i s extremely important when the r e s u l t s of an analysis are used i n p o l i c y formulation. 3.2.3 The Limitations of Expenditure-Revenue Analysis, and of the Par t i c u l a r Expenditure-Revenue Study, Should Be C l e a r l y Documented and Presented Along with the Results The f i r s t step i n ensuring that the r e s u l t s of a study are used within the context of the study's l i m i t a t i o n s i s to c l e a r l y document the scope of both expenditure-revenue analysis and of the study i t s e l f , as well as the assumptions and methodology used i n the study. These l i m i t a t i o n s should be presented along with the study's r e s u l t s . The d e t a i l of the documentation of the l i m i t a t i o n s should enable persons who have no knowledge of expenditure-revenue analysis and/or have not been involved i n the study, to assess the l i m i t a t i o n s of the study and thereby evaluate the usefulness of the study's r e s u l t s i n p o l i c y determination. The documentation should cover: - the conceptual and functional bases of municipal expenditure-revenue analysis; - the scope of the s p e c i f i c study; - contextual and methodological assumptions used i n the study; - the methodology used i n the study; and 72 - the strengths and l i m i t a t i o n s of the study, and thei r impact on the usefulness of the study's r e s u l t s . Verbal presentations of a study's r e s u l t s should also include a discussion of the scope and l i m i t a t i o n s of expenditure-revenue analysis i n general, and of the study i n p a r t i c u l a r . The impact of the study's l i m i t a t i o n s on the usefulness of the study's r e s u l t s should also be discussed. 3 . 3 A p p l i c a t i o n of the C r i t e r i a to the Evaluation of Municipal Expenditure-Revenue Analyses Many "grey" areas s t i l l e xist i n both the methodology of expenditure-revenue studies and the app l i c a t i o n of study r e s u l t s . It i s important, therefore, that expenditure-revenue methodologies are designed i n a manner that best addresses the po t e n t i a l weaknesses of expenditure-revenue analysis. The c r i t e r i a developed i n t h i s chapter provide a guide to analysts involved i n undertaking an expenditure-revenue analysis, and to analysts who wish to evaluate the usefulness of a previous study's methodology and r e s u l t s . They point out areas of major concern, both in the design and evaluation of expenditure-revenue analyses. As mentioned previously, many of the c r i t e r i a discussed i n t h i s chapter are d i f f i c u l t or impossible to achieve. It i s also not possible to prescribe how 73 completely the c r i t e r i a must be met i n order for the re s u l t s of the study to be usef u l . If unmet, each c r i t e r i a has the pot e n t i a l to destroy the v a l i d i t y and r e l i a b i l i t y of a study's methodology and r e s u l t s . The extent to which the c r i t e r i a are met, and the impact of f a i l i n g to meet any c r i t e r i a should be assessed by the analyst, and the r e s u l t s and the i r usefulness i n p o l i c y formulation should be evaluated accordingly. 74 F O O T N O T E S 1 Burchell and L i s t o k i n (1978) suggest that property taxes are usually considered because they are understood by a l l taxpayers and analysts, and because they are conceptually and procedurally easy to deal with. 2 The importance of documenting the assumptions, as well as the scope and methodology of studies, w i l l be further discussed i n section 3.2.3. 3 Methodological assumptions can also be used to d e l i b e r a t e l y manipulate the r e s u l t s of a study (see section 3.2.1). 4 Burchell and L i s t o k i n (1978) conclude from a study of 140 f i s c a l impact analyses, that two t h i r d s of the analyses were used to show po s i t i v e a f f e c t s of a proposed land use a l t e r n a t i v e which the analyst supported. 5 Average a l l o c a t i o n involves multiplying the expenditure or revenue item by the proportion of a variable that can be associated with a land use category, i n order to i d e n t i f y the expenditure and revenue associated with that land use category. 6 Marginal expenditure or revenue would consider the expenditure or revenue associated with an additional unit of an i d e n t i f i e d v a r i a b l e . Marginal costing r e l i e s on careful analysis of e x i s t i n g supply and demand rel a t i o n s h i p s for l o c a l services, and i s relevant where future expenditure-revenue rel a t i o n s h i p s are to be predicted. 75 CHAPTER 4 4. EVALUATION OF THE THREE CASE STUDIES In t h i s chapter the three case studies presented in Chapter 2 w i l l be evaluated on the basis of the c r i t e r i a developed i n Chapter 3. By applying the c r i t e r i a to the case studies, the strengths and weaknesses of each case study w i l l be highlighted. Where c r i t e r i a have not been met, the impact on the study's r e s u l t s w i l l be discussed, and the usefulness of the study's r e s u l t s i n p o l i c y formulation w i l l be considered. 4.1 Ci t y of North Vancouver - Cost-Revenue Study 4.1.1 A l l Calculations Involved i n the Study Should Be Accurate The ca l c u l a t i o n s involved i n t h i s case study were c a r r i e d out manually, on a hand c a l c u l a t o r . It would be extremely time consuming to check every c a l c u l a t i o n involved i n the study as the ca l c u l a t i o n s were numerous and involved multiple data sources. The documentation of the study does not include the working c a l c u l a t i o n s involved i n the study, and much of the data was obtained from u n o f f i c i a l records which would not be available to non-municipal employees. The documentation of the study does, however, allow the expenditure and revenue associated with d i f f e r e n t budget items to be checked against figures appearing i n the 1984 f i n a n c i a l statement. For example, expenditure on f i r e protection 7 6 a l l o c a t e d to the d i f f e r e n t land use categories can be added together to show t o t a l expenditure on f i r e protection considered i n the study, and t h i s can be compared against the figure for t o t a l f i r e protection appearing i n the f i n a n c i a l statement. Differences between the two figures would suggest that errors i n c a l c u l a t i o n had been made. Unfortunately, a comparison can not be c a r r i e d out for a l l items of expenditure and revenue, as the study often used a f i n e r breakdown of a budget item than the f i a n c i a l statement, and without d e t a i l e d records i t i s d i f f i c u l t to reconstruct figures that represent the same items of expenditure and revenue. In most cases the figures reconstructed from the case study equal figures shown i n the f i n a n c i a l statement; however, i n some cases the figures are s l i g h t l y d i f f e r e n t . For example, t o t a l expenditure on p o l i c e protection i n the case study equals $2844632.00 while the corresponding figure i n the f i n a n c i a l statement equals $2847497.00 Expenditure of f i r e p rotection was the only figure which d i f f e r e d greatly from the f i n a n c i a l statement figure ($1883853.00 i n the case study versus $2292019.00 i n the f i n a n c i a l statement). While comparing the two sets of fig u r e s , i t was also noticed that i n the case of one revenue item a 1982 revenue figure had been used i n error of a 1983 f i g u r e . 77 The degree to which these differences w i l l a f f e c t the r e s u l t s of the study i s impossible to predict without redoing the entire case study. The point to be made here i s that the study does includes some inaccuracies and, therefore, before the r e s u l t s can be confidently used i n any type of p o l i c y formulation a l l ca l c u l a t i o n s involved i n the study should be checked for accuracy. 4.1.2 The Study Should Consider A l l Sources of Municipal Expenditure and Revenue A l l but two sources of revenue were included i n the case study. Revenue from interest on deposits and investments ($610282.00) and revenue from sundry sources ($21429.00) were erroneously excluded from the study. The e f f e c t on the resultant revenue-expenditure r a t i o s of excluding these sources of revenue i s l i k e l y to be small; however, the point i s again made that the res u l t s should not be trusted as r e l i a b l e information i n the formulation of p o l i c y . Although revenue and expenditure associated with education was not included i n the study, a number of other items of revenue that are c o l l e c t e d for other agencies and passed on i n f u l l were included. As equivalent expenditures were also included i n the study, the e f f e c t of including these items was e s s e n t i a l l y cancelled out(1). 7 8 The study considered sixteen items of expenditure and forty-nine items of revenue(2). The discrepency between the number of expenditure and revenue items r e f l e c t s the previously discussed point that revenue t r a i l s are more e a s i l y accessible than expenditure t r a i l s . 4.1-3 A l l Municipal Departments Should Cooperate i n Undertaking a Municipal Expenditure-Revenue Analysis The C i t y of North Vancouver study was undertaken by an independant consultant who was contracted by the Department of Development and Licencing Services. Only planning d i v i s i o n (a sub-division of the Department of Development and Licencing Services) s t a f f were involved i n the design of the study methodology; municipal s t a f f outside of the planning d i v i s i o n were informed of the study only when the i r help was needed i n i d e n t i f y i n g useful records, or i n making a l l o c a t i o n decisions. When members of other municipal d i v i s i o n s or departments were asked to p a r t i c i p a t e i n the study, they were given l i t t l e or no explanation of the goals, methodology or ap p l i c a t i o n of the study. S t a f f members who were asked to make a l l o c a t i o n decisions were given l i t t l e introduction to the issues involved i n making a l l o c a t i o n decisions. As the body of information necessary to i d e n t i f y useful records, and undertake meaningful a l l o c a t i o n decisions i s fragmented among municipal s t a f f , i t i s 7 9 extremely important that municipal s t a f f from a l l municipal departments are intimately involved i n the design and implementation of an expenditure-revenue analysis. Municipal s t a f f involved i n providing and monitoring each municipal function should have been incorporated into the planning and implementation of the study. Cooperation between municipal departments should have been established at the outset of the study. Those o f f i c i a l s making a l l o c a t i o n decisions should have also been involved i n the exploration of: the issues involved i n expenditure-revenue analysis; the methodological options for the study; and the p o t e n t i a l a p p l i c a t i o n of the r e s u l t s . Involvement i n , and knowledge of, these areas would a f f e c t the l e v e l of e f f o r t municipal s t a f f would dedicate to th e i r a l l o c a t i o n decisions. Improved cooperation between municipal departments, and increased involvement of knowledgeable o f f i c i a l s involved i n providing and monitoring each municipal function, would have greatly improved the qu a l i t y of the information on which the a l l o c a t i o n decisions could be based and, therefore, the quality of the case study's r e s u l t s . Ideally, the primary role of the consultant should have been to introduce municipal s t a f f to the technique and l i m i t a t i o n s of expenditure-revenue analysis and to f a c i l i t a t e the study; the decisions regarding the a l l o c a t i o n of items of expenditure and revenue to d i f f e r e n t land use categories should have 8 0 been l e f t to municipal o f f i c i a l s who had a det a i l e d knowledge of each municipal function. 4-. 1 .4 The D e f i n i t i o n of Land Use Ch a r a c t e r i s t i c s Should Be Narrow and S p e c i f i c The C i t y of North Vancouver study made use of broad categories of land use. Items of expenditure and revenue were al l o c a t e d only among r e s i d e n t i a l , commercial and i n d u s t r i a l land uses; no d i s t i c t i o n was made between d i f f e r e n t densities of r e s i d e n t i a l development or between d i f f e r e n t types of commercial or i n d u s t r i a l a c t i v i t i e s . Other expenditure-revenue studies, including the other two case studies evaluated in t h i s chapter, have shown that revenue-expenditure r a t i o s vary with density of r e s i d e n t i a l development. It i s also l i k e l y that d i f f e r e n t commercial or i n d u s t r i a l a c t i v i t i e s (for example, r e t a i l commercial versus warehouse commercial) would involve d i f f e r e n t revenue-expenditure r a t i o s . Inclusion of additional sub-categories of r e s i d e n t i a l , commercial and i n d u s t r i a l land use would have provided useful, additional information. The case study made use of B.C.A.A. d e f i n i t i o n s i n defining land use categories. Although these d e f i n i t i o n s are broad i n nature, they are useful as they are well defined, and well understood by most municipal o f f i c i a l s . The boundaries of each land use category are c l e a r l y defined, thereby allowing analysts to determine 81 exactly which a c t i v i t i e s f a l l into which categories of land use. Unfortunately, the B.C.A.A. d e f i n i t i o n of commercial land use i s extremely broad; i t includes a l l r e t a i l and wholesale a c t i v i t i e s , as well as a l l l i g h t i n d u s t r i a l a c t i v i t i e s . As a r e s u l t the revenue expenditure r a t i o calculated for commercial land use i s d i f f i c u l t to apply i n p o l i c y formulation. Because l i g h t i n d u s t r i a l a c t i v i t y i s included i n the commercial land use category, the i n d u s t r i a l land use category accounts only for heavy i n d u s t r i a l a c t i v i t i e s (only 29 properties i n the C i t y of North Vancouver were included i n t h i s category). As a r e s u l t , t h i s category i s r e l a t i v e l y narrowly defined, thereby making the r e s u l t s more useful i n p o l i c y determination. Although two out of the three categories of land use used i n the C i t y of North Vancouver study were very broadly defined, the d e f i n i t i o n s of these land use categories were c l e a r l y documented, and the l i m i t a t i o n s of using broad categories of land use were discussed. The study would have benefitted from the use of more narrowly defined categories of r e s i d e n t i a l and commercial land use; as the r e s u l t s now stand they consider land use categories which are too broad to be u s e f u l l y applied to most land use p o l i c y decisions. 8 2 4.1.5 Assumptions and Short-Cut Methods Used i n the Study Should Be C l e a r l y Documented and Defensible The l i m i t e d time frame available to the City of North Vancouver study made i t i n f e a s i b l e for the consultant to study each item of expenditure and revenue i n d e t a i l i n order to accurately define the amount of each item to be a l l o c a t e d to each land use category. A s a r e s u l t the study r e l i e d heavily on the use of assumptions i n defining short-cut or contrived methods to i d e n t i f y the amount of each item of expenditure or revenue that should be a l l o c a t e d to the land use categories. Due to the lack of cooperation between municipal departments i n defining records that would be useful i n making a l l o c a t i o n records, or i n making the a l l o c a t i o n decisions based on the experience of o f f i c i a l s intimately involved i n each function, a large proportion of the items of expenditure and revenue were al l o c a t e d to land use categories on the basis of variables which were assumed to r e f l e c t actual expenditure or revenue associated with each land use category. The variables on which the a l l o c a t i o n decisions were based, were defined by an "outside" consultant, who had a l i m i t e d knowledge of the s p e c i f i c nature of the C i t y of North Vancouver's municipal functions and land use categories. The assumed rela t i o n s h i p s between the variables and actual expenditure and revenue were, therefore, academic and 83 generalized, rather than p r a c t i c a l and s p e c i f i c to the City of North Vancouver. The degree to which the assumptions and the short-cut methods based on these assumptions r e f l e c t r e a l i t y i s d i f f i c u l t to assess; t h e o r e t i c a l l y t h i s assessment would require a step-by-step evaluation of each assumption made throughout the study methodology. However, by proceeding i n t h i s manner, one would lose sight of the bigger picture; i t would be extremely d i f f i c u l t to bring i n d i v i d u a l observations together to determine the o v e r a l l r e a l i t y of the study r e s u l t s . For th i s reason, the degree to which the assumptions are defensible, w i l l be assessed i n a general manner. A large number of the a l l o c a t i o n decisions were based on what seem to be defensible assumptions. In many cases the a l l o c a t i o n was obvious (for example, revenue from dog licences and the animal pound should be all o c a t e d to r e s i d e n t i a l land use), or records could be used as the basis on which to make the a l l o c a t i o n decisions (for example, rent from c i t y owned properties could be al l o c a t e d to land use categories on the basis of records kept by the purchasing and property services department). In other cases l o c a l o f f i c i a l s f e l t confident that t h e i r knowledge regarding the function i n question, could be used to accurately define a defensible a l l o c a t i o n decision. It was only i n cases where the a l l o c a t i o n decision was not obvious, relevant 84 records were too time consuming to use, and municipal o f f i c i a l s were not confident i n t h e i r a l l o c a t i o n decisions that the accuracy of assumptions and short-cut methods need be assessed. Unfortunately, due to time r e s t r i c t i o n s and the lack of cooperation between municipal departments a f a i r l y large number of items of expenditure and revenue were allo c a t e d on the basis of methods which are questionable i n the extent to which they are defensible and r e f l e c t actual expenditure and revenue associated with categories of land use. Of p a r t i c u l a r concern i n t h i s case study i s the use of a base l i n e variable (assessed value of land and improvements) i n making a l l o c a t i o n decisions which could not be made on the basis of any more defensible assumptions and a l l o c a t i o n methods. This a l l o c a t i o n variable was applied, i n p a r t i c u l a r to items of expenditure and revenue that could not be d i r e c t l y connected with the i d e n t i f i e d land use categories. This base l i n e variable was used for reasons of accountability (the portion of the budget a l l o c a t e d i n t h i s manner could be determined and the e f f e c t on the r e s u l t s could be assessed), consistency (used as a l a s t resort for items of both expenditure and revenue) and convenience. The study f a i l e d , however, to assess the impact of using t h i s base l i n e variable i n the determination of the f i n a l r e s u l t s . 85 The exact e f f e c t of the assumptions and short-cut methods on the study r e s u l t s i s extremely d i f f i c u l t to assess (assessment of the e f f e c t would involve the use of numerous "control" studies; although t h i s i s t h e o r e t i c a l l y possible, i t i s p r a c t i c a l l y i n f e a s i b l e ) ; however, i t can be safely assumed that the r e s u l t s of the case study do r e f l e c t the assumptions and methodology used, and that d i f f e r e n t assumptions and methodologies would produce d i f f e r e n t r e s u l t s . The r e s u l t s of t h i s case study are, therefore, not r e l i a b l e , and should not be used i n a manner that assumes t h e i r v a l i d i t y . The lack of v a l i d i t y i n the r e s u l t s of the study i s due to the state-of-the-art of expenditure-revenue analysis, to the lack of time available to the study and the lack of cooperation between municipal departments. 4.1.6 The Analysts Involved i n the Study Should Have Nothing to Gain or Lose from the Results of the Study The Ci t y of North Vancouver Cost-Revenue Study was undertaken by an "outside" consultant. The consultant had had no previous dealings with any of the departments of the Ci t y of North Vancouver, or with any l o c a l i n t e r e s t groups. The consultant had nothing to gain or lose through the r e s u l t s of the study. The primary concern of the consultant was to develop and implement a study that would produce the most useful r e s u l t s given the time constraint placed on the study. The Department 86 and Development and Licencing Services sponsored the study out of an i n t e r e s t i n the r a t i o of revenue to expenditure i n d i f f e r e n t land use categories; i t was not anticipated that the study would make a case for any predetermined courses of action. As none of the o f f i c i a l s (outside the Department of Development and Licencing Services) involved i n the study were b r i e f e d on the e x p l i c i t r a t i o n a l e for the study, or the a p p l i c a t i o n of the r e s u l t s , i t i s u n l i k e l y that any of these o f f i c i a l s purposefully manipulated th e i r a l l o c a t i o n decisions i n order that the r e s u l t s would r e f l e c t a desired course of action. 4.1.7 The Results of the Study Should Be Used Within the Context of the Study's Scope, Assumptions and Methodology As yet, the r e s u l t s of t h i s case study have not been formally used i n p o l i c y formulation. The extent to which the r e s u l t s of the study have been informally used in p o l i c y formulation i s unknown. The r e s u l t s of the study were presented to both p o l i c y makers, and members of the Planning Department s t a f f and, therefore, could have played a role i n any number of land use decisions made since the presentation of the r e s u l t s . Every attempt was made, however, to ensure that anyone who had access to the r e s u l t s of the study was warned of the l i m i t a t i o n s of the study; the r e s u l t s of the study were presented along with a thorough discussion of the 87 l i m i t a t i o n s of* expenditure-revenue analysis, and of the study i n p a r t i c u l a r . The r e s p o n s i b i l i t y to use the r e s u l t s of the study within the context of the study's l i m i t a t i o n s now l i e s i n the hands of the i n d i v i d u a l s who have had access to the study r e s u l t s . Given the e f f o r t that was put into ensuring that a l l those who came i n contact with the r e s u l t s were warned of th e i r shortcomings, and the process of municipal decision making, i t i s u n l i k e l y that the study r e s u l t s w i l l ever be formally used outside of th e i r context. However, the p o t e n t i a l that the r e s u l t s w i l l be informally used outside of the context of the study's scope, assumptions and methodology, to consciously or sub-consciously add to a case for a pre-determined course of action s t i l l e x i s t s . Policy makers and municipal s t a f f should continually assess the r e l i a b i l i t y of the information on which th e i r personal convictions regarding the r a t i o of revenue to expenditure i n d i f f e r e n t land use categories i s based. 4.1.8 The Limitations of Expenditure-Revenue Analysis, and of the Particular Expenditure-Revenue Study Should Be Clear l y Documented and Presented Along with the Study's Results Perhaps t h i s case study's greatest strength i s i n i t s documentation of the scope, strengths and weaknesses of expenditure-revenue analysis, as well as of the scope, assumptions and methodology of the case study. The dangers of using the study's r e s u l t s out of the 88 context of the study's l i m i t a t i o n s were emphasized i n both written and verbal presentation of the r e s u l t s . The role of the study's r e s u l t s i n planning and p o l i c y formulation was also discussed to ensure that those who were involved i n p o l i c y formulation understood the narrow focus of expenditure-revenue analysis. Through t h i s c a r e f u l documentation and discussion of the study's l i m i t a t i o n s , the consultant made sure that the task of in t e r p r e t a t i o n of the re s u l t s was l e f t to i n d i v i d u a l s who had an understanding of the l i m i t a t i o n s of expenditure-revenue analysis, and the study i t s e l f . As the resources available to the study were extremely l i m i t e d , the study methodology made extensive use of short-cut methods i n order to i d e n t i f y the expenditure and revenue that could be associated with d i f f e r e n t land use categories. The l i m i t a t i o n s of the methodology and assumptions used were, however, c l e a r l y i d e n t i f i e d and documented along with the r e s u l t s . The only shortcoming i n the documentation of the study was i n the f a i l u r e of the study to present de t a i l e d working notes, from which the accuracy of a l l the c a l c u l a t i o n s involved i n the study could be assessed. As mentioned i n Section 4.1.1 errors i n c a l c u l a t i o n were detected i n the documented material; i t would be useful to evaluate the accuracy of other undocumented cal c u l a t i o n s involved i n t h i s study. 89 In summary, the City of North Vancouver case study dealt well with the contextual c r i t e r i a that were outlined i n the previous chapter: the study was undertaken by an objective analyst who had nothing to gain or lose through the study's r e s u l t s ; the study's l i m i t a t i o n s were well documented and discussed; and the r e s u l t s have not been formally used without consideration of the study's scope, assumptions and methodology(4). The methodological c r i t e r i a were less well dealt with: inaccuracies i n the study were observed; and two relevant sources of revenue were not considered i n the analysis. The case study f a i l e d also to meet the methodological c r i t e r i a that are central to the q u a l i t y of the a l l o c a t i o n decisions that were defined and, therefore, the quality of the study's r e s u l t s . A l l o c a t i o n decisions were often based on a l i m i t e d and academic rather than p r a c t i c a l knowledge of municipal functions. The rationale for a l l o c a t i o n decisions was not always defensible; the choice of a l l o c a t i o n decisions was sometimes made on the basis of convenience rather than on d e f e n s i b i l i t y . The f a i l u r e to deal well with these methodological c r i t e r i a i s only p a r t l y the f a u l t of the analyst involved i n t h i s case study. These c r i t e r i a address the areas of expenditure-revenue analysis that are conceptually and methodologically d i f f i c u l t to deal with. These c r i t e r i a could, however, have been more s a t i s f a c t o r i l y dealt with 90 i f more time had been av a i l a b l e , and i f the study had involved a cooperative e f f o r t between a l l municipal departments. As the study now stands, too l i t t l e time has been invested into the study to allow the r e s u l t s to be formally, or informally, useful i n p o l i c y formulation. A f i n a l point regarding t h i s case study, i s that the consultant substituted the term "cost-revenue analysis" for the term "expenditure-revenue analysis. The use of the term "cost-revenue" to describe the general methodology on which t h i s thesis focuses i s inconsistent. The word "cost" implies that out-going and in-coming monies have been compared, and the difference between the two calculated; t h i s difference would represent the cost to the municipality ( i t could be negative or a p o s i t i v e value, representing a municipal d e f i c i t or surplus r e s p e c t i v e l y ) . On the other hand "revenue" refers to in-coming monies, with no assessment of how these d i f f e r from out-going monies. It would be more consistent to use the term expenditure-revenue analysis, or a l t e r n a t i v e l y "cost analysis" when formulating the study t i t l e . 91 4.2 Ci t y of Vancouver - Expenditure-Revenue Analysis 4.2.1 A l l Calculations Involved i n the Study Should Be Accurate The c a l c u l a t i o n s involved i n the City of Vancouver case study were performed by a computer. A microcomputer algorithm(5) was developed to tabulate the d i s t r i b u t i o n options s p e c i f i e d by the d i f f e r e n t participants/groups and to calculate the resultant revenue-expenditure r a t i o s associated with each land use category. The use of a computerized methodology greatly decreases the time requirement of an expenditure-revenue study, and f a c i l i t a t e s the evaluation of the accuracy of the c a l c u l a t i o n s involved i n the study. The algorithm used i n the study was checked for accuracy and no inaccuracies were found i n the algorithm or i n the resultant c a l c u l a t i o n of the expenditure and revenue associated with d i f f e r e n t categories of land use. The information fed into the LOTUS program was not, however, checked for accuracy; t h i s i s a p o t e n t i a l source of error that could be r e f l e c t e d i n the study r e s u l t s . The use of a computerized methodology not only increases the speed at which the c a l c u l a t i o n s are c a r r i e d out, and s i m p l i f i e s the evaluation of the accuracy of those c a l c u l a t i o n s , but i t increases the f l e x i b i l i t y of the study. The s e n s i t i v i t y of the r e s u l t s to d i f f e r e n t d i s t r i b u t i o n options, or d i f f e r e n t 92 analysts opinions can be e a s i l y observed and compared. Unfortunately, the City of Vancouver case study did not exploit the f l e x i b i l i t y of the methodology to i t s f u l l p o t e n t i a l . Only the s e n s i t i v i t y of the r e s u l t s to d i f f e r e n t group backgrounds (finance versus planning) was explored; the s e n s i t i v i t y of the study's r e s u l t s to d i f f e r e n t i n d i v i d u a l s backgrounds and opinions was not explored. Had such analyses been undertaken, they would have provided useful information for the i n t e r p r e t a t i o n and evaluation of the study's r e s u l t s . 4.2.2 The Study Should Consider A l l Sources of Municipal Expenditure and Revenue The City of Vancouver case study considered a l l relevant sources of expenditure and revenue. The study made use of a breakdown of the municipal budget which included 20 items of expenditure and 16 items of revenue(6). As i n the City of North Vancouver case study, school expenditure and revenue, i n d i r e c t expenditure and revenue, and private expenditure and revenue associated with municipal functions were excluded from the analysis; as discussed before, these exclusions do not represent weaknesses i n the case study. 4.2.3 A l l Municipal Departments Should Cooperate i n Undertaking a Municipal Expenditure-Revenue Analysis Two municipal departments were involved i n the C i t y of Vancouver case study. The two departments were 93 chosen to be involved because of the i r willingness to p a r t i c i p a t e , and because they have regular contact with a broad segment of the municipality's organization, one with a f i n a n c i a l perspective, the other with a land use perspective. This combination seemed appropriate for an inquiry into the d i s t r i b u t i o n of expenditures and revenues across d i f f e r e n t land use categories (Heikkila, 1986). Neither department could, however, claim a det a i l e d expertise for each item of expenditure or revenue subjected to t h i s analysis. Each department had an aggregate overview of the f i s c a l dimensions of urban land use patterns, rather than a de t a i l e d understanding of municipal functions and the expenditure and revenue associated with them. The generalized, rather than s p e c i f i c background of the p a r t i c i p a n t s i s l i k e l y to be r e f l e c t e d i n the i r a l l o c a t i o n decisions. The pa r t i c i p a n t s did not have a det a i l e d understanding of many municipal functions, thereby making i t d i f f i c u l t to accurately a l l o c a t e the expenditure and revenue associated with these functions to land use categories. A l l o c a t i o n decisions were based on assumptions regarding the a c t i v i t i e s that accounted for d i f f e r e n t items of expenditure and revenue. Some information was provided, to the pa r t i c i p a n t s involved in the study through the a l l o c a t i o n options (see Table I I ) . These a l l o c a t i o n options provided f a c t u a l information on a number of parameters (for example: property values by 94 land use category; general purposes taxes by land use category; and employment by land use category) which are useful i n breaking down expenditure and revenue among land use categories. The provision of additional information on which pa r t i c i p a n t s could base t h e i r a l l o c a t i o n decisions would have been useful; information on the breakdown of components included i n each item of expenditure and revenue (for example, the components making up expenditure on general government) would have been p a r t i c u l a r l y useful to pa r t i c i p a n t s who had only a li m i t e d understanding of ce r t a i n budget items. The extent to which the a l l o c a t i o n decisions r e f l e c t actual expenditure and revenue associated with d i f f e r e n t land use categories would have been increased, had municipal s t a f f from a l l municipal departments been involved i n the study. As the re s u l t s of the study now stand, they represent the views of municipal o f f i c i a l with a general and aggregate knowledge of municipal functions and of expenditures and revenues associated with these functions. The quality of the re s u l t s would have been improved had municipal o f f i c i a l s with a deta i l e d knowledge of each item of expenditure and revenue (or sub-items of expenditure and revenue) been incorporated into the analysis. 95 4.2.4 The D e f i n i t i o n of Land Use C h a r a c t e r i s t i c s Should Be Narrow and S p e c i f i c The C i t y of Vancouver case study considered the revenue-expenditure r a t i o associated with s i x land use categories; these categories consisted of single family r e s i d e n t i a l , other r e s i d e n t i a l , commercial and i n d u s t r i a l land use, as well as vacant and tax exempt land. The d e f i n i t i o n of these land use categories were based upon B.C.A.A. d e f i n i t i o n s of each land use, but were modified by the City's use code d e f i n i t i o n . The breakdown of r e s i d e n t i a l land use into two sub-categories, based upon density of development, increases the p o t e n t i a l usefulness of the study r e s u l t s i n p o l i c y formulation. The commercial and i n d u s t r i a l land use categories are, however, broadly defined; t h i s decreases the u t i l i t y of these r e s u l t s . The City of Vancouver case study i s the only case study that considers the expenditure and revenue associated with vacant land; t h i s adds an i n t e r e s t i n g dimension to the analysis. Another category t h i s study considers i s tax exempt land; the finance and planning revenue-expenditure r a t i o s for t h i s land category d i f f e r e d greatly, suggesting that the departments had d i f f e r i n g perceptions of the composition of tax exempt properties. This category seems to be an accounting designation rather than a land use category, which leads H e i k k i l a (1986) to suggest that i t should be subsumed within 96 other categories of land use i n future applications of the study. Of the three case studies examined i n t h i s t h esis, the land use categories used i n t h i s case study are most narrow and s p e c i f i c ; however, no clear d e f i n i t i o n of the c h a r a c t e r i s t i c s of the d i f f e r e n t land use categories was ever provided to the part i c i p a n t s i n the study. This case study amended the B.C.A.A. d e f i n i t i o n of land use categories by the City's own use code d e f i n i t i o n without describing the r e s u l t i n g d e f i n i t i o n s . It i s l i k e l y , therefore, that d i f f e r e n t p a r t i c i p a n t s based t h e i r a l l o c a t i o n decisions on d i f f e r i n g perceptions of the c h a r a c t e r i s t i c s of the land use categories. This i s p a r t i c u l a r l y l i k e l y with respect to the d e f i n i t i o n of commercial and i n d u s t r i a l land use; i t i s not clear whether l i g h t i n d u s t r i a l a c t i v i t i e s should be included i n the commercial or i n d u s t r i a l land use category. The f a i l u r e of the study to make the d e f i n i t i o n s of each land use category clear both to the pa r t i c i p a n t s and to persons who have access to the study r e s u l t s , severly decreases the u t i l i t y of the study's r e s u l t s . 4.2.5 Assumptions and Short-Cut Methods Used i n the Study Should Be Defensible and Cl e a r l y Documented The documentation that accompanies the discussion of t h i s case study's r e s u l t s was l i m i t e d to a description of the methodology used i n the case study. The contextual and methodological assumptions involved 9 7 i n t h i s methodology were not described or discussed. The impact of the p a r t i c i p a n t s ' personal perceptions and biases on the re s u l t s of the study was also not discussed. The methodology involved i n t h i s study made use of municipal o f f i c i a l s ' estimates regarding the expenditure and revenue associated with a p a r t i c u l a r function that should be al l o c a t e d to each land use category. The o f f i c i a l s ' estimates were based on either i n d i v i d u a l or group assumtions regarding the nature of the function and the proportion of the expenditure or revenue item r e l a t e d to that function that should be al l o c a t e d to i d e n t i f i e d land use categories. The accuracy and d e f e n s i b i l i t y of these assumptions r e f l e c t the l e v e l of understanding ( i n d i v i d u a l or group) the p a r t i c i p a n t ( s ) had of each municipal function, and the expenditure and revenue associated with that function. Unfortunately, the p a r t i c i p a n t s ' l e v e l of knowledge regarding municipal functions was often general and vague. A l l o c a t i o n decisions were, therefore, based on assumptions that were not backed by a detai l e d understanding of the municipal functions. Some of these assumptions may have r e f l e c t e d r e a l i t y and, therefore, been defensible, but i t i s l i k e l y that many of the assumptions would have been d i f f e r e n t had the par t i c i p a n t s had an intimate and deta i l e d knowledge of a l l municipal functions. 98 Although the d i s t r i b u t i o n options by which each item of expenditure and revenue were al l o c a t e d to the land use categories are documented, the ratio n a l e for the d i s t r i b u t i o n option i s not documented. This makes i t d i f f i c u l t to assess the extent to which the assumptions used i n the study are defensible and accurate. Given the l i m i t e d background and experience of the study p a r t i c i p a n t s i n many of the municipal functions addressed by t h i s t hesis, i t i s u n l i k e l y that the r e s u l t s are p a r t i c u l a r i l y accurate or useful i n p o l i c y formulation. The study would have benefitted from the i n c l u s i o n of municipal o f f i c i a l s who were intimately involved with each municpal function covered in the study. 4.2.6 The Analysts Involved i n the Study Should Have Nothing to Gain or Lose From the Results of the Study The motivating forces for t h i s study suggest that the study was undertaken as a r e s u l t of a general in t e r e s t i n the expenditure and revenue that could be associated with d i f f e r e n t land use categories, rather than for the purpose of making a case for any pre-determined course of action. The methodology used i n t h i s case study involved e s t a b l i s h i n g a group consensus i n defining the a l l o c a t i o n decision, thereby making i t d i f f i c u l t for any pa r t i c i p a n t to consistently determine the a l l o c a t i o n decision. In order to influence the r e s u l t s of the analysis, a p a r t i c i p a n t would have to consistently persuade other particpants that his/her suggestions were reasonable. The only s i t u a t i o n where t h i s i s l i k e l y to occur i s where one of the p a r t i c i p a n t s of the group i s dominant and the remaining p a r t i c i p a n t s are w i l l i n g to adopt the dominant particpant's views as a group consensus. Given the experience, heirachy and i n t e r e s t of the membership of both groups, i t i s u n l i k e l y that t h i s would have occurred. The manner i n which a l l o c a t i o n decisions were defined also l i m i t s the extent to which i n d i v i d u a l analysts could consciously influence the study's r e s u l t s ; p a r t i c i p a n t s did not d i r e c t l y select a f i n a l d i s t r i b u t i o n option for each item of expenditure and revenue. Instead, the p a r t i c i p a n t s c o l l e c t i v e l y selected rules upon which the a l l o c a t i o n decision was based. A microcomputer algorithm then used the rules to tabulate the r e s u l t i n g d i s t r i b u t i o n of expenditure and revenue. Given the underlying reasons for which the study was undertaken, and the methodology i n which a l l o c a t i o n decisions were made, i t i s u n l i k e l y that r e s u l t s of the study were manipulated to r e f l e c t p a r t i c i p a n t ' s i n d i v i d u a l biases or objectives. 4.2.7 The Results of the Study Should Be Used Within the Context of the Study's Scope, Assumptions and Methodology The r e s u l t s of t h i s case study have not been formally used i n p o l i c y formulation, i n f a c t , the 100 r e s u l t s of the study have not been presented to municipal p o l i c y makers. Only those municipal o f f i c i a l s who p a r t i c i p a t e d i n the study were aware that the study was being undertaken; some of the o f f i c i a l s who p a r t i c i p a t e d i n the study were not shown the study r e s u l t s . The study r e s u l t s were not formally consolidated as i t was hoped that a t h i r d department, the Manager's O f f i c e , would be included i n the analysis; however, before the Manager's Office could p a r t i c i p a t e i n the study, the study coordinator l e f t the City of Vancouver, and the study was prematurely concluded. The r e s u l t s of the Finance and Planning consensus d i s t r i b u t i o n s were computed, and they were examined by some of the p a r t i c i p a n t s that were p a r t i c u l a r i l y i nterested i n the r e s u l t s . The p o t e n t i a l does, therefore, exist for the r e s u l t s to be used outside of t h e i r context and l i m i t a t i o n s . This i s p a r t i c u l a r i l y true given that the p a r t i c i p a n t s i n the study were given l i t t l e introduction to the technique of expenditure-revenue analysis and the l i m i t a t i o n s associated with t h i s technique. The r e s u l t s could have had the e f f e c t of changing or r e i n f o r c i n g these p a r t i c i p a n t s assessments of the expenditure and revenue associated with d i f f e r e n t land use categories. Some of the study p a r t i c i p a n t s are i n the p o s i t i o n to influence municipal decisions (through recommendations to the municipal c o u n c i l ) ; the study r e s u l t s could, therefore, be used as 101 an informal basis on which recommendations are formulated. 4.2.8 The Limitations of Expenditure-Revenue Analysis, and of the Particular Expenditure-Revenue Study Should Be Clear l y Documented and Presented Along with the Study's Results Although the need for methodological improvements in expenditure-revenue analysis i s acknowledged along with the presentation of the r e s u l t s , there i s l i t t l e discussion of the issues and problems encountered i n expenditure-revenue analysis and how these problem areas may impact the study's r e s u l t s . Warnings regarding the s t a t i c and objective nature of the r e s u l t s were included in a b r i e f evaluation of the methodology; however, the impact of these short-comings on the usefulness of the study's r e s u l t s i n p o l i c y formulation was not discussed. The documentation of the study f a i l s to provide readers with an understanding of the scope and l i m i t a t i o n s of expenditure-revenue analysis, and the manifestation of the technique's l i m i t a t i o n s i n the case study methodology and r e s u l t s ; t h i s greatly increases the p o t e n t i a l that the r e s u l t s w i l l be used outside of the constraints of th e i r l i m i t a t i o n s . The general methodology used i n the study i s well described; however, the contextual and methodological assumptions involved i n t h i s methodology are not discussed. The scope of the study i s also not i d e n t i f i e d . The study documentation f a i l s to a l e r t 1 0 2 p o t e n t i a l readers to the context i n which the methodology and r e s u l t s should be evaluated. This increases the r i s k that the r e s u l t s w i l l be used i n a misleading manner. Given the nature of the municipal decision making process and the fact that the r e s u l t s of the study were not presented to municipal o f f i c i a l s responsible for p o l i c y decisions, i t i s u n l i k e l y that the study r e s u l t s w i l l be formally used i n p o l i c y formulation. However, the po t e n t i a l does exis t for informal use of the study's r e s u l t s . The f a i l u r e to document the l i m i t a t i o n s of expenditure-revenue analysis, and the context i n which the study's r e s u l t s should be interpreted and used, represents a weakness i n the City of Vancouver case study. It i s l e f t up to in d i v i d u a l s who may have no understanding of the l i m i t a t i o n s of expenditure-revenue analysis i n general, or the study i n p a r t i c u l a r , to interpret the r e s u l t s and decide whether they would be useful as a basis for determining land use p o l i c y decisions; t h i s increases the l i k e l i h o o d that the r e s u l t s w i l l be used i n a misleading way. In summary, the major short-comings of the City of Vancouver case study concern i t s f a i l u r e to consult a broad spectrum of municipal o f f i c i a l s with a d e t a i l e d knowledge of s p e c i f i c municipal functions, and to document the assumptions and l i m i t a t i o n s involved i n t h e methodology. The study's reliance on municipal 1 03 o f f i c i a l s with only a general knowledge of many municipal functions i n making the a l l o c a t i o n decisions involved i n the methodology, brings the r e l i a b i l i t y and usefulness of the study's r e s u l t s into question. Due t o the o f f i c i a l ' s lack of knowledge regarding many municipal functions, i t i s l i k e l y that the assumptions on which a l l o c a t i o n decisions were based were not always accurate and defensible. It i s , however, impossible to evaluate the accuracy of the a l l o c a t i o n decisions, and the assumptions on which the decisions were based, as the rationale for the choice of a l l o c a t i o n decisions i s not documented. In addition to f a i l i n g to document the a l l o c a t i o n decisions on which items of expenditure and revenue were assigned to land use categories, the analyst responsible for the study f a i l e d to document the l i m i t a t i o n s of the study. This increases the l i k e l i h o o d that the r e s u l t s may at some time be used without consideration of the study's l i m i t a t i o n s . The computerization of the study methodology represents an important strength of the case study. Not only does the computerized methodology f a c i l i t a t e the evaluation of the accuracy of the ca l c u l a t i o n s involved i n the study, but i t offers the case study a l e v e l of f l e x i b i l i t y that i s i n f e a s i b l e i n manual methodologies. The impact of d i f f e r i n g a l l o c a t i o n decisions on the r e s u l t i n g revenue-expenditure r a t i o can be e a s i l y 1 04 assessed; t h i s i n turn allows for the assessment of how the d i f f e r i n g backgrounds of the o f f i c i a l s involved i n the study are r e f l e c t e d i n the study r e s u l t s . Unfortunately, t h i s case study did not exploit the f l e x i b i l i t y of i t s methodology to the f u l l e s t p o t e n t i a l . Other strengths of t h i s case study include the completeness of the sources of expenditure and revenue that were considered, and the use of numerous categories of land use to which expenditure and revenue were assigned (these categories were not, however, e x p l i c i t l y defined to the o f f i c i a l s who p a r t i c i p a t e d i n the study or to p o t e n t i a l users of the r e s u l t s ) . 4.3 C i t y of New Westminster - Cost-Revenue Study 4.3.1 A l l Calculations Involved i n the Study Should Be Accurate As the working calcul a t i o n s involved i n the study are not included i n the municipal document describing the study methodology and r e s u l t s i t i s impossible to evaluate the accuracy of a l l the ca l c u l a t i o n s involved in the analysis. However, from the documentation that i s provided a methodological error i s suspected(7) i n the c a l c u l a t i o n of the revenue-expenditure r a t i o for each land use category. In order to explain the suspected source of t h i s error i t i s necessary to review the methodology involved i n t h i s case study. Expenditure and revenue were f i r s t a l l o c a t e d to a set of 1 05 variables and the net expenditure/revenue per do l l a r of each variable was calculated by d i v i d i n g the t o t a l amount al l o c a t e d to that variable by the t o t a l variable value. Expenditure and revenue associated with each land use category was then brought together by multiplying the net expenditure/revenue per do l l a r of each variable by the t o t a l variable value i n each land use category. In the case of one variable (taxable value of land and improvements) the revenue per doll a r involved was m u l t i p l i e d by incorrect values (assessed value of land and improvements i n each land use category instead of taxable value of land and improvements i n each land use category) when c a l c u l a t i n g the revenue associated with each land use category. The ef f e c t of t h i s error on the f i n a l r a t i o of expenditure to revenue i s l i k e l y to be extremely small; however, the presence of even a suspected error decreases the r e l i a b i l i t y and usefulness of the study's r e s u l t s . 1.3.2 The Study Should Consider A l l Sources of Municipal Expenditure and Revenue Making use of the budget items i d e n t i f i e d i n the municipality's 1971 and 1972 annual budgets, t h i s case study a l l o c a t e d expenditure and revenue for each year among 17 categories of expenditure and 20 categories of revenue(8). A l l relevant sources of expenditure and revenue were considered i n the case study. 1 06 The study also considered revenue c o l l e c t e d and transferred i n f u l l to other government a u t h o r i t i e s (for example, revenue from and expenditure on schools, non-municipal parks, and h o s p i t a l s ) . In these cases the incoming monies equal the out-going monies, therefore, the impact on the revenue-expenditure r a t i o s should t h e o r e t i c a l l y be cancelled out. However, i n some cases incoming monies associated with a government function were a l l o c a t e d among land use categories d i f f e r e n t l y from out-going monies associated with the same function. For example, c o l l e c t i o n s for other government authorities(9) were always al l o c a t e d among land use categories on the basis of assessed value of land, improvements and machinery, while monies transferred to other government authorities(10) were al l o c a t e d by population, school population or other variables as determined to be appropriate. As a r e s u l t , these monies have the capacity to af f e c t the r e s u l t i n g revenue-expenditure r a t i o of each land use category (the ef f e c t w i l l be cancelled over a l l land use categories), even though i n r e a l i t y they have no impact on municipal expenditure and revenue associated with the land use categories. Although the resultant impact on the revenue-expenditure r a t i o of each land use category i s l i k e l y to be extremely small, i t would be preferable that monies c o l l e c t e d and transferred i n f u l l to other government autho r i t i e s be excluded from t h i s and other 1 07 expenditure-revenue analyses. If these transfers are considered i n expenditure-revenue analyses care should be taken to ensure that the in-coming and out-going component of the transfer are i d e n t i c a l l y a l l o c a t e d among land use categories. 4.3-3 A l l Municipal Departments Should Cooperate i n Undertaking a Municipal Expenditure-Revenue Analysis This case study was undertaken by the Planning Department of the City of New Westminster. It i s not clear from the documentation of the study whether other municipal departments were involved i n the s t u d y ( 1 1 ) . Given that no other municipal department or o f f i c i a l s were acknowledged i n the study documentation, i t i s l i k e l y that the planning department was the only department involved. The degree of informal involvement of other departments (for example, i n providing information regarding the components of d i f f e r e n t budget items) i s also unknown. Without a knowledge of the departments and o f f i c i a l s involved i n the study i t i s d i f f i c u l t to assess the completeness of the information and l e v e l of understanding on which a l l o c a t i o n decisions were based. Both of these factors impact the r e l i a b i l i t y of the study's r e s u l t s . 1 08 4.3-4 The D e f i n i t i o n of Land Use Categories Should Be Narrow and S p e c i f i c . The C i t y of New Westminster case study assessed the revenue-expenditure r a t i o associated with four categories of land use: houses; apartments; commerce; and industry. The d e f i n i t i o n s and c h a r a c t e r i s t i c s of each land use category were not, however, i d e n t i f i e d i n the study documentation. Whether attached and semi-detached housing units were included i n the houses or apartments category i s unclear. S i m i l a r l y , the study documentation provides no insight into the boundry between commercial and i n d u s t r i a l land use categories. This greatly decreases the value of the r e s u l t s and the i r p o t e n t i a l i n land use and tax p o l i c y formulation. Although r e s i d e n t i a l land use was broken down by density of development, the commercial and i n d u s t r i a l land use categories are broadly defined; as mentioned i n r e l a t i o n the other two case studies, i t would have been useful to consider the expenditure and revenue associated with sub-categories of commercial and i n d u s t r i a l land use. 4.3.5 Assumptions and Short-Cut Methods Used i n the Study Should Be Defensible and Clearl y Documented In t h i s case study a l l o c a t i o n decisions were made on the basis of variables which were assumed to c l o s e l y r e f l e c t the expenditure and revenue associated with d i f f e r e n t land use categories. For example, expenditure on f i r e , p o l i c e and j u s t i c e services was assumed to be 1 09 associated with the assessed value of improvements i n each land use category. This i s a short-cut method of a l l o c a t i o n which i s used when i t i s d i f f i c u l t or too time consuming to assess the exact expenditure and revenue associated with d i f f e r e n t land use categories. The degree to which the variables used i n t h i s study r e f l e c t actual expenditure and revenue associated with the d i f f e r e n t land use categories (and are, therefore, defensible) i s d i f f i c u l t to evaluate. Two factors are important i n the s p e c i f i c a t i o n of variables which accurately r e f l e c t the break down of expenditure and revenue associated with a municipal function: the l e v e l of understanding the o f f i c i a l responsible for spec i f y i n g the variable has regarding (a) the nature of the municipal function and (b) the expenditure and revenue associated with that function; and the degree to which items of expenditure and revenue are broken down into sub-categories to which a single variable can be accurately applied. As no documentation i s provided on who was responsible for choosing the variables associated with d i f f e r e n t items of expenditure and revenue, i t i s impossible to discuss the l e v e l of understanding on which the decisions were based. I f , as suspected, the choice of variables was made only by Planning Department s t a f f , the l e v e l of understanding regarding both the nature of many municipal functions and the expenditure and revenue associated with those 11 0 f u n c t i o n s was l i k e l y to be l i m i t e d and g e n e r a l i z e d . The budget i tems to which v a r i a b l e s were a p p l i e d were b road i n n a t u r e . In a d d i t i o n , a s i n g l e v a r i a b l e was always a s s o c i a t e d w i t h a s i n g l e budget i t em. The a l l o c a t i o n p r o c e s s would appear to be more d e f e n s i b l e had a g r e a t e r number o f budget i tems been used , and had t h e r e been more f l e x i b i l i t y i n the manner i n which v a r i a b l e s were a p p l i e d to budget i t ems . A l though the reasons g i v e n f o r a p p l y i n g v a r i a b l e s to budget i tems were g e n e r a l i n n a t u r e , they were always w e l l documented i n the s tudy . The reasons were i n a l l cases d e f e n s i b l e when c o n s i d e r i n g the g e n e r a l na ture of budget i t ems , but may not have been had they been a p p l i e d to sub - i tems making up the g e n e r a l budget i t em. For example, when the g e n e r a l na tu re of e x p e n d i t u r e on t r a n s p o r t a t i o n s e r v i c e s i s c o n s i d e r e d , i t might seem a p p l i c a b l e to a l l o c a t e the e x p e n d i t u r e by the a s se s sed v a l u e o f l a n d and improvements i n each l a n d use c a t e g o r y ; however, when the components o f e x p e n d i t u r e on t r a n s p o r t a t i o n s e r v i c e s are c o n s i d e r e d , o ther v a r i a b l e s may be more a p p l i c a b l e . The r e s u l t i n g breakdown of e x p e n d i t u r e on t r a n s p o r t a t i o n s e r v i c e s between l a n d use c a t e g o r i e s i s l i k e l y to be d i f f e r e n t where a l l o c a t i o n d e c i s i o n s are based upon s u b - c a t e g o r i e s o f e x p e n d i t u r e on t r a n s p o r t a t i o n s e r v i c e s i n s t e a d of on a s i n g l e g e n e r a l i z e d a l l o c a t i o n r u l e . 1 1 1 4-- 3 . 6 The Analysts Involved i n the Study Should Have Nothing to Gain or Lose from the Results of the Study. It i s d i f f i c u l t to evaluate the City of New-Westminster case study against t h i s c r i t e r i o n as the study documentation does not include a description of who was involved i n the design and implementation of the analysis. The documentation does, however, provide a reason for undertaking the study which to some extent r e f l e c t s on the o b j e c t i v i t y of the study. One of the reasons for which the study was undertaken was to create int e r e s t i n municipal cost-revenue methods (City of New Westminster, 1974-). This reason implies a l e v e l of o b j e c t i v i t y i n the approach to the study, which given the l i m i t a t i o n s of expenditure-revenue analysis i n general, and the study i n p a r t i c u l a r , i s a legitimate reason for undertaking a study of t h i s nature. Despite t h i s r a t i o n a l e for the study, the study f a i l e d to include either a p r a c t i c a l or t h e o r e t i c a l discussion of the major issues involved i n expenditure-revenue analysis. Interest i n expenditure-revenue analysis was generated through the study; however, the study did l i t t l e to develop the technique or a p p l i c a t i o n of expenditure-revenue analysis. 4.3.7 The Results of the Study Should Be Used Within the Context of the Study's Scope, Assumptions and Methodology It i s d i f f i c u l t to evaluate the extent to which the study r e s u l t s have been used outside of the context of 1 1 2 the study's scope, assumptions and methodology within the t h i r t e e n years that have passed since the study was undertaken. Such an evaluation would require f i r s t hand observation of both formal and informal p o l i c y formulation within the City of New Westminster since the r e s u l t s were made available to decision makers, municipal s t a f f and the general pu b l i c . There i s , however, evidence that the study r e s u l t s have once, at l e a s t , played a role i n the formulation of p o l i c y . Walisser (1978) refers to an example where the r e s u l t s of t h i s study were, i n part, used to propose a moratorium on the construction of smaller sized housing, based on the b e l i e f that low priced housing was not self-supporting from a municipal cost-revenue perspecitve. Wallisser suggests that t h i s proposal was unsupported by substantive research. The documentation and discussion of the study's scope, assumptions and methodology i s poor; t h i s greatly increases the l i k e l i h o o d that the r e s u l t s have been used outside of the context of th e i r l i m i t a t i o n s . The conclusion of the case study suggests that the r e s u l t s of the study should be used as a basis on which to evaluate the f i n a n c i a l implications of a l t e r n a t i v e p o l i c i e s and plans for the C i t y . This i s a dangerous suggestion since the documentation of the study provides l i t t l e insight into the l i m i t a t i o n s of the study. The study documentation does acknowledge that the study i s 1 1 3 l i m i t e d i n scope i n that i t considers only a f i n a n c i a l perspective on service provision; however, the fact that the assumptions and methodology involved i n the analysis, as well as the impact of these assumptions and methodology on the r e s u l t s , are not c l e a r l y documented along with the r e s u l t s increases the p o t e n t i a l that the r e s u l t s w i l l be used ouside the context of the study's l i m i t a t i o n s i n the formulation of misleading p o l i c y . 4.3.8 The Limitations of Expenditure-Revenue Analysis and of the Par t i c u l a r Expenditure-Revenue Study Should Be Clear l y Documented and Presented Along With the Study Results Although the study documentation does mention that the technique of expenditure-revenue analysis does have l i m i t a t i o n s , the nature of the l i m i t a t i o n s and th e i r impact on the usefulness of the technique are not discussed. S i m i l a r l y , the study documentation acknowledges that the p a r t i c u l a r case study represents a "modest beginning i n a complex subject" (City of New Westminster, 1974) but the l i m i t a t i o n s of the study were not discussed. Alternative methodologies and t h e i r e f f e c t s on the study r e s u l t s were also not considered. The study documentation merely a l e r t s readers to the p o s s i b i l i t y that the study r e s u l t s may not be r e l i a b l e , but does not give any i n d i c a t i o n of how the r e s u l t s may be affected by the study's l i m i t a t i o n s , or how the r e s u l t s should be amended to take the l i m i t a t i o n s into account. In f a c t , despite the presence of acknowledged 1 1 4 l i m i t a t i o n s i t i s suggested that the r e s u l t s be used i n p o l i c y formulation. The general methodology involved i n the case study i s also not well documented. In order to understand the d e t a i l s of the methodology a reader must move step-by-step through the working material provided i n the study documentation. Even then the rationale behind c e r t a i n steps i s not c l e a r l y i l l u s t r a t e d or explained; i t i s l e f t up to readers to guess why c e r t a i n steps were taken. The case study f a i l s to document the l i m i t a t i o n s involved generally i n expenditure-revenue analysis, and s p e c i f i c a l l y i n the study i t s e l f . As a r e s u l t i t i s l e f t up to i n d i v i d u a l s who may have a very l i m i t e d insight into the technique of expenditure-revenue analysis, and exposure to the study methodology, to interpret the study's r e s u l t s and decide whether they are useful as a basis for determining land use or taxation p o l i c y . The f a i l u r e to document the l i m i t a t i o n s of both the technique of expenditure-revenue analysis i n general, and the study i n p a r t i c u l a r represents a weakness i n the Ci t y of New Westminster case study. In summary, the City of New Westminster case study highli g h t s the importance of deta i l e d documentation i n a study of t h i s nature. The poor documentation of the study hampers both evaluation of the study methodology 1 and consideration of the extent to which the study's r e s u l t s are useful as a basis for p o l i c y formulation. Evaluation of the accuracy of the c a l c u l a t i o n s involved in the study i s impossible, as a l l the working c a l u l a t i o n s are not included in the study documentation The o f f i c i a l s and departments responsible for the study were also not referenced i n the study documentation, thereby making i t d i f f i c u l t to evaluate the o b j e c t i v i t y and l e v e l of knowledge of those involved i n making a l l o c a t i o n decisions. The f a i l u r e of the study to document the d e f i n i t i o n s of the land use categories to which expenditure and revenue were allocated, and the l i m i t a t i o n s of both expenditure-revenue analysis i n general, and the study i n p a r t i c u l a r , increase the l i k e l i h o o d that the r e s u l t s may be used i n the formulation of inappropriate land use p o l i c y . On the p o s i t i v e side, t h i s study represents a concerted e f f o r t to understand the f i s c a l implications of land use decisions, as well as to generate interest in the development and a p p l i c a t i o n of the technique of expenditure-revenue analysis. 1 1 6 F O O T N O T E S 1 . The ef f e c t w i l l only be cancelled out i f similar assumptions were used for a l l o c a t i n g both expenditure and revenue associated with a municipal service to the s p e c i f i e d land use categories. 2. The sources of expenditure included expenditures on: general government; p o l i c e protection; f i r e protection; law enforcement; parking services; development and l i c e n c i n g services; other protection; engineering; garbage c o l l e c t i o n and disposal; recreation and community services; appropriations for reserves and provisions for allowances; transfers to own reserves; transfers to general c a p t i a l ; transfers to j o i n t boards and committees; grants; water supply; and sewage disposal. The sources of revenue included revenues from: property tax; revenue sharing grants; b u i l d i n g permit fees; l o c a l improvement l e v i e s ; refuse c o l l e c t i o n l e v i e s ; e l e c t r i c a l permit fees; gas permit fees; plumbing permit fees; business licence fees; vehicle licence fees; s t r a t a fees; b u i l d i n g inspection fees;rezoning fees; sign permit fees; family suite fees; street occupancy fees; liquor tax; dog licence fees; rent; miscellaneous revenue; i n t e r e s t on taxes; penalties on taxes; tax sale i n t e r e s t ; service charges; Canada Assistance Plan; revenue sharing (housing); revenue sharing (planning); emergency health service revenue; emergency program revenue; j u s t i c e administration administration; government enterprises; other l o c a l government revenue; storm sewage connection revenue; fines and fees ( p r o v i n c i a l court); f i n e s and fees (pound); fines and fees (parking) cemetry fees; revenue from the assessment authority; revenue from the municipal finance authority; revenue from the G.V.R.D.; revenue from B.C. Transit; revenue from the U t i l i t y Company; surplus f o r r p r i o r years; revenue from the G.V.H.D.; grants i n l i e u ; revenue from the water supply system; and revenue from the sewage system. 1 1 7 3. The consultant should also be responsible for providing municipal o f f i c i a l s with background information on the issues and l i m i t a t i o n s involved i n expenditure-revenue analysis. 4. The r e s u l t s of the City of North Vancouver study have not been formally used either with or without consideration of the study's scope, assumptions and methodology. 5. This algorithm was developed using Lotus 1-2-3 on an IBM PC. 6. The sources of expenditure include: general government; f i r e protection; other protection; streets; parking enforcement; street l i g h t i n g ; sewers and p o l l u t i o n control; scavenging and waste removal; waterworks; parks and recreation -general; parks and recreation -operations; l i b r a r i e s ; c i v i c theatres; museum, planetarium, art g a l l e r y ; other community services; health; l o c i a l services grants; s o c i a l planning; l o c a l improvements debt charges; and p o l i c e . The sources of revenue included: general tax levy; receipts i n l i e u of taxes; penalties and i n t e r e s t ; business taxes; p r o v i n c i a l government revenue sharing; i n t e r e s t on short term investments; licence fees; rentals and taxes i n l i e u ; recreation/community services; parking enforcement; miscellaneous; waterworks; and property endowment fund, surplus reserves and outstanding commitments. 7. The reason that t h i s error i s only suspected, i s that the available documentation does not allow the suspicion to be either confirmed or disproved. 8. The sources of expenditure include: general government; f i r e , p o l i c e and j u s t i c e ; protective inspections; coroner, ambulance, pest and animal control; transportation services; sewage and refuse; comfort sta t i o n ; public health and welfare; planning; market and grants; parks and recreation; f i s c a l services; transfer to reserves; fransfer to c a p t i a l and loan fund; transmission of taxes to hospitals and parks; transmission of taxes to the GVRD and MFA; and transmission of school taxes. 1 1 8 The sources of revenue include: general property taxes; l o c a l improvement taxes; business taxes; grants i n l i e u of taxes; refuse c o l l e c t i o n ; f i r e protection; sewers; health; a l l other sales of services; f i n e s ; rentals; pole aggrements; school d i s t r i c t s ; business licences; a l l other revenue from own sources; conditional transfers; water d i s t r i b u t i o n p r o f i t ; e l e c t i c i t y d i s t r i b u t i o n p r o f i t ; a l l other transfers; and c o l l e c t i o n s for other governments. 9. C o l l e c t i o n s for other government a u t h o r i t i e s are considered to be revenues. 10. Transfers to other government a u t h o r i t i e s are considered to be expenditures. 1 1 . The Planner responsible for the Study has since l e f t the City of New Westminster and, therefore, cannot be contacted to provide additional information on those involved i n the study. 1 1 9 CHAPTER 5 5 . CONCLUSIONS AND RECOMMENDATIONS This chapter considers the role of the case studies, and of municipal expenditure-revenue analysis in land use planning and p o l i c y formulation. In addition, on the basis of the analysis and evaluation of the three case studies, recommendations to analysts undertaking future municipal expenditure-revenue analyses are developed. This chapter interprets the content and analysis of previous chapters into a form which w i l l help planners, as well as finance o f f i c e r s , p o l i t i c i a n s or c i t i z e n s explore the expenditures and revenues associated with land use categories i n the i r p a r t i c u l a r community. 5 . 1 The Role of the Case Studies i n Land Use Planning and P o l i c y Formulation As discussed i n the previous chapter the formal use of the case studies' r e s u l t s i n land use planning and p o l i c y formulation has been extremely l i m i t e d . Only i n the City of New Westminster have the r e s u l t s been formally used i n the formulation of a land use p o l i c y a l t e r n a t i v e ( 1 ) , and i n t h i s case the al t e r n a t i v e was c r i t i c i z e d for being based upon insubstantial research (Walisser, 1978). In the case of the City of Vancouver study the re s u l t s were not even presented to municipal 1 20 o f f i c i a l s responsible for land use planning and p o l i c y formulation. The r e s u l t s of the City of North Vancouver study were presented to the appropriate o f f i c i a l s , but the l i m i t a t i o n s of the study were emphasized, thereby ensuring that the studies' r e s u l t s would not be used without consideration of the studies' l i m i t a t i o n s . To date, the r e s u l t s of the City of North Vancouver study have not been used formally i n planning or p o l i c y formulation. The extent to which the studies' r e s u l t s have been informally used to influence land use planning and p o l i c y formulation i s more d i f f i c u l t to determine. In a l l three c i t i e s , o f f i c i a l s with the a b i l i t y to influence planning and p o l i c y formulation had access to the r e s u l t s of the studies. The extent to which the r e s u l t s were used to reinforce or a l t e r land use decisions i s impossible to determine, but the p o s s i b i l i t y c e r t a i n l y exists i n a l l three j u r i s d i c t i o n s . The role that the studies' r e s u l t s (as they now stand) should play i n planning and p o l i c y formulation i s extremely l i m i t e d . A l l three sets of r e s u l t s require i n t e r p r e t a t i o n i n the l i g h t of t h e i r l i m i t a t i o n s , before they can be e f f e c t i v e l y put to use i n planning and p o l i c y formulation. The North Vancouver and New Westminster case studies should be reworked to check for inaccuracies i n the c a l c u l a t i o n s involved. These two case studies should also be reviewed i n order to ensure 1 21 that they include a l l relevant sources of expenditure and revenue, but exclude transfers to other government agencies (or at l e a s t , use i d e n t i c a l a l l o c a t i o n rules i n a l l o c a t i n g the "expenditure" and "revenue" associated with each transfer to land use categories). A l l three case studies should be further analyzed i n terms of the e f f e c t on the f i n a l r e s u l t s of the background, knowledge and personal biases of those involved i n the studies. This i s p a r t i c u l a r l y important where the a l l o c a t i o n decisions involved i n the study were made by o f f i c i a l s with a l i m i t e d or genaralized knowledge regarding the nature of municipal functions and the expenditure and revenue associated with those functions. The s e n s i t i v i t y of each case study's r e s u l t s to other aspects of each study's methodology should also be analyzed. For example, the e f f e c t of the use of a base variable on the r e s u l t s of the City of North Vancouver study should be considered. Even i f the r e s u l t s of the case studies were e n t i r e l y defensible (which c l e a r l y they are not), their role i n planning and p o l i c y formulation would be l i m i t e d because of th e i r use of land use categories which are broad i n nature, and poorly defined. In general, planning and p o l i c y formulation address very s p e c i f i c sub-categores of land use; therefore, i n order to be most useful the breakdown of land use categories i n expenditure-revenue analyses should be both narrow and 1 2 2 c l e a r l y defined. However, as discussed before, the use of narrow and s p e c i f i c categories of land use greatly increases the d i f f i c u l t y of making accurate and defensible a l l o c a t i o n decisions. Before the r e s u l t s of any of the three case studies are formally or informally used i n land use planning or p o l i c y formulation, each study should be reworked to address the weaknesses highlighted i n the evaluation of each case study. Even then the role of the r e s u l t s i n planning and p o l i c y formulation w i l l be l i m i t e d by the nature of municipal expenditure-revenue analysis i t s e l f . 5 . 2 The Role of Expenditure-Revenue Analysis i n Land Use Planning and Pol i c y Formulation The role of expenditure-revenue analysis i n land use planning and p o l i c y formulation i s determined by the nature of the technique; expenditure-revenue analysis addresses only one component of information required i n land use planning and the formulation of e f f e c t i v e land use p o l i c y . Land use planning and p o l i c y formulation should r e l y on a range of information, which i n addition to f i n a n c i a l information includes s o c i a l , environmental, p o l i t i c a l , economic and design r e l a t e d information. The art of land use planning and p o l i c y formulation i s to bring these sources of information together i n order to define a decision which represents an e f f e c t i v e and acceptable solution, given the context i n which the decision i s being made. The information generated from expenditure-revenue analyses should be recognized for what i t represents: one component of the information necessary for e f f e c t i v e land use planning and p o l i c y formulation. The importance of d i f f e r e n t components of information w i l l change over time, and over j u r i s d i c t i o n s , depending on the context i n which land use decisions are being made. The role expenditure-revenue analyses and their r e s u l t s play i n land use planning and p o l i c y formulation w i l l depend on the perceived importance of a f i n a n c i a l perspective r e l a t i v e to the importance of other perspectives. At times the f i n a n c i a l perspective may be extremely important and take precedence over a l l other perspectives(2). For example, when a municipality i s on the verge of insolvency(3) the information generated from an expenditure-revenue analysis would play an important ro l e i n land use (as well as se r v i c i n g and taxation) planning and p o l i c y formulation. When a municipality i s in a f i n a n c i a l l y secure p o s i t i o n , the role of expenditure-revenue analyses may be accorded a low p r i o r i t y i n the formulation of land use p o l i c y . It would, however, never be safe for a municipality to disregard a f i n a n c i a l perspective i n land use planning and p o l i c y formulation as ultimately the municipality's f i n a n c i a l s i t u a t i o n a f f e c t s i t s a b i l i t y to f u l f i l l i t s functions. 1 24-The a p p l i c a t i o n of expenditure-revenue analysis to land use planning and p o l i c y formulation i s l i m i t e d by the s t a t i c nature of these studies. Expenditure-revenue analyses, i n most cases, consider the items of expenditure and revenue from the previous year; therefore, by the time the studies are completed th e i r r e s u l t s are already outdated. Land use planning and p o l i c y formulation are "forward looking" processes; although they are often based upon observations and information form the past and present, they involve the ap p l i c a t i o n of t h i s information to the future. This implies a dynamic rather than a s t a t i c technique. The ap p l i c a t i o n of the r e s u l t s of an expeniture-revenue study to the future involves an extension of expenditure-revenue analysis into the bounds of f i s c a l impact analysis. Before the r e s u l t s of expenditure-revenue analysis can be applied to planning and p o l i c y formultation they should be reworked and extended to r e f l e c t the time scale involved. Another example where the r e s u l t s of f i s c a l impact analyses are more applicable to planning and p o l i c y formulation than those of municipal expenditure-revenue analyses re l a t e s to the l e v e l of generality of the r e s u l t s . F i s c a l impact analyses usually address very s p e c i f i c land use categories under very s p e c i f i c conditions (for example, the impact of the development of x multi-family r e s i d e n t i a l units on a municipality's 1 25 finances). Expenditure-revenue analyses, on the other hand, are usually general i n nature (for example, the municipal revenue-expenditure r a t i o of multi-family r e s i d e n t i a l use i n general). As land use planning and p o l i c y formulation usually consider narrow categories of land use under f a i r l y s p e c i f i c conditions, expenditure-revenue analyses' r e s u l t s offer only l i m i t e d a p p l i c a t i o n i n these areas. The ro l e of expenditure-revenue analyses i n land use planning and p o l i c y formulation i s also l i m i t e d by the need for further research into the technique. Two areas i n expenditure-revenue analysis which, i n p a r t i c u l a r , require further research are: - the appropriate a l l o c a t i o n of expenditure and revenue associated with people among land use categories; and - the s e n s i t i v i t y of expenditure-revenue analyses' r e s u l t s to the s p e c i f i c methodology used. The methodologies of expenditure-revenue analyses are s t i l l based upon premises and assumptions which have not been demonstrated to be acceptable or v a l i d . The f a i l u r e to develop a widely acceptable methodology r e f l e c t s an important c h a r a c t e r i s t i c of expenditure-revenue analyses. These studies make use of and manipulate quantitative data, however, the manner i n which the data i s manipulated i s subjective. S u b j e c t i v i t y i s a key component of expenditure-revenue 1 26 analysis; i t i s t h i s component of the methodology that defies wide acceptance. Different analysts w i l l define land use categories d i f f e r e n t l y , and w i l l make use of d i f f e r e n t information i n a l l o c a t i n g expenditure and revenue to land use categories; t h i s i s p a r t i c u l a r l y true i n the a l l o c a t i o n of expenditure and revenue associated with people to land use categories. D e f i n i t i o n of a widely acceptable expenditure-revenue analysis methodology w i l l probably never occur because of the subjective nature of a large component of the analysis. However, short of defining an objective methodology, analysts should s t r i v e to eliminate extremes and narrow the range of acceptable premises and assumptions i n expenditure-revenue analysis. Despite the lack of a widely acceptable methodology and the subjective nature of a large component of the analysis, the importance of t h i s technique should not be underemphasized. A well thought out and c a r e f u l l y implemented study may produce a bottom l i n e that i s useful to planners; however, even where the bottom l i n e i s imprecise, the process i n getting to the outcome i s important. The process requires a consistent and e x p l i c i t framework for quantifing expenditure and revenue associated with d i f f e r e n t land use categories. It demands that planners and other municipal s t a f f consider the f i s c a l side of municipal functions; t h i s i s a component of information that i s too often ignored i n 1 27 planning and p o l i c y formulation. Even where the bottom l i n e i s questionable the process of getting to the bottom l i n e i s l i k e l y to af f e c t the manner i n which future land use decisions are made. The data used and generated i n the process of undertaking an expenditure-revenue analysis w i l l contribute to the municipality's data base, and may be useful for other purposes. For example, data used and generated i n the City of Vancouver study was incorporated into a la t e r study which i d e n t i f i e d c i t y areas i n which d e n s i f i c a t i o n could occur at the least cost to the municipality. 5.3 Recommendations to Analysts Undertaking Municipal Expenditure-Revenue Analyses The recommendations l i s t e d below address key issues and common problems i n expenditure-revenue analysis. Like the c r i t e r i a developed i n Chapter 3 these recommendations represent ideals towards which analysts should s t r i v e . The discussion under each recommendation suggests how the issues and problems should be best dealt with i n the design and implementation of expenditure-revenue analyses, and also considers any constraints to acheiving the recommendations. Recommendation 1: Expenditure-Revenue Analyses be Undertaken under Objective Circumstances Should 1 28 Expenditure-revenue analyses should be undertaken out of a genuine and objective interest i n the expenditure and revenue associated with d i f f e r e n t land use categories. As discussed previously, expenditure-revenue methodologies and the i r r e s u l t s are open to manipulation through the premises and assumptions that are used i n defining a l l o c a t i o n decisions. In order that the c r e d i b i l i t y of the analysis be upheld, every attempt should be made to ensure that the analysis i s undertaken under objective (and what appears to be objective) circumstances. The following measures w i l l help to es t a b l i s h the o b j e c t i v i t y and c r e d i b i l i t y of a study: (a) Expenditure-revenue studies should be designed and implemented by many o f f i c i a l s from a broad cross section of municipal departments. The greater the number and d i v e r s i t y of persons and int e r e s t s involved the less i t i s l i k e l y that the re s u l t s of the study can be consciously manipulated to provide a r a t i o n a l i z a t i o n for any desired course of action. The involvement of a broad cross section of municipal departments i s also important given the fragmentation of knowledge regarding the nature of municipal functions and the expenditure and revenue associated with those functions. (b) A l l o f f i c i a l s involved i n the study should be introduced to the nature, strengths, weaknesses and 1 29 a p p l i c a t i o n of municipal expenditure-revenue analysis. They should also be informed of the po t e n t i a l impact that t h e i r personal perceptions and assumptions could have on the re s u l t s of the analysis; o f f i c i a l s should be asked to make a conscious e f f o r t to r e t a i n o b j e c t i v i t y i n the choice of data, variables and a l l o c a t i o n decisions. (c) Ideally, expenditure-revenue analyses should be coordinated by a consultant with a det a i l e d knowledge of the technique of expenditure-revenue analysis, and with no possible i n t e r e s t i n the study's r e s u l t s . The role of the consultant should be to i d e n t i f y municipal o f f i c i a l s who would be useful to the analysis, and introduce them to the technique. The consultant should also h i g h l i g h t the strengths and weaknesses of the technique and coordinate the design of the study methodology. The knowledge the municipal o f f i c i a l s bring to the study, regarding the nature of the municipal function and the expenditure and revenue associated with these functions i s also important i n the design of the methodology. The implementation of the analysis should be undertaken s o l e l y by the municipal o f f i c i a l s . O f f i c i a l s should be made to defend th e i r chosen a l l o c a t i o n decisions by explaining the rationale for the a l l o c a t i o n to other members of the study group. 1 30 In r e a l i t y both t h i s recommendation and the steps to achieve the recommendation are d i f f i c u l t to f u l f i l l . Expenditure-revenue analysis involves a subjective component which can never be "objective". In addition, exactly how to define objective circumstances i s unclear. However, the point to be made here i s that expenditure-revenue analyses should not be undertaken for the purpose of proving an outcome; they should be undertaken under "open-minded" circumstances i n which the process i s valued as highly as the outcome. Involving a large number of municipal o f f i c i a l s i n the analysis may reduce the l i k e l i h o o d that the r e s u l t s w i l l be consciously manipulated; however, t h i s i s done at the r i s k of rendering the study "unworkable" and increasing the cost of the study. Time and money constraints also l i m i t the extent to which the o f f i c i a l s can be introduced to the nature, strengths, weaknesses and a p p l i c a t i o n of the study. Finding a consultant who has both a d e t a i l e d knowledge of expenditure-revenue analysis, and no vested in t e r e s t i n the study's r e s u l t s i s a d i f f i c u l t , i f not impossible, task. Even where a consultant may have no interest i n the r e s u l t s he/she may have an in t e r e s t i n ensuring that the study w i l l lead to further work. Recommendation 2: The Resources Available to the Study Should Allow a Thorough and In-Depth Analysis of the 131 Expenditure and Revenue Associated with Land Use Categor ies If an expenditure-revenue study i s to be undertaken, the resources dedicated to the study should be s u f f i c i e n t to ensure that the study's r e s u l t s are useful and meaningful. Too often, the r e s u l t s of such studies have no appl i c a t i o n because methodological short-cuts were used which adversely a f f e c t the a c c e p t a b i l i t y of the r e s u l t s . To a c e r t a i n point, there seems to be a c o r r e l a t i o n between the resources ava i l a b l e to a study and the r e l i a b i l i t y and v a l i d i t y of the study r e s u l t s . The point at which additional resources w i l l no longer improve the quality of a study's r e s u l t s i s unclear; however, i t i s l i k e l y to be beyond the point that any of the three case studies reached. The resources available to the study should make i t possible f o r : - An independent and knowledgeable(4-) consultant to be h i r e d with the r e s p o n s i b i l i t y of coordinating and f a c i l i t a t i n g the study; - The involvement of a broad cross section of municipal o f f i c i a l s with varying backgrounds but extensive experience and knowledge regarding the nature of municipal functions and the expenditure and revenue associated with these functions; 1 3 2 - An o r i e n t a t i o n period during which the consultant introduces the o f f i c i a l s to the nature, goals, strengths, l i m i t a t i o n s , issues, problems, design, implementation and a p p l i c a t i o n of expenditure-revenue analysis; - A working session during which the consultant and o f f i c i a l s involved i n the study i d e n t i f y the most appropriate methodology given: - the rationale for the study, - the consultant's understanding of expenditure-revenue analysis, and - the o f f i c i a l s ' understanding of municipal functions, the expenditure and revenue associated with those functions, and land use within the municipality; - The agreed upon methodology to be implemented to the point which ensures the r e l i a b i l i t y , v a l i d i t y and usefulness of the r e s u l t s ; - A working session at which each o f f i c i a l responsible for an item of expenditure or revenue must r a t i o n a l i z e the decisions used i n a l l o c a t i n g the item to land use categories to the remainder of the study team; - An objective analysis of the role of the study's r e s u l t s i n land use planning and p o l i c y formulation; and 1 33 - Detailed documentation of the the study's methodology, strengths, l i m i t a t i o n s and ap p l i c a t i o n . As mentioned previously, there i s no "magic l i n e " which determines what resources are necessary to ensure a credible product. Given the subjective nature of expenditure-revenue analyses i n f i n i t e resources could be dedicated to the study, and there would s t i l l be grounds for questioning the r e s u l t s . The purpose to which the re s u l t s are to be put should determine the extent of resources dedicated to the study. Recommendation 3: The Study Methodology Should Combine The Range of Approaches Outlined i n Chapter Two of t h i s Thesis Ideally, the methodology used i n an expenditure-revenue study should combine the range of approaches discussed e a r l i e r i n t h i s t h e s i s . These approaches should not, however, be combined haphazardly, but should be applied i n a h e i r a c h i c a l manner. F i r s t , the o f f i c i a l s involved i n the analysis should attempt to locate documents on which a l l o c a t i o n decisions can be based. In many cases available documents w i l l not help in the a l l o c a t i o n process; the o f f i c i a l should then make use of the second approach, which involves using the experience he/she has aquired i n his/her p o s i t i o n as a 1 34 basis on which to a l l o c a t e items of expenditure and revenue to land use categories(5). Samples of available records can be used as a means of evaluating and ammending o f f i c i a l ' s a l l o c a t i o n decisions. The r a t i o n a l e for the choice of a l l o c a t i o n decisions should be c l e a r l y documented by the municipal o f f i c i a l . In the case of some items of expenditure and revenue neither of the above approaches may be f e a s i b l e ; no records may e x i s t on which to make a r e l i a b l e a l l o c a t i o n decision and the o f f i c i a l may have no basis on which to specify an a l l o c a t i o n decision. In t h i s case the t h i r d approach should be used, whereby a l l o c a t i o n decisions are based upon one or more variables with assumed relationships between the expenditure or revenue items and the s p e c i f i e d land use categories. Again, the rationale for basing the a l l o c a t i o n decision on the defined variables should be c l e a r l y documented. This h e i r a c h i c a l approach w i l l ensure that a l l o c a t i o n decisions are based upon the most r e l i a b l e and defensible information a v a i l a b l e . Recommendation 4: The Calculations Involved i n Expenditure-Revenue Analyses Should Be Computerized As useable and inexpensive computer software, which i s well suited to the implementation of expenditure-1 35 revenue analyses, i s r e a d i l y available, a l l future studies should be computerized. Computerized methodologies offer two important advantages over manual methodologies: (1 ) the c a l c u l a t i o n s involved can be more e a s i l y checked for accuracy; and (2) the s e n s i t i v i t y of analyses' r e s u l t s to d i f f e r i n g a l l o c a t i o n decisions (and assumptions underlying the a l l o c a t i o n decisions) can be more e a s i l y analyzed. Checking the ca l c u l a t i o n s of a manual methodology that i s suspected to include inaccuracies i s a time consuming and tedious task. Suspected inaccuracies(6 ) i n a computerized methodology can be e a s i l y checked and ammended i f necessary. It i s u n l i k e l y that the s e n s i t i v i t y of a study's r e s u l t s to d i f f e r i n g sets of assumptions and a l l o c a t i o n decisions would be analyzed i n a manual methodology; t h i s would be too time consuming to consider. However, the use of a computerized methodology makes the consideration of the s e n s i t i v i t y of the r e s u l t s to the a l l o c a t i o n decisions used an easy and expedient task. S e n s i t i v i t y analyses allow the r e l i a b i l i t y and v a l i d i t y of the study's r e s u l t s to be considered; t h i s i s important where the r e s u l t s of expenditure-revenue analyses are to be used i n land use planning and p o l i c y formulation. 1 36 Recommendation 5: A l l Aspects of the Study Methodology Should be C l e a r l y Documented Careful documentation of a l l aspects of an expenditure-revenue analyis i s important i n the appropriate a p p l i c a t i o n of the study's r e s u l t s . A study's r e s u l t s should be considered i n the context i n which the study was undertaken; documentation should, therefore, cover: - the nature and scope of expenditure-revenue analysis; - issues and problems i n expenditure-revenue analysis; - the rationale for undertaking the study; - the methodology used i n undertaking the study; - the names, positions and experience of a l l municipal o f f i c i a l s involved i n the study; - the r a t i o n a l e , and assumptions behind each a l l o c a t i o n decision; - clear d e f i n i t i o n s of each land use category; - the strengths of the study's methodology and r e s u l t s ; - the weaknesses of the study's methodology and r e s u l t s , including the s e n s i t i v i t y of the r e s u l t s to the p a r t i c u l a r methodology used; - the study r e s u l t s ; 1 3 7 - the p o t e n t i a l a p p l i c a t i o n of the study's r e s u l t s ; and - areas of the study which would benefit from further research. Although t h i s thesis has not solved any of the issues and problems facing municipal expenditure-revenue analysis, i t has highlighed and discussed the major stumbling blocks encountered by analysts who wish to quantify municipal expenditure and revenue associated with d i f f e r e n t land use categories. This thesis has also interpreted lessons learned through the analysis of the three case studies into recommendations which provide a guide to analysts wishing to undertake or evaluate expenditure-revenue studies. It i s hoped that through continued interest i n , and a p p l i c a t i o n of, such studies that the issues and problems of expenditure-revenue analysis w i l l be further analyzed, understood and resolved, i n order that a f i s c a l perspective can be confidently incorporated into land use planning and p o l i c y formulation. 1 38 FOOTNOTES 1. The study r e s u l t s were used as a basis on which to recommend a moratorium on the construction of smaller sized housing. 2. Where a f i n a n c i a l perspective takes precedence, other perspectives are not disregarded, rather they are considered, but are awarded a low p r i o r i t y r e l a t i v e to the f i n a n c i a l perspective. 3. This may seem u n l i k e l y today, but i n the 1930s many North American m u n i c i p a l i t i e s faced insolvency. 4. Regarding the nature, strengths, weaknesses, design, implementation and a p p l i c a t i o n of expenditure-revenue analysis. 5- O f f i c i a l s estimates should also take any useful data sources into account. 6. In a computerized methodology inaccuracies can occur either i n the data entered into the program, or i n the algorithms used by the program. 1 39 BIBLIOGRAPHY Amborski, D.P., Urban Growth Strategy: Phase 1 - F i s c a l  Impact Analysis. City of Edmonton Planning Department, 1981. Anderson, W.H., Financing Modern Government. Houghton M i f f l i n Company, Boston, 1973. Arthur Anderson and Company, Downtown Highrise D i s t r i c t  Cost-Revenue Study Update. San Francisco, 1981. Bahl, R.(ed), The F i s c a l Outlook for C i t i e s . Syracuse University Press, New York, 1978. Barnes, R.M., and Raymond, G.M., The F i s c a l Approach to Land Use Planning. American Ins t i t u t e of Planners  Journal 21, 1955, 71 -75. Beaton, W.P., The Determinants of Police Protection. National Tax Journal 27, 1974, 335 - 349. Berolzheimer, J., Influences Shaping Expenditures for Operation of State and Local Government. B u l l e t i n of  the National Tax Journal Association 32, 1947. Bish, R.L., Local Government i n B r i t i s h Columbia. Unprinted Manuscript, Centre for Public Sector Studies, School of Public Administration, University of V i c t o r i a , 1984. B l a i r , J.P., and Nachimas, D., F i s c a l Retrenchment and  Urban Policy. Sage Publications, Beverley H i l l s , 1 979. Booze, A l l e n and Hamilton Inc., F i s c a l Impact of Reston,  F a i r f a x County, V i r g i n i a . Reston, V i r g i n i a , 1973. Bradford, D.F., Malt, R.A., and Oates, W.E., The Rising Cost of Local Public Services: Some Evidence and Reflections. National Tax Journal 22, 1969, 185 -202 . Buchanan, J.M., P r i n c i p l e s of Urban F i s c a l Strategy. Public Choice, 11, 1971, 1 - 16. Burchell, R.W., and L i s t o k i n , D., The F i s c a l Impact  Handbook. Centre for Urban Policy Research, New Jersey, 1978. 1 40 Burchell, R.W., and L i s t o k i n , D., Pr a c t i t i o n e r ' s Guide  To F i s c a l Impact Analysis. Centre for Urban Policy Research, New Jersey, 1980. Burchell, R.W., L i s t o k i n , D., and Dolphin, W.R., The New  Pra c t i t i o n e r ' s Guide to F i s c a l Impact Analysis. Centre for Urban Policy Research, New Jersey, 1985. Calgary Regional Planning Commission, Municipal Growth:  Revenue and Expenditure Analysis. Calgary, 1979. Canada Mortgage and Housing Corporation, A Preliminary  Investigation into the Fi n a n c i a l Aspects of Municipal  Reluctance to Service Medium Density Residential  Development. 1980. Carr, J.H., C r i s i s and Constraint i n Municipal Finance. Centre for Urban Policy Research, New Jersey, 1984. Chamberlain, G.M., Local Revenues versus Land Use. The  American City, May 1974, 96. Chambers, J.W., Do Single Family Homes Pay the i r Way? in Growth Cost-Revenue Studies, Leonard W.T., Berkeley, C a l i f o r n i a , Associated Home Builders of the Greater EastBay Inc., 1972. Cho, Yong Hyo, F i s c a l Implications of Annexation: The Case of Metropolitan C i t i e s i n Texas. Land Economics 45, 1969, 368-372. City of New Westminster, Land Use and the Municipal  Budget. New Westminster, 1974. City of North Vancouver, Cost-Revenue Study. Unpublished document, 1984. Clark, D., Urban Renewal and Municipal Taxation. Canadian Tax Journal 10, November - December 1962. Clarke, W.H., An Area of Need for Cost-Revenue Studies. Municipal Finance 36, 1963, 130 -139. Connecticut Development Group Inc., Impact Analysis for Residential Development. Connecticut, 1971. Downing, P.B., Local Servicing P r i c i n g P o l i c i e s and the i r E f f e c t on Urban Spatial Structure. University of B r i t i s h Columbia, 1977. Esser, G.H. J r . , Urban Growth and Municipal Services. Popular Government 23, 1956, 3 - 8 . 141 Feinberg, M.S., The Implications of Core-City Decline for the F i s c a l Structure of the Core-City. National  Tax Journal 17, 1964, 213 - 231. Garrison, C.B., New Industry i n Small Towns: Impact on Local Government. National Tax Journal 24, 1971, 493 - 500. Greater Vancouver Regional D i s t r i c t , The Dollar Burden  of Growth. Vancouver, 1976. Gruen, Gruen and Associates, F i s c a l Impact of New  Downtown High-Rises on the City and County of San  Francisco. San Francisco, 1981. Hei k k i l a , E., and Kolk, J., Sectoral Cost-Revenue  Analysis. Inter-Departmental Memorandum, Cit y of Vancouver, 1983. He i k k i l a , E., and Leckie, P., Municipal Revenues and  Expenditures by Land Use Category. Unpublished Document, City of Vancouver, 1986. Howell, J.M., and Stamm, C.F., Urban F i s c a l C r i s i s . Lexington Books, Lexington, 1979. Hirsch, W.Z., Vincent, P.E., T e r r e l l , H.S., Shoup, D.C, and Rosett, A., F i s c a l Pressures on the Central City. Praeger Publishers, New York, 1971. In s t i t u t e of Real Estate Management, Income Expense  Analysis: Suburban Office Buildings. 1979. Isard, W., and Coughlin, R., Municipal Costs and Revenues Resulting from Community Growth. Chandler-Davis Publishing Company, Wellesley, Mass., 1957. Levin, M.S., Cost-Revenue Impact Analysis: State of the  Art. Urban Land 34, 1975, 8 - 1 5 . Levine, C.H., and Rubin, I.R. (eds), F i s c a l Stress and  Public Policy. Sage Publications, Beverley H i l l s , 1 980 . L i t c h f i e l d , N., Cost-Benefit Analysis i n Plan Evaluation. Town Planning Review 35, 1964, 159 -1 69 . L i t c h f i e l d , N., and Chapman, H., Cost-Benefit Analysis i n Urban Expansion: A Case Study. Regional Studies 3, 1969, 123 - 155. 1 42 Ludlow, W.H., Urban Densities and th e i r Costs, i n Urban  Redevelopment: Problems and Practices. Coleman Woodbury, Chicago, The University of Chicago Press, 1 953. McHugh, F.D., Cost of Public Services i n Residential Areas. American Society of C i v i l Engineers 107, 1942, 1401-1446. Mace, R.L., Municipal Cost-Revenue Research i n the United States. In s t i t u t e of Government, University of North Carolina, 1961. Mace, R.L., Cost-Revenue Research and the Finance O f f i c e r . Municipal Finance 36, 1963, 122 - 129. Mao, J.T., E f f i c i e n c y i n Public Urban Renewal Expenditure Through Benefit-Cost Analysis. Journal  of American Inst i t u t e of Planners 33, 1966, 95 - 107. Margolis, J., The Governance of Metropolitan Areas:  F i s c a l Aspects. FELS Centre for Government, Pennsylvania University, 1971. Ministry of State for Urban A f f a i r s , Impact of  Alter n a t i v e Residential Land Uses on Municipal  Government Finances: A Cost-Revenue Model and Case  Study. 1973. M i t c h e l l , G.W., The Fi n a n c i a l and F i s c a l Implications of Urban Growth. Urban Land, July - August 1960, 4. Muller, T., and Dawson, G., The F i s c a l Impact of Residential and Commercial Development: A Case Study. Urban I n s t i t u t e , Washington D.C, 1972. Muller, T., F i s c a l Impacts of Land Development. Urban In s t i t u t e , Washington D.C, 1973. Navin, R., Analysis of a Slum Area. Catholic University of Washington Press, Washington, 1934 0'Conner, J., The F i s c a l C r i s i s of the State. St. Martin's Press, New York, 1973. Off i c e of Planning and Research, Economic Practices  Manual. C a l i f o r n i a , 1978. Patterson, G.M., A l l o c a t i n g Expenditures to Land Use Categories. Municipal Finance 36, 1964, 136 - 139. Rose, R., and Page, E., F i s c a l Stress i n C i t i e s . Cambridge University Press, 1982. 1 43 Seasongood, M., and Dykstra, C.A., The C r i s i s i n Municipal Finance. National Municipal League, New York, 1933. State of Missouri, Office of Administration, An Analysis  of Revenue and Expenditure Patterns for Selected  Major C i t i e s . 1977. Stein, E., Cost-Revenue A l l o c a t i o n Model: A Tool for F i n a n c i a l City Planning. Urban Land 35, 1976, 13 -22 . Stephens, G.M. J r . , F i s c a l Impact Model for Land Development: A Case Study. Urban Land 34, 1975, 16 -23. . Walisser, B.E., F i s c a l Impact of Residential Growth: B r i t i s h Columbia. Ministry of Municipal A f f a i r s and Housing, V i c t o r i a , 1978. Wheaton, W.L.C., and Schussheim, M.J., The Cost of Municipal Services i n Residential Areas. Department of Regional Planning, Harvard University, Boston, 1955. Weicher, J . C , The E f f e c t of Urban Renewal on Municipal Service Expenditures. Journal of P o l i t i c a l Economy 80, 1972, 86 - 101. 

Cite

Citation Scheme:

        

Citations by CSL (citeproc-js)

Usage Statistics

Share

Embed

Customize your widget with the following options, then copy and paste the code below into the HTML of your page to embed this item in your website.
                        
                            <div id="ubcOpenCollectionsWidgetDisplay">
                            <script id="ubcOpenCollectionsWidget"
                            src="{[{embed.src}]}"
                            data-item="{[{embed.item}]}"
                            data-collection="{[{embed.collection}]}"
                            data-metadata="{[{embed.showMetadata}]}"
                            data-width="{[{embed.width}]}"
                            async >
                            </script>
                            </div>
                        
                    
IIIF logo Our image viewer uses the IIIF 2.0 standard. To load this item in other compatible viewers, use this url:
https://iiif.library.ubc.ca/presentation/dsp.831.1-0302335/manifest

Comment

Related Items