Below is a summary of the Carl Vinson Institute updated Fiscal Analysis. If you would like to read the entire fiscal analysis, you may view the 838 KB PDF file.

Revenue and Expenditure Analysis of a

Proposed City of Dunwoody: Methodology Report

Introduction

This report serves as a companion to the primary revenue and expenditure report on a proposed City of Dunwoody that the Carl Vinson Institute of Government completed at the request of Senator Dan Webber and sponsored by Citizens for Dunwoody, Inc. The purpose of this report is to explain in more detail some of the calculations used to develop the revenue and expenditure estimates shown in the primary report. Since several of the revenue and expenditure estimates given in the primary report are relatively straight forward, not all the calculations will be repeated here. However, this report will provide more detailed data in some areas for the reader.

Population Calculations

Dunwoody: 37,154

2006 population estimate provided in Georgia State University’s 2007 report, “The Fiscal Impact on DeKalb County with Possible Incorporation of Dunwoody, Georgia”

Sandy Springs: 86,698

The Atlanta Regional Commission estimated a population growth rate of only 0.2% for Sandy Springs between 2000 and 2006. Therefore, this population figure is used for the FY 2007 and FY 2008 population estimates as well.

Johns Creek: 72,988

Milton: 19,861

The U.S. Census Bureau has not yet produced population estimates for the cities of Johns Creek and Milton. As a result, CVIOG calculated their populations based on 2000 census block data¹ and assumed a growth rate equaling the average growth rates for the cities of Alpharetta and Roswell from 2000-2006.² Growth rates for 2007 are currently unavailable from the U.S. Census Bureau.

Johns Creek 2000 Census Block data estimate taken from previous CVIOG studies: 60,249

Milton 2000 Census Block data estimate taken from previous CVIOG studies: 16,884

Source: U.S. Census Bureau

Average increase in population: (24.59 + 10.67)/2 = 17.63%

Applying increase in neighboring cities’ population to new North Fulton Cities

Johns Creek: 60,249 x 1.1763 = 72,988

Milton: 16,884 x 1.1763 = 19,861

Revenues

Table 3 in the primary report lists the key metrics used for estimated revenues. For the reader’s edification, the table below shows the population and assessed property values (2006) which were used to calculate the vast majority of the existing revenues (i.e., revenues that DeKalb County already collects in the Dunwoody area).

Source: Dunwoody property data from the DeKalb County Tax Commissioner. Property tax data come from the Georgia Department of Revenue consolidated tax digest.

Parks and Recreation Skate Park Revenue

With the recent opening of the Brook Run Skate Park (July 2007), CVIOG lacked the historical data necessary estimate revenues from this recreation fee.⁴ However, skate park fees should still be considered existing revenue because the County is currently collecting it. Admission fees from the City of Asheville Skate Park were used as a substitute. The fee structure is similar to Brook Run though Asheville’s daily rates are somewhat less expensive.

1. City of Asheville also offers annual family passes for residents and non-residents which are more economical than the individual annual passes.

In addition to existing revenues, a City of Dunwoody may be able to collect three new revenues:

Non-cable franchise fees

Homestead Options Sales Tax Revenue

State Grants-Community Development Block Grant

Franchise Fees

Franchise fee estimates came from representatives of the relevant utilities. The representatives stressed that as estimates, the dollar figures should not be considered fact.

To provide a single cost figure for the report, the median revenue estimate of $125,000 was used for telecommunications.

Homestead Option Sales Tax

Adopted in 2007, Georgia Code 48-8-104 provides for qualified municipalities, of which Dunwoody would be one, to receive a portion of the Homestead Option Sales Tax. The formula determining how much revenue Dunwoody would receive requires tax levy data that CVIOG was unable to acquire in time to meet the report deadline. However, based on our analysis of the law, the formula determining the HOST contribution to Dunwoody would equal the amount of HOST property tax relief Dunwoody homeowners would have received if Dunwoody remained in the unincorporated area. Therefore, CVIOG calculated the total value of all HOST exemptions awarded to Dunwoody homeowners in 2006. Data for this calculation came from the DeKalb County Tax Commissioner.

Total assessed property value of qualified homesteads after all exemptions (i.e., county exemptions and state homestead tax credit) for 2006 = $1,221,015,770

Unincorporated service district tax rate 2006 = 2.04 mills (.00204)

Value of HOST exemption 2006 = 56.0 percent

Value of HOST revenue available to Dunwoody:

$1,221,015,770 x .00204 x .56 = $1,394,888

State Grants-Community Development Block Grant

Since the new North Fulton cities have been in existence for only a short period of time, their opportunities to acquire state grants has been limited. To estimate this revenue, CVIOG instead looked to “older” Georgia cities with similar populations. We chose 20 cities with populations between 21,000 and 57,000 persons in 2005 (see list of cities on following page). Using these cities’ Community Development Block Grant revenue for the years 2001 - 2005,⁵ we calculated a per capita amount for each city for each of the five years. Next, we created an average revenue amount for all 20 cities for each year and adjusted that figure for inflation so that the base year was 2006.⁶ The five years, now in real dollars, were again averaged for a single per capita figure. This per capita figure was multiplied by Dunwoody’s population.

DeKalb County Services

For the fiscal analysis of an incorporated Dunwoody, CVIOG assumed residents would continue to receive fire and rescue and general government services from DeKalb County. The following services are paid from the DeKalb County General Tax Fund and therefore will continue to be available to Dunwoody residents after incorporation.

General Government Operations

All Health and Welfare Services

All Courts and Judicial Services except for Recorders Court

Animal Control from Police Department

Citizens Help Center

Civil Defense from Police Department

Cooperative Extension

Economic Development

Emergency Operations / Communications E-911) from Police Department

Geographic Information Systems

Library

Registrar and Elections

School Crossing Guards from Police Department

Sheriff

Strategic Planning from Planning and Development Department

Tax Commissioner

Tax Assessor

Dunwoody property owners would continue to pay property taxes as well as receive services for Fire and Rescue and Grady Hospital.

Dunwoody Expenditures Calculations

The following services are adequately explained in the primary report and therefore will not be discussed here. Please see the primary report for calculations regarding the following services:

City Manager

City Clerk

Facilities Maintenance

Finance Department

General Operations

Legal Services

Municipal Court

Public Works – Road Maintenance

Storm Water

Surplus for Reserve/Fund Balance

Tourism Board

Data from North Fulton Cities

As stated in the primary report, we used budgetary data from Johns Creek fiscal years (FYS) 2007 and 2008; Milton FY 2008, and Sandy Springs FYS 2007 and 2008. We excluded Milton’s FY 2007 budget because the City had consolidated expenditures for a few services into single departmental line items within its budget (e.g., parks and recreation and public works were under a single departmental cost-Community Services). Milton segregated these service expenditures for 2008 though.

Equipment used by the new cities was acquired in two ways: direct purchases by the cities and through CH2MHill-OMI. To assist the new North Fulton cities in getting started, CH2MHill-OMI leased much the governments’ initial office and computer equipment. Therefore, “start up” office expenditures for the new North Fulton cities are reflected in their respective CH2MHill-OMI contracts and a similar equipment allocation for Dunwoody is unnecessary. In addition, because the Dunwoody fiscal analysis accounts for equipment purchases and leases separately, CVIOG removed these types of expenditures, when possible, from the new cities’ budgets prior to calculating departmental cost estimates.

One challenge in utilizing comparison cities’ budgets to estimate expenditures for Dunwoody is the variation in financial management practices. Among local governments, including the new North Fulton cities, there is no standard practice for allocating non-departmental expenditures. Governments differ as to where they budget general support staff, risk management costs, etc. The result of which can be “per capita” cost variations by department even though service levels are comparable. For example, cities can have very different per capita costs for a city manager’s office depending upon whether a government cost allocates the department’s expenditures to direct service departments, assigns the government’s risk management costs to this account, appropriates special projects to this account, etc. We can expect to see these kinds of differences in the new North Fulton cities as well. However, the variations of where “the bill is paid” balance out when the governments’ entire budgets are considered.

City Council

Senate Bill 82, as passed in the House Governmental Affairs Committee, specifically lists allowable Dunwoody City Council expenditures. For this report, city council cost estimates are based on those provided in SB 82.

Community Development

Because Community Development services, like building inspections, are fee based and generally thought to be self-funded (i.e., revenues from fees fully fund service costs), CVIOG decided to apply a per capita expenditure cost estimate from the DeKalb County Development Fund and Police Department Code Enforcement Unit.

Parks and Recreation

For general Parks and Recreation Maintenance, CVIOG used the parks, Chesnut Farm, and Spruill Art Center acreage and multiplied that figure by the DeKalb County Parks and Recreation’s performance measure, Maintenance Cost per Acre Annually, found in the FY 2007 Operating Budget ($1,582). We use this measure because the entire acreage of Brook Run is included even though 80% of the land must remain undeveloped per the qualifications within the property’s deed.

Park and Facility Acreage

Brook Run 102

Dunwoody Park and Nature Center 35

Windwood Hollow 11

Chesnut Donaldson Farm 3

Spruill Art Center 6

To determine the cost for maintaining the Brook Run skate park, we used the FY 2008 operating budget for the City of Asheville, North Carolina’s skate park. We used Asheville because 1) it is also an outdoor, cement skate park; 2) the park remains open all year; and 3) also has a concession.

The skate park cost estimate includes one staff person to run the concession but excludes purchases for resale because no revenues from concession sales are included as revenues. Asheville Skate Park installed cameras for security rather than hiring staff from a security company.

Breakdown of FY 2008 budget for City of Asheville Skate Park:

Salaries and Benefits $54,000

Utilities $14,000

Department Supplies $7,000

Miscellaneous $1,000

Maintenance: $5,000 (estimate from Maintenance Budget)

Total $81,000

Excludes revenues from sales/equipment rental: $18,000

Excludes expenditures from purchase for resale: $10,000

Police Services

Like the new North Fulton cities, this report assumes Dunwoody would create its own police department and not contract this service out to another provider. Therefore, CVIOG created a hypothetical police budget from the ground up using salary levels and equipment costs very similar, if not the same, as those paid by the new North Fulton cities. We calculated the number of patrol officers based on staffing ratios and assuming four patrols in the Dunwoody area. Currently, Dunwoody has three patrols.

For brevity’s sake, the primary report did not detail the calculations from the Shift Relief Factor model, therefore it is given below.

Source: Swanson, Mike and Timothy J. Buckley. Staff Operations Study: Toccoa Police Department, Carl Vinson Institute of Government

1. Assumes 40 hour work week

The costs that comprised the recruitment expenditure were not fully explained in the primary report. The costs associated with recruitment are as follows:

Source: Christopher Lagerbloom, Acting City Manager for City of Milton

Capital

Parkland and North Precinct Purchase

Acres of Parkland in Dunwoody:⁷

Brook Run 102

Dunwoody Nature Center 18

Dunwoody Athletic 17

Woodwood Hollow 11

Chesnut Donaldson Farm 3

Spruill Art Center/Library 6

Total Acreage 157

x $100 per acre = $15,700

5 year loan at 5% interest annually

Monthly payments: $296.28

Total Annual payment: $3,555

North Police Precinct

Estimated Purchase price $800,000

5% annual interest assumes bond sold at face value and discount rate equals interest rate

Each biannual payment is $20,000 for annual cost of $40,000.

Ongoing Capital Budget

For explanation of the estimate of PCID / Other, please see primary report.

To determine the average capital spending for highways and streets of the 20 Georgia cities for the years 2001 to 2005, we used the same methodology as for Community Development Block Grants. Please read that section of this report to learn how we calculated the average per capita spending for these cities. Again, Georgia Department of Community Affairs data were used to calculate this cost estimate.