Did you see the press release on Friday about the New APFO Fiscal Study from Department of Planning and Zoning? Here it is:

Department of Planning and Zoning (DPZ) Releases New APFO Fiscal Study

Today, the Howard County Department of Planning and Zoning (DPZ) released a study on the fiscal impact of the Adequate Public Facilities Ordinance (APFO). The Fiscal Year 2019 (FY19) Howard County Spending Affordability Advisory Committee previously recommended that Howard County conduct a fiscal impact analysis to study the effects of 2018 amendments to APFO. An independent fiscal and economic consulting firm, Urban Analytics, was selected to conduct the fiscal study. Their full report can be found here.

APFO BACKGROUND

The Adequate Public Facilities Ordinance (APFO) provides a growth management process that will enable the County to provide adequate public roads and schools in a timely manner and achieve general plan growth objectives. This process is designed to direct growth to areas where adequate infrastructure exists or will exist.

The 2018 amendments to APFO imposed more restrictive School Capacity test standards which took effect in July 2019. School capacity utilization rates, a standard used to determine whether a school district is closed to new development, were lowered from 115% to 105% for elementary school districts and 115% to 110% for middle school districts. A new high school district test was added, closing high school districts to new development at 115% capacity utilization.

FISCAL IMPACT

According to the study, the recent changes to the school capacity test (that resulted in closing portions of Howard County to new development) could trigger less residential and commercial growth than projected in the currently adopted General Plan. The report predicts the net fiscal impact of these changes could be a reduction of as much as $63 million in net revenues to the County during the first six years following the July 1, 2019 effective date, and potentially a $152 million reduction over twenty years. The predicted net reduction in revenue could occur because new development generates more revenue than expenditures incurred, and less new development could result in less net revenue to the County.

The study also predicts that all types of new development could generate net revenue growth in Howard County:

Residential Development: The fiscal report estimates that each new single family detached house generates an average annual fiscal surplus of $5,048, each new townhouse generates an average annual fiscal surplus of $3,531, each new apartment generates an average annual surplus of $942, and each new condominium generates an average annual surplus of $4,134.

Non-Residential Development: On a per square foot (PSF) basis, new retail generates an average annual surplus of $1.31 PSF, office space generates an average annual surplus of $0.68 PSF, and manufacturing/industrial/warehouse space generates an average annual surplus of $0.91 PSF.

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Here is information from the report (page 9) about potential revenue loss by area:

The net fiscal impact to each of the five planning areas in Howard County as a result of the implementation of the APFO amendment is as follows:

Columbia: The APFO amendment is projected to result in a net fiscal loss to the Columbia planning area of $17.8 million in the first six years and $89.0 million over twenty years.

The APFO amendment is projected to result in a net fiscal loss to the Columbia planning area of $17.8 million in the first six years and $89.0 million over twenty years. Elkridge: The APFO amendment is projected to result in a net fiscal loss to the Elkridge planning area of $13.9 million in the first six years but a net fiscal surplus of $3.9 million over twenty years (a small average surplus of $195,000 per year for 20 years).

The APFO amendment is projected to result in a net fiscal loss to the Elkridge planning area of $13.9 million in the first six years but a net fiscal surplus of $3.9 million over twenty years (a small average surplus of $195,000 per year for 20 years). Ellicott City: The APFO amendment is projected to result in a net fiscal loss to the Ellicott City planning area of $8.8 million in the first six years but a surplus of $6.7 million over twenty years ( a small average surplus of $335,000 per year for 20 years).

The APFO amendment is projected to result in a net fiscal loss to the Ellicott City planning area of $8.8 million in the first six years but a surplus of $6.7 million over twenty years ( a small average surplus of $335,000 per year for 20 years). The Rural West: The APFO amendment is projected to result in a net fiscal loss to the Rural West planning area of $2.1 million in the first six years and $12.3 million over twenty years.

The APFO amendment is projected to result in a net fiscal loss to the Rural West planning area of $2.1 million in the first six years and $12.3 million over twenty years. The Southeast: The APFO amendment is projected to result in a net fiscal loss to the Southeast planning area of $16.6 million in the first six years and $72.3 million over twenty years.

The small average annual surplus over the twenty-year period for the Elkridge and Ellicott City planning areas are mathematical outliers; at $195,000 and $335,000 annually for Elkridge and Ellicott City, respectively, these planning areas are at the “fiscal break-even point.” The fiscal break-even point occurs for these two planning areas, in part, because of the initial land-use projection mix used in the model.

Check out the 108 page report to see all of the information…and it is a LOT!!!

As I look at this information…it strikes me that balancing slowing down development and the need for revenue in the county is a tricky thing. There are a great many people advocating for slowing down development…but we see what that may do to revenue in the county. On the other hand…it is hard to argue that development in some areas of Howard County seems to be excessive.

Given this report and the potential for significant revenue losses…I see these as some options going forward:

Things stay as they are now and the county learns to live with less incoming revenue from those sources for the foreseeable future.

The County Council to take a look and make some tweaks to the current APFO legislation so that revenue reductions are not as significant.

The county to starting looking for new ways to make up the potential lost revenue. This could come in many forms but some may include new taxes or fees.

Developer fees are significantly raised to help fill in the gap. There are many that have been advocating for this option long prior to this report.

I am sure there are many other options…but those are the ones I thought of this morning.

Because of the “more restrictive School Capacity test standards” noted in the press release above…school redistricting plays into this topic. When and how often we look at school redistricting can affect development. Essentially the Howard County Board of Education (HoCoBOE) plays a significant role in the development process in Howard County and decisions they make in regards to school redistricting will affect where development may or may not happen in this county. Think about that for a second. Will we reach a point where we are watching the finance reports of candidates running for HoCoBOE seeing which developers are funding their campaigns? I know this sounds silly…but may be a political reality now.

I was surprised that no mention of the press release from the HOCO APFO Facebook page. Maybe they are still digging through the 108 page report. Maybe they will give us some interesting feedback soon…I will keep an eye out.

I am hoping that we get additional information in the near future from the county government and elected officials on this topic with their thoughts about the best way to move forward.

Do you have thoughts? Let me know in the comments.

Scott E

Article update: I just noticed that Howard County Government has not shared this press release on social media (Facebook or Twitter) and the press release is not yet on the Howard County Government website under news…interesting. The press release did not go out until 4:43pm on Friday…so maybe the folks that handle posting that stuff just had not seen it yet. I will watch to see if it is published to those platforms on Monday.